| Text Message Marketing for Fitness Studios

Basic Startup Costs of Starting a Gym

Last Updated on Mar 14, 2018



Opening a gym can be a very profitable venture. That is, if you do it correctly. I’ve worked with over 500 fitness businesses since starting FitnessTexter in 2011. I’ve talked to successful gyms and I’ve talked with unsuccessful gyms. I could always tell which gym owners had thoroughly planned the opening of their gym from start to finish, and those who had the idea of starting a gym, a little money in their savings account, and started their gym without putting much thought into long-term costs of running a gym. Opening a gym has large startup costs, don’t confuse yourself. Even if you think you can do it for cheap, it’s still going to cost more than you expected. You’re going to be hemorrhaging money for awhile and you’re going to need to be okay with that. Get your check book ready baby!

The basic cost of opening a gym can fluctuate between $15,000 and $100,000+; depending entirely on how much you’re willing to invest in the success of your business. You’re going to need a healthy amount of working capital before you dive into your business endeavor. Set up a budget for starting your gym. Make sure you’re willing to spend the entire amount in your budget. However, as I linked to earlier, you can make some good money in this industry. If you’ve ever though, “How much does it cost to start a gym?”, you’re in the right place.

Here is a list of the most basic, as well as long-term, costs of starting and running a gym. There will be expenses that come up along the way, but you’ll have to deal with them as they land on your plate. The start up costs for a gym aren’t small, but they are manageable. Take a look at the financial calculator to see when your gym will turn a profit.

State Business Incorporation Fees

Starting a business is more than just buying a location, putting up a sign, and having people flood in your doors. There’s a lot that goes into the pre-starting phase of business. This is often one step that new business owners forget to take into account when they’re starting their business. They get too worked up thinking about their logo and future income to think about the nitty gritty of starting a business. You need to make sure you have all your ducks in a line before you even open your doors.

As I said, most new business owners send all their time thinking about their business name, where they’re going to open their business, how much money they’re going to be making within the first week(ha!), and all that other jazz. Stop right there. There are some boring, but necessary papers to be filed before you can start rolling in the money. If you aren’t a properly registered business, you can get into deep trouble with the government.

First and foremost, you’ll need to incorporate your business in your state, as well as get a federal Employer Identification Number (EIN) number for your business. Incorporation costs money, whereas the EIN number is free. Even if you don’t anticipate having employees at the start of opening your gym, it’s still a good idea to get one.

Building Your Gym’s Website

Have you seen some of the gym websites out there?!? Yikes! They’re horrible. In today’s Google lifestyle, you can guarantee that a person is going to creep your website and Facebook page before they even think about stepping foot into your business. If your website is ugly, you might as well just give up. A good website is going to run you a couple thousand dollars, but it’ll pay for itself 10X when it convinces people that your business is the real-deal. Those cheap-ass online website builder sites are going to produce a cheap-ass website that will diminish your brand before you’ve even had time to build it. Holler at my good friend Mat Vogels if you want a sexy website. The guy is a design genius and usually has stuff done within the month. As a disclaimer, Mat isn’t giving me any money to give him a shoutout on this website. Maybe he’ll buy new a beer the next time I’m in Denver though. He’s just an honest to goodness amazing designer. Check out his stuff and you’ll see what I mean. A good website will pay for itself over and over. How many times have you went to a website and thought, “Wow, this business is legit.”? Probably quite a few. You also know what it’s like to stumble upon a poorly-designed website.

Pay Attorney for Waivers & Contracts

Here comes another money-pit; lawyers! You probably just said to yourself, “I don’t need a lawyer, I’ll do it myself.” Here’s what could happen when you do it yourself. Lawyers exist for a reason; they help businesses protect themselves from lawsuits, the government, the IRS, you name it. They’re your business body guard. Ask around on Facebook and someone will surely have a legal referral they can give you. I used a lawyer in NYC to write just one of my business contracts, and it cost a $1000. Your savings account will get depleted pretty quickly, but it’s worth it in the long run. You might be able to find a free gym liability waiver online, but it only takes one typo for a sneaky member to find a loophole and nail you with a lawsuit. Make sure you cross your T’s and dot your I’s when it comes to a lawyer. As they say, an ounce of prevention is worth a pound of cure. Take care of your legal needs right away. Also, as a disclaimer, nothing in this blog post can be taken as legal advice or tax advice. You’ll need to contact your accountant or lawyer for that (which is why you need to hire one!). I’ve linked a good legal beginners book about the legal side of running a small business. Give it a read and then go out and find yourself a trustworthy attorney that can help you write your waivers and contracts.

Buying Business Insurance

Gyms are inherently dangerous. People are exerting themselves beyond their normal levels. Because of this, someone might get hurt and make a claim against your gym. Even if you have a bulletproof waiver, there’s still a chance that someone hurts themselves and decides to take out their angry on your business. Even if it was a normal-use injury, it’s still a possibility. Even worse, what happens if you have an equipment failure injury that wasn’t covered in your membership waiver? It’s best to get some quality business insurance to cover your butt. A good friend in Denver, Whitney Smith, has been in the commercial insurance industry for years. She underwrites a lot of big Denver businesses. Give her a ring and tell her Patrick from FitnessTexter sent you (then she’ll have to buy me a beer!). I honestly can’t tell you all the reasons why you need business insurance, I just know that if you don’t, one bad accident claim can bankrupt your business.

Leasing Fitness Center Location

Now you’re past most of the boring parts of starting a fitness center. Once you get through the lawyers, the incorporation, the insurance and the website design, you get to start doing the real work; finding a spot to build your gym. You need to figure out if you want to buy or lease the location. There’s a good chance you already have a location eyed up, but if not, have no fear, the internet is here to help. I use CityFeet for my commercial property searches, but you can also use LoopNet; either will do. A word of warning; fitness businesses aren’t the safest business bet, so many commercial landlords are hesitant to lease their facility without a healthy security deposit. If you intend to build out the facility, you’ll need to find a commercial contractor as well. As I said at the beginning, starting a gym ain’t cheap. There’s a lot to be said about negotiating for better lease terms. If you’ve got a way with words, you might want to do this yourself. There’s the chance that you could save several thousand dollars in the long run if you negotiate successfully. If you aren’t the best negotiator, you can hire a negotiator or ask your attorney help (that’s what you’re paying them for!)

Buying Weight Lifting Equipment

Okay, so you’ve got the lawyer stuff done, set your business up legally, now what? Well, it’s time to spend even more money. This time, it’s gym equipment. First and foremost, think about what kind of gym you’ll be starting. If you’re running group classes, you’ll need enough equipment for every single person to be doing the same thing as one. That means if you have classes of 15 you’ll need to have 15 squat bars, 15 sets of weights, 15 weight belts, etc. You get the gist. Classes are a great gym model, but they can also be more expensive to start. If you’re opening a “do-it-yourself” gym like Crunch Fitness, then you’ll need to buy a pulley-based equipment. This is safer for your client to use and will(hopefully) lead to less injuries. Rogue Fitness is a big supplier of many CrossFit boxes. PreCor is a big name for your do-it-yourself gyms, and ProMaxima sells about everything. Figure out if you want to buy or lease your equipment. There are advantages to both.

Paying Employee Wages & Benefits

Unless your business is just going to be you, there’s a good chance that you’ll need to hire a few people. Ideally you’ll be able to have your significant other help out, but even so, having someone at your gym during all open hours is going to be a necessity. Payroll doesn’t have to be that nerve-wracking. However, when it comes to running a business, there are times when you do it yourself and there are times when you pay the pros to do it. Payroll is one of those jobs. People like getting paid on time and if you don’t pay them on time, you’ll have trouble in the end. ADP is obviously the biggest player in the payroll world. I think they ran the payroll for most restaurants I worked at during college. ZenPayroll seems like a much more “hip” payroll company. I personally love using Intuit for all my tax stuff, so I’m sure their Intuit Payroll is solid.

Purchasing Gym Management Software

Up there with purchasing your gym equipment, you’ll most likely need to purchase the gym software to run your business. This software takes care of member checkin, billing, email updates, credit card reminders, class scheduling, and pretty much anything else you can think. They’re not cheap, but they make running a gym a lot easier. The big names are MindBody and ZenPlanner, but GymRXSoftware out of Colorado has sick prices and great reviews. Support the little guys! You might not need gym software at the very start of your business, and maybe you’ll try to do everything with Excel. That’ll work for awhile, but eventually you’ll get to a point where you can’t keep up with it anymore and you hit the wall. Using some type of gym software will help you out in the long run.

Tracking Your Business Finances

Since I was already pimping them in the last section, I might as well just say that Intuit Self-Employed is absolutely AMAZING when it comes to running a business. You connect your bank accounts and credit cards, and it automatically tracks your monthly income and expenses and even helps you pay quarterly taxes. You’re paying quarterly taxes, right? If you’re lucky enough to own a business (and not have any employees), then it’s for you. If you have employees that aren’t 1099 contractors, you’ll need to find a better expense tracker. PaySimple, my old employer, was actually working on some small business expense tracking stuff back in the day. I bet they’ve nailed it down really good by now. Either way, you’re going to way to keep track of your finances from day one. There’s nothing worse than sitting down in March, trying to consolidate all your tax information from the prior year. Get yourself organized beforehand and it will be a much less stressful tax time for you.

Advertising & Marketing Budget

Here’s where you get to have a little more fun with your money. The advertising costs for starting a gym is actually one of the more enjoyable costs of doing business. Gym advertising and marketing is pretty simple. You need to get the word out about your facility, and then make those people fall in love with your gym. You’ll first want to set up all your social media profiles, but I’d stay away from Twitter. It’s not the best for gyms. A Facebook and an Instagram should suffice. Spend money on getting gym members, keeping gym members, and building community. The rest should fall into place quite nicely.

Paying Your Personal Salary

If there’s any money left over at the end of the month, you get to pay yourself; hooray! I think it’s a smart bet to figure you won’t pay yourself for the first six months of running your business. That’s why it’s so important to have a healthy financial cushion before your start your business. You need to take into account all the expected expenses, as well as all those unforeseen expenses that are surely going to add up. Always make sure you have a large financial safety net before you dive into the world of starting your own business. It might seem fun from the outside, but once you’re inside, it can be a pretty stressful place. Make sure you’re in a good place mentally before you dive in, otherwise you’ll have a hard path to till.

This blog most might have been a bit of a buzzkill for you; but it’s better to be prepared for the difficulties that lay ahead of you. Starting a gym can be a great experience, but be prepared, it’s going to cost money. It might be a good idea to find a business partner so you’re not absorbing all the startup costs yourself. Either way, good luck!

If you can think of any startup costs I missed, please shoot me an email(info@boostfitnessmarketing.com) or leave a comment below. I’ll make sure to add it to the list.

Image Credits:
GrassRootsy.com