Do you have $50,000 laying around? If so, you’re one of the lucky ones. According to SmallBusiness.com, starting a gym is going to cost you between $10,000 and $50,000. Those are just the startup costs, not the day-to-day business costs.

For the rest of us that don’t have $50,000 in liquid assets, starting a fitness business, be it a yoga studio, functional fitness “box”, kickboxing studio or regular fitness center, is going to require finding investors with cash on hand. Don’t worry though, investors aren’t too hard to find, especially when gyms can be very profitable investments.

We here at FitnessTexter put together this short list of the 5 necessary steps any budding fitness entrepreneur should take before they start looking for gym investors. Just remember, talking to investors BEFORE you have all your ducks in a row is a bad idea, just look at Silicon Valley.

Step 1 | Build an Experienced Management Team

Let’s set the record straight, starting a fitness business is not a one-person job. Running a small business is a grueling task. According to a Sage Small Business survey, small business owners work an average of 42% more hours than non-business owners. If you’re looking for a steady paycheck, being your own boss might not be the best choice. However, if you’re looking for employment freedom, keep on reading!

Take a couple days to sit down and figure out who you want on your fitness management team. Do you have a fitness owner that is willing to mentor you? Having a mentor can make a huge difference. Do you have any prior business management experience. Having an MBA is nice, but if you’ve never done any business management before, the degree won’t really help you out. Takeaway – Make sure you have a team of people that will impress your potential investors. No investor wants to give money to someone they have a hard time trusting. Impress them from the time you walk into their office until you leave.

Be open about your business idea. You never know, you might have a friend with business experience that would love to team up with you, but never knew you were interested in starting your own business. Having an experienced management team is one of the most important things to investors. They want to know that their money will be in the best hands possible. Also, don’t be worried that someone is going to steal your business. Better to bounce the idea off many people than start it without getting any help and watching it fail.

Step 2 | Create a Detailed Fitness Business & Marketing Plan

Once you’ve got your management team lined up, it’s time to put together a business plan. Just having a general idea of what you’ll do with your investors money isn’t going to be enough for them to trust you. They’ll want to see a thorough business plan that includes a marketing plan, strengths and weaknesses, management team bios, and a myriad of other sections.

If you need help starting your business plan, we’ve created a fitness business & marketing tools section on our website. You can find business plan templates for various fitness business, be it a yoga studio, fitness bootcamp, functional box fitness center, or even a martial arts studio. Download one of these business plans and start filling it out. It will take you at least a week to put together a solid business plan, but it will pay huge dividends when you see your potential fitness investors smile when you present them a printed business plan at your first investor meeting. Having a business plan also gives you a chance to flesh out the ideas of your business. It’s one thing to think that you know exactly how your business is going to function, it’s another to actually write out the ideas and start to play with them in your head. Takeaway – Don’t get expect to get investors if you can’t show, plainly, how your gym will make them money. Not you, them. Also, refrain from using your “status” in the fitness community as a reason why your gym will be popular. Many famous athletes have tried opening gyms and failed. Why will yours be different?

Step 3 | Calculate Long-Term Return on Investment (ROI)

Investors have one goal when they give you money, they want to make MORE money in return. That’s how an investment works my friends. If someone invests $100,000 in your business, they’re expecting to make a decent return on that money, in the form of monthly or quarterly payments (dividends). That said, in order to attract investors to your fitness business, you’re going to need to provide a return on investment report. This needs to be a detailed report that shows how much money your business will be producing at various stages in its lifetime. In order to get a general idea of how much revenue your business will be making, use one of our appropriate fitness financial forms. You’ll be asked to input your projected membership levels, membership fees, cost of starting the business, monthly expenses, and a few other items. Once you input these numbers, you’ll be able to see your estimated monthly gross revenue and profit. Show this to your investors to they can get a better idea of the dividends that your business will produce.

Step 4 | Attend Investor Networking Events

As much as I hate “networking events”, I realize that they’re a necessary thing in the business world. Networking events are one of the main places where you’re going to meet your angel investors. These are wealthy people who are looking for young companies that have good growth potential. Do a few google searches for investors meet up in your city. You might find a few good ones to attend. If you don’t find any in your city, be prepared to travel to the nearest event. At the event, make sure you have a ton of business cards, an attractive website(or at least a design printed on paper), and a few business plans at the ready. It’s best to have all this on your website. Make conversations with potential investors, give them business cards, and hope they check out your website. Don’t let the idea of networking scare you; it’s not as bad as it seems. It’s just a bunch of like minded individuals getting together to discuss problems and solutions. Takeaway – It might be boring, but getting the word out that you’re seeking investors and going to local events will be a great way to meet people that might be able to put you in touch with the right people.

Step 5 | Be Confident & Be Prepared to Fail…A Lot!

No one likes an arrogant entrepreneur, so leave your attitude at the door. When I say to be confident, I don’t mean being cocky about how you’re going to be the “best effing business in my city!” I’ve had people call FitnessTexter and tell us how great their business was, only to do some research and see that they have a horrible website and no Facebook followers. Great business, huh? Being confident in your ability as a business owner will attract more investors than being unsure of yourself. It’s a fine line to walk, so walk it carefully. Investors want to see that you’re ready to put some of your own resources into the business as well. If you’re looking for a 100% investment, they know that if you fail, you lose nothing. Having some skin in the game makes your investment seem much enticing to an investor. Takeaway – Don’t worry about failing. It happens to even the best business people. However, have a backup plan so that if you fail, you’re not scrambling to get by. Also, don’t take investments from your family members. It’s one thing to take investments from a third party and lose them. It’s another thing to lose grandma’s hard earned money.

As for failing, every newspaper article and news story loves to talk about the successful entrepreneur who started with an idea and was an “overnight success” in their industry. As fun as these stories are, they are FAR from the truth. Building FitnessTexter took a solid 4 years of hard work. It’s always fun when people say, “You’re so lucky to have a successful business!” Luck had nothing to do with it; hard work did. Business fail, a lot, and you need to be prepared for failure. It’s good to get those failures out of the way early on so that you can get to your successes sooner. Best of luck out there!