Owning a Gym - Good Business Idea?
Hello,
Has anyone here owned / operated a gym before?
I want to open a gym that is purely focused on attracting the amateur bodybuilder - a gym that goes back to basics.
I envision the space being 1 or two levels and dominated by squat racks, benches and dumbbells - a place where you don't have to worry about the squat rack or bench being open because there would be 10-15+ of them. No cardio or other BS machines (..okay maybe 1 or 2 treadmills/bikes for warming up legs)...
I think this is a niche missing in the market. Mass market gyms are two crowded and are filled with too much cardio / other BS - true bodybuilder wants to get their heavy lift in (read: squats, deadlift, bench) followed by crushing some hypertrophy (i.e. dumbbells). Crossfit and other similar functional athletic classes spend too much time on metabolic conditioning and less on pure aesthetic.
Don't get me wrong, i believe a functional workout class like Crossfit is better for your health, but from a purely aesthetic point of view, you only get the big gainz with moving weight (i.e. hypertrophy/increasing your major lifts).
Financial consideration:
Cons:
- High upfront costs
- Saturated market
- Expensive lease (in NYC/SF/Other)
Pros
- Low maintenance costs
- Side hustle (i.e. do not have to quit my day job)
Am I crazy??
Edit: What an interesting discussion thank you all.
yea bro sounds like free money
bad idea friend. used to work at a bank that had a strict policy of avoiding lending to gyms like they were the plague. not profitable enterprises.
maybe start a steroid racket using the gym as a distribution network. now that's cooking with gas.
what kind of enterprises did your bank like lending to
profitable enterprises with solid growth potential, like wework
I’d fund it out of personal cash
I think your onto something with your business idea. I just don't feel it would be profitable. Fitness centers are notorious for selling memberships and +/- 60% of them don't get used. It's also my belief that the FCs are secretly banking in this. I signed up at a local FC around here and when I asked about the number current members and capacity. The manager informed me that his facility was set up to accommodate 5,000 members but only had 1,000. This wasn't a large facility. I never saw more than 60-70 members at one time. But the treadmills, ellipticals and steppers were always packed during "peak hours"I couldn't understand how they say they could keep selling additional memberships unless they were able to restrict times.
Since gyms bank on people not showing up. If you cater to a niche of "meat heads"that are dedicated to working out. You will run into similar congestion issues without the benefit of people paying you and not utilizing their membership.
You need to create a hybrid model.
One final thought is, get partners! it spreads out the financial risk and each partner will be able to tap into their own network to sign up members.
Good point. Pricing would need to be demand driven. Never seen a gym that charged people differently at different times of the day though...maybe there is good reason for that!
Are you a body builder or aspiring one?
From my perspective, part of the challenge of appealing to a 'niche' is you need to either be part of it or, as others have mentioned, have partners who are part of it... in your case, ideally ones that are body builders/managers/business minded folks. That is probably a tough find generally speaking just by sheer numbers.
I'd also tell you that you may want to do some heavy market research and figure out what gyms already exist - where i'm from, not a huge city, there were a number of 'private' gyms or otherwise which existed you never knew about. They were basically invite or pseudo invite only, decently expensive but effectively were smaller versions of what you are talking about. Clearly in a large metro there might not be that downtown - but - I'd make sure you know the full landscape.
Others have mentioned this, but your biggest issue will simply be pricing. Gold's gym being an example - they have tons of members, cardio, standard 'gym' stuff that you'd find anywhere - and then have a dungeon, downstairs, for body builder/power lifter types (at least where i lived). Logically that allows you to bring down overall pricing (a la most gym models) yet still pull in niche members, expanding your overall membership. Without that - the economics will largely not work, especially if you aren't operating it as an owner.
I think these things work when you convert a space you bought/own into something for your own hobby, expand to your friends and then expand further into the niche - not as a side hustle/passive income opportunity.
I worked in Asia for three months and that was one of the quirks I noticed with the gyms. The prime window from 4:30 to 7 PM was ~$160, midday membership was ~$95 and early morning was $135 if I remember correctly. Plenty of people abused this in practice.
Your secret belief is 100% justified. A lot of these chain FC's love the free money that comes to them from customers who keep paying for a membership they never use because the fee is either too small for them to notice on their monthly expenses or the customers are too lazy to cancel the gym membership coming up with an excuse saying, "ooooh I'll go the the gym tomorrow," or "you never know when I'll end up going to the gym." Yet they never follow through on it and the FCs end up profiting from their apathy and negligence.
What are your expectations around not having to quit your day job? You're thinking about hiring managers, etc?
Yep
meh
What the fuck are you smoking dude
Wow, you pretty much stole my idea. Jerk. :)
That said, I've reluctantly decided not to touch gym ownership with a 10 foot pole. The competition is overwhelming. They are becoming like restaurants--on every street corner.
^this. don't start a gym.
Just no. It isn't as good of an idea as you think it is.
Respectfully, I disagree. There are a lot of dudes between 16-30 that are looking to hit the weights and don't want anything else. They don't care about all of the bullshit amenities. I belong to a gym that is full of these types of people, but the gym is tiny and is cluttered with 50% cardio bullshit. All you need is 5-6 treadmills to please cost conscious gym goers that only want to do cardio, and fill the rest with enough machines and squat racks to allow for the average lifter to complete varying workouts. I go to the gym 5-6 days a week and have been for six years. I've been to powerlifting gyms, Golds gyms, and all that shit. I don't like it. Its weird being in a place where everyone there fucking lives for the gym. There is a fine line between being a serious lifter and making it your life's work. I would certainly argue there is a decent market. With that said, I have zero concrete evidence, so further research would be interesting.
Most people are not that concerned with what gym they go to anyhow - especially people who don't live for it, like you said. There are 24 hour gyms out there that charge $19.99 and you can go whenever you want.
You need to be unique to compete against that - serious powerlifting gyms, culture-based crossfit gyms, expensive gyms that offer a sense of exclusivity, etc. Being a bro isn't a unique enough differentiation and most "bros" are just going to go to the nearest and/or cheapest option anyhow because, as you said, they aren't the people who live for it.
Finally, depending on your market, the type of gym you describe probably already exists.
its one of those conundrum where (dont mean this in a bad way), most people who would be into having a "back to basics" gym, probably don't have much disposable income and are looking for the lowest price.
If you know who Marc Lobliner is (youtube guy), he has had ran a free gym in Ohio (I think), and not a ton of people came.
But Jocko told me to do it
Depends where you open it.
Open it by a university / where there are students Open it near some offices Open it near some housing estates Open it near some eateries
you need it to be accessible and logical eg gym after work / gym and then can get food after / lift after class / get home from work see the kids and then lift.
my family is in the gym business. it's not a side hustle bro. the only gyms that are "set and forget" are the ones with lots of cardio (think YMCA/planet fitness/lifetime). boutique gyms require an owner or manager who is present, because people can find barbells anywhere, the reason they'd come to your gym is because of the atmosphere and camaraderie.
I thought this was BS until I saw my family's gym and their competitors and what went wrong/went well. weight equipment and cardio machines are a dime a dozen. are you engaged with your members, do you celebrate their accomplishments, do you give back to them, stuff like that?
so yes, the boutique gym business is good, but it's not a side hustle, it's a full time job. the only "but" here is if you have a great manager (non-owner), they can be the face of your operation, but if they leave, you're fucked.
Agreed, I live in a small city outside NYC, and there are crossfit gyms and gyms like crossfit that aren't crossfit that come and go.
crossfit (which I don't do) sustains because people are invested in the atmosphere and the people.
People can get a cheeseburger anywhere, okay? They come to Chotchkie's for the atmosphere and the attitude. Okay? That's what the flair's about. It's about fun.
To add onto thebrofessor - there are plenty of businesses competing against one another. What makes the difference is the delivery of customer service. People will pay and return to a place they feel comfortable in.
if your business goal is to max profit...then this is a bad idea. OrangeFitness is the new rage because people are inherently lazy and get bored easily....so the constantly changing routine in their circuit training keeps you energized and coming back for more. This is where the money is.
If you operate a gym you don't actually want people to use it, you just don't want them to cancel.
How are you gonna compete with LA Fitness? Serious question they have pricing power and they’re everywhere. Aside from them how upscale do you wanna make your gym?
I’m in NYC - no LA Fitness here. Every gym here is a freaking rip off anyway ($250 for equinox all access...ridiculous). Sure there are lower priced options that have scale advantage (ie crunch, blink, NYSC, heck even equinox has scale).
All those mentioned though are pretty lousy when it comes to good, quality space for bodybuilders. Even a Big Crunch / equinox usually won’t have more than 4 true squat racks.
I am thinking that this will be pretty upscale ($150/mo seems right in my head) - picture a Barry’s / Rumble / Other boutique studio meets bodybuilding. Everything will be top of the line - but only the bare necessities for true bodybuilder types (squat / bench / dumbbells / pull-ups / pushups/ dips, etc. )
How long have you been in NYC? I'm a native, so I saw many bodybuilding gyms come and go. Steel was my favorite gym, as I was a member there for years. The clientele it attracted was insane - I remember going into the middle squat rack with Dennis Wolf on one side, and Victor Martinez on the other!
Nevertheless, it went out of business, as they could barely cover the high increases of rent, and the necessary cap ex, i.e. replacing bent barbells and damaged treadmills.
This is unfortunately the major trend with gyms geared towards bodybuilding or hardcore powerlifting. The anomalies are Complete Body on 19th St and Star Fitness in the Bronx.
Sorry if I come off discouraging, I just want you to give you insight on what you are planning to get into.
Guys - all I’m saying is that I truly believe that this is an unexploited niche. People spend soooo much dough on personal health - bodybuilders would as well if there truly was an outlet where they could “own the space” while feeling like it is a “best in class” experience.
Plenty of testosterone fueled finance types that would easily shell out $200 a month to have undisturbed bench, squat , deadlift , etc. (which even equinox cannot offer bc too much space dedicated to BS classes / TRX bands / yoga mats / other nonsense) area every damn time they go to the gym - something that no gym can offer them at the moment.
I mean - do it.
You're always going to have naysayers. People in this thread have told you many roadblocks you will face, from your target market being much smaller than you think it is, to the full-time nature of what you're trying to do part time, to the difficulty in competing with national brands, etc.
Still, if you believe it in, and you go into it with your eyes open, who knows?
You may have something, but it all comes down to a numbers game. How much is it going to cost per month, how much to open, and most importantly, the breakeven point (how many memberships you have to sell by X date).
I’d think long and hard about how you plan to get enough memberships in the door for profitability. Why are you different? What makes you special? It sounds like a sort of hassle free environment with easy access to lifting heavy. Find a way to capture that in your brand and marketing as people need to latch onto something.
This is actually the correct answer in the entire thread. Model it out. Create a pro forma financial statement, look to the market and decide what you can charge, then estimate your membership numbers. This is exactly what I did with CycleBar, which I reaaaaally wanted to open. After a few months of due diligence I abandoned my plans. It was an easy answer, too. I looked to other CycleBar studios around the nation and I literally just counted the number of people who had signed up for each class (you have to select your own bike before class online, so you could count the number of attendees). It was clear that it would be a battle getting enough attendance/membership to cover rent.
Good friend of mine did this. Opened a gym focused specifically on body building / olympic weightlifting. At the time, it was the only one in the city so yeah it definitely filled a niche (not sure if there are any new ones since then). Idk a ton of the specifics, but it was shockingly profitable. He found a cheap lease in a less than desirable location, but was close to transportation and since it was the only one of its type, people traveled. I think upfront costs were like $25k or so for equipment (super bare bones) and after paying all the employees and everything, I think he made like $40k a year from it working like 8 hours a week (side gig) once it reached steady-state. He did all the management, maintenance and menial shit himself so it certainly wasn't glamorous, but not a bad deal. Think he ended up selling it for like 4x FCF after a few years
why don't you make them have to interview to get into the gym, so that there is a prestige factor - like goldman sachs or hbs.
another idea is to make it a male only gym
you mean a members only club?
nice.
You should instead cater to fatties, the largest and growing (no pun intended) group in America
Include complimentary Coca Cola beverages in every corner of the gym A dozen free donuts for each member every day (donuts are cheap carbs + economies of scale) Areas for lardwhales to pedal 0.5 mile per hour with their ass on a bike while playing candy crush No freeweights above 5 lbs (lets be real, lifting the fork is all they do)
And charge $300 a month for it. Boom profit!
That being said, you’ll face competition from McDonalds, Dunkin Donuts, and PLANET FITNESS.
As a >450 Wilks powerlifter who has also competed in classic physique, living in Manhattan with a dearth of PL-dedicated equipment absolutely blew two at a time. The reasons for the absence of "real gyms" in NYC was something I contemplated extensively during my time in the city. But it ultimately makes sense. We all know how exuberantly high rents costs are in Manhattan, and that has been discussed extensively in this thread already. Your target demographic in NYC, especially when factoring in comeptetion from large fitness chains with significant economies of scale, is much smaller than you are making out to be. Based on previous threads about fitness on WSO, I think you are dead wrong that finance bros want the type of training environment you are speaking of. Most finance frat-bro types don't know there ass from a hole in the ground when it comes to training, and would rather skip leg day to go lift at the Nox and stare at the wannabe Instagram models doing donkey kicks. For most of these types, the gym is social hour. You won't have the IG models at your BB/PL gym in Manhattan. NYC is a prestige / one-upsmanship city; people want to be heard saying loudly in public on their phone "I'm headed to the Nox bro" to flex that they can afford a $250/mo gym membership.
Your membership base would be small, and you won't be able to charge as much as the Nox, and you won't be able to charge as little as Crunch/Blink. Your income stream will be very fixed and likely barely enough to cover your largest fixed costs (rent, janitorial & maintainence staff, etc.), and the up front costs are high. The handful of people in NYC who DO want the type of training environment you are describing will want all rogue equipment, calibrated plates etc. That stuff isn't cheap, and it's unlikely you will find a facility at the intersection of sensible rent cost & enough space that makes sense.
With the above in mind, there are a few strength-based gyms in the outer boroughs (South Brooklyn Barbell Club) & further out in Long Island. But again, there are reasons why they are in the outer bouroughs and not in midtown. Capitalism is in very full effect here.
Fortunately I no longer reside in NYC and train at a dedicated PL/strongman gym. Even in a lower CoL city that places a premium on health & fitness, my gym had to downsize recently due to rent demands against what is ultimately a fixed-income business model. Once you attract your initial membership base, you're betting on more people moving into the area to drive growth in your membership base, because the serious people who want this type of environment will likely start going as soon as they find out about it.
I'm friends with a few other gym owners as well (as the result of being a part of the PL/BB community), in various cities in the US, and they all tell me the same stuff. They aren't taking home high finance money from these jobs. Most of their income comes from coaching (read: actual coaching not "personal training") where they can charge clinets $150/mo for intelligent programming, technique feedback, nutritional & drug use guidance, posing coaching for BB, etc. Are you qualified in any way to give any of those services?
There are a few strength-based & powerlifting YouTubers who have put out videos on the pros/cons of owning a strength-based gym. Calgary Barbell just put out one on their YT channel last week. Alan Thrall has done one and has discussed the stuggles of owning & building out his gym (Untamed Strength in Sacramento) in numerous videos. I believe Omar Isuf has covered this on his channel as well. You should give all of those videos a watch & listen to get some insights from actual gym owners vs. those of us in this thread.
Seriously though I hope you do it and hope you're successful. Just know the risks up front.
Your first paragraph had me laughing. This is spot on.
ME: What do you do for a living? HER: I'm an Instagram Model. What do you do? ME: I'm a soldier on Call of Duty.
I don't think it is. Your upfront costs would probably be around 20-30k$ at least, not including employees and their salaries. Lets say you charge ~100$ per month for the membership, you'd need a 100 members to make 10 000$ which would barely pay the rent and the employees. Not from NY myself, but I know a lot of people apply for gym memberships just to say they go to a expensive af/branded gym. Would you attract your targeted niche? Sure, you may do but will that be enough to keep the place running? And as for that side hustle thing, you can scratch that off because for the first couple of months you'll be working your ass off to keep the gym running, only then you may be able to afford a manager.
Nevertheless, if its important to you you'll figure it out and make it profitable and I hope you do, these were just some of my thoughts on the idea.
i'll pay $100 a month if there were hot girls wearing little clothing everywhere
you dont need to pay $100 to see that
This is why I'm looking forward to the Equinox opening up next door.
Unfortunately the most profitable gym out there I feel is one like Planet Fitness where the memberships are cheap but only 10% of members regularly use your equipment.
In the model you describe in the OP you would have 90%+ avid gym goers attend 5+ times per week. That causes wear and tear on your equipment much faster, increases staffing needs and is definitely not as profitable as a wider supply of lazy average slobs.
I think 24/LA cater to this niche well because they have equipment for you to go pretty crazy but still lots of cardio equipment for the average folks who just hit the elliptical for 20 mins and call it a workout.
IMO I would rather have a well equipped home gym for a few thousand bucks and run another, more profitable business as a side gig.
truth is you don't even need a few thousand bucks to get a good home gym going. Couple of kettlebells, a pullup bar. Maybe a squat rack, barbell and some plates if you have the space. Done. And can't beat the commute.
Who wants to go to a gym that's full of powerlifting meatheads rather than cardio chicks? I'm there for the view.
Gyms make money from people signing up and NOT showing up, and in selling PT to newbies. Oh, and some personalized nutrition plans, over-priced meals and shakes at the bar, and premium workout classes. Hell, some gyms damn near give away memberships, hoping to upsell you into expensive personal training, and making money selling you food, gear and supplements.
You've proposed instead to sell to dedicated regulars, like powerlifters, who will never pay for PT. And a bare-bones gym that won't have a food bar. It's like the perfect opposite of what you want to do. Instead of a lot of soccer moms signing up in January, and not showing up more than once or twice a month, you're going to pack your gym with dudes working out for 3 hours per day 6 days/week, and having high demands in terms of equipment access. This is a terrible idea. The only way you could make this work is to get in on some really cheap real estate, like some basement somewhere. But even still, it would be a grim place. Bunch of meatheads and no chicks. And I doubt it would be a good business.
Pretty much
Have to look at it from both sides:
Gym owners-- want a receive lot of money, basically don't want people to show up Gym goers-- want to pay a little amount of money, use the gym frequently. This also varies, BBers will use the gym the most, others will only occasionally.
The proven way so far to do this is the planet fitness model; charge $10. Just enough where people will join and pay, but not enough for people to consider closing their membership. If all of a sudden PF charged $1,000 a month, membership would probably go way down. Problem from there is, as price goes up, less people join (ala CrossFit).
Anybody know the failure rate on gyms? I can see it being comparable to the restaurant industry.
The few benefit being lower start up cost and lower operating cost.
restaurants are truly a dismal business. Key to success seems to be 1) repeat customers, 2) fast turnover of customers, 3) selling higher margin items (eg. dessert). There are so many substitutes in the market, and barriers to entry are so low.
We have financed gyms- either as a single tenant or in a multi tenant center. My most recent transaction was a single tenant 24 Hr Fitness in a suburb of SF. The location had approximately 14,900 members, that complete approximately 65,000 monthly workouts, which ranks sixth among the 63 Bay Area locations and within the top 2.0% nationwide. In addition to the $5.5 million ($98 psf) in tenant improvements supplied by the borrowers, the tenant spent approximately $5.6 million ($100 psf) in completing the build-out and on equipment at the premises. The rent was $36 PSF for a 56K SF facility.. Another transaction I remember was a suburb in LA where the 24 Hr Fitness had 11,000 members with over 2,000 swipes per day and that was decent as well. Bottomline, see how many memberships do you need to sell in order to pay the rent. Lots of business ideas sound good in theory until you start talking about numbers. My examples gives you an idea how this business is not for the faint of heart. While you have a day job doing something else, there are people living and breathing this business that will want to crush you.
So I own a gym franchise and can give you a few thoughts.
It sounds you're looking to be more like the Gold's Gym model. Pretty sure they've shut down many locations as the true bodybuilding community isn't as big as the other gym communities.
Could work if somehow you know for a fact that there's a big juice monkey community around where you want to open.
When I was in business school we had a case study on CrossFit. It was one of the best case discussions I've been a part of and we were fortunate to have the co-founder Greg Glassman come into class. Glassman was an absolute riot. The shabbiest dressed and most foul-mouthed case protagonist I had ever seen in 2 years of business school. If you did not know he was the co-founder of CrossFit, you would assume he was just some crazy bum on the streets. The guy simply did not give a fuck, but hey, he's worth close to ten-figures, so he can dress and act however he wishes.
Anyways, the big takeaway for me are the 1) affiliate model (i.e. franchise model) and 2) getting traction with an initial small but devoted customer base. If you want to make money in this space, you absolutely have to go into franchising. The thing where CrossFit succeeded was it had much lower costs compared to a traditional franchise model. Beyond paying the annual fee, the gym owner/operator does not owe anything else to CrossFit. Very low barriers to entry, yes, but also low barriers to exit - so if things don't work out, no big deal - the owner/operator is only down a couple thousand bucks. Essentially, the affiliates absorb all the downside risk, but the risk is only a couple thousand bucks and the time they have put into it (opportunity cost). Also, unlike traditional franchise models that have many restrictions, with CrossFit an owner had almost complete freedom to do whatever they wanted in their gyms - so each gym developed it's own culture/identity.
For number 2, it might seem hard to believe since CrossFit is so mainstream now, but in the early days its initial customers were a very small but very devoted niche of ex-military, firefighters, and former pro athletes. This group fed into the affiliate model, since making the jump from fitness enthusiast to gym owner/operator is not that hard. This was how CrossFit was able to scale so fast. The takeaway is essentially to find your niche. The Y Combinator mantra of (I am paraphrasing) how it is better if your product/service is absolutely loved by 100 people than just kinda liked by 1 million people applies. It sounds trite, but if you want to create a business that can scale, you need people to really love your product/service.
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