How to Open a Gym

Americans are more health-conscious than ever and gym owners are reaping the rewards. It’s a growing industry worth more than $35 billion, and even small gyms can tap into that market. Gyms make money from memberships, fitness classes, sales of refreshments and supplements, and renting space to instructors and personal trainers, so opening your own gym has great profit potential.

Starting any business is not easy, however, and opening a gym will require diligence and knowledge. Fortunately, this step-by-step guide will provide all the information you need to jump into the gym business.

Step 1: Decide if the Business Is Right for You

Pros and cons

Every business has pros and cons that you should consider with care before deciding if opening a gym is the right path for you.

Gym industry trends

An appealing new concept called hybrid gym membership has the potential to shape the future of the industry. Hybrid members have the option of taking advantage of the gym’s online offerings — from a personal trainer to a variety of yoga and fitness classes — or coming to the gym in person. Outdoor spaces for workouts and personal training are also trending, so gyms have been looking to use outdoor areas for classes and workouts.

The most popular fitness classes are yoga, Pilates, circuit training, and high-intensity interval training. New workouts are popping up as well, such as Pound, a cardio jam session inspired by the beat of drum-playing.

Industry size and growth

• Industry size and past growth – Following a decade of steady growth, market analyst IBISWorld values the US fitness industry at more than $36 billion. The industry is still recovering from the pandemic-driven downturn in 2020.((https://www.ibisworld.com/industry-statistics/market-size/gym-health-fitness-clubs-united-states/))
• Growth forecast – The global health and fitness club market is predicted to grow by 7% annually through 2027.((https://www.mordorintelligence.com/industry-reports/health-and-fitness-club-market)) 
• Number of businesses – There are more than 100,000 gym, health, and fitness clubs in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/gym-health-fitness-clubs-united-states/))
• Number of people employed – The fitness industry employs more than 800,000 people.((https://www.ibisworld.com/industry-statistics/employment/gym-health-fitness-clubs-united-states/))

Trends and challenges

Trends in the gym industry are:

• Hybrid gym membership, a combination of in-person and online sessions, is gaining popularity
• Increasing use of wearable technology such as fitness trackers and heart rate monitors
• Outdoor gyms and physical activities such as organized hiking 
• Growing preference for home exercise facilities

Challenges in the gym industry include:

• Building a client base and retaining members
• Rising prices of gym memberships

Consumer spending

• Average consumer spend – US consumers spend $59 on gym membership, $48 on on-demand fitness services, and $136 per month on studios.((https://www.cardlytics.com/blog/which-fitness-spend-trends-build-the-strongest-new-years-resolutions/))
• Potential customer base – More than 23% of the US population engaged in sports and exercise per day in 2020.((https://www.statista.com/statistics/189562/daily-engagement-of-the-us-poppulation-in-sports-and-exercise/))
• Average prices – A budget gym membership could cost as low as $40 per month while a high-end gym membership could be as expensive as $80 per month, or an average of $60 per month.((https://www.glofox.com/blog/gym-membership-prices/))

What kind of people work in gyms?

• Gender – 60% of fitness trainers in the US are male, while 40% are female.((https://www.zippia.com/fitness-trainer-jobs/demographics/#gender-statistics))
• Average level of education – Almost 60% of fitness trainers hold a bachelor’s degree.((https://www.zippia.com/fitness-trainer-jobs/demographics/#degree-level-types))
• Average age – The average age of a fitness trainer is 37 years old.((https://www.zippia.com/fitness-trainer-jobs/demographics/#age-statistics))

How much does it cost to start a gym?

Startup costs for a gym range from $25,000 to more than $120,000. The low end represents a smaller space with less equipment. You could always start small and expand your gym later, to a larger space or multiple locations.

You’ll need a handful of items to successfully launch your gym, in addition to the space itself. Here’s a list to help you get started:

• Treadmills, cycles, steppers, ellipticals
• Training bench and free weights
• Kettlebells
• Other weight training equipment

How much can you earn from a gym?

The average profit margin of a gym is 20%, while the average annual cost of gym membership is about $500.

In your first year or two, if you’re able to sign 500 members, you’d bring in $250,000 in annual revenue and $50,000 in profit, assuming that 20% margin. As your brand gains recognition, sales could climb to 2,000 memberships, giving you $1 million in revenue and a tidy profit of $200,000.

What barriers to entry are there?

There are a few barriers to entry for a gym. Your biggest challenges will be:

• Startup costs – Costs of equipment and space are high
• Competition – It’s a very saturated market

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Step 2: Hone Your Idea

Now that you know what’s involved in starting a gym, it’s a good idea to hone your concept in preparation to enter a competitive market.

Why? Identify an opportunity

Research gyms in your area to see their membership and fitness training offerings, prices, and online customer reviews. You might find an area without a gym, or maybe the local gyms don’t have good trainers. A small boutique gym with more personal service and training might be another opportunity.

You might consider targeting a niche market by specializing in a certain aspect of your industry, like yoga classes.

This could jumpstart your word-of-mouth marketing and attract clients right away.

What? Determine your products or services

In addition to your workout facility, consider what else you might be able to add to increase your revenue. You could offer:

• Fitness classes of various types
• Vitamins and supplements
• Fitness apparel
• A juice or smoothie bar
• Online classes & hybrid membership

How much should you charge for gym services?

The average cost of a gym membership is $500 per year. The typical cost of a fitness class is $35 to $50 per person per class. You should aim for a profit margin of around 20%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market depends on the concept you choose and the classes you offer. If you offer high-intensity circuit training, your target market will probably tend to be younger. You’re most likely to find those customers on Instagram rather than Facebook.

Where? Choose your business premises

You’ll need to rent out a large enough space for equipment and classes that is also in a convenient location. Find commercial space to rent in your area on Craigslist, Crexi, and Commercial Cafe.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “gym” or “fitness”, boosts SEO
• Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services: Describe your offerings in detail.
• Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
• Competitive Analysis: Analyze main competitors, assess their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to gyms.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your gym will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a gym. You might also try crowdfunding if you have an innovative concept.

Step 8: Apply for Licenses/Permits

Starting a gym requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your gym as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You can use industry-specific software to manage your memberships and payments, such as PushPress, GymMaster, or PerfectGym.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Marketing

Some of your business will come from the casual passerby or online visitors, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:

• Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
• Instagram: Same benefits as Facebook but with different target audiences.
• Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Sign Up Now.” This can sharply increase memberships.
• Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

Kickstart Marketing

Take advantage of your website, social media presence, and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:

• Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as your first month free.
• Signage – Put up eye-catching signage at your store and website. 
• Flyering – Distribute flyers in your neighborhood and at industry events. 
• In-Person Sales – Offer your gym services at local markets and trade shows. 
• Sponsor events – You can pay to be a sponsor at events that are relevant to your target market.
• Post a video – Post a video about your gym. Use humor and maybe it will go viral!
• Email marketing/newsletter – Send regular emails to customers and prospects. Make them personal. 
• Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
• Press releases – Do press releases about new equipment, etc.
• Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
• Pay–per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
• Influencer marketing – Pay people with large social media followings to promote your gym. You can find micro-influencers with smaller followings and lower rates.
• Make a podcast – This allows you to make a personal connection with your clients.
• Do a webinar – Share your fitness expertise online with a video seminar.
• Testimonials – Share customer testimonials about how your gym helped them.
• Create infographics – Post infographics and include them in your content.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your gym meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Global pizza chain Domino’s is renowned for its strong USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your gym could be:

• Personal fitness for women
• Work out when you want; we’re open 24/7
• Hybrid members have access to all our classes online

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a gym, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in a gym for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in fitness and health. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

As your business grows, you will need workers to fill various roles. Potential positions for a gym include:

• Front Desk Clerk – greet customers, sign up members
• Fitness Trainers – Run fitness classes, personal training
• General Manager – Staff management, accounting
• Marketing Lead – SEO strategies, social media, other marketing

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Start Making Money!

Opening a gym is a great opportunity to help people live healthier lives and make a good living at the same time. The gym industry is growing fast as Americans are investing more in their overall health and fitness, so this is a great time to jump into the market. To differentiate your gym from the competition and attract more members, think of a unique concept and innovate on the latest trends.  

You’ve made the right first move by gathering all the relevant information. You should now be ready to flex your entrepreneurial muscles and open your own successful gym!