How Personal Trainers Will Know When They’re Ready to Open a Gym

Unless you’re a trust fund baby, there’s some real financial questions you’ll want to ask yourself before understanding if you’re ready to take the plunge into gym ownership. If you are a personal trainer the good news is you’ll always have income from your consistent flow of clients.

However, opening a gym means that you’ll simply be adding to your expenses and making something of an estimate that in time, operating your own gym will be more profitable and rewarding than working for someone else.

Basic Income Rule of Thumb:

You are booked, consistently, for 30 sessions a week for $50 a session. This would equate to about $6,000 in income a month, which , based on many small business gym models, should be the minimum income you are receiving that will still allow you to eat while the rest of your income goes back into the business.

So, if you can make about $1,500 a week and carry that over into your business, you may afford yourself the pleasure of not struggling too much. Of course, this will vary state to state. $1,500 in Manhattan would rent you a dumpster whereas that kind of money would give you a damn Costco-sized space in the middle of Indiana somewhere. I hear there’s some big corn-fed cats out there; maybe it is a good place to start a gym?

Leasing Space: how big, how much?

That said, understand the local market rents so that you know what you might be paying in rent. A good resource for this is CBRE, a commercial real estate resource site where you can get industry trends as well as look up rents of commercial space in your hood.

Considering you’re just starting out, you’ll probably want to get some space in the 500 SF to 1,500 SF range. I’m also going to go ahead and recommend that you lease and not buy; you’ll still have to prove that you can make your business model work, and given that you likely don’t have a proven business record, getting a loan for commercial real estate will probably be tough because of the level of risk the bank will have to take on you (which they probably won’t).

Equipment: how much, lease or buy?

The amount and cost of the equipment you need will greatly depend on your business model. If you run a yoga studio you don’t need anything other than special flooring and some mirrors. If you run a CrossFit gym, the equipment you buy can probably keep you in a nice $10,000 price range.

A personal training studio of about 1,000 SF would likely run like $15 to $30k in equipment costs. If you are in need of more expensive equipment, leasing it is often a safer bet. Leasing gym equipment means you’ll have to worry little about wear and tear (the leasing companies will generally help with maintenance), and you’ll be able to upgrade to new equipment when you start to make a little coin. Leasing equipment is also much more affordable up front, making it a good option for trainers who need to scale their businesses as they grow them out.

Utilities: what are your fixed costs?

Utilities fall under the essential expenses category and are fixed, meaning they are the same from month-to-month. These include things like:

• Water
• Sewage
• Trash service
• Telecommunications- TV, internet, phone
• Electricity

Before entering a lease, try to get some hard numbers of what these numbers were for the previous/existing business owner so you can compare location-to-location.

Insurance: what types do I need?

I think it was Chris Rock who said “they should call insurance ‘in case [expletive] happens.’ But if [expletive] don’t happen, shouldn’t I get my money back?”

In your case, you’ll have to buy two forms insurance:

1. Personal trainer insurance– this is liability insurance for trainers who have clients who may get hurt while on their watch. There are different forms of this, like Sexual Abuse Personal Trainer Insurance or Products Liability Insurance. These aren’t super expensive – some as little as 50 cents per day – but are necessary and should be included as an expense.
2. Business Renters Insurance- you’ll also need liability insurance for your business as this may be required by your lease. If you rent property, you are responsible for any damage you cause to it. Or, if your equipment gets stolen or damaged, you’ll be able to file a claim to get reimbursed. Best advice is to talk to an insurance professional about the types of business renters insurance you need versus what you should consider.

Build-out Costs: what is it and what are your limitations?

You find the perfect gym space. A nice shell of a warehouse that you’ve already mapped out the locations for your little office, water fountain and stretching area.

Right before you sign the lease you find out that the landlord puts the burden of the construction to do these things on you.

Some leases will allow you some wiggle room to place the burden of the buildout on the landlord while others will not. Construction costs can be expensive and therefore prohibitive to new business owners so before you sign, find out if the landlord will carry out buildouts or if they fall on you. You can also negotiate these into the lease, so make sure anything you do is penned on the contract.

Marketing and Advertising: how much will this set you back compared to ROI?

In addition to using my charm to get new clients, I’ve had to invest my fair share of money into attracting new ones. Chances are, so will you.

There are a lot of different forms of marketing – search engine optimization, mailers, networking events, workshops, etc. – and you’ll want to ensure that you’ll know how much you can dedicate to these versus the kind of return you can get.

According to the U.S. Small Business Administration, most small businesses should dedicate about 7 to 8 percent of their gross revenue to marketing. Rather than thinking of marketing as an expense, think of it more as an investment that pays itself back.

Staff- do I need them and how much do I pay them?

It is likely that you’ll be wearing a lot of hats at your new gym. In addition to running the day-to-day operations such as paying the bills and training, you’ll be pulled in a ton of different directions that make it seem like you can work 80 a week and still not get anything done.

A lot of business owners need to learn how to delegate tasks that don’t require their expertise, and this is where hiring someone will come in. Often, a small business can get away with hiring someone to answer the phones, maintain a presence in the gym while their training or away, and handle some remedial work that doesn’t necessarily require the expertise of the owner.

Budgeting for an employee is tough, but if you find that you can make more money by hiring someone than you would by not having them there, try to get an intern or someone you can pay minimum wage.