How to Write A Gym Business Plan
All of us have dreamt about running our own business. There is nothing like the satisfaction of chasing your passion, and working for yourself. But here’s a reality check – many people have dreams and ideas, but only a few have a plan. In the world of venture capital, ideas don’t get funded, a plan with an execution team gets funded. If you want to get into business, you will need a business plan. A comprehensive gym business plan is the first step to transform your dream into reality.
In this article, we have discussed the key ingredients of a successful gym business plan that will tick it off your bucket list, and help you look like a rockstar!
Gym Business Plan: Introduction
Most people love the gym. It is a helpful place to work out, improve your lifestyle and look like an ace of all. But for a gym owner, it is much more than that. It is a vision of seeing an ambition come to life – to stay in the fitness industry. So, whatever time, energy and money you pour into it, you want to make sure it bears fruits.
In this article we are going to see the essential ingredients of a gym business plan. Demand for gyms and fitness centres have been on the rise with a conscious shift in consumer behavior and spending. Opening a gym often requires upfront investment, and careful planning and research. A good gym business plan is a pre-requisite to obtain funding. It can also serve as an operational guide to help you navigate the changes in the business environment. As the world recovers from the COVID pandemic, it is a great time to update your gym business plan, or create a new one to weather the unpredictable conditions.
Also, before you jump into the guide that we have created below, it is important for you to understand that owning a gym can be quite a daunting task. It is not just about the layout and construction costs but also the equipment, insurance, and property fees. What is more, is that you need to pay the class instructors regularly and the fitness trainers. So, you have to make sure you plan your finances upfront.
Gym Business Plan: The Essential Ingredients of A Successful Gym Business Plan
Chapter 1: Create An Executive Summary
An executive summary is the most important section of your gym business plan. It is usually written once you’ve completed the rest of the plan. Most of the investors read only the executive summary before taking the decision to move forward. Therefore, it is important to have a strong and a compelling executive summary if you’re looking to raise capital. Remember – the first impressions of your plan are crucial, and can make or break the chances of raising capital.
Start with a brief description of your gym along with the market research summary. Explain the need (the problem statement) for the gym, and how your gym is uniquely qualified to address this problem. Your executive summary should address the following questions:
- What is the need to have a gym at that location?
- How does your gym meet/address that need?
- What is the target demographics for your gym?
- What is the market size – how many customers can you get?
- Is there any competition for your gym in that locality?
- How is your gym different from the competition?
- What is your business model – how do you make revenue? What are the different revenue streams?
- Who is going to be the team that will run the show?
- How much money are you looking to raise?
- How do your profitability and cash flow numbers look like?
Remember that this is the high level summary of the entire business plan. Make sure that the summary is crisp, and conveys the overall business idea.
Chapter 2: Business Overview
The next section of your business plan is the business overview. In this section, you should discuss the name of the gym (the brand), and the name of your business entity (if different from the name of the brand). You should also give a detailed overview of your gym, the target audience you are looking at and how your gym stands out from the rest of the competition. The business overview section of your gym business plan should answer the following questions:
- Name of your business entity
- Type of your business entity
- Ownership structure
- Location(s) of the gym
When analyzing the answers to these questions, think about why you wanted to do this in the first place. What motivates you to open a gym? Why do you think you are passionate about it?
The more you tell the readers about your business, the more they are likely to trust you. Whether you are looking to use your gym business plan for funding or as an operational guide, you should communicate your high-level objectives to investors, employees and other stakeholders.
Chapter 3: Market Research
The market research section is the most important section in your gym business plan. In this section you will need to carefully research your local market and see why your gym addresses the customer problem. Make this section attractive with colorful charts, graphics, and statistics that catches the reader’s attention. The idea is to help the reader understand the market potential.
The market research section of your business plan should answer the following questions:
- Is there a market for good gymnasiums?
- What is the overall market size?
- Is the market size growing or shrinking? At what rate?
- Why is now a right time to capture this market?
- What are the market dynamics?
- How has the market evolved over the last few years?
Once you’ve defined your overall market statistics, move to the target audience discussion. Who is your target audience – be very specific.
- What age group do they belong to?
- Do you know their income levels?
- Is your gym restricted to any gender? If yes, why?
In the next section, move on to the marketing strategy. How will you bring new customers:
- What is your online and offline marketing strategy?
- How will you gain their loyalty?
- What offers will you give your potential customers?
- How will you convert customers into membership plans (recurring revenue)?
- Do you have provide any special services that other gyms in the area don’t provide?
Chapter 4: Services and Amenities
This section is where you can get really creative. Start with a description of the services that your gym will be offering. What products are you selling? A typical gym business plan will have:
- Gym equipment
- Wraps and Straps
- Music/Audio equipment
- Protein Shaker
- Water Bottles and other drinks
- Branded Merchandise
- Personal training/coaching
- Sports facilities
- Storage lockers
- Spa and massage
You should also discuss the pricing list in this section. What are the one-time revenues (eg: equipment sale)? What are your recurring revenues (eg: membership revenue)? This will lead you to your financial plan.
Chapter 5: The Financial Plan
Now, we come to the most important section of the entire gym business plan – the financial projections. You should split this section into two:
- Income Statements
- Cash Flows
Under the income statements, you should translate your products and services to numbers. Build a monthly plan of revenue by breaking down the revenue by the product/service type. Discuss the growth rates (based on your marketing strategy). Is there going to be any seasonal variation of revenue? What are your revenue streams? How are they growing month-on-month?
In the same section, you should also project your expenses. Usually expenses for gyms include:
- Cost of goods sold (eg: cost of supplements, snacks, drinks)
- Cost of services provided (eg:cost of trainers, salaries, wages)
- Repairs and maintenance
- Operational costs
Adding all the expenses, and subtracting it from the revenue will give you the monthly profit (or loss). You also need to plan for taxes, if you’re profitable. If you are having losses, see why the losses occur – is it because your expenses are high? How would you cover your losses?
Chapter 6: The Strategy
Having a financial plan is good. Mapping out your financial estimate is also great. But without an intelligent strategy, you can’t imagine running your gym business plan effectively. Why is that? Because the strategy is what helps your business run in the right direction.
How are you planning to use the fees for enrollment increase? What are the customer offers, cashback and rewards you will be giving your clients? Are there other ways to lure customers using your marketing strategy? Once you get the hang of all this, there is no turning back.
Payment options you avail of at your gym are essential. If customers don’t find an easy option to pay, they might look for alternatives. So, you need to avail payment options that are updated, advanced and provide utmost convenience.
We will recommend you offer a versatile range of payment options that will be most flexible for customers. Credit and debit cards, PayPal and other payment options are the best for this purpose. That way, they will never have to struggle to make payments, and you can receive transactions without taking a second chance. So, do not forget to include them in your gym business plan.
Chapter 7: Funding Ask
The final section of your business plan is your funding ask. So this section should answer – “How much capital do I need?” Where will this money come from? Evaluate your options. The key sources are personal savings, crowdfunding, partners, investors, and bankers. Sponsorship from other businesses could also be a possible way to do this.
Gym Business Plan – Key Milestones
Creating a stellar gym business plan is not the end of the journey. That is merely the start. The real game begins when you plan is complete, and you approach investors. Here are the key milestones in getting your gym business plan to take off:
- Do your market research
- Build the financial model
- Write business plan
- Design company logo and brand
- Develop website
- Register your business
- Apply for a business license and permit
- Open business bank accounts
- Opt for an online payment platform
- Obtain tax payer’s ID
- Purchase insurance
- Organize rental space / purchase facility
- Purchase / rent equipment
- Recruit employees
- Draft legal contracts
- Create accounts on social media sites
- Design leaflets and brochures
- Organize branded uniforms
- Hold launch party
A comprehensive gym business plan can be a tough nut to crack. It can take years to create the plan, and execute it correctly. If you are looking to write your business plan, get in touch with us. We will be more than happy to help!