While gathering information about how to start your own gym or fitness center, you must have come across the term ‘business plan’ in many blogs and how-to guides.
Everyone talks about how essential business plans can be for a new start-up’s potential success, but what exactly are these useful tools and why would you need one for a gym?
What Is A Business Plan?
A business plan is a collection of different strategies and analytical reports which serve as a guide for entrepreneurs during the initial stages of the business.
In simple words, these plans contain the goals and objectives of your business and outline the tools that you can use to achieve these targets.
Traditionally, business plans were long, 10-page documents which made you feel like you were putting together another thesis for your masters.
Nowadays, however, things have changed.
Formal, full-fledged business plans are only required if you’re planning to meet up with an investor or a bank; institutions that require all details to determine if your business is worth the investment or not.
Otherwise, experts actually recommend creating your first draft on small 5”x 5” paper napkin. This will force you to include only the most important details, such as the product/service you’re going to sell, how you’re going to make money, and what sets you apart from the competition.
All of the financial predictions and competitor analysis can be done at a later stage when you’re about to set-up your facility.
What’s important at the start is that you have a basic understanding of what you want to achieve. This applies to businesses of all kinds, from gyms to fitness retail stores.
A wise man once said on the matter, “If you don’t know where you’re going, you’ll end up someplace else."
While this thought certainly isn’t revolutionary, it’s very important in the context of the business world. The biggest reason why most start-ups fail is because these entrepreneurs don’t plan their venture properly and just jump headfirst hoping for the best.
Sure, this strategy might give you some initial success, but it might lead to chaos in the long-term. Eventually, you won’t be able to sustain the business since you won’t know how far you’ve come and where you’re supposed to go.
Why Does Your Gym Need A Business Plan?
To put it simply, a gym is a business first and foremost, and much like any other start-up, it comes with its own set of challenges and problems.
A lot of these challenges will be the same as those of any company, such as the need to scout and purchase a suitable location, invest heavy amounts of capital, manage finances smartly, advertise aggressively, etc.
The major problem, however, is that unlike entrepreneurs in other industries, gym owners are typically long-time fitness trainers or former athletes who don’t necessarily have the business acumen required to run a company.
This is the prime reason why a lot of new gyms fail. It’s not because they don’t offer world-class facilities or employ the best trainers and coaches. On the contrary, it's the mismanagement regarding business operations (finances, memberships, etc.) making the entire infrastructure to crumble down.
Creating a detailed plan is the best way to prevent any sort of mismanagement from occuring.
CHECK OUT OUR GUIDE ON HOW TO MAKE YOUR FIRST BUSINESS PLAN HERE.
In addition to helping you avoid some of the common pitfalls of starting your own entrepreneurial venture, there are plenty of other reasons why a business plan is essential for your gym or fitness centre:
1. Adds Clarity
The primary purpose of creating a business plan is to provide some form of direction and clarity on where you’re heading.
As we mentioned earlier, a good business plan will serve as a beacon that helps you straighten the ship any time it starts to sway in other directions.
Set out your goals and objectives (e.g. “X number of memberships within the first year”, “first professional partnership in Z years”, etc.) and make sure you keep them realistic and achievable.
It’s all good to be ambitious and determined to achieve success, but if think your gym will reach Gold’s Gym status in the first 5 years of operations, you’re going to be very disappointed.
2. Thorough Market Analysis
If you have even a hint of business-acumen in you, you would have researched your target market thoroughly long before you even decided to start your own gym.
This research includes everything from how much competition you’ll face in the industry to your potential earnings based on how many consumers there are in the market.
This information is important because it helps you judge the feasibility of your business ideas.
If you’re planning on opening a new gym in an area where there are already 3-4 similar facilities, it’ll take a long time for your gym to make a name for itself. You’ll also need to ensure you’re giving customers something that no other business in the vicinity offers.
Since there hasn’t been a lot of innovation in this industry over the past few years (yes, you can always make sure the floor layout is designed well, but that will only get you many customers), it becomes very hard to stand out from the crowd.
3. Attract Investors
Not all of us have the deep pockets to completely fund our own businesses, and thus many business owners look for investors. This investment typically comes from 3rd party investors or banks, who help get the business off the ground for a share in the equity (usually 10-30%).
If you require such investment, you’ll need to prepare a detailed business plan that focuses on all the core aspects of your business, especially the finances; both current and forecasted.
These finances should be listed in a profit loss statement for at least the next 3 years (the last 3 years as well if the business is established). Keep in mind that you’ll need to explain your numbers to the investors, so make sure the math checks out.
If you don’t have a background in finance, look for an accountant to help you prepare this part of the plan instead and have him explain it to you in complete detail.
4. Securing Trainers
As a gym owner, your first priority will always be to secure more memberships and build long-lasting relationships with your consumers. You’ll need to do two things for this.
The first is procuring the best and most relevant gym equipment. Jack-of-all-trade gyms are slowly becoming outdated as more and more people seek specialized fitness centers that cater to their specific needs.
Therefore, before you purchase any equipment, it’s important that you know and understand what kind of gym you want to run.
The second thing is world-class trainers. If you’ve been around the fitness industry for a while, you already know that a huge majority of customers end up joining specific gyms simply because a certain instructor is working there.
How does your business plan aid you with this?
When selecting a gym, trainers want to see potential for growth and success (a nice six figure salary would certainly help). This is where you can use your plan to woo them in.
Show them that you’ve thought things through, you know what you’re doing, and that there is immense potential here just waiting to be explored. It’s just a matter of confidence.
Final Thoughts
Preparing a business plan for your new gym will ensure that you go into the new venture as equipped as possible.
This plan not only serves as a guide for when you need any kind of help, but it also has a ton of other great benefits that make it a necessity for when you’re starting out.
Don’t be like other entrepreneurs who jumped into the process head-first without a chalked out plan and give your business the best start possible.
Be sure to check out our guide on how to prepare a thorough business plan in case you haven’t already.
