There are many factors to consider when opening a fitness store including rent, utilities, interior design, website costs, marketing and advertising. We've discussed them in detail in this blog.
Before anything, you need to develop a business plan. A business plan will list all of the strategies, goals and objectives of your business. You will need to do in-depth research for your Fitness Retail Business and include it in your business plan.
The research for your business will include realistic calculations of the startup costs as well as the monthly expenses you’ll incur initially. This will not only help you as a business owner, but lenders might also require it as they might need to see whether your business is worth their investment or not.
Costs to Open and Run a Fitness Retail Store
1. Rent
For deciding what your rent will be you need to first decide where your store will be located. Location plays an important part in determining your rent. The cost per square foot for commercial space varies according to the location.
A store in a popular shopping area can cost you $25 per square foot. Whereas a location that does not have much footfall can cost you around $11 per square foot. You might require 1000 to 3000 square feet of space for your retail store. By using the following you can calculate your monthly rent:
Yearly price per sq. ft. x square feet ÷ 12 months = monthly rent
$25 x 2000 sq. ft. ÷ 12 months = $4,166.66
We would recommend you allocate $4000 - $6500 for your monthly rent.
2. Licenses, Permits and Insurance
Any type of business requires permits and licenses for operating. These permits and licenses vary according to the type of business and the location of your retail store. The business structure you have also affects your costs as it determines how you will be taxed and who will pay the debts.
Following are the types of business organizations you can form:
- Sole proprietorship
- Partnership
- Corporation
- Limited Liability Company
Some of the permits or licenses you’ll require are:
- Employer Identification Number (EIN) for taxes
- Local licenses as specified by the SBA
- Resale certificate
- Certificate of occupancy for the retail space
The costs of permits can vary anywhere from $200 to $2000 depending on where your business is located. You would need to check the state government website for further information on the costs of the permits.
Having a retail store always has some risks involved in it, these risks can include unexpected events, natural disasters, cyber-attacks or defective products. In this case, insuring your business becomes necessary. You can insure your overall business for as low as $1000 per month which will make $12,000 annually.
3. Utilities
Once you have decided to rent a space for your retail store, you will need to pay for the utilities. The average monthly utility costs in the US are as follows:
- Electricity: $117.46
- Gas: $61.69
- Water: $45.44
- Sewer: $66.20
- Internet: $59.99
- Phone: $114
Total utility bill for one month: $464.78
We would suggest you allocate $500 - $700 for your utilities.
4. Store Fixtures
Usually, the space that you have decided to rent will not be ready for any sales without any upgrades. There might be fixtures that you would have to deal with before opening your store. Store fixtures might include painting the walls, replacing flooring, shelving, and lighting fixtures. The following are the costs for store fixtures:
- Paint: $30 - $55 per gallon of paint
- Shelving: $300 - $3,000
- Lighting: $150 - $900
- Flooring: $3 - $22 per square foot
According to the above-mentioned costs, we would suggest you allocate $8,000 - $20,000 for store fixtures.
5. Initial Inventory Costs
Your initial inventory cost will be one of your most important expenses. It will depend on the type of products you will be stocking, the markup on those products, and how many items of the product line you would need to stock up. Our suggestion would be that you order a quarter's worth of stock.
You need to do some research for finding the best wholesaler and distributors so that you can get the best price and margin on the products you will be selling at your retail store.
Related Article: How To Smartly Manage Your Fitness Retail Store's Inventory?
6. Interior Décor
Smaller fixtures are one thing but you may need to change the overall look of your retail store to make it fit your theme. For a bigger renovation project, you may need to hire an interior designer and a contractor. A contractor can charge $50 an hour on average and an interior designer may charge $50 - $500 per hour for their services.
New furniture can cost anywhere from $30,000 - $80,000 depending on the items you are getting. Your costs may also vary as they also depend if the furniture will be high-end, mid-end, or standard quality.
7. Fitness Equipment
The cost of Fitness equipment that you will incur will depend on the stock you will be getting for your retail store. Following is a list of wholesale fitness equipment you can resell at your retail store:
- Gym Gloves: Price ranges from $12 - $34 per pair
- Weightlifting Belts: Price ranges from $14.99 - $55.99 per product
- Weightlifting Gear: Price ranges from $8.99 - $36.99 per product
- Strength Training: Price ranges from $6.99 - $87.99 per product
- Exercise Bikes: Price ranges from $250 - $8,000
- Elliptical Trainers: Price ranges from $119 - $9,125
- Treadmills: Price ranges from $200 - $8,000
- Stability & Mobility Gear: Price ranges from $12.99 - $111.99 per product
- Braces & Support Gear: Price ranges from $13.99 - $55.99 per product
- Equipment Bags: Price ranges from $24.99 - $50 per bag
You can initially buy 10-20 pieces of each of the mentioned boxing and MMA equipment or as per your requirement and budget.
As fitness goods are products so you’ll need to have an inventory or any inventory space for fitness goods. Inventory space can cost you as much as $20,000 - $45,000 depending on the area and the space required for the products.
Related Article: Scale Your Retail Business Through Wholesale
8. Professional Services
Professional services will include all the costs including legal fees of the lawyer and renovation services. If you are working with a lawyer, their services can cost you anywhere from $100 to $400 depending on their experience and expertise. Janitorial services can cost you anywhere from $15 to $50 an hour.
Professional services can cost you anywhere from $115 to $450 per hour which equals $3,680 to $14,400 monthly if you require 32 hours of their services every month.
9. Retail POS System
Having a retail Point-of-Sale system has become a necessity in today’s day and age, especially a cloud-based POS system. It not only allows you to process transactions with all types of payments but also provides advanced reporting tools, inventory and employee management, helps in growing sales and runs your business operations efficiently.
A POS system can cost you anywhere from $60 - $300 per month depending on the service provider or software that you will be using.
10. Hiring Staff
Once you’ll open up your retail store you’ll need to hire the right staff for handling the operations of your retail store. You should budget your employees’ wages beforehand. Here is a breakdown of the average wages of different staff positions in a retail store:
- Sales Associate: $41,230
- Store Manager: $43,084
- Cashier: $24,900
- Inventory Control Specialist: $38,400
Your monthly wages will be anywhere from $80,000 to $148,000
11. Website Cost
Having your business's presence online is a must if you want to promote your brand, reach a bigger audience and increase your sales. There are a lot of e-Commerce platforms which you can use for your business but you need to check whether the platform you are choosing integrates with your POS system or not.
An e-Commerce platform can provide you with a site builder and templates alongside it so that you can save money on your site design. You can even get a POS system which comes with an e-Commerce platform. This sort of e-Commerce typically starts at around $120 per month.
12. Marketing and Advertising
Many new store owners see marketing as a side cost but it is very important for the promotion of your retail store. There are a lot of things you would need to consider for marketing and advertising your retail business such as the amount you will be spending, product type and location.
Your marketing techniques and strategies will include both digital marketing and traditional marketing strategies. Digital marketing will include social media marketing, Google advertising, website and SEO. Traditional marketing will include flyers, posters, signage, business cards, and cold-calling.
The overall marketing activities can cost you anywhere from $1,000 to $10,000 per month. The cost of your marketing and advertising activities will depend on how much you are promoting your brand both online and offline.
Related Article: Marketing Tips For Retail Stores Of All Shapes & Sizes
Summary of Monthly Costs
- Rent: $4,166.66
- Licenses, Permits and Insurance: $1500
- Utilities: $464.78
- Store Fixtures: $8,000
- Interior Décor: $50,000
- Fitness Equipment: $35,000
- Professional Services: $8000
- Retail POS System: $100
- Hiring Staff: $148,000
- Website Cost: $120
- Marketing and Advertising: $3500
Estimated store opening costs: $258,851.44
The amount of $258,851.44 is the estimated store opening cost. As store improvement and remodelling would be done only once before opening your store to the public, the monthly expense would be approx $200,651.44.
Takeaway
Starting a Fitness retail business can be very exciting and incredibly rewarding if it is a success. For having a successful fitness retail business the most important step you need to take is to calculate your financial forecasting accurately. The more accurate your cost breakdown will be the more it will ensure that your business will succeed.
