Are you wondering what it would be like to open a gym? Before I owned one, I thought I’d spend 80 percent of my time coaching and maybe 20 percent doing business things. Boy was I wrong!

 

It wasn’t long after opening (while I still had my full-time job) that I realized it was quite different than I expected. I had to get good at business, and fast, if I wanted to stay in business. 

 

As the owner, it was my job to make the final decisions on things. It was my job to come up with the next great idea, organize my thoughts, decide how it would be implemented and then actually follow through with those actions. It was also on my shoulders when something went wrong.

 

Despite any hint of confidence in my ability to lead others, I could have used some help in those early years. I’m here to help you do just that.

 

Your Evolution to Ownership

 

In the beginning, you’re going to have to get pretty good at all the things. You’re likely not going to have the time to be amazing at any one thing, but you’ll have to wear many hats instead. If you evolve effectively over time, you’ll find that this is temporary. On the other hand, we see a lot of gym owners drowning in the day-to-day tasks. When you’re drowning, it’s because you’re attempting to tread water and exhausting yourself. Instead, you need to learn to swim. That’s what this blog is here to teach you!

 

The Gym Owner’s Time Commitment

 

In the beginning, you’re going to be at the gym more hours than anyone else. You’ll likely open the doors before the first athlete arrives and close long after the last staff member heads out for the day. Even then, you probably have payroll, cleaning and email replies to complete. In those early days, it was a lot of long hours – and for me it was long hours after an 8-hour workday at my full-time job. 

 

Expect to be working hour after hour will work for awhile while you make decisions about how you want things done. (Remember the key here is imperfect action. You’ve got to be good at things, not perfect at them. Your processes will evolve over time, and that’s necessary. 

 

The way out: You’re going to need to build systems and delegate those systems out to your staff. You should even have a process for holding staff accountable at this phase. Don’t be mistaken. This “grind” cannot happen long term. When people come to us to look for help, they’ve often been in this phase far too long. Don’t wait until you’re burned out to get help. Once you get direction, you’ll always have more work before you have less work just to get on the right path. By writing systems and delegating, you can reduce your workload giving you more time to focus on the business.

Key assets: Dedication, perseverance, self-discipline and team-building skills.

 

Opening a Gym: The True Cost

 

The reality is, most cheer gym owners do not start with enough capital right off the bat. Ideally, you’d be starting with at least $75,000 to purchase your equipment, deposit for rent, purchase a website and other necessary software.

 

Those numbers can go way up if you’re opening a gymnastics gym with far more equipment necessary. If you intend to hire expensive directors and coaches from day one, that will go even higher. 

 

When starting your gym, sort your expenses into two categories: one-time and ongoing. Opening a gym can be a significant financial commitment that requires a lot of thought and critical decision making. You also may be transferring out of a facility you’ve rented so you have a large portion of the equipment you need. As such, you may not need the items detailed below.

 

One-Time and Start-Up Expenses

 

Choosing a location is going to be one of the most important decisions you make. While it’s possible to open in the back lot of an old Walmart (I’ve been there), it’s ideal to have a location with adequate parking and sign space. That said, don’t panic if that type of facility isn’t available in your area. You can absolutely invest your money into marketing rather than a front-of-mind stripmall and be successful. 

 

Most gym owners have their eyes set on one thing when they’re looking for a facility: Ceiling height. Be realistic about what levels of teams you expect to have. For cheer gym owners just starting out, most are going to have level 1-2 teams their first season. If you’re not pulling a large number of kids from a pre-existing gym (and if you think you are, you’re likely going to pull far less than you think in your first season), you won’t need the ceiling height you’re anticipating for a few years. Most gyms take at least three years to build teams up beyond a level 3. I’ve operated for 11 years with no more than 18-foot ceiling height. In fact, it’s 18 feet in the center panel only, and I’ve had up to level 4 at my gym. It’s more important that you find a good facility in a great location than that you have 25-foot ceilings. In fact, if you’re in the northern half of the country, you’ll seriously want to consider science. Heat rises. So, when the winter months roll around, expect big heat bills and cold kids.

 

Gym owners also seem to panic about not having a full floor. We practiced on 6 ½ panels for years before we bought our building. (Yes, I shed a tear when I had to cut a $600 flexiroll in half.) Our kids did fantastic on the mat and you’d never guess we didn’t have a full floor. Some of our teams still do practices on that partial floor today.

 

Keep your costs in check here and read the fine print. Pay attention to words like “Triple Net” and “CAM fees.” Also, make sure your attorney reads any lease before you sign it. The $200 you’ll spend for a lease review could save you thousands later on. You’re likely to be paying a deposit, so prepare your finances for typically paying the deposit and first month’s rent up front.

 

Smaller Start Up Costs

 

Once you have decided on the facility, prepare for smaller expenses like licenses, permits, legal fees to review your waivers and contracts, building modifications (paint isn’t cheap!) and lobby seating. Additionally, expect the following: 

 

  • Signs, office supplies and marketing materials
  • Deposits on utilities
  • Setting up computer, phones and other software
  • Equipment and aids
  • Website set up
  • Operating cash or line of credit

 

There are many ways to obtain funding from your gym. Within Next Gen, one of the most popular are SBA loans. While partners can be helpful, be cautious of taking on a partner only for the intention of helping with initial startup costs. 

 

Ongoing Costs After Opening a Gym

 

Your ongoing cost will vary depending on the demands and type of gym. Gyms that specialize in rec will usually have lower ongoing costs, while gyms that are all-star based will have more expenses inevitably throughout the year. It’s important to keep a budget of ongoing costs. This is something you’ll want to set up and use from day one. It will help you know exactly what you need to bring in each month to break even. 

 

Annual costs should be broken into monthly fees and set aside in a regular budget. Below, you’ll find a list of other expenses to keep in mind: 

 

  • Liability insurance (this will be based on the anticipated number of athletes and the activities you offer in your gym and can range from $1,800-10,000 annually.)
  • Utilities: These will be heavily influenced by your climate, but begin around $500/mo.
  • Cleaning supplies: $75-100
  • Employee wages: This is variable based on your market rate, but make sure you take employer withholding taxes into account as well as they can increase your total wage spend by 20%. (Note: Your staff are likely not contractors. If you’re unsure, check out our podcast about 1099 v. W2 employees here.)
  • WiFi and phone service: $100/mo. You can add an extra line to your personal phone, but we strongly recommend you not use your personal phone number for the gym.
  • Jackrabbit, iClass or some other gym software. Be leary of free software. You definitely get what you pay for here.

 

Depending on your business situation, you’ll also want to anticipate other monthly expenses and have about $1,000 cash on hand.

 

Key assets: Budget, spreadsheet

 

Marketing Responsibilities

 

Don’t be like me and rely solely on word of mouth alone. I bragged the first two years that we never paid a dollar in marketing. We also didn’t get paid exactly what we wanted and also couldn’t pay our staff as much as we wanted. Marketing is an investment.

 

Once you know what makes your gym the best around, you need to help others learn that by marketing your product. You’ll need to become an expert in marketing and sales to see consistent growth. Your ability to build a solid brand for your gym is vital. There are a ton of online resources available to help you with marketing on social media. Subscribe to Next Gen’s podcast for episodes that will help you better learn marketing and branding.

 

Sales Requirements

 

If you feel like sales is a dirty word, you’re wrong. Sales are going to be necessary to a thriving gym. There are likely other after-school activity options in your gym, and you need people to see why your gym is the place to be. Marketing will help get them in the door, but sales will make them members. 

 

In the beginning, you need to focus on the revenue to ensure you can break even. You shouldn’t be paying to own a gym beyond the initial investment. Over time, you’ll want to increase that revenue goal and start paying yourself. Sales are not a sleazy thing if you’ve got a great product. You deserve to get paid for your work. These two things go hand in hand!

 

Key assets: Social media marketing, sales and business plan

 

Pricing Strategy When Opening

 

Most gym owners think the best way to get new athletes is to undercut their competitors. This just isn’t the case. By charging far less than your competitors, you’ll need far more athletes. (That doesn’t make sense as a new gym, does it?) You’ll need to do some research to ensure your pricing is appropriate for your area, but still competitive. If you’re opening a gym with competitors around, you must believe you’ve got a unique selling proposition for your gym families. This is where you’ll prove that.

 

Pricing yourself as the most expensive product in town also may not make sense just yet. You’ve got a bit of credibility-building to do and probably some systemizing to justify the pricing. Recreational classes range as low as $40/mo. up to $139/mo. depending on your location and brand while all star typically is priced per season ranging from $2,400 for novice or prep to upwards of $6,000 for full-travel elite teams. 

 

It’s important in the early stages to know your numbers. Based on the prices you set and your ongoing expenses, how many athletes will you need each month to break even? The key to your success here is to know your gym’s value and what it has to offer. Then, link that to your expenses and profit goals. Once you do that, you can confidently determine your pricing structure. 

 

Don’t guess! Rely on math.

 

Key assets: Spreadsheet skills, strategic planning.

 

Athlete Retention

 

Keeping your gym families happy and loyal is essential to your gym’s growth. Remember you have two target audiences when it comes to retention. You’ll need to make sure the athlete is having fun and progressing at a pace that maintains a healthy challenge while also instilling confidence in your safety and knowledge of skills for the parents. In most gyms, tuition accounts for about 80 percent of total fees (though recreational gyms that also host events and birthday parties can have tuition as low as 60 percent of their total incoming revenue.) Smaller gyms often have better retention rates, but sit at risk of having larger, more established programs entice athletes away by promising upper levels. 

 

On the brighter side, any improvements made in athlete retention will have dramatic effects and change your marketing expenses. For example: 

 

  • Recruiting new athletes cost five times more than retaining current athletes.
  • With a 60-70 percent success rate, selling to existing athletes is much easier than selling to a new customer.
  • Happy and contented gym families are your best salespeople. They become a key part of your marketing plan by referring their friends.
  • A solid member base provides an excellent opportunity for upselling and cross-selling.

 

Any increase in retention will result in a profit boost. This retention doesn’t just happen at the end of seasons either. It happens by providing a great service all year long so families have very little choice when it comes to where they will spend the next year of their lives.

 

Retention Tactics

 

It’s very apparent that you will need a member retention strategy as part of your opening a gym checklist. 

 

You should include methods to increase retention such as: 

  • Promoting social interaction – Around 70 percent of parents who have developed relationships with other parents in the gym would identify themselves as “gym promoters”. 
  • Paying more attention to potential dis-enrollments – Typically these athletes have the lowest attendance record in recreational classes while they have major conflicts with season practices, extra practices and team events on the all star end. You can reach out to both types of athletes early in the season as you see the conflicts arise to minimize the potential of quitting once the season is in full swing.
  • Direct interaction between coaches and athletes (and their parents) – Again, we are unique in that we have two customers – the athlete and the parent. Coaches and staff should have regular interaction with both types of customers on a regular basis.
  • Promoting gym events – Families who participate in activities outside of team practices and classes such as Nerf Night, private lessons, open gym and team bonding events are more likely to build connections with teammates and loyalty in your program.

 

Key assets: Attendance tracking system, client success manager, goal review sessions and other regular touchpoints. 

 

The Insatiable Need for Revenue: Creating Different Revenue Streams

 

Before you open for business, pre-selling memberships will help you offset your start-up costs and pad your enrollments. By doing this, you can open with cash in hand and athletes in the building on day one. (Make sure you have a business license before you begin doing this!)

 

While all revenue is important, relying on just one or two income sources is a challenging business model. You can increase your gym’s chances for success by including a variety of income sources in your gym opening plan. Some potential related revenue streams include: 

 

  • Private lessons
  • Open gym
  • Birthday parties
  • Special events
  • Pro Shop
  • Snack bar

 

Don’t forget about the easiest and most profitable option of all – classes! By hosting recreational tumbling classes, you’re taking something your coaches are already good at (teaching tumbling skills) and making them available at an affordable price to all athletes. These athletes attend for just 45 minutes to 1 hour per week just to learn tumbling and develop a love for the sport. 

 

All gyms benefit greatly from classes as they’re a fantastic low-barrier option into all star cheerleading as well as a way to drive more enrollments. 

 

Key assets: Tumbling drills and skills, staff training, retail sales

 

Find Quality Staff and Training Talent

 

When opening a gym, one of the most important decisions will be on staff members and skill. These coaches and front desk staff are the ones who make daily personal contact with your athletes and parents. Because differentiation within the gym market is slim at times, cheer parents can be fickle. It’s important to have well-trained coaches who can both teach skills and have excellent communication skills with children of all ages. To find these people, you’ll need to ask yourself whether you can attract, retain and motivate exceptional coaches and front desk staff. 

 

Your recruitment and retention of staff members should be as well planned and vigorous as your marketing and client-retention efforts. While it’s helpful to get candidates who already know skills, every gym has their own style and mentality about spotting and teaching tumbling skills. As a result, you should be looking for someone who will match your personal values, loves children and has the physical ability to learn skills. 

 

A simple ad portraying a male or female who evidently loves children is going to be the #1 way to get the right types of candidates. You’ll need to find this image that well-embodies your brand, write copy that also reflects the type of person you’re looking for and get to posting! If you’re struggling with the idea of how to find the right person (rather than just the right skills), then Next Gen can help you.

 

Key assets: W2 pay structure, raise and evaluation plan, opportunities for advancement, social media marketing for hire

 

Opening a Gym Checklist

 

When considering all the facets of opening a gym, it’s very apparent you’ll need a checklist to ensure you cover all the key points. It doesn’t need to be in the form of a business plan, but a business plan’s framework will help you organize your plan and reduce the risk of overlooking something. 

 

Open the Gym with a Business Coach’s Help

 

If you’re considering opening a gym for the first time, all the challenges and details can be intimidating. It is impossible to know all the best ways to manage each situation with no prior ownership background. Having a seasoned coach can make the journey much smoother and more profitable. 

 

Seeking advice from other local gym owners usually isn’t much of an option as they will likely view you as a competitor. Posting on social media also may not help as you’re not quite sure the credibility of those who are offering advice. 

 

Seeking guidance from successful business owners in other industries can be helpful, but you’ll often miss out on a lot of industry-specific advice and consultation.

 

Many all star gym owners get professional guidance from Next Generation Gym Owners, the largest all star gym mentorship practice in the world. Next Gen has helped thousands of gym owners increase profits, enrollment numbers and revenue. To find out how you can avoid mistakes and reach profitability faster, book a free call here.

 

Making the Decision

 

Like starting any business, opening a gym is a significant commitment of money, time and resources. The decisions and problems you will face can be stressful and challenging. However, by assembling your support team and planning, you stand a much better chance of ending up with a successful gym business. 

 

Remember this above all: When opening a gym, you are no longer just a coach or trainer. You’re an entrepreneur and you’ll need to know more about business than just cheer. 

 

About the author: Danielle Johnston has run a successful cheer gym for 11 years with over 700 athletes in small-town Missouri. She has written hundreds of blogs on business entrepreneurship, all star cheerleading and marketing through Next Generation Gym Owners.