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Close Your Small Box Gym and Take Your Business Home

Close Your Small Box Gym and Take Your Business Home

small gyms closingAt the beginning of the year, the global fitness industry was valued at nearly $100 billion.

In a previous post on our predictions for the fitness industry, we looked at numerous informal polls targeting fitness enthusiasts and consumers. Their response varied widely as to when they want to return to a gym or health club. Some of them said “immediately” and were very enthusiastic. Others were somewhere in between and wanted to use caution. Still, others said “never” and were looking for home gym and outdoor fitness solutions.

This means you need to be flexible and willing to adapt in order to stay successful.

Challenges of Running a Small Box Gym

In recent years, small box gyms have obviously been very popular and profitable for many. In other cases, high rent and additional costs such as insurance, franchise fees, mandatory purchases from the franchisor, and payroll can keep profit margins lower than needed.  In various surveys, we have read from North America and Australia, it seems that anywhere from 20% up to 40% of these businesses may not last through the end of the year because of the quarantine and extenuating circumstances.

Each of these businesses has a different model. Some have independent contractors. Some have only employees. Some are individually owned by a person or family. Some have a very small footprint, maybe as small as 400 ft.². Others have a larger footprint, perhaps up to 3000 ft.² or more. This creates a significant ongoing fixed cost for rent and miscellaneous expenses. There may also be other city, county, and state fees.

Monthly Operational Costs for Small Box Gyms

So, how much does it cost to start a gym? To answer that, you’ll have to start by envisioning the ultimate version of a gym you have in mind.

For example, a modest studio gym could cost $65,000, while a mid-size gym could cost $115,000. You could also open a simple studio for as little as $50,000, but even within that framework, costs can vary drastically. The bottom line is that it’s possible to spend anywhere from $50,000 for a budget facility to upwards of $1,000,000 for a mega-gym with all the jazzy amenities.

Your rent/lease payment is likely one of your biggest expenses. Operation costs can vary significantly depending on size and most importantly location. The location will be one of the largest cost factors and can even vary widely within cities.

The most important factor is determining whether your location will get enough foot traffic for the cost. Street visibility is important if you do not plan on spending a ton on marketing but it will cost you much more in terms of rent per month. It is also important to take note of the businesses in the surrounding area to help determine if you can siphon some of their customers. For example, being located next to a health food market may attract more customers than being adjacent to an industrial warehouse. Just for a numerical comparison, a 2,000 sq ft space is estimated to cost $6,000 a month in rent in Los Angeles.

comparing profit margins of various fitness business models

Challenges of Running a Fitness Franchise

As fitness became more of a lifestyle than a trend and people grew more conscious about getting fit, budding fitness professionals and entrepreneurs started taking advantage of this by investing in boutique studios, small box gyms and fitness franchises.

There are some obvious advantages to buying a franchise. You get a business model that has been refined over time. You also get the benefit of nationwide marketing. But, there are some obvious huge downsides to a fitness franchise.

In addition to all the costs related to owning and running a small box gym, with a franchise, you will have significant upfront and monthly fixed and/or variable costs. When you add this to all the other costs of doing business, it can be prohibitive.

Of course, you can increase your Facebook and other social media presence and advertising budget. However, with the additional fixed expenses, now your total expenses have increased.

The costs are real. On average, the cost of a franchise can be around $350,000. Here are a few different breakdowns of some of today’s more popular fitness franchises.

OrangeTheory

Orangetheory Fitness was founded in 2010 and started franchising in the same year. An initial investment between $560,000 and $1,000,000 is required to become a franchisee. The ongoing fees include a royalty fee of 8% and an ad fee of 2%. The initial contract term is 10 years.

  • Total Initial Investment: $560,000 to $1,000,000
  • Existing Locations: Over 1,200
  • Liquid Capital Required: $150,000
  • Net Worth Requirement: $500,000
  • Franchise Fee: $60,000

9Round

9Round offers a 30-minute kickboxing-themed fitness class that incorporates functional, interval, cardiovascular, and circuit training regimens, and started franchising in 2009. You need an initial investment ranging from $99,675 to $143,075 if you want to become a 9Round franchisee. Their ongoing fees include a 6% monthly royalty fee and 2% monthly ad fee, which are based on gross sales.

  • Total Initial Investment: $99,675 to $143,075
  • Existing Locations: Over 600
  • Liquid Capital Required: $35,000
  • Net Worth Required: $150,000
  • Franchise Fee: $30,000

F45

F45 Training started in 2010 and began franchising in 2015. The total investment for a franchise is $100,000 to $300,000, which is low compared to other franchises because the studios have a small footprint. The initial term agreement is for five years and a renewal lasts two years. F45 Training charges a 7% royalty fee and a 2% national advertising fee, both of which are based on gross sales.

  • Total Initial Investment: $100,000 to $300,000
  • Existing Locations: 985
  • Liquid Capital Required: $100,000
  • Net Worth Required: $150,000
  • Franchise Fee: $50,000

Online Personal Training and Working From Home

After having the time to learn and become used to working out and training from home, plenty of people will want to continue to do so, especially since there are plenty of ways to get a good workout at home, especially with the virtual guidance of a certified personal trainer.

Online personal fitness training takes many forms. It can be a collection of streaming videos that are live or pre-recorded and shared through an online personal training platform like gymGo or app like Zoom. It can include live training and coaching sessions offered in a variety of ways. There are even some hybrid training where coaching is blended with in-person and online training.

According to an article by CNN Business, virtual and digital fitness companies are benefiting from the industry shift. Many fitness professionals are transitioning to virtual workouts and online personal training via video calls. Other personal trainers have begun offering their online programming for free or at a reduced cost.

Forced to close their doors, most gyms and boutique studios have had to adapt fast, moving their workouts and content online. This has included virtual group workouts, one-on-one personal training with services like gymGo, zoom, Skype and Google Hangout, and free prerecorded workout suggestions on social media and Youtube.

Still, despite this extra effort, many small-box and franchise owners are having to grapple with the very real possibility of closing up shop. Many studios won’t recover. Some will, but many will not. Within our circles, and on social media, we have already seen a surge in small-box and franchise owners looking to sell. “Going online full time” is a common ending to many of these announcements.

Just like homeschooling, people didn’t realize all the technologies and opportunities that were available with online training until they needed it as a new business model and reality.

Benefits of Working from Home

If you’re super passionate about changing lives, it is much easier to reach people online.  As an online or virtual personal trainer, there are more options for clients of when and where you can meet with them. You can be with clients all around the world and still work from the comfort of your home.

You can customize your training career by moving it online and into your home. Yes, of course, you can still work with clients in-person if you like. You can do both. It’s up to you.

Personal Freedom

If you’re used to spending hours in traffic to and from work every day, some of the most exciting advantages of starting a home-based training business are your newfound freedom and the retrieval of lost time. The average American spends 348 hours each year commuting. With an online and home-based personal training business, you have those extra hours to regain control of your personal life.

Keep the Money You Make

Your earning potential is directly proportional to your performance, so you don’t have to wait for a raise or a promotion. You work harder, and you produce more. You’ll also save money on gas and food. Preparing lunch at home is more cost-efficient and offers a nice break in your workday.

Increased Opportunity

With so many corporations and industries in a slump, starting your own home-based enterprise means you can create your own income-producing opportunities. Good job prospects can be scarce in some industries, and promotional opportunities within major companies are also shrinking.

Less Risk

Running an online personal training business from home takes much less startup cash than a freestanding business or even a franchise location. And once your training business is up and running, it’s cheaper and easier to maintain than a brick and mortar studio or gym business.

Tax Advantages

In-home personal training services have always been popular, but are becoming more popular, as they provide a convenient way to get one-on-one help with fitness experts. Private training sessions are one-on-one and can be as short as 20 minutes or as long as 2 hours. Clients love private training because it gives them the opportunity to work individually with their trainers.

There are a number of tax advantages to having your home and studio/office under one roof. You can deduct a part of your home’s operating and depreciation expenses on your home as business expenses. This can be a percentage of your mortgage, property taxes, insurance, utilities, or the expenses of household maintenance.

More Time for Friends and Family

This is especially important for parents of school-age children: you can see the kids off to school and on most days be home when they return. Also, if someone is sick, it’s easier to leave your home’s desk than one in someone else’s office.

Less Stress

It’s a little less stressful to juggle the demands of work and family when you know you can stay home to care for a sick child and generally set your own schedule.

Opportunities for Professional Growth

Being your own boss gives you the chance to wear a lot of hats: sales director, marketing professional, strategist, business development manager, and more. This gives you insight into and experience with all the aspects of running a personal training business, which, in turn, makes you even more marketable.

Increased Productivity

Now that you no longer have to budget time and energy for commuting or a succession of useless meetings, you should have a lot more time and energy to make your training business a success.

A Creative Outlet

Launching your online or home-based personal training business can be an opportunity for you to give birth to your passions and hobbies and create a money-generating outlet for your unique and creative talents.

Starting an Online Personal Training Business

Check out what it takes to start a career in personal fitness training. This is your most affordable and fastest way to become a highly qualified personal trainer.

Is your re-certification coming up? Learn more about earning your CEU credits. You can find the full list of CEU courses here.

If you are ready to start your online personal training or coaching business, don’t forget to learn more about our online coaching course. You will also really enjoy this very comprehensive training course called Online Expert Empire.

There is always something exciting about earning a new training or coaching certification and applying that new knowledge of how you train your clients. This also helps you hit the reset button.

NESTA and Spencer Institute coaching programs are open to anyone with a desire to learn and help others. There are no prerequisites.

That’s it for now.

Take action!

NESTA | Spencer Institute

PS: Click here to see many helpful business/career resources

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NOTE: When you take your fitness business home, you can also work with clients outdoors as you operate your business from your kitchen table and even coach clients online from home.

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