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5 Steps to Success for New Gym Owners

You’ve got space and equipment, a website and a lot of heart. You’re ready to teach people to move and to transform lives. But in order to ensure long-term success, new gym owners need to think ahead.

Though 80 percent of small businesses survive their first year, 50 percent don’t last 5 years. What do you need to do to make sure you fall on the right end of that statistic?

Here, successful gym owners Nikole Gessler (CrossFit Recursive) and Alex Tubbs (Seven Devils CrossFit) share their hard-won advice.


 

1. Get a Mentor

You may be an expert at coaching the squat, but it takes more than that to run a business.

Do you know the pros and cons of a triple net lease? How about a balloon loan? Do you know how to set prices to generate profit or how to run a marketing campaign?

“We were lucky to know some people in the CrossFit community and in our local community that helped us out before we even opened,” Gessler said, “but I still wish we had used a business mentor right from the start. They helped us avoid a lot of mistakes, but (a mentor) could have helped us more.”

Someone who’s not emotionally invested in your business can help you see flaws you might be blind to and offer a fresh perspective. Business mentors also have the benefit of hindsight and can help you steer clear of mistakes they’ve made.

Plus, going to an expert for advice on setting prices, choosing a location or offering discounts means you don’t have to get an MBA before you launch your business.

“I would’ve loved to have had more business experience before opening the gym, but the gym wasn’t going to wait for me,” Tubbs said.

 

2. Set Smart Goals

What’s reasonable in terms of goal-setting depends on a number of variables. When setting goals for monthly profit, growth and retention, consider your location and target market.

Are there other gyms with a similar market nearby? Are you located in a large or small city? Is it a sleepy community filled with retirees or a bustling metro area packed with transient 20-somethings?

“Being in a small town with two other CrossFit gyms, we can’t expect explosive growth in our market,” Tubbs said.

Set_Goals

Instead of tearing his hair out trying to bring in huge flocks of clients in a city of just more than 30,000 people, Tubbs focused on slow, steady growth.

“I think that this has allowed us as owners to grow with the business and our members to develop a very strong community,” he said. “For us, at this point, a net positive in member growth is the most realistic goal.”

Still, don’t be afraid to think about profit.

“Money isn't evil,” Gessler said. “Yes, every CrossFit affiliate owner started their gym to help people—but they are on that list, too. If I can't feed my family, I can't keep the gym open. If the gym isn't open, there isn't a place for people to go to work out and I can't help them with their weight-loss goals. I can't give people a place to go to alleviate stress, anxiety and depression.”

And be specific. Don’t just say, “If I can pay the bills, we’re good.”

“Profit is a really important goal,” Gessler said. “If the gym doesn't make money, nothing else happens.”

 

3. Stay in Your Lane

We get it. You want to be the best. But if you spend all your time thinking about what the guy down the road is doing, your gym will suffer.

Consider competitive pricing.

“I think a lot of new gym owners get scared and try to undercut other established gyms when they first open,” Gessler said. “That only attracts people looking for a bargain, and soon after, you’ll have to raise your prices and that comes with its own set of difficulties.”

Instead of trying to monopolize the market, pick a target market and stick with it. Your gym isn’t going to be a good fit for every client, and a bad client is worse than no client at all.

Think about your market and your skill set: Does it makes more sense to target competitive athletes, families with kids, young professionals or retirees?

“There will be some people that will fit in well and others that will be better served by a different gym, and that’s OK,” Gessler continued.

 

4. Focus on Quality, Not Quantity

Imagine this: You open a gym in a large city, with growth in mind. You sign a lease for a 5,000-square-foot space and slash your prices in half for the first 100 members.

Your growth is explosive, which seems great at first. But then classes get full. You have so many members that you don’t know all their names. There aren’t enough barbells and half the athletes leave without having gotten a single personalized cue. The rent comes due and you’re thousands short because half your membership is paying half a membership.

Eventually, clients become dissatisfied and leave.

“(If I could) do it all over, I would choose a smaller gym,” Gessler said. “I would focus on fewer people that were higher value.”

Instead of focusing on increasing membership, think about how you can add value to and get more revenue from your current members. That might look like adding specialty classes, personal training and goal-setting or nutrition services.

Tubbs agreed.

Obviously growth is important, but I believe that developing around a core group of members is better in the long run,” he said. “You and your partners… need to get a feel for how to run things. You and your coaches need to develop their skills, and you need to develop your community.

Don’t get “stuck in the mindset that bigger is better,” Gessler added. “It’s not—better is better.”

 

5. Track Metrics

Your approach to training is measurable and observable, and so should be your approach to business.

From Day One, you should be tracking monthly profit and loss. This includes more than what you make and spend. Think about things like hours worked, fixed and variable costs and return on investment for every initiative.

Gessler recommended you also track average revenue per member (RPM).

“We don’t often need more people—more people equals more problems—we need each person to be more valuable,” she said. Again, add-ons like clinics, specialty courses and PT can all increase your RPM.

Retention is equally important.

“How long do your members stay?” Gessler asked. “It’s 10 times more expensive to get a member than it is to keep one.”

Tubbs takes a less calculated approach.

“I think our biggest signal that we need to reassess our goals is when it feels like there needs to be a change,” he said. “Classes getting too busy? We need to offer more or expand. Us owners getting tired of coaching? We need to hire (and) develop new coaches.”

Either way, for your business to be successful, you need to evaluate it regularly.

Always be assessing where you are, where you want to go and how to get there,” Gessler said. “Like CrossFit, be better than yesterday. When you know better, you do better.

Like you as Gym Owners, we have faced the same challenges. Check out our other articles, which will help you save time and increase revenue. We cover many topics, including:

  • Client Retention
  • Lead Generation
  • Business Health Metrics
  • Operational Efficiency
  • Sales Funnel Optimization
  • Gaining Lost Time to Devote to Your Business and Members
Learn More