How to start a gym business
Considering opening a gym in the UK? Get your heart rate going with our business guide which shows you how to set up a gym...
Important things to consider when opening a gym are:
- 01 | Skills
- 02 | Costs
- 03 | Regulations
- 04 | Premises
- 05 | Expansion
- 06 | Useful contacts
What is a gym business and who is opening a gym suited to?
The issue of health and fitness is never long out of the media these days.
With obesity levels rising and the NHS straining under the weight of treating related illnesses there's a high demand for gyms and fitness centres. Exercise comes in many forms and most commercial gyms will offer group classes, as well as an area for individual fitness training.
Gone are the days when gyms brought to mind the image of Schwarzenegger/Stallone look-alikes pumping iron; gyms are now the refuge of yummy-mummies and City professionals.
According to the 2017 State of the UK Fitness Industry Report, health clubs and gyms in the UK now generate £4.7bn market revenue with more than 300,000 people joining gyms and health clubs each year.
The rise of the health and fitness chains over the past decade is proof enough that people are willing to dedicate a lot of their time and money on getting in shape. But the smaller more independent gym could offer something a bit more personal and if you're keen to open a commercial gym that could be just the market to tap into.
Who is opening a gym suited to?
Well to start with, a strong interest in fitness is really a given. Unless you're planning to hire staff to do everything from the outset, it's safe to assume you'll be spending a lot of your time on the premises so the sight of health crazed people pounding away on the treadmill has got to fill you with excitement.
You'll also have to be willing to put in long hours. Most people who can afford to use a gym are employed, which means they'll want it to be open at the crack of dawn until late at night so they can fit their exercise regime around work hours.
Stephen Sharkey set up his own gym with a friend in South Wales back in 1990 and says that “For the first few years we didn't employ anyone”:
“We used to get up early and do all the cleaning, and then go on to do all the instructions with the members. We didn't even hire a cleaner until three years into the business.”
Sharkey is also keen to point out the importance of being passionate about wanting to help people. “You've got to understand how this industry is really capable of changing people's lives.” If you can create the right kind of atmosphere, then your gym will not only be a place to improve your fitness, but an escape from the pressures of daily life.
So a strong work ethic, and good people skills are essential if you want to succeed in opening a gym.
Also remember that opening a gym is not an easy way to make money, so you'll need a tight grip on your finances. Excellent marketing and sales skills will also come in handy when trying to recruit and retain gym members.
So, if you're thinking of opening a gym, you'll need to have:
- A passion for fitness – a qualification in personal training would help too
- Motivation to work long hours and sacrifice work/life balance, at least at the initial stages of opening a gym
- Good people skills
- The ability to manage finances well
- Marketing and sales skills are desirable, although you could hire someone to take care of this.
How much does it cost to launch a gym?
Opening a gym is expensive so if you've only got a few thousand pounds to invest, a gym is unlikely to be the perfect business opportunity for you.
Putting in a home gym in your spare room can easily cost over £10,000, so the start-up costs for opening a commercial gym are huge.
Back in 1990, Stephen Sharkey and his business partner opened their gym and had to sell an expensive car, and a house between them and they still needed a £50,000 loan from the bank. “It cost us about £80,000 back then, but I think if you were setting up a new gym now it would cost you a lot more,” says Sharkey.
David Courteen founded Fitness Express with a friend from university. The company sets up and runs health clubs for hotels who want a gym on the premises but don't have the expertise to run them themselves:
“If you want to kit up a gym from scratch you're looking at spending north of a million,” says Courteen. “It's not just the gym equipment you need to consider – there's changing rooms, showers, saunas etc.”
While setting up your own gym can cost you a minimum of around £80,000 to £100,000, anywhere up to £1m as Courteen suggests, there are ways to open a gym for less.
In terms of kitting out your own gym, there are companies out there that sell remanufactured gym equipment for about half the cost of buying it new.
Graham Bertrand runs Physique, one such company and says “you can kit out a 1,000 sq ft gym for about £45,000 to£50,000 using remanufactured equipment”.
Opening a gym via franchising
The costs of opening a gym and running a gym can be less if you pursue the fitness franchise route.
There are a number of established, and new, fitness chains offering you the chance to open a gym or offer gym services through them.
Anytime Fitness is one of the leading franchises in this sector and operates over 5,000 franchise gym outlets in seven continents, having initially launched in the UK back in 2012. It offers a franchise package for minimum liquid capital investment of £110,000 but this includes everything from support and training through to access to marketing materials.
Speaking to Startups' last year, Cathryn Hayes, head of business support at the bfa, explained that “one of the bigger [franchising] growth sectors is gyms and health clubs, from low-cost, no-contract models to big brands and large outlets in town centres:
“It’s a growing marketplace – arguably the UK population has never been so health-conscious and fitness franchising has been big business for a while now.”
Rules and regulations for opening a gym
Opening a gym is a potential minefield for injuries and accidents but there is no equivalent of, for example, the Food Standards Agency where exact safety guidelines for the industry are laid out.
However, by opening a gym you would have to conform to basic standards according to the Health and Safety Executive (HSE), which would cover both the users of the gym and its staff. If an accident occurred, you would also be investigated by the HSE, so it's in your best interests to be rigorous about safety procedures.
A good guideline to follow would be the FIA's code of practice which details the minimum requirements for any fitness centre to be awarded their stamp of approval.
The FIA request that all fitness centres and gyms comply with the Health and Safety at Work Act 1974, and the Management of Health and Safety at Work Regulations 1999.
Under the code of practice all staff employed within a gym or fitness centre, must have adequate safety training and there must be an appropriate number of first-aiders in relation to the size of the club – only HSE approved first aid courses count.
All fitness instructors should be trained to the standards required by the Register of Exercise Professionals.
All equipment including fitness equipment as well as lifts, electrical appliances, boilers etc must be kept in a safe condition and regularly inspected by appropriate people. All gym equipment must by maintained according to the manufacturer's guidelines, with all checks and maintenance documented, and records kept on site.
Of course you will also be legally bound by employer legislation for any instructors or other staff members you take on.
Another important thing to remember for opening a gym is that if you have a café or food area on site you will need to comply with Regulation (EC) No. 852/2004 on the hygiene of foodstuffs and the Food Hygiene Regulations 2006.
In summary, to open a gym you should look to follow these rules and regulations:
- Conform to the standards set by the Health and Safety Executive
- Follow the FIA's code of practice
- Comply with the Health and Safety at Work Act 1974, and the Management of Health and Safety at Work Regulations 1999.
- Ensure that all fitness instructors that you employ to work at your gym are trained to the standards required by the Register of Exercise Professionals.
- If you're going to sell food and drinks at your gym, you must comply with Food Hygiene Regulations.
Business insurance for opening a gym
If you're employing staff to work at your gym business then legally you're required to have employer's liability insurance. This insurance will cover you for any compensation claims made by your employees for injury or damage that’s caused by their work.
For instance, if one of your fitness instructors injures their self on your gym equipment or your receptionist suffers from repetitive strain injury caused by computer work.
If you're opening a gym, it's also highly recommended that you get public liability insurance. As your business comes into contact with the public this will protect you if someone blames injury or damage on your business.
Buildings and contents insurance, while not a legal requirement, should also be another consideration.
Business plan for opening a gym
Starting your own gym can leave you haemorrhaging cash if you don't have a watertight business plan in place therefore forward planning is essential.
Use this business plan template to create a business plan for your gym.
Finding business premises for your gym business
Location is crucial if you're starting your own gym. You have to do your research on how many people in the area can even afford to sign up with a gym. Basic demographic details can be obtained from your local authority but there are private companies that will give you a far more detailed profile of the local population in return for a fee.
“Don't even consider starting up in an area that has less than 70,000 people within a six minute drive,” says gym owner Stephen Sharkey. He is also keen to point out the need for a competitive analysis: “just how many other gyms are there in the area and can you compete with them?”
“It's a very difficult industry to get a foothold in now,” says Barry Cronin, executive director at the Central YMCA in London. “It's reaching saturation point, where the majority of big players are in most of the areas where there's a need for them demographically.
“To get a financial return you have to have the right site, the right size, in the right place, with the right market – it sounds obvious but if you look around, most of the single sites that are failing just don't fulfil that simple criteria.”
Cronin also believes assessing your competitors is critical: “Can you afford to charge £40 a month for your little club when a bigger, established gym is charging £40 for twice as much?”
So location and pricing are the most important factors to consider before you even think about acquiring a site to open a gym.
Customer service is key to the success of your gym business
Customer service is something that often gets overlooked by those starting a gym, says Fitness Express' David Courteen:
“We recognised that this is predominantly a service industry, and I don't thing gyms are particularly good at doing that. The industry is full of people that are really into their exercise and love working out, but that is very a-typical of the general population.
“A lot of people that work in health clubs don't understand people who find doing exercise a pain in the neck, but at the end of the day, this is an entertainment business so you have to make it as enjoyable as possible for people.”
Gymbox founder Richard Hilton also has some useful business advice for pricing your gym business. Having successfully navigated Gymbox through the recession, the company held its nerve. “Every single gym business was suffering, including ourselves,” he remembers. “The temptation was to cut advertising and start talking about price – that was what everyone did. They started doing price offers; started cutting their advertising spend.
“We actually took the opposite approach so we doubled our advertising budget in the recession years and took a branded approach. The belief was that while people were becoming more price conscious, if we could deliver something different to them, and then the price objections would be overcome.”
Want to open a gym? Plan for sustainable growth
Another crucial thing to remember if you're opening a gym, is that you can't try to grow too quickly. “You have to try and work inside the business and understand it inside out before you can roll the concept out,” says Courteen. “We made sure we got the business working exactly as we wanted it to work before we tried to grow.”
Sharkey is eager to point out the dangers of taking on too many members too: “In our first club we tried to fit 500 members in a 2500sq ft space. We now have 12,000 sq ft for just short of 1,000 members. It's been tempting at times to take on more members but it would take away the personal service we offer.”
Most importantly, if you want any chance of succeeding in this industry, you have to have a clear idea of what you want to achieve from it.
It's a big commitment to take on and not really something that's going to work out as a part-time hobby. The industry is tough and competitive, so you'll need to put in a hell of a lot of time and dedication to sustain a successful gym business.