Fitness is big business, as baby boomers lead the charge to remain healthy for a lifetime. Gyms have come a long way, and new gym owners have a seemingly endless array of choices. Yet many new gym businesses fail because their owners try to be all things to all people. A written business plan is crucial to growing and developing your gym in a controlled, sustainable manner. In addition, gyms are expensive to build and outfit. Investors and lenders look to the business plan to decide whether to invest in your gym.
What Is a Business Plan?
A business plan provides a snapshot of your gym as it currently exists alongside a detailed road map for its next three to five years of growth. It identifies your goals, notes potential challenges, and explains your strategies for reaching your goals. As a living document, it will grow and evolve alongside your gym.
Although it is usually written last, the executive summary provides an overview of your business plan. The first page must entice potential financiers to read on, so provide clear and concise explanations. Briefly describe your gym, provide a summary of your market analysis that identifies an unfulfilled need, and explain why your gym is uniquely qualified to meet that need.
In the company analysis, outline your gym as it currently exists. Explain its founding, legal structure, and current business stage. Describe important milestones that you have already met, such as hiring a respected fitness guru or securing a key partnership with an equipment vendor. Elaborate on your gym’s unique qualifications, such as the only yoga classes in town or a heated indoor pool.
For the industry analysis, focus on your relative market, or the specific niche of the fitness industry that most closely matches your gym. Are you interested in broad-based general fitness? Do you specialize in hard-core athletics or focus on beginners? Do you provide lots of classes and personal trainers, or is yours more of a workout room with only a handful of staff? Once you identify your relative market, research the current trends and future projections that will affect that segment of your industry. Write a detailed plan for overcoming any obstacles that your research uncovers.
Customer analysis is extremely important for gyms, because potential gym customers come in all shapes and sizes, but it is impossible for a single gym to meet everyone’s needs. Who do you want to serve? Are they interested in yoga, Pilates, and aerobics? Are they high school, college, or professional athletes? Business executives trying to stay healthy despite a busy schedule? Moms trying to get back in shape after pregnancy? Narrow down your customers’ demographics, assess how they make their buying decisions, and then identify their specific needs. Craft a detailed plan for meeting those needs.
Your indirect competition is every other gym in town, as well as nutritionists and other businesses that target your market with a different product or service. Your direct competition includes only those gyms that fulfill the same needs for the same market as yours. Name each of your direct competitors and explain how your gym differs from theirs. Put your indirect competitors into a single category, and discuss them as a whole.
A good marketing plan is built on the four P’s: Product, Place, Price, and Promotion. Product includes every single item or service you sell. Place refers to the physical location of your gym, as well as your web presence. Price is the amount you will charge for each product or service, along with a description of how you arrived at those prices. Promotion is your plan for convincing people to spend money at your gym. Customer retention is another important category that explains how you will get customers to return.
While the earlier sections of the business plan focused on defining your goals, the operations plan explains how you will meet them. Everyday short-term process are the day in and day out tasks of running your gym, from selling memberships to teaching classes to cleaning the equipment. Long-term processes focus on meeting your business goals, such as opening a second gym or adding new classes.
While it is important to have qualified trainers and fitness experts on board, investors and lenders also want to know that your gym can succeed as a business. Identify key members of your management team and highlight the parts of their background that demonstrate the ability to build a business. A strong advisory board can fill in any gaps, as long as you can prove that board members will have a direct impact on the company’s growth.
The financial plan is heavily scrutinized by potential lenders and investors, but it can be a nightmare for many gym owners to write because it is based on a number of assumptions. In this section, you must detail your individual revenue streams by relative importance and projected implementation timeline, as well as any outside funding sources. You must also summarize both past and future Income Statements, Balance Sheets, and Cash Flow Statements based on verifiable and reasonable key assumptions. A strong exit strategy shows financiers that you understand the market and are interested in capitalizing on profitability.
The appendix is the spot for you to attach your full financial projections, along with any other documents that prove your claims. If you have letters from potential partners, a patented new technology, or other such documentation, enclose it here.
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