Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their gyms. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a gym business plan template step-by-step so you can create your plan today.
What Is a Gym Business Plan?
A business plan provides a snapshot of your gym or fitness center as it stands today, and lays out your growth plan for the next five years. It explains your business’ goals and your strategy for reaching them. It also includes market research to support your plans.
Why You Need a Gym Business Plan
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.
Source of Funding for Gyms
With regards to funding, the main sources of funding for a gym are bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.
The second most common form of funding for a gym is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund a gym. They might consider funding a chain of gyms, but never an individual location. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual gym or fitness center could never achieve such results.
Gym Business Plan Template
Your plan should include 10 sections as follows:
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of gym you are operating and the status; for example, are you a startup, do you have an existing gym you would like to grow, or are you operating a chain of gyms or fitness centers.
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the gym and fitness industry. Discuss the type of gym you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. Discuss the ways you will generate revenues (e.g., gym memberships, personal trainer services, etc.), and offer an overview of your financial plan and forecasts.
In your company analysis, you will detail the type of gym you are operating.
For example, you might operate one of the following types:
- Membership Gym: this is the most common type of gym or fitness center. Members pay a monthly or annual fee in order to access all of the amenities which typically include free weights, cardio equipment and weight machines. The membership gym may include personal training services (for a fee) and fitness classes (possibly for an additional fee).
- 24 Hour Access Gyms: these types of gyms can be accessed 24 hours a day via member key cards. Such gyms usually include free weights, cardio equipment and weight machines. They usually do not offer fitness classes and have less staff and amenities than membership gyms.
- Training Gyms: training gyms usually only offer personal training and small group training classes.
While these are the 3 most common types of gyms, yours doesn’t have to precisely fall within one of these three categories. Think about your gym start up or gym you are growing. Are you interested in offering 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? Document the precise gym you are/will operate here.
In addition, use the Company Analysis section of your business plan needs to provide background on your fitness business. Include answers to question such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, membership/customer amounts reached, new store openings. They could also include hiring a respected fitness guru or securing a key partnership with an equipment vendor.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
Finally, in this section, you should elaborate on your gym’s unique qualifications, such as the fact that you offer the only yoga classes in town or have a heated indoor pool.
In your industry analysis, you need to provide an overview of the gym and fitness business.
While this may seem unnecessary, it serves multiple purposes.
First, researching the gym industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards personal training services, it would be helpful to ensure your plan called for offering such options.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your gym business plan:
- How big is the gym business (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key equipment manufacturers and suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your gym. You can extrapolate such as figure by assessing the size of the market in the entire country and then applying that figure to your local population.
As much as possible, in your industry analysis, focus on your relative market, or the specific niche of the fitness industry that most closely matches your gym type.
The customer analysis section of your gym plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: sports enthusiasts, soccer moms, techies, teens, baby boomers, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of gym you operate. Clearly baby boomers would want a different atmosphere, pricing and product options, and would respond to different marketing promotions than teens.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most gyms primarily serve customers living in their same city or town, such demographic information is easy to find on local government websites.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
As you can imaging, 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. Think about who 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.
Your competitive analysis should identify your indirect and direct competitors and then focus on the latter.
Direct competitors are other gyms that offer the same or very similar services to yours.
Indirect competitors are other options that customers have to workout that aren’t direct competitors. This includes fitness equipment that customers can purchase and use at home. It includes public recreation centers. It even might include customers who workout without any facilities (e.g., outdoor running).
While you want to mention indirect competitors to show you understand the competitive landscape, the majority of this section should focus on direct competition. These will be gymes with which you compete. Most likely, these will be gyms offering similar offerings to your gym and which are located close to your location.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What services/products do they offer?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to stand outside your competitors’ locations and ask customers as they leave what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide better facilities (equipment, cleanliness)?
- Will you provide better services or services that your competitors don’t?
- Will you make it easier or faster for customers to use your services (e.g., better location than competition)?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. Your gym marketing plan should include the following:
Product: in the product section you should reiterate the type of gym that you documented in your Company Analysis. Then, detail the specific services and products you will be offering. For example, will you offer free weights, fitness classes, food services, personal training, etc.?
Price: Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting your menu of products and services and their prices. For example, how much will monthly memberships cost? Will there be different levels of memberships? How much will you charge for personal training sessions?
Place: Place refers to the location of your gym. Document your location and mention how the location will impact your success. For example, is your gym located next to a heavily populated office building or shopping center? Discuss how your location might provide a steady stream of customers.
Promotions: the final part of your gym marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). Usually for a gym start up business plan the choice of promotions will be different from a more established gym or fitness center business plan. The following are some promotional methods you might consider:
- Making your gym’s front store extra appealing to attract passing customers
- Advertising in local papers and magazines
- Reaching out to local bloggers and websites
- Partnerships with local companies and organizations
- Local radio advertising
- Banner ads at local venues like high school gymnasiums or local sports venues
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your gym such as selling new memberships, conducting promotions, teaching classes and cleaning the equipment.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to secure your 1,000th member, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee, launch a new location or launch a new series of fitness classes.
To demonstrate your gym’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in the fitness business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in gyms and/or successfully running a small businesses.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
Income Statement: an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you have 100 paying members by the end of your first month 200? And will sales grow by 2% or 10% per year? And will the average member pay you $100/month or $150/month? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets: While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $500,000 on building out your gym, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $500.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement: Your cash flow statement will help determine how much money you need to start or grow your gym, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a $300,000 contract to provide personal training services to their employees. Let’s further assume the contract would cost you $100,000 to fulfill in terms of increased staffing costs. Well, in most cases, you would have to pay that $100,000 now for employee salaries, etc. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a gym:
- Gym build-out including design fees, construction, etc.
- Cost of equipment like free weights, cardio machines, etc.
- Cost of other supplies (towels, cleaning supplies, etc.)
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your gym design blueprint or location lease.
Putting together a business plan for your gym is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the fitness industry, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful gym.
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