appreciate the effort you have put into this thread kyle definitely one of the best on the site!
My pleasure. As I said in the beginning, when I wanted to step into the industry it was hard to get any information at all, even the most basic like what qualifications you needed, what sort of hours to expect, etc. At some point I will summarise my stuff in articles on my blog.
kyle, do you think the average gym makes ok $$$ or is it really only the big players like FF that are making any money? im not necessarily talking a fortunate but enough to consistently make a profit.
Well, remember that most small businesses - cafes, hairdressers, accountancy firms, PT studios, everything - fold in under 18 months. Fitness stuff is no different. Most just think, well...
i always thought they would be a good business to own in that after the initial purchase/set up they would be relatively low maintenance/hassle
yes, they think that. But of course you have to pay rent or mortgage on the premises, insurance, electricity, gas and water, maintenance of the gear, and so on.
Imagine that you open a gym. Where? Cheapest place to rent is a warehouse. The very cheapest is right among factories and things, but down some dingy road with big trucks going and no parking, nobody will go there. So we need something with plenty of parking and near a main road, not too far from residential areas. Well
here is an okay place, it's between two main roads, has several parking spaces, and is 280 sqm with 40 sqm of office. Rent? $30,000pa. Basically $600 a week.
Okay, that's the rent. If we want to have happy staff and members, we'll have to stick a small kitchenette in, a toilet and at least one shower. That's going to run us $10,000 or so. Let's spread that cost over the first year, call it $200 a week.
Staff? Well, what will our opening hours be? 0600-2100 should do it for weekdays, and 0800-2000 on weekends. That's 5x15 + 2x12 = 99 hours a week. We can probably get away with closing a bit earlier on Friday and Sunday nights, but we might have to have staff come in earlier and stay later for cleanups and stuff. So call it 100 hours a week.
Casual gym instructor rate is $20-$25 an hour. Then there's super and payroll tax, brings it up to $30-$35 an hour. We want to hire quality staff, so we're looking at $35 an hour for 100 hours a week. Sure, we can probably get away with having nobody around at like 10am Mondays, but during busier times we'll want 2 people on, and of course someone has to clean the joint. So we're looking at $3,500 a week in staff costs.
Yes, we can do it all ourselves, but do you really want to be at the place 100 hours a week? And anyway don't we get paid? Presumably you're not running the place as a charity.
So just looking at rent, a bit of refurbishment and staff costs, we already have a cost of $4,300 a week.
Now, how many members do you want to have, and how much will you charge them? Standard gym membership is $70-$150 a month, so just to cover the rent and staff you'd need 30-60 members. But to get members you need to advertise, to advertise costs money, and...
We haven't covered the equipment yet. Sure, barbells and racks only cost a few thousand each. But if all you have is barbells and racks, you'll have limited appeal. To really get in the members you need the treadmills, and the modern ones cost $12-24,000 each - most gyms rent them.
Basically, only the big chain gyms make a lot of money. And they make money by the simple expedient of doing nothing for their members. If you just sign people up and forget them, only 25% will still be around in 3 months. If you look after them, 75%. Say your gym has room for 1,000 people - care for them and you can sign up 1,333, ignore them and you can sign up 4,000. So if you ignore people you can get three times as much money from them, or else charge one-third as much and make the same money, or something in between.
The community gyms
try to look after people, so more people stay - so they don't make much money.
That leaves the PT studios. And this brings us back to the numbers above, and the general fact that most small businesses fold in the first 18 months. You have to be really business-savvy, or else well-connected to someone who'll set you up.