Business Overview

Each year, millions of people join gyms to get fit and lose weight. To be profitable, a gym model typically revolves around several key revenue streams. The most basic is the gym membership. However, membership dues or fees are typically not enough to make gym owners rich. This is why most gyms supplement their core revenue stream with supplemental revenue from fitness classes, juice bars, tanning salons, and renting space to personal trainers.

Who is this business right for?

The type of people who start a gym are usually people who are passionate about health and fitness and have good business sense. Because owning a gym requires a massive time commitment, it’s not suited to individuals who need a flexible work schedule.

What happens during a typical day at a gym?

Gym owners typically arrive early in the morning, before 5 am, and may leave well after the sun has gone down. Gym owners may also have to work weekends, especially in the first few years when the business needs extra support.

The key day-to-day activities of a person involved in a gym business include opening the gym and cleaning up and prepping for the day, checking the register for any sales from the previous night that weren’t deposited, cleaning up and checking the equipment before opening, and managing gym members and employees.

If you run the business yourself, you will also need to manage the accounting for your gym, which includes verifying that all membership dues are current and that all classes are paid in full. Since a gym’s core income comes from gym memberships, doing the accounting for this is one of the more important tasks a gym owner has to perform.

What is the target market?

Preferred customer types include individuals who want to lose weight or hire personal trainers to meet personal fitness goals. Most gyms advertise locally in newspapers or by word of mouth. Good clients are those interested in working out with a serious long-term commitment.

Poor clients would be those who join for a short period of time and then quit. However, many gyms actually capitalize on this by charging a joining fee which protects the gym from early cancellations. The up-front fee is usually several months worth of fees, allowing the gym to recover advertising costs.

How does a gym make money?

The standard business model for a gym is to collect membership dues in addition to supplemental revenue. Supplemental revenue includes income from various classes, like:

  • Yoga
  • Pilates
  • Aerobic classes
  • Spin classes
  • Circuit training
  • Military fitness
  • Kickboxing
  • Jujitsu training
  • Dance classes
  • Crossfit

Most gym memberships are charged on a monthly basis, with other revenue (like special workout classes) being charged either monthly or as a flat fee upfront.

Other sources of revenue include:

  • Personal training
  • Juice bar
  • Tanning beds and related services
  • Supplement sales
  • Chiropractic services
  • Massage services

Gyms typically see an influx of new members in January, peaking in the second quarter, then falling during the summer months. This makes the gym business highly cyclical.

What is the growth potential for a gym?

Small gyms are usually run by one or two people and may include a lot of personal training. They typically won’t have extensive supplemental revenue, however. An example of a small gym would be a so-called “black iron” gym, where members join primarily to hire a personal trainer and weightlifting coach.

Scaling a gym requires significant investment. For mass appeal, most gyms need at least 3,000 square feet of space to accommodate cardio equipment, a wide range of resistance and training machines as well as free weights.

Large-scale gyms also partner with supplement companies, self-employed personal trainers, and sometimes food services businesses.