How to Open a Gym
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.
Learn how to start your own Gym and whether it is the right fit for you.
Ready to form your LLC? Check out the Top LLC Formation Services.
Start a gym by following these 10 steps:
- Plan your Gym
- Form your Gym into a Legal Entity
- Register your Gym for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Gym
- Get the Necessary Permits & Licenses for your Gym
- Get Gym Insurance
- Define your Gym Brand
- Create your Gym Website
- Set up your Business Phone System
We have put together this simple guide to starting your gym. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What will you name your business?
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
Luckily we have done a lot of this research for you.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Gym Name Generator
If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
What are the costs involved in opening a gym?
Startup costs for a gym are significant. Most modest gyms costs between $200,000 and $400,000 to get going. A larger gym may cost upwards of a million dollars or more. Franchises may carry lower operating costs, but you have to pay a franchise fee, which may or may not make it a cheaper option to get started.
Some gym owners try to lower their initial overhead by buying used equipment. This is a double-edged sword. New gym goers want to see new equipment. Used equipment may not be in the best condition. If you go this route, make sure to have all used equipment thoroughly inspected and serviced prior to use.
What are the ongoing expenses for a gym?
The largest expense for a gym is the initial investment in gym equipment, which can cost upwards of $200,000 or more. The second-largest cost is either the labor cost or rent, depending on the size of the business.
Who 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:
- Aerobic classes
- Spin classes
- Circuit training
- Military fitness
- Jujitsu training
- Dance classes
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.
How much can you charge customers?
Gyms usually charge between $20 and $50 per month for memberships and require members to sign a one year (or multi-year) membership contract. Some gyms offer discounted deals if the client pays for a year in advance. On top of that, gyms charge a sign-on fee, which is usually between $100 to $300.
Supplemental revenue varies according to the demand and the type of gym you want to run. Consider your target market and gym location. If you’re in a high-rent district, you can charge more for memberships, personal training services, supplements, classes, and tanning and chiropractic services.
How much profit can a gym make?
Revenue and profit varies by size. However, it’s typical for a gym to generate between $1,000 and $2,000 a month in revenue within the first 6 months. After a year, a successful gym will generate at least $20,000 per month. According to the AFS 2016 Marketing Best Practices Research Report, a typical small fitness center in the U.S. makes $63 per SqFt., or up to $200,000 to $300,000 per year. Larger gyms can make up to 10 times as much money.
How can you make your business more profitable?
Generating more profit with a gym is simple. Most gyms add supplemental revenue as space permits. These “side businesses” are set up to rent space from the gym owner, creating predictable streams of income. For example, a gym owner might lease space to a chiropractor, a tanning company, a massage therapist, or even a food services business to handle the juice bar.
STEP 2: Form a legal entity
The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your gym is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
Besides being a requirement when applying for business loans, opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Get a business credit card
Getting a business credit card helps you:
- Separate personal and business expenses by putting your business' expenses all in one place.
- Build your company's credit history, which can be useful to raise money later on.
Recommended: Apply for an easy approval business credit card from Divvy and build your business credit quickly.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate gym business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Certificate of Occupancy
A gym business or fitness center is typically run out of renovated warehouse or commercial space. Businesses with a physical place of business require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
If you plan to lease space for your gym business:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a gym business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
If you plan to purchase or build a gym or fitness center:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business’ location to ensure your gym business will be in compliance and able to obtain a CO.
Many gym businesses play music to keep customers focused and entertained during their workouts. In order to play music in a business setting, permission must be acquired from the composer or license holder. Typically, it is possible to obtain “blanket” license allowing a businesses to play music owned by a large catalog of artists and recording studios. Such licenses can be obtained from Performance Rights Organizations, such as ASCAP and BMI.
Learn more about music licensing requirements and how to obtain a blanket license here.
Working out at a gym can be a high risk activity, especially for individuals lifting heavy weights or with certain medical conditions. It is strongly advised to have new gym members sign a liability waiver accepting personal responsibility for any injuries.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
FInd out what types of insurance your Gym needs and how much it will cost you by reading our guide Business Insurance for Gym.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
How to promote & market a gym
Word of mouth and local advertising are the two primary methods of gaining new membership. Many gyms take out ads in local newspapers and offer discounts for first-time members. They may also offer free workout days or even free personal training services to attract new members.
How to keep customers coming back
A gym is often seen as a commodity service business. Because of this, you must differentiate yourself. Big chains, like Planet Fitness, for example, define a niche or target market and demographic. You should do the same. Catering to a specific group of people also works. For example, you could market your gym as a specialty gym for busy professionals. You could also set up your gym to be especially accommodating to women.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.
Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
TRUiC's Startup Podcast
Welcome to the Startup Savant podcast, where we interview real startup founders at every stage of the entrepreneurial journey, from launch to scale.
Is this Business Right For You?
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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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 are some skills and experiences that will help you build a successful gym?
People who open and run a gym usually have experience running or managing a gym. While not required, it is helpful to have a degree in at least one of the following:
- BS in Athletic Training
- BS in Culinary Science (Culinology®)
- BS in Nutrition & Dietetics
- BS in Nutrition Science
- BS in Nutrition, Exercise and Health Science
- BS in Pre-Health
- MS in Biochemical & Molecular Nutrition
- PhD in Biochemical & Molecular Nutrition
- PhD in Community Nutrition & Health Promotion
- MS in Community Nutrition & Health Promotion
- MS in Community Nutrition & Health Promotion
- MS in Dietetics
- MS in Exercise Physiology & Nutrition
- PhD in Exercise Physiology & Nutrition
- MS in Food Literacy, Quality & Safety
- PhD in Food Literacy, Quality & Safety
- MS in Interdepartmental Nutrition Program (INP)
- PhD in Interdepartmental Nutrition Program (INP)
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.
TRUiC's YouTube Channel
For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe to view later.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
How and when to build a team
Most gym owners start by hiring freelance or self-employed personal trainers. This is because many gym members expect to have experts in the gym, even if they don’t pay for personal training services.
These are some of the first positions you should fill because they’re the largest revenue generators. You can rent space to a personal trainer for between $1,000 and $2,000 per month. Hiring salaried employees also makes sense as the business grows. Typical payscales start at $20,000 to $30,000 per year for full-time entry-level positions.
- Ranking of gym franchises
- The Association of Fitness Studios
- Descriptions of 6 fitness industry organizations