Gym Owners Talk

[windsor88]

thanks for the link.  Thats pretty much what I want.  do not want to deal with franchise

[onlyme]

a few questions about starting a gym.

1. Did you guys write your own business plan?  If not who did it?  Is it possible for someone to post their successful Business Plan or cost of a proven one?
2. I have always heard keep personal funds and business funds totally seperate.  Is that even possible?
3. What if I never owned or managed any business before.  Is that a major strike against me as far as the loan institution is concerned?
4. I know women have a better chance of getting business funds like low interest loans and even grants.  Is this a good consideration?
5. The average price per Sq/Ft is $8-$12.  I am looking for around 1200 - 1400 sq/ft.  Does this mean rent is $9000 a month?
6. Did you all hire salesmen/trainers or just advertise and sign up whoever came in to ask?
7. Do any of you bill Medicare or insurance companies?  If so how do you get started and what are the rules (got a link)? 
8. Who wrote your contracts?
9. Does anyone have a 24 hour club with no staff at night?  Any horror stories?
10.  How much is insurance roughly?

Well these are a few questions I have.  Now let me tell you what I had in mind.

At my gym if I wanted to do Cardio I have to basically stand in line like a vulture.  Sooo....I was thinking why not have a 24 hour cardio only place.  No staff at night.  Cameras everywhere.  Fingerprint ID\or pin plus picture to get in the building.  No long term contracts.  Can go month to month.  Medicare/Insurance billing if applicable? (not sure if I can or not).  18 and over only.  About 50 machines total. 20 ellipticals, 20 Treadmills, 10 Bikes. TV's and radio with transmitters for the machines.
May include Tanning during the daytime while staff is there. May rent out space for massage therapist, physical therapist, aerobics.
I work in the I.T. field so any aspect of cameras, ID verification, software, payroll, etc...will be handled by me. 

I know many may cringe at a cardio only place but it is just a business idea that fills a void where other gyms cannot deliver. I see the same people at the gym everyday hitting the cardio and heading out.  I always think why do they spend $40 a month for just cardio.  I would like to charge $20 to $25 a month with perks like refer 4 people to sign up for year and you will get a year free.  In my head it is a cannot fail. The scariest thing is startup.  How do I get 300-400 members to join in very quickly to cover my costs.  Even then I am not sure that 400 memberships would do it.

Hopefully someone has some valueable input.  I would like to really have a go at this.  In the long term I would like to franchise out.  That's where the money is.

 

First off is the square footage you put down correct.  If so, that is very small for a gym even if it is just cardio.  Cause thats all you'll have.  You need a front desk area.  There you have a small concession and also maybe do sales from there.  No way for a shower or bathroom. A place that small I doubt would handle a membership of more than 200 to 250 if that.  I doubt your rent is going to be that high.  Unless it is in an high traffic office building.  But even that is high.  And way to high for a gym. And why do you need PT's.  There won't be any weights.  Anyone can ride a bike or walk a treadmill.  You would only need one staff member working but that would be a headache if someone is calling and someone is siging up and someone else is asking you a question. No matter what you have to have a business plan.  Especially if you are going to a bank.  Having atrack record is good. I have done many business plans for a variety of companies.  Including a few gyms including the 160,000 sq ft gym I was dveloping on Oahu.  That plan was awesome.  It covered everything.  It also included an unbias market study that cost an additional $10,000.  But the landlord required it.  First though, you need to rethink everything if this space is really only 1000 sq ft or so.  Going to be hard to make any money.

[ARMZ]

Hmm  If you get a bank to finance you, please let me know..  My god 8-$12 per square foot..  holy crap!
There is no rule of thumb on how much a square foot is.. It all depends on how big and where it is located..   12-1400 sq/ft isn't even big enough for a PT studio..  If there are competitors anywhere near, trust me, they will put you out on your butt.. 

[windsor88]

my bad I was actually wanting 12,000 or so sf. 
I did see something today that was 6000 sf.  The leasing agent sent me this...

We are asking $14/sf, and are estimating the NNN be $2.70/sf. 

This is in the older section of town.  There are new sections that I am sure go higher.

There may be light weights provided, tanning, PT's.  Just brain storming really.  It all depends on the money I will have to shell out a month.  If I knew how much the monthly lease payment would be I can determine from that if it is worth it.  So if that $14/sf for 6000 sf space had a payment of $84,000 a month then it cannot be done.  I see these other business that have spots in this plaza too.  I have no idea how they make the payments.  I mean how much can you really make doing shoe repair?

[onlyme]

my bad I was actually wanting 12,000 or so sf. 
I did see something today that was 6000 sf.  The leasing agent sent me this...

We are asking $14/sf, and are estimating the NNN be $2.70/sf. 

This is in the older section of town.  There are new sections that I am sure go higher.

There may be light weights provided, tanning, PT's.  Just brain storming really.  It all depends on the money I will have to shell out a month.  If I knew how much the monthly lease payment would be I can determine from that if it is worth it.  So if that $14/sf for 6000 sf space had a payment of $84,000 a month then it cannot be done.  I see these other business that have spots in this plaza too.  I have no idea how they make the payments.  I mean how much can you really make doing shoe repair?

No way in the world can a gym of that size survive with a $14 a sq. ft rent schedule.  Where is this gym.  You need ot find warehouse space NOT office or retail space.  They get top dollar for that.  See if the zoning permits mix-use. I am in Hawaii and even here NO gym is paying more than $2 a foot maybe a little more.  But most are sub $2 and even as low as $1.  The gym I am in the process of buying right now we are going to be paying $1 for 26,000 sq.ft. That is located in the middle of town with front footage on the main street.

You need to figure out your hard costs.  What improvements are need and if the landlord will give you any TI money.  Once you get your hard costs, you need to figure out your membership income and how many members do you need to pay your hard costs.  Some equipment (leasing) companies will allow build out costs to be included with your equipment lease payments. 

[windsor88]

No way in the world can a gym of that size survive with a $14 a sq. ft rent schedule.  Where is this gym.  You need ot find warehouse space NOT office or retail space.  They get top dollar for that.  See if the zoning permits mix-use. I am in Hawaii and even here NO gym is paying more than $2 a foot maybe a little more.  But most are sub $2 and even as low as $1.  The gym I am in the process of buying right now we are going to be paying $1 for 26,000 sq.ft. That is located in the middle of town with front footage on the main street.

You need to figure out your hard costs.  What improvements are need and if the landlord will give you any TI money.  Once you get your hard costs, you need to figure out your membership income and how many members do you need to pay your hard costs.  Some equipment (leasing) companies will allow build out costs to be included with your equipment lease payments. 

This is in the St. Louis area.  I see other places like Curves and tanning places in theses Plaza type places.  I figured there had to be something I am missing with the payment.  There is no way these businesses are pulling down that much cash to pay that high of a price.  I am gonna contact some other property management places and tell them what I want so I can get a solid quote.  I just didn't want to go in looking like a total dumbass when it comes to leasing and stuff..( i know I am though). 

I did look at the warehouse locations.  They are high as well.  usually listed as $8 sf.  Looks like I am doomed to the 9-5.

Thanks for your suggestions bro.  I will keep on researching options around here.

[gunnz]

This is in the St. Louis area.  I see other places like Curves and tanning places in theses Plaza type places.  I figured there had to be something I am missing with the payment.  There is no way these businesses are pulling down that much cash to pay that high of a price.  I am gonna contact some other property management places and tell them what I want so I can get a solid quote.  I just didn't want to go in looking like a total dumbass when it comes to leasing and stuff..( i know I am though). 

I did look at the warehouse locations.  They are high as well.  usually listed as $8 sf.  Looks like I am doomed to the 9-5.

Thanks for your suggestions bro.  I will keep on researching options around here.

There are two ways to list commercial property.  Depends on what part of the country you are in.  Some list the sq ft rate annual, some list it monthly.  I am 99% sure they are listing it annual.  So, for a 6,000 sq ft club: $14 + $2.7 nnn (common area maintenance, real estate taxe, property mgmt) would be $16.70 x 6,000 = $100,200 annual rent / 12 = $8,350 per month.

I have two Fitness Centers, one in Madison Wisconsin paying $10.50 sq ft + $4.00 nnn that is 5,260 sq ft.  The other is $16 sq ft + $4 nnn at 4,760 sq ft in Sun Prairie, WI.  At each club I have approx 22 peices of cardio, all with "Cardio Theatre",  1 "full" set of selectorized equipment, power cage, smith machine, 5 pieces of hammer strenght, 5 - 100 lb TKO rubberized dumbell, 2 tanning rooms, 2 privite bath w shower, 1 restroom, two offices.  Fits nicely.

A "Cardio Only" club of 6,000 + sq ft would be insanley expensive to equip with enough equipment to fill it up.  Cardio equipment is by far the most expensive stuff!  On 22 pieces I spent about $60,000.

[windsor88]

There are two ways to list commercial property.  Depends on what part of the country you are in.  Some list the sq ft rate annual, some list it monthly.  I am 99% sure they are listing it annual.  So, for a 6,000 sq ft club: $14 + $2.7 nnn (common area maintenance, real estate taxe, property mgmt) would be $16.70 x 6,000 = $100,200 annual rent / 12 = $8,350 per month.

I have two Fitness Centers, one in Madison Wisconsin paying $10.50 sq ft + $4.00 nnn that is 5,260 sq ft.  The other is $16 sq ft + $4 nnn at 4,760 sq ft in Sun Prairie, WI.  At each club I have approx 22 peices of cardio, all with "Cardio Theatre",  1 "full" set of selectorized equipment, power cage, smith machine, 5 pieces of hammer strenght, 5 - 100 lb TKO rubberized dumbell, 2 tanning rooms, 2 privite bath w shower, 1 restroom, two offices.  Fits nicely.

A "Cardio Only" club of 6,000 + sq ft would be insanley expensive to equip with enough equipment to fill it up.  Cardio equipment is by far the most expensive stuff!  On 22 pieces I spent about $40,000.

Great info gunnz...I did finally figure that out about the annual rent.  Unfortunately the place I was looking at was a bust because they are using an old walmart next door to open a Golds gym.  I would be screwed.  The shady thing is that the agent never told me about Golds moving in.  It could have been a major disaster financially.  He called to see if I was interested in more property.  I told him to F off. 

Thanks for the reply man.

[onlyme]

I live in one of the most expensive places on earth and rent here for most gyms are around $1 to $2 a foot.  The 24 Hour Fitness on Kapiolani pays about $2 a sq. ft. and their gym is just over 54,000 sq. ft.  The Golds in Honolulu pays just over a dollar a foot and they are 25,000 sq. ft.  The gym we were developing on Oahu in the mid 90's was 160,000 sq. ft. and the rent was $99,000 a month with $34,000 in CAM ($133,000 total).  The rent at the Golds i owned here in Kona was $1 a foot for 14,000 sq. ft.  The gym we are looking at now is in prime location on the main street and it is $1 a foot at 26,000 sq. ft.  I can't imagine having to pay those rates you guys are paying.  I also couldn't see having a gym under 10,000 sq. ft.  But, here we are limited to the number of gyms.  You need to get industrial property and get it rezoned or find a mixed-use property.

[gunnz]

I live in one of the most expensive places on earth and rent here for most gyms are around $1 to $2 a foot.  The 24 Hour Fitness on Kapiolani pays about $2 a sq. ft. and their gym is just over 54,000 sq. ft.  The Golds in Honolulu pays just over a dollar a foot and they are 25,000 sq. ft.  The gym we were developing on Oahu in the mid 90's was 160,000 sq. ft. and the rent was $99,000 a month with $34,000 in CAM ($133,000 total).  The rent at the Golds i owned here in Kona was $1 a foot for 14,000 sq. ft.  The gym we are looking at now is in prime location on the main street and it is $1 a foot at 26,000 sq. ft.  I can't imagine having to pay those rates you guys are paying.  I also couldn't see having a gym under 10,000 sq. ft.  But, here we are limited to the number of gyms.  You need to get industrial property and get it rezoned or find a mixed-use property.

So the Golds you owned was $1 a foot for 14,000 sq ft, or $14,000 a month, right?

Where I live, and throughout much of the country (but not everywhere) they list square footage on an annual basis, so for your gym:

$14,000 per month rent x 12 months = $168,000 annual rent
$168,000 annual rent / 14,000 sq ft  = $12.00 sq ft

So you are paying $1 sq ft monthly, or $12 sq ft annually.  Not that different.

And the gym you were developing would have been listed at about $10 sq ft annual if I did my quick math right.  Also not that different considering that was in the mid 90's.

A facility under 10,000 sq ft can fill a nich and be quite profitable!  IMO alot of people are tired of the "medium" and "big box" gyms. 

[windsor88]

I live in one of the most expensive places on earth and rent here for most gyms are around $1 to $2 a foot.  The 24 Hour Fitness on Kapiolani pays about $2 a sq. ft. and their gym is just over 54,000 sq. ft.  The Golds in Honolulu pays just over a dollar a foot and they are 25,000 sq. ft.  The gym we were developing on Oahu in the mid 90's was 160,000 sq. ft. and the rent was $99,000 a month with $34,000 in CAM ($133,000 total).  The rent at the Golds i owned here in Kona was $1 a foot for 14,000 sq. ft.  The gym we are looking at now is in prime location on the main street and it is $1 a foot at 26,000 sq. ft.  I can't imagine having to pay those rates you guys are paying.  I also couldn't see having a gym under 10,000 sq. ft.  But, here we are limited to the number of gyms.  You need to get industrial property and get it rezoned or find a mixed-use property.

Damn dude 160,000 sq ft.  You could put living quarters up in that place.  How many clients do you need to make a living?  How long did it take to get your customer base.  Man that is a phenomenal gym man.

[ARMZ]

160,000 sq ft gym sounds like something us gym owners only dream about.. Never happened, never will..  Anything over 100,000 sf would be way too much for any membership base to cover the cost of overhead..  I'm happy with 15,000 sq ft tops and if you knew how much I pay you'd be wanting to partner up with me fast..   

[windsor88]

160,000 sq ft gym sounds like something us gym owners only dream about.. Never happened, never will..  Anything over 100,000 sf would be way too much for any membership base to cover the cost of overhead..  I'm happy with 15,000 sq ft tops and if you knew how much I pay you'd be wanting to partner up with me fast..   

alright ARMZ....how good of a deal you get dude? 


I was scoping out these Steel buildings that you can get for around $5-$10 a sq ft.  Of course that is only for the building material.

Here is a link for one.  There are many out there though.  http://www.buildingsguide.com/steel-shop-buildings.htm

Instead of throwing away money on rent I would think, in the long run anyway, this would be the way to go.  I am guessing you could get a 30 year note.  If you managed to stay in the biz for 10 - 15+ years you might have the structure and land paid for at the same price as rent while building equity.

Any Thoughts?

[gunnz]

alright ARMZ....how good of a deal you get dude? 


I was scoping out these Steel buildings that you can get for around $5-$10 a sq ft.  Of course that is only for the building material.

Here is a link for one.  There are many out there though.  http://www.buildingsguide.com/steel-shop-buildings.htm

Instead of throwing away money on rent I would think, in the long run anyway, this would be the way to go.  I am guessing you could get a 30 year note.  If you managed to stay in the biz for 10 - 15+ years you might have the structure and land paid for at the same price as rent while building equity.

Any Thoughts?

You can't really go wrong with owning the real estate imo......  but you are going to need some money to get the loan.  Paying for the building, land and equip, misc supplies... you are going to have to have a good net worth, good cash in the bank, good credit.  figure 20% minimum down on the note.

[onlyme]

So the Golds you owned was $1 a foot for 14,000 sq ft, or $14,000 a month, right?

Where I live, and throughout much of the country (but not everywhere) they list square footage on an annual basis, so for your gym:

$14,000 per month rent x 12 months = $168,000 annual rent
$168,000 annual rent / 14,000 sq ft  = $12.00 sq ft

So you are paying $1 sq ft monthly, or $12 sq ft annually.  Not that different.

And the gym you were developing would have been listed at about $10 sq ft annual if I did my quick math right.  Also not that different considering that was in the mid 90's.

A facility under 10,000 sq ft can fill a nich and be quite profitable!  IMO alot of people are tired of the "medium" and "big box" gyms. 

Oh I thought you were talking monthly rent.  Your are right then.

160,000 sq ft gym sounds like something us gym owners only dream about.. Never happened, never will..  Anything over 100,000 sf would be way too much for any membership base to cover the cost of overhead..  I'm happy with 15,000 sq ft tops and if you knew how much I pay you'd be wanting to partner up with me fast..   

I can't remember the exact overhead costs but close to 80% of the rent was covered trhough subleases I had setup involving, restaurant, travel agency, suntanning company, sports medicine, car detailing, personal trainers, etc.  We had clsoe to 3,000 pre-signups before we officially broke ground.  This is a very lengthy story but in short the developer stole the money and it never officially opened.  They foreclosed on me and we shut everything down.  None of the members lost any money and 100% of it was returned.  Our projections had us at 10,000 members after the 18th month if I remember. 

Now the gym here we are looking is a very successful operation.  Payroll is high at $700,000+ last year but that can be fixed very easily.  The rent is great.  As opposd to buying the building without owning the land which makes it touchy.  Plus the land lease is up in 2020 I think so buying the buildings aren't the smart thing to do.  But the business is easily worth we are offering.  It is just 26,000 sq. ft.

[rudylrichards]

Is it worth it? 
Yes.. You have to have a passion for it along with some basic business sense.  There are so many things involved that the average person who workout don't even notice when they're in the gym. 
 
 Was it hard to get ta loan? 

For me it wasn't, I had pretty good credit and collateral

Where did you get your equipment, and did you buy new or used?   

A little of both.  Some equipment (benches, dumbbell's, rubber plates, etc) last for quite awhile.  If you can afford to buy those upfront I think cheaper in the long run.  Cardio equipments on the other hand breaks down more frequently, these are better to lease.

Are you glad you did it? 

Yes,


If you could go back 5 or 10 years, what would you do differently?

You always learn when you're doing something no matter how long you've been doing it. can't specifically say I'd change a, b or c. But I've gain a bit more knowledge on things here and there that will make you say "emm ok, I' do this next time or I should have done it this way and I'd be a bit easier"

One negatives of working out in my gym is interuption from members.  They assume you're always working and have a free access to ask you anything at anytime.  that's ok except wen I'm trying to get my training done.  The easy solution would be to train somewhere.  When you own a gym or any business you realize that the more you're around the smother it goes.   

[jimijimi]

any gym owners here i would like to get some feedback on this.
It will prevent on the wear and tear on your gym floors and dumbbells, as well as injuries
to the user or someone standing around your workout. Go to my web site, if you look on the
Home page upper left side you can click on to other features, Pics.and more Info on it. Thanks

Here's the site.  www.tekfusionnewagegymeq uipment.com

[loco]

How has the economy the past three years affected business for gym owners here?

[Rhino]

good job everyone.

[Goldilox]

Is it worth it?  Was it hard to ge ta loan?  Where did you get your equipment, and did you buy new or used?  Liability? Other issues?

Are you glad you did it?  If you could go back 5 or 10 years, what would you do differently?  This is the place where gym owners, or those interested in maybe starting a gym down the road, can talk about it!

Wow, leave it to Rob to start such a thoughtful and informative thread.

Since this thread is quite a few years old, I was wondering if any of the respondents might have any 20/20 hindsights they might want to add in this new post-pandemic era?

Thanks in advance