Author Topic: So you want to open a gym?  (Read 85573 times)

Offline Chad Zwadlo (Zwadloc)

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So you want to open a gym?
« on: May 18, 2011, 09:11:46 PM »
I just responded to a question on facebook someone had about wanted to open their own gym and where to start.  Since I'm kind of in the thick of that right now I realized I've got a lot of first hand knowledge on the subject and thought it might be a good idea to post some of it on here.

So, wanting to start a gym.  The first thing you really need is a student base.  I've been teaching out of a local gymnastics school for about 3 years now and I've got just over 100 students.  Everything comes down to money when you decide to make a business.

The space to rent out for a gym usually will cost about $1/square foot a month, so if you want a 5000 sq. ft. facility (pretty typical 50x100 feet or so) it's going to cost around $5000 a month.  You could get a smaller gym, but smaller space is going to be more limiting.  The Tempest Freerunning Academy is around 7000 sq. ft., the space we're looking at right now is 7840 sq. ft.  You may also have to pay utilities in the space which they usually estimate at about $0.10/sq. ft. a month (so about $500 a month in a 5000 sq. ft. facility.  The space will also have to be fully up to code and registered as an assembly occupancy for the amount of people you can have in it.  With that comes the codes on safety like sprinkler systems and air ventilation as well as accessibility for handicapped people.  Since you'll probably end up renting out a warehouse space with relatively high ceilings, this means the space will probably be registered for storage and not assembly (this is the case with our space).  The sprinkler system will probably be fine, but the parking may be an issue as well as handicapped access depending on the space.  A bigger issue is the air ventilation since storage space is not required to be well ventilated and this means you may have to put in an HVAC unit (which is what we're going to have to do and it's going to cost about $30,000)

With that you'll need equipment, you can build a lot of stuff out of 2x4s and plywood.  We're planning on spending about $5000 right away in building materials for everything.  Metal scaffolding is actually really cheap right now since the housing market died, all of the bars for our entire gym is going to cost about $850.  But if you want any sort of mats, those are expensive.  Just look at something like www.tumbltrak.com to see what I'm talking about.  We're going to end up spending about $15,000 in mats.  Also flooring, as awesome as it would be to keep the floors just concrete, there's no way any insurance company is going to allow that.  So we'll be spending about another $10,000 on floor matting.  You also need to consider the administrative side of it all as well.  You'll need a computer and software (Quickbooks for the business is about $200 and a Class Manager system for registering students and taking payments is about $600) as well as probably a printer/scanner/copier, filing cabinets, desk, etc.)  Also the random stuff you may want like a sound system to play music in the gym (or a projector tv like we're planning on getting to play motivational freerunning videos on a 12' screen on the wall all the time :)

Speaking of insurance, you'll need to get that figured out too.  I recommend talking to a private insurance broker (if you go to a gymnastics school and ask, they may be able to hook you up with someone) since they can talk to lots of big companies and know how to deal with them.  Trust me you do not want to deal with a big insurance company directly.  You can pretty much expect to pay about $1000 a month for insurance.  And that's not just liability insurance but also workmans comp, unemployment insurance, and all that jazz as well. 

When you add everything up, if we charge around $75 a month to our students, we need about 120 students to keep the place running and to not actually make any money to live off of.  Plus we'll have to get a small business loan to buy all the stuff to get started, and paying that off month to month adds even more to our operating expenses.  And our instructors will need to get paid (plus as a business you need to pay a bunch in payroll taxes as well).

So I guess you kind of have 2 first steps to take.  First of all, what kind of teaching experience and student base do you have?  Without students you have nothing.  Second, what kind of business experience do you have?  Can you write a business plan, apply for a loan, talk to an insurance agent, talk to the state and inspectors about business permits and registering everything?  Remember once you change a hobby into a business, everything changes.  It's all of a sudden not as much about the love of the sport and all those noble goals, suddenly it's more about paying the rent and putting food on the table.  Of course it is still about teaching more people as effectively and the best way you can, but if you don't make enough money to keep your facility open, there's no point to all that.

I don't want to sound discouraging, it's definitely possible, but it is a lot of really hard work.  I've been planning this for the last 4 years and it's just now happening.  I've learned a lot along the way though and I'd be glad to help anyone out as much as I can.  So if you have any other questions feel free to ask.

Offline Sparklefish

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Re: So you want to open a gym?
« Reply #1 on: May 19, 2011, 12:57:55 AM »
Thank you so much Chad.  I always appreciate what you bring to the discussions here.

I would point out that rent varies highly by location, so $1/sq. ft. won't be available everywhere.

Offline Alec Furtado

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Re: So you want to open a gym?
« Reply #2 on: May 19, 2011, 02:11:07 PM »
This is legit... having a gym has always been in the back of my head and this is certainly an eye-opener...
Water conforms to the shape of it's surroundings. Do not be water. Shape your own life.

Offline Charles Moreland

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Re: So you want to open a gym?
« Reply #3 on: May 19, 2011, 05:59:23 PM »
Important to note that this is just one approach to opening a gym.

The Rochester Parkour Gym was started with under $6,000.

Offline Chad Zwadlo (Zwadloc)

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Re: So you want to open a gym?
« Reply #4 on: May 19, 2011, 06:01:47 PM »
Yes, this can definitely be done different ways.  This is going for more the Tempest Freerunning Academy style of gym (not quite that extravagant, I'd love to know how much all that cost them).  You can go cheaper and smaller and it can definitely work.  This is just our experience with what we've done so far.

Offline lethalbeef

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Re: So you want to open a gym?
« Reply #5 on: May 21, 2011, 07:33:17 PM »
Thanks for the post. This is good information. How comfortable are you about your student base coming over to you once the gym opens? It's going to be hard to estimate, especially if you open in a different location, if you don't offer the same classes, etc. Where is your capital coming from? Do you have a loan secured already?

Offline Chad Zwadlo (Zwadloc)

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Re: So you want to open a gym?
« Reply #6 on: May 21, 2011, 09:14:56 PM »
I'm quite confident that the students will follow us.  Since they come to the classes for my instruction, not for the location.  For many of the students the drive will be shorter, and my prices will be less than half what they pay now.  However, even if they don't follow us we're setting up the program at Gleason's as an affiliate of Fight or Flight (I'm training in a new instructor to take my place) and the gyms will split the income from the program 50/50.  So we'll actually be making the same amount off any students that stay as we will if they follow us.  We'll be trying to set up similar affiliate programs in gymnastics schools all over the area.  If we supply the instructor and the training, and we split the income between the gyms, we'll be bringing in a ton of extra income with virtually no overhead costs to us.  Gymnastics gyms will love it because it brings in a huge demographic that they don't usually have (teenage boys mostly).  We're already in negotiations for this with a couple gyms in the area.

Our initial capital is coming from our own savings as well as a private investor giving us about $9,000.  The bank loan we're working on right now but we actually got really lucky in that the owner of the warehouse we'll be renting is also the owner of a bank that does small business startup loans.  So with that connection we're pretty much set for the loan.

Offline aerosfcity

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Re: So you want to open a gym?
« Reply #7 on: May 24, 2011, 08:06:32 PM »
I think it is irresponsible to even suggest you could start a successful/sustaining gym of any kind for <$6000.  Definitely not going to be legal.  That wouldnt cover two months of operation even if you totally negated any start up costs.  But good luck dudes.

Chads estimates seem right on par. Try your hardest to find a commercially zoned facility if you are worried about start up costs.  Variances and Occupancy permits alone can run several thousand dollars just to the local govt before you even deal with installing what is required and getting it inspected.  The Light Industrial cheap rent is usually just not worth it.

As far as insurance, Nexo is pretty good and relatively cheap ive heard.  They also fight hard for their clients when sued (CFM got sued for a parkour related injury before i started working there but i watch the suit unfold over the first 1.5 years i was there.  We won.)  It would be cool if an organization (PKVisions, APK, APEX) could set up a RRG like what the Crossfit Community has.

But yeah it is alot of liability to take on (aka $$ and time) to have it only ever barely break even.  Otherwise it might be easier to rent a livework loft somewhere cheap and call it a "CLUBHOUSE" on the down low.

Thanks for stepping up and explaining what it really takes to make a dream like this work in the real world= Sacrifice.

Offline Charles Moreland

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Re: So you want to open a gym?
« Reply #8 on: May 25, 2011, 08:40:30 AM »
Thank you, Ryan, for calling me irresponsible having never met me and not knowing anything about the Rochester Parkour gym. Perhaps you read my comment as offensive, but I was simply attempting to add to the discussion by introducing a different approach. I was in no way saying Chad's approach was the wrong one. It is one of many approaches.

 

Offline aerosfcity

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Re: So you want to open a gym?
« Reply #9 on: May 25, 2011, 10:18:00 AM »
I checked out the mission a goals of the Rochester Parkour gym and was wicked stoked.  It sounded like the dream most of us go for when trying to form that community hub.  But I also saw the blog post where the gym might not make rent in the months to come due to lack of the necessary start up funds.  I think the model you are trying to create is admirable to say the least but it is also a very bold move.  I also felt that your post was trying to negate the, IMO, very accurate scenario that Chad was presenting.  PkVisions was started with about the same amount of cash flow that you mentioned so we know it can be done,  but that kind of business plan is likely to be scoffed at by any loan officer or business major.  Number one reason for start ups of any kind failing is the lack of proper start up capital,  so to encourage it just goes against what I've been taught since day one.   Didn't mean to offend you personally cause it is even harder for you in your situation ( even more stress and sacrifice), but that the idea presented is very unsafe/risky business.  Like I have mentioned in other forums I am wicked stoked that you guys exist and had the cajones to even try,  but I think the purpose of this thread was to present what it takes to make a successful business plan and attempt to figure out actual ongoing operating costs and get a loan from somebody other than a benefactor or "lucking out".

I'm a very blunt guy definitely to a fault.  But I'm honest.  You guys are trying to something wicked awesome and hold you in high regard and I whole heartedly apologize of you felt I was attacking you, your commitment to your community, or your goals.

Offline Charles Moreland

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Re: So you want to open a gym?
« Reply #10 on: May 25, 2011, 11:50:33 AM »
Thank you for clearing that up and helping me understand. I will be the first to admit that I am not a business-minded individual. No offense was given, nor was it taken.

Offline lethalbeef

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Re: So you want to open a gym?
« Reply #11 on: May 25, 2011, 08:30:49 PM »
I think all of us on here are rooting for you if you're going to take the huge risk, both financially and psychologically, to start up a gym (as long as you're not the first to do it in our area, lol). One thing that would be helpful to hear is how you managed to get your gym open and sustainable with only $6000; if this were feasible for most of us I think it'd be the first thing we would do. Chad's plan seems to be pretty realistic, though, in terms of things that an average, reasonably experienced coach might need to consider.

Offline NOS - from Parkour Mumbai

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Re: So you want to open a gym?
« Reply #12 on: June 18, 2011, 07:51:10 AM »
Hey, no way Tempest is 7000, it looks more like 10 or 20 thousand to me. I know that Ryan's (Ford) first gym at the Boulder location was 5000-7000 sq ft something, dunno how big is his Englewood location, but the Englewood one looks far larger than the Boulder one, probably twice the size. And the Englewood APEX still looks smaller than Tempest. And Salil's Urban Escape is also within the 5000-7000 range, and that doesn't look too large either, compared to the Englewood Apex or Tempest. I'm sure you've got the figure wrong on this one.

BTW, excellent post.

Offline Chad Zwadlo (Zwadloc)

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Re: So you want to open a gym?
« Reply #13 on: June 18, 2011, 08:41:39 PM »
No, I know my numbers.  The Tempest Academy is just over 7000 sq. ft.  Urban Evolution I'm guessing you're talking about in DC is about 1500 sq. ft. actually.  You are highly overestimating these gyms.  The gym I work at right now is 20,000 sq. ft. and it's freaking huge.

Offline NOS - from Parkour Mumbai

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Re: So you want to open a gym?
« Reply #14 on: June 19, 2011, 10:16:39 AM »
I may have over-estimated Tempest, but I'm sure about the others. I dunno why, but from all the pictures and videos they've released, Tempest looks to be humongous in size.

I'm sure Urban Escape (it's in Virginia, actually, but yeah, we're both referring to the same one) is 5000 or more. One, my own gym is 1700 sqft, and it's tiny. I've seen pictures and videos of the UE gym, and they've got a huge space, tons of things in it, that we couldn't dream of fitting in my gym all at the same time. Also, I've seen their business plan before they opened and spoken to the guys that own it, and the document confirmed it was 5000.

I also remember reading an APK news report (and related links on CO/Ryan's websites) when the first Apex location opened at Boulder that it was 5000 or 7000 (I'm sure it was either of the two figures).

Offline Chad Zwadlo (Zwadloc)

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Re: So you want to open a gym?
« Reply #15 on: June 19, 2011, 03:00:23 PM »
I was just training at Urban Evolution a couple weeks ago for (B)east Coast...and it's definitely not 5000 sq. ft.  Trust me, I've been there.  Going by pictures isn't the best way to go for stuff like this.  I also trained at Apex and it may have been around 5000, but that would have to include the office as well.  It doesn't matter, this is a silly argument all around and I'm not going to get into it any more.  The space we're trying to get is 7840 sq. ft.  And here's a picture of our design for it...

http://www.facebook.com/photo.php?fbid=240096762672794&set=pu.224573700891767&type=1&theater

Offline Chad Zwadlo (Zwadloc)

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Re: So you want to open a gym?
« Reply #16 on: June 19, 2011, 04:10:50 PM »
Here's another interesting turn of events as far as our gym goes.  We had to get the building re-zoned by the city so we can use it they way we need to, and they came back telling us the parking lot isn't big enough for us to open there.  Apparently 188 spaces isn't enough...  So now we have to get a shared parking agreement contract written up by a lawyer and signed by all the tenants of the building saying that we won't hold classes before 5pm, then it has to get approved by the zoning committee which meets twice a month.  Pain...in...the...ass.

So I e-mailed the Mayor of the city introducing us and what we do and asking if there was any way we can get this process moving a little quicker because it's kind of crucial we open in September as it's the start of the new school year.  We'll see what happens.

Offline aerosfcity

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Re: So you want to open a gym?
« Reply #17 on: June 19, 2011, 07:05:34 PM »
Yeah thats what stalls most of us. Finding an awesome place to build and go nuts= easy.  Finding a spot that is commercially zoned and awesome=Harder.  Dealing with special use permits and variances for changing the zoning=$$$$$+frustration.

I wish you luck, but ive heard that zoning stuff with the city for making an awesome "Light industrial" spot legal is damn near impossible or impossibly expensive.  Check out some of the old crossfit.com boards for "starting an running a facility"- lots of zoning stories and advice.

Here we must have 1 parking space per 100sqft of facility space to stay legal.

California might be different though.  Its hard to find any legal commercially zoned properties that work for under $.75-1.00 a square foot out here.  Getting permits can go another $20K to get the use permits here too.

But keep pushing dude and dont let the man/zoning s.o.b's get you down.

Offline Patrick Witbrod

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Re: So you want to open a gym?
« Reply #18 on: June 22, 2011, 12:34:45 PM »
I have a question. What if you wanted to open a gym sort of piggy backing on another gym. Like in a gymnastics or martial arts gym?

Offline aerosfcity

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Re: So you want to open a gym?
« Reply #19 on: June 22, 2011, 05:31:13 PM »
without a wicked strong model you would probably end up just being an "employee" in that gymnastics or martial arts school...

Some are able to get their foot in the door with "workshops" and other one offs that allow for profit sharing type arrangements but chances are you'll probably end up with a wage unless youre bringing a whole lot to the table (equip/training/coaches/insurance/an established clientele/yadayadayada)