How to write a gym or fitness studio business plan
A business plan is central to starting, growing and developing a gym or fitness studio. It serves as a road-map and allows you to step back and think objectively about what it will take to build a sustainable and profitable business.
Do you need to raise capital from investors or acquire a bank loan? If so, potential investors and bank loan officers will want to see and review a well-written, data-driven business plan that shows them you’ve done your homework and thought about what it will take to start or grow your business. Before investing or loaning you money, investors want to see they will get a return on their investment in a reasonable time frame and loan officers want to know you’ll be able to pay back your loan with interest.
Creating a business plan is an organized and detailed process that results in clearly defining the key factors associated with any successful gym or fitness studio business..
This post covers how to write a business plan, but we also wrote a comprehensive guide on starting a gym that you should check out next.
Gym Business Plan Outline
Before going into the details of every section, here is an outline of what your fitness club business plan should include:
- Executive Summary
- Market Research and Analysis
- Marketing and Sales Forecasts and Strategies
- Programs, Services and Products
- Facilities and Equipment
- Ownership and Investor Structure
- Financial Projections
Having a strong executive summary is crucial if you’re looking for investors or loans. If your first few pages aren’t compelling, potential investors or loan officers won’t read on. Thus, the summary should succinctly lay out a compelling business case for your gym.
It’s best if you write this section after finishing the rest of the document so that you can pull the most important information and data from the overall plan.
Address these questions in the executive summary:
- What is your business model and its strengths?
- What market demand will your gym or fitness studio fulfill?
- What key market data supports your concept?
- What is your competitive advantage?
- What is the bottom line with regard to revenues, expenses and profit/loss for the first three years?
- What are you requesting in terms of funding?
Market Research and Analysis
As a starting point, understand and communicate fitness industry trends. IHRSA has developed multiple industry reports that focus on this topic and provides data to support that the industry is strong and growing.
In addition, discuss in detail your specific market location. This will include detailing the local competition and the demographics of your primary and secondary markets in the area. Based on this research, articulate why your fitness club concept will be attractive to your ideal customers.
Your market research and analysis provides one of the key elements of why your business will be successful and will help with messaging once you open, so spend a considerable amount of time wrapping your head around this information.
Marketing and Sales Forecasts
This section outlines your marketing and sales strategies, as well as sales forecasts for your first three years.
You’ll want to address the following questions:
- What membership types and/or class packages will you offer and what will you charge for them?
- What are your sales forecasts?
- What is your strategy to get your target market into your club and convert them into members?
- What is your unique selling proposition?
- What promotional offers and marketing strategies will you use during pre-sale and post-launch?
- How will you retain your members?
Products and Services
Next, you’ll need to define your service philosophy and the workout environment you’re looking to create. Will your business be high touch or limited touch in regards to your members? Do you want an aura of luxury or is your gym a no-frills fitness model?
In addition, provide a breakdown of the revenue and non-revenue services your business will offer. Products for sale, such as merchandise, food, and beverages should be included as well.
Facilities and Equipment
At this stage of your business start-up, you may or may not have a location picked out.
If you already have a site or facility, describe its key characteristics and benefits such as size, visibility, accessibility, parking, zoning, build-out potential, rent expectations, area demographics, and exposure to your target market. Include a map that shows exactly where it is.
If you are still exploring location and site options, provide the criteria you’ll use to evaluate potential facilities, including the ideal characteristics you’re looking for as mentioned in the paragraph above.
Include a detailed description of what the club will have, i.e. luxurious locker rooms, studios, cafe and/or amenities, and its general design aesthetic as well.
If you have architectural plans, include them in your appendix and reference them in this section.
Finally, you’ll want to list the equipment your facility will provide as well as the methodology behind how you’ll choose from the myriad equipment offerings available.
The staffing section is where you’ll describe your organizational structure, job categories and compensation and benefits plan.
If you plan on managing the club, include your bio alongside the rest of the management team profile in the appendix. Provide an organizational chart along with a description of any non-management staff you’ll need (front desk, trainers, etc).
Outside of rent, labor is the biggest expense for most fitness club operators so thinking through compensation and benefits structures is critically important. Keep in mind that how you structure compensation and benefits will impact your ability to attract and retain a strong team and can make the difference on whether or not your business is profitable in the short and long term.
Ownership and Investor Structure
In this part of the plan, you’ll need to outline the legal structure of your business, i.e. is it structured as a S Corp, LLC, partnership, or some other entity?
In addition, if you’re looking to bring on investors, this is where you’ll detail how much money you’re looking to raise, how much equity they’ll get in return, their projected ROI, and potential ways they can exit the investment, i.e. through the sale of the business or by having you or other investors buy them out.
Financial projections will likely be your most time intensive section to build out.
You’ll want to create comprehensive financial projections that include income statements, balance sheets, and cash flow statements for three to five years based on best, expected, and worst-case scenarios.
You should also provide context for these numbers by comparing them to industry benchmarks and ratios. Start-up costs, payroll expectations, debt payment schedules are important to reference as well.
The basis for the financials will be developing assumptions around membership and service pricing, membership and revenue-generating service ramp-up, membership churn (attrition), and staff compensation in your projections. Other key line items for the operating budget include rent, administrative costs, insurance, utilities and sales and marketing.
You’ll also need a start-up budget that includes capital expenditures such as construction and equipment as well the working capital you’ll need to operate the club before it breaks even.
Once you have the numbers worked out, summarize the data, define your assumptions, and write a short introduction for the beginning of this section.
The appendix is your gym/fitness studio business plan’s last section where where you’ll include all supporting documents.
Common items to include are:
- resumes for you and your management team
- job descriptions
- demographic information
- facility plans
- marketing plan specifics
While starting a new business is exhilarating, it can become quite complicated with all the factors to consider and steps to take.
Doing your homework and having a detailed plan will be critical to your success.
A thorough business plan will help you assess the viability of your project, cement your ideas, develop goals and how to achieve them, and attract funding to get your gym startup launched and positioned for long-term sustainability.
Looking for help with opening your gym?
Over the years, we have assisted numerous first-time entrepreneurs and people new to the fitness industry in planning and opening their own gym businesses.