Finance Research Paper
The first step to opening a gym before anything else is to obtain a fitness repressions certification, American Council on Exercise and the International Health, Racquet and Sports club Association offer certification and business education courses that will help establish my professional credibility. Secondly will need to evaluate the services I plan to provide at my local gym. Many gyms offer a wide variety of services from cycling classes, basketball, swimming, sauna, hot tub, Samba classes, rehabilitation, and personal training.
I will be determining my customer base factors into the type of services and classes my gym will offer. My demographic is going to reach for al ages and personality types. Obviously it will appeal to personalities whose hobby is to be maintain a healthy and active lifestyle. I will need to find a gym location that will support the services my gym will offer. Seek out demographic areas that will support my gym’s services. Location is essential in establishing clients so will factor in higher rental rates when estimating startup costs to afford locations closest to my customer base.
Determine the types of members you want to attract. Offer programs like circuit weight training, cardiac or aerobics classes and Palates. Palates is a type of exercise aerogram designed to build stamina, strength and endurance with or without equipment. I can also offer self, defense classes to attract additional business. My gym will be equipped for serious bodybuilders as well as individuals who are looking to just stay in shape. When seeking out a location I will consider such things as street access, parking and visibility. Location is one of the most important considerations in opening a new gym.
I will find a location in a busy area such as a business district or in shopping center. That way I can generate interest from local people who drive near my gym. Ill make sure you plenty of parking is available for my customers’ convenience. It is also crucial that I study my competition. Trying to avoid competing directly against other large fitness centers. They can easily put me out of business by cutting membership prices that I cannot meet. Using my name as my brand could work if I’m a well-known fitness instructor or competitive bodybuilder (probably not the second one).
Another option is locating the gym in a small town or city that doesn’t already have a fitness center. My next step will be to select the proper gym equipment for my gym. I will elect fitness equipment after selecting my gym’s services and determining the required fitness equipment needed. Certain factors, such as cost, new technologies and equipment maintenance, plays a role when selecting fitness equipment, including weight machines, treadmills, free weights, weight benches and mats. I will consider leasing and purchasing options when estimating the cost of fitness equipment. Ill write a business plan and get gym financing. Starting a gym will require both a written business plan and a loan. According to Entrepreneur, the average cost of opening a gym is $1 0,000 to $50,000. Lenders will not consider a business loan application without a complete business plan attached. Some of the risks that I may experience when starting up the new gym are the possibility of not having an adequate amount of finances, not obtaining enough market shares to actually be selling a good amount of our product (memberships/training) to have a good profit.
As well as the misuse of finances and operational errors. In order for us to handle any situation that comes our way, in a quick efficient way is to work together and find a well-thought out solution to every problem. The U. S. Small Business Administration offers free service to help develop business plans and provide assistance in getting loans. There are many different types of loans, including the Expresses Loan that offers small businesses the chance to get an SABA-backed loan of up to $350,000 to start- up or expand. The ‘express’ piece refers to the fact that your loan can be turned around in 36 hours.
Another option is to seek venture capitalists that could possibly be interesting in investing in my company for a percentage of ownership In return. Possibly the most important factor to making all of this work will be applying or business permits and licenses. Opening a business requires owners to register and adhere to all regulatory laws. Certain states require that there are automated external defibrillators, staff trained in CPRM and the DEAD on site at all times, and a written emergency plan developed by physician is an example of some of the requirements I would face. I also can’t forget to purchase business insurance.
Gyms are places where injuries and accidents happen. Purchasing some form of business insurance will protect the business. I can contact my homeowner’s insurance agent for a referral to an gent who specializes in business insurance. After purchasing insurance I can start the process of decorating the gym facility, install the fitness equipment, hire my staff and begin advertising a campaign. My trainers and staff must also be familiar with the proper operation of the equipment. Minimize the chance of accidents by offering clients mandatory training sessions before they use any of the equipment.
Having trainers show the client how to properly use each machine not only lowers my risks, but also often lets the client use the machine more efficiently. If a trainer sees someone using a ice of equipment incorrectly, he should review proper usage guidelines with the client again. To reduce the burden of employment regulatory costs such as payroll taxes and benefits when starting I will consider hiring on an independent contractor basis. May be able to run the gym mostly by myself. Hire a spouse or family member to help you cover other shifts, especially if you are open six or seven days per week.
You may also consider hiring a secretary to help you answer the phone. I will add trainers and aerobics instructors since I plan to offer these services. Will hire these instructors on a untactful basis, paying them an hourly rate for their services. Many of these professionals are self-employed anyway. I do not typically have to pay independent instructors health benefits, which will save you on labor costs. Obviously this is subject to change considering that my gym will eventually expand, and I will need to hire additional staff for front desk positions and more personal trainers as we expand.
Although before any of this will need to figure out how plan to obtain capital to finance all of my expenses for my gym. Unless you’re independently wealthy, you will most likely need investors. Ill start inquiring with clients, friends, family, etc to see if anyone has any interest. I will find out what they re interested in for a return on their investment. Hopefully you’ll be able to find other business owners that need an additional expense off their bottom line, which will be all that they’re looking for. The initial financial outlook looks a little like this.
We will open with $365,650 in investments, and $700,000 in founder investments. We will also take a 3- year loan for $1 00,000, making total start-up capital Of $1 , 165,650. As a Fitness center, we will use these funds on property, production facilities Gym), and equipment. They will also go towards legal costs to establish contracts with clients, our computer systems, and website development, as well as establish our human resources department to begin hiring. Our staff will be salaried from the beginning in management positions and our external members on the board of directors have expenses related to bi-annual meeting attendance covered.
Advertising is going to be crucial in launching my gym business. I plan to advertise my new gym in both the print and online yellow pages. Many people find gyms through these two sources. I can also SE coupon magazines to promote special trial offers. These magazines usually contain coupons from multiple vendors, including restaurants, small retailers and brake or oil service establishments. Coupon magazines are distributed through newspapers or by mail in the immediate area. And most of my business will come from within a five- or 10-mile radius. Some fitness clubs use lead boxes.
Lead boxes are distributed in high traffic retail locations, including car dealerships and automotive service places. The objective is to offer people free “one-week” memberships. People, in turn, fill UT their names and phone numbers and drop their forms in the box. Lead boxes help get people in the gym to work Out. The best thing to jumpstarted my gym operation is to entice people to work out in my gym. Believe I will find it helpful to offer special packages, promos, freebies and even fitness business cards so people will be interested to exercise in my gym.
Giving clients big discounts for referring other gym buffs can help in boosting the number of clients that will patronize health and fitness business. I can then give them tours of my gym and, subsequently, sell them three-month or annual memberships/ month to month. The expenses of opening my gym will be heavy at first but hopefully my profits will outweigh the expenses. Will need to take into consideration the space to rent out for a gym usually will cost about $1 ‘square foot a month, so if I want a 5000 sq. Ft. Facility (pretty typical xx 00 feet or so) it’s going to cost around 55000 a month.
I could get a smaller gym, but smaller space is going to be more limiting. The Tempest Free running Academy (Los Angels CA) is around 7000 sq. Ft. , the space would be looking at right now is 7840 sq. Ft. May also have to pay utilities in the space, which they usually estimate at bout $0. 1 0/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 assembly occupancy for the amount of people I can have in it. With that come the codes on safety like sprinkler systems and air ventilation as well as accessibility for handicapped people.
Since I’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 (Only a possibility). The sprinkler system will probably be fine, but the parking may be an issue as well s 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 may have to put in an HAVE unit (which is what I’m going to have to do and its going to cost about $30,000) With that I’ll need equipment; I can build a lot of stuff out of axis and plywood.
We’re planning on spending about 35000 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 the entire gym are going to cost about $850. I am also looking to purchase mats, those are expensive. For example, just look at something like www. Tumbler. Com to see what I’m talking about. We’re going to end up spending about $1 5,000 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. I’ll also need to consider the administrative side of it all as well. I’ll need a computer and software (Cookbooks 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 renter/scanner/copier, filing cabinets, desk, etc. ) Also the random stuff may want like a sound system to play music in the gym (or a projector TV like I’m planning on getting to play motivational free running videos on a 12′ screen on the wall all the time.
A few things I will keep in mind are – Monthly bills such as electricity, gas, water, sewer, trash collection, phones, internet (? ), grounds keeping, snowplowing – Recurring payments such as property tax – Random costs such as equipment repair. Entrust the gym equipment, but also plumbing, air conditioner, heater, etc. Everything breaks sometime. Promotional costs (am going to buy advertisements in the paper? Billboards? Etc. ). – Office equipment – desks, chairs, computers, cash register – If I have a vending- machines (water, Storage, whatever), do I get a cut of the profit?
