Americans have long been self-proclaimed gym rats. However, the past several years have welcomed a new trend in working out: boutique fitness studios. While mega-gyms may have ruled the nineties and early 2000’s, specialty fitness classes are dominating today’s fitness landscape. Small, specialty studios are responsible for driving much of the growth that the health industry has realized. From barre classes to Barry’s and, of course, CrossFit and Soul Cycle, there are studios catering to everyone and every fitness level.
This fitness revolution has definitely helped more people carve out healthier habits. However, it is also creating a generation of new fitness leaders who are not just content to teach classes, but driven to open and run studios of their own. If you are a fitness enthusiast and eager to open the doors of your own endorphin-boosting boutiques, here are a few expenses you should keep in mind.
Franchise a Location
One of the best ways to get into the fitness scene is through franchising. This enables independent entrepreneurs to capitalize on the brand name of mega-studio brands. Some of the biggest current fitness franchise options include PureBarre, CorePower, and Orangetheory. The beauty of franchising is that, often, a new location will market itself. As awareness for cult fitness followings in one city easily spreads (thanks to social media), new consumers are often eager to try the workouts their out-of-state friends have been raving about. On the other hand, opening a franchised location can also increase the overhead costs, as there will be additional overhead fees plus weekly sales cuts. For example, anyone wanting to open a new Orangetheory location must pay the brand an initial fee of $49,500. Subsequently, the studio chain also requires 7% of gross weekly sales. PureBarre’s franchise fee falls at $46,500 with overall initial startup costs (excluding New York City locations) approximately $168,100-$300,700.
Some corporations do provide loan options to franchise applicants, but these options often do not cover the entire scope of the demanded fees.
Launch Your Own Venture
If you don’t like paying for another business’s branding, you can always build a studio from scratch. While launching a new brand or type of fitness offering means that you escape some of the giant franchise costs, it also means that you may end up spending more on marketing down the road. It may also take longer for your business to grow a following and generate profit.
Like franchised locations, starting your own boutique from the ground up will still require a significant capital investment. In addition to securing real estate large enough to hold classes and locker rooms, you’ll also need to purchase the correct equipment. Depending on the type of fitness studio you’re looking to start, equipment purchasing will vary wildly; after all, there’s a big difference between purchasing 30 yoga mats and 30 treadmills. In the world of fitness, the type of equipment you use to fill your studio will be one of your most significant decisions. Old or faulty equipment is an extreme liability. The potential damages and injuries from one piece of bad machinery may be enough to crush your entrepreneurial dreams.
Location, type of workout, and brand all shape the initial costs of launching a new fitness studio. Health club consultants estimate that new ventures can cost entrepreneurs anywhere between $30,000-$500,000, with many clubs on the higher end investing in both location and sleek interiors to build an exciting brand around the workout.
Regardless of which door to the fitness world you choose, new studios tend to demand fairly steep overhead costs. Rather than bootstrapping the business all on your own or liquefying your existing assets, there are several mobile equipment finance options that support new ventures. Unlike traditional bank loans, these options offer fast financing and typically do not require specific credit minimums or business history rates, making them the best option for first-time business owners. Before you begin the application process, map out all of the potential costs that will go into your new studio – as well as sales projection models to help you establish a feasible timeline for loan repayment plans. ProjectionHub offers a comprehensive modeling system for startup gyms that can be adapted based on your location, equipment needs and brand goals.
Once you’re ready to look for a small business lender, contact the Currency team.