How to Open a Gym | TRUiC (2024)

Start a gym by following these 10 steps:

1. Plan your Gym
2. Form your Gym into a Legal Entity
3. Register your Gym for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Gym
6. Get the Necessary Permits & Licenses for your Gym
7. Get Gym Insurance
8. Define your Gym Brand
9. Create your Gym Website
10. Set up your Business Phone System

We have put together this simple guide to starting your gym. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Gym Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening a gym?

Startup costs for a gym are significant. Most modest gyms costs between $200,000 and $400,000 to get going. A larger gym may cost upwards of a million dollars or more. Franchises may carry lower operating costs, but you have to pay a franchise fee, which may or may not make it a cheaper option to get started.

Some gym owners try to lower their initial overhead by buying used equipment. This is a double-edged sword. New gym goers want to see new equipment. Used equipment may not be in the best condition. If you go this route, make sure to have all used equipment thoroughly inspected and serviced prior to use.

What are the ongoing expenses for a gym?

The largest expense for a gym is the initial investment in gym equipment, which can cost upwards of $200,000 or more. The second-largest cost is either the labor cost or rent, depending on the size of the business.

Who is the target market?

Preferred customer types include individuals who want to lose weight or hire personal trainers to meet personal fitness goals. Most gyms advertise locally in newspapers or by word of mouth. Good clients are those interested in working out with a serious long-term commitment.

Poor clients would be those who join for a short period of time and then quit. However, many gyms actually capitalize on this by charging a joining fee which protects the gym from early cancellations. The up-front fee is usually several months worth of fees, allowing the gym to recover advertising costs.

How does a gym make money?

The standard business model for a gym is to collect membership dues in addition to supplemental revenue. Supplemental revenue includes income from various classes, like:

• Yoga
• Pilates
• Aerobic classes
• Spin classes
• Circuit training
• Military fitness
• Kickboxing
• Jujitsu training
• Dance classes
• Crossfit

Most gym memberships are charged on a monthly basis, with other revenue (like special workout classes) being charged either monthly or as a flat fee upfront.

Other sources of revenue include:

• Personal training
• Juice bar
• Tanning beds and related services
• Supplement sales
• Chiropractic services
• Massage services

Gyms typically see an influx of new members in January, peaking in the second quarter, then falling during the summer months. This makes the gym business highly cyclical.

How much can you charge customers?

Gyms usually charge between $20 and $50 per month for memberships and require members to sign a one year (or multi-year) membership contract. Some gyms offer discounted deals if the client pays for a year in advance. On top of that, gyms charge a sign-on fee, which is usually between $100 to $300.

Supplemental revenue varies according to the demand and the type of gym you want to run. Consider your target market and gym location. If you’re in a high-rent district, you can charge more for memberships, personal training services, supplements, classes, and tanning and chiropractic services.

How much profit can a gym make?

Revenue and profit varies by size. However, it’s typical for a gym to generate between $1,000 and $2,000 a month in revenue within the first 6 months. After a year, a successful gym will generate at least $20,000 per month. According to the AFS 2016 Marketing Best Practices Research Report, a typical small fitness center in the U.S. makes $63 per SqFt., or up to $200,000 to $300,000 per year. Larger gyms can make up to 10 times as much money.

How can you make your business more profitable?

Generating more profit with a gym is simple. Most gyms add supplemental revenue as space permits. These “side businesses” are set up to rent space from the gym owner, creating predictable streams of income. For example, a gym owner might lease space to a chiropractor, a tanning company, a massage therapist, or even a food services business to handle the juice bar.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your gym is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate gym business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

Certificate of Occupancy

A gym business or fitness center is typically run out of renovated warehouse or commercial space. Businesses with a physical place of business require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

If you plan to lease space for your gym business:

• It is generally the landlord’s responsibility to obtain a CO.
• Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a gym business.
• After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.

If you plan to purchase or build a gym or fitness center:

• You will be responsible for obtaining a valid CO from a local government authority.
• Review all building codes and zoning requirements for you business’ location to ensure your gym business will be in compliance and able to obtain a CO.

Music Licensing

Many gym businesses play music to keep customers focused and entertained during their workouts. In order to play music in a business setting, permission must be acquired from the composer or license holder. Typically, it is possible to obtain “blanket” license allowing a businesses to play music owned by a large catalog of artists and recording studios. Such licenses can be obtained from Performance Rights Organizations, such as ASCAP and BMI.

Learn more about music licensing requirements and how to obtain a blanket license here.

Liability Waivers

Working out at a gym can be a high risk activity, especially for individuals lifting heavy weights or with certain medical conditions. It is strongly advised to have new gym members sign a liability waiver accepting personal responsibility for any injuries.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

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