Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on December 15, 2021 Updated on November 5, 2023
$24,550 - $119,100
$250,000 - $1 million p.a.
Time to build
1 – 3 Months
$50,000 - $200,000 p.a.
Americans are more health-conscious than ever and gym owners are reaping the rewards. It’s a growing industry worth more than $35 billion, and even small gyms can tap into that market. Gyms make money from memberships, fitness classes, sales of refreshments and supplements, and renting space to instructors and personal trainers, so opening your own gym has great profit potential.
Starting any business is not easy, however, and opening a gym will require diligence and knowledge. Fortunately, this step-by-step guide will provide all the information you need to jump into the gym business.
Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.
Every business has pros and cons that you should consider with care before deciding if opening a gym is the right path for you.
Passion – If you’re passionate about fitness you’ll be doing what you love
Steady income – Membership revenue should be fairly steady
Few employees – You don’t need a big staff to run a gym
Startup costs – The gym space and equipment won’t come cheap
Competition – Most areas have many gym options
Long hours – Gyms tend to be open 12 hours or more per day
Gym industry trends
An appealing new concept called hybrid gym membership has the potential to shape the future of the industry. Hybrid members have the option of taking advantage of the gym’s online offerings — from a personal trainer to a variety of yoga and fitness classes — or coming to the gym in person. Outdoor spaces for workouts and personal training are also trending, so gyms have been looking to use outdoor areas for classes and workouts.
The most popular fitness classes are yoga, Pilates, circuit training, and high-intensity interval training. New workouts are popping up as well, such as Pound, a cardio jam session inspired by the beat of drum-playing.
Startup costs for a gym range from $25,000 to more than $120,000. The low end represents a smaller space with less equipment. You could always start small and expand your gym later, to a larger space or multiple locations.
You’ll need a handful of items to successfully launch your gym, in addition to the space itself. Here’s a list to help you get started:
Training bench and free weights
Other weight training equipment
Functional training equipment, such as:
Setting up a business name and corporation
$150 - $200
Licenses and permits
$100 - $300
$100 - $300
Business cards and brochures
$200 - $300
$1,000 - $3,000
Location rental security deposit
$3,000 - $15,000
$20,000 - $100,000
$24,550 - $119,100
How much can you earn from a gym?
The average profit margin of a gym is 20%, while the average annual cost of gym membership is about $500.
In your first year or two, if you’re able to sign 500 members, you’d bring in $250,000 in annual revenue and $50,000 in profit, assuming that 20% margin. As your brand gains recognition, sales could climb to 2,000 memberships, giving you $1 million in revenue and a tidy profit of $200,000.
What barriers to entry are there?
There are a few barriers to entry for a gym. Your biggest challenges will be:
Startup costs – Costs of equipment and space are high
Competition – It’s a very saturated market
Related Business Ideas
If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.
Now that you know what’s involved in starting a gym, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Why? Check out the competition & identify an opportunity
Research gyms in your area to see their membership and fitness training offerings, prices, and online customer reviews. You might find an area without a gym, or maybe the local gyms don’t have good trainers. A small boutique gym with more personal service and training might be another opportunity.
You might consider targeting a niche market by specializing in a certain aspect of your industry, like yoga classes.
This could jumpstart your word-of-mouth marketing and attract clients right away.
What? Determine your products or services
In addition to your workout facility, consider what else you might be able to add to increase your revenue. You could offer:
Fitness classes of various types
Vitamins and supplements
A juice or smoothie bar
Online classes & hybrid membership
How much should you charge for gym services?
The average cost of a gym membership is $500 per year. The typical cost of a fitness class is $35 to $50 per person per class. You should aim for a profit margin of around 20%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Who? Identify your target market
Your target market depends on the concept you choose and the classes you offer. If you offer high-intensity circuit training, your target market will probably tend to be younger. You’re most likely to find those customers on Instagram rather than Facebook.
Where? Choose your gym location
When it comes to choosing the best gym location, there are several factors to consider. First and foremost, aim for a central location that is easily accessible via public transportation. This ensures that your gym is conveniently reachable to a larger pool of potential customers. Additionally, prioritize a commercial space that offers ample ventilation and natural light, creating a welcoming and refreshing environment for your clients.
In terms of the physical space, it’s beneficial to find a location that is spacious enough to accommodate the necessary gym equipment and classes you plan to offer. This ensures that your clients have enough room to comfortably engage in their workouts and participate in group activities. It is also important to find a space that requires minimal renovations or repairs, allowing you to start your gym operations smoothly.
Lastly, consider the lease terms of the commercial space. Look for a flexible lease agreement that can be extended as your gym business grows. This allows you the flexibility to adapt and expand your operations according to the demands of your clientele. You can find commercial space to rent in your area on Craigslist, Crexi, and Commercial Cafe.
Step 3: Brainstorm a Gym Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
Short, unique, and catchy names tend to stand out
Names that are easy to say and spell tend to do better
The name should be relevant to your product or service offerings
Ask around — family, friends, colleagues, social media — for suggestions
Including keywords, such as “gym” or “fitness”, boosts SEO
Choose a name that allows for expansion: “Fusion Fitness Center” over “Yoga Bliss Studio”
Avoid location-based names that might hinder future expansion
Discover over 250 unique gym name ideas here. If you want your business name to include specific keywords, you can also use our gym business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Step 4: Create a Gym Business Plan
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
Executive Summary: A brief encapsulation of your gym business, highlighting its unique value proposition, financial potential, and the roadmap to success.
Business Overview: An outline of your gym, including its mission, objectives, location, and the type of gym experience it will offer to clients.
Product and Services: Detailed descriptions of the gym memberships, personal training services, classes, equipment, and any additional amenities or products you’ll offer.
Market Analysis: An examination of the local fitness industry, potential gym clientele demographics, and demand for gym services in your target area.
Competitive Analysis: An assessment of other gyms and fitness offerings in your area, how your gym will differentiate itself, and strategies to gain market share.
Sales and Marketing: Your strategies for attracting and retaining gym members, including pricing, promotions, advertising, and your online presence.
Management Team: Profiles of the key team members, their roles, experience, and how their expertise will contribute to the success of the gym.
Operations Plan: The day-to-day logistics of running the gym, such as location, hours, staffing, and facilities management.
Financial Plan: Projections of your gym’s financial performance, including startup costs, revenue streams, profit margins, and break-even analysis.
Appendix: Supplementary materials like resumes of key team members, detailed financial projections, and any legal or regulatory documentation pertinent to the gym business.
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Step 5: Register Your Business
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Choose where to register your company
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to gyms.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Choose your business structure
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your gym will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
Limited Liability Company (LLC)– Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Step 7: Fund your Business
Securing financing is your next step and there are plenty of ways to raise capital:
Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
Personal: Self-fund your business via your savings or the sale of property or other assets.
Bank and SBA loans are probably the best option, other than friends and family, for funding a gym. You might also try crowdfunding if you have an innovative concept.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your gym as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Step 10: Get Business Insurance
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
Business Property: Provides coverage for your equipment and supplies.
Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
Worker’s compensation: Provides compensation to employees injured on the job.
Property: Covers your physical space, whether it is a cart, storefront, or office.
Commercial auto: Protection for your company-owned vehicle.
Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Essential software and tools
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
Develop your website
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
Your clients are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Digital Marketing & Online Presence
Facebook & Instagram Ads: Target specific demographics with tailored ads.
Social Media Posts & Stories: Regularly share engaging content, including member success stories and workout tips.
Website Optimization: Ensure your website has optimized calls to action and high-quality content for better search rankings.
Google Business & Yelp: List your business on these platforms to enhance local search visibility.
Blogging & SEO Content: Share informative content on fitness, nutrition, and gym news to attract and engage visitors.
Video Marketing: Create and share videos that could potentially go viral, using humor and relatable gym experiences.
Personalized Newsletters: Send out regular updates, fitness tips, and member spotlights.
Targeted Advertising: Use platforms like Google AdWords to appear in relevant searches.
Engagement Through Technology
VR Workout Previews: Give a virtual tour of your gym and sample workouts to prospective members.
AR Fitness Posters: Develop interactive posters for an engaging visual experience.
Integration with Wearables: Sync with devices to track workouts and offer data-driven insights.
Custom Fitness Apps: Create member-exclusive apps with personalized workout and nutrition tracking.
Live Classes: Offer real-time participation for members outside the gym.
AI Personal Trainers: Implement AI technology for personalized workout feedback.
Experiential & Community Marketing
Fitness Flash Mobs: Organize engaging public displays to garner attention.
Pop-Up Workouts: Create temporary workout spaces in high foot traffic areas.
Workout Celebrations: Host events that combine fitness with social elements, like dance and themed workout nights.
Community Fitness Projects: Sponsor local fitness initiatives to boost public presence.
Corporate Wellness: Partner with local businesses for exclusive employee wellness programs.
Personalization & Member Experience
Fitness Concierge: Offer workout and nutrition planning for a personalized gym experience.
Birthday Perks: Celebrate members’ birthdays with a special workout or offer.
Competitions & Giveaways: Host challenges with prizes for participation or achievement.
Testimonials & Stories: Highlight member transformations and testimonials.
Brand Building & Partnerships
Co-Marketing with Brands: Partner with related businesses for joint promotional efforts.
Sponsor Local Events: Increase visibility by sponsoring events related to your target market.
Influencer Marketing: Engage with influencers to promote your gym to a broader audience.
In-Person Marketing Efforts
Signage & Flyering: Use eye-catching signs and distribute flyers in strategic locations.
In-Person Sales & Promotions: Represent your gym at local markets, trade shows, and industry events.
Education & Expertise Sharing
Podcasts & Webinars: Share your fitness expertise through online platforms to build trust and authority.
Infographics: Create and share visually appealing infographics with workout tips and health statistics.
Family Fitness Initiatives: Offer programs and discounts tailored to families.
Senior Programs: Develop classes and workouts suited to older adults.
Student-Focused Offers: Create student-centric promotions and late-night workout sessions.
Focus on USPs
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your gym meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its strong USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your gym could be:
Personal fitness for women
Work out when you want; we’re open 24/7
Hybrid members have access to all our classes online
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a gym, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in a gym for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in fitness and health. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
Step 12: Build Your Team
As your business grows, you will need workers to fill various roles. Potential positions for a gym include:
Front Desk Clerk – greet customers, sign up members
Fitness Trainers – Run fitness classes, personal training
General Manager – Staff management, accounting
Marketing Lead – SEO strategies, social media, other marketing
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Opening a gym is a great opportunity to help people live healthier lives and make a good living at the same time. The gym industry is growing fast as Americans are investing more in their overall health and fitness, so this is a great time to jump into the market. To differentiate your gym from the competition and attract more members, think of a unique concept and innovate on the latest trends.
You’ve made the right first move by gathering all the relevant information. You should now be ready to flex your entrepreneurial muscles and open your own successful gym!
Gym Business FAQs
How profitable is opening a gym?
A gym can be a very profitable business. Profit margins are a healthy 20% and you can make money from memberships, fitness classes, clothing and supplement sales, and more.
Do I need an LLC for my gym?
You can choose any type of business entity for your gym. An LLC offers many benefits, particularly personal liability protection. If your gym is ever sued for something like an injury, an LLC will protect your personal assets.
How can I open a small gym with no money?
You can’t open a gym with no money, but you might be able to get financing to start one. Your best bet is an SBA loan.
What is the gym failure rate?
The failure rate of gyms is a little over 50%. It’s a very competitive industry and gyms require convenient locations and a good marketing strategy.
What are the risks of a gym?
Opening a gym carries the risk of losing the significant capital that you must put into it. You’ll also have liability risks from people getting injured while using the facilities. You also face the risks of entering an extremely competitive industry.
How to Open a Gym
Decide if the Business Is Right for You
Hone Your Idea
Brainstorm a Gym Name
Create a Gym Business Plan
Register Your Business
Register for Taxes
Fund your Business
Apply for Gym Business Licenses and Permits
Open a Business Bank Account
Get Business Insurance
Prepare to Launch
Build Your Team
Run a Gym - Start Making Money!
Gym Business FAQs
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