Are you planning to open a new gym? Want to raise funds via bank loans or investors to finance your dream fitness club? In that case, loan officers and potential investors would like to see a robust, data-driven and professionally written gym business plan. More than anything, it will show them whether you know exactly what takes to launch a new gym business and turn it into a sustainable venture.
Before we get started, you might be interested to check out our Ready-made Gym Business Plan Template with pre-written text and automatic financials which you can easily customize and adapt to your own project, no financial expertise required.
A business plan is a must-have for every budding entrepreneur looking to raise capital for his or her project. That said, even self-funded projects need one, since a detailed plan acts as a road map for building a successful and sustainable business.
That brings us to the main question: How do you write an effective business plan for a gym?
Writing a comprehensive gym business plan, as you may guess, is a detailed and demanding process. When done correctly, it helps in clearly defining each step and key factor linked with launching a successful venture.
In this post, we will take you through all the steps involved in the writing of a compelling gym business plan. So let’s get rolling.
Outline for a Gym Business Plan
Before discussing each section in detail, here is a brief outline of what should be included in your gym business plan:
- Executive Summary
- Company Overview
- Market Research and Market Analysis
- Sales Forecast and Strategies
- Services, Programs, and Products
- Equipment and Facilities
- Financial Projections
The importance of having a strong, compelling executive summary cannot be stated enough. If the initial few pages of your plan don’t pique interest and enthuse confidence, investors may not read further.
Precisely for this reason, ensure your executive summary is captivating and draws the readers in, showing them early on that you not only have an awesome business idea but have done a thorough homework.
So how can you ensure your executive summary lays out a compelling case for your fitness club?
Your executive summary must clearly outline the following:
The what – What are your business goals?
The why – What is your mission?
The how – What’s going to turn your fitness center into a success story?
The bigger picture – What is your vision?
Answer these questions in your executive summary and potential investors will be all ears.
Which business model you will be following? What are the strengths of your business model?
What kind of market demand your fitness club aims to fulfill?
What key data support your business concept?
Why customers will pick your gym business over others? What are your unique selling points?
What is your sales forecast and financial projections for the first three years?
How much capital do you want to raise?
Even though an executive summary is the most crucial document of your business plan, you should write it last, after you have created all other sections. This way you will have the answers to all the above-listed questions when you sit down to pen the executive summary and consequently will be able to put forward a more compelling case.
This is where you should put passion onto paper. In the first section of your business plan, you briefly outlined your mission and vision. Now is the chance to elaborate these points to give potential investors further insight into your gym business.
You should cover the following points:
The purpose of your fitness club
Who will be your target audience
How do you plan to achieve your business aims
If you want, you can have a more personal mission statement. You can talk about the outcome you desire from your venture.
Here’s an example of a personal mission statement:
To bring innovation and inspiration to all athletes. If you are enthusiastic about working out and staying fit, you can count on us to help you achieve your fitness goals.
Think about your main reason for joining this business niche and share it.
Do you want to change something about the fitness world? Do you want to make it a little better? Like we said above, this is the time to put passion onto paper.
Next, share your history in brief with your readers.
Some of the questions you must answer to convince them you are serious about your new fitness venture are:
What have you achieved previously?
Do you have a previous experience in the gym business?
Have you ever run a business before? If yes, in which industry and for how long?
What is your current status?
Information shared in this section will help potential investors understand your journey so far, besides giving them a clear picture of your future plans. Remember, the more investors know about you the businessman, the more likely are they to trust you.
Next outline your business strategy. List the services you will be offering right off the bat, your plan for developing the business, and the new offerings you plan to include later on. Perhaps you plan to rope in a gym instructor or set up a new facility such as a workout studio or spa. This information will help you understand when and/or where you may need extra space or additional funding.
Market Research and Analysis
Start this section by communicating the latest trends of the fitness industry. In addition to that, discuss your specific market location in detail. This should include information regarding local competition. Also, use this space to define your target market.
Your target market might be:
It also might be a specific group, like yoga enthusiasts, body builders or cyclists.
Once you have zeroed in on your target audience, it’s time to explore just why they would like to join your fitness club. For instance, if you target audience is cyclists, they may want to join your gym for cardio and spinning workouts. Similarly yoga enthusiasts may queue up for a membership because a highly-experienced yoga teacher will conduct classes in your fitness center twice a week.
A thorough market research helps you understand your target audience better. Now it is time to ask yourself these questions:
How will you gain the loyalty of your target audience?
What are your strengths? What factors make you stand apart from the competition? Why would customers choose you over others?
What kind of membership package would work best for you?
Is there a good demand for special equipment?
When you sit down to answer these questions, you will be automatically able to define your business’s unique selling point (or USP for short). More than anything, this information will tell your potential investors why your gym is a great investment opportunity — one they would not want to miss out.
Market analysis and research is a key element of why your venture will be successful, so spend as much time you need to gather all relevant information and present it in a precise, neat manner.
Marketing and Sales Forecasts
In this section, outline the marketing and sales strategies you will follow. In addition to them, outline your sales forecasts for at least first three years.
With regards to marketing, you may include a number of channels below:
Loyalty plans and referrals
Word of mouth
Some of the questions you should address in this section include the following:
What are the different membership plans that you will offer and how much you plan to charge for each?
What are your sales forecasts for the first year, second year, and third year?
How do you plan to convert your target audience into paying and long-term customers?
What marketing strategies and promotional offers you plan to use during pre-launch and post-launch?
What is your plan for retaining customers?
One thing that you should understand is that your sales forecasts should be realistic. If you cannot back them up with data, you will have a hard time convincing investors that your projections are based on hard facts rather than wishful thinking.
Products and Services
This is where you should introduce your products and services to your readers.
Here are a few examples of products that you may need to buy:
Gym equipment (rowing machines, treadmills, elliptical trainer, stationary bicycle, recumbent bicycle, etc.)
Specialist equipment (you may want to invest in top-quality and latest equipment to attract members such as body-builders, etc.)
Beverages and food items (health foods, energy drinks, etc.)
Here are a few services that you may want to offer at your gym:
Fitness classes (body pump, yoga, aerobics, spinning, etc.)
Do more than list the products and services you will offer. Instead, highlight the benefits of each. For instance, with the help of hard facts, you may be able to show that gyms that offer a range of fitness classes (like yoga classes, cardio workout sessions, spinning classes, etc.) do better business than those that don’t.
Next, create a pricing list. The simplest way to create a pricing list is to use bullet points to highlight the rate of specific products and services.
This is the section where you need to breakdown:
Your staff profile
Your management profile
Your organizational structure
Your compensation and benefits plan
Do you plan to manage the fitness club yourself? If so, mention that, as well as any prior experience or qualification that makes you a suitable person for this role. You may also consider adding your bio along with the rest of the management profile in the last section of the business plan — the appendix.
Also, create an organizational chart that includes all non-management staff that you are going to need (receptionist, cardio trainers, weight trainers, yoga teachers, etc.)
Two of the biggest expenses for the majority of gym operators are rent and labor. Therefore, carefully planning your compensation and benefits plan is crucial. Remember how you structure the compensation and the business plan will have a huge bearing on your ability to create and, no less importantly, retain a good team and will impact your short-term and long-term business goals.
This section is likely to take the most time to create. However, since it can make or break your chance to raise the necessary capital, leave no stone unturned while preparing your financial projections.
Your financial projections should be as comprehensive as possible, but to help investors understand and absorb the information, use charts and graphs. Include balance sheets, income statements, and cash flow statements for a minimum of three years based on three scenarios: ideal scenario, expected scenario, and worst-case scenario.
However, showcasing financial projections is not enough. You must also be able to provide context for the numbers you have mentioned. One way to do that is by comparing your numbers to your industry benchmarks.
Don’t forget to include membership and service ramp ups, staff compensation, and membership churn in your financial projections.
After you have figured out all the data, summarize it neatly using graphs and charts, define the assumptions you have made, and pen a short, to-the-point introduction for this all-important section.
This is the last section of your fitness club business plan. This is where you will add all the supporting documents such as:
Resume of your management team
Your own resume
Marketing plan specifics
Promotions and creatives
Launching a new fitness venture is exciting, but if you want to raise capital or create a roadmap for success, you need a detailed business plan. Follow the tips shared in this post and you will have no problem creating a thorough gym business plan, one that helps you judge the viability of your business idea, develop business goals and attract funding.