Imagine a client trains at 6 a.m. at your gym and then puts in an eight-hour remote workday inside your building.
According to The Wall Street Journal, this is happening as some gyms now offer co-working spaces to solve clients’ problems and generate additional revenue.
So is it a good idea?
Here’s the WSJ article: “The Hottest New Office is the Gym” by Anne Marie Chaker.
The 411: The post-pandemic world of remote employment has some people looking for places to work in between the office and the home. And some fitness facilities are capitalizing on this by selling access to co-working spaces.
The cost? About US$500 a month, at least in the Life Time gym profiled in the article. The WSJ also reported that another gym—Biân in Chicago—offers co-working space for $4,000 a year plus a $1,000 startup fee.
So can your bring more revenue into your gym by setting up a co-working space and selling premium packages to clients?
The answer is maybe.
But here’s an even better question: What’s the very best use of every square foot of your space?
Run the Numbers!
About eight or 10 years ago, it was trendy to try and put coffee bars and smoothie stations in gyms.
The idea works in principle: Clients buy coffee and post-workout shakes from you instead of the shop down the street. That raises average revenue per member.
Same deal with co-working spaces: You’re using your existing space to make money from current members or new members who would join to train in your gym and work in your space.
But in practice, coffee bars, smoothie stations and co-working spaces can cause trouble:
- They take you out of your area of expertise—coaching fitness.
- Food services require supplies, storage and equipment.
- Co-working spaces require desks, décor, AV equipment and internet bandwidth, and perhaps build-out costs if you put in a conference room, cubicles or booths for private calls.
- You have to have a plan to sell products or services that fall outside your core offering.
- Coffee and smoothie bars require staff or very regular supervision and cleaning at minimum. Co-working spaces require management at minimum, and you’ll likely have some audio-visual and internet problems someone has to deal with promptly.
- The space dedicated to a new offering might create more revenue and fewer headaches if you used it another way.
I’ll just focus on the last one because it’s the most important.
Gym owners would be wise to maximize revenue per square foot. This is related to a key Two-Brain principle of ensuring all expenses generate ROI.
The key word: maximize.
That means you must do more than just avoid bad decisions: You must also avoid “suboptimal decisions.”
The best way to do that: Run the numbers. Then run the numbers for a different plan. And another. Compare them all.
Here’s basic example that doesn’t address all the variables, which include the risk of vacant space and other considerations:
You might find that you can sell 10 monthly co-working memberships at $500 apiece. That’s $5,000 a month, or $60,000 a year. But the buildout costs of the space are going to be $100,000, which includes some walls, desks, furniture, AV equipment, carpeting, décor, lighting and additional bathrooms.
Compare that to this scenario:
Run just 60 PT sessions per month—about two per day—in the space at a rate of $80 per session. Use equipment you already have and pay a trainer four-ninths of the revenue. That’s $4,800 a month gross with no buildout costs, and after paying the coach about $35 per session, you’d clear about $2,688 a month delivering a service you already know how to market.
I’m not suggesting co-working spaces are a bad idea. My point is that The Wall Street Journal is suggesting the “hottest new office is the gym.” That might be true. But it might not.
As a gym owner, the best plan whenever you see a news story like this is to ignore the hype, do your research and talk to a mentor. Then choose the best action to grow your business.
