“Hey, Chris. I make a great living as a personal trainer. I net around $80,000 per year working from someone else’s gym. But I’d like to open my own gym to make more money. Can you give me some advice?
My advice might surprise you: I said, “Don’t do it.”
This trainer was doing 1:1 training at a CrossFit gym. The owner wasn’t charging them (the trainer just had to run a couple of classes each week; in return, they kept all of their PT income). The trainer was definitely earning far more than the gym owner. But still, he wanted to earn more. So he thought the next step was to open a gym, just as I had.
But when he saw the math, he realized that opening a gym would require a major step backward in his income. To make $80,000 per year net as a gym owner, he’d have to generate at least $240,000 (that’s best case), sign leases, commit to loans and scramble to find clients who paid less for his coaching. He’d be required to market and sell constantly instead of just cherrypicking clients from a waiting audience.
So he raised his PT rates by $5 per hour, gave himself a raise, and I never heard from him again.
This coach was really reaping all the benefit of the gym owner’s hard work. These opportunities are disappearing, and rightfully so. They’re unfair to the gym—and they usually wind up killing the gym.
In the previous installment in this series, I mentioned my start as a personal trainer: using local parks, parking lots and my clients’ homes. That worked for a few months—until winter came. Then I needed a roof.
I made a deal with a local gym: My clients would buy memberships and I would train them. It was a great deal for me: The gym didn’t take a percentage of my coaching, and I had all the equipment that I needed. As an unbelievable bonus, the gym had an unused dance studio upstairs where I ran my conditioning drills! For a few months, my clients and I enjoyed a fantastic training space.
But then: a phone call in the middle of the night.
“Uh, Coop? It’s Shane. From the gym. Listen, you’d better get over here and grab your stuff. Fast. The bank’s going to padlock the doors in the morning. We’re bankrupt.”
So I threw on a pair of shorts, drove to the gym and loaded up my pylons and agility ladders in the dark. By morning, the gym was closed forever, and I was homeless again. I called my clients and told them I didn’t have anywhere to train them. For a few months, I was out of business; and then I had to start from scratch when I found a new home.
If the training relationship doesn’t benefit everyone—coach, gym owner and client—then it won’t last long.
Finding a Space
If you want to coach people in small groups or 1:1, look first for fitness businesses that aren’t gyms.
For example, some personal trainers in my city rent space from a local gymnastics club and train their clients in the corner there.
Other sport-specific coaches rent basketball courts or hockey dressing rooms to run their workouts. Some use parks to run their bootcamps. Some rent dance studios to teach pilates or yoga.
Many of the first CrossFit “affiliates” were run this way: no commitment to a private space, no equipment purchase, no overhead. And the head coach at Catalyst used to run boot camps in local parks for almost a decade before leading my team.
What to Pay
How much should you pay in rent? It depends what you’re buying.
The hardest part of any fitness business is building an audience for your service. If you’ll be training the clients of the gym where you’ll work, you should expect to give up 30-50 percent of your revenues to that gym. That might seem high at first, but consider this:
- You don’t have to go out and find clients.
- You don’t have to pay for advertising.
- You don’t have to figure out marketing or sales.
- You don’t have to pay insurance.
- You don’t have to buy or cart equipment around.
- You don’t have to pay bank fees.
Any business can be divided into two parts: operations (how you deliver the service) and audience (how you get people to pay for it). If the “audience” part is off your plate, you can just book clients and collect money. You’ll make more per hour than you probably ever have, and you’ll get as many clients as you want. Most commercial gyms pay their coaches 15-25 percent of the personal training fees they collect because they understand the value of the audience.
If you’re renting space in a building and recruiting only your own clients, you should pay a flat rate. Typically, that rate is calculated by square footage, usage and cost. It can also go up if you’re using the facility’s insurance, equipment and bank processing equipment. All these options are still a great deal: It’s cheaper to pay 5 percent to use the gym’s booking and billing software than to pay $150 per month to get your own.
(Gym owners: calculate that rate with this tool.)
In general, my rule of thumb for trainers is this:
Pay up to 56 percent of your revenue for space and audience. If you opened your own gym, you’d pay more like 88 percent of your income. Keeping 44 percent of your revenue is way more than the gym owner keeps, in almost every case. A 44 percent profit margin is great in any service business. At a globo-gym, you can expect to be paid around 15 percent of what your clients pay for a session; at a Two-Brain microgym, you’ll be paid triple that amount.
Pay up to 22 percent for space only. You’ll still have to pay for insurance, booking and billing software, and coaching software. You’ll still have to put in 20-30 hours per week to build an audience from scratch. But the space can give you a foundation to operate.
If you need to leave your equipment in one place, you’re going to pay a lot more. Owning immovable equipment means committing to a lease.
If you just need empty space and minimal equipment, pay per hour and carry your things with you. This is a typical case for yoga teachers who are just starting out.
If you need something in the middle, pay per hour and a minimal space rental fee. For example, a fitness instructor leads a “seniors’ fitness” class at our little local Town Hall. She wants to leave her Swiss balls and mats in a storage room, so she pays to rent the storage room by the month and the rest of the space by the hour. This works in a blank-slate multi-use facility, but not in a gym setting.
The Best for Everyone
Sometimes good coaches open gyms, and then the gyms close. That’s OK. Their passion for coaching didn’t turn into business excellence. But they can still make a great living as a coach at another’s gym, and they won’t have to worry about acquiring clients or managing others.
I know many long-term owners who closed down, got a job coaching elsewhere and are now happier for it. Their clients are better served at the new gym, too. It’s a win for everyone.