I love hearing about gyms that make lots of money in small spaces.
Here’s a snapshot of a very cool model:
- About 1,000 square feet of space.
- A focus on personal training and semi-private training (high-value services).
- An average revenue per member of $500 or more.
It doesn’t take a business wizard to see the elements that contribute to profitability:
- You don’t have huge overhead.
- You don’t need a lot of gear.
- You don’t need a lot of clients.
- You don’t need massive marketing campaigns.
- You don’t need a huge team.
Despite all that, I couldn’t have come up with this formula when I opened a gym back in 2011.
In 2011, I had a growing number of clients for a bootcamp I ran out of a globo gym. I decided to go big on a space and rented 6,000 square feet.
To be fair, rent wasn’t much back then—especially in my town. So I got away with a lot of mistakes as a new gym owner.
Many times, I said this: “I’m so glad we rented more space than we need so we don’t have to move as we grow.”
I thought I had saved renovation and moving expenses by occupying a large warehouse early in the life of the gym. But as the years rolled by and rent increased, I realized that I had far too much space. And it was rarely filled.
Sure, my noon and 5-p.m. classes were big. Sometimes we’d get 20 people, and the extra space was fantastic. But from 7 a.m. to noon and 1 to 3 p.m., the space was almost always vacant.
So had I “saved moving expenses” or committed to overpaying for a lot of unused space for a decade?
It was the latter.
Small-Gym Superstars
I was reminded of my mistake recently when I spoke to two gym owners whose average revenue per member is well over $600 per person. In back-to-back interviews, they laid out their businesses for me, and the commonalities were obvious:
- About 1,000 square feet (in very high-rent areas).
- A focus on personal training and semi-private training.
- Small number of team members.
- Very clear focus on a well-defined avatar.
- Niche expertise and special skills.
- Regular goal review sessions with clients.
- Steady streams of referrals.
- No marketing budgets.
Sounds amazing, right? Were I to open a gym today, I’d probably use this model. In fact, we eventually moved out of our warehouse, decreased space by about 90 percent and focused on a fewer clients who get better results faster. (Yes, the business is more profitable now.)
So what’s the kiss of death in a model that seems like a sure winner?
Too few clients and bad retention.
An ARM of $1,500 would be impressive, but a business would die if it had four $1,500-month-clients and lost two per month.
To go with a “small model,” you’ll need three key things:
- A plan to acquire a small but clearly defined number of clients.
- A plan to deliver great value and make sure clients see that value.
- A plan to retain high-value clients for a long time.
A mentor can help you create a plan that’s specific to your business. But I’ll give you a few general Two-Brain resources so you can see how these problems can be solved:
- Client acquisition: “How to Get Referrals”
- Value: “How to Charge What You’re Worth”
- Length of engagement: “Retention: What Actually Matters”
Optimize Your Space
Can you run a profitable business in a very large space? Yes, but the risks are greater. You’ll have to acquire and retain a lot of clients and manage a large team—many fitness entrepreneurs struggle with this.
The best plan is to do the opposite of what I did: Start small and make use of every square foot of space while serving high-value clients who stay for years.
If you do that, you have every option available to you. If you want to expand and go big, you can. If you want to stay small and earn more by delivering more value, you can do that, too.
And if you have too much space right now, I wouldn’t be afraid to consider downsizing if that improves profitability. It’s not a mark of shame—even though I was worried about what people would think if I reduced the size of my gym.
To run a very profitable business, you must find the optimal amount of space and then maximize revenue per square foot. And different spaces work better with different models.
I didn’t get all that years ago, so I understand if you’re unsure if your space works with your model.
To get an expert’s insight and find out how a mentor can help you optimize your business, book a call here.
