One of the key questions I get from potential gym owners is: “Should I wait?”
This seems like a bad time to start any new business, let alone a gym. Though the U.S. is mostly open after the COVID pandemic, a lot of the world is shutting down. And even though the U.S. indexes are rising, most “experts” fear a market correction.
But no time is ever the right time. Many entrepreneurs simply accept the risk and take the leap, hoping to “build their wings on the way down.” I admire their courage (in my case, it was ignorance—I had no idea that owning a gym is a different skill than coaching). But I don’t want to start fragile gyms: I want to start robust gyms that are profitable from Day 1!
Below, I’ll tell you how to minimize the risk of opening a fitness business with an excerpt from my new book, “Start a Gym.” (Click here to order.)
Crossing the Chasm
Starting a new business isn’t risky. Relying on your new business as your sole source of income is risky.
Eventually, though, you’re going to have to go all-in on your gym if you want it to be successful.
Imagine two cliffs with a chasm between them.
The cliff you’re standing on is your current lifestyle. The other cliff is your dream of entrepreneurship. But if you fall into the gap, it could hurt you.
You’re standing at the edge of your current life. You have to make it to the other cliff.
Many books describe the entrepreneurial “leap.” But I don’t want you to leap: I want to help you build a bridge and then take a small step across into your new life.
Here’s the process we use to help people build a bridge to their new dream life.
Measure the Gap
First, we have to measure the distance we need to cross:
1. Calculate how much you need to earn to cover your current expenses.
2. Now audit your expenses: What could you cut if you had to? In other words, what is your absolute bare-bones income requirement?
For example, let’s say that you need to make $3,500 per month to cover your apartment, your groceries and your car payments, etc. These are the non-negotiables. You don’t need to include a personal budget for entertainment and similar things; you can get by without the pub for a few months if you need to.
Let’s say you work at another job and you make $4,000 per month. You can’t quit that job because you don’t have any savings to help bridge the gap. That means you can’t get leverage from money because you don’t have any to spare. But you can still leverage your time.
Narrow the Gap
Our next step is to narrow the gap by trading your time to get leverage:
3. How much could you make at the gym by working around your current job? If you took a part-time job as a coach in the gym and traded your mornings or evenings, how much could you make? Every dollar helps you bridge the gap. For example, if you got a job at the gym for $25 per hour and you coached six classes per week, that’s $150 per week or $600 per month. The chasm has shrunk from $3,500 per month to $2,900 per month.
4. How long could you survive with the income from the gym plus your savings?
Then, if possible, we make the chasm less deadly:
5. If things go wrong, what’s your fallback? Write down that plan.
6. Determine the point at which you’ll pack up the gym. This isn’t “failure”—you can always try again—but it’s important to decide and record your maximum risk before you take it. Your family might be less comfortable with risk than you are.
7. Ask for a leave of absence or to work part time. Create a fallback position before you start and narrow the earning gap as much as possible.
8. If you decide to buy a gym, ask the current gym owner to finance the purchase for you. For example, if the gym has a true valuation of $100,000, would the current owner allow you to pay monthly over a few years if you paid them $105,000 instead? This mitigates your downside a little; gives them 5 percent interest on the “loan”; and they can always take the gym back if things don’t work out.
Make a Timeline
Finally, map out the timeline to step across into your new life.
9. Determine how much you need to earn from your current job. Identify the “gap” you’re comfortable with. Set a target date to go all-in.
10. Forecast your cash flow using your bookkeeping software. Then you’ll be able to see the timeline to becoming a true entrepreneur!
11. Pay Yourself First. It will be tempting to take the money you make from coaching and use it to pay off your loans faster or buy more equipment or get more certifications. You must avoid this temptation. Pay yourself and borrow money to buy equipment. Remove the choice every week by writing yourself paychecks in advance and depositing them at your bank. This will force you to dedicate time to the things that will grow your business.
12. Understand that your job has shifted from “practitioner” to “entrepreneur.” You might still be coaching, but you’re an entrepreneur now. Worry less about acquiring coaching skills and more about growing your business.
For example, when I opened my gym, I needed to earn $900 per week. That was enough to pay my bills, but my credit-card debt would still accrue, and I wouldn’t be making any headway at all. Still, if my gym could pay me $900 per week, I could afford to spend all my time working on it.
1. Calculate how much you need to cover—my expenses were really more like $1,400 per week, but … .
2. I could have gotten by—for a while—on $900 per week. That was my bare minimum.
3. By training some clients in the evenings—and one in the morning—I could make around $400 per week.
4. Unfortunately, I couldn’t survive on $400 per week because I had no savings. So I had two choices: build up a buffer or start a waiting list for clients. I chose to build a buffer, so I worked very long days for several months, doing both my regular job and training clients, until I had $4,000 in the bank. That bought me two months’ of expenses. I went all-in.
5. My fallback was to move home with my parents and sell our house. Yes, it was extreme.
When I leapt, the fear of starvation had me hustling hard. Because I was scared of going broke, I asked my clients for referrals, started marketing with email and showed up at every public event with my Catalyst T-shirt on. I hung banners at local track meets, attended my clients’ hockey games and even drove around a triathlon course at 4 a.m. to write messages in chalk on the roads. If I’d kept my job, I couldn’t have done those things.
At some point, you have to focus all your attention on your business; it can’t be a “side hustle” forever. The key is to minimize the risk, not avoid it.
If you can work part time at your current job or take a leave of absence, do it. Keep your safety net in place. You will have the best chance to succeed, thanks to knowledge and mentorship.
But you should never take unnecessary risks. Tens of thousands of gyms have failed because their owner leapt too soon with no safety net.