Do you want to know exactly how much it cost to start a gym? If YES, here is a detailed cost analysis for starting a fitness center and raising finance.
Having provided you with a:
- Fitness Industry Overview
- Market Research and Feasibility
- Gym Business Plan
- Fitness Center Marketing Plan
- Gym Business Name ideas
- Gym Licenses and Permits
- Cost for Starting a Gym
- Gym House Marketing ideas
We will consider how much it cost to start a gym house from scratch including the operating costs.
How Much Does It Cost to Start a Gym House / Fitness Center?
We need to enter the estimated startup costs for a gym. We also assume $1,500 in startup inventory costs for retail products, and $1,500 in other startup costs. We will also assume $3,000 for furniture in the gym. Then we are going to assume $175,000 for Gym Equipment.
When we add all of these startup costs together we are going to need to raise $200,500 in funding between personal investment, loans and other investment. Let’s assume you can get a $150,000 loan and will invest $50,500 of your own money.
This is the key areas where we will spend our start – up capital on;
- The Total Fee for Registering the Business in Irving, Texas: $750.
- Legal expenses for obtaining licenses and permits: $1,500.
- Marketing promotion expenses (8,000 flyers at $0.04 per copy) for the total amount of $10,000.
- Cost for hiring Consultant – $5,000.
- Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $30,800.
- Cost of accounting software, CRM software and Payroll Software – $3,000
- Cost for leasing facility for the gym: $80,000.
- Cost for facility remodeling – $50,000.
- Stationery – $1000
- Phone and utility deposits – $3,500
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $40,000
- The cost for Start-up inventory – $15,000
- Storage hardware (bins, utensil rack, shelves, glasses et al) – $1,720
- Cost for acquiring gym equipment – $200,000
- The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al): $4,000.
- The cost of Launching a Website: $600
- The cost for our grand opening party: $1,500
- Miscellaneous: $5,000
You would need an estimate of $3.6 million to successfully launch our gym and fitness business in the United States of America. It is important to state that the testing and evaluating expenses would be high because of the large amount of equipment needed to start up a gym and also the sophistication of the technology used in gyms. Also, the supplies would cost a bit more because of the regular demand for it.
- Financing a Gym Business
Business practices and financial disciplines are as varied and diverse as there are stars in the galaxy. There is no financial “holy grail” when it comes to planning the financial end of your gym business. However, making sure that your financial strategy fits within your means, is conducive to continued growth, and is free of any hidden fees should be staples of any plan.
One of the most common funding options is the use of a Small Business Administration (SBA) loan. This will likely offer the most competitive rates and allow you to allocate funds to be used toward tenant improvement (TI) costs (flooring, lockers, mirrors, etc), and equipment. However, the application and approval process is rather extensive and may not work with your business timeline.
Other gym owners prefer utilizing equipment leases or finance options directly through the fitness equipment manufacture, as this offers a great deal of convenience. However, rates may not be as competitive compared to an SBA loan or third party leasing/financing company but the terms are generally very straight forward and have no hidden fees.
Unfortunately, the lease amount is only applicable to the company’s equipment so TI and other equipment cannot be included. You should give a good thought to the following concerning your finance;
- Ensure that your financial strategy is within your means and conducive to continued growth.
- Read the fine print and be cognizant of any early pay off penalties.
- Know the difference between leasing to own and a residual lease.
- Partner with an equipment manufacture that has a high resale value and continues to manufacture parts for older models.