Top 10 Reasons Why New Gyms Fail

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If you have opened a new gym, you must know that it is, after all, a new business. So you should be prepared to run and develop that business as a business.  To do so, you must acquire knowledge about the fitness business industry, and also be aware of the pitfalls for why new gyms fail so you can be sure to avoid them.  In my opinion, here are the top 10 reasons why new gyms fail…

Chalkboard saying that Failure is Not an Option and only has a check box next to Success

#1 – No Proper Business Plan

No business plan can be fatal to your new gym. Before starting a gym, you should be equipped with the knowledge of your short-term and long-term goals, finances, as well as gym equipment you need, people to be employed, and promotions for your gym. If you don’t plan where to go, you will most likely never survive the journey.

#2 – Shortage of Capital

Capital is the life-blood of a business. If you open your gym without adequate capital to buy the required equipment or employ the right people, you would not be able to finally earn so much that you can develop or expand your gym further. You will also not be able to have the cushioning necessary to absorb potential losses.

#3 – Neglecting Finances

First and foremost, you do not have be an accountant to run a business.  BUT, you must be responsible and familiarize yourself with the gym business terminology and the basics of finance 101.  Unless you keep track of your finances, you are bound to overspend. As a result, even if you had opened your gym with adequate capital, you might squander it in no time, and then you will find it impossible to survive.  Stay alert and aware daily of your budget!  Write down goals for your business’s financial goals to achieve and stay accountable to them!  Track everything, new membership sales, retention, attrition, recurring revenue, personal training sales, membership length – just to name a few!  MEASURING these statistics ahead of time will help you IMPROVE your strategies and GROW your fitness business’s PROFIT!  At the end of the month you will not be scratching your head wondering where all of your hard earned money went.

#4 – Improper Location

Place your gym in a location where it is VISIBLE and CONVENIENT your target members!  If you open your gym in some place just because you are getting the space cheap, you might be heading for failure on the grounds of not being able to attract and retain members!

#5 – Frantic Growth

Don’t try to grow faster than what your revenues can keep up with. Set practical goals and try to achieve them. Even if your gym is making great profits, don’t spend it all in trying to expand because it will add on overheads which your future earnings may not be able to cope with.  Slow, steady growth is good!

#6 – Taking Competition Too Lightly

If you have opened a gym at a perfect spot, and it is a great success, don’t let it get to your head. Just because you don’t have competition now doesn’t mean you never will. If you do have competition already, don’t underestimate it. A brand new gym could sneak into the neighborhood without you even realizing it.  Stay on top of customer service and listen to their requests.  Find a niche that a brand new gym with brand new equipment cannot compete with and market it like crazy!!

#7 – Bad Supervision

If you do not manage your fitness business yourself, you need to hire and pay big for a great manager!  Having a great manager verses an OK manager will make or break your business.  Find someone you can trust and give him/her no reason to be dishonest to you.  The manager is figurehead that all of your employees and personal trainers will follow, if respect is there.   Additionally, the manager will directly and indirectly reflect on your membership base.  You need to make sure that your members stay motivated enough to keep coming back and the manager will be in charge of motivating your staff who in turn will motivate and retain your membership base.

#8 – Inadequate Promotions & Marketing

Every business needs promotions and marketing strategies. Simply having a great gym, with great instructors and state-of-the-art equipment won’t get you initial inflow of memberships needed to survive. You have to let your target market know that you don’t just exist, but how great you are in terms of services and deals. Once you have promoted enough to get an initial flow of memberships, you will find that, if you stay consistent with customer service, your current membership base will aide you promoting your gym by word of mouth too.

#9 – No Changes over Time

Change is required everywhere. The equipment that is state-of-the-art now may not remain so after a while. The setup that looks and feels great now may change to old and boring later. You need to be always prepared for change.  Introduce interesting and unusual fitness equipment every once in a while, changes to your setup and classes from time to time, and always stay on top of gym cleanliness and equipment maintenance.  Otherwise, lack of change will lead to member dissatisfaction and loss.

#10 – No Web Presence

Having no web presence makes you invisible to a large mass of today’s population. Internet has become a commodity like water or electricity these days. Everyone uses it, and if you have a website and social media presence, it will not only create a good impression of your gym, but also provide you with a plethora of feasible marketing opportunities and ultimately becoming better known within the fitness industry community!

Now over to you…

What should #11 be?

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7 thoughts on “Top 10 Reasons Why New Gyms Fail

  1. I would have to say number 11 would have to be partnership. When going into business with a friend or family member, at first its fun but once the cash starts rolling in well that changes every thing. Its better to ask for funding from that person and return the envestment and avoid going into partnership at all.
    I would have to strongly agree with not having enough capital point. This is the reason why I had to take a step back before opening my gym. I didn’t want to be a pushy salesmen when people walk in the door. I want to have enough cash to make it without any members for 6 months if I had to.
    Thanks a lot you guys for this post. And as always-
    Drop weights not bombs.

    Jesus Baeza
    http://www.thesupshop.net

    • Great points Jesus! Being in partnership should be on the list. Not all are bad, but all need to be carefully weighed with how the ebb and flow of money will change the dynamic of the relationship.

      I am going to add #12 in here too and say that you need to be passionate about the gym industry, but not so passionate that it affects your decision making. You need to have a reasonable balance in order for business decisions to stand the test of time.

      I think it is great that you are taking the right step in building up a sufficient “emergency fund,” (as Dave Ramsey would say) to fund your business for 3-6 months.

      Thank you for your insight too!

      I wish you health and success,
      Lawrence

  2. Great article.
    Having run many business’s to the public I would have to say another very important one would be Customer Focus or Customer Service. A lot of gyms do not focus enough on insuring that their clients are achieving the goals they set out to achieve in the first place. Don’t just settle for their membership fee and forget about them.
    Make sure they are achieving what they set out to achieve. If they don’t see any benefit to the gym it is unlikely they will renew their membership. So maybe number 11 or 12 would be “Retention” Well actually I personally would put it number 1. If your customers are happy everything else will fall into place.

    • You are right on the money Donagh. Once a membership base is built up, I absolutely agree with you that retention has to be near the top of the list. To add on to your point about retention: I run a small gym, and I see the importance of having a person hired specifically to focus on just that, membership retention. That employee would not have managerial duties or be a personal trainer or nutritionist. In fact, that employee would be discouraged from selling anything themselves. Their main job description is to reach out to members and get them back in through the door by whatever means. They would be required to find out their motivation for joining the gym in the first place and what barriers they face in preventing them from their original health and fitness goals. Then once the root problem is identified by that employee, then referrals to other services throughout the gym (PT, nutrition counseling, etc) would be implemented.

  3. Hire NICE people to help operate the gym! Past fitness experience/expertise is far less important than having gym personnel with a sunny disposition and ready smile. You can teach expertise but cannot legislate niceness. Most all of the past gyms I’ve been a member of have zombies or sourpusses on their staff with rare exception. Many years ago I was traveling and took advantage of a Gold’s Gym feature that allowed a member to work out at other similar gyms.

    This gym on the road happened to be in Eau Claire, WI. When I showed my normal keychain pass card, the nice 20s blonde smiled brightly and said, “We’re so glad to have you here today and hope you come back anytime you’re in town. If you need anything, be sure and let me know?” I about fainted on the spot for all this niceness but it obviously had an impact on me to report it here some 10 years later.

    Far too many gym employees go through the motions, seem either indifferent to or hate their jobs. It shows. And, it motivates me to put up with the sour personalities until I can find someplace that’s better.

    • William, thank you for sharing your experience and why nice people really can make an impact. It is a great point that can be easily overlooked if you are not watching your staffs’ interactions carefully and consistently.

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