Top 10 Reasons Why New Gyms Fail

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  • Top 10 Reasons Why New Gyms Fail

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 of 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…

#1 – No proper business plan

No business plan can be fatal to your new gym. Before starting a gym know:

Success or Failure
Successful gyms watch finances, growth and marketing carefully.
  • Short-term and long-term goals
  • Finances
  • Required gym equipment
  • Employees necessary
  • Gym promotions

#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 will not be able to earn enough to develop or expand your gym. You also will not have the cushioning necessary to absorb potential losses.

#3 – Neglecting finances

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 opened your gym with adequate capital, you might squander it, and then find it impossible to survive. Stay alert and aware daily of your budget:

  • Write down your business’s financial goals and be accountable to them
  • Track everything: new membership sales, retention, attrition, recurring revenue, personal training sales, membership length – just to name a few 
  • Install well-designed gym management software.

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

Choose a location that is VISIBLE and CONVENIENT for your target members, not just cheap space.

#5 – Frantic growth

  • Slow, steady growth is good!
  • Don’t grow faster than your revenues.
  • Set practical goals and try to achieve them.
  • Don’t spend all your profits trying to expand; It will add overhead, which future earnings might not cover.

#6 – Taking competition too lightly

If you 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. A brand new gym could sneak into the neighborhood without you even realizing it. You must:

  • Stay on top of customer service and listen to member requests.
  • Find a niche that a new gym cannot compete with
  • Market like crazy!!

#7 – Bad supervision

  • A great manager versus an OK manager will make or break your business.
  • He/she will have less reason to be dishonest if you hire and pay big for a great manager.
  • If respect is there, all your employees will follow his/her leadership

Additionally, a manager directly and indirectly reflects on your membership base. 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 an 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 promote your gym by word of mouth.

#9 – No change 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. Lack of change will lead to member dissatisfaction and loss. Always be prepared. Continually:

#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?

Gym Insight membership software

At Gym Insight, our gym management software provides a clear, easily accessed, and transparent picture into your company’s financials. Sales Guru feature allows new members to sign up quickly on a tablet and our sales solution automatically integrates client payment data with the member management system. Our gym software is built in-house, by fitness club owners. There are no cumbersome third-party plug-ins or complicated protocols, and it’s available for a single, low monthly subscription price — no hidden fees, no links to your payment processor. Call us today for a free demonstration on how we can lower your software management costs!

This blog originally ran Sept. 18, 2013 and has been updated Jan. 20, 2021


My Gym Family
April 30, 2018

When it comes to your health, go for professionally equipped gym and professional personal training assistance only.

Lawrence Fagan
February 19, 2018

Take a look at our blog “Bootstrapping a Gym Business from Zero”. Hope this is helpful. Thanks for reading our blog and for your question!

January 30, 2018

Can you post something on managing finances. Is taking a loan a better option instead of putting in own funds.

November 4, 2017

Some genuinely choice posts on this web site, saved to my bookmarks.

Lawrence Fagan
August 22, 2017

Thank you so much for the positive feedback there will be many more posts to come!

Hermusa Skincare
August 19, 2017

Thank you so much with regard to giving us an update on this topic on your
site. Please realize that if a brand new post appears or in the event that any alterations occur
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understanding how to make good utilization of those
techniques you reveal. Thanks for your time and
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Lawrence Fagan
June 11, 2017

Great to hear! Thanks for the feedback!

October 1, 2015

I love the gym for years growing up with Jack LaLanne on the tele and the ads with Cher the ever evolving of the gym over the decades, Partnership is fine providing the business head starts it grows and the passionate one develops and builds on it all this comes down to TRUST . money flows out and in and don’t bite more than you can chew. No one wants to enter a gym that smells like a gym , dull lighting dark and mediocre feel and look. A gym fitness center is more the die hard muscle worshiper but open to all types and ages. Offer everything for all lifestyles, Being relaxed and having enough capital to survive the winter but no pushing pressure sales, no over spending on high end shake and smoothie machines. Interview your staff and management , its your lifeblood and hard work that builds it Do not allow others to steer in the wrong direction . Marketing is key to being word of mouth

August 24, 2015

Thank you very much all ,,, can I know any other reason of failure….

June 20, 2014

#11 – Over promises with under deliverance towards your clients..

Lawrence Fagan
May 30, 2014

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.

April 14, 2014

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.

Lawrence Fagan
October 3, 2013

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.

October 3, 2013

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.

Lawrence Fagan
September 20, 2013

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,

September 20, 2013

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

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