Business Plan Gym: WHAT MUST BE AVOIDED AT ALL COSTS!

Whether you are passionate about fitness or it represents a good business opportunity, you have a project to open your own gym. You are now at the stage of the famous business model. The Business Plan has several objectives:

1. Define the commercial and financial strategies of your fitness.

2. Demonstrate the feasibility of your project

3. Give credibility to your company

4. Convince banks/investors to grant you a loan

«  The success of your business plan is essential »

Here are the mistakes to avoid when developing the business plan for your gym:

1. Do not present the team and the project's origin

2. Rush the market study

3. Neglect the importance of digital marketing

4. Minimize investments and costs

5. Forget about additional sales

Error #1: Do not present the team and the project's origin

Before being a matter of numbers, a company is a human adventure. You will not raise funds if you do not provide context to your approach.

Your creditors want to know the motivations that drive you to undertake. They also wish to know the leader, and the rest of the team that will support you.

During this stage, it is important to highlight the skills and personalities of the project’s stakeholders. Do not lose sight of the fact that investors (banks, funds, or individuals) bet on a project but also on people.

Error #2: Rush the market study of your gym

The study of your market is the beating heart of your business plan. Its primary goal is to validate the commercial feasibility of your gym.

This study is an analysis of the sector in which your fitness operates. Gather data, take an interest in the dynamics of the sports market in France.

The right questions to ask yourself:

Is the environment favorable to this activity?

List the positive and negative elements. The idea is to have an objective knowledge of the market in which you will operate.

For example:

Political = Promotion of sports by public authorities +

Economic = Decreased purchasing power after the COVID-19 crisis –

Social = Wellness trend +

Technological = Home sports applications –

Ecological = New ecological trends in gyms

Legislative = Safety within ERP

What are the essential elements for the success of a business in a specific sector (Key Success Factors)?

It is important here to ask what the consumers' expectations are and how your competitors behave.

Develop very targeted marketing questionnaires to know your potential customers inside out. During this phase, try to gather as much useful information as possible.

Questions such as age, gender, purchasing power are essential but insufficient. Seek to understand the environment in which consumers operate, their motivations, and their needs.

Moreover, it is crucial that you also pay attention to your competitors. Analyzing their strategy and positioning will give you the keys to imagine what your fitness will be like.

This work will allow you to start imagining:

• The geographic location (defining your catchment area)

• The positioning (Price + Quality of Service)

• The business model and commercial offerings (Session booking, subscriptions…)

Be careful, the gym market is extremely competitive, and spots are scarce. By the end of this study, you must understand what your advantages are compared to competitors. This is a sine qua non condition for launching your activity.

For example, if you want to launch your fitness gym 7 days a week from 6 a.m. to 11 p.m. in Nice. After studying your competitors, you realize that this model is also that of large low-cost chains that offer prices you cannot match. These low prices are partly due to the absence of coaches in the gym.

Your consumer study has revealed that a significant portion of respondents desires on-site support. Therefore, you choose to offer personalized coaching to all members of your gym. You are the only ones offering this service in your catchment area: this represents a competitive advantage, leverage it!

Error #3: Neglect the importance of digital marketing for your gym

You now have clarity. The viability of your gym market is validated. Now, you must think about customer acquisition.

This step is crucial as it will subsequently define your projected revenue.

You will need to establish the channels that will allow you to:

1. Develop the notoriety of your establishment

2. Spark interest in your services

3. Generate purchase desire

4. Encourage the purchase

5. Retain your customers and turn them into referrers

A volume of prospects is associated with each step of this funnel. Know that the transition between two steps systematically results in the loss of part of the prospects counted in the previous step. That’s why we talk about a funnel system.

Your mission, if you accept it, is therefore to define the expected volume of prospects at each stage. You will then deduce the total sales volume.

Multiply this by the estimated average basket, and you will have a rough idea of the revenue that your fitness gym can generate.

1. For example, you decide to launch a radio campaign. You choose your station and estimate that the population that will hear your campaign is 10,000 people.

2. After research, you realize that only 50% will be interested during the listening, which means 5,000 prospects.

3. Among these 5,000 people, 10% will call you for information, i.e., 500 received calls.

4. Finally, let’s consider a conversion rate of 15%, which brings us to a number of 75 signed clients.

(This is an example to illustrate a process. The data is not based on research. You will need to conduct your own.)

And digital marketing in all this?

Traditional physical channels such as print media, radio, and/or billboard advertising have been in decline for many years.

The fault lies primarily with new communication methods such as websites, social networks, and mobile applications.

You must factor these acquisition channels into your strategy; they are essential!

We have prepared a special file dedicated to the new marketing trends for sports complexes.

For example, an SEO strategy (free referencing) for your website can be incredibly powerful but will require a massive time investment.

Conversely, paid advertising on social platforms such as Facebook or Instagram will offer you quick but costly notoriety with an uncertain return on investment.

Moreover, acquiring clients is important; retaining them is even more so. The renewal rate in gyms is only about 20% on average. However, digital tools can boost this ratio.

This is the case of a dedicated app for your gym. Once expensive, there are now solutions available at a lower cost with an extraordinary design and integration!

Clients of Doinsport, the most efficient software publisher for gyms, present unequivocal figures. Clients who opted for a dedicated app see a renewal rate of subscriptions 32% higher than those on a " marketplace ".

It is important to show that you understand the mechanisms of digital marketing. You must be able to anticipate the volume of members you will convince to join your fitness gym through the channels you choose.

Above all, do not overestimate these figures.

Error #4: Underestimating the costs incurred by your gym

The most common mistake made by those seeking funding is to construct a forecast with negligible costs.

Let’s be clear between us:

! YOU WILL NOT ACHIEVE PROFITABILITY IN THE FIRST YEAR !

Therefore, you need to be rigorously thorough about the costs that will arise from running your sports complex.

Do not overestimate them either, as banks do not judge you based on the amount granted but on your ability to repay the sum.

Thus, by staying as close to reality as possible, but also by considering your expenditures as investments, you will be able to convince the financial backer you face.

For example, a gym app costing several thousand euros may seem like a superfluous expense.

But when one realizes that it allows for an additional renewal of 30% of memberships or generates between 5 and 10% additional revenue through an online store and cross-sales; those thousands of euros spent create value. And that, believe me, will please your banker 🙂

On the other hand, machines at double the market price will incur unjustified costs. These equipments will prove to be destructive of value...

It is essential to understand this concept in preparing your projected income statement.

Error #5: Forgetting about additional sales

This brings us to our last mistake: forgetting about additional sales.

More than just sports, your members are looking for a community space. That is how you will differentiate yourself from franchises.

Large brands have bet on low prices by cutting, among other things, all human interaction.

The concept of a " third place " developed by sociologist Ray Oldenburg has made a fortune for brands like " Starbucks " or " McDonald's "; why not yours?

In simple terms, a third place is a space that is neither your work environment nor your living space.

It is highly valued because it is a neutral place conducive to relaxation. It is also a space that allows certain " nomadic " workers to come work while consuming.

We can easily imagine a company looking to improve its lifestyle, coming to take a workout session, and having lunch on-site during its lunch break.

The bar/food service and a " shop " service can account for up to 30% of your gym's revenue. Neglecting this aspect is to turn away from an extremely important revenue source.