Smart Things We Did With Starting a Fitness Business – Part 2
Written on August 26, 2013 at 6:46 am, by Eric Cressey
In part 1 of this article, I talked a lot about the financial portion of starting a training facility. If you missed it, definitely give it a read before you move forward with this article, as this second installment won't mean much if you have no money when you start up!
With part 2, I'll focus more on the actual decisions we made with respect to planning our staff, business model, and actual gym space. We'll pick it up with point #4, as Part 1 included the first three. What's funny about these points is that I can distinctly remember sitting down for dinner at Applebee's with my business partner, Pete, and discussing them. We wrote our notes on a napkin.
4. We started small.
Cressey Sports Performance 1.0 could have been politely described as a dungeon. This is actually the view on the second day.
It was very rough on the eyes, so we had to put in a lot of renovations in the first few weeks to make it more aesthetically appealing.
Still, in spite of what we invested on this side of things, it still wasn’t what I’d consider a showcase location. Rather, it was our "test facility." We had to make sure that our business model was sustainable and profitable before writing checks our butts couldn't cash. In other words, we made a good decision by starting small.
That first facility was only 3,300 square feet. The rent and utilities were very reasonable, and it allowed us to get profitable quickly. Just as importantly, it helped to give the perception of "busyness" that you want in order to create good energy in the gym. Had we gone to 10,000 square feet right off the bat, we would have dug ourselves a much deeper hole – and I question whether we would have been able to establish a great training environment early on. Rather, it might have felt like a personal training studio – which doesn’t exactly get young athletes excited. While we longed for a larger facility, we resisted the urge - and instead opted to satisfy our temptations by getting panoramic shots of our ~1,500 square foot weight room to make it seem really big to us.
Only nine months later, we moved three miles east to CSP 2.0. It was 6,600 square feet.
Then, 18 months later, we knocked down a wall to bump it up to 7,600 square feet by taking on some new office space.
Finally, 2.5 years later, we essentially doubled our space again, going to our current 15,000+ square-foot space.
The other hidden benefit of gradually increasing your space is that you can get away with making facility design mistakes along the way, as you simply commit them to heart and then work them into your next expansion. You don't get that luxury if you start at 25,000 square feet, especially since you're usually more worried about paying rent than managing the "flow" of the facility and optimizing the client experience.
The moral of the story is to start small and give yourself room to grow. This might mean you need to sign shorter-term leases to allow for these adjustments, or just seek out a building that you know has room into which you can expand.
5. We purchased equipment our clients needed, not just stuff we thought would be fun to have.
This is a basic lesson, but an important one nonetheless. We all (hopefully) learn the difference between "need" and "want" at a young age. However, the ability to make this differentiation often escapes fitness entrepreneurs when they plan their new facilities and are perusing equipment catalogs and websites. Don't buy stuff you want to train yourself; buy stuff you need to train your clients.
Just like 25,000 square feet isn't necessary if you only have five clients, a $10,000 machine probably isn't necessary - especially right off the bat. You probably don't need a leg curl - let alone four different varieties of leg curls. It's much easier to add items later than it is to have to continually look at (and pay off) an unnecessary piece of equipment you never use.
As an interesting frame of reference, in our last facility expansion, we added about 7,500 square feet, but only two pieces of equipment: an extra set of farmer's walk handles and a Prowler. We just needed more space.
Remember that it's your expertise and the training culture and environment you create - not equipment bells and whistles - that brings people back.
6. We selected a sustainable niche.
I've written at length in the past about how we found and developed the baseball "niche" and expanded our business in this avenue. One of the key points I made what that we made a point of picking a population segment that was sustainable. You can't pick farmers in New York City and expect to thrive, nor would you be able to train surfers in Ohio. There are cultural, geographical, scarcity, financial, and logistical factors one has to consider in making this specialization decision.
Our "niche" came about somewhat by accident, but our development of it was absolutely, positively no accident. In fact, our approach to baseball training and growing our business in this regard is incredibly calculated. Believe it or not, by popular demand, we added a one-hour business development presentation from my business partner, Pete Dupuis, as part of our Elite Baseball Mentorships - and he received insanely positive reviews.
7. We complemented ourselves instead of replicating ourselves.
I've written about this in the past, so this will be brief. If you're going into business, don't just pick business partners and initial employees because they are "just like you." Pick people whose skillsets complement yours. If you don't, your entire staff is going to be standing around with hammers looking to smash nails when you really need a screwdriver.
As a quick example, my goal on a daily basis is to do zero administrative business tasks; we have a business director and office manager who handle these responsibilities so that I can best leverage my strengths.
8. We established a good network.
Your network may consist of professionals to whom you refer clients (physical therapists, massage therapists, pitching and hitting instructors), or those to whom you look for business advice (accountant, equipment supply company, business consultant). These are all relationships you can establish before your business is up and running, as they are important and must be trusted resources before you have already backed yourself into a corner where you're too busy to critically evaluate their role with respect to your business. Essentially, my recommendation is to not just establish a network, but be meticulous early on in making sure these individuals are a good fit for your business. If you don't do this up-front leg work, these individuals can make your business look very bad at a time (start-up) when you need to look very good.
Closing Thoughts
I hope that these last five points have complemented the three from part 1 nicely in order to give you a more comprehensive perspective from which to draw when starting up a fitness business. As you can probably tell, there are a lot of incorrect paths you can pursue if you don't critically evaluate important decisions in the planning stages. For more insights on this front, I'd encourage you to sign up for our Business Building Mentorship that's taking place September 22-24. For the first time, it'll be offered in a 100% online format. You can learn more HERE.
Sign-up Today for our FREE Newsletter and receive a four-part video series on how to deadlift!
|
August 26th, 2013 at 9:57 am
Very timely and helpful posts, Eric! Thanks for putting this together.
I have a question regarding the purchasing of equipment. Do you recommend leasing or buying outright? I have received mixed advice on one hand saying buy outright so you don’t have the debt. On the other hand I have been told to lease everything in order to maintain liquidity in the business. Thoughts?
Thanks!!
August 26th, 2013 at 3:32 pm
Excellent Eric, just what I needed to hear. I especially liked what you said in the first installment about staying out of debt. No one talks that way any more. So thanks for that.
August 26th, 2013 at 6:42 pm
Great advice Eric, you spot on! Wish I could of met you in long Beach a few weeks ago.
August 27th, 2013 at 5:01 am
Steve,
I don’t like the idea of leasing simply because it’s a “false” way of showing you have that three months of operating expenses in the bank. Obviously, in a huge commercial gym, folks are probably going to have to do this if they want to buy 10 each of treadmills, ellipticals, bikes, etc. However, in your case, you should be able to outfit that sucker much more affordably. I think you’ll actually find that flooring is your biggest expense!
August 27th, 2013 at 4:44 pm
Thanks dude and totally agree with the flooring. There was a bit of a sticker shock there. My fingers are crossed that my landlord will fit the bill with the TI money. Any suggestions for cable pulley systems? I have been keeping my eye on Craigslist and EBay.
August 27th, 2013 at 5:41 pm
Steve,
We bought a floor model for our first one. Might be worth trying that option.
September 13th, 2013 at 6:18 am
It’s a very nice work you have started to keep people fit and toned.
I appreciate it, all the best for your future guys
February 9th, 2017 at 8:51 pm
Hey Eric,
Thank you for spending the time creating this 2 part series it has given me great value as I am about a month away from opening my facility. I wanted to ask your opinion on equipment purchase. Do you reccomend a particular company to buy equipment from? I have looked into rogue fitness and their equipment seems high quality and fairly priced. Also what kind of power racks are you showing in the facility tour?
February 17th, 2017 at 5:47 am
John,
We’ve had great experiences with Perform Better. Those racks are from Elite FTS and have stood the test of time (10+ years old and still going strong).