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Since 2016, gym membership has risen by 5.1%, and the industry’s market value is up by 6.3%.

And with the popularity of health and fitness growing thanks to social media , this is an ideal time to think about setting up a gym business.

But before you grab this opportunity with both hands, you have a lot to consider to give yourself the best possible chance of success. Learn everything you need to know about legal requirements for a gym and developing your new fitness enterprise with these 10 quick tips.

1. Setting Up a Gym Business Plan

legal requirements for a gym

Set out on a ten-mile hike without a map and you might lose your way. Likewise, your business needs a plan. Otherwise, you lack the structure and direction you need to make your gym a success.

The main benefits of having a business plan are:

  • If you face a challenge or need to change something in the future, you need a point of reference to help you make informed decisions.
  • If you need start-up investment, you need to show potential investors you have a secure financial strategy that will see you through at least three years of business.
  • When you hire managers or other staff, you can show them your vision for the business, and where they fit into the bigger picture.

And crucially, you need to leave no table unturned for your own peace of mind, so you can move forward confidently without feeling blindfolded.

2. Research the Market

Market research is about discovering your ideal demographic and using this as a foundation for defining your Unique Selling Point (USP).

It is also the key process that delivers clarity to many other aspects of setting up a gym as a business, especially marketing your brand. The Balance contributor, Laura Lake, confirms this:

“It takes the guesswork out of marketing and gives you data that you can use to drive your marketing strategy and accomplish your objectives and goals. It's a systematic approach that with an investment can make your marketing not only easier but more effective.”

Here’s what you’re looking to find from your research:

  • Consumer behaviour
  • Age
  • Profession
  • Location
  • Gender
  • Cultural and societal influences
  • Personal factors that can influence behaviour (goals, hobbies, family etc.)

There are two ways to conduct your research:

Primary research: telephone interviews, face-to-face interviews, online polls, or surveys

Secondary research: blogs, competitor’s social media activity, Google Analytics, Facebook, or forums

Using your findings, your goal is to answer these questions to get cosy with your customers:

  1. Who are your customers?
  2. What do they buy now?
  3. Why do they buy?
  4. What will make them buy from you?

If you have plans to build a larger gym, it might be worth using some of your budget to hire external market researchers. That way you have more time to focus on other areas of setting up a gym business.

3. Nail Your Niche

There are clear disadvantages to developing a mainstream gym. While it might feel safer to avoid a specific audience, it will be hard to compete with the buying power of larger, successful gyms that cater to everyone. MarketingProfs’ Geoff Dillon agrees:

“Even a small share can be remarkably difficult to obtain with a new offering in a highly competitive market.”

Whereas the benefits of catering to a niche are clear: getting specific means a smaller audience, which can result in lower start-up costs and less competition.

Your niche might be defined by your passion for fitness; you could be a bodybuilding enthusiast who wants to offer like-minded individuals the facilities to train and fuel their passion.

Or you could be influenced by your market research. Is there a lack of women-only gyms in your area? Does your main demographic have a keen interest in spinning or yoga?

Once you have your niche, define the group’s:

  • Characteristics (behavior, likes and dislikes etc.)
  • Preferences (needs and desires)
  • The pros (they have disposable income, likely to bring friends to work out with them etc.)
  • The cons (they need expensive equipment, they’re only likely to be available during certain hours etc.)

Your findings will provide you with plenty of fodder for your marketing which is paramount for your success in setting up a gym as a business.

4. Size Up the Competition

setting a gym business plan

An essential step for your marketing, getting the low-down on competitors in your area will help you determine the potential for business and where your gym slots into the marketplace.

Your research: make a database of the gyms you have scoped and list:

  • Shared qualities
  • Geographic area
  • Ownership structure
  • Customer base
  • Membership fees
  • Facilities
  • Extra income

Get your intel from Google, a company and directors searching tool like DueDil, small business development centers, or economic development corporations.

Again, you could outsource your competitor research, but this can bump up your initial outlay.

5. Define Your USP

You’ve completed your market research and identified your niche. Now you need to decide what will make your gym a stand-out business.

Will you have superior equipment? Will you specialize in a certain exercise? What is in demand where there isn’t supply?

Your goal is to articulate what is unique and superior about your business in order snap up members from the existing market.

It’s worth spending lots of time on this because your USP is a beacon that will illuminate ideas for your future advertising. And when you’re setting up a gym business plan, define your USP with clarity to paint a picture of your enterprise for future investors.

6. Know Your Legal Requirements for a Gym

A gym can be daunting to set up when you start to think about the legalities.

But when you break down what you need to do to operate behind the line, breathing becomes easier.

Insurance is essential. And because there will be high levels of physical activity, the eventuality of incidents is considered high by insurers.

It might be worth hiring a specialist insurer (like SimplyBusiness) to safeguard against all potential dangers - they can provide you with a non-standard insurance policy to cover all eventualities.

But if you do, don’t take a back-seat when it comes to your awareness about these rules: ensure that you know what’s covered and what isn’t to minimise stress in the event of a bump down the road.

For example, if new members haven’t been given an induction to your equipment and an accident occurs, that is a condition that hasn’t been met and your insurers won't pay out if there’s a claim.

You’ll also need employee liability insurance for staff, and professional indemnity insurance to protect you against:

  • Professional negligence (i.e hiring class instructors who aren’t trained)
  • Loss of documents or data
  • Unintentional breach of copyright and/or confidentiality
  • Loss of goods or money

Otherwise, you might not be covered for legal costs and expenses if you need to make a claim.

Also, equipment should be routinely maintained for you to adhere to health and safety requirements. Additionally, if you decide to open a cafe, ensure that you’re abiding by food safety and hygiene legislation.

7. Calculating Your Capital

Your start-up costs are going to be high, and it’s likely that it’ll take you two-to-three years before you’re generating enough revenue to cover the costs.

With that said, putting your start-up costs on the table from the beginning will give you a clearer picture of what you can afford (and afford to lose).

Your list might look like this (with a figure next to each expense).

  • Equipment
  • Rental spaces
  • Operating costs
  • Utilities
  • Liability insurance
  • Employing staff
  • Marketing
  • Membership management

To consider: lease your equipment from a specialist company, rather than buying it outright. At the end of the lease, you might be able to purchase the equipment at a heavily discounted rate. It’s also likely that they will maintain the equipment for you so you can avoid depreciation of assets.

Fundamentally, a breakdown of costs will help you estimate your start-up investment. And this is an essential addition to your business plan, giving you, your investors, future partners, and managers a clear idea of the scope of your business, your financial forecasts, and an educated guess on how much you need to borrow to lift your gym off the ground.

8. Find Funding

setting up a gym as a business 

Once your expenditures have been laid bare, wrapping your head around funding options will help figure out what’s possible (and what isn’t) when setting up a gym as a business.

As a start-up, you have a few options:

Government funding: You can apply for a government-led start-up loan and claim up to £25,000. There are no longer any age restrictions on this scheme.

Bank funding: This will involve a loan application where you’ll have to meet a specific set of criteria to qualify for investment.

Crowdfunding: Think Dragon’s Den, but with a much bigger group of investors. Your aim is to pitch your idea to the public on a crowdfunding site like Seedrs. And then it’s up to the people to decide if they want to invest or not.

“But how can I convince people to invest in me?” You ask. Your business plan plays a big part in helping you do this.

Show that you have a solid financial strategy for the future, and give your investors the confidence they need to take your loan application seriously.

Accomplish this by putting together projections that are based on industry research, your sources of income, and any advertising plans for the future.

The numbers should be consistent with how you plan to operate the business (which should be clearly laid out in your business plan).

If and when you do apply for a loan, set aside some time to gather the paperwork you’ll need for your application, such as:

  • Bank statements
  • Real estate
  • Life insurance
  • Pensions
  • Previous loan applications
  • Vehicles you own

And any other personal asset you might need to declare. Also note that you’ll need a three-year history of business and personal tax returns for most loan applications.

9. Seek Sponsorship

Getting a bank’s helping hand isn’t your only avenue for extra funds.

The big perk of setting up a gym business: you have lots of opportunity for sponsored advertising.

For example, you might contact a local business and get their advertisements on your gym’s flyers and brochures. Or place a local brand’s logo on or near your gym equipment.

10. Pick Your Payment Options

The way you charge your customers will affect their loyalty towards your business.

For instance, making your customers call reception to pay for a class over the phone is a lot more time consuming than taking payment by Direct Debit.

And this is something you want to hash out before you get busy. Otherwise, you could end up with an awkward payment system that leaves you open to issues like missed or forgotten payments (which does absolutely no favours for your cash flow).

Thinking about a third-party Direct Debit system is a step in the right direction. Because you’re more likely to get a solid cash flow through recurring payments with direct debits. And better yet, if you have this automated, you can spend less time worrying about admin errors and more time focusing on building your business.

Getting Ready For Success

setting up a gym business 2018

Follow these 10 quick tips, and give yourself the best possible start in launching your new venture.

Need a quick refresher before you leave? Here you go:

  1. Setting Up a Business Plan
  2. Do Your Market Research
  3. Nail Your Niche
  4. Size Up the Competition
  5. Define Your USP
  6. Know Your Legal Requirements for a Gym
  7. Calculate Your Capital
  8. Find Funding
  9. Seek Sponsorship
  10. Pick Your Payment Options

Our final piece of advice? As Zappos CEO, Tony Hsieh, puts it:

“Chase the vision, not the money, the money will end up following you.”

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