Science keeps on giving us reasons to exercise and keep fit. As more and more people appreciate the benefits of regular exercise, the more that will be keen to join a gym. Although there is stiff competition for the large companies, smaller gyms continue to thrive as niche or local businesses that offer a good-value, personalised service. Jamie Lawrence looks at the gym market and provides advice on how you can set up your own gym business and make it profitable.

Science keeps on giving us reasons to exercise and keep fit. As more and more people appreciate the benefits of regular exercise, the more that will be keen to join a gym. Although there is stiff competition for the large companies, smaller gyms continue to thrive as niche or local businesses that offer a good-value, personalised service. Jamie Lawrence looks at the gym market and provides advice on how you can set up your own gym business and make it profitable.

What does the market look like?

The gym market is worth billions of pounds a year; big name brands dominate the headlines, and in many cases the market, but there are opportunities for smaller, local businesses. The traditional gym model is doing well, but people expect the price to be reflective of the amenities; if the cost is £40+, then basic gym equipment will not cut it. People are more aware of what they personally need to be fit, and as purse-strings tighten, want a gym that provides a tighter fit.

Niche gyms are growing in popularity, including concepts – like child-friendly gyms – that would have been unheard of a decade ago. Niche gyms are generally small businesses, although there are some franchises and brands that are used, particularly for combined gyms and fighting schools. The rise in popularity of mixed martial arts (MMA) has led to huge numbers of schools starting up, and many are doing very well.

Starting a gym requires being smart – understanding the mind-set of your target market, what they need and how much they are willing to pay.

Create a unique selling point (USP)

If you want to start a business in a sector dominated by big players, you need to create something very different to the standard model. Starting a mainstream gym, which cater to as many different groups as possible, is extremely difficult because the larger companies have economies of scale and buying power that you can’t compete with.

Targeting a niche which has merit with your target market is a much better idea; not only will your start-up costs be lower but you can also focus your marketing efforts on a specific group of people, and there will be fewer competitors.

Which niche you target is important, of course, and shouldn’t be decided until you’ve conducted market research to see if there is demand in the region. Consider a few different regions to ensure you site your gym in the area with most potential.

Some examples of gym specialities include:

  • Women’s only
  • Bodybuilding
  • Olympic powerlifting
  • Rehabilitation
  • Powerplates
  • Class-centred e.g. yoga and zumba
  • MMA/fighting

Diversifying revenue streams

In some ways gyms are a seasonal business; you have your loyal year-round customer base but experience seasonal spikes in revenue e.g. the post-Christmas rush. These help keep your revenue up but during ‘slumps’ it can be useful to offer additional services to boost revenue.

Some possibilities:

  • Selling products e.g. protein shakes
  • Private hire for studio
  • DVD library/book library
  • Juice bar

Many gyms partner with third-parties to provide additional, expert services. These include personal training, sports massage and hairdressing. Offering these services can really increase your gym’s ability to build a sizeable customer base.

Start-up costs

Gyms cost a lot of money to start, because commercial equipment is very expensive. Mainstream gyms are the most expensive, because not only will you need a large cross-section of equipment to please your customers, but you may also need to install a sauna, steam room and Jacuzzi (depending on the type of establishment).

As well as the gym equipment, classes will need their own dedicated space, such as a hall, and more specialised classes such as spinning (cycling to music) would need a selection of dedicated static exercise bikes. The cost of rent for such a large premises would also be expensive.

Niche gyms will need less equipment – for example, a no-frills gym dedicated to weightlifting would need very little cardiovascular equipment, which would save you money. Women-only gyms would have more of an emphasis on cardiovascular equipment. Smaller gyms would also require smaller premises and, if people are prepared to travel, a less prominent location.

Marketing a gym is also a considerable expense, and you’ll need to factor this on regardless of the type of gym you start.

If you can start a gym for under £50,000 - £100,000, you’d be doing very well indeed.

Insurance and compliance

Gyms can be dangerous places, which makes insurance essential. Consulting a specialist insurer is a good idea as you may need a non-standard insurance policy to cover all the eventualities that could happen in a gym. Before signing off on a policy, make sure you’re aware of exactly what is covered and what is not covered. Many policies will require you to give gym members an introduction to using the machines, and will not pay out in the event of a claim if this condition has not been met.

You’ll need employer’s liability insurance before you recruit staff, and also public liability insurance and professional indemnity insurance as a minimum. Check with your insurer to see whether third-party providers – such as personal trainers – can practice at the gym under your policy.

Health and safety is an important part of running a gym and involves a number of concerns depending on what services you provide. Upkeep of the gym and the machinery is important, as poorly-maintained equipment can fail and cause injury. People can also slip on floors so you’ll need to install carpet or non-slip mats. Jacuzzis and sauna rooms have their own cleanliness needs, which may involve the use of chemicals.

If you offer lunch or snacks, you’ll need to comply with relevant food safety and hygiene legislation. The Health and Safety Executive (HSE) and your local council will be able to provide further information.