The health and fitness space has boomed into a $30 billion industry that encompasses everything from individual-owned boutique studios to gargantuan franchises that are household names. If you’ve undertaken the endeavor of opening your own gym you face fierce competition and the bar for quality is set incredibly high.The good news is, as we move toward a more health-conscious society, more people are not only exercising but are also becoming passionate about wellness. This means that where there is a high-quality fitness product, there will be customers.
Now, for the bad news. Owning and operating any caliber quality of gym is expensive and the costs only multiply as you make the essential choices to positively differentiate your gym from your competition.
Business funding to the rescue. If you’re strapped for capital and are looking to grow your gym’s business, a small business loan can provide funds that allow you to make improvements and additions that eventually lead to growth. Here are 11 tips on growing your gym with a small business loan.
1. Purchase new equipment
With technology fueling the advancement of gym equipment, the desire to improve and replace your outdated cardio equipment with Pelotons or to install the newest contraption from Technogym is justified. Not to mention, equipment breaks down and has to be replaced or repaired. The funds from your small business loan can allow you to upgrade to the latest, greatest machines and make your gym patrons that much happier.
2. Operating costs
The overhead of running a gym can be overwhelming: payroll, liability insurance, utilities, laundry (managing that infinite supply of dirty towels can cost you up to $1000/month on average) and more. Especially if your gym experiences seasonal lulls and surges in membership, these costs alone can threaten to put you in the red. Taking out a loan can cover these expenses while you wait for sales to pick back up again, right around when everyone makes those New Year resolutions.
3. Inventory costs
While equipment is an obvious and huge expense, the smaller items that make up your gym’s inventory really add up. While you probably don’t need to replace your treadmills very often, things like stretching/resistance bands or exercise balls will wear quickly and need to be replaced more frequently. Same goes for weights, towels, and mats. What about the cleaning supplies you need to keep stocked? The hand sanitizer refills? Toilet paper and paper towels?
And that’s just bare minimum, essentials. The above list doesn’t include any of the stock of amenities that you could supply to your patrons. When talking about differentiation in the fitness industry, amenities are one of the many ways you can make your gym stand out, but it’ll cost you.
If you use loan funds, however, you could spring for that extra level of amenities (i.e. a better brand of shampoo and conditioner for your showers or supplying flat irons along with your blow dryers). Many of today’s gym patrons expect your locker room to be an extension of their bathroom; by using your loan to make sure you’re fully stocked, you can make their gym bag lighter and they will thank you with their loyalty.
4. Upgrade your gym technology
Today, good tech can make or break most businesses and your gym is probably no exception. Your gym depends on the functionality of essential systems like marketing, payroll, and sales.
Beyond essentials, this is another place where extra cash can make a big difference: when used correctly, upgrading to top-of-the-line client management software has the power to increase your memberships and customer retention and motivate your patrons, while saving one of your most precious resources as a business owner: time.
Your loan funds can go toward hiring someone to design an app for members, instituting a loyalty or rewards program, increasing your presence on social media through improved marketing initiatives, or installing a program that tracks the progress of your member’s fitness goals and delivers it directly to them.
With so many resources available, this is an investment with a high return that you’ll be able to see.
5. Renovate your existing premises
Maybe you want to do a total reboot of your space and gut everything, maybe you just want to make your locker rooms nicer or install a steam room—whatever your renovation needs, however extensive, a loan can provide the funds to give your space a facelift if you don’t have the capital to cover the upfront costs.
6. Grow your team
Bringing on new talent is an effective way to stimulate growth in your business, but it can be really expensive. Not only do you have to worry about increases to your payroll, but you also have to account for the cost of taking the time to interview and select them, and, on top of all of that, the cost of training them once you bring them on board.
By taking out a loan, you have more working capital to utilize to absorb some of these costs without shocking daily operations and stretching your budget thin. Whether growing your team because you’re planning to expand or because you need a specialized employee like a marketing professional, having extra capital on hand can help alleviate the initial financial stress of the stack of costs that come with a new hire. This is especially true when you hire someone like a marketing professional because that one hire can lead to increases in revenue that will make the initial cost well worth the return.
7. Preparing for relocation
Relocating is sometimes absolutely necessary. Let’s say your gym has grown beyond your wildest dreams and your flagship space is simply not big enough anymore—a relocation would open up the doors to accommodate more members and employees and eventually, more revenue. Or maybe you’re finding that your current location doesn’t have enough traffic or access to public transportation: relocating could make you more attractive to both prospective hires and members.
Again, this is a place where you’ll have to fork over a huge upfront cost to make it happen but, if all goes well, the return on this investment will be worth the hassle and expense. Utilizing loan funds can help you make a down payment on a new space, or maybe you put the money toward an increase in your rent. The extra money will support your existing working capital and allow you to continue paying your operating expenses. Even if the money goes to sneakier costs like paying your moving company, it is capital that will be welcomed in a time where you’re undoubtedly going to have big- ticket items that you have to spend money on.
8. Expanding your gym
Expansion can come in the form of opening an additional location or expanding your current space by adding something like an additional free weights area, locker rooms, or a studio for group classes. Either avenue is costly: if you’re opening a new location, you know how much it cost the first time around. Even though you’re savvier now, you’ll still have to repurchase everything from a new sound system to a massive supply of shampoo. The same goes for adding on to your additional space—it won’t be cheap if you want the job done right.
It’s easy to be intimidated by the idea of such a mountain of expenses, but if it’s the thought of spending the money that’s holding you back, a loan could give you the confidence you need to make a move that has the potential to double your revenue. Expansion should be at the heart of the overarching goals for your business; if the opportunity makes sense, a loan can make it more feasible.
9. Invest in marketing
Social media has shifted much of what we once knew about marketing. Now, Instagram ads and content creation (think: viral video) dominate the space. It’s also changed the effectiveness of marketing; today’s businesses, across industries, can’t really survive without strong social media marketing campaigns as users are constantly inundated with such content and time and time again it’s proven that it works.
Using a loan to strengthen your marketing initiatives on social and beyond will help draw attention to your brand and establish you as a dominant player in the fitness world.
10. Offer additional services
Today, it’s fairly common for a gym to offer more than just a weight room and cardio. Many gyms feature stores in the lobby that stock the latest trends in athletic wear, organic smoothie and juice bars, various group class offerings, daycares, with some even offering spa and salon services.
While you don’t have to do it all, all of these options present an opportunity for additional revenue and many of your prospective members will choose their gym based on these extra perks. Again, chances are you’ve thought about providing one or maybe even all of these extra services, but this type of programming expansion comes at a high cost. If there’s something that you’re really passionate about—maybe you love food and want to provide your patrons with a cafe that offers healthy farm-to-table snacks—and it has the potential to drive extra cash to your business, a loan can help you kickstart the planning process and cushion your upfront cost.
11. Boost cash flow
As a small business owner, you know the dangers of a slow season. The drop in sales can have a detrimental domino effect on your business as suddenly covering your operating costs is a challenge. Financing should not be overlooked here. Taking out a loan to sustain your working capital and daily operations is one of the best uses for financing as it can make or break your business’ survival.
A Quick Note on ROI
We’ve just thrown a lot of ways to spend the funds that you acquire from your loan at you and we know determining how to invest your money isn’t always easy. Looking at and understanding Return on Investment (ROI) is one way to gauge which opportunities will have the most impactful benefit to your business. With the most efficient investment, you’ll get the highest return and spend the least—however, this doesn’t mean that the cheapest option is necessarily the best. Instead, you want to pick the option with the most lasting return for your growth goals.
With flexible funds from small business term loans, the possibilities are endless. Whether you need money to upgrade your current space or open an additional location here are tips on how to best use a small business loan to grow your gym.