Average Costs to Start a Health Club

Thursday, September 26, 2019, 6:00 AM | Leave Comment

Albeit starting a health club may take some effort, it is a rewarding task.

The fact that the health industry in the U.S. is worth ca. $30bn and that it has been growing ca. 3 percent annually, it naturally follows that it is a lucrative business.

The average American spends $155 monthly or $112,000 annually on health and fitness. Plus, 87 percent of Americans attend gym or fitness classes on a regular basis, while 16 percent belong to a health club.

It would appear that the time to open a health club is right now.

The first thing everyone asks is: how expensive is it?

Depending on your desired preferences, the entire project could cost anywhere from $65,000 for a modest facility to $115,000 for a mid-sized one.

The upper limit is unthankful to envision, as exclusive facilities with all the amenities may cost up to $1,000,000 to launch.

  • Initial Costs

    First, you will need to choose a location and the size of the facility, decide on the amenities to include and choose gym equipment. Costs of the location may vary greatly. Some people opt for renting while others choose to buy a building. Calculate the desired space from the beginning, taking the amenities into consideration. Do you want to open a gym? Do you want to add beauty parlors? Do you want a sauna, locker rooms and similar?

    Gym equipment is also a broad category. It depends both on the type and the amount of the equipment you have in mind. Some average estimates range from $10,000 for a modest gym all the way up to $50,000 for a fully-equipped commercial fitness studio. The good thing is: discounts are bountiful when equipment is being bought in sets.

    Costs of licenses, permits and certifications should be considered next. The type of licenses and permits your facility will need depends on the location. You will need health and safety compliance permits, as well as a business license. Common ones include a business license, business plan, certificate of incorporation, operating agreement, employment agreement and so on.

    As for certifications, good health facilities employ licensed staff, which translates into roughly $500 to $800 per personal trainer certification. There are numerous certifications to consider, some of which are International Sports Sciences Association (ISSA), American Council on Exercise (ACE), National Strength and Conditioning Association (NSCA) and National Academy of Sports Medicine (NASM).

    Costs of legal assistance should also be taken into account. Knowing your licenses and permits is troublesome, as a rule, and you may also need help with negotiating your rent. An average price of legal services is $200 per hour and, depending on the legal documents you will need to obtain, amount to an average $9,000.

    Insurance costs need also be taken into consideration. The minimum paperwork includes general liability, a surety bond and employees’ compensation. Merely these three amount to ca. $12,000 in premiums, but rates may vary depending on the size of the facility, staff and other factors.

    Advertising and merchandise are up to you. Ads can be done traditionally, via email, or simply by distributing pamphlets. Up to $5,000 can be spent on a traditional ad campaign. Merchandise is a great way to advertise your facility in a cheaper way. Think in terms of t-shirts, water, supplements and more.

    The POS system and internet connectivity come next. A POS system is an absolute must, as you will wish your health club to accept all forms of payments. Internet connectivity goes without saying. Depending on the provider and hardware of your choice, annual costs for POS system and the internet may vary between $550 and $2,300.

    Additional costs may include employee uniforms, remodeling, supplies (such as towels and similar) and operating cash. Operating cash is really up to individual choice, but some recommended minimum is $1,000.

    Finally, most clients in your area will use online search to find the closest and most convenient health club. Mostly, they will do it on the go, using a mobile device. To that end, your facility should have a responsive website, which may amount to anywhere to pay $300 to $700 to get started.

  • Recurring Costs

    Recurring costs are a bit more difficult to calculate because they depend on the facility type, size and location. Still, there are some general categories you should take into account, such as are permits (renewal fees), insurance (the $12,000 premiums mentioned above), lease (or mortgage) payments, utilities, equipment lease, repairs and maintenance payments (ca. $29,000 to ca. $77,000), HVAC maintenance (ca. $500 per annum for routine maintenance), monthly bills, employee wages, taxes (i.e., self-employment taxes amount to ca. 7.6 percent of individual income), fees and miscellaneous expenses. Don’t forget the latter! It falls under operating cash mentioned above. Finally, don’t forget processing and credit card fees (up to 3.25 percent), along with PCI compliance fees (usually start at $5 per month).

As you can see, there is no such thing as an “average cost” when it comes to starting a health club, but these estimates should give you a good idea what size and type of a business is the best for you. If you are worried about the future, opt out for a smaller business and lease the space and equipment as you build up your brand from there, step by step.

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