How to minimize the risk when opening a gym..

how to open a gym

Keep your day job. Start your gym.

That's my advice.

That's what I did. That's what Austin did. That's what you should do.

Why?

1. You become a better leader.
Clear, concrete communication is key to a successful business, especially one that doesn't rely on its owner. By continuing to work at your day job and having employees run your gym, you'll learn to communicate clearly on day 1. If not, you'll have nothing but headaches, stress, and eventually, a failed gym.

2. You don't steal the gym's most important asset.
Cash. You can have a "profitable" business and still close your doors. How? Poor cash flow. Cash is the lifeblood of a business. If you keep your regular job, you can reinvest the profit from the gym back into it, and exponentially increase its growth, getting you from point A to point B a lot sooner.

3. You build in profit from day 1.
I'm assuming you, like myself, have multiple reasons for opening a gym. I'm sure one of them is making money while you're not there. You'd love to have an automatic, absentee paycheck. Of course, a gym can give you that but only if you build a profit in it from day 1. 

And if you do, as you grow, you'll be able to step away from the gym at any point because your absentee paycheck is already built into it. No need to increase prices or slash expenses.

Now, let's look at it from a different perspective. Like most, let's say you quit your job, open a gym, and spend every waking minute making sure it's a success.

1. You never develop as a leader.
Because you're there every second it's open, you do everything, spending 99% of your time working in your business and 1% of your time on it. And if you're lucky to have an employee or two, when they come to you looking for help with something, you just do it because it's easier doing it yourself than explaining to them 10 different times how to do it.

Of course, because you're awesome, your gym is a success, but you're literally spending every waking second there. After a few years, you realize you just can't do it anymore and decide to become an absentee owner. It's a disaster. Within a few weeks, your employees aren't running the gym exactly as you did, your members are complaining, and your "absentee" ownership isn't feeling like absentee ownership. You realize you have three options: 1) Sell the gym. 2) Go back to working there. 3) Learn how to communicate better and create systems and processes for everything so you can truly be an absentee owner.

If you just did #3 from the start, you would have been able to walk away at any point with little stress. Unfortunately, you just didn't have the time.

2. The cash is sucked out of your business.

I've been in business long enough to pick up on patterns. And one pattern I see over and over again is gyms failing because they run out of cash due to: 1) they didn't include 3-6 months of expenses in their startup costs. 2) they didn't include the cost to acquire a member in their startup costs.

So what happens? They spend all of their startup cash on getting the gym open and start their first day of business with less than $100 in their business bank account because they assume they'll start making enough money to cover their expenses by the end of the first month. They don't. Or, they barely do, but not enough to pay themselves. Month 2 ends, and again, they are barely getting by. Month 3 ends, and now it's been 90 days since the owner has had a paycheck. Personal bills are piling up and the little cash that is left in the business is used to pay those overdue personal bills. Although the gym was growing the first 3 months and there was light at the end of the tunnel, the growth is plateauing because the profit that would have been used to acquire new members is being used to personal expenses. Months 5, 6 and 7, are the same.

And that's why 5 out 10 businesses fail.

3. You're stuck. Forever.

So you quit your job and open a gym. Because you don't know exactly what your competitive advantage is and you need to pay your bills asap, you choose the easiest one - low price. You offer deals and incentives to get members to sign up, you undercut the competition, and you view any sale as a good sale. Everything is great. Your gym is growing, you're paying your bills, and you're even making enough to pay yourself.

A few years go by and you're ready to step away and be an absentee owner. You sit down with your accountant and crunch the numbers to see if you can afford to hire someone to replace you. You can't. Or, you can, but there won't be any profit left over for you, the owner. Why? You never factored in a profit to your pricing model because you were always getting paid a salary and never thought about anything beyond that.

You're stuck. 

So, what route looks better now? 

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