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Please Don't Open a Health Club

Fitness enthusiasts who have dreams of opening a fitness facility need to realize that this is a business, not a hobby.

In my last two columns, I've discussed the issues that I think prevent most of the U.S. population from being members of fitness centers. One of those issues is that fitness facilities are run more like hobbies than businesses. This is a huge issue among independently owned facilities. These are the clubs that are owned, typically, by kind and well-meaning people who love fitness, want to share it with the world and make a living in their community. They want to work for themselves and get out of the "rat race." What better business to get into than owning a fitness center?

In this respect, health clubs are like restaurants and bars. People love their local bar, their favorite restaurant, their neighborhood gym, so they want to own one themselves. Even better, they'll only focus on the fun stuff like, "We'll have fresh fruit at the front desk every day!" and, "Everyone can pay as they go instead of using auto-billing on the computer." After all, who wants to ruin a good dream with business realities?

Like the new bar or restaurant owner, too many new gym owners don't want to get any experience by working for someone else (I'm talking months and years, not days and weeks). They don't have any qualifications as fitness professionals. They don't want to understand business financial issues. They've never managed people. They don't know how to research their market. They have no idea how expensive it is to run a fitness center. At best, they have passion and a dream, and they believe that potential customers will feel that passion and jump on board.

When the honeymoon is over

Once the initial excitement wears off, the fitness center won't be new or special anymore. Eventually, staff departs, service suffers, the club is not cleaned as it should be, equipment is not maintained and hours might be reduced. Amazingly, a core group of members will remain because this particular facility is most conveniently located for them, and it will surely be inexpensive. But, inevitably, the club will fail - and all of the members and prospects who came through its doors will have a diminished opinion of what they can expect from a fitness facility.

Please don't open a health club ...

So, if it's not too late, allow me to talk you out of opening a health club. Don't open one if ...

... Your primary qualification is that you love to exercise or that fitness changed your life. Find advisors who are qualified fitness professionals and get at least one on your staff. If you can't afford a "staff," then stop!

... You did not create a proper business plan and subject it to scrutiny. You need a real business plan with real projections, and you need to share that plan with people who can give you honest feedback. Even if you are not involving a bank or third-party financing company, you should be able to make your business case and defend it.

... You think, "I'm not a numbers person." You need to be a numbers person, or have a trusted advisor who can fill that role for you. Try this oversimplified formula: Estimate your monthly expenses (rent, utilities, equipment leases, payroll), then take your projected number of members (be realistic - you won't have 500 members in two months) and multiply it by your monthly dues. How do those numbers compare? Now, double your projected expenses and reduce your revenue by 50 percent. How does it look now?

... You think you are the target demographic, but you haven't researched the local population. Does your community have enough people like you? More specifically, are there enough people like you in a drive time of just eight to 12 minutes (income level, age, single vs. family households)?

... Your competitive position isn't based on something that real customers will care about. Does your community really need a 24-hour facility? A new yoga studio? A family friendly club? A new single-sex express workout facility? Are you building something that anyone will really care about?

As a health club owner, I know why so many people want to get into the business. But, please do not open a new fitness center if you are not prepared for its many challenges - and don't think your love of fitness will be enough to make your facility successful!

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