Business plan for a fitness center

The growing interest in our society for image care and healthy living has turned sports centers into one of the most demanded businesses today. It would be rare for a town or neighborhood not to have at least a couple of fitness centers.

Types of sports centers

There is no single fitness center model. It is such a diversified market that classification is difficult. There are low-cost and premium fitness centers; open 24 hours; franchised; personalized training; exclusive for women; yoga or martial arts oriented; specialized in rehabilitation and re-adaptation, and many others. The global offer is completed by municipal sports centers, the flourishing industry of personal trainers (also on the online channel) and outdoor sports. When opening a fitness center, fitness center business plan it is important to establish the position and define which and how many services to offer or decide whether to specialize in one.

Be that as it may, the sports center business is easy to diversify, especially if it is linked to nutrition and healthy food. For example, it can be complemented with a cafeteria area – with a healthy offer of snacks, energy shakes, etc. -or include a wellness area with a spa offering massage, nutrition and physiotherapy services, etc.

Industry trends

Like the rest of the markets, the sports sector grows hand in hand with technology. We spoke with the expert Luis Flores. a consultant in the sports and fitness sector, who highlights two keys to this technological development. In the first place, wearable technology is those electronic devices we wear as accessories or are included in our clothes. In the fitness world, we find everything from augmented reality glasses and contact lenses that control glucose levels to shoes and socks with GPS, vibration and even heat.

On the other hand, there are already countless mobile applications to monitor the follow-up and evolution of the results, providing the athlete with data and statistics without the need for extensive equipment. In short, dancing to the sound of technology, also incorporating the latest generation of machines can be a winning asset.

Another major trend in the sector is group training, a service that more and more fitness centers offer and whose benefits for athletes are obvious: a feeling of belonging to a group, greater motivation when going to the center, and easier access to time to schedule.

In any case, as Luis explains: "the main challenges for the future are to improve the management and management processes of sports organizations to attract more customers and retain them due to the increase in competition that is taking place." Producing in the sector."

In this sense, marketing plays a fundamental role. There is a lot that will be done: active presence on social networks through the generation of content and with advertising (for example, campaigns with influencers on Instagram), more traditional media, and highly targeted at the local market (radio, billboards, propaganda distribution). , SEO in search engines, establishing synergies and carrying out joint actions with prescribers (doctors, for example) and related companies (sports stores, manufacturers, federations, etc.) and even guerrilla marketing actions to attract attention ( collective master class, flashmob). Not to mention the good work of the center's professionals and the quality of care received will make satisfied customers pass it on to their environment.

Who can open a fitness center?

In principle, the one who makes the most sense to open a business of this type is dedicated to bodybuilding since they can provide more first-hand knowledge. However, many people do not go to the fitness center to gain muscle but to lose weight. This is where nutritionists and health professionals come into the picture, who can provide personalized advice to each client. Finally, a fitness center can represent an investment, both on its own or under a franchise regime, so people outside the sector can decide to set up a center for athletes, provided they have the help of specialized fitness personnel.

As for the investment size, a basic fitness center should have at least a receptionist, an instructor and a maintenance person (if any). An unavoidable expense when starting is that of the premises: at least 200 square meters are needed, no matter how basic the activity is. And for the fitness center to succeed, you must take great care of its location. You can gradually evolve from there: add equipment, hire staff and offer the complementary services we saw previously.

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BUSINESS PROFILE: INITIAL BALANCE SHEET

Two sports monitors decide to start a fitness center in Murcia. The premises have 700 m2 and will include: a reception and waiting and leisure area, multipurpose room for collective classes, weights area, bike room (spinning), room with tatami (martial arts, pilates, yoga), men's changing room and female, physiotherapy room, a small store.

The following investments in tangible fixed assets are planned:

• Renovation and conditioning (€14,000)
• Machines and materials for the activities (€54,000)
• IT equipment (computer, printer, telephone, access turnstile with card reader) (€2,800)

Intangible assets include a management computer program worth €350. The deposits corresponding to two months' rent for the premises (€2,800) constitute the fixed financial assets. In addition, investments in initial establishment expenses (€3,200) for the incorporation of the company, the launch publicity, the technical project and the building license are also included in Assets.

Over time, the profits obtained and not withdrawn (reserves) will be added to the initial capital, which gives rise to the so-called "self-financing," which is usually the modality most used by SMEs to meet the financial needs imposed by growth. It is important to achieve a stable balance between self-financing and bank indebtedness, which generates financial expenses that reduce the income statement's BAI (profit before taxes). On the other hand, it is beneficial for the investor that the economic return – measured as earnings before interest and taxes (EBIT) to total assets – is greater than the cost of debt since borrowing increases financial profitability. From the investment.

BUSINESS PROFILE: INCOME STATEMENT

The income statement records all income and expenses made throughout the year (excluding VAT).

Expenses. The main expenses incurred by a fitness center are:

-personal expenses. The entrepreneurs create a 50% limited company, and both register in the RETA (Special Regime for Self-Employed Workers) as self-employed companies, whose monthly amount amounts to 364.20 euros for each one. They are assigned a salary of 1,000 per month. They also hire a full-time person in reception, customer service and administrative tasks.

-Services of independent professionals. At first, the two entrepreneurs will take turns in the weights room and attend to the different activities in the fitness center. Later they will have the help of specialized freelance monitors. They also contract the services of an agency and a community manager to manage social networks.

Rental of the premises

·         Supplies: water, electricity, telephone, Internet connection

·         civil liability insurance

·         maintenance and repairs (computer and local)

·         Financial expenses of the loan obtained to finance the investment

a depreciation of fixed assets. Amortization is understood as the effective depreciation, year after year, of the different elements of fixed assets as a consequence of their operation, use and obsolescence. The amortization process makes it possible to generate a fund with the necessary financial resources to replace the Asset once its useful life has ended. The investment does not affect the income statement, but the amortization fees represent an annual expense for the company.

Sales:

Making sales forecasts supposes, in a certain way, an effort of imagination. To get it right, you have to know the size of the market, the target audience, and the competitors and succeed with the planned marketing campaigns. Therefore, it is recommended to consider 3 scenarios: optimistic, pessimistic and conservative. And break down the estimates by month, anticipating seasonality (summer and Christmas are the weakest times) and the start-up stage.

In our fitness center, sales come from the sum of the different rates:

• Enrollment (€25)
• Monthly base rate with full access (€35)
• Access two days a week (€28)
• Exclusive access to the weights room ( €30)

From the average obtained, promotions for quarterly payments (10% discount) and semi-annual payments (15%) will have to be discounted. Other services, such as the sale of beverages and food products, physiotherapy and personal trainer services, can be added as an estimated percentage (10% in our case) to the recurring income.

There are hardly any variable sales costs – direct expenses associated with the service – so the gross margin on sales is close to 100%. Calculating the break-even point also helps us forecast sales since it allows us to establish minimum sales objectives and the number of partners that guarantee the business's survival.

In our fitness center, the break-even point (in which we have neither losses nor profits) stands at 102,771 euros of turnover. It is calculated by adding the fixed (operating) expenses and the financial expenses, divided by 0.90 (gross margin on sales, which we estimate at 90%).

All in all, our entrepreneurs estimate a turnover of 85,650 euros in the first year. Despite the losses in the first year, they will consolidate the business in the following years and calculate that the return on investment will occur between four and five years.