How to get Financing on a New Fitness Studio
Just like the old adage says; “it takes money to make money.” And it’s true. No matter whether you are in the startup phase or if you are looking to expand your business, you’re going to need MONEY!
Questions to Ask Yourself
How much money do you really need to get started? Do you want to lease your equipment or do you want to purchase it? How many employees do you need? Do you even need employees at the start? How much will it cost to lease a building? What is a gross lease? What are triple net (NNN) fees? Do you want your business located in a retail center or in a warehouse? What kind of permits do you need to start your business?
This is just a sample list but there are a lot of questions that you have to ask yourself before starting your business…and this list above isn’t even all of the questions that you need to ask prior to starting your business. So assuming that you have done all your homework in regards to planning for your new studio, it’s now time to focus on the numbers and get the money you need so you can reach your goal: signing up your first member at your own fitness studio!
Here’s a Look at Some of your Startup Costs:
- Deposit on the Building Lease
- Fitness Equipment
- Business License
- City/Building Permits
- Liability Insurance
- Payroll & Workers Compensation Setup
- Office and Studio Furniture
- Membership Software Setup
- Accounting & Legal Fees
- Office Supplies (i.e. computer, desk)
- Website Setup
Here’s a Look at Some of your Ongoing Monthly Costs:
- Monthly Rent
- Liability Insurance
- Payroll & Workers Compensation
- Membership Software Maintenance
- Accounting & Legal Fees
- Telephone Services
- Website Hosting
- Quarterly Taxes
Obviously everyone is different and the cost will vary depending on location, needs and wants, along with the overall preferences of the owner, but to give you a starting reference point, you are most likely looking at a minimum of startup of $10,000 for a quality fitness studio with basic equipment.
If you have the minimum of $10,000 in savings to get your business started, then that’s great and you are already ahead of the curve. However, the average person usually needs some type of assistance with financing their new venture. So let’s look at the 3 most popular options for acquiring capital to help you accomplish your goal of opening your very own fitness studio.
Family or Friends
Many people first tap the shoulders of those around them for help with financing their new business. It can be your parents, siblings, grandparents, friends or even kids that you may ask for financial help…and why not, you know that they love you and have your best interest at heart, right? This option works out really well assuming that you hit all of your financial goals once your business is operating and you’re able to pay them back in a reasonably and/or agreed amount of time.
However, it should be mentioned that you should PROCEED WITH CAUTION with this route because things can go bad really quickly. If you aren’t able to repay your debt, then how do your loved ones recoup their money? In a worst case scenario, they can sue you or have your wages garnished. They can stop talking to you and could even hurt you. obviously putting a huge damper on your relationship. As these things can happen more often than you think, make sure you seriously think about this option before you choose it.
This is probably the most common way to start a business from a financing standpoint because unlike borrowing from friends and family, this financing option is very legal and will hold you more accountable. When you borrow money from a financial institution, you will have to submit some form of collateral (i.e. your house, life insurance, equipment, etc.), have a minimum acceptable credit score, have at least 10% of the requested amount available in your checking or savings account, and go through a very thorough credit application process to determine if you are credit worthy or not.
Although it is a more rigorous process, it allows both sides to be protected moving forward. It also allows you an opportunity to grow your business from infancy with “seed money”, benefiting you in the long run with a growing relationship that will help you should you need to borrow more in the future.
Another popular option nowadays is crowdfunding. Websites such as Kickstarter and GoFundMe allow you campaign online to raise money for your business venture. The most intriguing things about crowdfunding is that you can potentially go right to the core audience to help fund your project. The process is not as rigid as getting a bank loan and it’s not as emotionally risky as borrowing from family and friends but just like receiving money from anywhere, there is a risk and a huge expectation for you to perform on your end too.
So with all of that said, there are pros and cons to every option, so just do your homework and find which option works best for YOU. Good luck with getting your new business financed, getting the doors opened and preparing for massive success!
About the Author
Mike Z. Robinson is the owner of the highly successful personal training facility, MZR Fitness as well as Mike Z. Robinson Enterprises which features & highlights a myriad of options to help fitness professionals grow their businesses and careers. Mike was the 2015 IDEA Personal Trainer of the Year, is the author of the E-Book: “Fitness Up, Everything Up”, and he is also a Media Spokesperson for both the American Council on Exercise & IDEA Health & Fitness Association.