How to start a gym business: A founder's playbook

Starting a gym is an exciting venture that combines a passion for health with business savvy. The fitness industry is worth tens of billions of dollars, with consistent demand from diverse groups like young professionals, families, and dedicated athletes.

This guide will take you through the practical steps of validating your business concept, securing funding, selecting the right location, and acquiring equipment to help you launch a successful gym business in the U.S.

Step 1: Validate your business concept

First, understand your potential members. Use data from the U.S. Census Bureau to analyze local demographics like age and income. Industry reports from sources like IHRSA also provide valuable insights into national fitness trends and consumer behavior. This data helps you define your target audience.

With that data, you can analyze the competition. Use Google Maps to identify all gyms within a five-mile radius. You should visit at least three of them as a potential customer to observe their equipment, class offerings, pricing, and overall atmosphere. Note what they do well and where gaps exist.

Estimate your startup costs

Gym startup costs vary widely. A small, specialized studio might require $50,000 to $150,000. A larger, full-service facility can easily exceed $500,000. Key expenses include equipment ($20,000+), lease deposits and renovations ($25,000+), and licensing ($5,000). Many new owners miscalculate their initial cash needs, so plan for at least six months of operating expenses in reserve.

Here are 3 immediate steps to take:

• Download a local demographic report from the U.S. Census Bureau for your target zip code.
• Visit three competitor gyms in your area to assess their services and pricing.
• Create a preliminary budget spreadsheet with estimated costs for equipment and rent.

Step 2: Establish your legal structure and licensing

You should consider forming a Limited Liability Company (LLC). This structure protects your personal assets from business debts. A common mistake is mixing personal and business funds, which can void this protection. Open a dedicated business bank account immediately after your LLC is approved.

Secure federal, state, and local permits

First, get a free Employer Identification Number (EIN) from the IRS website. You will need this for taxes and hiring. Next, register your business with your state’s Secretary of State. This process typically costs between $50 and $500, depending on your state.

Your city or county requires a Certificate of Occupancy (CO) to ensure the building is safe for public use. This can cost over $250 and take several weeks to process. Also, plan for music licensing fees from ASCAP or BMI, which can run from $400 to $2,000 annually.

Here are 4 immediate steps to take:

• Apply for a free EIN on the IRS website.
• File for an LLC with your state's business registration office.
• Contact your local building department to inquire about the CO application process.
• Research annual music licensing costs on the ASCAP and BMI websites.

Step 3: Secure insurance and manage risk

Your next move is to secure comprehensive insurance coverage. Gyms face unique risks, from member injuries to equipment damage, and the right policies are your primary defense against financial loss.

Key insurance policies for your gym

You will need several types of coverage. Many new owners make the mistake of only buying general liability, which leaves them exposed if a trainer gives advice that leads to an injury. Always bundle professional liability with your general policy.

• General Liability: This covers slip-and-fall incidents. Aim for at least $1 million per occurrence and a $2 million aggregate limit. Annual premiums often range from $1,000 to $5,000.
• Professional Liability: This protects against claims of negligence from personal training. A $1 million policy is standard, with premiums typically between $500 and $1,500 per year.
• Property Insurance: This safeguards your equipment and building from fire or theft. Your coverage amount should match the full replacement value of your assets.
• Workers’ Compensation: If you have employees, this is legally required. It covers medical costs and lost wages for staff injuries.

You might want to contact insurers specializing in fitness, such as K&K Insurance, Markel, or Philadelphia Insurance Companies. They understand the industry's specific risks and can offer tailored packages.

Here are 4 immediate steps to take:

• Request quotes for a business owner's policy from at least two fitness-specialized insurers.
• Create an inventory of your equipment to determine the necessary property insurance coverage.
• Confirm that your professional liability coverage is at least $1 million.
• Check your state's requirements for workers' compensation insurance.

Step 4: Find your location and buy equipment

Look for commercial spaces between 2,000 and 5,000 square feet for a small to mid-sized gym. Ensure the property has a commercial zoning classification that permits "recreational" or "fitness" use. You can verify this with your city’s planning department before you sign anything.

Many new owners get stuck with unexpected build-out costs. When you negotiate your lease, ask for a Tenant Improvement (TI) allowance. This is money from the landlord to help pay for renovations like new flooring or locker rooms. Aim for a 5-year lease with a renewal option.

Select your core equipment

With your space chosen, it's time to equip it. Avoid residential-grade machines; they will not withstand heavy use. Instead, invest in commercial-grade pieces from suppliers like Life Fitness, Precor, or Rogue Fitness. This decision impacts member satisfaction and long-term repair costs.

A basic equipment package will be a significant part of your budget. Here are some typical price ranges for new commercial gear:

• Cardio Machines (Treadmills, Ellipticals): $5,000 - $12,000 each
• Squat Rack with Barbell and Plates: $2,000 - $5,000
• Dumbbell Set (5-100 lbs): $3,000 - $7,000
• Adjustable Benches: $500 - $1,200 each

You might want to consider leasing high-cost cardio machines to manage your initial cash outlay. This can reduce your upfront equipment spend by 60-70% and often includes maintenance plans.

Here are 4 immediate steps to take:

• Contact your city’s planning department to confirm zoning for potential locations.
• Ask landlords about Tenant Improvement (TI) allowances in your lease negotiations.
• Get equipment quotes from at least two commercial suppliers like Life Fitness or Precor.
• Compare the costs of leasing versus buying your treadmills and ellipticals.

Step 5: Set up your payment processing

Most gyms operate on recurring monthly memberships. You can also offer annual pre-paid options, which helps your initial cash flow. You need a system that automates these billings and manages member contracts to avoid constant administrative work.

A frequent misstep is choosing a processor with high transaction fees that quietly drain your revenue. Average commission rates often exceed 2.9% plus other monthly charges. You should look for a payment solution with transparent, low fees that works with gym management software.

For handling payments on-site or for one-off services, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone. Just tap and the payment is complete.

At just 1.99% per transaction with no hidden costs or extra hardware needed, it's particularly useful for personal trainers collecting payment after a session or for selling day passes. This rate is much more favorable than what many other providers offer.

• Get Started: Download JIM app for iOS
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone
• Access Funds: Your money is available right on your JIM card as soon as the sale is done - no waiting for bank transfers

Here are 3 immediate steps to take:

• Research gym management software options that handle recurring billing.
• Compare the transaction fees of at least two payment processors.
• Download the JIM app to test its functionality for single payments.

Step 6: Secure your funding and manage finances

Secure your startup capital

With your business plan ready, you can approach lenders. The Small Business Administration (SBA) is a strong option. Their 7(a) loan program guarantees a portion of the loan, which makes banks more willing to lend to new gyms.

Expect to need a credit score of 680+ and a down payment of 10-20%. Loan amounts can range from $50,000 to over $500,000, with interest rates typically between 11% and 15%. Also, ask your equipment suppliers about financing options, as they often have programs for new businesses.

Calculate your working capital

A mistake many new owners make is not having enough cash for the first six months. You need a reserve to cover rent, payroll, and marketing before membership revenue becomes consistent. This is your working capital.

Calculate your total monthly operating expenses and multiply by six. For example, if your monthly costs are $15,000, you should have $90,000 in the bank on day one. This buffer gives you room to grow without financial pressure.

Here are 4 immediate steps to take:

• Contact an SBA-preferred lender to discuss a 7(a) loan application.
• Ask your top equipment vendors for their financing terms.
• Calculate your 6-month operating expense total to define your working capital needs.
• Finalize your business plan with detailed financial projections for lenders.

Step 7: Hire your team and set up operations

Hire your core team

Your staff defines the member experience. Start with 2-3 certified personal trainers and 1-2 front desk employees. Trainers should hold certifications from accredited bodies like NASM or ACE. Expect to pay them $25-$50 per hour, while front desk staff typically earn $15-$20 per hour.

Some new owners hire trainers without proper credentials to save on costs. This exposes your business to liability and can harm your reputation. Also, ensure every employee, from the front desk to trainers, has current CPR/AED certification before their first shift.

Set up daily operations

Manual scheduling and payment tracking are not sustainable. You might want to use gym management software like Mindbody or Zen Planner from the start. These platforms handle class booking, member check-ins, and automated billing, which frees up your time to focus on growth.

As you build your team, aim to keep your total payroll between 35% and 45% of your gross revenue. This is a standard industry benchmark that helps maintain profitability. A lean initial team helps you stay within this range as you build your membership base.

Here are 4 immediate steps to take:

• Draft job descriptions for a personal trainer and a front desk associate.
• Research certification requirements on the NASM and ACE websites.
• Request demos or free trials from gym management software like Mindbody or Zen Planner.
• Check local Red Cross or American Heart Association sites for CPR/AED class schedules.

Step 8: Market your gym and get members

You should begin marketing 60-90 days before you open. A common mistake is to wait until launch day. Start with a pre-sale campaign offering "Founder's Club" memberships at a discount. This can generate enough cash to cover 20-30% of your initial operating costs.

Build your digital and local presence

First, claim your free Google Business Profile. This makes you visible on Google Maps. You should also create a simple website with your location, hours, and membership prices. This is your digital storefront and a place to direct potential members.

You can run targeted ads on Facebook and Instagram to reach people within a 5-mile radius. Aim for a Customer Acquisition Cost (CAC) between $100 and $400 per new member. Also, consider partnerships with local businesses like supplement stores or physical therapy clinics for cross-promotion.

Here are 4 immediate steps to take:

• Plan a "Founder's Club" pre-sale campaign to launch 60 days before opening.
• Claim and fully complete your Google Business Profile listing.
• Set a marketing budget based on a target CAC of $200 per member.
• Identify two local businesses to approach for a partnership.

Step 9: Set your pricing strategy

Select your membership models

Most gyms use a tiered membership structure. You might want to offer a basic plan for gym-only access around $45 per month. A premium tier at $75 per month could include all classes and a discount on personal training sessions.

In addition, consider offering class packs, like 10 classes for $180, to attract members who cannot commit to a monthly plan. An annual pre-paid membership, perhaps at $450, provides a strong upfront cash injection and rewards member loyalty.

Analyze competitors and set your price

First, research the public pricing on the websites and social media of at least three local competitors. You can also call them to ask about any unlisted specials. This will give you a clear market baseline for your area.

Many new owners make the mistake of trying to be the cheapest option. This is often a race to the bottom that hurts your brand and profitability. Instead, calculate your prices to achieve a 15-25% net profit margin after covering all operating expenses.

If your price point is higher than a competitor's, your value must be obvious. Highlight your advantages, whether it is superior equipment, unique classes, or a better overall facility. Your members should understand what they are paying for.

Here are 4 immediate steps to take:

• Document the membership prices of three direct competitors.
• Create two or three membership tiers for your own gym.
• Calculate the price needed to hit a 20% net profit margin.
• Draft a "Founder's Club" discount for your pre-sale campaign.

Step 10: Maintain quality and scale your business

Monitor your key metrics

Once your gym is operational, you need to track its health. Your member retention rate is a primary indicator. A rate below 70% annually suggests members are not satisfied. You can also use a Net Promoter Score (NPS) survey to ask members how likely they are to recommend your gym.

For classes, you should aim for a 75% attendance rate. If classes are consistently full or empty, you may need to adjust your schedule or offerings. These numbers give you a clear picture of what is working and what is not.

Know when to grow

Many owners make the mistake of expanding before the business is ready. You should only consider a second location once your current facility operates at 85% capacity for at least three consecutive months. This shows sustained demand.

Hiring should also be data-driven. When your personal trainers' schedules are 80% booked for a month, it is time to hire another. For managing growth across multiple sites, you might want to look at software like Club Automation, which is built for larger operations.

Here are 4 immediate steps to take:

• Set a target member retention rate of 75% for your first year.
• Create a simple Net Promoter Score (NPS) survey to send to members quarterly.
• Define your capacity limit and track monthly membership numbers against it.
• Review advanced features in your gym software for multi-location support.

Conclusion

You now have the roadmap to launch your gym. Remember that your success will depend on the community you build, not just the equipment you buy. Members stay for the atmosphere you create. You have a solid plan, so go make it happen.

As you handle daily sales, a solution like JIM can help. It turns your smartphone into a card reader to accept payments for a flat 1.99% fee, with no extra hardware needed. This makes one-off transactions simple. Download JIM to get started.