The fitness industry is constantly growing as people become more aware of the benefits of a healthy lifestyle. Long gone are the days when gyms brought to mind Schwarzenegger look-alikes; a gym is now the refuge of food-lovers and city professionals.

The global health club industry pulls in $81.2 billion each year. This is enough proof that people dedicate a lot of their time and money to getting in shape. Therefore, you may wonder how to turn your passion into a profitable business by opening a gym. This article will outline the necessary considerations when starting a gym.

Business structure

When starting a business, there are various structures to choose from. Selecting the right one is important for you get started on the right foot.

Sole trader

Features

Individual carries out the business

Cost

Cheap and simple. You need an Australian Business Number (ABN)

Risk

You are personally liable for all responsibilities and debts

Tax

Normal income tax

Partnership

Features

Business structure where two or more people are business partners and operate together

Cost

Cheap and simple. You need an ABN and partnership agreement

Risk

You will have joint liability with other business partners if the business fails.

Tax

Each partner pays their tax based on their share of profits.

Company

Features

A system with a separate legal existence from the owner(s)

Cost

Fee required initially to register with the Australian Securities and Investments Commission (ASIC). If there is more than one shareholder, you will also need a partnership agreement.

Risk

Since a company is a separate legal entity, the shareholders and directors are not responsible for the transactions. The company has sole responsibility of everything.

Tax

Company tax at a fixed amount. The current company tax rate in Australia is 27.5%.

Create a brand

Creating a unique logo and selecting a professional business name are key to securing long term customers and building a positive reputation. Once you choose a name and design your logo, you should take steps to protect it. Simply registering your business name does not give you enough protection so it is recommended that you also register a trade mark to have exclusive rights over the name and logo.

Your trade mark will help your customers recognise your brand and are useful marketing tools as a result. Further, they ensure a brand identity if you choose to franchise or open more gyms in the future.

Choosing a Premises

Your premise is probably the most important aspect of your business so all related decisions will be vital. To start, you need to understand your target demographics in order to cater to their needs. For example, you can create a gym to deliver a family atmosphere where most of the equipment will be cardio machines and deliver weight loss programs. On the other hand, if you want to target a younger demographic, you will need to have more weights and equipment. Finding a balance between the two is preferable to maximise memberships.

You should also consider these factors when searching for a premises:

  • Size of the facilities
  • Proximity to shopping centres, competition and public transport
  • Rent cost
  • Lease terms

Nowadays, people go to gyms for a full experience rather than just a simple workout. Hence, your gym should be more than an iron paradise. Try incorporating health shops, cafes, nutritionists etc where customers can feel comfortable spending their time.

Lastly, decide on your hours of operation. Nowadays, people often prefer gyms with 24/7 access. Although customers desire this, it may drive up the costs substantially so it is an important consideration to think through.

Membership

Your customers will be the lifeline of your business so understanding their needs are key when creating membership packages and marketing your gym. Your membership packages should consider:

  • Free trials
  • Length of membership
  • Flexibility of membership
  • Which facilities the membership gives access to

Once the membership packages are ready, it is essential you draft the terms and conditions of your gym. This document should outline:

  • Calculation of fees
  • Cancellation of memberships
  • Responsibility in the case of an injury
  • Events of late payment
  • Dispute resolutions

Also, it is important to be in constant communication with your members to receive feedback. You should email them about any news, promotions, and events.

Hiring Employees

A gym will almost always require more than one person to operate. You will usually need receptionists, office workers, cleaners and trainers. Having qualified trainers to assist you is critical for the success and expansion of your business. Once you have your employees ready to work, you should discuss the terms of employment with them and formalise this with an employment agreement.

Retaining your staff is also crucial to your business. One way to do this is by offering training to them. This will not only improve their skill set but also your business will keep up with the latest fitness trends

Rules & Regulations

Running a gym involves a range of safety and occupational health hazards you will need to be aware of. You will own a duty of care towards your customers and employees. In order to maintain high standards of safety, consider:

  • The safety of machinery;
  • The positioning of equipment; and
  • How classes are taught.

Furthermore, it is wise to join an industry association. Fitness Australia is the national fitness and health association that monitors the adherence to the safety regulations and standards of service.

Lastly, insurance is absolutely crucial. You have to ensure that you are legally and financially protected if anything goes wrong.

Need more information? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.

Kemal Arikan

Kemal is a legal intern at LawPath as part of the content team. He is currently studying a Bachelor of Laws and a Bachelor of Business at UTS.