Suppose you are a gym owner who started their fitness journey 2 years ago. You have enrolled world-class fitness trainers and personal trainers specializing in different fitness categories such as yoga, bootcamp, high-strength training, etc. Moreover, your gym has world-class equipment to ensure a remarkable fitness experience for your clients. But still, your gym is struggling to draw profits from your gym membership sales compared to your client who started 1 year ago. Based on your struggle in the fitness industry, you begin to think that running a gym is not a profitable business.
However, as per RunRepeat’s research, the total revenue that the fitness industry generates in 2023 is expected to be $216 billion. Between 2021 and 2028, the fitness market will increase its earnings by 172% and is expected to generate a revenue of $435 billion by 2028. Moreover, by 2030, the fitness industry is expected to serve 230 million members worldwide. This means that running a gym is a profitable business, but it might be you who have not taken steps beyond the box to earn profits.
So, to help you earn more profits from your gym business and drive a salary of $1,000,000, we have gathered the possible ways that the majority of successful gym owners use. Thus, it enables you to draw more profits and establish your gym as a brand.
Building blocks for your gym growth
Before drawing profits from your gym, you need to understand your gym business model and the essential building blocks. Thus, all these building blocks enable you to draw revenue from different streams in a way that makes your business successful. As per Chris Cooper, a hardworking Canadian business owner and author of the book Millionaire Gym Owner: Everything You Need to Turn Your Passion into Wealth (Grow Your Gym Series), four key business model components can enable you to grow your gym business financially.
Average revenue per member
As per Chris Cooper, the number one point that can enable you to define the success of your gym business is the average revenue per member. This is the average amount of money that you can earn by selling your fitness services to each client per month. Calculating the amount of revenue that you earn on each member is crucial as it enables you to find how much each client is worth your gym business. After calculating the average revenue per member, your goal is to increase that revenue in a way that enables you to draw more profits from your gym business model.
For example, you have around 100 members in your gym to whom your gym provides fitness services 24/7. The average revenue that you earn per month after selling your services is around $20,000. This means that per member, you earn around $200. If you want to increase your gym profit and become a millionaire, you have to make sure to increase the amount of revenue per member. Thus, the target you have to set after the calculation is to earn around $220 per member. After a month, the amount you will gain from 100 members will increase to $22,000, leading to a $2,000 increase in your gym revenue.
Length of engagement
As per the book, the second point that enables you to define your business’s financial success is the length of engagement. This parameter, as per the book, allows you to measure the amount of time your client stays in your gym and performs workouts. Thus, the length of engagement enables you to design new client retention strategies to attract new clients as well as to retain the older ones. As per Forbes’s research, If you increase the 5% client retention rate, it leads to a 25% to 95% increase in your business profits.
However, if your gym has a frequent turnover of clients, it makes your business unstable. Thus, you have to make sure that you have to design new strategies that enable your gym to increase client retention rates. For example, in your gym, you have noticed a sudden downfall in the number of older clients. This leads to a decrease in your gym profit by 95%. If you want to remain constant with your client’s retention, you have to employ new retention policies, such as implementing loyalty programs or promo codes. Implementation of new retention policies not only enables you to increase your profits but also enables you to attract new clients.
Return on investment
The third point that enables you to increase your gym profitability is the calculation of the return on investment. This point enables you to understand how well you have made an investment in your gym while hiring personal trainers and equipment. The return on investment that you need to count depends upon equipment, space, insurance, gym management software, and the staff you hire. So, if you make the investment suitable, it enables you to draw more profits and increase your gym revenue.
For example, in your gym, you have made investments in terms of buying equipment for different workout formats such as Yoga, bootcamp, HIIT training, etc, and hiring professional trainers for each workout format. Moreover, you also buy a subscription to gym management software to streamline all your fitness studio operations. All these investments put a burden on your budget. Thus, you have to make sure that all these investments that you made in creating your gym are up-to- the market standards. So you can draw more profits and increase the stability of your gym finances.
Net owner profit
As per Chris Cooper’s book, the net owner profit is the actual profit you can take home after managing all your gym expenses. You can calculate this profit after subtracting all the costs from the annual amount you received from your clients after selling services. If the profit after deducting all the expenses gives you cash in hand, this means that your gym is financially stable and in good health. On the contrary, if your gym has to take some money from your pocket while managing your studio operational cost, this means that your gym is working on a loss model, and you need to change the gym policies.
For example, you have received an amount of $22,000 per month after selling your gym memberships to 100 clients. You have 3 trainers in your gym to whom you pay around $8,000 monthly. Thus, after paying personal trainers, you were left with $14,000. Moreover, you pay a rent of $2,000 for the gym space. After paying for the gym space, you are now left with $12,000. Every month, you also pay installments for the gym insurance, which can cost you around $3,000. After paying the insurance premium, you are now left with $9,000.
However, you also have to pay the miscellaneous expenses of your gym, which can cost you around $2,000. So, in the end, you are left with $7,000, which is your net profit. Thus, this $7,000 reflects that your gym is financially healthy. On the contrary, if your gym draws around $2,000 from your pocket after managing all the expenses, this means that your gym is at a loss and you need to change the policies.
Expert opinion
“ When you’re looking to grow your gym, it’s really easy to find advice. You can find it online, you can find it on podcasts, in books like mine, and generally, there are three types of advice that you find. First, there’s bad advice, then there’s useless advice, and then there’s good advice.”
These are the words of Chris Cooper, a famous Canadian gym owner and author of the book Millionaire Gym Owner: Everything You Need to Turn Your Passion into Wealth (Grow Your Gym Series). During the podcast with Two Brain Business, he states the difference between bad advice, useless advice, and good advice. Moreover, based on good advice and the four building blocks of gym growth, he quotes examples of some famous gym brands that are now making more than a million dollars per year. During the podcast, he quotes examples of gyms that operate in the US, Sweden, Norway, and Australia, and all these gyms are ranked in the top 15 on Google.
Chris Cooper states that all these gyms work to increase average revenue per member, length of engagement, return on investment, and net owner profits. Thus, by working on all these factors, all these gyms begin to earn more than $20,000 a month. Moreover, he also states that all these gyms follow the good advice that enables them to diversify their gym profit revenue streams. All these gyms allow their clients to take part in group classes, bootcamps, online virtual classes, etc. Furthermore, this gym also offers a certification program for their clients that enables them not only to earn more than a million dollars but also establish them as a brand.
5 ways you need to know to earn a $1,000,000 salary
Based on the good advice of Chris Cooper in a podcast, here are 5 different ways that you can earn more than $1,000,000. All these 5 ways enable you to diversify the revenue stream for your gym and contribute to the financial stability of your fitness studio.
Group fitness classes
If you want to grow your gym financially and establish your brand, you have to offer your clients group fitness classes. Incorporating group fitness classes in your gym enables you to increase the number of clients served per hour. Thus, it allows you to increase your gym hourly rates. Moreover, you can also increase the length of engagement of your clients in your gym, which enables you to attract new clients and improve the retention rates of the existing ones. Apart from helping your gym financially, group fitness classes also enable you to create an environment where clients can interact and motivate each other during the workout classes, leading to a remarkable fitness experience.
For example, in your gym, you organize different group fitness classes such as dance, yoga, Zumba, pilates, etc. In all these group classes, you entertain 25 clients at a time, and the time duration of the class is about 1 hour. This means that for the same hour, you can charge 25 clients, which improves your gym’s effective hourly rates.
Virtual classes
To earn more than a million dollars, you have to follow Chris Cooper’s good advice and offer virtual classes in your gym. As per Allied Market’s research, the global market size of virtual classes was about $13.5 billion in 2022 and expected a growth of 15.8% CAGR and a valuation of $56.7 billion in 2032. So, if you incorporate virtual classes in your gym, it enables you to scale up your business beyond the physical limitations of your gym. It allows you to diversify your gym revenue streams as well as to increase the number of clients served per hour.
Additionally, virtual classes are also cost-effective as they reduce overhead expenses, which allows you to increase your gym’s overall profit margins. For example, you have started to offer your clients virtual workout classes on yoga. At a time, you are offering your services to around 250 clients around the globe, which increases the effective hourly rates for your gym. Moreover, by providing virtual classes, you are dividing the return on investment for your gym and enabling you to earn more revenue per member.
Certification programs
Apart from hiring personal trainers from renowned institutions having PT training certifications, you can also offer your clients certification programs. These certification programs can enable your clients to be masters of any type of workout and start their fitness journey as a gym owner or a fitness trainer. You can offer your clients certifications in specialized areas such as personal training, nutrition, and sports conditioning. With certification programs, you can also conduct workshops in which you can invite fitness experts who can share their vision and motivation with your clients. Thus, it enables you to expand your gym revenue streams and turn your gym into a successful business.
For example, your gym offers specialized PT training certifications in Cardio, Zumba, and HIIT training. More than 150 clients have taken part in these classes to become professional trainers. Thus, offering certification programs to your clients enables you to reduce the return on investment and enhance your gym’s profitability. Moreover, after the completion of the certification program, you can select the top candidate for your gym as an instructor.
Nutrition counseling
If you want to improve your clients’ retention rate, you need to offer them nutrition counseling as well. Nutrition counseling not only allows you to attract new clients but also enables you to increase the average revenue per member. For example, in your gym, you offer a nutrition plan to all the clients to stay healthy and keep up with the training.
Thus, by providing nutrition counseling, you earn your client’s trust while providing a more extensive wellness solution that meets your client’s holistic health needs. Furthermore, by adding nutrition counseling to your gym membership cart leads to higher rates and increases your gym profitability.
Selling merchandise
Based on good advice, you can also expand your gym revenue and earn up to $1,000,000 by selling your gym merchandise. You can offer your clients gym-branded merchandise, such as accessories, supplements, apparel, and equipment. You can also generate extra income by selling these merchandise on different platforms, which also enables you to attract new clients and broaden your gym vision.
For example, you also sell printed shirts with your gym brand in your gym. This not only enables you to earn money from your existing clients but also enables you to market your gym. Whenever your client goes out or makes entry into the gym with your gym shirt, that client draws the attention of people and markets your gym without saying a word. Thus, an effective merchandising strategy enables you to attract new clients while fostering a sense of belonging among the existing ones.
Final takeaway
If you want to run your gym successfully, you have to make sure that your gym draws revenue from different streams. Running a gym successfully is not as easy as it seems. You must diversify your gym revenue by offering virtual classes, selling merchandise, etc. If you want to earn more than $1,000,000, you have to follow the good advice of Chris Cooper and follow the key components of gym growth.
