How Do I Determine the Size of My Facility?

How Do I Determine the Size of My Facility?

OPEX Fitness CEO Jim Crowell Answers

 

 

The size of your gym is almost always determined by the type of fitness model you are running.

For example, large gyms like 24 Hour Fitness and L.A. Fitness require almost 30,000 square feet of space. Though the costs of leasing such a facility size are astronomical, they are able to maintain profit by offering cheap gym services and coaching while operating a very large client base. The same analysis can even be applied to most CrossFit or group fitness gyms, because the overlap in when clients train necessitates larger facilities and more equipment.

“If you have a huge group model where you’re going to have 30-person classes on every half hour and they’re going to overlap each other, you might need a much larger facility.” OPEX Fitness CEO Jim Crowell

Conversely, OPEX Individual Design Facilities only requires about 2,500 square feet. Why? Because Individual Design Facilities create a higher willingness to pay per client, which means fewer clients but more revenue. The type of service offering at a Individual Design Gym generates higher lifetime value for the client and ensures that retention of these clients remain high. Because you have fewer clients with little overlap in training sessions or equipment use, it significantly lowers the economic barriers to entry.

Another factor to consider in gym size is the cost of rent when compared to your earning potential.

It always comes back to hard math and cash. While you do need to be in an area which allows you to grow financially, you also need to be making enough monthly income to afford the cost of rent.

That is one of the reasons why we always recommend to our OPEX licensees that they start in a small 2,500 square foot facility. Demonstrate that your business model is successful in a small setting first, before you think about expanding into larger gyms.

Tip on Leases and Landlords:

“You can always ask a landlord when you’re signing a lease to put in options. Meaning maybe you have a year contract or two years contract but there’s an option that you might be able to take that you pay a little bit of extra money and you can get out of that lease if you grow aggressively. I don’t want people to make their runway smaller, meaning I don’t want them to have so many expenses that they burn their business out before they ever get a chance to get up and running. You might need 12, 24, 36 months to really prove your model. You better not have a facility that’s too expensive in that time or else you’ll run out of cash.” – Jim Crowell

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