The Gym Market That No One Is Targeting

If you're looking to buy a house or open a business and use a realtor, I can guarantee you'll hear one phrase over and over and over again. 

Location. Location. Location. 

Commercial realtors would have you believe that a location will make or break your gym's success. Foot traffic. Car traffic. Window shopping. You'll hear all kinds of crazy, enticing numbers.

In other words, they're talking about your market because they know, like you should know, one of the most common reasons why someone joins a gym is because of its close proximity to her home. 

It's not much different in the world of startups. You'll hear founders say things like, "It's a $1 billion dollar market. All we need to do is attract 0.001% of the market and we'll be successful." 

Everyone is in love with a BIG market. The bigger the market, the bigger the payday. 

The big franchise gyms love a big market. The small high-end studio gyms love a big market. 

I don't, and I have two gyms in a big market.

I think you can easily make $100,000 per year in a small, almost tiny market. And better yet, you'll have half the headaches and worries compared to a big market. 

How so? 

Let me grab my pen and paper. 

  1. CHEAP rent: Main Street U.S.A in small towns is dying. That's not news. However, therein lies an opportunity, which almost everyone overlooks. Local governments and landlords are desperately seeking business owners, and as a result will make extremely attractive lease agreements. My high-end studio in a suburb of St. Louis pays almost $18 per square foot while a HomeTown Gym pays less than $6 per square foot. 
  2. CHEAP, quality labor: Every business owner knows that controlling expenses will make or break your business. As an owner, beyond negotiating a good lease, the biggest expense you have control over is payroll. Let it get out of control, and you'll be out of business in a few months, especially if you're a training-only gym. Because the cost of living in small communities is much cheaper than the city, expected salaries are also lower than the city. 
  3. CHEAP marketing: Change is slow in small towns. In fact, at times, it seems like time slows to a halt. So, when a new business opens, everyone hears about it. You don't need to spend $5,000 on a grand opening or spend $500 per month on flyers and newspaper ads. Simply opening your doors and turning your sign on will be more than enough to get the word out because news travels extremely fast in towns that have just a few stoplights. And in turn, your cost to acquire new clients is minimal. 
  4. Little or No Competition: Start a gym in a crowded, big market, and you better either have extremely deep pockets so you can out-market everyone else or have a great position/niche. The suburb my personal training-only gym is located in has a population of ~30,000 people. Just within that suburb we have 5 or 6 other studios like ours plus a Planet Fitness,  two YMCA's, an Anytime Fitness, and an independent traditional gym. That doesn't even count the studios for yoga, pilates, etc. There's a lot of noise we have to break through to get to our potential clients. Luckily, we have strong positioning or else we'd barely be keeping our gym afloat. That's not the case in small towns. You'll probably be the only gym in town, and because of that, you won't be fighting for market share.
  5. Loyal Clients: If you own a gym, manage a gym, or work as a trainer, you've probably heard more times than you'd like about your turnover rate (or churn rate). Even though the majority of clients are on contracts, those month-to-month contracts can at times be the difference between a break-even month and a $5,000 monthly profit. The lower the turnover rate, the lower your cost to acquire new clients, and the more money that goes into your bank account at the end of the month. Because small towns really are small communities that take pride in their "littleness", they're extremely loyal to the businesses that can withstand the small market.  

Of course, you can ignore everything I've said, and respond with, "If small towns were so great, why is Main Street U.S.A dying, and businesses folding like there's a drought?". 

And to that, I leave you with this... If a business isn't structured to withstand the giant that is the internet, then it will fail. Wal-Mart, Macy's, and a handful of other longstanding business behemoths are starting to feel the wrath of e-commerce. Those mom and pop shops in small communities have already been swallowed up because they weren't structured to withstand Amazon.com. The HomeTown Gym is. 

 

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