Starting a brick and mortar business

[canadiangal]

ok, guys, my head is all over the place looking for different streams of income.
I'm thinking of a forum website to start. I'm not quite sure where that will take me but on the other hand, my husband and I are considering opening a gym.
We went driving around to a new strip mall, in a new neighbourhood and were happy to find out that there was no gym in proximity. The trip mall has a few banks, a Tim Horton's, Starbucks, coffee waves (3 coffee shops in proximity, wow), a few high end spas, a pre-school. It's an an expensive neighbourhood. Houses are no less than 900k to start.
My husband is so excited about it but I'm a little scared.
We have about 80k saved up. We lost 38k when we attempted an online business. Most of the money was spent on getting the website built and also marketing.
My husband is an active guy, he's always at the gym but I'm the type that pays for it but don't go. He thinks a lot of people are either like him or like me and we'll gain either way.
Why am I scared?
We called a manufacturer, he says it takes about 350k to buy all equipments for a 10,000sqft gym. To that, we have to add a lease, and at least one staff, plus, we're IT consultants, we've never run a gym before.
Going for a franchised gym (Anytime fitness or Snap fitness) is around 70k, and they will offer an existing system that works.
I know the community on Fastlane does not encourage going for a franchise, but what would you do if you were in out shoes?

 

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[openminded790]

Holy crap, 38k on building a website and marketing? I don't know about other but imo that's quite a bit!

If you'd like to start something online I would recommend learning some simple html, design, digital marketing yourself. When you do decide to outsource you'll know how much man hours certain things take and can better spend your money.

You need to have a clear plan on how you plan on monetizing your forum or website. Affiliate programs, adsense, membership areas, etc.

38k, 350k, are very big numbers! It's better to start with smaller investments, but aim for the same learning goals especially if your still new to running a business.

Wish you the best of luck with whatever you decide to do!

 

[TJPB]

I suggest you and your husband read the book this forum is based on. Then come back with a new perspective.

 

[DrkSide]

If you have read the book I think you need to read it again and really study some of the lessons.

Along with that, I see you posted a thread on starting a B&M business and starting an online forum. If you do decide to do one of these PICK ONE and do it. Focus all of your energy on one business and make it work.

 

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[canadiangal]

I've read the book. Maybe I need to read it again.
Yes, the forum is just for me, but the gym, which I call brick and mortar, involves my husband since it may take way more money. I can't decide to spend that much without him.

Yes, we lost $38,000, and if you read my old posts, you'll even see the website we built. It was a food portal website. Talking about it aches. We spent about $6000 on the website(two different companies since the first screwed up), another 5000$ on a coach who came from Texas for 10 days. He helped us sign restaurants up, taught us all the how to's. We had to pay for his hotel for the 10 days, his meals, plus his service. Printing fliers about $3000- not cheap in Canada. Using the post office to distribute $850. Radio ad, I believe was around $800, Getting car wrapped with a decal $1500, Hubby went to Vegas for a conference, and more and more expenses. We hired a company in the Philippines to call restaurants for us, $1800 for a month, Facebook ads, ect. Things looked really good but we had to work at the same time at our regular jobs to sustain these expenses. We had to leave our jobs sometimes during the day to deliver to a customer. At some point, we just couldn't do it anymore. We had less and less orders since we reduced our advertisement, until we had zero orders for a long time.

I'm determined to succeed. I will succeed at some point. I just need to find the right thing.
No one made a comment on the gym business... what do y'all think?
I'll suggest my hubby reads the book as well.

 

[TJPB]

Read it again. Then again. How ever many times it takes to make you realize you need to tell your husband "no way in hell."

 

[canadiangal]

uhmmm

 

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[TJPB]

Without going into details.....I've been down the "I'm going to open a gym" road a few times. Starting with franchises like Athletic Nation (now out of business), Snap Fitness, and others like Max Muscle (supplements).

You are not in business for yourself with a franchise.... TMF principle of control is violated.

You are looking for the easy road....buying someone else's "plan"....TMF principle of entry violated.

A B&M business has a finite potential customer base Unless you have an associated, well established eCommerce site etc., TMF principle of scale is violated.

If you had done any in depth research you'd know that 100s if not 1000s of gyms close every year which floods the market with used gym equipment. SnapFitness closes more locations than they open.

I'm sorry to say but from the tone of your first post in this thread, you and your husband have no idea what you are doing. You need to take a huge step back and re-read TMF again....together. Take notes and really focus on the principles/commandments. You will save yourselves much heartache and, potentially, bankruptcy.

 

[canadiangal]

Thanks for your input. Don't want to go the bankruptcy lane. Luckily, we don't have a lot of debts. If we lose, we lose our own money. And we have jobs.
I'll read the book again for sure. I'm glad I posted this here today. I was actually almost sold on the gym idea, just thought it was too expensive.

 

[Ashta]

Don't forget your risk assessments, Heath and safety, insurance on top of what you've mentioned.

I really don't think a gym is a good idea purely because going by experience in MY local area, unless it's a well known gym people don't want to join, or if they do they want the membership fee for peanuts.

Ever seen the movie dodgeball? I just have visions of 'Average Joe's' gym when I hear of low budget gyms.

Another option could be to be a bit more niche and instead of a general gym you could do something that focuses on indoor circuit training and exercise classes. That could be a solution if you were determined to do something in that area. This would build up your reputation in the area and establish a solid client list before investing too much into it all.

Just giving my personal opinion there and throwing a few alternatives you could think about in there :]

 

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[biophase]

This thread made me get out of bed. Every morning I usually read posts on my phone while I lay in bed. But this post made me get up and turn on my computer to reply. This is a horrible horrible idea.

You spent $38k on the internet business and still don't know what you are doing. It is clear that you have no idea what you are doing based on that business? Why did you spend money on a radio ad? wrapping your car? $5000 on a coach? Is that what the coach told you to do? You just kept spending money on stuff? $1800 for someone to call businesses? And then you had to deliver food to people? What kind of internet business was this?

Let's pretend that the gym is a "ok" idea. What is the maximum amount of revenue that you can get per month at this gym? How long would it even take you to break even? 1000 members x $20/mo = $20,000 a month. EVEN if you somehow got 1000 people to join AND if it were 100% profit, it would take you 18 months to breakeven without any expenses or paying yourself.

As others have said, reread the book. I just don't feel you like guys "get" it. I don't feel like you learned anything from your failure. If you learned from your internet business failure you should be able to start your next business for under $5k-10k.

 

[AroundTheWorld]

I don't feel like you learned anything from your failure. If you learned from your internet business failure you should be able to start your next business for under $5k-10k.

Exactly.

I'm determined to succeed. I will succeed at some point. I just need to find the right thing.

Before you do ANYTHING else - Read the book, together. And, do it with a notebook or 3-ring binder next to you.
You MUST figure out WHY you failed at this business before you start another one.

Make the following pages in your notebook:

• WHAT WE LEARNED
• ADDITIONAL RESEARCH REQUIRED
• WHAT WE WILL DO DIFFERENTLY

If you don't stop to learn the lessons you need to learn, YOU WILL REPEAT THE MISTAKES.

Through this process, you could even come back to this thread and post things that occurred or failed to occur and the forum members here can help you see what went wrong. There is no shame in failing - as long as you learn from it.

WHY did the orders stop coming in?
WAS there a demand for what you were offering?
WHAT KIND of (if any) market research did you do before you started?
IF YOU DID DO MARKET RESEARCH why was it incorrect? How did your method fail you?
HOW was your advertising ineffective?
HOW could you have made it more effective?

WHAT is the difference between a necessary expenditure and a "fun" make-you-feel-like-you-are-doing-something-but-not-actually-necessary expenditure. And, what drove you to the latter? People fall "in love" with being in business and spend money on flyers, car decals, and cool office furniture. No, No, No.
Nail your business model. Know your market. Do the stuff that ACTUALLY produces results. Revenue.

WHY did you "need" a coach? Really? Honestly? Because you were afraid? Because you lacked confidence? Drive? Momentum? A sense of direction?
Don't say "because you needed to learn." You could have learned it with MJ's book (and a few other's from the library) and on this forum with an INSIDERS's subscription. This is a heck of a lot less than what you paid for this coach.

Some "from the hip" ideas that you may need to place on your Additional Research Required Page. (Your list will need to be much longer than this, if you have done a thorough assessment about yourselves and the failed business)

How to Conduct Market Research
How to Write Copy
How to Locate the Information You Need Without a Coach
Affective Marketing Techniques
How to put together a REALISTIC pro-forma. What is the projected revenue? What is the projected expense? What are all the upfront costs? Given this information, does the business make sense?

Then, go out and find resources and learn all you can.

If you want to stick with something online, do something similar to what biophase did with his Amazon thread. DO NOT COPY HIS PRODUCT But set up something with very little overhead and upfront money needed. Use the process (or really, the process for any sort of online business that can be found somewhere on this forum) as a hands on way to learn the things you need to learn.

 

[Deevo]

I would work on your due diligence. Then look some more. It sounds like you're jumping into it blindfolded. Why a gym instead of any other type of B&M?

What are the operational costs? What's break-even? What's the median age? What's the foot traffic in the area? Ever wonder why gas stations literally move across the street? Traffic. Do people even want another gym? If the higher income area is full of people who often travel, have their own gyms/trainers or just don't care starts you out with limits. Many may join but quit after the first week. After it levels off, how do you plan to acquire new customers and how much will it cost?

What happens when a gym (competitor typically as many franchises don't allow you to just setup another one across the street) opens up in the same area? You now split your capped market in half.

Many active people aren't loyal to one specific gym. Aside from people giving up and not coming back, people move, people get sick of a gym and go to another for quite a few reasons.

If a gym is what you must do, figure out the why first. You want people even further away to skip past all other gyms closest to them just to come to your gym. That requires being different.

A guy I know is in this niche. Owns a few patents on equipment he produces in-house and sells to the NHL. He's added services on top of that as well. Does pretty well. Now he's working on a new system for a gym. Investors lined up for his first 30K sq ft gym. Could become a franchise success or it could fall flat on its face.

Aside from @TJPB there are other members who have started gyms on this forum. One who isn't active here anymore provides some details either on this forum or on a podcast of his. I would at the very least start there.

 

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[AroundTheWorld]

@canadiangal Where did you go?
Come back!

 

[458]

Im pretty sure I never got a facebook flyer or saw a car wrapped in their logo. I think what you lack is simple common sense. If your business is on the INTERNET, you should probably advertise on the INTERNET.

Ps. If you want to lose the rest of your money, PLEASE start a gym.

 

[MarkNNelson]

If you don't stop to learn the lessons you need to learn, YOU WILL REPEAT THE MISTAKES.

THIS^ is a key lesson not just in this context, but for all of life.

 

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[Stubbers]

@canadiangal where I live we have all the same spas, Timmies, 4 starbucks (within 4 square miles), winners etc yet 1 snap fitness closed down and an Energy that was there for years oh and the bootcamp I used to go to shut down why? LA fitness opened for $29 per month they killed there businesses this was 2 years ago. Recently I was trying to promote a co-op mailer to local businesses, all the franchisees I spoke to had their hands tied to what they could do in terms of advertising.

That said an Orange theory gym recently opened (5 kms from LA) so it can't be that bad! Good luck

 

[CPisHere]

I own a B&M business.

Gyms are very difficult to profit in. They generally require a TON more members than actual users, and the break-even point is VERY high - especially if you buy all the equipment brand new (which, as mentioned, is easy to find used since these guys go out of business all the time).

I know someone who lost $80k+ opening a Snap Fitness. Reread the book and get a better business plan.

 

[biophase]

Watch the latest episode of The Profit.

 

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[AroundTheWorld]

@canadiangal last logged in on March 2nd.

Makes me sad, because she missed out on a lot of great info on this thread.
It is a good bump though, for other people asking the question, "Is this fastlane?"

 

[Heisenberg]

Note: I'm as inexperienced as you are and my advise are based on what I've learnt from books and other people.

With your experience I really wouldn't suggest taking that big of a risk, but here are my 2 cents anyways..

350k is a HUGE risk for someone with no experience. What you need to do, if you're serious about this, is to decrease that risk. You can do that by validating that people are gonna be walking through those gates when the building is up, and everything is running. A good way to validate is to get feedback and pre-sales from people around that area. Show them what the building will look like once its done (prototype) and offer them an incentive to pay for a subscription before it's built (pay for 3 months now and get 10% off for life). Three things could come out from this:

• You find that a lot of people are interested in the gym in the area, you get a lot of presales
• You find that people say they are interested in the gym but would only like to pay for it once it's up, you get a some presages
• You find that people are not interested in a gym in the area

If possible, try to get acquire the amount of customers you need to break even BEFORE launching but that is unlike - but a good goal.

Obviously, with great risks, comes great rewards. Best case senario is you make huge profits, expand in a different area, eventually franchising then IPO.

Best of luck to you and your husband,

Heisenberg

 

[dabelge]

Anyone watch the show "Bar Rescue"? Here's a good example of a guy who had a dream of opening a bar(with his wife's money)

http://www.spike.com/episodes/p6q5tz/bar-rescue-barely-above-water-season-3-ep-320

 

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[Gale4rc]

You can launch a Kickstarter for this or Indiegogo.

Make flyers for your whole neighborhood, send em out/ physically drop them off (a lot cheaper, I used to do around 6k /week) and launch the campaign. If the community really wants one they will fund you. Also go to local chamber of commerce meetings, everything and anything local. This is a good way to start the gym if your hubby really wants to go that route and this would bring the startup costs to $0 out of pocket and it only becomes real if it's something the community really wants.

Goodluck