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Mid-tier gyms and their memberships have been “hollowed out” of the industry, wrote Nate Hindman, CEO of One Day Gym Pass, in Forbes last year, who concludes that there are only two paths for commercial health clubs moving forward: one, become budget-tiered or two, become boutique-y.
Welcome to the new fitness landscape where specialized, niche fitness workouts while in a group setting and a pay-as-you-go model is all the rage. Going to a spin class at the gym is for yesterday’s fitness aficionado. According to the 2014 Health Club Consumer Report, personalized fitness studios now make up more than 20 percent of the market — and don’t seem to be slowing down any time soon.
Want proof? Just take a look at the wildly successful ClassPass, which has broken all the fitness industry’s rules and today, has over 3 million workout class reservations in 33 cities and recently raised $14 million. ClassPass teams up with over 1,000 classes at boutique studios to offer everything from cycling to yoga to dance to martial arts for its members. For a $79-$99 (varies by city) monthly fee, members enjoy unlimited classes to studios in the ClassPass network and can attend the same studio up to three times every month. To deter people from skipping class, members are charged a cancellation fee when they don’t show up for a reservation.
Dana Sherne took her first class in September 2014 and says the choices and convenience ClassPass offers got her hooked from the start.
“I like it because my schedule is never consistent and where I am in the city during my free time is also never consistent,” says Sherne, a 27-year-old New York-based journalist who often works late hours.
“If I’m sore and stressed, there might be only two yoga classes offered at a gym,” she explains. “And if I’m stressed and want to kick something there might be only one kickboxing class.” With ClassPass, Sherne says she can simply look up what classes are available around her and sign up through the app.
ClassPass’ success story is one example that customers want specialized, niche workouts offered in fitness boutique studios. We see this in the growing number of fitness businesses that have cropped up in recent years. There’s boxing studio ShadowBox, which charges $34 per class and has models like Adriana Lima and Romee Strijd publicly endorsing its workouts. For $29 per class, customers can imitate House of Cards’ Kevin Spacey and row themselves in shape at GoRow Studios in NYC and NJ. Then there’s modelFIT, which at $40 a pop, has become a sort of hangout spot for celebrities like Karlie Kloss and Taylor Swift.
“People are kind of shying away from the lone wolf workout of going to a box or a membership gym because the [boutique fitness] market is more efficient,” says Eric Posner, co-founder of Swerve Fitness in NYC’s Flatiron District. “You get a better workout in a less amount of time and pay less than you would for a personal trainer by going to a fitness boutique.”
But what actually makes a fitness business successful? Below are a few important factors to keep in mind when researching how to start a fitness business.
Grow Your Business
In a panel discussion hosted by American Express’ U.S. Small Merchants Group earlier this year, ClassPass founder Payal Kadakia said fitness studios are “like the new restaurant scene” — it’s not just about burning calories and working out; it’s about the experience and lifestyle. It’s paramount you know this if you want to know how to start a fitness business.
This concept of hanging out at your workout spot is how Posner, along with his co-founders Chelsea Kocis and John Henry McNierney came up with the idea for Swerve. It was just a few years ago that the three co-founders, who at the time were college athletes-turned-finance professionals, found themselves tired of taking clients to the same steak dinners and drinks and instead, took them to cycling classes.
“We found this to be an unbelievable way to build relationships that were meaningful as opposed to the typical steak dinners and drinks,” says Posner.
“We were going to mostly cycling classes and what we saw about these classes was there were unbelievable ways to get an efficient workout in and do it with other people, but [these classes] weren’t capturing the camaraderie of going with a group or going with other people. It was very individualistic,” continues Posner. “So, that’s how we came up with the concept of a team-inspired indoor cycling workout.”
After successfully attaining $1 million in raised capital (from some of the clients they took to cycling classes), Swerve opened its doors on November 2013 and since then, the team has tripled the amount of classes — and revenue — they offer. Posner and his co-founders are currently finishing up a second round of funding to open up their second location.
We live in a data-driven world so it makes sense that people want data-driven workouts. People want to see how much calories they burned, how they compared to their past averages, how they compare to other people — basically what they achieve when they leave a workout session.
If you aren’t naturally a competitive person, you will be when you enter a technologically-savvy Swerve workout room where riders are divided into teams and try to bike their way to the highest score.
“Technology is playing a big role and the way that [Swerve was] able to tap into that is we have a console — you have a console on your bike — and you see your own personal metrics on this console during class,” explains Posner. “And there are big flat screens behind the instructors where you see your team’s average score. After class, all your stats — and this shows how many miles you biked, how many calories you burned, where you ranked in class, and all that — can be viewed on your account profile.”
“So, we find that to be a huge motivating tactic for our riders … and that kind of adds another layer of accountability and it’s very results-driven.”
When Alana Kessler opened the doors to her yoga studio in 2009, she quickly realized classes offered to pregnant mothers who have busy, working lives basically didn’t exist. As a result, Kessler made prenatal classes essential to Sangha Yoga Shala’s list of classes offered and has since then built a name for herself — something not easily done in Williamsburg, Brooklyn where a yoga studio sits on every corner.
Last January, Kessler opened the doors to a new studio — twice the size of her first — has added over 15 classes, and enjoys 70 to 100 new students per month.
If your fitness business is going to be specializing in personalized training, you can’t skimp on good trainers. Spend time training instructors and finding excellent ones who will give your customers consistent results every time they’re in front of the class. If you want to know how to start a fitness business, the first thing you should figure out is how to acquire awesome trainer talent.
“I encourage my teachers to build,” advises Kessler. “I incentivize them to build with me. Some [studios] might tap at a low rate to keep their overhead low, but I pay my teachers well.”
Vanessa Packer, co-founder of modelFIT, told the audience at American Express’ panel discussion that Instagram played an “instrumental part” in helping modelFIT become a lifestyle instead of just a gym. This means reaching out and engaging with your community on social media.
Do you make it easy for customers to post about their experience? Do you respond in a timely manner that builds connections with existing clients? Additionally, have you thought about untraditional marketing strategies to spread the word for your business? For example, ClassPass gave away passes to influential fitness bloggers in the beginning to quickly get their story out there. What could your fitness business do?
With their state-of-the-art technology, higher-end equipment and gears, and a boutique-y vibe (it’s not unusual for studios to have a small juice and coffee or snack bar) to encourage clients to “hang out,” fitness businesses aren’t cheap businesses to start.
An article in the Associated Press quotes health club consultant Bryan O’Rourke as saying costs can be as little as $30,000, but can quickly soar to $500,000. If you want to know how to start a fitness business, you also need to know it’s going to be a heavy financial lift. Even worse, getting a fitness business up and running takes some time — so get used to having little in the bank. Case in point is ClassPass’ Kadakia, who said at the panel that her idea took two-and-half years to launch and during that time, “it took a handful of employees dealing with countless setbacks and endless reworking of the company’s business model to get to this point.”
Nonetheless, for those who want to give their own fitness business a real shot, Posner says this type of business is “extremely rewarding” because you get to see the positive change in clients’ lives:
He says: “While it’s very difficult to run a business and it’s still very stressful, being surrounded by this environment has definitely had a huge impact on me and my co-founders from a happiness standpoint and a health standpoint.”
“We see people come in and how they transform their bodies and their attitudes and although they’re getting more fit and they’re losing weight, we also see how it builds a sense of confidence and how this kind of transfers over to their personal lives and professional lives. That is something that is extremely rewarding about running the fitness boutiques.”