Freshman Year

Experts reveal what your gym’s  debut is really going to cost.

By Jennifer Renée Smith

The fun-and-games part of launching an all-star program is when you sit down to create that wish list of amenities you plan to offer. However, as you go on to develop your business plan, one of your more disheartening discoveries may be coming to terms with what you need to have versus what you want to have during your first year of business.

Read on for industry-insider figures and tips on which goods and services should be considered primary and secondary necessities when it comes to plotting an annual operating budget.

The A-List

Operating costs truly run the gamut depending on the area of the country you’re located in, the square footage you’re renting, the size of your program and staff and how frugal or fancy you can afford to be, but as a new gym owner, expect your “dream” to cost anywhere from $60,000 to upwards of $250,000, excluding taxes and startup equipment.

Rent

Ballpark Cost: 25 percent or less of your overall budget; numerically speaking, about $50,000 on average, plus a possible security deposit.

“One of the most common—and certainly the most important—questions I get is, ‘What percentage of my gross revenue should be allotted for rent?’ ” says Jeff Metzger, president and founder of Kids First Sports Center as well as Small Business Boot Camp in Cincinnati, OH. “The rule of thumb is that for every revenue dollar, you shouldn’t be paying more than 25 cents toward rent.”

For long-term success, Metzger suggests thinking in terms of percentages rather than numbers. “If you ask me, ‘How much should I pay in rent?’ I can’t begin to tell you. The person who thinks in absolute dollars will struggle with their business decisions.”

Additionally, Metzger advises that your projected enrollment and revenue gross should be such that you move toward renting a target of below 25 percent. Metzger’s own Kids First runs with 17 percent of its income being allotted to rent, however, the day they started, he admits they were at 35 to 40 percent. “I knew we wouldn’t be able to last unless we drove our revenue up,” he says. Bottom line is that you should be able to attract enough students so your rent’s less than a quarter of your operating costs, or if you can’t do that, you’ll need to have a decent amount of capital to operate on until you do reach that percentage.

Build-Out Improvements

Ballpark Cost: $0-$60,000

The most challenging aspect of inhabiting an empty warehouse is making it fit the all-star lifestyle: high ceilings, no columns; proper bathroom. Chances are, even if you find a decent space, you’ll need to shell out for some improvements in order to make it user-friendly. However, if you’re leasing a space from an existing business that’s taken care of the nitty-gritty requirements—let’s say a gymnastics club—you may luck out and be able to omit this expense from your startup budget.

Utilities

Ballpark Cost: $4,000-$10,000

“You’ll be surprised to find out how expensive utilities wind up being,” says Stan Stec. “Especially if you live in an area like we do, near Chicago, where we have high gas bills in the winter and high electrical bills in the summer. Depending on where you live, you can probably save a lot of money if you don’t need to have air-conditioning.”

Insurance

Ballpark Cost: $3,000-$5,400/year for liability and workers comp; for competitive rates, visit usasf.net.

“This is a must-have and cannot be an oversight,” says Leslie Baugh, who ran Indiana’s Rushville All-Stars from 2001-10. “Gym owners and coaches must have this to better serve their student-athletes and protect themselves, their business and entities.”

Office/Cleaning Supplies & Equipment

Ballpark Cost: $1,200/year plus $1,000 to lease a copy machine.

You can save money by becoming a member of wholesale stores, such as Costco and buying your supplies in bulk, or buying used equipment and furniture like computers, desks and chairs on Craigslist. This might also vary, depending on if you do your billing business mostly online instead of on paper.

Phone/Internet

Ballpark Cost: $100/month, depending on your service package.

Be sure to do your research, as a number of companies offer bundles that include phone, internet and cable.

Coaching Staff

Ballpark Cost: It varies, but an average rate ranges from $10-$15 an hour; expect to pay more for specialty coaches, such as tumbling.

When it comes to keeping track of payroll, Baugh recommends using QuickBooks. “There’s a 30-day free trial available online,” she says. “Also, read Financial Peace by Dave Ramsey. Without sounding cliché, the book changed my life, and at the very least, changed how I ran and operated both my professional and personal finances.”

Certification & Training

Ballpark Cost: If you’ve enrolled your gym as a USASF member, the cost for credentialing is $210 a coach, which works out to be $15 a level (1-5) for tumbling; $15 a level (2-5) for tosses and $15 per level (1-5) for stunting.

Your athletes will be in better hands with instructors who are trained and knowledgeable when it comes to safety precautions and USASF rules and regulations. “We always pay for certification and coaches conferences for our staff,” says Stec. “But, we make it clear that if they leave within a year, they’ll need to reimburse those costs.”

Basic Training and Equipment

Ballpark Cost: It varies depending on the matting variety, but expect to spend between $15,000-$50,000. Spring floors alone typically cost $12,000 ($11,000 if you install them yourself).

Now, having the standard nine-panel spring floor is essential to preparing your teams for competition.

Trademark Fees

Ballpark Cost: Approximately $275-$325 for preliminary paperwork filing.

“If you’re going to be in business for the long haul, this is absolutely something you should do,” says Metzger. “Protecting your brand by trade-marking is very important. That should rank right up there early. Once you establish your name and your business entity as a corporation or an LLC, then protect it. I had one trademark infringement over the years, but we fought it and won easily because we were protected.”

For more info, visit the U.S. Patent and Trademark office’s website uspto.gov.

Advertising & Promotions

Ballpark Cost: $5,000-$15,000 depending on your tactics; website design and hosting companies are typically $1,000 a year.

During your first year, this may turn out to be one of your biggest expenses. “We always try new ways to spread the word, but lately Facebook has been the most effective,” says Stec. “But there is risk involved, because people on Facebook can help or hurt you. It’s another version of word of mouth.”

Routine Music

Ballpark Cost: $500-$750 a team is typical.

Stec suggests getting the best quality you can get, since this a main component of your teams’ routines. “Pretty much from day one, music and choreography have been among our top priorities,” he says.

Choreography

Ballpark Cost: In-demand choreographers typically charge $3,000 a team, plus traveling expenses.

If there’s one thing Baugh wishes she’d allotted more money to this during her first year, it’s choreography. “It’s funny to assume that one person can do it all, but initially I had that false belief,” she says. “I soon learned there’s a huge advantage to outsourcing your choreography. Your clients are happier, you as coach and owner are less stressed and you’re often more of a legitimate contender on the competition floor. You and your squads stay current, trendy and learn new skills this way.”

The B-List

Secondary costs to consider after the first six months to a year:

Additional Training Equipment

Ballpark Cost: Varies greatly per supply company and size of equipment.

Once you have a handle on your overhead, your projections are on target and you have the floor space, consider investing in additional training equipment, such as a tumbling strip, Tumbl Trak, trampoline and resi-pit.

Office/Support Staff

Ballpark Cost: Varies; hourly wage or salary, depending on the amount of responsibilities.

While a support staff may be a necessity down the line, it’s important to find the right person (or people) to work your front desk. “You can’t turn your biz over to someone else you don’t know,” says Stec. “Especially when it comes to collecting money.”

USASF Membership Dues

Ballpark Cost: $150 a gym; $40 a coach; $35 an athlete.

Visit usasf.net for benefits of joining and additional info.

Travel:

Ballpark Cost: It varies, but could cost $15,000 or more.

“This is an expense that may be somewhat surprising, depending on how much you plan to travel and your philosophy,” says Stec. “We pay for our coaches’ traveling expenses. It’s definitely a choice that can add up.”

Advanced Sound System

Ballpark Cost: I varies, but top-of-the-line costs are anywhere from $3,000-$6,000.

Until you can afford a more complex system, hooking up your iPod to a Bose or similar dock station should suffice for the first few months. Although, if you want to prep your athletes for the wall-shaking decibels their music will be played at during competitions, this may move closer to the top of your list.