When to Open a Second Location for your Fitness Business

When to Open a Second Location for your Fitness Business

Owning and running a fitness business (or any business for that matter) can be full of every sort of up and down imaginable. And when things are going well, it can be tempting to take that passion and drive and open another and another and another location until you are helping everyone possible.

The problem is that opening a second (or third or fourth) location is about more than passion and drive and it can be easy to overextend yourself as an owner if you expand too much, too soon.

If you are considering expansion, here are my top indicators if a business (and an owner) is ready to take on a new endeavor and open an additional location:

Show me the money.

I hate to make it all about the money, but if you are just squeaking by in your current business, a new location will NOT bring you more money. I repeat, expansion does not mean more money!!!

It’s easy to fall into this trap. If you are making $100,000 at location A, then location B would mean $200,000! This is almost never, never the case. Yes, a new location will bring in new revenue, but it will also bring renovation expenses, advertising and marketing expenses, staffing issues, time constraints, and so much more.

First, consider how much your facility is making. Are you pulling in a consistent $10,000 or more in net profit every month? Notice I said “net profit” not “gross profit.” If you need a little help understanding the difference, then check out my article on Understanding Your Business by the Numbers. You should be making a profit before you take on another facility! And that same facility should be growing, not stagnant. If you are making the numbers and you have been growing and growing for at least six months, then start thinking expansion, not before.

Then you need to take into consideration how much you are making. You, not your business. Whether you are taking owner distributions or are a salaried employee, if you are not making at least $100,000 in take-home pay, I would advise against a second location.

There are a lot of ways to make more money at your current location without additional locations, so if you are trying to break that six-figure ceiling, make sure you have exhausted all other avenues and are making a comfortable living before throwing everything off balance by overextending yourself with new staff, new clientele, new everything.

Show me your people.

Let’s say you checked the box on the money issue already. You are doing great and making a decent living off an already-successful, growing business. Amazing! My second question is, who are you people? Do you have a team of people working with you who will help you with this transition? Are they doing ninety percent of the operations (including sales)?

You may have a few trainers, and hopefully a manager and sales team. You will need these people to help run your current facility so you can focus your attention on the second. If you don’t have an extremely strong team at location A, then please think twice before opening location B (even if you have trainers and staff ideas for the new spot). The fact is, if you are making good money, you don’t want to jeopardize that by leaving your money maker in the hands of a team you don’t like or don’t trust. Those people will literally be your bankroll while you are investing your time and money in a new location, so they need to be top-notch for you to take on more.

Show me your systems.

Do you have a sales system? Lead generation? Programming? Employee manuals? Training requirements? Tell me about your business systems!

If you are reading this with a blank stare of unrecognition, then maybe a second location isn’t the best idea just yet. Again, your people should be set up for success with systems you have already set in place. You want to ensure your success, not take a chance on your livelihood!

Make sure you not only have a strong, reliable, competent, hardworking team (see above), but have your systems and structures solidified before you even think about expansion.

Show me even more money.

If owning a business has taught you anything, it has taught you that you need money to make money. You need a space, equipment, staff, marketing, software, and, and, and … and those things aren’t free, or even cheap sometimes.

If you want to expand and you have the cash flow, you have the team, and you have the systems, do you also have the savings? Please do not steal from Peter to pay Paul! Even though business A is doing great, you don’t want to pull all the profits from that company to finance business B.

Ideally, you should have $50,000-$200,000 in CASH to fund your next business (depending on the scale of it). And ideally, that is actual cash, not a loan. I am not a huge fan of taking out loans when I’m not one hundred percent sure I will be able to pay them in a timely manner. Insert Covid here.

These tips are geared directly towards fitness businesses, but the same principles apply to any business! Expansion does not necessarily translate to more money, so truly look at your business as a whole before making the leap into owning multiple businesses. Business owners already wear multiple hats. Are you ready to also wear multiple coats and multiple gloves and … ? Well, you get the idea. I’m not trying to discourage you from multipreneurship (I love owning multiple businesses); I just want you to be fully prepared before expanding so quickly that you literally explode from the pressure.

Good luck!

If you want help determining if you are ready to expand, let’s connect!

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