Starting your own health and fitness business is a daunting yet rewarding experience. Not only does it require time and effort, but also your own personal investment that many budding entrepreneurs don’t have right away. There’s considerable freedom in becoming your own boss, but also a financial risk in writing your own paychecks if things don’t work out. However, with careful planning and spending, you can ensure financial success in the first months and years of operation.
To help you navigate the financial planning process, here are six steps you should take to ensure a successful and fiscally responsible launch:
1. Assess Your Personal Finances
The potential to start your own training or yoga studio may seem like a luring idea, but it’s important to remember that, like any other investment, launching a business can put your personal finances at risk. Before you hit the ground running, take time to evaluate your personal finances, and determine how much money you need to start your business. Between renting a space, purchasing fitness equipment, and potentially hiring employees, your costs can begin to pile up.
Start by assessing your current financial standing, considering any outstanding debt, savings, and other major ventures you may be involved in. Understanding your financial health will help you decide how much you can feasibly put toward your business. By subtracting the amount, you can personally invest from the overall cost of launching your business, you can figure out how much additional funding you will need to raise.
Your credit score can also play a critical role in your ability to secure funding for your business. If you have poor credit, you may not meet the requirements necessary to qualify for loans or lines of credit. That said, it’s important to improve your credit score to increase your chances of approval for business financing.
2. Remain Flexible with a Hybrid Business
Starting your own fitness or lifestyle business doesn’t mean that you need to open a full-fledged gym with dozens of employees. Hybrid business models allow you to be flexible as you begin to build your business from the ground up. The basic concept is to offer a variety of different services, rather than being siloed into one offering. Some of the benefits may include having a more flexible schedule, meeting new clients, and accommodating a wider audience.
For example, the main offering of your business could be fitness classes that you run out of a rented studio. However, you could also pick up additional work on the side as a personal trainer. This way you have the flexibility of working with large groups of people, as well as one-on-one with individuals. You may also have flexibility with your hours and rates, as you can schedule the classes for recurring time frames with a flat cost, and at the same time bill hourly and book personal training sessions whenever they fit into your schedule.
As a business owner, your personal life and professional life are practically guaranteed to intermingle more than the average person. A hybrid business model could allow you to easily make the transition as you make these adjustments.
3. Control Your Cash Flow
According to U.S. Bank, an astounding 82% of small businesses fail due to poor cash flow management. Tracking your spending and prioritizing expenses is crucial to your startup’s financial well-being. Whether you monitor your expenses yourself or enlist the help of a financial professional, keeping tabs on your money may help you prevent financial problems in the long run and better allocate your funds.
To avoid costly cash flow problems, start by tracking your expenses so you know exactly where you’re funneling your money. Break your budget down by constant costs, such as rent, insurance and licensing, and variable costs, like the purchasing of new equipment. Understanding these expenses will also help you to determine the price points for your services to turn a profit.
It can be easy to overspend in the first few months and even years of launching your business. To avoid spending beyond your means, keep close tabs on your expenditures and remember that every purchase takes away from your bottom line. That’s why it’s important to consider the cost-benefit of every expense and limit spending to only the necessities.
4. Establish Small Financial Benchmarks
Rather than setting hefty revenue goals, focus on small and measurable milestones, and adjust your strategy as needed to ensure growth. These goals should encompass everything from your emergency savings to revenue and profitability. Establish goals that are ambitious, yet attainable, and that encourage year-over-year growth.
Once you have these benchmarks in place, make a conscious effort to track your progress. Since your goals should be tied to a timeline and numerical value, monitoring your progress should be straightforward, making it easier to call out hurdles and pivot your strategy. For example, your goal could be to book a certain number of training sessions or classes every month and try to achieve growth over the course of the year.
As an entrepreneur, achieving these smaller goals may give you the confidence and motivation you need to continue working toward your broader business vision.
5. Use Your Home as Headquarters
Many startups begin right out of people’s garages. Once they have built up their business and increase revenues, they then decide to move into a larger space and hire more employees. If your goal is to open your own gym, you may consider doing the same. However, if you want to save money in the long-haul and keep your business more personal, you may consider making your home the permanent base of your business.
You may think this is impossible to do for a sustained period, but with the right tools and set up it can be easily achievable. All you really need is a separate space to run your business out of, somewhere separate from your living space. The key is to make sure that you are working within your local zoning codes and have any necessary licenses to run your business from home.
If you find that working out of your home is rewarding financially, and you become committed to running your business out of your home long-term, it may also make sense to invest in a larger space. Since you’ll be both living and working out of your residential property, you’ll need ample room to do both. Find a house that will give you the opportunity to increase your total square footage with minimal additional investment. Just keep in mind that it’s important that you stay local to maintain your current customer base.
6. Consider Legal Aspects
As you prepare to launch, you should take into consideration the legal requirements for new businesses about financial regulations, tax obligations, employee laws, and proper permits and licensing. Overlooking these critical components could result in costly lawsuits that could ultimately cost you your business.
To start, you will need to choose a business structure, whether it be a sole proprietorship, partnership, corporation, or a Limited Liability Company (LLC). Each offers different tax and legal benefits, which is why you should research your options thoroughly to determine which structure makes the most financial sense for your needs. They also differ based on the number of people involved in your business. Will it just be you or will you have partners? Do you plan on hiring employees?
Addressing these legal aspects ahead of time could save you significant time and money in the long run. By considering your legal responsibilities prior to launching, you can have peace of mind and focus more on growing your business.
Thoughtful financial planning is key to a successful business launch. By taking these tips into account, you’ll avoid some of the common pitfalls many entrepreneurs overlook in the beginning stages of their businesses and set yourself up for greater profitability and success.