With such a hot fitness market right now, many boutique studio owners around the world are looking to expand their brand. But whether you hope to grow your current space or add locations, knowing when and where to expand requires a lot of research and is a huge undertaking with many moving parts to consider.
At ClassPass, we’ve worked closely with dozens of partners around the world to support their expansion efforts, both with providing data on opportune neighborhoods as well as upfront capital to assist with build out.
We’ve learned some tips along the way to prepare for and carry out a studio expansion that will ensure your success, no matter where you hope to grow.
#1: Consider Your Current Space
When it seems like a new studio opens up down the block every other week, it’s easy to get caught up in the excitement of growing your fitness business. But before you start scoping out new real estate, consider the state of your current studio or gym. Have you mastered your existing business plan with effective pricing, a dedicated community, and well-run team of staffers? It may seem obvious, but you need to feel confident that everything in your current space is running smoothly before you can transition your mindset to the next location — because once you open those new doors, you’ll be managing multiple teams of staff and clients. You will need to delegate work to trusted members of your team, which is not always easy to do, so make sure you feel stable in your existing set-up before you start to prepare for that next step.
#2: Assess Your Capital
Arguably the most important aspect of preparing for an expansion is getting your financing lined up. Will you draw from your existing cash flow, take money from investors, or take out a loan? Once you find the right place and secure a lease, the ClassPass Empowerment team can be a resource to provide upfront capital with preferred financing terms to top partners. We also have some additional tips for increasing capital when you need it. You’ll need your financial game plan in place before you can start thinking about anything else.
#3: Determine Needs vs. Wants
You may dream that your next studio will be a beautiful space with exposed brick walls, soaring windows, showers and lockers for clients, and a large entry with seating in a ground floor, high-traffic location, for a price that doesn’t bust your budget. However, it’s nearly guaranteed that you will not find a space that accommodates everything you want. Going after a lofty list of aesthetic goals will often lead to a lengthy and disappointing search, or you jumping on the first space that feels exciting, but that may not be truly right for your business.
Avoid jumping on the first space that feels exciting, but that may not be truly right for your business.
Before you start looking, create a list of what you absolutely need in a new space, versus what you want. Every space you see will need at least some customization to fit your brand and style, so focus on the basics like location, the size and layout of the space, and the price. Beyond that, determine what’s nice to have versus necessary. For example, if you know a complaint in your current space is the lack of showers, you can prioritize that in your next build out, as well as other realistic factors that can be tied to a true business need, such as potentially investing more to get a central location. This helps you focus your search and be more efficient as well.
#4: Build Your Team of Experts
Once you’re ready to kick off your expansion process, connect with fellow studio owners, lawyers, and real estate professionals to advise you on next steps. You’ll want to do research into the area you plan to expand to better understand the demographics, including what studios currently operate there, whether people drive or use public transit, what genres are trending in the neighborhood, and more. ClassPass is able to provide this information to exclusive partners as part of its Empowerment Program, drawing from CP user data and neighborhood stats to pinpoint high-demand opportunities for growth. Ask your fellow studio owners as well for references on brokers who’ve dealt specifically in fitness venue leasing, as having that expertise can be incredibly helpful when finding a new space and coordinating all the moving parts of lease negotiation.
#5: Anticipate Delays
It may take anywhere from 1-4 months to find a space — or longer! Be patient with the process and don’t rush it, because you’ll likely need to commit to the space for anywhere from 5-10 years at minimum, unless you’re signing a subleasing agreement. You’ll also want to budget at least a month for negotiating the lease. Contract the services of a real estate lawyer to review the lease on your behalf (they can be over 100 pages with tons of hidden details) so that you make sure your own interests are protected.
View more: Building a New Studio Space Webinar
At the same time you’re working through the lease negotiations, you’ll want to start contacting vendors to help build out your perfect studio space. The process of customizing your space can take months as well, so make sure your budget, schedule, and resources are prepared for inevitable delays. To help maintain your sanity, coordinate weekly check-ins with your contractors to ensure everything is running to schedule, but be patient, knowing that materials will be delayed or out of stock, inclement weather will push back your timeline, etc.
Before you know it — or maybe 6-24+ months later — you’ll be in a new space fit to grow your business and welcome more clients!
For more information about the ClassPass Empowerment Program, contact the Partner Success team.