Being an entrepreneur may be the classic American dream, but that’s not to say it’s without its many challenges. According to a 2015 Bureau of Labor Statistics study, about 50 percent of all small businesses fail within the first four years. Despite this, more than half of our nation’s private workforce—56.1 million people, to be exact—is employed by small business owners, which shows that with the right mindset and resources, survival and even success are a very real possibility.
Prior to opening your business or even getting your financing in place, you need to sit down and visualize exactly what it is you’re looking to create. Write it down. Take note of your core values—both in life and business—your fitness principles, what it is you believe in and how you define (non-financial) success.
Once you’ve got these tenets in place, they will be your reference guide going forward when it comes to staffing worries, client complaints and pretty much any issue that arises.
Next up: Write your business plan. Make it as thorough as possible, and follow it as closely as you can. Revisit it every six months to tweak it so that it doesn’t become some old dusty document that holds no bearing on your current business.
MONEY, MONEY, MONEY
Let’s face it, most of the time a business fails because of poor money management. Entrepreneurs are typically talented and passionate about their product, but lack the business acumen that’s necessary to keep their books afloat. To avoid this, thorough revenue forecasting prior to opening your doors is a must. Touch base with someone in the industry who can provide you with insight about first year earnings. These goals should be realistic—don’t let your optimism and enthusiasm for this venture overshadow what you’ll realistically be bringing in.
Another cardinal rule: Don’t overspend. Yes the old adage that you need to spend money to make it has some truth to it, but at the same time every dollar spent is a dollar taken away from your bottom line. In the weeks and days leading up to opening—the crunch time when overspending often occurs under the guise of “let’s just get it done”—you really need to analyze the cost benefit of every single expense you’re considering.
Two other rules of thumb—keep two months of operating expenses saved in cash, and six months of living expenses. These reserves will serve as a life raft in the event of cash flow issues arriving, and preserve you from going into personal debt.
DON’T DISCOUNT THE UNKNOWN
One more thing to add to your budget? Those undetermined costs that will surely arise. “Everything adds up,” says Melissa Boyd, owner of Salt is the Cure, a high-intensity barre studio in San Francisco. “Laundry has become a much bigger expense than we had planned and as we continue to grow, it seems to triple—clients love to use multiple towels! Graphic design projects, water, toiletries, business cards…I didn’t plan ahead for any of these expenses. There are so many variables and things you cannot control or predict no matter how well you plan.”
Talk with other business owners to get a sense of what to expect—especially when it comes to the unexpected—and plan your miscellaneous backup funds accordingly.
When it comes to staffing, remember that you’re going to be spending a lot of time with these people. “Hire a team you enjoy to be around because they are your new family,” recommends Boyd. “Also, never assume your staff should know something—be direct and clear, not passive aggressive. The team and vibes you build are what makes your studio standout from all the others. Happy staff, happy clients.” Careful vetting of potential employees also ensures you won’t be spending valuable time and resources looking for new staff in another month or two.
REALISTIC REAL ESTATE
When it comes to your space, many gym owners recommend starting small to maintain low overhead. Yes, the 2,000-square-foot space on the water is gorgeous, but the 700-square-foot studio on a quieter street is a third of the price.
“Make sure the landlord is very aware of your plan,” advises Boyd. “Are you going to be playing loud music? What are your operating hours, your power needs, will you use loud equipment, etc. Also be sure to get detailed reports on the property, especially regarding roofing, pipes and lead. And definitely try to pre-negotiate the ability to extend your lease, as well.” As you grow in revenue, you can consider expanding down the line, but start small in order to allow this to be an option someday.