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The Business Plan - Part 7: Choosing the Right Space

This week we continue the Business Plan discussion of How to Start a Box by taking a look at how to choose the right space for your affiliate. Now that you have done your homework on the demographics and have decided on what type of location you wish to pursue (garage, industrial, prime retail), the next step is to decide the size (square footage) of the gym that makes sense for you to open, and make sure you can afford it in the short and long run.

Determining Ideal Size

Based on the demographics research you did, you should have a good idea of the number of potential members you can convert. You should also have an idea of the best potential class times and when you'll be busiest. These numbers will help you to determine how much space you can potentially utilize efficiently.

Step 1: Maximum Number of Members per Class 

The general rule of thumb that we've found is that each member will require between 70 to 100 square feet of space to safely and efficiently perform in. Obviously, different WODs have different requirements, and a body-weight or kettlebell workout needs less space than one focused on Olympic lifting, but the 70-100 square foot range is reliable across the board. For example, if your workout space (not total gym size, just the workout area) is about 1,700 square feet, you should be able to safely accommodate up to 24 members (1700/70=24). Yes, this is cozy, but it is efficient and cost effective – very important if you've chosen to be located in a high-rent prime retail area.

Step 2: Determining Maximum Capacity

You now know how many members you can accommodate in each class. Now you have to determine how many classes you can have each day, and how often members will be coming in. Most locations find that they are busiest during the early morning and late afternoon and evening hours, and quiet during the day. Depending on how you stack your schedule, you may be able to achieve up to nine “prime-time” classes  each weekday, and another four classes during the weekends, for a total potential schedule of 53 high-capacity classes per week. If you take the maximum number of members per class from Step 1, you can comfortably service 1,272 visits per week. If you estimate that your average member drops in about 2.5 times per week, you come up with your maximum member capacity of 508 members.

Again, the 508 member capacity is based on maximum efficiency of a 1,700 square foot workout floor with members dropping in 2.5 times a week. If you choose to have a more open space and give each member 100 square feet to work out in, you drop the capacity of the same size size club to 360 members. If you choose to run the space efficiently but have fewer classes, you've again limited the potential capacity of your club. You should also factor in smaller and off-prime classes, such as potential mid-morning and noon classes that may not be at capacity, but bring in loyal members nonetheless. These will allow you to capture an additional group of members that will provide good income without much additional incremental costs.

There are a lot of moving parts to this, so you've got to do your math and decide early on how you want your club to look and feel. A lot of this also depends on cost of space as well. Some of our competitors who elected to open in industrial parks and pay one-quarter the rent we were paying had excess room to spare, while others who decided to open like us in prime retail locations had to come up with creative ways to utilize every inch of space they had.

Review of the Math:

Step 1: Maximum Number of Members per Class

(Workout Floor Square Feet) / (WOD Space Required) = Maximum Class Capacity

WOD Space Required: 70-100 square feet per member

Example: (1,500 square feet of workout floor space) / (100 square feet per member) = 15 members per class

Step 2: Determining Maximum Capacity

Step 2a: Determine your Maximum Potential Schedule. In the example above I calculated nine weekday classes (Mornings: 5AM, 6AM, 7AM, 8AM; Evenings: 4PM, 5PM, 6PM, 7PM, 8PM) and four weekend classes, for a total of 53 classes per week.You may add or deduct classes as you see fit, based on your market research or desired business hours.

       Step 2b: (Maximum Members per Class) x (Maximum Potential Schedule)) / (Average Visits Per Week) = Max Member Capacity

Example: ((15) x (53)) / (2.5) = 318 members maximum capacity

When looking at spaces, take a step back and really think, "is this the right space." Don't let your excitement get the best of you, where you make the wrong decision. When looking for locations for our gyms, we patiently waited until we got the right space at the right price. For each location we opened probably toured 15-20 prospective spaces, wrote offers on 5 of them, and ended up picking what we thought our best horse.

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