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The Business Plan - Part 8: Key Issues for the Right Space

This week we continue our series, The Business Plan, with a quick look at key issues to prepare for and keep in mind as you begin your search for the ideal space. We know that the desire to open a box is sometimes overpowering, but you have to remember that the right space is one of the, if not the most important, key factors to your potential success. We have seen many affiliates get excited about a space that seems perfect, and find out too late that the issues they should have, or could have, identified up front would end up costing them members and success. So, as you prepare to hit the road and turn over every rock in your search, here's a few things to keep in mind.

Basics of a Lease: Almost all commercial properties are leased using a price per square foot calculation. The price per square foot is generally listed on a monthly or annual basis. You may see a 2,000 square foot space available for rent at $24 per square foot, and unless you're looking in the heart of Manhattan, that rate generally refers to the annual rate. This doesn't mean you need to pay the entire year up front, you just simply divide the $24 by 12 months making it $2.00 per square foot per month. You may also see spaces being advertised at $2 per square foot per month, essentially the same as $24 per year. Later on in the series of blogs we will get into greater detail about lease terms and other factors to be aware of when negotiating rate.

Getting a Feel For Lease Rates: Before you can run your numbers to determine whether opening a gym is a realistic venture, you need have a good idea of what rent will cost, so you can make an informed decision. In our experience, rent is one of top three monthly expenses, so getting an accurate handle on it in the planning stage will only strengthen your position when you open. There's a few ways to determine market lease rates, and they're all free. One way is to contact a local commercial leasing agent. These professionals don't charge for information, and many have relationships with landlords that can lead to you getting information that may not be publicly available. Another obvious way to find space is to drive around and look for “For Lease” signs, although you'll probably end up talking with a commercial leasing agent who is representing the property owner. Another good method is to go online to www.loopnet.com, a free service for most purposes, and search in the lease section for commercial property listings. With LoopNet, you get to search on your schedule and can find most of the information you'll need for your analysis.

Square Footage:Based on the calculations you've run using some of the techniques discussed in previous blogs, and with a good feel for commercial lease rates, you can determine what size gym you should or can open based on your funds and projected demand.

Choosing the Right Location: We are firm believers that when you walk into the right space you know right away! When looking at locations here are a few points that we would always consider:

  • Is the location of the place zoned for a gym, or can the zoning be changed? In some towns or cities this does not matter much, but in most municipalities, the parking requirements for a gym use are very high, and city officials are quick to penalize and fine violators.
  • Does the location have sufficient parking? Depending on how car-oriented of a community you're looking to open in, this may be a major issue. In metropolitan areas like Los Angeles, people live in their cars, and parking is a make or break issue for many locations.

  • Are the dimensions of the space right for an affiliate gym? Does the width and length of the space make sense for accommodating classes? We've walked into many oddly shaped spaces and wondered how they could possibly be configured to hold classes. When in doubt, just walk out.

  • Does the space have bathrooms, and are they good condition and in locations and don't take away from your floor space? In all of our spaces we have had to build bathrooms and shower facilities from scratch. This is a time consuming and highly expensive undertaking that should be avoided if at all possible.

  • Is the ceiling height enough to accommodate a rig, wall balls, and climbing ropes? Just like you don't want to be in a space that is oddly shaped, you don't want to be constrained by height.

  • How much work will the location need before opening? In our case, two out of three of our locations were “vanilla shell” locations that needed massive construction. We had to build walls, bathrooms, shower rooms, install lighting, and just about everything else need before we could occupy the spaces. Unless you've prepared properly for this and have a strong budget that can withstand delays and cost overruns, we recommend against doing this.

  • Is there room to take additional space for future growth? This should be something you really do think about because the chances are good that, if you start small and follow the basics of providing high quality WODs combined with solid business management practices, you will grow and need more space. Expanding into the space next door is infinitely cheaper and easier than building another location from scratch. While this is not a high level need to worry about, it should be viewed as a bonus if the space you want also has room to grow.

Next week we will dig deeper into finding the right location for your affiliate, and provide additional information on leasing and lease negotiations.

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Maxwod is a commercial-grade fitness equipment store. Shop affordable commercial grade fitness equipment designed for commercial gyms, affiliate gyms, garage gyms, and more. Maxwod carries a full range of rigs and racks, strength and conditioning equipment, and cardio fitness gear. Maxwod is not associated or affiliated with CrossFit® and/or CrossFit Inc. We make no claims to provide items directly from or endorsed by or approved by CrossFit® and/or their licensing companies. Maxwod is a collection of fitness equipment stores and an authorized re-seller of fitness equipment.

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