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Handle Your Business, Man – Starting A CrossFit Gym Part 5

After being a coach at CrossFit South Brooklyn in NYC for 6 years I moved halfway across the country to open my own affiliate, CrossFit Lumos, in Austin, TX. This series will chronicle my experience opening the gym and what I am learning along the way. This article is Part 4 of the adventure. Part 1. Part 2. Part 3. Part 5.

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I am not a businessman. I’ve understood that for a long time- I have a certain point where too many numbers and figures makes me go cross eyed. It’s not that I can’t understand them, but that my personal threshold for finance and such is fairly low. So, as I started to think about building a gym, and at many stops along the way, I’ve had to go firmly into the realm of the uncomfortable- call it mental CrossFit- unknown, although eminently knowable.

As I started to pull together the idea for the gym I needed a tool to do some cost and profit estimating. I wanted to see how much the project would cost, but also how/when/if it would be profitable. I have a love/hate relationship with business books, most of which I envision being written by guys with spiky pomaded hair named Chad (sorry to the Chads out there) but I have read a few. In The E-Myth Revisited author Michael Gerber is quick to point out that you need to focus on building a business and not just a new job for yourself. I loved my job at CFSBK, so I needed to make sure that taking this leap was worth it and actually feasible.

There are some online tools out there, and I’m sure people with real understanding could probably build themselves a better one fairly easily, but after a lot of digging I liked this one the most. It’s a fairly basic Profit and Loss statement (aka P&L) that takes into account the big pieces that go into running a gym. I added some pieces to it and had to tweak some of the columns, but overall it let me start developing a sense of things. As I got more info and costs firmed up I could input them and get more realistic projections. For example, after I secured my space I put my rent in there as a firm figure (as opposed to a rough guess) and then built out an equipment list that matched my new space. I also used the tool to play around with some of the more fluid costs like what I wanted to charge for memberships, what software to use, etc. and it helped me see what changing each value did to my overall bottom line.

One big thing I think most CrossFit owners fail to grasp (although I’ve heard more and more about it as the business side of CrossFit develops) is that margin is the most important aspect of your business. Everyone wants to build a mega colossal gym with turf and 600 foot rope climbs and a turf track and lap pools and a smoothie bar and a cage full of pygmy masseuses, and so do I. We want to have hundreds of members because we want to share our passion with as many people as possible, even if that means financial and organizational acrobatics to make it happen. More members means more space, equipment, and coaches, all of which cost money. If you have a 500 member gym that grosses 25K a month, but you pay 10K in rent and expenses, 10K to your coaches, and 3K to cover random stuff you are not doing as well (2K profit/mo) as the 100 member gym that grosses 10K, pays 3K in rent, 2K to coaches, and 1K to random stuff (4K profit/mo), and you are likely working harder to do so.

So controlling my margins, my monthly costs over time, has been a priority. I got lucky with my space, which is pretty cost friendly, and I am going to try and staff pretty lean. I picked my software system for ease of use and its ability to stand alone and not need a dedicated front desk staffer to run it. Finally, my space isn’t huge, but I’m planning to resist expansion as long as possible, and toying with the idea of simply capping my membership at a point and having a wait list. I know that’s generally verboten in CrossFit, but I’d rather my gym be a place people were dying to go to than a warehouse 3x as big as I need with membership that lags behind financial outlay.

Lastly, I’ve learned that the budgeting and building process tests your mental flexibility. I had a bunch of reallywaycoolandawesome ideas that have been canned for constraints related to realism, budget, or both. I had dreamed of ultra chic rolled floor mats in custom colors, but as other pieces of my budget grew (ahem, PERMITTING) paying $2-3 per square foot for stall mats vs $6-9 per foot for the cool mats became very attractive. At the suggestion of my architect I had planned on glass “full-view” garage doors, but realized that the doors would spend most of their time open and out of sight, so switched them to regular ol’ steel doors to save some coin.

This process is ongoing if you are working with a fixed budget- as one thing balloons in cost you have to find another area to trim- within reason. Hopefully this means that by the time I’m set to open I haven’t convinced myself that people don’t really need barbells- some parts of your budget are non-negotiable.

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