The Five Biggest Mistakes I’ve Ever Seen In Opening a Fitness Studio - Amy Mewborn

The Five Biggest Mistakes I’ve Ever Seen In Opening a Fitness Studio

How to open a fitness studio

In my eight years launching fitness studios, I have seen some done well. And I have seen some mistakes so huge that I have seen the studios close down in just a few months in business!

Mistake #1 – Lease:

One of the absolute biggest mistakes I have seen made time and time again are surrounding the lease:
It could be:

  • Not having appropriate renewal terms
  • Overpaying rent
  • Being responsible for LARGE expenses that are normally borne by the landlord (Think $150k in BAD expenses)
  • Unusual maintenance costs
  • Atypical tax Costs of the landlord

This past year, I had a lovely young girl named “Diana” reached out to hire me. She called me AFTER she had negotiated her lease, after she had applied for her financing, and AFTER she realized that she had created an absolute mess for herself.

Her lender was telling her that based on a number of mistakes she had made, that she would not be able to get financing. In a number of communications, we were able to clean this up and secure her financing.

However, she had already negotiated her lease. When she sent me the lease, I was SHOCKED – Her lease was the WORST lease I had ever seen! I could literally list 20-30 things that were “wrong” with this lease.

But the biggest problem with Diana’s lease is that the landlord saddled her with a series of both up front and annual expenses that were not typical.

But worse than that – they not only didn’t give her any building concessions – they charged her to INSTALL the AC, to INSTALL the walls between her and her neighbor, and to INSTALL the initial electrical.

In my time in finance, I was ALSO a real estate agent, and my husband STILL works in real estate. Despite having a ton of business experience herself, Diana did NOT negotiate a good lease.

Based on my real estate, experience, we normally negotiate about $20,000 – $50,000 in tenant improvements and/or free rent for our clients! It’s a HUGE benefit of working with me and my team! But Diana didn’t get any concessions – and in fact her lease included over $150,000 in FIRST YEAR EXPENSES that she should never have incurred.

There are literally HUNDREDS of mistakes you can make in launching your studio. Unfortunately for Diana, I believe that she will probably STRUGGLE for YEARS TO COME because of this one mistake! There is a HIGH likelihood that she will never truly be profitable, and I truly believe that one day within the next five years, Diana will close her doors – never making back her investment and never truly turning a profit in her business.

This mistake is the most severe I’ve ever seen and I can honestly say that I would be surprised if she is still in business in three years!

Mistake #2 – Financing

Yesterday we talked about the ABSOLUTE biggest mistake I’ve seen in opening a studio. Today, I want to talk to you about the second biggest mistake I’ve seen – making a mistake in your financing, that causes you to lose credibility, and not receive financing!

I FREQUENTLY get phone calls from women who applied for financing for their studio and were turned down. It wasn’t because they weren’t a good credit risk. It wasn’t because the business model isn’t potentially hugely profitable!

It is one simple mistake…. When they apply for their loan, they don’t have a comprehensive enough business plan or full financial projections – showing why a lender should take a risk on lending to them.
Business owners not having a business plan or adequate financial projections will FREQUENTLY be unable to get financing or be approved for their desired lease.

Bethany was unable to get financing OR get the landlord to rent to her because they felt her business plan was not strong enough to take a chance on her.

The big issue with this is simple – Once you make this mistake, you can not typically rectify it with the same lender or landlord.

Bethany contacted me AFTER she had been declined. The problem is that both the landlord and lender had already determined that Bethany was not a good risk. At this point, they were highly unlikely to change their mind – meaning she would never get that loan, and she would never get her desired location. She had checked out a number of franchises and decided she could do it on her own – until she realized that she couldn’t (or shouldn’t).

Bethany had gone online and found a business plan template and just started filling it in, but she had not done the research, and she did not have comprehensive financial projections really showing what the business model looked like financially. ALSO, as Bethany didn’t have a lot of business experience, the lender wondered how she was going to run a six figure business without tools and systems already in place!

Bethany reached out to me after it looked like her business dream was dead! Fortunately, these were each areas that I had EXTENSIVE experience in! And we were able to work together to rebuild a more comprehensive business plan. And she took the projections we had already built as part of Studio in a Box and all we had to do was plug in a few details that were key to her business – and she was ready to apply with other lenders!

Ultimately, Bethany WAS able to get financing. She missed out on her first choice on her space! But, we found a space that really was a better fit, and once I spoke to her potential landlord about the systems we were putting in place in her business, he realized that she did have the tools to succeed!

Ready Fire Aim does NOT work well in launching a studio! Follow the process!

The US Chamber of Commerce shows that businesses who follow a proven system have a 97% success rate over 5 years. Those that do not have less than a 47% success rate over 5 years. This means that almost 50% FAIL without systems! Franchises are successful for a reason! Franchises charge their fees because they KNOW that their systems will help businesses be more successful! But I truly believe that you shouldn’t have to pay $50,000 plus 7% per year to get success systems!

I have helped launch over 45 studios – including barre, cycling, yoga, pilates, TRX, bootcamp – and more! Every single time we open a studio – we learn something new and different – and this is with 15 years of business and 8 years of studio ownership/studio launch experience!

A studio can be WILDLY profitable – but I’ve also seen MANY lose a LOT of money! A few costly mistakes could be the difference between a $500,000 per year business and a $100,000 per year business!

You MAY totally be able to open a studio on your own. But I can GUARANTEE you that you will make some costly mistakes that will affect your business income!

I believe that if you truly want to be successful, you find someone that has gone before you, and you get tips, advice, and help! I have been hiring mentors and coaches since my first year in business. My second studio was THREE TIMES MORE PROFITABLE than my first studio – because I avoided the biggest mistakes I made the first time!

Today, I help women open and grow successful, profitable, studios – without the $50,000 franchise fee! If you are serious about launching your own studio – and YOU want to avoid the franchise fees (or worse the $150,000 – $250,000 in mistakes you could make on your own), schedule a free consultation below!

Mistake #3 – Being Understaffed

This mistake caused her to close her doors!
So far, over the past few days, we’ve talked about mistakes in leases and mistakes in financing. The third mistake I want to talk to you about is a BIG one – and it can literally destroy your business – as well as the quality of your life!

As a business owner, you will often feel like you are wearing ALL the hats. Too many studios have FAILED because they didn’t have the team and support skills to help grow their business. You can NOT be in your studio 24/7. Even if you could, that probably defeats WHY you wanted to open this studio in the first place. As a business consultant, my goal is not to help you create another job where you trade an hour of your time for a dollar amount – keeping you chained to your business forever!

MY JOB as your consultant is to help you build a business that pays you while you travel, spend time with your family, and do what you REALLY wanted to do when you first dreamt of launching your studio! Your team will be the people who support you in this! Without a great team, you are almost guaranteed to fail!

Steph called me after she had launched her studio and had been open for almost a year. She was SIGNIFICANTLY understaffed! She didn’t have enough instructors. But more than not having enough instructors, her bigger challenge was that she knew that she wasn’t good at sales and marketing, but she never hired someone to help her with those things!

At almost a year into her business, she still wasn’t breaking even. She had lost almost $70,000 since she opened her doors and she was barreling toward the inability to do anything about it! You see, if you start off your business losing money, it becomes a snowball rolling down the hill – it’s hard to turn around – and you probably have to have MONEY to turn it around! In Steph’s case – she never really had any steady income coming in from the studio and she had burned through all her money! She waited too long to do something!

I know women grossing $500,000 + in their studios each year. I know women grossing almost $1,000,000 in their studios each year. But that type of success DOES NOT HAPPEN BY ACCIDENT! They had business plans! They had marketing plans. They had awesome teams of instructors, desk staff, and sales people! Their businesses pretty much ran without them – often allowing them to own MULTIPLE studios around the world!

A successful studio requires plans. It requires work. It requires a great team. And it often requires that you set it up right BEFORE you open your doors. I often hear from women who decide that they can do it on their own, THEN once they’ve made a number of costly mistakes they panic – often causing them to make MORE mistakes. Once they reach out – it’s often too late!

My studios made WAY more than I made in my 15 year six figure finance career. But I was CONSTANTLY investing in training, coaching, and help! Even though I didn’t have a franchise or an advisor prior to opening my studio – I knew quickly that my 15 years of management in existing, successful business did NOT equip me with the skills to launch a multi six figure studio without mistakes. Less than a year in my business, I had launched my second studio and then hired a $25,000 per year business coach. It was the best thing I ever did!

  • She helped me train my staff for better sales conversion.
  • She helped me look at my business with a fresh perspective – changing my offerings to be WAY more desirable than my competitors.
  • She helped me re-position myself and my business, so my business didn’t really compete any more with the large franchises.
  • She helped me track what was working and not working in my business – freeing me to ONLY do what was working!
  • She helped me establish some of the business and marketing systems that I was missing in my business – something that was CRITICAL now that I had two studios and a team of 30!

Mistake #4 – Not having PROPER staffing procedures!

Her wildly successful business became her biggest nightmare

Yesterday, I told you about one of the women who reached out to me after her business had lost over $70,000 and she was just too far in the hole to turn it around! Her big mistake was that despite knowing that she HATED sales and marketing, she was the person responsible for these tasks in her business (which really meant that no one was doing it)!

Today’s story is about another big staffing issue. It often goes hand in hand with being understaffed, but the real issue was that staff management was OUT OF CONTROL!!!

One of my very good friends, Kim who first introduced me to barre opened a studio with one of the large franchises about a year after I opened my first studio.

Her studio was WILDLY successful. She had an awesome location! Her clients LOVED her! She was making a TON of money!

But the franchisor did NOT give her a good methodology to hire, pay, and manage staff! Her staff of 9 was KILLING HER! They were not motivated to make her life easier. They were not dependable. Her dream business became a NOOSE around her neck!

As a mother, rather than spending time with her family on Tuesday night, she was filling in at the front desk, or teaching a class when the instructor didn’t show up!

I knew when I opened my studios that I wanted to be the business owner, not the lead cook and bottle washer! I wanted to be able to spend time with my family. I wanted to travel.

There ARE ways to manage this! But unfortunately Kim didn’t run her business that way, and once you set up your team in a certain way, it’s hard to change it later! (It can be done over time – but it’s not easy – and it is WAY easier to set it up properly when you START hiring your team!)

Two years into her business, she decided that even though she was really profitable and loved inspiring clients, it was NOT the life she had envisioned! Two years in, despite making great money, she closed her doors.

The big problem here was that her lease and franchise agreement were five year agreements! To be able to close her doors, she had to write both the landlord and the franchisor BIG checks to get out of her contracts!

Mistake #5 – The franchisor OWNED HER AND HER CLIENTS

About two years ago, I got a call from Melissa, a franchisee in Arizona who was really unhappy with her franchisor.

As part of their franchise agreement, the franchise owned the rights to her Mind Body Scheduling account, they were on her bank account, and were allowed to take money from it at will – based on the contract, gross income, and fees owed.

Melissa had a great attorney, but the franchise agreement was VERY one sided! And once it was signed, there was NOTHING that Melissa could do to truly control her business! The franchisor was newer in the market place and had not really shown yet what some of their long term plans were for the brand!

Imagine Melissa’s surprise when after they had been working together for a couple of years, the franchisor started emailing Melissa’s clients directly and were actually offering competing home products and services to her clients! The clientele that she had built up – all on her own – without any help from the franchisor was now receiving free an cheap access to online classes, to equipment, and all kinds of offerings that were in DIRECT competition to Melissa’s business!

Unfortunately, Melissa wasn’t the only one the franchisor was doing this to! But when other studio owners tried to leave the franchise, the franchisor would sue them for breach of contract and would reach out to the clients and disparage the studio owners. But the BIGGEST surprise to a number of these franchisees is that their contract auto renewed – at the franchisor’s discretion. The franchisees were STUCK – and literally had no way out! Ultimately, in order to close or to leave the franchise, Melissa and the other franchisees eventually had to pay the franchisor a very large buy out! Word of caution – Once you make the decision to partner with a franchise, it is often very hard and costly to leave.

Remember that these franchises have a team of advisors working on their contracts and trying to identify ALL the things that could go wrong – and writing provisions to protect themselves! I could probably tell you at least 25 stories of how franchisees have been left with big bills, have had their clients stolen, or have had their businesses harmed by the people who once swore to help and protect them!

At this time, I have helped launch over 45 studios – including barre, cycling, yoga, pilates, TRX, bootcamp – and more! Every single time we open a studio – we learn something new and different – and this is with 15 years of business and 8 years of studio ownership/studio launch experience!

A studio can be WILDLY profitable – but I’ve also seen MANY lose a LOT of money! A few costly mistakes could be the difference between a $500,000 per year business and a $100,000 per year business!

You MAY totally be able to open a studio on your own. But I can GUARANTEE you that you will make some costly mistakes that will affect your business income!

I believe that if you truly want to be successful, you find someone that has gone before you, and you get tips, advice, and help! I have been hiring mentors and coaches since my first year in business. My second studio was THREE TIMES MORE PROFITABLE than my first studio – because I avoided the biggest mistakes I made the first time!

Today, I help women open and grow successful, profitable, studios – without the $50,000 franchise fee! If you are serious about launching your own studio – and YOU want to avoid the franchise fees (or worse the $150,000 – $250,000 in mistakes you could make on your own), schedule a free consultation here!