Articles


Gym Business Fundamentals

by Ray Gillenwater, SSC | December 24, 2019

coaches at starting strength houston

Perform full-body barbell exercises. Do sets of five. Rest long enough between sets. Go up in weight. Recover with adequate sleep, time, and nutrition between workouts. These are fundamental strength training principles, that if followed carefully, will result in you getting stronger. These principles aren’t common knowledge and there are countless “experts” online sharing contradictory opinions that they are not qualified to have. Believe it or not, this level of misunderstanding is not exclusive to strength training – the parallels in business are amusingly similar. 

Like strength training, the beautiful thing about entrepreneurship is that it has principles that are clearly identifiable by those that have experience, and the result of those principles being followed (or not) is blatantly (and sometimes painfully) obvious to see by anyone that’s paying attention. There is no faking it, not for long anyways. Time spent in the gym is either making you stronger, or it’s not. A new gym business is either on its way to a rapid payback period and profitability, or it’s on a path to mediocrity or worse, bankruptcy. 

From my perspective, the analogous business principles are as follows: 

First, you must have a defined group of people that has an unmet need that you’re able to uniquely fulfill. This one is commonly misinterpreted to mean that if you generally offer something that people might want, you’ll be successful. The group of people and the unmet need must be specific and verifiable. For example: I believe that opening a gym that focuses on barbell-based strength training for the general public is a bad idea. Who is the general public? How will you communicate with them? Is your marketing budget big enough to speak to that big of an audience? How will you convince people to do something they’ve been warned by their doctor/friend/PT not to do? The general public is too broad. Strength training is too poorly defined (since our definition isn’t the general public’s definition). 

This is the reason I would not be in the gym business if it wasn’t for Starting Strength. I have a general disdain for most of the industry due to their dishonest advertising practices and generally questionable business ethics. That’s in addition to the fact that there isn’t a commercial gym chain in the country that I believe is providing a uniquely valuable and indispensable service to its members. I know that more people need to be strong but I would never venture to try to convince people of that. Having to change people’s minds as a core feature of a business model presents more risk than I’m willing to bear. It’s questionable that there is demand for a barbell-focused strength training gym geared towards the general public in your city. There is however, significant and verifiable demand for Starting Strength, provided you’re in a top 40 US market. This is the difference between attempting to create demand and fulfilling existing demand – a lesson in business that is much less painful to learn without experiencing it first-hand. 

People sign up for Starting Strength Gyms because they know that they’ll be doing the Starting Strength program under the guidance of a Starting Strength Coach. Rip and Stef have created a powerful brand, one that subconsciously communicates that the programming will be effective, the coaching will be precise, and that a trainee’s effort in the gym will bear rapid results. There are more people who want to do Starting Strength than people who have the time, interest, and/or tenacity to effectively coach themselves. This means there is a gap in the market – an unmet need of people that are interested in doing the program, but can’t or won’t due to the inherent constraints of self-teaching. 

This is why I would bet that “Ray’s Strength Training” would fail even though “Starting Strength Gyms” are succeeding – even if the service offering is exactly the same. The difference? Starting Strength has the brand, the trust, the audience, and the ability to communicate to that audience, and Ray’s Strength Training has none of those things. In the case of Starting Strength Gyms, the defined group of people that have an unmet need is a proportion of the three million people that visit the Starting Strength website each year. For a new brand, this audience is hypothetical and largely inaccessible. Anyone that’s ever tried to start a business from scratch will understand this point well: there is a vast graveyard of incredible products that never found an audience; or of those that had an audience, but was not capable of communicating with them; or more frustratingly, those that had an audience, the ability to communicate with them, but no one cared enough to make a purchase. 

Developing a product (or in our case, a service) for a defined audience is a much simpler task than trying to find a market for an already developed product. This is important enough to reiterate: fulfilling existing demand is a less risky endeavor than trying to create new demand. Once the product is created, the clock has started and it either stops when the business is profitable or when it’s time to call it quits due to mounting bills and not enough income to pay them off. The market is ruthless and doesn’t care how great you think your idea is – it only cares if you’re able to appeal to an adequate number of people that are interested in paying for it.

This is principle number two: the product (or service) being offered must meet the needs of a well-defined audience. Sometimes this requires trying something new – and anything new that you try is by definition unproven, which means it’s high risk. In our situation, for example, we were faced with a choice: give people what they’re used to with access to the gym and a flexible schedule, or ask that people train on a fixed schedule. Our wager was that if people did indeed want professional guidance to do the program effectively, then they would want to do it the way it was meant to be done. Asking the members to train on a fixed schedule each week meant that we were taking a risk – asking for behavior change that no other gym chain is asking for – but the risk of allowing people to train on a less rigid schedule means worse outcomes for our members. For that reason, we’ve opted for the rigid schedule. Some trainees won’t be able to adhere to it, but enough have already done so to convince us that this is the best approach if we intend to do what we promised to do: make people stronger. 

Principle number three is access. The business must have a fulfillment mechanism that matches the preferences of the target audience. For our purposes in the gym business, access depends on geography (physical access) and affordability (price accessibility). Hiring a professional to teach you a useful skill is an expensive endeavor, which is why we place our gyms in areas that are saturated with people who have a high level of disposable income. A successful Starting Strength Gym needs to be in a city with high demand for Starting Strength, in an area of that city where our target demographic lives and/or works, and in a retail location within that area that is visible and easy to get to by that group of people – with tens of thousands of cars passing the storefront sign every day. Many gym owners start their real estate search asking themselves the question, “Where can I find the cheapest rent?” when a less risky question would be, “Where can I place the gym to give access to the highest percentage of my target audience?” This piece of the equation is so critical and hard to reverse that, for example, we’re now in month 12 of the real estate search for Starting Strength Boston. It’s better to have no gym at all than a gym in a sub-optimal location. 

Principle four is communication. This principle is often overlooked as simple, automatic, or obvious. On the contrary, it’s the most underestimated and most critical part of fulfilling demand. You can have product, market, and demand figured out and still fail completely if you’re unable to effectively communicate with your target audience. We do this in several ways, one of which is by placing geo-targeted banner ads on Starting Strength web properties to inform local website visitors when a gym is coming to their city. A defined audience with an audience-specific communication mechanism is something that is truly undervalued and overlooked by many new entrepreneurs. 

Regular and high-quality communication is also required to build upon an existing audience in a market and grow a brand’s presence. For a gym, especially one that offers a non-standard, high-cost service, this primarily means growing a social media following and a mailing list. The word needs to spread that there is a gym that produces results for all of its members, even though its methods contradict most people’s understanding of fitness. People need to see the inside of the gym, how great the coaching is, and how strong the members are becoming. This is a slow process that pays off over time – a business typically cannot depend on this type of growth as its primary source of income, hence the importance of brand and existing demand. 

The last principle applies to companies that face actual competition, which is why your internet provider is so awful to deal with: value. The promise that was made to your target audience about how well your product or service will solve their problem must meet or exceed their expectations. Unethical marketers in the gym business stack the deck in their favor by making ridiculous promises (You can be this good looking too!) and then lock members into long-term contracts. Not getting the value you expected out of your membership? Too bad, you’re obligated to keep paying. The more honest way to approach this, of course, is to simply offer something that’s valuable enough for the member to keep paying for, without the threat of legal recourse.  

A well-defined audience; a service that fulfills an unmet need of that audience; a distribution mechanism that fulfills the need in a way that suits the audience’s preferences; a means to communicate with that audience effectively; and giving enough of a shit to make sure that the value they get is equal to or more than they expected – those are the most important business principles from my perspective. Follow the principles and get steady gains. Ignore them, pretend they don’t apply to you, or focus on the wrong priorities, and your progress will suffer. Fooling around in the gym without a solid understanding of strength training principles is relatively harmless – it’s just not productive. Doing the same in business has more serious and damaging consequences. A wise entrepreneur (and strength trainee) learns from the mistakes of others instead of having to personally pay for the same lesson.


Discuss in Forums




Starting Strength Weekly Report

Highlights from the StartingStrength Community. Browse archives.