How to open a second location

Your business is doing well. You have an overflowing building and a long waiting list. You need to open a second location, but how?

You should first ask yourself whether you need a second store. This article will walk you through the long list of things you should do before you make the jump.

IHRSA reports that 81% of fitness businesses fail in the first year. You may have a winning business formula, but you should still consider your second location a new venture. It doesn’t matter if it worked before; it won’t work again.

How do I open a second location?

It is tempting to replicate your success by opening a second gym or studio. The most successful fitness brands around the world have expanded from their original studios. Why not you?

Here is a checklist that you should complete before opening a second location.

Your first location has been a success. Your location has a high retention rate and is profitable. It is a good sign that your concept has worked and can be used in a second location.

You can’t handle the demand: If you have long waiting lists for your classes and your schedule is full, you may need to open another location to meet demand.

Your new ideas are not suitable for the original location: You might have some new class ideas or concepts that you can’t implement in your current location. This is a great opportunity to find a new place.

You are ambitious: The answer is simple. You don’t want to settle for just one gym but instead build an empire. If you can dream it, do it.

Mehdi Elaichouni: What Experts Say

My first location was a kind of proof-of-concept. I was able to gain the confidence needed to open my second location.

Mehdi Alaichouni founded and owns Carpe Diem BJJ. Mehdi Elaichouni, based in Singapore, saw a lot of success with his first location. He quickly opened a second.

Mehdi shared some of his experiences when he was a gym owner and opened a second location.

The following are his key points:

The first location will always be the place where you test your concept, where you’ll make mistakes and gamble. Reflect on the main success factors of your first location and build from there.

Standardization plays a crucial role: People flock to McDonald’s for the assurance that their food will taste the same everywhere. Medhi looked at restaurant brands outside of the fitness industry and found that a standard playbook was the key to success. This kept the quality and overall operations high.

Buyer beware – Avoiding Pitfalls at Your Second Location.

The expansion of a gym is not an easy journey. You may have found a formula that works with your first location, but new challenges could arise with your second. Here are some pitfalls to avoid when planning your gym expansion.

Don’t stretch yourself too thin.

It is a common problem when opening a second store. Your resources can be stretched to the limit. Medhi said in his interview that you will lose money in the first or second year of your business. This could also happen at the second location. Be sure to have enough money for your gym expansion.

Have a Playbook

Document each successful process in your first location so that it can be duplicated in the next area. It is important to track even minor details, such as cleaning schedules and message cadences. It may be necessary to adjust certain things depending on the new market that you are entering. However, don’t jump in without having a written roadmap.

Don’t overestimate the market.

Even if you have a successful formula for your first location, that doesn’t guarantee it will work again. It is particularly important if you’re opening in a different town, city, or even state. Market research is important as other people may respond differently to certain messages.

Do Your Market Research

Research the market before you open a gym or studio. Even if your studio or gym is in the same town, demographics and the competition could be different. If necessary, adapt your concept to fit the market.

If you enter a more affluent market, you may have to increase the cost of your membership in order to match the higher standards of membership that this type of market prefers.

Don’t stay at your desk all day – get out and meet business owners. Talk to gym members in your area and learn what is missing.

Identify a Source of Capital

The majority of second and third locations are operating at a loss, usually for or at least per year. So make sure that you have plenty of runways.

Be as analytical as you can when you create your budget for the second location. Double the amount when you have accounted for all costs.

Rent, insurance, wages, and equipment are all costs that need to be covered upfront, just as with the first location of a fitness center. You may lose money in the first two years before you start making profits. So, you’ll need to have a capital source.

Mehdi funded his first location with his own money until he made a profit. He secured investor capital for his second location. He could do this because he had demonstrated his ability to run an effective business at his first location. This made it easier to attract outside investors.

Look around your community to see if you can find investors who are willing to work with you. It’s a numbers game if you can prove your success and sell yourself. You may be surprised by the amount of feedback you receive if you cold call as many investors as you can.

Make sure your tax and insurance are impeccable.

Tax and insurance plans need to be planned down to the smallest detail because this is where business is made.

Talk to experts and do research. You could end up saving a lot of money.

Your landlord may require you to purchase insurance to protect the property.

Ensure that you have insurance to cover workers and materials in the event of renovations and construction.

When you are up and running, insurance can cover injuries and accidents to your staff.

Check out your local insurance laws. From the Small Business Association of the US also suggests that you check the taxes in your new area as they may differ from those in your previous location. This is especially true if you are setting up in a different state.

Start Pre-Sales Early

It doesn’t really matter if this is your first or last studio. Pre-selling memberships will be a crucial part of the process. This is for two main reasons:

Immediate capital: If you start selling memberships before opening, you will generate revenue even before you open. It will help you to reduce the stress in the early months.

Powerful social proof: If you open your doors to your first class and only two people show up, your reputation takes a big hit. The best way to convince members that you are the right business for them is by having full classes on the first day.

Mehdi pre-sold his first location a month before it opened. After learning from his mistakes, he extended the pre-sale period to six weeks in order to sell more memberships and trials. This generated more revenue for opening day than when he opened his first studio.

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