Did you know? Data from the Exploding topics shows that around 20% of businesses fail in the initial set of years (6 months-2 years). Whereas around 50% face failure in the initial 5 years. However, the multiple aspects vary from industry to industry, and various market influences affect the business as well. 

If we simply talk about the health and fitness market, it is known to be one of the most compact yet competitive markets. The projected value of the fitness market is around $96.6 billion this year alone. In such an industry, opening a gym requires keen and thorough planning to make the business successful. 

You must have seen multiple articles offering tips and tricks on how to make your business successful, yet here’s a blog on the fifteen biggest reasons why gyms fail. After reading this blog, you will understand why most gym businesses fail and what key considerations you need to keep in mind to avoid repeating such mistakes, and making the right decisions. 

  1. Lack of good business plan

Starting a gym without a detailed business plan is a recipe for disaster. A clear business plan helps you outline your objectives, target market, budget, and marketing strategy. Without it, you risk overspending, underestimating costs, or failing to reach your target audience.

Problem: A business plan is nothing without a firm basis and a clear goal. It is very important to have a precise and directional plan as if you try to do everything, the results won’t be as good as you require them to be.Affect: If a business’s niche is not defined, its marketing is not directed, and it really doesn’t have a clear objective to work on. This leads to an unclear budget and waste of money, along with an unspecified targeted audience, which leads to failure at the very initial time period.
  1. Not enough finances 

Before you start your business, the main thing you plan on is the budget for the upfront capital. It’s highly essential to establish the business and make it stable in the market. It is important to have enough on your hand to at least execute your business plan.

Problem: If you are making a gym business plan, which requires a big investment for the equipment, staff, and other facilities, you don’t have enough upfront to invest. Even at times, people invest all that they have in the business, and by the end of the day, you are empty-handed.Affect: It has quite an aftereffect, as you might know, that establishing a new business in any market requires time. The amount of time depends on the industry and the market you have chosen to launch in. However, if you are short after the initial investment, it will be hard for you to spend on ongoing expenditures which will lead to business failure. 
  1. Lack of expertise

Complete knowledge of the business or market you are entering is essential, as insufficient research might lead to further difficulties, including financial. You need to have the correct information on demographics, the location you are choosing, and the current marketing trends. You have to understand, or you can hire an expert to better guide you with the business plan and setting. 

Problem: Most gym owners don’t thoroughly research the market to determine the ongoing trends before opening a gym. If you don’t have enough expertise, you might be unable to define a single niche for your gym. Affect: Lacking experience will lead to an undefined gym business project. You will not have any focused niche or a tailored strategy to work on. Ultimately, it will not be a good one and can lead to a downfall in such a competitive market. 
  1. Unfit location

Finding a suitable location for the gym is crucial. It greatly impacts the business’s reach and growth rate. 

Problem: Location can be the most prominent factor and highly impact your membership rate. You have to keep in mind the distance from your members’ residences. However, low foot traffic and accessibility are big drawbacks.Affect: This leads to inconvenience and increased difficulty for the potential members who visit the gym daily. 
  1. Neglected branding and marketing 

The fitness and gym industry is highly compact. Understanding the right strategic marketing and how to do branding is necessary to make yourself seen and prominent in this field, as around 22% of startups fail due to implementing wrong marketing strategies, as shown in research reports by CB Insights. Back-to-back promotions and advertisements are used to engage potential targeted members.

Problem: If your marketing lacks strategy, there’s no point in branding your gym. Usually, gym owners don’t brand or market their gym to save money and run the business on the basis of word of mouth. Affect: Neglected marketing can negatively impact the gym business and can be a leading cause of its failure. 
  1. Lack of capability to retain members

Suppose you cannot fulfill the members’ requirements and fail to address personal preferences. In that case, they are more likely to switch to another gym. It is essential to focus on retaining programs and increasing the offerings for their members. 

Problem: Multiple gym businesses lack the factor that helps to engage their members and gain their loyalty. Affect: The neglect increases the members’ churn rate and starts the downfall of the gym business in the market. 
  1. Excessive competition

The gym industry is highly competitive. Every year, hundreds of new gyms are introduced to the market. Multiple gym and fitness franchises target the same audience, making it even more difficult to compete. Such a situation makes uniqueness necessary. It is important to bring a unique value proposition to the market and offer various new opportunities.

Problem: Nowadays, all the gyms provide almost similar services. In contrast, members are always looking for new mesmerizing deals in this saturated market. Affect: The inability to introduce something new in the market can really backfire, as the target audiences wouldn’t be interested since you are not serving something new.  
  1. Not targeting the right audience

One of the biggest mistakes made by multiple business owners is that they are targeting the wrong audience. The services and offerings are of no use if you are conveying them to the wrong audience.

Problem: One of the biggest reasons for the failure of a business is targeting the wrong audience. This is due to gaining less insight and knowledge of the market. AffectCB Insights reports that around 70% of startups fail due to inadequate market research. When the wrong audience is targeted, the entire strategy is useless and doesn’t pay back anything.
  1. Lack of staff and equipment

If your gym equipment is not high-quality, there’s always a chance of a mishap, which can drive members away. Mostly, gyms don’t have sufficient staff and equipment, which is a big turnoff for members. 

Problem: A lack of equipment and fitness trainers is a big deal for any gym. For example, if you operate a gym with a capacity of 10 members at a single time, and yet you have only one treadmill to jog on, believe me, it ruins the gym’s reputation. Affect: No matter how strong the marketing is, if there is bad word of mouth regarding your gym, there’s a high chance of your business failure. 
  1. Limited opportunities

The key to attracting new members is to bring multiple offers and options for new fitness regimes. You must have seen this practice among multiple businesses launching new products; it is simply to keep their value high in the market.

Problem: With the same limited opportunities at the gym, people start to feel bored and are less excited.Affect: Once they are bored and feel unchallenged, they start their search for a better gym and look for alternatives.
  1. Unprofessional management

Having experienced management can play along and help improve the business value in the market and enhance membership engagement. It leads to good, healthy member and gym relationships. However, if the management is unprofessional, members are likely to cancel. 

Problem:Unprofessional management can really ruin the gym’s maintained business professionalism, leading to excessive complaints and bad online reviews. 

Affect: One of the leading reasons for quitting the gym is the unprofessional management, as no hygiene is maintained, the member service is not supportive, and the in-house staff is not cooperative. This simply leads to decreased members and, later on, to business failure.  
  1. Ignoring the importance of social media

The stronger your social media game is, the better your market value, as in the current times, it ensures the authenticity of the brand. According to RetailDive around 87% of product consumers tend to conduct online research before they make any purchase

Problem: It is very hard for consumers to rely on any business that doesn’t have a social media page. Undoubtedly, websites play an important role, but they aren’t enough. The ongoing trend of social media posting and tagging their gyms is known as automatic marketing, which enhances their credibility. This will simply allow your competitors who have a good social media presence a better chance of getting more publicity and a better member retention rate. Affect: A lack of good social media presence may lead to a loss of credibility and might not attract many potential members in the long run.
  1. Avoiding integration of market trends 

With each passing day, the fitness and gym industry is constantly evolving and introducing new trends. This has been a great source of interest for fitness freaks. However, it is becoming really difficult for gym owners to keep up with the pace of the industry to ensure higher success rates.  

Problem: Gyms usually fail to adapt to changes on such short notice, as it’s really hard for multiple owners to shift to sustainability on such short notice. It requires constant planning and enthusiasm, which may be lacking in multiple local gyms, and it’s one of the biggest reasons for their downfall. Especially the ones who don’t implement the trending fitness regime, including HIIT or Zumba. Affect: Suppose the gym owners are not ready to invest in upgrading to the new trends. They are more likely to lose members if they continue to work around outdated equipment and routines as people move forward and look for more exciting alternatives. 
  1. Inconsistent membership Models(Unrealistic goals)

Gym owners and all the young entrepreneurs out there need to understand that consumers prefer ease and simple processes over complex and challenging procedures.

Problem: Constantly changing modules can really affect the credibility of the project and leave the members confused. Affect: It directly affects the retention rate as it refuses to cater to multiple needs of the members at the same time.
  1. Managing members satisfaction

Undoubtedly, member management is the most important aspect of B2C businesses. The satisfaction level depends on various factors, including member services, managing the bookings, and payment processes. 

Problem: One experience can totally break or make a whole impression on the members, which may lead to further conclusions depending on the experiences they had.Affect:  If the experience is positive, they might be up for a long-term connection with the gym, whereas if it’s negative, they are more likely to go for an alternative. 

Role of gym management software

You must wonder what role gym management software can play in preventing business failure. Well, you must be surprised how easily a single software can cope with multiple reasons for failure and streamline all the essential tasks to ensure a higher success rate with enhanced member experience rates. 

It improves and simplifies business management by reducing the number of human staff and automating all the essential tasks. The following are the main services that almost all the top gym management software covers, and you need to ensure the one you implement is capable of functioning according to your own business. 

  1. An integrated POS system is essential for automating the payment processes and helping your members keep their dues in check.
  2. Keenly processes all sales-oriented SMS based on any sort of sale trigger. 
  3. Marketing and advertisement is an essential part of any business. Gym management software plays an important role in providing services for businesses, including email marketing and providing data for other social media platforms. 
  4. Provide analytical SWOT analysis of sales and overall revenue generation. These features help to obtain in-depth information on how the business is performing and what further decisions should be made. 
  5. Above all, the gym management software provides a service of scheduling all the sessions and makes it easier for everyone. 

Implementing the right gym management software can totally change the whole game and allow your business to walk down the path of success. 

Conclusion

There are various reasons behind gym business failure. In the above blog, the fifteen major reasons are thoroughly explained, as well as the problem and how it affects the business. 

You can implement gym management software to streamline all the processes. This not only improves member service but also improves advertising and branding by providing monthly analysis. It makes it easier for you to boost the chances of adequate growth of your gym business.