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Opening a Gym (and How to Succeed) | Featuring Flagship

by Pablo Fuentes | Last Updated March 29, 2017
How to Open a Gym

The fitness industry is exploding.

One in five Americans are heading to the gym or at least have a gym membership. Fitness trends like Crossfit, Soul Cycle, pilates and yoga are now mainstream and available in most cities.

More and more folks are quitting their 9 to 5 and chasing their passions by jumping full steam into the fitness industry.

However, starting a gym is not just about passion. The bottom line is, it's still a business and most small businesses fail within the first 18 months.

How do you insure that your gym succeeds and does not become a statistic?

Can you turn your passion into a financial success?

To help us answer these questions (and more), we talked to Brian Hassan of Flagship Athletic Performance, a successful gym enterprise in San Francisco. Brian has succeeded by combining his business background with his passion for fitness and he has tons of awesome advice for anyone flirting with the idea of opening a gym.

Check it out:

Listen to the podcast:

Show Notes

A summary of our interview with Brian Hassan from Flagship Athletic Performance is below.

You can use the links below to jump to your interests.


How would you describe Flagship?

Brian Hassan: Flagship is actually a strength conditioning gym. Follows sort of the Crossfit methodology. But is a training regimen primarily for people that are looking to lose weight, get in shape, or help them actually excel in a current sport, whether it's running a 5K, running marathons, swimming, triathlons, Jiu Jitsu, and many others.

You were already running another successful business when you started Flagship. What inspired you to, on top of your other successful business endeavors, get into the fitness business?

Brian Hassan: I've always loved being in the gym. Many of you guys who know me personally know that's like a passion. So, I actually got into Crossfit back in 2013, and was fortunate enough to be part of the Regionals team, representing San Francisco Crossfit, and met some really great guys. And, you know, when we met we realized there wasn't a place that we could train close to work, which is in downtown San Francisco. So we got together and said, well let’s see if we can open up a gym together. And what started as an idea over some Sunday afternoon drinks turned into a reality when we found the perfect location, at the perfect price point. And it just sort of all came together.

We really wanted to be a little bit different. We didn't want a gym that was focused in on lifting 800 pounds or really just being that muscly meat head walking around. And for us it was more of a focus in on form, functionality, health, safety, and fitness. And so that was sort of the mantra: let’s deliver a really high-end experience to members with a core focus on moving correctly.

What did it mean for you to find the perfect location? And what was that process like?

Brian Hassan: Well, I think its a pretty extensive process, but if we were kind of boiling it down to keep it pretty simple, you obviously want to take a look at what competitors are in your market, right?

We looked at zip codes where we'd like to put the gym, and looked at where competitors were, and how close they were. And then second we looked at the demographics and the daytime traffic. And so for us, in the Financial District of San Francisco we saw a significant hole in that there were no competitors serving a specific area.

And we knew what the average earnings were of people that were part of the daytime traffic in that particular area. And we said that, well this could perhaps work because we found a location with very little, if no competition. And also, we thought that members would be able to pony up the membership price point that we're asking for to substantiate all of our overhead expenses, including rent.

Many fitness businesses struggle to make the financial side of things work. What would be your main piece of advice for people starting a fitness business?

Brian Hassan: Yeah I think before you start any business, right? A lot of people, they've got a lot of passion. And they just say, "I'm just gonna go for it". But they actually don't really put together a plan.

And when I mean a plan I'm not talking about putting together a 70-page business plan, because, as you and I both know, things can change a lot. So when we looked at Flagship, we looked at just a general business model that would make sense financially.

The largest component obviously is rent. Number two, where are we going to source the coaches? And if we want high quality coaches, what are we going to have to pay them to be competitive in the market? We also looked at other associated fixed and variable costs. We asked ourselves: “What do we feel we can grow our membership to?” “What number, lets be conservative about it, in the first, say, 90 days? And lets put that pen to paper, and again, being ultra-conservative, lets over exaggerate what our expenses are, and lets underestimate what we think our revenues will be.

You have to have a margin of safety, especially if you're signing up for a five year lease in one of the most expensive cities to rent commercial property. You have to have the numbers and need to be conservative.

So that's probably something that's good advice for anybody, starting any sort of business, right? And like you said, in order to start a business you have to be a little bit irrational in the first place, and have this burning desire to do it. But also having all the financial preparation and numbers ahead of time can make a big difference.

Brian Hassan: I mean I say there's two types- there's people out there that start a business because they see the dollars, but they don't have the passion. And they'll do okay. Then you have people that start a business that have the passion, but they don't have the financial wherewithal. They'll do okay, but if you start a business and you have both the passion and the financial wherewithal and the actual planning, both financial and strategic, you're more likely to be successful. And that is the case not just in the gym business, but business overall.

What is something that most people don't know about the fitness business that you see very clearly, being on the inside?

Brian Hassan: Yeah I would say that, in the fitness business, it’s very difficult to find quality talent, meaning coaches. Because if you think about it, the coach is the representative of your brand. When people go to a workout, often times I don't hear them talk about, "Oh, this new thing was amazing!

They talk about the coaching experience that they had. And so for us, the most difficult part is securing the best coaches. And when we look at coaches, obviously there's a laundry list of things that we look for. But typically, the top two are, knowledge base and safety.

Movement is very very important. But that, alone, doesn't get you the job; you also have to have passion. And you have to have the ability to connect with athletes and the ability to facilitate athletes connecting with one another to build that sense of community. So I would say the hardest part of certainly building out a gym, or a fitness space is, you got to find the best, what I would call your “brand ambassador.”

What are the specific things you've done to build community, in terms of making people feel like they're a part of something?

Brian Hassan: Community can be built both during the workout, because think about it, when you're actually going through a challenging routine together, you bond over that, right? Take the military, as an example. When you go through training with someone you create a bond, because you're both struggling to achieve, perhaps a similar goal.

But I would also say what's important is having stuff outside of the gym. We do a lot of different member events. Once a month, to celebrate pride, we do a pride WOD (workout of the day), and in the summer we do barbecues once a month.

We also do member appreciation events. And I think it’s important to get members into the gym, to kind of hang out with one another outside of just the actual fitness regiment.

Did you have any trouble getting buy-in from members to show up to these? Or was it something that, organically, people responded well to?

Brian Hassan: I would say, first, obviously, you have the diehard people, right? They just buy into your brand, and just love it. They show up, and then, as the events become more prevalent, you see other additional members coming because they're talking about how fun or how great the event was.

And when you're running a business, loyalty is important. You create a memorable experience and bonding between staff and other customers. To where they can speak about, "Hey what do you love? What do you not like?". But it’s also important for management and ownership to actually listen to, not as much as what they love, but what can be improved. Because, you know it’s funny, this translates into so many other parts of business, is that so many people focusing on improving what's already great, and they don't focus on what lacks.

Can you give me a specific example of something you improved that was lacking?

Brian Hassan: I would say, from an equipment standpoint. When we first opened the gym we had some really amazing just standard Crossfit-based equipment. But when we actually started looking at the membership and their needs, as developing athletes, it made us kind of take a step back and say, "Hey lets put a little more focus in on buying equipment for athletes that would rather do conditioning-focused workouts".

At our facility we kind of break it up. We have competition training, which is for people that are competing in the sport of Crossfit, that's a very tiny percentage of our members. Then we have our performance classes, which are like typical barbell, kettlebell, and metabolic conditioning workouts. And then we have conditioning, which is something we started sort of as an experiment but then started expanding upon it due to its popularity. It consists of non-barbell focused workouts that are longer in duration.

What makes us special is we actually teach you how to move correctly, but we also focus, before and after the workout, on actually mobilizing areas of your body, that are perhaps stiff. Because when you think about the demographic of the athletes that we have as members, a lot of them are sitting at a desk all day. So it’s just as important to focus on improving them from a conditioning and strength standpoint, as it is to improve their body mechanics.

Can you tell something about some of the wackier things you've seen, I mean maybe without naming names, what's some of the weird stuff that's happened?

Brian Hassan: It’s funny, when you think of Crossfit as a brand; they do a phenomenal job with the training, but sometimes people have a strange sense of fashion. It’s not as common anymore but sometimes you see people showing up with knee length fluorescent socks with hot dogs and tacos on them. And then cutoff shirts and they take their shirts off during the workout and they throw it. Its not as prevalent anymore, actually, in fact at Flagship you don't really see it. But when you travel across the U.S. you see a lot of really interesting gym fashion.

Where do you want the Flagship brand to grow in the next ten years? When people think of the name Flagship, where do you want that to go?

Brian Hassan: Yeah, absolutely. The way that we look at the brand is not necessarily preparing somebody to compete in the sport of Crossfit. Granted, the sport is amazing. We wouldn't be here today if it weren't for Crossfit, right? But for us, our core focus is improving the movement and mobility for the everyday person and helping them achieve their goals, whether its an athletic-related goal, it could be a Jiu-Jitsu tournament, whether its to run a 5K or a marathon. Or whether it’s a personal goal of being able to jump up on a box or get off a bus without hurting their knees. The whole goal of our brand is to help people move better. We have two locations now, and we're looking to expand and share that message.

I think that if we can keep spreading the message of moving correctly and helping you achieve your goals outside of, perhaps competing in Crossfit, but perhaps competing in the sport of your choice. We're just helping you do anything, better, everyday, helping you feel better.

To me that's a great sign of success and I think that our membership growth is indicative of the fact that people don't necessarily go to the gym because they want to compete in a sport of fitness, but they go to the gym because of the sense of community, and walking away knowing that they learned something today that will help them move better in the future.

Do a lot of people use this kind of athletic training as a way to supplement another sport or activity?

Brian Hassan: Yeah absolutely, if you go on some of our earlier Yelp reviews, you'll see that there was a gentlemen, that he ran his fastest, it was either 5K or 10K. This gentleman is in his fifties or sixties, I believe he's in his sixties, and he actually hit a PR (personal record) simply by training with us.

Also in training Jiu-Jitsu, it’s remarkable how the training helps translate, because with anything, whether its, again, a triathlon, running, dance, Jiu-Jitsu, what have you? It’s important that your body moves correctly. Whether it’s lifting up groceries off of the ground, making sure your shoulders are set. I think it all translates well into everyday activities, but also sports. So I can't really think of a better way to train for strength and conditioning than training the methodology that Flagship follows.

We're here sitting in Austin, Texas, while you're visiting. You've been visiting here in some way or another for 15 years. How have you seen it change? How do you see what Austin is today versus what it was 15 years ago? As somebody who comes in periodically and sees it, and where do you see it going?

Brian Hassan: One thing is that traffic is crazy now, because of the tech boom that's happened here in Austin. So it’s really awesome to see, because you see the city developing around all the new commerce. My brother mentioned to me that Austin was the number one best city to live in in a recent survey.

And the music scene, it’s always been big here, but it’s getting much bigger, with South by Southwest, which has always been there, but it’s getting so much more traction now.

Is there anything else that you want our audience to know about your business? Where can people find you?

Brian Hassan: People can find us at FlagshipAthleticPerformance.com or Flagshipcrossfit.com.

We're located in San Francisco, we have two locations. We have a location in the Castro, Noe Valley area, Duboce Triangle, we call it Upper Market at 160 Church Street.

We have another location downtown at 250 Montgomery Street, and hopefully more to come.

Would you ever spread beyond the San Francisco bay area? Is that something you want to take broader? Or is that something you want to keep more local? Because you have two locations today, could you see 10 locations and all over the West Coast?

Brian Hassan: If we go back to one of the first questions you asked me, which is about building a successful business and having a model, you don't want to overbuild, or build in markets that you're not familiar with. I think that'd be a mistake. So I think that, clearly we're open to other markets but I think it’s important to get to know the market first.

And then from there at that point, when you're a healthier company financially, then you can start exploring other markets. But again, taking the data points that have made us successful in the locations that we have, for example daytime traffic, demographics, competition and what have you. And if those match up to what Flagship's offering its existing markets then hell yeah, of course.

Final Thoughts

Starting a gym sounds awesome to a lot of desk jockeys out there that love to work out. But to really succeed, you need to open a gym with a plan. You need to know what your overhead will be, what can you expect in terms of clients, and how much can you charge?

One of the most difficult components of starting a gym is finding good trainers. The average personal trainer lasts in the industry for less than two years. With gyms, you are not only the owner and operator but also the face and brand of the business. Who you bring in to help you will directly impact your potential to succeed.

If you have any question or comments about today's episode, please leave a comment below.

Topics: small business war stories, podcast

Pablo Fuentes

Written by Pablo Fuentes

Pablo Fuentes is the CEO of Proven. He is a graduate of the Stanford Graduate School of Business and UCLA. He is a Brazilian Jiu-Jitsu practitioner and a blues guitar player and builder.

 

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