And it’s totally upside down from conventional wisdom.
(I’d sincerely love for you to give this a read and respond one way or the other ESPECIALLY IF YOU WANT TO CONFIRM I’M CORRECT jkjkjk.)
“The easiest market to build a sustainable and high-margin independent brick and mortar training gym…
Is a lower population density area with medium to low average income.”
I realize this flies directly in the face of what you’re probably heard.
In fact, some owners will point to their success in this kind of market as proof of their business acumen as an operator.
Now your skill as an operator is of course going to be a factor. But the market you’re playing in will have a powerful influence.
Here are four reasons why sometimes it’s actually way easier to succeed in smaller markets.
(And keep reading. At the end I’ll explain why big ol’ markets like NYC also have unappreciated advantages.)
1) You won’t have much (if any) competition from comparable fitness services.
There will probably be a handful of big box gym options, either globo-gym chains or independent health clubs. You may also have a smattering of Crossfits here and there. But you definitely won’t have to worry about sexy boutique fitness studio chains muscling in on you. Because your market is too small.
More than likely, you’ll be one of the only— and maybe the only— modern training gyms/ microgyms. This does mean you’ll have to do some education in your market to build value for your pricepoint. Most prospects won’t understand what you do, at least not at first. But all in all, this is still an advantage.
This reduced competition means retention will be easier. If clients like your service, they won’t have many– if any– comparable options to consider.
2) You have less competition for time and money from other leisure activities.
In smaller markets, there’s less stuff going on to take away your members’ time, energy, and money. This helps support the stickiness of your service and makes it easier to build a center for your community.
To be clear, I’m not trying to make it sound like “Small Town = Bored All the Time.” I promise, this ain’t New Yorker shade, I swear! But it IS fair to say there’s comparatively less going on.
Even if average income is lower, in practice, there’s less to spend it on. So if you create a semi-compelling service, your training gym will be an attractive option for people looking for something health-promoting, fun, and that facilitates social interaction.
And if you put in even a modest effort to create some opportunities for socializing and community, you’ll have an easier time getting traction. Because you won’t be competing against a robust arts scene, local professional sporting events, or the other activities that even modest size markets offer.
3) Your business expenses will be much lower.
It’s true, you may not be able to command quite as much average revenue per member or total revenue in these markets. But everything is relative.
You can get larger spaces for much lower cost per square footage. And it’ll be infinitely easier to get your foot in the door and buy your own space (which is a no- brainer move whenever possible).
You’ll also be able to pay your staff less money while affording them a reasonable quality of life since their cost of living is relatively lower. Even nominal costs for many supplies and vendors will be lower.
Taken together, these lower expenses means it’s much easier to command higher margins.
(Another bonus: like your staff, you also live in a relatively lower cost area. That means your personal cost of living will also be lower as groceries, restaurants, mortgages, etc. will all be cheaper.)
4) It will be easier to retain staff.
This lower cost of living means it’s easier to keep your staff around longer. Unlike mid-size and larger markets, they won’t have as many alternative fitness jobs to consider.
In turn, your staff retention improves client retention.
It also saves you time, energy, and money by reducing the frequency of job searches and onboarding new staff.
And you’ll have an easier time keeping your 1-3 key hires; the roles most training gyms need to help run the day-to-day, and by extension, free up the owner’s time.
Admittedly, you’ll have a lower volume of options when you’re looking for new team members. But the roles in a microgym don’t require massive amounts of experience or high levels of unique skills. You’ll still want quality humans who align with your values, but this is doable.
Now lest you think I’m saying there’s NO skill involved in succeeding in these kinds of markets, that’s NOT what I’m saying. Your skill as an operator will always have an impact on your success.
But here’s some Business 101:
The context of your market can prop up a crappy operator OR make for a permanent struggle bus ride for a savvy operator.
One more point…
People always talk about how tough NYC is because there’s so much competition.
I think this is partly right, but in important ways, also incorrect.
In fact, NYC actually has some advantages over many mid-size markets.
NYC is expensive as hell, yes. There’s always a shiny new thing to lure away clients. Competition for staff is relentless and ferocious. And much like the dating scene, many city slickers don’t like to commit because they value variety and novelty.
(New York Vibes: “You’re getting MARRIED?!? But you’re not even FIFTY yet! You should be out there playing the field!! Oh. Got it. You’re in an open-relationship. Ok, cool cool…”)
However, the sheer volume is a MASSIVE strength that midsize markets do not have. You have a nearly endless supply of prospects. And this is a big plus over geographic areas that genuinely have a hard cap on potential clients.
Sure, you’re not going to make 50% margins in midtown Manhattan. And even living north of the city in the Hudson Valley, there are cheaper areas of the country for me to live. And yes, it’s probably a bit more stressful because of the reasons discussed above and the generally aggressive speed of life.
But on the other hand, I don’t know of any other training gym that does the revenues MFF does even in our “bad” years. So I’m not mad about a smaller slice of a pie that’s literally 10x in revenue of the average training gym.
(Semi-Related Point: NYC is not for everyone, but there are hard to quantify personal and professional benefits in a city of millions of ambitious, talented, and creative people. A random hang with friends can turn into an impromptu tactical brainstorm with other multimillion dollar business owners. My personal social circle is also a constant fount of casual investment opportunities. Which I dig a lot! And while I suspect the second half of my life will be nestled in #treelife, I’m still long on NYC, apocalypse be damned.)
Now unless you’re planning to close up your business and move somewhere else, I realize this topic may not be immediately actionable.
But my hope is it encourages you to think a bit more critically: about how you look at the industry as a whole, and the opportunities and challenges in your market.
Now one more time (for the people in back)…
Your skill as an operator still matters.
Yes, you should appreciate the outsize impact of external forces on business outcomes.
But this dash-of-humility isn’t a call to abandon hope or blame everything on your market.
If you love where you live and are committed to making it work, there’s always room for a truly world-class training gym.
And disciplined execution of the basic principles will still lead to success.
(And if you ever want unicorny halp, more deets HERE.)
Loving ya like a taco,
PS Want to check out a training-gym focused podcast with legit guests and actionable strategies?
Oh you saucy minx! I’ve got one for you right here in my back pocket…
Check out the Business for Unicorns podcast HERE.