In Parts 1 through 3 of this series, I have discussed various aspects concerning how much gym equipment costs. This fourth and final part of the series goes over different funding options. Every situation is different for people opening a new gym, and one method of funding may be perfect for someone and not quite right for another’s particular needs. No matter what type of gym you are looking to open, (24/7 coed gym, crossfit gym, personal training studio, sports performance gym, etc.), it’s essential for you to work with a New Gym Specialist to help steer you to the best funding method for your specific situation.
Before we get started, let’s review Parts 1 – 3:
In Part 1, we learned about the importance of distinguishing between the three main types of gym equipment – residential (home use) gym equipment, light commercial gym equipment and full commercial gym equipment. Whereas each serves its specific purpose, a full scale gym requires full commercial gym equipment.
We also touched upon the importance of purchasing new gym equipment for your new gym. Although the lure of buying used gym equipment may seem appealing, it’s never a good idea to open a new gym with old gym equipment for a wide variety of reasons discussed in Part 1. A New Gym Specialist will be able to work closely with you with Discounted Complete Package Pricing on new gym equipment so that the lure of used gym equipment is, well…not so alluring.
Part 2 discussed the three main ingredients to get your best deal on your gym equipment. These are – 1) only purchasing new gym equipment, 2) only purchase as a Complete Package and 3) only purchase through a New Gym Specialist
In Part 3, we discussed how to determine your budget for your gym equipment with a few brief questions that act as a guideline for you to use for this.
You will need to have your funding in place before your New Gym Specialist can create a Complete Package designed especially for you. Knowing your budget allows him to put you into the right mix and amount of equipment while keeping within your limits. This will allow you to get the most treadmills, elliptical, spin bikes, selectorized equipment, plate loaded equipment, free weight equipment, olympic bars, olympic plates, dumbbells and whatever else you will need for a complete new gym set up.
There are several options when it comes to getting the funds together for your new gym. Here’s a breakdown of the more common ones with the general pros and cons –
- Direct Pay – If you have the funds available, the least expensive way for you to open your new gym is to pay for your equipment without using another source. This way, you don’t have monthly payments and, more importantly, interest rates. You also do not need to hand over any collateral to be held against a loan so that you can purchase your fitness equipment. And, there is the satisfaction that you are not accountable to anyone. For sheer cost savings and ease, direct pay is your best way to go and it allows you to take the most advantage from the Discounted Complete Gym Package that your New Gym Specialist has created for you.
PRO – Least expensive / Paid for and out of the way – no payments hanging over your head
CON – Not always feasible, particularly with larger new gym projects
- Investor / Partner – People who don’t have access to all of the funds, (or prefer not to use them), often tie in with an investor or partner who supplies the funds while not being otherwise involved in the day to day operations of the business. This allows you to save on your upfront capital expenditure while still keeping clear of any additional charges associated with going through a bank or other lending source.You can use one or several investors/partners. The key with this way of securing your funds is to align yourself with the right investors/partners. These will need to be people whom you trust and who trust in your capabilities to successfully own and operate a new gym. A careful selection of the right people and a concrete mutual understanding of what is expected from each party will go a long way to eliminate hassles down the road.
PRO – You can set it up however works best for you / No interest rate because the investors/partners can get a small % of your business profits. The investors/partners will want your new gym to be successful, so they will not take enough of a % of your business’ profits to hinder that.
CON – You’ve got to make sure that you tie in with someone whom you want to be with / The agreement needs to be detailed so that each party knows what their part is.
- Bank Loan – A standard bank loan for a small business will usually have a better interest rate than a lease company will give you. This can work out very well if you have an established relationship with your local bank and banker. A local bank should be interested in working with a new business in the community.
PRO – Lower interest rate / Business partner is not needed / Pretty simple process.
CON – May need a business plan to present to the bank / may need collateral against the loan.
- Leasing – This is actually financing-to-own. The lease company will run a credit check to determine what you qualify for. Leases, like bank loans, usually run from 2 to 5 years, depending on the amount needed, your credit score and possibly other factors. Unlike a bank loan, qualifying for a lease is mostly determined by your credit score or a combination of the credit scores for you and your partner, if you are opening your new gym with someone else. Also unlike a bank, the leasing company works with various funding sources, so there may be more than one payment required to be sent each month.
PRO – Simple application process / tax write off advantages / requires a minimal payment down to qualify.
CON – High credit score is usually required / Highest interest rate / May need to pay different lending sources independently on a monthly basis.
- Direct Pay / Leasing Hybrid – With this method of funding, you direct pay a certain amount upfront and lease the balance. You determine the amount that you want to direct pay and the amount that you will leave open for leasing. This is a good approach to take if your credit score isn’t high enough for you to secure all of your needed funds with the lease company or if you want to bring your monthly payment down.
PRO – This method decreases your monthly lease payment to a level where you may be more comfortable while still giving you the tax advantages of leasing.
CON – Still interest involved with the amount that you are leasing.
To summarize, Direct Pay is the least expensive way for you to open your new gym. If that isn’t entirely feasible, there are several options to help you get the right gym equipment to be successful. Of these options, the Direct Pay / Leasing Hybrid is a very good one if you have some amount of funds on hand. It gives you control over what you pay monthly for your lease payments and can quickly put you on the road to owning your new gym.
Once you have secured your funds, your first call should be to your New Gym Specialist so that he can get started doing what he does – determining the best product mix for your new gym and creating a Custom Gym Equipment Package at a Discounted Package Price.
Regardless of how you secure your funds, remember that your equipment will need to be paid for in full to place your order. This allows your New Gym Specialist to quickly distribute the funds to the proper sources so that you can take advantage of all of the discounts that he has gotten put in place for you.
This concludes this series, How Much Does Gym Equipment Cost? If you have any further questions, please feel free to contact me to discuss. As a New Gym Specialist, I am available to help you to turn your dream of opening a gym into a reality.
[box type=”” size=”large” style=”rounded” border=”full”]
If you missed Part 1, Part 2 or Part 3 of this information series check it out below or some of our other important and useful information guides.
[related_posts limit=”5″ image=”0″]
Written by Bill at BAMPSCO International Inc. / GymStarters.com