Starting a boutique fitness studio, or any business for that matter, is frightening. The simple reality is that it is risky. For studios with a physical location, you will need to sink considerable cost into construction and build out, and in most cases you will need to sign a long term lease for which you are personally responsible.
There are exceptions and outliers.
But what we’ve been seeing for the past few years is that sunk startup costs for a reasonably viable 1,500 – 3,000 square foot fitness studio are between $300,000 and $700,000. There are many examples of studios spending over $1 million. This is money you spend before you open. 5 to 10 year lease commitments are common, and monthly rents in areas that can typically support these businesses range from $4,000 to $12,000 per month (more in urban cores).
So yes…the financial risk in starting a boutique fitness studio is considerable. Risk cannot be eliminated, but risk can at least be minimized by careful planning and doing your homework.
On the other hand, the reason for the explosive growth in these studios over the past 10 years is because the potential rewards are great (plus the business is fun). In it’s filing to go public a few years ago (they never did), Soul Cycle reported: “…..On average, in 2014, our studios generated annual studio revenue of $4 million and a Studio Contribution Margin of 53%…..”
Would you pay a million dollars to open a studio that generates $2 million in profit in one year?
You’re damn right you would. Soul Cycle is the poster child for highly successful boutique fitness studios and there aren’t many others making that kind of money….. That being said, very high profit margins of 20% to 40%, on lower revenues, are not uncommon for well executed studio in a variety of niches.
What you will read about in this blog about starting a boutique fitness studio — is critical factors in startup.