Wednesday, November 16, 2016

Step 4 of your business plan; reality check… Expenses and Budgeting

No business plan would be complete without at least basic financials. It will take some money to make this work, even if you are starting on a shoestring. Last time, we talked about whether it was better to have an indoor boot camp or outdoor boot camp.

Here are some common expenses that you are going to have to deal with. I am going to use rough-estimates and round numbers, since your individual situation and where you live can influence it wildly. You will need to shop around to get exact numbers.

This is simply for a ball-park to get an idea for your planning process, but should be refined as you get close to launch.

1) Location

Your rent for sublease arrangements could be from $200 per month up to about $1000 per month. I never paid the upper end of that, since if I wanted a space nice enough, I’d offer a percentage of revenue before that would happen, but always managed to negotiate something on the low end. If you deal with parks, a few hundred a month would be all I would pay too. If you want to go for a stand-alone location you are in a completely different ball-game, and plan on forking out over several thousand, on the order of $5,000 to $10,000, which we can cover at a different time, and I won’t use that example for the remainder of our discussion here.

2) Equipment

You are going to want equipment, but the good news is that it should all be low-cost and portable. Kettlebells, medicine balls, and dumbbells are common and usually the first in someone’s mind, but are heavy and cumbersome when traveling. If you have an indoor location, they could be stored. In the beginning a small set is all you need. We will show you how to create stations of 4-5 so you don’t need enough for an entire class. This means the cost could come down to $100 to $200 for heavy stuff. Then you have things like bands. 

My favorite products were those from my buddy Dave Schmidt. I loved the layered continuous bands that were the giant rubber band type. They were extremely adaptable and very portable. I actually saved up for complete sets, like the fitness band bootcamp set for $798.99. If you can afford that, just go with it, since it lasted me several years and I only had to replace one or two bands in that time and it made me a ton of money. You can also go with TRX and other specialty equipment like Lebert Equalizers (roughly $100 each). 

The TRX are unfortunately high-priced in my opinion and there are competitors now that come pretty close. The quality of the TRX is high, and if you go with a set of four for a good station, you are looking at $150-$250 each, so let’s look at the high end and say $1000 tops for TRX, and $400 for the Lebert Equalizer. All in, for equipment for a kick-butt Boot Camp and you are looking at $2400. Of course, this is with you not shopping around very well and assuming you just want to buy everything right away up front, which I didn’t do. I would make money training clients, and kept adding to my supplies as the revenue came in, which allowed me to excite my clients with new ‘toys’.

3) Business licenses, liability insurance, and fees

Be prepared to spend some money to create an LLC once you start getting moving. You can start out as a sole proprietor of your own tiny service in the beginning. A business license can be found for under $100 and registering for an LLC with the state is under $200 in most states. Liability policies for $1,000,000 to $2,000,000 coverage are very smart, since we live in a sue-happy culture and also you will need it to make your future locations feel comfortable with allowing you to train your clients on their premises. The costs are usually only $150 per year or so. For each location, you can get ‘additionally insured’ coverage for free. Use a good insurance broker that can shop around and help you with this like I did. Your total costs for all of this should be under $400.

In the next post, I cover PART II of the 4th step, which is probably the most important: Marketing your fitness boot camp business.

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