With 2021 here, there has been great headway made towards ending the pandemic. Experts estimate that this summer could be when our first return to normalcy happens, but what does that mean for your business?
Consumers will hopefully be out in droves, spending more than ever. To capitalize on this, your gym will need to have the newest gear, technology, and other resources to get consumers to come to your gym instead of a competitor.
Investing in your business after a lengthy recession may not be the first thing you are thinking about. If you aren’t sure about how to go about Gym Funding in 2021, keep reading this guide to ensure your business is able to expand safely and efficiently.
First, Identify Why You Need Funding
Most businesses that need funding need it for one of two reasons:
New funds will help them shore up a threat.
New funds will help them capitalize on an opportunity.
Sometimes in life, things happen, and we need money to bail us out. As a business owner, this can be an extremely scary situation to navigate.
Businesses that are in need of funding to get out of a precarious situation should really be looking for low-risk financial solutions that are intended to help business owners who are struggling.
This year, the SBA rolled out new low-risk, low-interest loans for businesses that needed a lot of financial assistance, quickly. If you find that your gym is in need of cash just to remain open, it may be time to apply for an SBA-backed loan.
For businesses that are not struggling, outside funding is often the best way to capitalize on a new trend or business opportunity within an industry.
If you are a business owner that is in need of funding to expand, there are steps to take to help make certain that you apply for the right capital solution for your business.
Pinpoint Areas of Opportunity
Before you can go out and apply for a grant or loan, you will need to identify where and why you need funding.
Within the fitness industry, there are plenty of opportunities available to help propel growth. These opportunities include, but are not limited to:
- Showcasing gym safety
- Investing in fitness technology
- Diversification of the product offering
- Business Expansion (new location)
Opportunities are truly endless within the fitness industry. Consumers are always looking for new ways to exercise, and as a gym owner, it is your job to provide these opportunities.
The financial aid that your gym chooses to leverage will be entirely dependent on the route of expansion that your business decides to pursue. Some gyms may only need a small technology purchase to hit their goals, while others may need to purchase a whole new building for a second location.
Whatever it may be, identifying the opportunity will help you better plan for the type of financial assistance that your business will need.
Choose a Funding Source
Now that you know how much money you need and what it is for, it is time to choose a funding source. Again, the capital solution that you choose for your business should be dependent on how much money you need and what you need the money for.
With that said, let’s take a look at some of the pros and cons of some of the most popular gym funding sources.
Small Business Loans
Taking out a business loan from a certified financial institution is likely the first funding option that comes to mind when thinking about business expansion, and for good reason. Lending companies today offer an array of loan options that are helpful for owners in any industry.
The advantages of applying for a small business loan are:
Guaranteed Funds — Not every funding solution will guarantee you delivery of your funds. When you agree on a loan amount with a business lender, you know that you are going to receive that amount.
Clear Repayment Plans — Anytime you go through a certified business lender, they will work with you to create a transparent payment plan that fits your needs.
Flexible Loan Options — A business loan can be as small as a few thousand dollars and can go all the way up to hundreds of thousands of dollars, meaning you can use them for
almost any business opportunity.
Some drawbacks of using a business loan are:
Strict Requirements — Certified lenders will have stringent lending guidelines that you must meet to qualify for a loan. Having a good credit score, healthy cash-flow, and a sound business plan will improve your odds of approval.
Cash-Flow Issues — Anytime you take out a loan, there is more stress to be financially responsible. If you take out a loan that is too big, your cash-flow can be disrupted, and paying off the loan can feel like your main business goal.
Crowdfunding has become an increasingly popular way to raise money. When crowdfunding, business owners take to online marketplaces where they can pitch their new business initiatives directly to consumers, in an effort to receive donations.
The advantages of crowdfunding are:
Zero Financial Risk — Unlike with a loan, crowdfunded efforts will not have to be repaid. This will allow you to test a new initiative with little risk attached.
Word Of Mouth Advertising — Crowdfunding sites can serve as a form of advertising as well. If a certain project begins to gain traction, it is often promoted to the front of popular crowdfunding sites, meaning more consumers will see and hear about your business.
Common issues associated with crowdfunding are:
Non-Guaranteed Funds — Crowdfunding sounds perfect in theory, but in reality, only 1 out of every 3 crowdfunding campaigns actually receives funding.
Time Commitment — Anytime you are asking people to give you money, there has to be some sort of presentation or call to action that explains why they should. Producing a crowdfunding campaign that sticks out amongst the crowd can be time-consuming and costly.
Grants are non-repayable funds that support specific industries and initiatives, that often come from the Government or another legitimate organization. Grants typically will be used for a specific purpose or effort.
The benefits of applying for grants are:
Zero Financial Risk — Grants will not need to be repaid.
The main problems associated with Grants are:
Difficult to Find — Finding a grant within your industry that you qualify for can be nearly
impossible. This makes it difficult to rely on grants for guaranteed funds, especially in a time of need.
Time-Consuming Process — Like any other initiative the government leads, applying for a grant can be very time-consuming. The time taken from the application to grant funding may be longer than you can wait.
Competitive — Chances are that you are not the only business applying for a specific grant. Others will be vying for the same limited amount of funding.
The funding avenue you go down will be extremely important in determining the success of your gym’s new efforts this year. Make sure that you do your research into each and every financial solution that is available to you.
No matter what camp you find yourself in, growing or surviving, I want to make sure that you have the financial knowledge to be able to be successful. If you have any other questions about managing your gym or fitness brand, I am here to help — give me a call anytime.
AnOutsourced CEO and expert witness, Jim Thomas is the founder and president of Fitness Management USA Inc., a management consulting, turnaround and brokerage firm specializing in the gym and sports industry. With more than 25 years of experience owning, operating and managing clubs of all sizes, Thomas lectures and delivers seminars, webinars and workshops across the globe on the practical skills required to successfully overcome obscurity, improve sales, build teamwork and market fitness programs and products. In addition, his company will buy gym equipment from gyms liquidating or closing. Visit his Web site at: www.fmconsulting.net or www.youtube.com/gymconsultant.
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