22 Reasons Gym Fail (Avoid These!)

22 Reasons Gym Fail (Avoid These!)

Posted by Tyler Spraul, Certified Strength and Conditioning Specialist® (CSCS®) on June 11, 2021 — Updated on August 24, 2023

Gyms fail because they don’t have enough capital, the owners are inexperienced, and they have lackluster branding. Owning a fitness business may sound like a lot of fun, but it is a business all the same. Neglecting to obtain the necessary capital, expertise, and branding are some of the reasons why new gyms fail, but check out this guide to learn the reasons gyms fail, so you can avoid the same common gym owner mistakes.

Fitness Income Ideas
  • Make arrangements for working capital well before your gym opens.
  • Work ON your fitness business, not IN your fitness business.
  • Marketing your gym won’t work without memorable branding.

Why do gyms fail? No one opens a gym expecting it to be unsuccessful (read these things you should know before starting a gym business). In reality, however, a multitude of factors contribute to why new gyms fail. Even if you think you have everything you need to succeed, like a perfect location, a great marketing program, and a custom-branded fitness app, your new gym may still falter. Here are three reasons why some gyms fail.

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#1 Not Enough Capital

When first opening any business, gyms included, it’s often smart to start small. Unless you’re a big celebrity, people won’t be lining up at your gym’s door to buy memberships the moment you open up. It will take time to build your business, which means it will take time before your gym can turn a profit. Until then, you’ve got to keep the lights on and the staff paid. Without enough money to sustain your business through this period, your new gym will fail before it even gets off the ground. Make arrangements for working capital in your business plan well before your gym opens.

Once you reach that sweet spot of profitability, lack of capital can still rear its ugly head if you take too much money out of the business without investing enough back in it. Giving your staff a raise, buying new equipment, and expanding your gym’s advertising campaign will help ensure your venture continues to grow.

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#2 Inexperienced Owners

You love to work out. You love gyms and gym culture. Surely you’re a great fit to own a gym, right? Not so fast. A common gym owner mistake that is true of many new business owners is that they spend too much time working IN their business and not enough time working ON their business. Don’t open a new gym thinking you’ll get to devote every day to coaching and chatting with your members; that’s what employees are for. As the boss, you’ve got marketing plans to execute and financials to study. You can make your life easier with tools like gym management software, but on the whole, expect running the business side of your new gym to be a full-time job.

#3 Lackluster Branding

You know what makes your gym special, but to the average Joe on the street, your gym is likely just another box in an already very crowded market. Marketing can help, but unless your branding is memorable, people will simply forget your ad — or worse, they’ll remember the ad but mistakenly credit it to the wrong gym. Read our gym design guide and gym logo design guide for more info.

Ideally, your new gym’s branding (meaning its name, logo, company colors, slogan, etc.) should paint a picture that immediately tells people what you’re about. It should be different from your competitors, but not so divergent as to confuse potential customers. It’s admittedly a tall order, but to give your new gym the best chances of success, you should take the time to get your branding right.

Here are some additional reasons gyms fail…

After all, there are various factors that contribute to the failure of gyms. From the lack of a unique selling proposition to financial mismanagement, each aspect plays a significant role in determining the success or failure of a fitness facility.

Discover more of the top reasons why gyms fail and learn how to avoid common pitfalls in the fitness industry.

#4 Lack of Unique Selling Proposition

One of the primary reasons why gyms fail is the lack of a unique selling proposition. In a highly competitive industry, it is crucial for a gym to differentiate itself from others. Without a clear and compelling reason for potential customers to choose your gym over others, it becomes challenging to attract new members and retain existing ones. Whether it is specialized training programs, cutting-edge equipment, or unique amenities, a gym needs to offer something that sets it apart.

Furthermore, having a unique selling proposition not only helps attract new members but also plays a significant role in retaining existing ones. When a gym offers something that sets it apart, it creates a sense of exclusivity and value for its members. This can lead to increased member satisfaction and loyalty, as they feel they are part of something special. Additionally, a unique selling proposition can also help generate positive word-of-mouth marketing, as satisfied members are more likely to recommend the gym to their friends and family.

#5 Poor Location Selection

The location of a gym plays a crucial role in its success. Choosing the wrong location can severely impact the number of potential customers in the area and hinder the growth of the gym. Factors to consider when selecting a location include accessibility, parking availability, proximity to residential areas, and competition in the vicinity. A poor location can lead to low footfall and limited customer reach, ultimately resulting in the failure of the gym.

In addition to these factors, it is also important to consider the demographics of the surrounding area. Understanding the target market and their preferences can help determine if the location is suitable for the gym. For example, if the gym aims to attract young professionals, it would be beneficial to choose a location near office buildings or residential areas with a high concentration of this demographic. On the other hand, if the gym targets families, proximity to schools or residential neighborhoods with a large number of families would be more ideal. By considering the demographics of the area, the gym can better tailor its services and marketing strategies to attract the desired customer base.

#6 Inadequate Market Research

Another significant reason why gyms fail is the lack of proper market research. Understanding the target market and their needs is essential for developing effective marketing and business strategies. Without conducting thorough market research, a gym may fail to identify their ideal customer demographics, resulting in ineffective marketing campaigns and low customer acquisition rates. Inadequate market research can also lead to a failure to recognize emerging trends and changing customer preferences, causing the gym to become outdated and losing its competitive edge.

Furthermore, inadequate market research can hinder a gym’s ability to accurately assess the demand for their services. Without a clear understanding of the market demand, a gym may invest in expensive equipment or facilities that are not in high demand, resulting in wasted resources and financial losses. Additionally, without proper market research, a gym may fail to identify potential competitors in the area, leading to increased competition and a struggle to attract and retain customers.

Moreover, inadequate market research can also impact a gym’s pricing strategy. Without a thorough understanding of the market and competitors’ pricing, a gym may set their prices too high, deterring potential customers, or too low, resulting in reduced profitability. Market research helps gyms determine the optimal pricing strategy that aligns with customer expectations and market conditions, ensuring sustainable revenue generation.

#7 Failure to Target the Right Demographic

Targeting the right demographic is crucial for the success of a gym. If a gym fails to understand and cater to the needs and preferences of their target audience, they risk missing out on potential members. For example, targeting an older population with high-intensity workouts may not yield favorable results. By identifying the ideal demographic and aligning the gym’s offerings to their preferences, gyms can create a strong customer base and increase their chances of success.

One way to ensure that a gym targets the right demographic is by conducting market research. This can involve analyzing data on the local population, such as age, income level, and fitness preferences. By understanding the characteristics and preferences of the target demographic, a gym can tailor its marketing strategies and offerings to attract and retain the right members. Additionally, regularly collecting feedback from existing members can help the gym make necessary adjustments to better meet their needs and preferences.

#8 Insufficient Marketing and Advertising Strategies

Effective marketing and advertising strategies are essential for attracting new members and increasing awareness about a gym. A lack of proper marketing and advertising efforts can lead to low visibility, resulting in fewer potential customers knowing about the gym’s existence. In today’s digital era, gyms must embrace online marketing channels, such as social media and search engine optimization, to reach a broader audience. Without a well-executed marketing strategy, gyms may struggle to gain traction and fail to generate a steady stream of new members.

#9 Lack of Effective Customer Acquisition and Retention Programs

A gym’s success relies heavily on its ability to acquire new members and retain existing ones. Implementation of effective customer acquisition and retention programs is key to building a loyal customer base and ensuring consistent revenue. Failing to develop such programs can result in member churn and a steady decline in membership numbers. By offering personalized training plans, incentives for loyal members, and excellent customer service, gyms can significantly improve their chances of success.

#10 Membership Fees and Pricing Structure

The pricing structure and membership fees of a gym can make or break its success. If a gym sets its prices too high, it may deter potential members, especially in an area with cheaper alternatives. On the other hand, setting prices too low can lead to financial instability and make it challenging to maintain the quality of equipment and facilities. Striking the right balance between affordability and profitability is crucial for gyms to thrive.

#11 Insufficient Staff Training and Development

A gym is only as good as its staff. Insufficient staff training and development can negatively impact the overall member experience and contribute to the failure of a gym. Properly trained and knowledgeable staff members are essential for providing expert guidance, motivating members, and ensuring their safety. Investing in ongoing staff training and development programs is crucial for creating a positive and professional environment that members can trust and rely on.

#12 Inadequate Equipment Maintenance and Upgrades

Gyms heavily rely on their equipment to provide a variety of workout options to their members. Neglecting equipment maintenance and upgrades can negatively impact the member experience and safety. Malfunctioning or outdated equipment can lead to injuries, dissatisfaction, and negative word-of-mouth. Regular equipment maintenance and strategic upgrades are necessary to ensure that members have access to top-notch facilities and feel confident in their choice of gym.

#13 Limited Class Offerings and Variety of Fitness Programs

A diverse range of fitness programs and class offerings is important for attracting and retaining members. Offering limited options can lead to members feeling bored or unchallenged, ultimately seeking alternatives elsewhere. By incorporating a variety of classes, such as yoga, dance, strength training, and cardio, gyms can cater to different interests and fitness goals. Providing a wide range of options ensures that members always have something new and exciting to try, keeping them engaged and motivated.

#14 Ineffective Member Engagement and Community Building

Building a sense of community and engaging with members is crucial for the long-term success of a gym. Ineffective member engagement strategies can lead to a lack of connection and loyalty. Establishing regular communication channels, hosting social events, and creating online platforms for members to interact can foster a strong sense of community. By making members feel valued and part of a larger fitness family, gyms can increase member loyalty and reduce member turnover rates.

#15 Lack of Cleanliness and Hygiene Standards

A clean and hygienic environment is essential to instill confidence in members and maintain their trust. Neglecting cleanliness and hygiene standards can result in an uncomfortable and unsafe environment that members may want to avoid. Regular cleaning schedules, well-maintained restroom facilities, and proper sanitization protocols are essential for creating a welcoming and hygienic space. By prioritizing cleanliness, gyms can create a positive and healthy environment where members can focus on their workouts.

#16 Poor Customer Service and Communication Skills

Exceptional customer service and effective communication are vital for member satisfaction and retention. Poor customer service and communication skills can lead to misunderstandings, frustration, and a negative overall experience. Gym staff should be trained in excellent communication techniques, actively listen to member feedback, and be responsive to their inquiries or concerns. By prioritizing customer service, gyms can build strong relationships with their members and create a supportive and welcoming atmosphere.

#17 Negative Online Reviews and Reputation Management Issues

In today’s digital age, online reviews play a significant role in driving customer perceptions and decisions. Negative online reviews and poor reputation management can severely impact a gym’s success. Addressing negative feedback promptly, taking appropriate actions to rectify any shortcomings, and actively soliciting positive reviews can help mitigate the impact of negative sentiment. Maintaining a positive online reputation is crucial for attracting new members and instilling confidence in existing ones.

#18 Inability to Adapt to Changing Fitness Trends and Industry Standards

The fitness industry is constantly evolving, with new trends and industry standards emerging regularly. Gyms that fail to adapt to these changes run the risk of becoming obsolete. Sticking to outdated workout routines or equipment can result in members seeking more innovative and exciting alternatives. It is essential for gyms to stay up-to-date with industry trends, incorporate new technologies and workout methodologies, and adapt their offerings to meet the evolving expectations of their members.

#19 Financial Mismanagement and Poor Budgeting Practices

A lack of proper financial management and poor budgeting practices can significantly impact a gym’s long-term viability. Poor financial decisions, overspending, or failing to allocate sufficient funds for necessary expenses can lead to financial instability. It is crucial for gyms to develop a realistic budget, monitor financial performance, and make informed decisions based on financial analysis. By implementing sound financial practices, gyms can ensure their financial sustainability and long-term success.

#20 Overwhelming Competition from Other Local Gyms/ Fitness Studios

Competition among gyms and fitness studios is fierce, especially in densely populated areas. The presence of numerous alternatives can make it challenging for a gym to attract and retain members. Offering a unique value proposition, specialized services, exceptional customer experience, and targeted marketing efforts can help set a gym apart from its competitors. Standing out in a crowded market is crucial for a gym’s success.

#21 Failure to Create a Positive Gym Culture and Atmosphere

A gym’s culture and atmosphere play a vital role in member satisfaction and their desire to return. Failing to create a positive gym culture can result in a lack of motivation, engagement, and sense of belonging among members. It is important for gyms to focus on fostering a friendly, inclusive, and welcoming environment. Establishing clear core values, promoting positive interactions among members and staff, and providing a supportive atmosphere can contribute to the success of a gym.

#22 Inability to Keep Up with Technological Advancements in the Fitness Industry

The fitness industry has witnessed significant technological advancements in recent years. Failure to embrace these advancements can hinder a gym’s success. From wearable fitness trackers to virtual fitness classes, technology offers numerous opportunities to enhance the member experience and attract new customers. By adopting innovative technologies relevant to the fitness industry, gyms can position themselves as forward-thinking and remain competitive in today’s digital era.

There are various reasons why gyms fail. Lack of a unique selling proposition, poor location selection, inadequate market research, failure to target the right demographic, insufficient marketing strategies, and lack of effective customer acquisition and retention programs are just a few factors that can contribute to a gym’s failure. Additionally, high membership fees, insufficient staff training, inadequate equipment maintenance, limited class offerings, and ineffective member engagement can also play a role. It is important for gym owners and operators to consider these factors and take appropriate measures to address them in order to improve their chances of success in a highly competitive industry.

What is the failure rate of health and fitness businesses?

According to the IHRSA, the failure rate of health and fitness businesses is 81% in their first year. Despite how often gyms fail, the fitness industry is still growing. Check out this guide to learn how you can make sure your fitness business is a success.

  • According to the IHRSA, 81 percent of health and fitness studios fail within their first year.
  • A gym is still a business and must be treated as such if it is to succeed.
  • The surest way to set your new gym up for failure is to open it before you know what you’re doing.

Owning a gym sounds like a great idea. You get to make money from fitness while working a job you love, right? While this isn’t necessarily wrong, there are far more details to consider.

For example, do you know the failure rate of health and fitness businesses? Do those gyms fail because of bad luck or is it something more? And most importantly, how can you set your gym up for success (hint: you’ll need the best gym management software and the best personal training software)?

According to the Global Health and Fitness Association (IHRSA), 81 percent of health and fitness studios fail within their first year.

That number sounds bad enough on its own, but it gets worse. According to the US Bureau of Labor Statistics, the first-year failure rate of private-sector establishments across all industries is about 20 percent. This means that new health and fitness businesses are four times more likely to fail than other types of business.

However, this grim statistic hasn’t kept the health and fitness club industry from growing. Statista reports that there were 41,370 fitness clubs in the US in 2019, which is up from 30,022 fitness clubs in the US in 2008.

Why do new health and fitness businesses fail?

Most businesses, including gyms, fail due to money. Here are a few common reasons a gym might fail:

  • The business opened without enough operating capital.
  • The business isn’t generating enough volume to turn a profit.
  • The business’ finances are being mismanaged.

As fun as it may sound to open a gym (read these things you should know before opening a gym), at the end of the day, that gym is still a business and must be treated as such if it is to succeed.

How can I make sure my new gym will be successful?

If you want to prevent your new fitness business from becoming a failure statistic, you must take the business side of your gym seriously. Learn how to put together a business plan and how to read a lease. Gain experience in gym marketing and sales (or seek out someone for your team who has this knowledge).

Your new fitness business will need gym management software; do you know what features you need in that software or where you will get it? Have you managed employees before? Have you ever applied for a business license or submitted tax forms?

As the owner of a new gym, you’ll need to do all this and much, much more. If you’re truly a beginner in these areas, take some business classes. Yes, really. The surest way to set your new gym up for failure is to proceed with opening it before you know what you’re doing.

Read More: Gym Marketing Ideas

Why do some gyms fail?

Some gyms fail due to a variety of reasons, including insufficient market analysis, poor financial management, lack of differentiation, inadequate marketing and sales strategies, lack of member engagement, ineffective operational management, and external factors such as economic downturns or unforeseen events. Exercise.com can help gym owners address these challenges by providing robust gym management software that assists with market analysis, financial planning, marketing and sales strategies, member engagement tools, operational management features, and data-driven insights to make informed business decisions.

Why are gyms not profitable?

Gyms may struggle to be profitable due to factors such as high overhead costs, inadequate cash flow management, ineffective pricing strategies, low membership numbers, and inefficient operations. By leveraging Exercise.com’s gym management software, gym owners can track their finances, analyze revenue streams, manage expenses, optimize pricing strategies, and streamline operations to increase profitability.

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What percentage of gyms fail?

The percentage of gyms that fail can vary based on multiple factors such as location, market conditions, management, and industry trends. While there is no specific percentage, it is essential for gym owners to have a solid business plan, conduct thorough market research, and utilize reliable gym management software like Exercise.com to improve their chances of success.

What problems are gyms facing?

Gyms face various challenges, including increasing competition, managing finances, attracting and retaining members, providing exceptional customer service, adapting to industry trends, and navigating external factors such as economic fluctuations or unforeseen events. Exercise.com’s gym management software offers solutions to these problems by providing tools for marketing, sales, member engagement, financial management, and operational efficiency.

What is the toughest thing about owning a gym?

The toughest thing about owning a gym can vary depending on individual circumstances, but common challenges include intense competition, managing finances, maintaining consistent membership numbers, addressing operational issues, keeping up with industry trends, and providing exceptional customer service. Exercise.com’s gym management software can assist gym owners in tackling these challenges by offering features for marketing, sales, financial management, member engagement, and operational organization.

What percentage of gyms succeed?

The success rate of gyms can vary, and there is no specific percentage. Success depends on factors such as effective planning, market analysis, financial management, differentiated offerings, exceptional customer experience, and adapting to changing industry trends. By utilizing Exercise.com’s gym management software, gym owners can optimize their operations, enhance member engagement, streamline processes, and make data-driven decisions to improve their chances of success.

Is owning a gym stressful?

Owning a gym can be stressful due to the responsibilities associated with managing finances, marketing, sales, staff, operations, and member satisfaction. However, with the right tools and resources like Exercise.com’s gym management software, gym owners can streamline processes, automate tasks, and gain valuable insights to reduce stress and improve overall efficiency.

What makes a successful gym?

A successful gym typically possesses characteristics such as a clear value proposition, well-defined target market, effective marketing and sales strategies, high-quality facilities and equipment, knowledgeable and engaged staff, a range of attractive programs, exceptional customer service, and a focus on delivering an exceptional member experience. Exercise.com’s gym management software can assist gym owners in achieving success by providing tools for marketing, sales, member management, scheduling, billing, and reporting.

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How long does it take for a gym to break even?

The time it takes for a gym to break even can vary depending on factors such as location, size, business model, membership rates, and operating costs. On average, it can take one to three years for a gym to reach profitability and recoup initial investments, although this timeline can vary. Exercise.com’s gym management software can help gym owners track financials, manage expenses, and optimize

pricing strategies to accelerate the break-even timeline and improve financial outcomes.

Is opening a gym risky?

Opening a gym can be considered risky due to factors such as the high gym start-up costs, intense competition, market saturation, and the need for effective management and differentiation. However, with careful planning, market analysis, and the right gym management software like Exercise.com, gym owners can mitigate risks by making data-driven decisions, streamlining operations, and leveraging tools to attract and retain members, optimize finances, and stay competitive in the industry.

What is the disadvantage of the gym business?

The gym business has its disadvantages, including high start-up costs, ongoing operational expenses, intense competition, the need to constantly adapt to changing trends and member preferences, and the challenges of attracting and retaining members. However, with the right strategies and tools, such as Exercise.com’s gym management software, gym owners can overcome these disadvantages by optimizing operations, providing exceptional member experiences, and implementing effective marketing and sales strategies to drive success.

How many start-up gyms fail?

The failure rate of start-up gyms can vary based on multiple factors, including location, market conditions, competition, management, and business strategies. While there is no specific percentage, it is important for entrepreneurs to conduct thorough market research, develop a solid business plan, and leverage reliable gym management software like Exercise.com to improve their chances of success. By utilizing the tools and resources provided by Exercise.com, start-up gym owners can streamline operations, attract and retain members, manage finances, and make data-driven decisions to increase their likelihood of long-term success.

The Bottom Line: Why do gyms fail?

People often open a gym because they want to turn their passion into their job. There’s nothing inherently wrong with this, but understand that your new gym will need the same planning, expertise, and commitment that all new businesses require. Otherwise, it will eventually become nothing more than a very expensive hobby.

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“The Exercise.com team is amazing, and their all-in-one software is more than we ever expected! All of this is made possible by a high-quality team.”
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If you’d like help getting your new gym off to a great start, book a demo to see what Exercise.com can do for you.

Or maybe you are ready to maximize your gym’s profits by streamlining your operations? Book a demo to find out how Exercise.com can help.


Tyler Spraul is the director of UX and the head trainer for Exercise.com. He has his Bachelor of Science degree in pre-medicine and is an NSCA-Certified Strength and Conditioning Specialist® (CSCS®). He is a former All-American soccer player and still coaches soccer today. In his free time, he enjoys reading, learning, and living the dad life.
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