Health & Fitness: Business Expenditure Ratio Cheat Sheet

Need to know how much you should be spending on, rent, wages, or marketing? Get the numbers here!

As an owner of multiple gyms for 11 years, I leant that in a service industry business like a gym, the percentage of expenditure can vary depending on various factors, such as location, size of the business, operational efficiency, and business model. However, here's a general guideline based on industry standards and best practices to simplify your decision making.

Rent: Typically, rent should ideally consume around 15-20% of total revenue. This can vary significantly depending on the location, size, and lease terms of the gym.

Wages: Employee wages, including salaries, benefits, and payroll taxes, are a significant expense for service businesses like gyms. Wages should ideally account for around 40-50% of total revenue. However, this can vary depending on the number of employees, their roles, and the level of service provided.

Merchandise: If the gym sells merchandise such as fitness apparel, supplements, or equipment, the cost of goods sold (COGS) for merchandise should ideally be around 15-20% of total revenue. This percentage may vary based on the type and volume of merchandise sold.

Utilities: Utility expenses, including electricity, water, heating, and cooling, can vary depending on factors such as the size of the gym, equipment usage, and local utility rates. Ideally, utilities should account for around 5-10% of total revenue.

Professional Services: This category includes expenses for professional services such as accounting, legal, and consulting services. Professional service expenses should ideally be around 2-5% of total revenue, depending on the complexity of the business and the level of external expertise required.

Marketing: Marketing expenses are crucial for attracting and retaining customers in a competitive industry like fitness. Marketing expenses should ideally range from 5-10% of total revenue. This can include expenses for advertising, digital marketing, promotions, and community outreach efforts.

It's important to note that these percentages are guidelines and may vary based on individual circumstances and business objectives. It's essential for gym owners to regularly review and adjust their budgets based on actual performance, industry trends, and changes in the business environment. Additionally, investing in quality equipment, staff training, and customer experience can contribute to long-term success and profitability in the service industry.