Over the last decade, Americans have become increasingly focused on health and wellness. As part of this trend, yoga – which has long had a loyal and dedicated following – has seen an increase in popularity as well.
Yoga itself finds its roots in 5000 years of ancient Indian traditions, yet it hadn’t received a widespread and dedicated following in America until the past few decades. Amazingly, a recent study from a few years ago indicated that the number of Americans doing yoga on an active basis has increased by over 50% over the last few years, growing from 20.4 million in 2012 to 36 million in 2016. These individuals, known as yogis (individuals who practice yoga), are also typically willing to pay good money for high-quality instruction from talented yoga teachers.
In this light, it is no wonder why yoga studios have grown at a considerable rate over the last few years, with many prospective small business owners choosing to try to make a splash in the industry.
One of the great things about opening a yoga studio is that the startup costs are incredibly low, especially if the yoga studio owner is one of the yoga instructors. Unlike working out in a gym, yoga is essentially free of equipment. The only yoga equipment people need is a yoga mat, and classes can be taught in almost any environment. These low barriers to entry make a yoga business an accessible small business opportunity for a wide array of Americans – including those whose financial resources are rather limited.
In this post, we’ll discuss the various costs associated with starting a yoga studio that you can expect.
Assessing Your Market
Assessing your market is a key component of starting any small business, including a yoga studio. In order to do this, you’ll need to understand local income levels, demographics, interest in athletic and wellness activities like yoga, as well as competition in the area. After all, if there are five yoga studios in a small town, opening another probably isn’t a good idea.
Build a Business Plan
As part of assessing the market, you should go ahead and make a comprehensive business plan that outlines not only the market research you have completed but also your business strategy and business ideas.
Business plans typically have the following:
Executive Summary – The executive summary should be a brief explanation and overview of your business and what you plan to offer.
Products and Services Summary – The summary of your products and services should outline exactly what you are planning on providing to your customers. For example, maybe you are planning two offer a monthly membership that gives members access to a certain number of classes of Bikram yoga, vinyasa yoga, and hot yoga each month. Maybe you plan to offer both yoga classes and Pilates classes. Additionally, maybe you plan to run a small shop inside your studio with workout clothes, yoga mats, and a few other products that you think will sell well. You may also have classes where you provide teacher training for individuals looking to learn about how they can teach yoga.
Take this moment to clarify your business model and how you plan to make money. Some yoga studios charge per class, some charge per month, some sell packs of classes, and some sell all of the above. Make sure to be clear and concrete about how you plan to make money – after all, this is one of the main goals of running a small business. You’ve got to pay the bills and keep the doors open.
Marketing, Advertising, and Promotion Strategy – If you are going to run start a new business you are going to have to raise awareness about it somehow. Your marketing, advertising, and promotion strategy should cover the exact methods and strategies you plan to use to draw potential customers into your new yoga studio.
You will want to make sure you are using a multi-pronged approach to marketing, reaching out to people via social media, engaging with the community, and advertising appropriately. You should try to detail each method to the best of your ability. For example, while word-of-mouth is great, maybe you plan to incentivize word-of-mouth marketing by starting a referral program. For each person a current customer refers to your yoga studio, maybe you plan to give them a free water bottle with your logo or a free yoga mat with your logo. This is a great method for driving awareness in your local community.
Market Research and Competitor Analysis – This is where you will detail the local market conditions and any competitors you might have to face. In particular, you will want to cover what exactly sets you apart from your competitors. For example, maybe your competitor offers classes at prices that are just way too high for the local market and you think your pricing (assuming it works out financially to cover all your costs and still provide a profit) will draw customers in quickly. Or maybe the competitor only offers one type of yoga and you plan to offer multiple.
Operations Plan – Execution is key when it comes to running a small business and your operational plan should detail exactly how you plan to make your ideas a reality. For example, maybe you plan to start by training a staff of three yoga instructors in vinyasa, Bikram, and hot yoga (make sure to detail how you plan to find and hire these individuals). As the business owner, you might plan to manage the studio yourself, keeping track of the customers, financials, and managing the staff full-time. This is your chance to envision exactly how you want your yoga studio business to operate on a day-to-day basis.
Finances – Finances are exactly why you are reading this article, right? This is the part of your business plan where you will want to cover exactly what it will cost to start your business. It should be an in-depth guide to everything you will have to pay for to get the business off the ground and running, and it should cover exactly how you plan to finance these costs. For example, you might be seeking a $35,000 loan from the bank while you plan to cover $15,000 in startup costs out of your own savings.
Why Is the Business Plan Important?
You might now be wondering what exactly you need the business plan for. Well, outside of it being a great opportunity for your to clarify your ideas and get them onto paper, it will enable you to assess whether or not you have a viable business plan and opportunity on your hands. At the same time, when you go to a lender to ask for financing, they will want a clear and detailed business plan to make sure they are not taking a risk in lending you the money. The more thorough, detailed, and realistic your plan is, the less hesitancy banks will have about loaning you money. This not only will help you get approved for a loan but it also might help you get a better interest rate!
The Cost of Starting a Yoga Studio
Now the moment we have all been waiting for. What does it actually cost to start a yoga studio? While the actual cost of starting a yoga studio varies based on the size of the studio, the location, and the surrounding market (i.e. property values in the area), yoga studios typically cost around $25,000 to $100,000 to start (though you could get this number to be a lot higher if you want to based on the decisions you make). This makes the yoga industry one of the easiest industries to break into!
In this next section, we’ll break down the different aspects of a yoga studio that drive these costs. For your reference, a basic yoga studio with enough room to hosts classes with 25 yoga students comfortably with some room to spare would be around 1,000 square feet.
Yoga Studio Startup Costs
Mortgage Down Payment or Rent
The biggest cost you will incur in starting up a yoga studio is the mortgage down payment or rent security payment. This will vary considerably based on where you are looking to open a studio (i.e. property in New York City is more expensive than property in the suburbs of Atlanta) and what the cost per square foot is in the area.
Across the United States, retail spaces have an average cost of around $200/square foot. As such, you can expect a 1,000 square foot yoga studio retail space to be about $200,000. Assuming a 20% down payment associated with a commercial real estate loan, you can expect to have to pay about $40,000 upfront for a place for your yoga studio.
If you decide to rent since it is a commercial lease you can expect to have to agree to a lease of at least two years (sometimes longer) with an upfront security deposit of 6 to 12 months rent. For example, if you are paying $20/square foot for a 1,000 square foot retail space, you can expect to have to pay $10,000 to $20,000 as a security deposit upfront.
Remodeling, Refurbishments, and Décor
Odds are the retail space you are buying or renting is not perfectly set up to host a yoga studio. In order to turn it into a proper yoga studio space, you will probably have to invest in some remodeling, such as painting the walls, replacing the floor, and adding in some decorations. For example, many yoga studios have floor to wall mirrors and wood floors. You may also need to add a sound system to complement your yoga sessions. Decorations are also common in yoga studios since many studios try to capture a certain theme or feeling as part of their yoga classes.
Since remodeling, refurbishment, and decor decisions are highly variable and depend upon the business owner, the costs associated with them can fluctuate drastically.
As a quick tip, make sure to factor in remodeling and refurbishment costs when selecting a location. For example, you might find one location that is $10,000 cheaper than another to purchase. However, it may be that the more expensive location has wood floors that would be perfect for your studio, saving you $15,000 on remodeling. Thus, while the cheaper location might look like a deal at first, the more expensive location might actually be the better option and save you money in the long run. Make sure to consider these sorts of things when selecting a location.
As already noted, one of the things that make starting a yoga studio so inexpensive compared to many other business models is the lack of expensive equipment needed.
The equipment you will need will mostly depend on your studio’s policies. For example, you might require that students bring their own mats, or maybe you provide a free mat when people join. However, you might choose to reuse mats and clean them between sessions. If this is the case, you will need to pay upfront for non-slip yoga mats.
In addition to mats, you will probably want to purchase reusable towels for yoga students to use during classes. Yoga blocks, yoga bolsters, and yoga straps are also common yoga equipment that studios use. Altogether, you can expect to spend around $3,500 to $5,000 on these things.
Business License and Permits
Starting a new business will also require you to obtain a business license and other permits depending upon the laws and regulations of your locality. Depending on your state and county governments and their laws, you might also incur legal fees in the process of obtaining these licenses. You can expect to spend anywhere from $500 to $2,000 on obtaining these different licenses and permits.
POS System and Technology
In order to operate your business, you will also need a point-of-sale system and technology to operate it on. This means you will have to purchase either a desktop computer or one or two tablets (such as an iPad) to run a point of sale (POS) system. POS systems allow you to collect payments, process credit cards, keep track of memberships, and more.
When choosing a POS system be sure to research your options carefully. Some POS systems have extra functionality, such as the ability to run a loyalty program or offer gift cards. Remember, it is better to choose a system that has more functionalities and capabilities than you think you will need than to choose one that you think may be missing some features you will need in the future. This will ensure that you won’t have to make a time-consuming and labor-intensive migration to a new POS system in the future.
Initial Marketing Budget
While marketing is something you will have to operate and pay for throughout the life of your business, having an initial marketing budget is important. You will need to get the word out about your business quickly, so you will want to make sure you budget for a sizable marketing budget as part of your startup expenditures.
In order to start operating your business, you will need to budget for insurance to cover your liabilities. As with any business, yoga studios come with liabilities. Someone could get hurt in one of your classes and bring a lawsuit against you – liability insurance will protect you against this. You will also need workers’ compensation insurance. There are other insurances you may need in addition to these, so we recommend seeking out a qualified broker who can help you analyze and assess the needs of your business. Remember, while you don’t want to pay more for insurance than you have to, it is always better to have too much coverage than too little. Lawsuits can be costly and mean the end of an otherwise healthy and successful business.
While employees’ wages are an ongoing expense, not just a startup cost, the hiring process is not easy and is costly. As such, when you are first getting started and need to hire employees, you will need a startup hiring budget. This should include enough money to post on job boards and get the word out about open positions. This way you can attract high-quality workers that will make your business a success.
There is no doubt that starting a new business is not easy work. It takes time and effort. However, with the proper approach owning and operating your own business can be incredibly rewarding.
As noted, one of the great things about yoga studios is there really isn’t that much upfront risk in comparison to other industries. It is a lot cheaper than opening a restaurant, gym, or hotel. This makes it a great option for individuals who do not have access to a great deal of capital. So, if you are willing to put in the time to build out a detailed and thorough business plan, odds are you can be on your way to running a successful and profitable business in no time.
As always, at Biz2Credit we continue to work hard each and every day to bring our readers the latest news and trends surrounding small businesses. So, please remember to keep checking back here at our Biz2Credit Blog to stay up to date on what is happening in your industry and others!