Starting your own Boutique Fitness Studio requires a decent amount of capital. There are numerous expenses that you will need to consider ranging from rent to employee salaries. All of these costs can pile up quickly and you might find yourself having difficulty keeping your business afloat. As you are formulating your business plan, ensure that you create detailed and realistic financial projections to determine your capital requirements. Now that you have an idea of how much financing you need, here are some ways you can finance your studio:
1. Government Grants
With the ongoing COVID-19 pandemic, strict measures have been implemented to safeguard Singaporeans, which have in turn impacted numerous fitness studios and freelance trainers. The Government has introduced a suite of support measures, such as the Sports Resilience Package (SRP) that amounts to $75 million, to help individuals and businesses tide over these challenging times. One example would be operating grants to help offset operating costs, and the Continuing Coaching Education (CCE) Training Allowance for Fitness Instructors, which aims to encourage eligible fitness instructors to continuously upgrade their skill sets and stay relevant. More information can be found on SportsSG’s website here.
In addition, aspiring entrepreneurs who wish to start their own boutique fitness studio can apply for the SG Startup Founder scheme under the “Start” track or the “Train” track. For the “Start” track, qualifying applicants will receive guidance and advice from Accredited Mentor Partners (AMP) as well as a startup capital grant of $50,000 from Enterprise Singapore. For the “Train” track, qualifying applicants will receive mentorship and undergo 3-month Venture Building (VB) programmes that will help them commercialise their ideas into a scalable business. More information can be found on StartupSG’s website here.
2. Friends and Family
When you wish to start your own business, friends and family are usually the first people you would reach out to to raise capital. They might be willing to lend you the capital with no interest or it might be in the form of an interest-bearing loan or share-of-equity investment depending on the terms agreed upon. It is an easier and less formal way to raise capital at a very early stage of your business as compared to borrowing money from banks, which can be more costly and less flexible. However, in return, you might face increased pressure and responsibility from the trust that has been placed on you. There is a risk of straining personal relationships or losing those closest to you, should your business end up folding.
Self-funding, or bootstrapping, is one way to embark on your entrepreneurial journey by relying on your own personal finances. Needless to say, building up your boutique fitness studio from the ground up, with little to no external financial support, is extremely tough. The limited capital available can inhibit growth and undermine the quality of your services, which is ultimately detrimental to your studio’s performance. Despite bearing all the financial risks, one advantage of bootstrapping is that you have full control over your business and you are able to concentrate solely on building the core aspects of your studio.
4. Business Loans
In Singapore, there is an array of business loans and other credit tools that you can take up from local banks and financial institutions. The application can be conveniently done online but you need to take note of the various criteria for eligibility such as the local ownership stake, number of employees, and amount of turnover. This is also a form of debt financing whereby the lending institution has no ownership control over your studio and the interest expense you pay is tax deductible as a business expense. However, a downside is that the interest repayments can damage your cash flow so it is crucial that you borrow at a reasonable and affordable rate. More information on the most popular business loans in Singapore can be found on a comprehensive comparison by SingSaver here.
Crowdfunding is essentially a way to raise capital from the general public to finance your new boutique fitness studio. There are mainly two types of crowdfunding – donation-based crowdfunding and investment crowdfunding. Social media platforms and crowdfunding websites such as Kickstarter have connected investors and entrepreneurs, which makes pooling together a significant amount of capital easier and more accessible. Another key advantage of crowdfunding is that you are able to grow your audience and gauge the level of demand or interest in your business idea.
However, crowdfunding takes time and effort and you will need to follow the regulations of the crowdfunding platforms. In the worst case scenario, your campaign fails and you will need to return all the money you have raised so far. Furthermore, it is not suitable for all businesses. For boutique fitness studios, you are likely to be successful if you are offering a new or highly innovative type of workout experience.
6. Angel Investment
Similar to crowdfunding, angel investments are largely uncommon for boutique fitness studios. An angel investor is usually a high net-worth individual who provides financial backing to promising startups in exchange for ownership stake. Typically, these angel investors look for opportunities such as a defined exit strategy, acquisitions or Initial Public Offerings (IPO). An interesting fitness technology concept that has caught our eye is Vision Gym, a local brand that prides themselves as Asia’s first wireless Electro Muscular Stimulation (EMS) studio. Unless your boutique fitness studio offers a revolutionary idea or adopts unique technological concepts, seeking angel investments may not be the wisest or most feasible choice.
Now that you have gained a better understanding of the forms of financing available, you will need to consider which one is the right option for your boutique fitness studio. Ensure that you have made proper and detailed calculations of your projected expenditures as it will determine the amount and method of financing your studio will require.
Once you have determined the right financing option for your business, you might need to start developing a business plan for your boutique fitness business. Use our free boutique fitness business plan template to build a business strategy and define your operational priorities so that you are well primed for success.