A couple of young entrepreneurs in the fitness space named Tim Suski and Corey Spangler are focused on a franchise model and building their startup from scratch using a bootstrapping method, not accepting any money from outside sources. And they happen to be doing very well with their San Diego-based Rush Cycle studio despite the oversaturation that is occurring in the niche fitness industry.
Suski and Spangler have embraced the standard spin class "party on a bike" model, with the lights down low and the music turned up.
Interested in this particular area, I recently spoke with Suski about his challenges and his game plan for continued growth.
What are the challenges and perceived benefits of bootstrapping a startup in the fitness space?
Suski: Bootstrapping (along with any other industry to be honest) definitely has its challenges; they tend to be most magnified in the very early stages. Being bootstrapped made it difficult to recruit instructor talent, which in the boutique fitness industry is the lifeline of your business, so we had to scrap and pitch our way to get local talent on our side. We also had to be efficient with our capital, especially when it came to building out our studio/physical location itself, because we could not invest in everything some of our competitors had like massive studio spaces, entertainment and technology, showers etc. so we were competing with million dollar build outs!
We also had to depend more on word of mouth referrals and marketing, as we did not have a massive digital advertising/marketing budget to work with, so we had to get creative with our partnerships and events that didn't cost much, but gave us maximum exposure. I remember we hosted this class inside Neiman Marcus for the launch of an athlesuire brand within Nordstrom . . . we rented a U-Haul and had to shuffle 25 bikes through the streets, into the mall and up a service elevator just to host this class.
Now with all of that said I think all of those challenges actually turned into benefits long term for our company and culture. We grew from grassroots beginnings and attracted all of our early talent and employees based off of pure passion and energy. So everyone who was working with us was not doing it for a paycheck, but rather because they vibed with the Rush Cycle philosophy and what we stood for.
Another great example of a story of how our challenges turned into strengths inside our brand . . . right when we opened our very first studio this beautiful, big indoor cycling studio opened up about a mile away from us. They had big name local investors backing it, a gorgeous brand, million dollar build out, etc. I remember Corey [Spangler] and I had a conversation and said OK we can't beat them with money, a bigger studio or larger ad spend, so let's invest everything we have into our people and talent. They closed their doors within a year and we continued to thrive!
There is certainly a current cycling "craze." What makes you think that it will continue and/or sustain itself over time?
Suski: There isn't just an indoor cycling studio craze, but rather a macro shift that has taken place in the fitness industry as a whole. People are demanding a focused/specialized workout, with a unique experience that also provides a valuable core product (the 45 minute heart pumping workout). They no longer want to just be a number at a big box gym, they want to feel like they are apart of a special community that shares the same goals and aspirations as they do.
Also, group exercise has been around forever and indoor cycling has been the most popular version of that since the 80s, so at its core our product is valuable to our consumers/clients . . . we have just put an exciting experience around that now and offer a new way to get the same health benefits in a much more attractive environment. I always like to say there will never be a day where we wake up and an article is published stating fitness is bad for you . . . so if we continue to provide a valuable workout in an inspiring setting there will never be a day where indoor cycling is not thriving.
What are the startup costs with creating a studio? What type of revenue do you have to see to just break even?
Suski: Startup costs associated with a Rush Cycle franchise location will be between $350,000 - $420,000 all inclusive (soup to nuts). From the franchise fee, architecture/construction to marketing spend and working capital needed. We have had franchise studios that are operationally (cash flow) break even at month 2 of having doors open.
Why is it still a good time to try to break into the very saturated fitness industry?
Suski: People involved or familiar with the fitness space will tend to have a misconception that the industry is saturated. We aren't even close to seeing that happen, we get about 40-60 leads a week from people who are interested in learning how to franchise with Rush Cycle from every single state and now country as well (and keep in mind we are just an emerging brand at this point). There are so many neighborhoods/cities that are in desperate need of and demand a quality brand/workout like Rush Cycle . . . there is a lot to be done and we are excited to be positioned to rapidly expand.