According to industry body Fitness Australia, it is becoming increasingly difficult to enter the fitness industry as the number of participants continues to grow and consumers become more demanding.
There are about 1300 fitness centres throughout the country and an estimated 11,000 to 12,000 registered fitness professionals.
"People that are going into business in the fitness industry have to be serious about it. No longer can they buy some second-hand equipment, stick it in the back of mum's garage, and call themselves a fitness centre" the chief executive of Fitness Australia, Ian Grainger, said.
"Consumer protection laws also require that our industry is suitably capitalized. You can't go out there and sell five-year memberships to try and scrape up enough capital to get your business together."
Regulators have attempted to stamp out fly-by-night operators by imposing a maximum pre-paid period for gym memberships of 12 months.
"The emphasis of the business has changed from sales and selling memberships, to actually providing a service and retaining clients" Mr Grainger said, also cautioning that entrants had to be aware of costs such as copyright payments for the use of music, and insurance.
Heightened competition from big chains is also raising the bar, as is the increased demand from a population that is ageing and becoming more health-conscious.
"We has a much more savvy customers these days. We also have people entering the marketplace who have been encouraged to seek out a fitness solution, who previously haven't done so" the co-owner of Hiscoes gym in Sydney's Surry Hills, Susan Kingsmill, said.
Ms Kingsmill said the challenge for the gym was meeting the workout needs of people who did not fit the profile of a typical 18 to 34 year-old, fit young person.
Ms Kingsmill did not, however, feel threatened by the rapid expansion in Australia of gyms like UK-based Fitness First, as she believes the overall membership base of the industry will continue to grow.
Fitness First now has about 40 gyms in Australia, and plans to expand that to 100 by 2010.
"The most important thing is member retention, and we put in dedicated staff called customer care managers. Their responsibility is to make sure that the members feel comfortable to stay there", development director David Allan said.
The accounts of the Australian operations showed total revenues of $99 million for the 12 months to October 31, 2003. And that is forecast to rise to $130 million this year.
Fitness Australia estimates that a centre with 1000 square metres of space typically needs 1500 members to break even, and a turnover of $1 million to earn a reasonable income.
Financial Review
Joyce Moullakis
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