Setting up a new gym is not easy on the purse strings, with the average cost of setting up a moderate-sized gym pegged at around $115,000. A large chunk of that expenditure will be furnishing your gym with fitness equipment.

You have two choices when it comes to furnishing your new gym with gear:

1. Either buying gym equipment or

2. Leasing gym equipment.

Let’s take a look at the pros and cons of both of these options, and see what factors you should consider before making a decision.

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Difference between buying and leasing gym equipment

The basic difference between buying and leasing gym equipment is pretty straightforward. When you buy gym equipment, you outright purchase everything at a cost. When you lease gym equipment, it works the same way renting a property does.

A financial lender purchases the equipment and you get to use it as your own for a predetermined period of time. Of course, you will be paying them a monthly rental during that term, inclusive of interest and other fees.

When that lease period is over, you can either renew your lease with the lender, purchase it from them at a reduced cost or return it to them.

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Buying gym equipment

Let’s get a little deeper into the pros and cons of buying gym equipment.

Advantages

• When you buy gym equipment, you get the luxury of customizing it, such as branding it with your studio’s logo. It is your property, and you get to choose what you want to do with it.

• When you buy gym equipment, you’re purchasing an asset. If you choose to upgrade the gear in a few years or even shut shop, you can sell this equipment and make money off of it.

• In the long run, buying equipment is actually less expensive than leasing it.

Disadvantages

• The average cost of buying new gym equipment is pretty steep, averaging around $50,000. That is a lot of money to put down even as a one-time purchase.

• Just buying gym equipment is hardly sufficient. You will need to deal with the recurring costs of maintenance as well.

• While there is a market for second-hand gym equipment, there is no saying how quickly you will be able to get rid of your gear, should you run into troubled times and need to shut down operations. You could be stuck with it for a while before you find a buyer.

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Leasing gym equipment

Leasing gym equipment comes with its own set of advantages and disadvantages. Here are some of them.

Advantages

• As an upfront cost, leasing gym equipment is definitely less expensive than buying it. This makes it a viable option for new gym owners working with a limited budget.

• When you lease gym equipment, you aren’t responsible for maintenance. If something large breaks down, such as an elliptical machine or treadmill, it will be easier for you to replace it with a lease.

• There are also tax benefits that you get to enjoy when you lease gym equipment. As of 2017, the Tax Cuts and Jobs Act makes leased equipment 100% tax deductible.

Disadvantages

• The biggest disadvantage is that you don’t own the equipment. That means you can’t even write off the cost on your balance sheets.

• Since it isn’t yours, you can’t make a penny by liquidating the leased gym equipment.

• In the long run, you will end up paying more than would have if you had bought the gym equipment. This is because you don’t own the equipment, and still pay interest every month on the lease.

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Making an educated decision: Which is the better option?

So how do you decide whether you should buy your gym equipment or lease it? Here are some factors to consider.

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What type of equipment do you need?

Think about what your immediate needs are in terms of equipment. Do you need all the latest, trendiest brands? Or is it enough for you to run your setup with core exercise equipment?

Also, spend some time researching different brands and prices before you make a decision.

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Take a look at your budget

Your startup budget is probably the biggest factor in this scenario. Keep in mind all the expenses you have to cover before you decide. Also factor in the amount of space you have, and the cost of maintenance.

This will help you decide if you should buy new gym equipment or second-hand gear, what types of brands to consider, or if you should simply lease everything.

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Think long term

Finally, think about the future before you decide.

• What is your business plan for the next three years?
• How is the fitness market in your geographic location?
• How long is it going to be for you to break even?
• Will you be able to buy back the equipment from your lenders at the end of the lease period, if that’s your choice?

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To conclude,

It would be impossible to say that one choice is better than the other. This is because it depends entirely on what your situation is as a business owner.

For some people, leasing gym equipment gives them the opportunity to build their businesses without having to stretch themselves too thin financially right at the beginning. For others, buying their gym equipment outright makes more sense, because they have the capital to build an asset right now.

However, knowing the pros and cons of each option, as well as other factors that should influence your decision, should definitely help you make the right choice for your new fitness center.

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