Looking for a health club business plan? You're in the right place.
A club with a pool, studios and childcare costs a lot to build and a lot to staff before the first dues payment clears. Anyone asking for money to open one has to answer the questions a landlord, a lender and an investor will ask. How many members does the building need? How long until each month covers its costs? What happens if people join more slowly than the forecast says? Generic templates leave all three blank.
This article walks through a complete sample plan for a health club in Seattle, Washington, one section at a time. It covers the executive summary, the market and competition, how members are won and kept, and, in most detail, the five-year financials.
Here's what you'll be able to do after reading it:
- Executive summary: put the club, the raise and the payback on a single page, so a reader sees what you're asking for in a minute
- Market and competition: size up big-box gyms, boutique studios and public pools honestly, and say where your club is different
- Membership and pricing: build dues, corporate seats and add-on programs into one forecast that holds together
- Staffing roster: time each hire to the members already paying for it, from lifeguards to a second pool technician
- Start-up funding: work out how much cash covers fit-out, presale and the months before dues catch up with payroll
- Five-year statements: follow how rent, payroll and member numbers flow into profit, cash flow and the balance sheet
- Downside case: have an answer ready for "what if revenue runs 20% short?", with the steps the founders take
If you're planning a club of your own, read this before you start writing. The club is fictional, so keep what fits your building and change the rest.
In this plan
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Summary of the Club
Lakeline Athletic Club is a 26,000-square-foot health club that opens on January 1, 2027 in a leased former fitness-club building in north Seattle. Members get a strength and cardio floor, two group studios, a four-lane 20-yard warm pool, a dry sauna and a staffed Kids Club. Employers can buy seats for their staff. Co-founders Dana Whitfield and Marcus Oyelaran run it day to day and own 55% between them. Three local investors own 45%.
The club raises $1,550,000: $450,000 from the founders, $500,000 from the investors and a $600,000 bank term loan. Of that, $767,000 stays in the bank as a reserve, $685,000 buys equipment, the pool refit and the fit-out, and $98,000 covers permits, legal work and the presale campaign.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $2,216,167 | $3,658,000 | $4,325,000 |
| Net income after start-up costs | ($446,788) | $215,524 | $370,917 |
| Closing cash | $470,711 | $705,016 | $1,000,930 |
Three hundred and eighty founding members sign before the doors open. The club reaches 1,248 membership units and 240 corporate seats by December 2027. Year 1 loses money because the building, the lifeguards and the front desk are staffed from day one while members are still arriving. Monthly operating profit turns positive in August 2027, and Year 2 is the first profitable year.
A weaker case is built in. If revenue runs 20% below plan in every year, and the founders cut hours, delay hires, trim marketing, take lower pay and pay no distributions, cash stays positive at every year end. The thinnest is $93,306.
The idea behind the club is one building a household can use at the same time: a parent swims or trains while the children are in Kids Club, and a teenager takes a swim lesson. Dues sit between a big-box gym and a resort-style club.
Lakeline at a Glance
Legal name: Lakeline Athletic Club, LLC, a Washington limited liability company. Owners: Dana Whitfield and Marcus Oyelaran (55% together); three local investors (45%). Building: 26,000 square feet in north Seattle, on a 12-year lease with two five-year renewal options and a pool shell already in place from the previous operator. Opening date: January 1, 2027 for the main club; Kids Club follows in February. Stage: pre-opening. Lease terms are agreed in draft and the founding-member offer is on sale.
Targets through 2029
- 380 founding members before opening day, and 1,248 membership units by December 2027.
- A month with positive operating profit by August 2027, and a profitable 2028.
- 1,640 units and 440 corporate seats by the end of 2029, with debt service covered 5.7 times.
- The first owner distributions in 2029.
What members pay for
| Line | How it is sold | Year 1 share of revenue |
|---|---|---|
| Individual and family dues | $119 single, $169 couple, $219 family a month at list | 74% |
| Corporate memberships | Seats billed to employers at $72 a month | 4% |
| Personal and small-group training | Sessions at a blended $68, trainer keeps half | 7% |
| Kids Club and swim school | Visit packages, drop-in, six-week swim sessions | 7% |
| Joining fees and pro shop | $79 average joining fee; smoothie bar and retail | 8% |
Pool, sauna and Kids Club oversight
Washington regulates public pools under chapter 246-260 of the Washington Administrative Code. Local health departments issue the operating permit, and it renews each year. Lakeline treats the permit as a condition of opening and employs a certified pool operator from the first day. The sauna is a dry, single-room unit with a timer and an emergency call button.
Child care in Washington is licensed by the Department of Children, Youth, and Families, with exemptions for some on-site care while a parent stays in the building. Whether Kids Club qualifies depends on its hours and rules. The plan budgets for a licensed program with a licensed lead, and the founders confirm the position with the department before the lease is signed.
Seattle's Fitness Market
What the labor market says
The Bureau of Labor Statistics put median pay for fitness trainers and instructors at $47,160 in May 2025 and projects 7% employment growth from 2025 to 2035. A trainer on Lakeline's 50% share who delivers 25 sessions a week at $68 earns about $44,000 a year, close to that median. Seattle's minimum wage is $21.30 an hour in 2026, which sets the floor for front desk, lifeguard and Kids Club pay.
Where a member could go instead
| Alternative | What it offers | Why a member picks it | How Lakeline differs by design |
|---|---|---|---|
| Big-box low-cost gyms | Equipment floor, long hours, low monthly dues | Price | A pool, included classes and childcare in one building |
| Boutique studios | Single-discipline classes such as cycling or yoga | Atmosphere and a loyal instructor | Classes are part of dues; a pool and floor sit under the same roof |
| City and community pools and centers | Lap swim, lessons and recreation classes at public rates | Low cost and neighborhood access | Longer hours, a strength floor and supervised care for children |
| Resort-style athletic clubs | Courts, spa services, dining and larger pools at higher dues | Amenities and status | Lower dues; no courts, no restaurant |
| Employer-run gyms | Convenience at large employers | Free or subsidized | Seats let smaller employers offer a similar benefit |
| Home equipment and fitness apps | Workouts without travel | Cost and time | Social, supervised and the only place with a pool |
The table describes what each category offers, not a ranking. Prices change often and are not quoted. The founders will collect published dues from the clubs nearest the site before signing the lease.
Strengths, weaknesses, openings and risks
| Strengths | Weaknesses |
|---|---|
| Pool, studios and childcare in one building | Pool and Kids Club are costly to staff in the first months |
| 380 founding members before opening | No brand yet in a neighborhood with established gyms |
| Two founders with complementary operating and aquatics experience | Both founders are guarantors on the bank loan |
| Openings | Risks |
|---|---|
| Employers in the north end looking for a staff wellness benefit | Dues competition from low-cost chains |
| Families seeking swim lessons and childcare together | Rising minimum wage on a payroll heavy in part-time hours |
| Corporate seats lifting use in off-peak hours | Pool equipment failure closing the main amenity |
Who Joins and Why
Households within a short drive
The core member is an adult aged 28 to 55 living within about ten minutes of the building, often with children under 14. The household wants a place to train, a pool the children can learn in and care for the children during the workout. Couples and families are about half of all units and, at $169 and $219, a larger share of dues.
Employees of nearby employers
The second group is workers whose employer pays for or subsidizes a seat. They use the club at lunch and before work, which fills hours that households leave empty. Seats are cheaper than dues because use is lower and the employer commits to a minimum number.
Swim school families and adult swimmers
Parents bring children to lessons and often join. Adult lap swimmers and people recovering from injuries use the pool in the early morning and mid-morning, when it would otherwise sit idle.
What drives the decision
Distance from home or work, a pool, child care that matches their schedule, class times, and a fee that does not change by month. The trigger is often a move, a new baby, a new job or a doctor's advice.
Selling Memberships
From tour to contract
A visitor books a tour online or walks in, sees the pool, studios and Kids Club, and is offered a trial week. The membership director and one counselor sign contracts on a month-to-month basis, billed by bank draft or card on the first of the month, with a $79 joining fee that is waived during promotions. Each founding member signs before opening with a refundable $50 deposit, returned if the club does not open.
The Year 1 funnel
Presale brings 380 units. The other 1,141 gross joins come from about 2,850 tours at a 40% close, roughly 240 a month, which two sales staff can host.
| Source of gross joins | Units | Share |
|---|---|---|
| Founding-member presale | 380 | 25.0% |
| Member referrals | 280 | 18.4% |
| Walk-ins and building signage | 280 | 18.4% |
| Paid search and social | 225 | 14.8% |
| Local partnerships and events | 130 | 8.5% |
| Website and local search | 116 | 7.6% |
| Swim school families | 110 | 7.2% |
Corporate seats
The partnerships manager joins in month 14, but the membership director opens employer conversations from the first month. A seat costs $72 a month in Year 1 and rises $2 a year. The plan expects about 14 employers averaging 17 seats by December 2027.
Keeping members
The plan expects 2.8% of units to cancel each month, about 29% a year. Joins have to replace those cancellations before the club grows. Members who use classes twice a week or take swim lessons cancel least, so the group fitness director from month 12 owns class attendance.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Membership units at year end | 1,248 | 1,500 | 1,640 | 1,720 | 1,760 |
| Corporate seats at year end | 240 | 400 | 440 | 540 | 580 |
Growth slows after Year 2 because the building fills. Peak-hour crowding starts near 2,200 unit-equivalents, with each corporate seat counted as half a unit, and Year 5 reaches about 2,050 of them.
Reaching North Seattle
Marketing budget and what it buys
Year 1 marketing is $160,000: $65,000 of launch spend paid from the start-up funds and $95,000 of operating spend. That is 7.2% of Year 1 revenue. The share falls to 2.9% in Year 3 and 2.6% in Year 5, as referrals take over. Across 1,521 gross joins in Year 1, the cost is about $105 a join, under a month of dues.
| Item | Year 1 spend | What it is expected to do |
|---|---|---|
| Sales gallery and building signage (launch) | $22,000 | A visible presale center before opening |
| Website, brand and photography (launch) | $14,000 | Tour booking, class schedule and swim school sign-up |
| Founding-member mail and digital offers (launch) | $19,000 | The 380 presale units |
| Open houses and opening-week tours (launch) | $10,000 | First-month walk-ins |
| Paid search and social | $31,000 | About 225 joins |
| Neighborhood mail and local events | $14,000 | Awareness among households within ten minutes |
| Member referral credits | $14,000 | A $50 account credit for each referral, about 280 joins |
| Employer outreach | $9,000 | Lunch-and-learns and HR introductions for corporate seats |
| Local partnerships | $8,000 | Schools, swim teams and physical therapy offices |
| Website, reviews and search | $9,000 | About 116 joins |
| Trial passes | $10,000 | A free week for tour visitors |
Milestones
- November 2026: presale center open, 200 founding members signed.
- January 2027: doors open with 380 units.
- April 2027: 772 units and 50 corporate seats.
- August 2027: 1,033 units, the first month with positive operating profit.
- December 2027: 1,248 units and 240 corporate seats.
Running the Building
Layout and hours
The club is open about 90 hours a week. The strength and cardio floor takes about 8,500 square feet, the two studios 3,000, the pool hall and sauna 5,000, Kids Club 1,400, locker rooms 3,200 and the front desk, offices, smoothie bar and storage 4,900. Peak use runs 5:30 to 8:00 in the morning and 4:30 to 7:30 in the evening.
The lease
Twelve years, with two five-year renewal options, modified gross at $20.50 a square foot with 3% annual steps. The landlord grants four months rent-free in Year 1 and a $390,000 improvement allowance ($15 a square foot), which is netted against the fit-out. Both founders sign a personal guarantee. The lease should be reviewed by counsel for exclusivity, assignment and the landlord's repair duties on the pool shell.
The pool
The pool has four lanes and is open the same hours as the club. Swim school uses about 25 lane-hours a week and aqua classes about 8, which leaves more than 300 lane-hours for lap swim. A guard is on deck whenever it is open, and the pool operator tests and logs water quality on a schedule the local health department can inspect.
Kids Club
Kids Club is open about 40 hours a week, with two attendants and the lead on weekday mornings and evenings. Visit packages and drop-in visits are billed to the member's account. Attendant ratios follow the Department of Children, Youth, and Families rules, which the founders confirm before opening. It loses money by design, and families who use it cancel less often.
Systems
One club-management system handles billing, access, class booking and the member app. A second handles payroll and scheduling. Software costs $34,000 in Year 1 and $50,000 in Year 5.
Staff and the downside plan
The roster reaches 13 full-time staff and about 35 part-time positions by the end of Year 2. Every hire follows member numbers: the downside case shows which hires are delayed or dropped if revenue falls.
Insurance and safeguards
- General liability, property, aquatic liability, professional liability for trainers, abuse-and-molestation cover for Kids Club and an umbrella policy, budgeted at $68,000 in Year 1.
- Workers' compensation through the state fund, in the payroll on-cost.
- Written pool safety, emergency and child-release procedures, practiced with staff each quarter.
- Member waivers and a documented policy for equipment inspection and repair.
- Key-person life and disability cover on both founders.
Suppliers
Equipment is bought from a commercial fitness dealer with a service contract. Pool chemicals, towel service and cleaning supplies come from regional suppliers, and none is hard to replace.
The Founders and Staff
Dana Whitfield, general manager
Dana has fourteen years in club operations, the last six as general manager of a 3,000-member athletic club. She has run a membership team, a payroll of about sixty and a capital budget. She and Marcus each invested $225,000 of savings in Lakeline, and she signs the bank guarantee.
Marcus Oyelaran, aquatics and operations director
Marcus has ten years in aquatics, at a municipal recreation center and then at a private club, where he ran lap swim, swim school and lifeguard training. He is a certified pool operator and a lifeguard instructor, and he signs the guarantee.
Where the team is thin
Neither founder has raised outside capital, and neither has run licensed child care. The Kids Club lead, hired in month 2, comes from a licensed center. A small advisory group of a retired club owner, an attorney and an accountant reviews the numbers each quarter.
If a founder is out
Dana runs operations and sales, and Marcus runs the pool, facilities and Kids Club. The assistant general manager, hired in month 19, can cover either role.
Owners and the bank
The founders own 55% in return for unpaid pre-opening work, operating control and the loan guarantees. The investors own 45% and put in 52.6% of the equity cash. Distributions are pro rata. The bank loan carries quarterly reporting and a debt-service cover test from Year 2.
The Numbers Behind the Club
Five years of figures follow: month by month for the opening year, annual after that. The funding comes first, then the operating figures behind each revenue line, so any total in the tables can be traced to its source.
Fit-out, presale and funding
| Use of funds | Amount |
|---|---|
| Strength and cardio equipment | $230,000 |
| Pool refurbishment and sauna build | $190,000 |
| Studios, Kids Club, locker rooms and front desk fit-out | $220,000 |
| Access control, point of sale, audio, screens and Wi-Fi | $45,000 |
| Permits, pool and childcare licensing | $12,000 |
| Legal: lease review, entity set-up, investor documents | $21,000 |
| Founding-member presale and launch campaign | $65,000 |
| Cash reserve for the ramp-up | $767,000 |
| Total uses | $1,550,000 |
| Source of funds | Amount |
|---|---|
| Founders' equity (two founders) | $450,000 |
| Three local investors | $500,000 |
| Bank term loan | $600,000 |
| Total sources | $1,550,000 |
The two founders put in $450,000 and three local investors $500,000, which together make up 61.3% of the $1,550,000 total. A bank term loan supplies the other $600,000 at a planning rate of 9.5% over ten years, interest-only for the first twelve months while the club fills. Both founders guarantee it and the lender takes a lien on the equipment. The rate is a placeholder for this example, not a quote, and a lender may ask for a smaller loan or a government guarantee. The fit-out line is net of a $390,000 landlord improvement allowance. The $767,000 reserve is the largest single use of funds. It is sized to the downside case further down the page rather than to the base case, where the lowest month-end cash balance is about $346,000. That leaves unused cash in the base case, which is why owner distributions start in Year 3.
Club operating figures
- Dues are priced at $119 a month for one adult, $169 for a couple and $219 for a family. A mix of 50%, 22% and 28% blends to about $158. The founding-year offer takes roughly 5% off, so Year 1 books $150 a unit. The blend is $160 in Year 2 and then rises about 3% a year, to $165, $170 and $175. A unit is one membership contract, whatever the number of people on it, and the mix averages about 1.9 people a unit. Prices are shown before Washington retail sales tax, which may apply to memberships and training and is collected from members for the state rather than counted as revenue. The Department of Revenue should confirm how each line is treated.
- Presale puts 380 units on the books in January, each backed by a refundable $50 deposit. Gross joins over Year 1 total 1,521, and cancellations take out 273 of them (2.8% of units a month, about 29% a year), leaving 1,248 at December 2027. Gross joins after that run at about 710 in Year 2, 670 in Year 3, 640 in Year 4 and 625 in Year 5, which gives 1,500, 1,640, 1,720 and 1,760 units at each year end.
- Space sets the ceiling. At about 1.9 people a unit, 1,640 units in Year 3 is roughly 3,150 members, or 0.12 members a square foot. Peak-hour crowding starts near 2,200 unit-equivalents, counting each corporate seat as half a unit. Year 5 reaches about 2,050, 93% of that, so growth after Year 5 would need price rises or a second site, which this plan does not model.
- Join volume dips from June to August, when outdoor activity pulls members away, and picks up in September and again in January. The Year 1 monthly table follows that pattern. Years 2 to 5 are spread evenly by the model, so no seasonality is claimed for them.
- Corporate seats are billed to employers at $72 a seat a month in Year 1, then $74, $76, $78 and $80. Seats reach 240 by December 2027, about 14 employers averaging 17 seats each, and 400, 440, 540 and 580 at the following year ends. Seat holders are counted separately from dues units, and employers pay on 30-day terms.
- About 6.5% of units buy training in Year 1 and 9% in Year 3, spending roughly $200 a month, which is three sessions at a blended $68. Trainers keep 50% of each session fee and that pay is booked as a direct cost. Year 3 holds about 5,100 sessions, or 98 a week, which four trainers can deliver at 25 sessions each.
- Kids Club opens in February, once its license is in place, runs about 40 hours a week and sells packages and drop-in visits at a blended $12 a visit. Year 3 holds about 15,000 visits ($182,000). Swim school sells six-week sessions at $165 a child, with about 180 children a session and five sessions a year ($148,000). Instructors are paid 40% of swim fees as a direct cost. Kids Club attendants are on payroll, and by Year 3 the Kids Club itself runs at a loss of roughly $100,000 a year. With swim school included, the combined line loses about $75,000 in Year 3 and is kept as a retention tool for families.
- Joining fees average $79 after waivers in Year 1 and $82 to $90 after that. The pro shop and smoothie bar sell $55,000 in Year 1 and $118,000 by Year 5. Stock costs about 55% of retail sales. The model uses a flat 30% direct cost on this combined line, which is cautious in Year 1, when joining fees dominate and stock would be about 17% of the line, and a little light by Year 5, when it would be about 37%.
- Card and bank fees on dues come to about 2%: roughly 60% of dues are drafted from bank accounts at under 1% and 40% are charged to cards at about 3%. Across the whole club, direct costs run at about 8.5% of revenue.
- Payroll adds 27% to full-time wages for payroll taxes, health cover, paid leave and workers' compensation, and 25% to part-time wages, whose hourly workers' compensation premiums and paid sick leave weigh more heavily. Part-time pay is set at about $24 to $26 an hour. Seattle's minimum wage is $21.30 in 2026 and moves every January, so each increase lands directly on the largest cost line. The 3% pay-raise line from Year 2 covers an ordinary year. Wages in the roster are launch rates.
- Rent covers 26,000 square feet at $20.50 a square foot a year, modified gross, which is $533,000 a year with a 3% annual step. The landlord gives four months rent-free in Year 1, which brings Year 1 rent to $355,000. Utilities are $165,000 in Year 1 because the pool is heated and its water is treated and turned over daily. Equipment replacement and repairs rise from $18,000 to $100,000 a year as the cardio floor ages.
- Washington taxes gross receipts through the business and occupation (B&O) tax, with the service rate at 1.5% below $1,000,000 of prior-year receipts and 1.75% from $1,000,000 to $4,999,999. Seattle adds its own business license tax, estimated here at 0.2%. The plan carries 1.7% of revenue in Year 1 and 1.95% from Year 2. If the Department of Revenue classes dues as retailing, the rate would be lower. Rates and thresholds change, so each should be confirmed before filing.
- Receivables average 5 days of revenue, because dues are drafted from members' bank accounts and only employer invoices wait. Failed drafts and bad debt are budgeted at about 0.8% of revenue.
- Income tax is charged at the 21% federal corporate rate with the Year 1 loss carried forward. Washington has no corporate income tax. An LLC taxed as a partnership would pass profit through to its owners, so the corporate rate is a cautious placeholder.
- Distributions of $100,000, $250,000 and $400,000 are paid in Years 3 to 5, pro rata to ownership, and only from cash the model shows the club can spare. The loan runs to term.
Revenue by line
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Individual and family dues | $1,638,900 | $2,640,000 | $3,110,000 | $3,430,000 | $3,650,000 |
| Corporate memberships | $94,608 | $284,000 | $383,000 | $459,000 | $538,000 |
| Personal and small-group training | $146,000 | $300,000 | $345,000 | $375,000 | $400,000 |
| Kids Club and swim school | $161,500 | $290,000 | $330,000 | $360,000 | $380,000 |
| Joining fees and pro shop | $175,159 | $144,000 | $157,000 | $167,000 | $174,000 |
| Total revenue | $2,216,167 | $3,658,000 | $4,325,000 | $4,791,000 | $5,142,000 |
| Growth on prior year | – | 65% | 18% | 11% | 7% |
Dues carry the club: 74% of Year 1 revenue and 71% of Year 5. Corporate seats are the fastest-growing line, rising from 4% of revenue to 10%. Year 2 grows 65% because it is the first full year of dues; December 2027 alone bills $250,930, an annual pace of $3.01 million before any further growth.
The opening year, month by month
| Month | Individual and family dues | Corporate memberships | Personal and small-group training | Kids Club and swim school | Joining fees and pro shop | Total revenue | EBITDA |
|---|---|---|---|---|---|---|---|
| Jan 2027 | $57,000 | $0 | $4,000 | $0 | $32,520 | $93,520 | ($100,852) |
| Feb 2027 | $80,850 | $864 | $6,500 | $7,500 | $16,430 | $112,144 | ($83,805) |
| Mar 2027 | $99,900 | $2,160 | $8,500 | $9,500 | $14,718 | $134,778 | ($63,088) |
| Apr 2027 | $115,800 | $3,600 | $10,500 | $12,000 | $13,875 | $155,775 | ($43,869) |
| May 2027 | $127,500 | $5,184 | $12,000 | $13,500 | $12,400 | $170,584 | ($30,314) |
| Jun 2027 | $137,100 | $6,840 | $13,000 | $14,500 | $11,952 | $183,392 | ($18,590) |
| Jul 2027 | $144,600 | $8,280 | $13,000 | $15,000 | $11,004 | $191,884 | ($10,817) |
| Aug 2027 | $154,950 | $9,720 | $13,500 | $15,500 | $12,584 | $206,254 | $2,336 |
| Sep 2027 | $169,500 | $11,520 | $15,000 | $17,000 | $15,454 | $228,474 | $22,674 |
| Oct 2027 | $179,700 | $13,680 | $16,500 | $18,500 | $13,400 | $241,780 | $34,853 |
| Nov 2027 | $184,800 | $15,480 | $16,500 | $19,000 | $10,872 | $246,652 | $39,313 |
| Dec 2027 | $187,200 | $17,280 | $17,000 | $19,500 | $9,950 | $250,930 | $43,228 |
January bills 380 presale members but has no Kids Club yet, so it is the lowest revenue month. Operating profit is negative from January to July and positive from August to December, when the fall join season arrives and the base of members is large enough to cover the building. The lowest month-end cash balance is Aug, at about $346,000 after allowing for the 5 days employers take to pay.
Staffing roster
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Co-founder and general manager | $115,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Co-founder, aquatics and operations director | $92,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Membership director | $68,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Membership counselor | $46,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Certified pool and facilities operator | $62,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Custodian | $46,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Front desk team (five part-time positions, combined) | $128,000 | Month 1 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Lifeguards and pool attendants (seven part-time, combined) | $134,000 | Month 1 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Group-class instructors (twelve paid per class, combined) | $72,000 | Month 1 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Kids Club attendants (four part-time, combined) | $104,000 | Month 2 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Fitness floor manager | $64,000 | Month 3 | 1 | 1 | 1 | 1 | 1 |
| Kids Club lead | $56,000 | Month 2 | 1 | 1 | 1 | 1 | 1 |
| Bookkeeper | $60,000 | Month 4 | 1 | 1 | 1 | 1 | 1 |
| Swim school coordinator | $52,000 | Month 9 | 1 | 1 | 1 | 1 | 1 |
| Corporate and community partnerships manager | $64,000 | Month 14 | – | 1 | 1 | 1 | 1 |
| Weekend lifeguards (four part-time, combined) | $68,000 | Month 15 | – | 0.5 | 0.5 | 0.5 | 0.5 |
| Assistant general manager | $78,000 | Month 19 | – | 1 | 1 | 1 | 1 |
| Evening Kids Club attendants (three part-time, combined) | $63,000 | Month 22 | – | 0.5 | 0.5 | 0.5 | 0.5 |
| Group fitness program director | $58,000 | Month 12 | 1 | 1 | 1 | 1 | 1 |
| Second pool and facilities technician | $58,000 | Month 26 | – | – | 1 | 1 | 1 |
| Member experience supervisor | $52,000 | Month 31 | – | – | 1 | 1 | 1 |
| Total payroll incl. on-costs | $1,299,725 | $1,675,188 | $1,905,262 | $1,944,420 | $1,944,420 |
Six full-time staff and 24 part-time positions open the building in January. The Kids Club lead and four attendants join in month 2, when Kids Club opens. The fitness floor manager follows in month 3, the bookkeeper in month 4 and a swim school coordinator in month 9. The group fitness director arrives in month 12, the partnerships manager in month 14, weekend lifeguards in month 15, an assistant general manager in month 19, evening Kids Club attendants in month 22, a second pool technician in month 26 and a member experience supervisor in month 31. Full-time headcount is 11, 13, 15, 15 and 15 at the year ends. Part-time pools appear as one line at their combined annual cost and count as half a position, so the revenue-per-full-time-equivalent row is better read as a trend than as a benchmark. The two founders' salaries of $115,000 and $92,000 are already in payroll, so the profit lines are what remains after both are paid.
Income statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $2,216,167 | $3,658,000 | $4,325,000 | $4,791,000 | $5,142,000 |
| Direct costs (card fees, trainer and swim-instructor pay, pro shop stock) | ($187,673) | ($309,772) | ($366,256) | ($405,719) | ($435,443) |
| Gross profit | $2,028,494 | $3,348,228 | $3,958,744 | $4,385,281 | $4,706,557 |
| Payroll incl. on-costs | ($1,299,725) | ($1,675,187) | ($1,905,262) | ($1,944,420) | ($1,944,420) |
| Rent | ($355,000) | ($549,000) | ($565,500) | ($582,500) | ($600,000) |
| Utilities | ($165,000) | ($172,000) | ($180,000) | ($188,000) | ($196,000) |
| Marketing | ($95,000) | ($115,000) | ($125,000) | ($130,000) | ($135,000) |
| Insurance | ($68,000) | ($76,000) | ($82,000) | ($86,000) | ($90,000) |
| Professional fees | ($18,000) | ($20,000) | ($22,000) | ($23,000) | ($24,000) |
| Software subscriptions | ($34,000) | ($40,000) | ($44,000) | ($47,000) | ($50,000) |
| Washington B&O tax and Seattle business license tax | ($37,700) | ($71,300) | ($84,300) | ($93,400) | ($100,300) |
| Cleaning, laundry, pool chemicals and water testing | ($105,000) | ($125,000) | ($137,000) | ($146,000) | ($155,000) |
| Repairs, equipment service contracts and replacement | ($18,000) | ($40,000) | ($60,000) | ($80,000) | ($100,000) |
| Music licensing, phones, bank and app fees | ($14,000) | ($18,000) | ($20,000) | ($21,000) | ($22,000) |
| Staff certifications and training | ($12,000) | ($16,000) | ($18,000) | ($19,000) | ($20,000) |
| Failed-draft and bad debt allowance | ($16,000) | ($27,000) | ($32,000) | ($35,000) | ($38,000) |
| Annual pay raises (3% a year) | $0 | ($50,256) | ($116,030) | ($180,300) | ($244,042) |
| EBITDA | ($208,931) | $353,484 | $567,652 | $809,661 | $987,795 |
| Depreciation | ($82,857) | ($82,857) | ($82,857) | ($82,857) | ($82,857) |
| Interest | ($57,000) | ($55,103) | ($50,704) | ($45,868) | ($40,553) |
| Income tax | $0 | $0 | ($63,174) | ($142,997) | ($181,521) |
| Net income before start-up costs | ($348,788) | $215,524 | $370,917 | $537,939 | $682,865 |
| Start-up costs expensed at opening (permits, legal, presale and launch marketing) | ($98,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($446,788) | $215,524 | $370,917 | $537,939 | $682,865 |
Year 1 loses $208,931 at the operating line and $446,788 after interest, depreciation and the $98,000 of start-up costs. Year 2 is the first profitable year, with $215,524 of net income and no income tax because the Year 1 loss carries forward. The operating margin rises from 9.7% in Year 2 to 19.2% in Year 5. Payroll falls from 59% of revenue in Year 1 to 43% in Year 5, while repairs and equipment replacement climb from $18,000 to $100,000 and hold some of that gain back.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($394,289) | $278,630 | $444,637 | $614,413 | $760,913 |
| Equipment, pool and fit-out | ($685,000) | $0 | $0 | $0 | $0 |
| Funding received | $1,550,000 | $0 | $0 | $0 | $0 |
| Term loan principal repaid | $0 | ($44,324) | ($48,723) | ($53,559) | ($58,875) |
| Owner distributions | $0 | $0 | ($100,000) | ($250,000) | ($400,000) |
| Net change in cash | $470,711 | $234,306 | $295,914 | $310,854 | $302,039 |
| Closing cash | $470,711 | $705,016 | $1,000,930 | $1,311,784 | $1,613,823 |
Cash stays positive at every year end, and the lowest is the $470,711 at the end of Year 1. Distributions start in Year 3. After the first payout, retained earnings stand at only $39,653 at the end of that year, so the payout is sized to keep the balance sheet positive.
Balance sheet at year end
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $470,711 | $705,016 | $1,000,930 | $1,311,784 | $1,613,823 |
| Accounts receivable | $30,358 | $50,110 | $59,247 | $65,630 | $70,438 |
| Equipment, pool and fit-out (net) | $602,143 | $519,286 | $436,429 | $353,571 | $270,714 |
| Total assets | $1,103,212 | $1,274,412 | $1,496,605 | $1,730,986 | $1,954,975 |
| Bank term loan | $600,000 | $555,676 | $506,952 | $453,393 | $394,518 |
| Paid-in capital | $950,000 | $950,000 | $950,000 | $950,000 | $950,000 |
| Retained earnings | ($446,788) | ($231,264) | $39,653 | $327,593 | $610,457 |
| Total liabilities and equity | $1,103,212 | $1,274,412 | $1,496,605 | $1,730,986 | $1,954,975 |
Break-even and club ratios
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -9.4% | 9.7% | 13.1% | 16.9% | 19.2% |
| Net margin (before start-up costs) | -15.7% | 5.9% | 8.6% | 11.2% | 13.3% |
| Payroll incl. pay raises as share of revenue | 59% | 47% | 47% | 44% | 43% |
| Revenue per full-time equivalent at year end | $170,474 | $228,625 | $240,278 | $266,167 | $285,667 |
| Average monthly revenue | $184,681 | $304,833 | $360,417 | $399,250 | $428,500 |
| Monthly revenue needed to cover operating costs | $203,702 | $272,651 | $308,736 | $325,536 | $338,568 |
| Debt service cover (EBITDA / interest + principal) | -3.7x | 3.6x | 5.7x | 8.1x | 9.9x |
Year 1 averages $184,681 of revenue a month against $203,702 needed to cover operating costs, which is why it loses money. Year 2 averages $304,833 against $272,651, a cushion of 12%. Debt service cover is negative in Year 1, then 3.6x in Year 2 as principal repayments begin, and rises to 9.9x by Year 5. Revenue per square foot reaches about $166 in Year 3 ($4,325,000 over 26,000 square feet).
If revenue runs 20% short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,772,934 | $2,926,400 | $3,460,000 | $3,832,800 | $4,113,600 |
| Net income before start-up costs | ($595,309) | ($124,365) | ($62,147) | $67,361 | $195,142 |
| Net income after start-up costs | ($693,309) | ($124,365) | ($62,147) | $67,361 | $195,142 |
| Closing cash | $230,262 | $128,628 | $93,306 | $184,857 | $400,135 |
This case cuts every revenue line by 20% in every year, including presale and corporate seats, which makes it harsher than a slow join rate alone. The response: part-time hours are trimmed by 12%, cleaning and supply spend by 10%, the bookkeeper starts two months later, every hire from month 13 starts six months later, the member experience supervisor is dropped, marketing is cut by 20%, both founders take a 20% pay cut, equipment replacement is deferred by 30% in Years 2 and 3, and no distributions are paid. On those terms the club ends every year with cash in the bank, never below $93,306, but it does not turn profitable until Year 4, two years after the base case. Only year-end balances are modeled, so a low point inside Year 2 or Year 3 could be lower. Equity ends Year 1 at $256,691, and the founders would open a conversation with the bank at the first sign of weak joins. Closing cash in the later years is higher than in the base case partly because no distributions are paid.
Sources
- Bureau of Labor Statistics, Fitness trainers and instructors, Occupational Outlook Handbook: median pay of $47,160 in May 2025 and 7% projected growth, 2025 to 2035.
- Seattle Office of Labor Standards, Minimum wage: $21.30 an hour for all employers in 2026.
- Washington Department of Revenue, Business and occupation tax classifications: service and other rates of 1.5% below $1,000,000 and 1.75% from $1,000,000 to $4,999,999 of prior-year gross income. The page shows no effective dates, so rates should be confirmed before use. Seattle's own business license tax rate is an estimate and was not sourced.
- Washington Administrative Code, chapter 246-260, water recreation facilities, a reprint of the state rules. The annual local operating permit is described in WAC 246-260-101; confirm with the local health department.
- Revised Code of Washington, RCW 43.216.010, the child care licensing definitions and exemptions. The exemption for on-site care was not read in full; confirm with the Department of Children, Youth, and Families.
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