Financing a Yoga Studio
The health-conscious craze is sweeping across the United States in many ways. We all see the rapid opening of health food stores, the growing market for health improvement diets, and the amount of gyms popping up on every street. The biggest trending health craze industry right now though is yoga. A recent comprehensive study of the consumer yoga market was conducted by Ipsos Public Affairs on behalf of Yoga Journal and Yoga Alliance. As of 2016, this study has shown that the retail side of the yoga industry has risen from $10 billion to $16 billion in just four years. In 2012 there were only 20.4 million people practicing yoga, but today there are now more than 36 million yoga practitioners in the United States. The yoga industry is predominately utilized by women; 72% of yoga practitioners are women. However, the recent study conducted shows that there are now 10 million American men practicing yoga today! Included with the rapid increase of both men and women practicing yoga, the study showed that 37% of yoga practitioners also have children under the age of 18 who also practice yoga with them. On top of the large amount of people already practicing yoga today, statistics show that 34% of Americans, which is more than 80 million people, claim that they are somewhat or very likely to practice yoga in the next 12 months! This means that any current or future yoga studio owners are going to experience a rapid increase in their business! These statistics are only continuing to grow, leading to this being one of the top fitness industries in America today.
Yoga Industry Trends
So what is yoga really and why is it becoming so popular today? According to Sadhguru, “The reason for [yoga’s] growing popularity is the large scale transmission of education. We have more intellect on this planet today than ever before. So, naturally as the intellect becomes stronger people look for logical solutions to everything. The more logical they become, the more they become dependent on science and the outcome of science is technology. As activity of the intellect becomes stronger in the world, more people will shift to yoga over a period of time and it will become the most popular way of seeking wellbeing”. Wellbeing is essential to the dominating generation, Millennials, who also happen to be the most influential demographic in every business strategy today – or, at least, they should be. Gallup showed how, “In addition to finding steady, engaging jobs, millennials want to have high levels of well-being, which means more than being physically fit. Yes, millennials want to be healthy, but they also want a purposeful life, active community and social ties, and financial stability”. This only solidifies the growing demand for more yoga and yoga studios. However, the massive amount of people joining yoga studios today has led to overcrowded yoga studios and to people literally walking out in the middle of the practice! This means that this booming industry is just begging for more yoga studios and yoga instructors!
Yoga Industry Economic Impact
The yoga industry study mentioned above shows that the total economic impact of the United States yoga industry is estimated to be $27 billion annually! Here are some current trends and reasons why yoga studio business owners need to be considering the different financing options available!
- Expansion Financing: As mentioned above, people are walking out of yoga classes because they are overcrowded. Yoga practitioners are demanding for more space! Expansion and remodeling can be incredibly pricey, especially because rent for yoga studios is already one of the largest expenses in the yoga industry.
- Employee Training: Yoga practitioners are also becoming obsessed with well-being and authenticity. Many believe that the yoga industry and commercialization have ruined the true essence of yoga, which is a combination of asana (physical movement) and spiritual reflection of oneself through traditional practices. Not every yoga instructor is taught these essential values that people are looking for in yoga classes today. Paying for additional training for your yoga instructors is invaluable, especially with the growing demand for authentic, spiritual, meditative yoga.
- Shop Local: Many people value a sense of community with local products and local businesses. There is a growing need for yoga business owners to focus on growing their customer base on a local level. What this means to yoga business owners, especially small-scale yoga studio owners, is that more needs to be done in the community through promoting your business at local events and local papers. This also includes local yoga studio owners working with other local providers to create product and class offerings that are tailored to the area and community that you are in! For example, individualized recommendations, products, and classes are important.
- Marketing and Advertising: Social media and website growth is incredibly important for yoga studios. This is a generation dominated by technology, and they are only continuing to only engage with businesses that are up to date with every aspect of their business. While there are cheap alternatives to market through social media, having access to quality marketers who truly understand the complexities of the social media world are essential. There are plenty of financing options available to yoga studio business owners looking to grow their social media platform.
- Inventory and Merchandise: Yoga accessories and gear are insanely profitable right now – have you seen how much LuLuLemon charges for a pair of yoga pants? American yoga practitioners spent $5.8 billion on yoga classes, $4.6 billion on yoga clothes, and $3.6 billion on yoga mats and other relevant items. Investing in the yoga accessory and gear market to enhance your yoga studio can be expensive up front, but taking advantage of the retail side of the yoga industry will only increase a yoga studio’s sales exponentially in the future.
There is so much versatility in the yoga world; there are over twenty different types of yoga that studios can offer, allowing yoga studio businesses to increase their capital. Also, incorporating accessories and gear into your yoga studio business allows for a wider area of profitability. These business is only continuing to grow in profitability, however there are always fees and difficult times when having access to financing and loan options can help!
Yoga Store Financing Options
|Bank||6-10%||3-7 years||14-30 days|
|SBA||6-10%||3-7 years||10-30 days|
|Line of Credit||5-15%||1 – 3 years||7-30 days|
|Alternative||6-25%||1-5 years||5-7 days|
|Cash Advance||1.16-1.55||3-24 months||1-3 days|
Yoga Studio Bank Loans
Bank term loans and lines-of-credit are clearly the best funding choice for any new or existing yoga studio because they offer the lowest rates and longest terms of all small business lending options. But, because banks offer such good rates, they are unwilling to take the risks that alternative business lenders take. Therefore you need to have excellent personal and business credit, have good business revenue, and also have all financial information well-documented.
- Rates: 5-8%
- Terms: 1-10 years
Yoga Studio SBA Loans
SBA loans are an excellent lending option for any yoga studio or small business that was unable to qualify for traditional bank. Administered through the Small Business Administration, the loan guarantee program entices traditional lenders to provide financing to borderline applicant by agreeing to have the government cover a large portion of the lender’s losses if the borrower defaults on their loan.
- Rates: 6-8%
- Terms: 3-25 years
Alternative Yoga Studio Loans
Alternative loans are the preferred choice for yoga studios and small companies that are unable to secure traditional bank financing or SBA financing. Mid prime alternative loans are the short term business loans that are truly amortizing. An alternative business loan can be approved in minutes and funded in days for qualified applicants.
- Rates: 8-25%
- Terms: 1-5 years
Yoga Studio Cash Advance
Merchant cash advances and business cash advances are a readily-available option to yoga studios that generate at least $5,000 in total revenue each month. A cash advance (both MCA and ACH) are the sale of future business earnings (credit card processing transaction and/or bank account deposits) in return for upfront funding. Rates for these types of loans are much higher than traditional and alternative lenders, and the terms are generally short.
- Factor rates: 1.16-1.50
- Terms: 4-18 months