How to Start Your Combat Sports Business

As reported by Policy Advice, global healthcare spending is expected to exceed $10 trillion by 2022. In addition to traditional spending on hospital care and out-patient services, the last few years have seen a steep rise in purchases involving healthcare products and services such as supplements, online fitness classes, fitness equipment, and notably combat sports training. For those who don’t prefer dedicating their exercise time towards lifting weights, combat sport provides a holistic training regime that develops one’s muscles, cardio, reflexes, and mental strength. The recent prominence of combat sports training across the world can also be attributed to the growing popularity of sports such as mixed martial arts (MMA), kickboxing, and more. Top MMA promotions namely One Championship and the UFC had nearly 10 billion combined views in 2019, a number which has grown further in the following years according to SportsKeeda.

For entrepreneurs looking to tap into the thriving health industry, now is the perfect time to start a combat sports business, and this article by FightBook MMA will take you through the steps of how to do just that.

Decide Your Niche

The first step is to decide what you will be selling and to whom. There are various types of businesses you can consider, such as:

Gear Supplier: This involves selling products such as gloves, punching bags, wrestling maps, hand wraps, mouth guards, etc. But keep in mind that different sports use different types of equipment, for example, boxing gloves are heavier with lots of padding, while MMA gloves are thinner, sleeker, and made to accommodate grappling, kicking, submissions, etc.

Moreover, you can choose to either sell directly to individual customers or be a supplier for gyms, allowing you to sell in bulk. This will depend upon your business plan, level of funding, and expertise.

Gym Owner: Opening a gym in a locality filled with combat sports enthusiasts will be the obvious choice, but you will need to balance it with the cost of rent and maintenance. Additionally, the heart of any good gym is the trainers. Having well-known trainers will attract clients to your gym and create a strong customer base.

But, setting up a gym is no cheap affair as it’ll involve buying training equipment, mats, hiring staff, and much more. If you have no prior experience running a gym, it’s advisable to find a partner to divide the expenses and responsibilities.

Establish an LLC

Regardless of the business of your choice, register it as a Limited Liability Company. In the world of combat sports, injuries are common yet can happen unexpectedly. Having an LLC will protect your personal assets from litigation in case of a dispute. Additionally, an LLC makes you eligible to pay lower taxes and add partners with ease. To create an LLC, consider using a formation service such as ZenBusiness, that helps you avoid expensive lawyer fees, deals with paperwork, and provides responsive customer service for any queries.

For the most part, an LLC is structured as either a sole proprietorship, a partnership, or a corporation.  A single-member LLC (sole proprietorship) is arguably the most common type of structure. Partnerships are also fairly common, with corporations being a lot less common. In fact, with the exception of C Corporations, LLCs are considered pass-through organizations. As such, formal tax rates are not imposed on the LLC itself. Instead, the members of the LLC report income on their personal income tax returns. This means that the 2022 federal income tax brackets apply to the income generated by the LLC. As for C Corporations, they are taxed using the federal corporate income tax rate—21%—along with any state-specific taxes (if any). 

Obtain Necessary Licenses

Depending on the state your business is registered in, you’ll have to apply and receive a business permit. When it comes to selling goods, you will also need to apply for a tax ID number or a resellers permit, to avoid paying sales tax on goods bought from a wholesaler. Similarly, if you are a wholesaler, you will not charge sales tax on goods sold to retailers as they are buying them for the purpose of reselling.

Other common licenses & permits include:

Sign permit

Building permit

Federal tax identification number

Promote Your Business

In the combat sports business, athletes are consistently on the lookout for brands to sponsor them. Having a collaboration with an athlete can help put your brand on the map, even if it is just locally. You can start small and then work your way up towards sponsoring events that will bring thousands of eyeballs to your brand. In addition, invest well in creating a strong online presence on platforms such as Instagram, and YouTube through which you can sell your goods and services directly to customers.

While combat sports have a rich history, the industry is still very young, providing the perfect opportunity for motivated entrepreneurs to enter and make a mark.