Health Club Business - Coursework Example

?Business Plan for Health Club Business Table of contents 0 Executive summery ...................................................................3 1.0 Introduction ...............................................................................3 2.0 Business details ..........................................................................4 3.0 Business mission ........................................................................4 4.0 Business aims and objectives .....................................................4 5.0 Market information ....................................................................5 6.0 SWOT and competitive advantage 6.1 SWOT analysis ………………………………………………...6 6.1.1 Strength ……………………………………………………....6 6.1.2 Weakness .................................................................................6 6.1.3 Opportunities ............................................................................7 6.1.4 Threats .......................................................................................7 6.2 Competitive Edge ........................................................................7 7.0 Details of customers and market segmentation ...………………8 8.0 Marketing strategy 8.1 Location and products ………………………………………….8 8.2 Pricing …………………………………………………………..9 8.3 Promotion ……………………………………………………….9 8.4 Market entry strategy …………………………………………..10 9. 0 Star up-summary ……………………………………………..10 10.0 Premises and equipment needs .................................................10 11.0 Key people 11.1 Functions and background .......................................................11 11.2 Salaries ......................................................................................11 12.0 Detailed profit forecast .............................................................12 13.0 Detailed monthly cash flow forecast ........................................12 14.0 The success of the project .........................................................13 15.0 The probabilities of failure in this plan ......................................13 16.0 Risk management .......................................................................14 Bibliography Executive summary N&M is a ladies-only health centre located in Luton. It offers physical fitness programs that are specially designed to meet the unique needs of women. The facility targets a selected portion of the ladies market, mainly the middle and upper class women. This business plan outlines the mission, aims and goals of the business. It also makes an extensive analysis of its market, customer base, competitors and the marketing strategy that the business will use in order to venture into the market. There is a clear outline of the kind of people the business requires for it to be successfully operational and their expected compensations for the various groups of people it will employ. In addition, the plan indicates a detailed profit forecast and detailed monthly cash flow forecast for the first year of operation. This is followed by an explanation of the chances of success of the project and an acknowledgment of the probability of its failure. Finally, it outlines possible risks and potential ways of managing them. 1.0 Introduction There is an increased need to create a personalised environment for women so as to encourage them to pursue their fitness goals. The number of women who have an active life but do not seem to spend sufficient time in gyms or other physical fitness activities is higher. It is also evidently, there a high number of women looking for fitness centres where their unique needs can be met. It is for these reasons that N&M was established as a female only physical fitness gym. 2.0 Business details N&M is a health club, a female-only physical fitness gym that offers exercise equipment, massage, swimming lessons, weight reduction and weight training program, fitness classes, and childcare centre. The centre seeks to create the most conducive and personalised environment where females of ages 18-50 can pursue their fitness and weight reduction goals. The business specifically focuses on urban professional women, young mothers and urban entrepreneurial women who are looking for a fitness centre that can focus on their unique needs. The childcare centre provides a range of play activities that keep the children of the clients happy. From the selection of machines, professional training staff to the organisation of the childcare centre, Smart Ladies has created a supportive fitness and weight reduction experience that will attract new members by a word of mouth. N&M operates as a sole proprietorship and is owned by (name). The business will be domiciled in a strategic location in an uptown street in Luton. 3.0 Business mission To create a supportive women-focused physical fitness environment that will enable the customers meet their fitness goals successfully. 4.0 Business aims and objectives The aim of staring this business is to provide income for my upkeep and upkeep of my family. The business objectives of N&M are, To maintain and grow our business position as one of the ladies-only health clubs in the UK that caters for the unique fitness needs of women. To surpass 50% class capacity by the lapse of the first year of operation. To acquire 150+ memberships by the lapse of the first year of operation. 5.0 Market information N&M operates under a large market region. Luton has a population of over 193,669 according to Mongabay (2012) and the business’ potential market size is estimated at 20,000 women from our analysis of the working population. A good percentage of this population works in Luton town and others in the United Kingdom. This market is bound to grow faster as indicated by the recent population increase in Luton as one of the towns near the London city and as a result of the increased number of high-tech companies in the region. This economic growth has attracted a pool of professional and entrepreneurial women which forms the target market of N&M. The market is, therefore, projected to grow by 20% in the first year and by 40% the second year. By the end of the fifth year, this growth is projected to be over 80%. The main competitor of N&M in its area of operation is Ladies Workout Express. This is a circuit training centre that provides an aerobic and full strength workout. 6.0 SWOT and competitive advantage 6.1 SWOT analysis SWOT analysis is an effective strategic planning tool for businesses that are forward minded. Based on SWOT analyses, both profit and non-profit oriented organizations can make realistic business decisions and come up with realistic and achievable objectives (Hill and Westbrook 1997). 6.1.1 Strength The main strength of N&M is its strong focus in a specific portion of the ladies recreation market. As mentioned above, the facility targets urban professional and entrepreneurial women, and young mothers. It is, therefore, more powerful in capturing clients who are reserved when it comes to choosing personal shopping centres. Another strength of the organization lies in the competency of its staff. All the personal trainers will be AFLCA certified, and will have a CPR and a standard first aid training. In addition, the facility has long of operation hours. With 10 working hours and three personal trainers, N&M can afford to offer personal attention to its clients. 6.1.2 Weakness The main weakness of N&M is its low workout. This is related to the level to which the facility has been equipped so far. For the start, the facility has only managed to acquire a few machines that have two hydraulic-pistons and so most of them can only allow a workout session of about 15-20 minutes. This is opposed to Ladies Workout Express whose equipments are specially designed, each having 10 resistance settings for accommodating different fitness levels and two hydraulic-pistons. Because of this, they are able to achieve twice the workout that N&M can achieve per client session. Ladies Workout Express’s 30-minute program is, therefore, more efficient in helping clients achieve lean tissues because their 30-minute program burns fats, speeds up metabolism and aids in weight loss. 6.1.3 Opportunities The main opportunity for N&M is the increased need to provide physical fitness classes to ladies in an environment that is less intimidating. There are a high number of women looking for a different type of physical fitness club that can accommodate their unique needs. Young mothers are also looking for fitness clubs which not only cater for their fitness needs, but also allows them to keep their children close. 6.1.4 Threats The major threat to N&M is the age diversification of its competitor. Ladies Workout Express attracts memberships from women of diverse socio-economic backgrounds, ages and level of physical fitness. Any level of economic shaking could send customers to the cheaper but extensively inclusive facility in the neighbourhood. 6.2 Competitive Edge For any organization to be successful in the market, it must harness its potential and make good use of its competitive advantage (Rae 2007). Basically, the competitive edge of N&M is the selective and supportive women-focused environment it has created in its facility. Female clients feel more comfortable and relaxed in a program that is dedicated to females. This makes the business outcompete other similar health facilities that do not focus on the unique needs of women and which women are not comfortable attending. In addition, the childcare centre for the facility has been designed in such a way that it is visible from the facility’s main workout floor. 7.0 Details of customers and market segmentation N&M focuses on three groups of customers. These are professional women and young mothers and urban entrepreneurial women. About 80% constitute urban professional and entrepreneurial women and 20% comprise young mothers. These are mainly women from middle and high social classes; either employed, running businesses in Luton or London, or married to rich men in these regions. Because of their type of jobs and statuses, these women are highly sensitive to their physical appearance and thus they are ready to part with some cash to maintain themselves physically. 8.0 Marketing strategy 8.1 Location and products The location or domicile of a (physical) business plays a major role in determining its success in the market (Burns 2010). The business will be in Luton town, 30 miles north of London. Its location near London will ensure that it not only highly accessible to professional and entrepreneurial women and, young mothers living in Luton but also those who are working in the city. This location will ensure that it fits into the busy schedules of its target market compared to locating it far from the city like similar facilities like Butterfly Life. Apart from its competitor Ladies Workout Express, the other nearest health club is 7.2 miles. 8.2 Pricing N&M will establish its prices through skimming. The business will charge higher prices as a result of the high inelasticity of demand characteristic of the physical fitness market. However, a 50% discount will be offered during the first month of operation in order to attract customers. The second month will serve to determine the ability of the business to satisfy its target market because the percentage of those who will retain their membership will indicate the level of customer satisfaction. Special offers will be given to clients who come in groups as, for example, family groups like mother and daughter or sisters, workmates, business mates or group of friends. A large range of payment terms will be designed to cater fully for the needs of the clients. These are cash, cheques, Paypal, and credit cards among others. 8.3 Promotion The business will publicize its services extensively through brochures given to clients. They are expected to reach out to women of similar socio classes and occupations and thus maintain the highly selective customer characteristic of the business. TV, radio and print media advertisements will also be employed for a short period in order to reach out to more target customers. In addition, the business will post adverts on the Internet given the increasing rates at which people surf for various reasons. At the front part of the facility, point of sale-displays will be placed in form of billboards placed near the facility and a smaller one at its entrance. 8.4 Market entry strategy N&M targets a specific or focused market and for this reason, will venture into the physical fitness market as a niche player. There is a high level of differentiation of the market segment and products offered and, there is a high probability of experiencing success despite offering products at a higher price. 9. 0 Star-up summary The startup capital for N&M is focused chiefly on exercise services and on equipment. A total of ?160,000 will be required to start the business. ?50, 000 will come from a combination of personal savings and donation from parents and ?100,000 will be obtained as long-term loan. There will be star-up expenses to fund like stationary, brochures, advertisements, insurance, rent, childcare setup, leased equipment and money to be spent obtaining legal documents. This will cost ?94,000. There will also be start-up assets to fund in the form of current assets, long-term assets and this will cost ?66,000. 10.0 Premises and equipment needs The club will require three exercise rooms and one equipment room. With these rooms, the facility can accommodate up to 200 people at a go. In order to meet the unique needs of its special group of customers, N&M has acquired a range of sophisticated equipment that are bio-mechanically that are specifically designed for a woman’s body. These include step mills, upright and recumbent bikes, 10 treadmills, stair steppers tairmaster, cycles, elliptical trainers bodytrek, gravitron, rower and cross aerobic trainers. It provides a floating form for a range of step, muscle conditioning, aerobatic and yoga classes. There is also need for one more room that will function as a child centre to ensure that the facility serves clients in a way that they can take their time without struggling with the stress of watching on children. It will also enable the facility to cater for the needs of women that would otherwise be unable to attend the facility without the help of a baby sitter. The membership fee will be ?180 a month and the fee for a personal trainer will be set at ?30/hr. The facility will offer half prices during its first month. 11.0 Key people 11.1 Functions and background The key people that will be required for the business to be operational are qualified personal training staff. These staff members will provide clients with expertise and knowledge on designing and successfully implementing a fitness program. Each of the trainers should be AFLCA certified and with a CPR and a standard first aid training. In addition, each of them should have specific training and qualifications that will enable them to provide individual clients with an individually designed fitness program. Other key personnel will include an operational manager/lead trainer, childcare staff and a clerk/receptionist. In total, there will be 7 employees, that is, 1 operational manager/lead trainer, 3 personal trainers, 2 childcare staff and 2 clerks/receptionists. The number of staff is chosen considering that the business will operate in two shifts, the first running from 8a.m. to 3p.m and the second from 3p.m to 10p.m. six days a week (Sundays excluded). 11.2 Salaries During the first year, the salary for the operations manager/lead trainer will be ?3,000 a month and ?36,000 annually. This will be increased by ?3,000 within the next two years. Each personal trainer will go home with a monthly salary of ?3,000 giving a total of ?30,000 for each in the first year. This will be increased by ?2,000 within the next two years. Each child care staff will part with a monthly salary of ?1,500, giving an annual salary of ?18,000 for each and each of the two receptionists/clerks will part with a monthly salary of ?1,600, giving an annual salary of ?38,400. Each person in these positions will also be added ?1,200 by the end of the second year. This gives a total payroll of ? 200,400 for the first year. 12.0 Detailed profit forecast The business expects t record ?350,000 worth of sales during the first year. This represents the gross profit because the facility will incur ?0 as direct costs of memberships and personal trainers. Annual rent is expected to total ?80,000. Together with salaries, total annual expenses are expected to be ?281,200. This gives an annual net profit of ?68,500 and an average monthly profit of about ?5,700. 13.0 Detailed monthly cash flow forecast Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Membership in ?1000 3 6 10 12 16 18 18 18 18 18 18 18 173 P. Trainers in ?1000s 3 8 12 14 16 18 18 18 18 18 18 17 177 Totals in ?1000s 6 14 22 26 32 36 36 36 36 36 36 35 350 14.0 The success of the project The project has higher chances of success because of making a special focus on the needs of females. There is an increased need of physical fitness programs that are specifically designed for this group. This means that the business will be able to encroach quickly into the market of unisex gyms by attracting women whose needs are not met in these gyms. This increases the chances of experiencing adequate sales both as membership fee and personal trainer fee. In addition, the business is commercially attractive and viable because there is a high demand and consumption of physical fitness services among this target segment than other groups of women. The facility is located within Luton town, and since it targets professional women, entrepreneurial women and young mothers as this groups are less sensitive to price changes. 15.0 The probabilities of failure in this plan There are low chances that this business will fail. Chances of failure can be attributed to competition from competitors who are more equipped and have more staff, especially personal trainers. In order to cope with this and eliminate the chances of failure, the business will hire more personal trainers after six months of operation to ensure that clients get sufficient attention from the trainers. The facility will also add one childcare staff to ensure that the children of the clients are given adequate and quality care. In addition, the facility will upgrade its equipment to include more cardiovascular training equipment to ensure the centre responds adequately to the increased need for cardiovascular training. Currently, the facility will utilize treadmill, elliptical trainer, stair stepper and, recumbent and upright bikes to help the customers low impact cardiovascular experiences. 16.0 Risk management Every business faces several risks some of which are preventable while others are not preventable (Burns 2010). It is prudent for business managers to take measures to minimize risks or somehow insure the business from risks that often strike unexpectedly (Gorrod 2004). One of the risks of the facility to the clients is infection. Clients can contract flu and cold viruses if one or some of them are infected. Paper towels will also be placed beside all equipments to help clients avoid contacting slimy sweat from other people. Another risk is accidents from using equipments. To avoid this, the facility will service its equipments regularly to ensure all the belts, bolts and cables are in place and in good condition. The facility will also locate its equipments at appropriate distances to ensure they are easily and safely accessible and that nearby clients do not hurt each other. The National Strength and Conditioning Association (2008) advices that collars should be used to secure weights in their proper positions. In order to secure the business against insurable losses such as theft, and destruction by fire among others, the business will be insured with a reputable insurance company. References Gorrod, M. (2004) Risk Management Systems: Technology Trends (Finance and Capital Markets), Basingstoke: Palgrave Macmillan. Hill, T. & R. Westbrook (1997) "SWOT Analysis: It’s Time for a Product Recall", Long Range Planning 30 (1): 46–52 Mongabay (2012) Population of Luton, United Kingdo, Accessed 13 March, 2012 http://population.mongabay.com/population/united-kingdom/2643339/luton National Strength and Conditioning Association (2008). Essentials of Strength Training and Conditioning. National Strength and Conditioning Association, National Strength and Conditioning Association. Burns P. (2010) Entrepreneurship and Small Business: Start Up, Growth and Maturity, New York, Palgrave McMillan. Rae D. (2007) Entrepreneurship, From Opportunity to Action. New York, Palgrave McMillan. Read More