Entrepreneurship - Starting and Growing a Wellness Center - Case Study Example

Business Plan for Starting and Growing a Wellness Center Introduction Business start-ups face numerous risks associated with both the internal and external commercial environments. Success of new star-ups depends on a venture’s ability to counteract dangers posed by the imminent risks. Typically, risks vary from one industry to another. Internal and external risks faced by fast food restaurants are not exactly similar to those risks faced by new wellness centers. Internal risks include aspects like financial management, operational strategies, and workforce risks. On the contrary, external risks involve failure of compliance, environmental uncertainties, socio-political climate and technological dynamics. As a start-up entrepreneur with limited practical skills, it is appropriate to design business plans with low risk growth strategies. According to Hill and Gareth (2009), components of such growth strategies should be able to effectively counteract consequences of either internal or external risk factors. The succeeding case study describes essential components of a potential venture that can adopt low risk growth strategies in its operation. Wellness Center as a Business Venture Currently, health and fitness centers feature among the leading business ideas, especially in developed countries. Both young and old people living in industrialized nations are struggling with the health issue of obesity. Employees find little time for physical exercise. They have to work for approximately 8 hours a day while seated, only to drive home and retire to bed. In addition to working, calorie-dense fast food remains popular among busy individuals in first world nations. This explains why such busy persons end up being obese because they consume calorie rich foods and have literally no time for physical exercises. In this context, setting up a health and fitness center named Leigh Fitness Club for a corporation features as one of the sound business ideas today. Such a business will not only generate income for the owner but will also save corporations loads of money spend on employees’ health care systems. Objectives One of the venture’s objectives is to prevent health problems, especially cardiovascular diseases associated with obesity and lack of physical activity. In the UK, employees as young as 40 years are experiencing cardiovascular complications. Thorough physical activity within the fitness center will reduce occurrence of such lifestyle diseases. In addition, the health and fitness center aims at providing a serene exercise environment filled with variety of machines. Most persons quit morning runs because they are repetitive; hence leads to eventual lack of motivation in physical training. Availability of gym machines like training programs like yoga, dance and weight lifting will enhance variety, thus motivate employees and other potential customers to join training classes. Vision The business venture operates with a definite vision statement. One year after establishment, the health and fitness center will be one of the leading wellness centers in its business setting. The center aims at providing customers with tailor-made solutions for their wellness needs. Leigh Fitness Club values unique needs and preferences of clients. Therefore, the center will strive to provide customized training packages to employees and other members of the society. The health and fitness center will strive to gain credit from its customers for shaping their lives. In addition, the center aims at addressing health needs of industrialized societies through provision of physical training services adjacent to workplaces. Mission With respect to the venture’s mission, Leigh Fitness Club values aspects of convenience and customization in service provision. Locating wellness centers adjacent to workplaces allows employees to exercise during breaks without the fear of being late for work. In addition, wellness centers located next to corporations should offer training services that meet customers’ needs. Corporations will benefit indirectly through the fitness center by reducing their spending on employees’ health care systems. In this context, the club’s primary clients will comprise of corporations’ employees interested in achieving their wellness objectives. Secondary clients will include any other member of the society working outside the identified corporation. In this regard, the chief mission of Leigh Fitness Club is to facilitate employees’ accomplishment of wellness goals; hence reducing health related burdens for both the employers and the employees. Theory of Entrepreneurship There is a misguided notion that entrepreneurs are outright risk takers. Traditionally, entrepreneurs are seen as people who prefer jumping off a cliff before assembling a glider. Entrepreneurial approach is far from attempting business ventures filled with uncertainties. Entrepreneurial skills do not necessarily pre-dispose individuals to take risks. According to Hill and Gareth (2009), those skills arm persons interested in business with the right knowledge and cognitive abilities meant to enable identification and optimization of business opportunities. As a start-up, both internal and external risks may compromise on a venture’s growth potential. However, real entrepreneurs know how to maneuver in rough business waters. They do not just jump of the cliff with the hope that the glider will be ready for takeoff shortly before they hit the rocks. Real entrepreneurs know for certain that even if the glider fails to fly, there are cushions beneath the cliff that will enable him to land softly. Those cushions represent the low cost and low risk growth strategies employed in new ventures. Low Cost and Low Risk Strategies In order to ensure smooth takeoff and eventual growth of the wellness center venture, the management will employ two related low risk strategies. The strategies are trade credit and profit re-investment. Leigh Fitness Club will be located within or adjacent a corporation’s building. Setting up the wellness center will involve findings a spacious premise for the venture followed by setting up physical training machinery. Planning and establishing such a venture can take even 1 week from inception to operation. Subsequently, both direct and indirect advertisement will be conducted in order to create clients’ awareness of the club’s existence. Within a month, the club will start accounting for its first revenues. Given the ease of establishment coupled with fast revenue generation, it is undeniable that trade credit and profit-reinvestment feature as the best low cost and low risk growth strategies for the wellness venture. Trade-Credit Strategy Conventionally, start-ups experience capital difficulties. Most persons with entrepreneurial dreams fail to implement their ideas because of limited capital. However, real entrepreneurs look beyond barriers placed by capital inadequacy. Trade credit features as one measure used in counteracting capital barriers. According to Justin (2010), most vendors and suppliers of fitness machinery are willing to extend credit for their products. In this case, Leigh Fitness Club will identify willing suppliers who can finance purchase of essential equipments like weights, training mills and aerobics uniform. Most suppliers are looking for new customers. This means that they will easily enter into credit agreements with potential purchasers of their products. Therefore, cost associated with purchase of equipment and supplies for the new wellness center will be addressed through trade credits with reliable vendors and suppliers. The little capital sources from banks in form of loans will be used as first salaries and remunerations for training personnel. This is because unlike suppliers, most gym instructors may not be willing to offer their services for credit. Profit-Reinvestment Strategy After employing the low cost strategy, the wellness center will integrate profit re-investment approach in enhancing chances of growth. According to McKinsey’s growth pyramid, start-ups should utilize excess revenue in increasing their customer base. Linda and Rose (2013) mentioned that instead of providing the same products and services to existing customers, new ventures should expand their coverage to new markets. According to Bruce (2008), start-ups fail to grow because they use the little profits generated in financing personal projects unrelated to the business. When they want to expand, they start looking for additional capital from venture capitalists and lending institutions, thus increasing a venture’s liability in form of debt. Undeniably, borrowing additional capital for expansion in a market full of competitors is not only risky by also commercially unsound. In this context, the wellness center in subject will re-invest its profits in financing the first phases of the new venture, which may include looking for additional customers for the fitness centre. Customer Relationship Management Apart from trade credit and profit-reinvestment, another important low cost growth strategy is customer retention. As the saying goes, a bird in hand is worth two in the bush. Most start-ups make a mistake of chasing for potential clients; hence ending up neglecting the existing ones. With time, loyal customers move away to competitors who address their needs in a friendly and timely manner. Therefore, increasing customer loyalty is an effective growth strategy that will enhance success of the wellness center in subject. One technique that the wellness center will adopt in order to increase customer loyalty is personalization of services. According to Justin (2010), clients usually like when businesses personalize their products and services. Within the gym, training equipment will have small audio players with earphones. The audio players will be loaded with music of various genres where clients can select and listen to their preferred tunes during training exercises. This will make customers feel that the center’s management considers their diversity in terms of entertainment preferences. Consequently, such techniques will increase the trainees’ loyalty to Leigh Fitness Club. Leveraging Strategy Leveraging of services is another effective customer retention technique. In marketing, ventures may be interested in increasing products and services available for customers. For example, the wellness center may begin with dancing classes as one of the services offered within the aerobics category. With time, it may emerge that women trainees like aerobics than their male counterparts. In this context, the center’s management will opt to leverage aerobics services offered within the club as a means of increasing attention to the elevated popularity of the service among female clients. Since these clients are already familiar with aerobic exercises like dancing, introducing cycling and dancing classes will not require additional promotion and awareness creation. Trainees will swiftly move from one aerobic class to another depending on their preferences and comfort during training. Howard and Stevenson (2005) says that apart from increasing customer loyalty, leveraging may also serve as a cost saving technique of attracting new clients into the wellness center. Financial Risk Strategies New business ventures may also suffer from financial risks. This means that appropriate financial management strategies must be put in place. One example of those appropriate strategies is purchase of relevant insurance covers. Wellness centers face specific risks and uncertainties which need insurance covers. For example, accidents may happen to both the trainers and their trainees. Weights are heavy and dangerous when not used properly. In case a trainee slips and fall during training, he or she may fracture a bone. In such cases, the center’s management is responsible for safety of its employees and clients. That means the center will be forced to provide financial compensations to injured victims in case of accidents during business. According to Linda and Rose (2013), such risks which will put pressure on the centers finances can be addressed through acquisition of relevant insurance covers for both employees and customers. Another relevant risk strategy for the centers finances is integration of efficient cash-flow management techniques. At one point, workload within the corporation where the wellness center is located may increase. This means workers may be required to work overtime, even during breaks. Consequently, such uncertainties may cause immediate loss of primary clients for the business. In such cases, efficient cash-management techniques ensure that new business ventures continues in operation even when primary clients withdraw. According to Howard and Stevenson (2005), financial contingency plans involve appraising financial requirements of operating business for a definite period of time. In case primary clients withdraw their purchases for one month, the wellness center must have set aside money that will finance operation expenses for more than that month. Such low risk strategies ensure survival during tough business times. Conclusion In conclusion, one can appreciate the fact that entrepreneurship does not necessarily involve literal risk taking. Entrepreneurship involves capitalizing on existing business opportunities by adopting low cost and low risk strategies during the early stages of a business venture. It would be inappropriate for a business to start competing with established firms before establishing customer loyalty. In addition, high risk strategies like additional borrowing during growth will only increase a venture’s debt and its tendency of becoming bankrupt in case of tough competition. Certainly, the wellness center in subject will benefit from the low cost and low risk strategies discussed within the business plan. The mentioned strategies will not only reduce risks and start-up costs but also facilitate future growth of the health and fitness center. References Bruce, L. (2008). Entrepreneurship: Creating and managing new ventures. Cardiff: Pergamum Press. Hill, C. & Gareth, J. (2009). Strategic Management Theory: An integrated approach. New York: Cengage Learning. Howard, M. & Stevenson, P. (2005). New Business Ventures and the Entrepreneur. Indianapolis: Indiana University Press. Justin, G. L. (2010). Small Business Management: Launching and growing new ventures. Harrisburg: John Wiley & Sons. Linda, S. & Rose, A. (2013). Business Risk Management Handbook: A sustainable approach. London: Elsevier Publishing. Read More