Feasibility of Starting a Physical Fitness Center - Essay Example

TOPIC: FEASIBILITY OF STARTING A PHYSICAL FITNESS CENTER CONTENTS PAGE 1. Chapter 1: Introduction (Starting a physical fitness center) 2 2. Chapter 2: Literature Review 4 3. Chapter 3: Methodology 12 4. References and Bibliography 14 Chapter 1: Introduction (Starting a physical fitness center) Of the myriad businesses and franchises obtainable today, the fitness and health industry business is undoubtedly in the right market at the right time.1 However, people make the mistake of thinking only about revenue while starting a physical fitness center. The truth is increasing revenue is only half of the equation. Controlling expenses is perhaps the more vital component.2 Budgeting is perhaps the one management task that health club managers detest. The process of calculating programs through numbers can be an intimidating exercise. However, it is crucial that managers know precisely where their businesses stand financially. This is particularly true as fitness facilities become bigger by the day and markets are more competitive. Several facilities go out of business through financial losses. Those losses are often attributed to careless budgeting or no budgeting. Budgeting helps answer major questions, like: Is the profit goal practical? How many memberships are needed to be sold in order to meet financial objectives? Is there enough money for advertising? Can you afford to give staff members incentives? There are two key types of budgets that should unfailingly be integrated into the management strategy: capital budgets and operational budgets. Operational budgets are the revenues and expenses that happen within your business are best explained as “the difference between the money that comes in and the money that goes out." 3It includes items like marketing, labor, rent expenses, mortgage expenses and sales revenues. The capital budget is difficult to define. Several organizations pay no attention to capital budgeting. Characteristically, a capital budget is developed once a year, and covers paraphernalia that cost over $500 and has a life of one year. Any piece of exercise equipment you acquire for your center should fall in the capital budget. The other vital part of starting a physical fitness business is the business plan. Before forming your business plan, you should discuss with a few key people. Top of the lost should be someone who runs a company similar to yours. Discuss the challenges that he or she may have encountered before starting his or her business. Consult your lawyer, your accountant as well as the bank manager. As you generate relationships with these people, you will realize that they can be a great source for ideas and guidance. Do this as early as possible and you will have people to look after you in the future. Have relationships with people who can aid you in making important decisions. After you have consulted with the people whose value and opinion you respect, then the time comes to consider forming your business plan. A business plan is a manuscript containing data like your business structure, mission statement, your niche clients, your financial projections, your marketing strategies and ideas, liability issues etc. It is imperative that you put your business plan down on paper. This helps you offer details to potential investors or anyone you want to involve in your company. The business plan is something of a road map, and helps in directing you as you start your business. 4 It also gives you greater focus. The first significant decision that you will be making is the kind of business structure you would like to have. The business structure you select will subsequently be affecting important issues like how much you need to spend at the start, tax issues etc. It is thus important for you to have some understanding of the fundamental structures you can pick from. Chapter 2: Literature Review Among those who dream about owning health clubs, the greatest challenges are often financial. With good finance, the licensing opportunities provide quick name recognition, an integrated retail profit center, as well as a network of owners who can act as models for accomplishment. [1] Phil Kaplan While most start-ups require $800,000 to $1.5 million, and money is a factor, it is not always the most important, according to Ed Connors, President, Gold's Gym Franchising Inc. in Venice, California. There should be a passion for fitness and the aspiration to be in a service business. Commitment, devotion, and business sense are vital in a businesses growth and expansion. Opening a fitness business without doing a proper feasibility study and a business plan is akin to jumping into a river without testing the current. The market is highly sophisticated and competitive today, and thorough careful analysis is crucial before designing your first membership special. While the U.S. market on the face of it appears inundated with 14,000 plus commercial health clubs, trends point to an incessantly growing need and with it, an ever increasing prospect. Feasibility studies also provide a detailed analysis of the competition and your likely clients. You can evaluate your financial resources and the probability for hiring staff. The results of a feasibility study can aid in making the options clearer and the tradeoffs required to begin a new business. You can begin your feasibility study by looking at various questions. What fitness businesses are in your locality? What services do they have? Who are the clients? Statistics can always be used for your advantage. For example, less than a third of the population is physically active. This third may include people who are willing to join a facility and those who are active without joining one. If you are thinking about opening a fitness business in an industrial area, you can personally approach each business and ask the human resource manager about the number of employees who use fitness facilities. You will find that one third of the employees are active and that a fraction of them would possibly be interested in the services you are offering. You can find out if the company has an in-house facility or if they are using a club close to the locality. Think about what you can offer the physically active that will lure them to use your services. It would also be important for you to investigate how many facility-based fitness businesses in your locality have closed down recently. If you learn that a fitness company shut down a few years back, you should find out the reasons for their lack of success. You would not want to be making the same errors. Some municipal government offices will give you the groundwork information that you require. If government agencies are not cooperative, then approach real estate agencies. An agent can give you invaluable information about vacancy rates, business establishments, and rental turnovers. Interest in gym ownership is rising, but only those who are most prepared with the best knowledge of the state of the industry are liable to succeed, according to Rick Romeo, Director of Licensing for Powerhouse Gyms International based out of Farmington Hills, Michigan. The numbers don’t lie. From 1997 to 1998, health-club membership in the country grew from 20.8 million to 22.5 million members. John McCarthy, Executive Director of the International Health Racquet and Sportsclub Association, based out of Boston: "The American Fitness Industry intends to reach 50-million health club members by the year 2010. Assuming that happens, this will create 50,000 new full time and 150,000 part time jobs in the next decade." [1] The reputation of fitness centers, and the requirement for such facilities, has been growing at a stable rate for a few years now. However, for those wanting to start a fitness business, a solid business plan is a must. A good business plan is the foundation stone of any flourishing business enterprise, and a fitness center business is no exemption. You can have no illusions. Opening a fitness center necessitates a huge outlay of capital, distinctly more than lay businesses. That means that the business plan mist have clear details on things like the equipment paraphernalia you plan to purchase, your budget on buying the equipment, the facility you intend to rent for your business and the monthly rent. Concomitant to those, the best fitness center business plan will have the necessary information on the ideal way to promote the business. It is noteworthy that ninety percent of new businesses crumble in the first two years. Failure is often accredited to a lack of objective review and competent planning. To augment your success, it is vital to use your business plan. It wouldn’t be a hyperbole to state that a well-constructed business plan can turn a fading operation into a resounding success. "The business plan is a necessity. If a Fitness Professional cannot outline the objectives clearly enough to organize a business plan, he or she is already behind when getting -- Samuel F. Hirschberg, Director of Business Development International Sports Sciences Association (ISSA) Notwithstanding the significant importance of a business plan, fitness professionals procrastinate when it comes to actually making one. They bicker over the lack of time. Still, mo builder has succeeded without an architectural blueprint. In the same way, an enthusiastic fitness professional with a grand business idea shouldn't dash into new ventures without a proper business plan. There are four core questions to look at prior to making a business plan. They are: 1. What service does your business offer and what needs does it fill? 2. Who are the prospective customers for your service and why will they obtain it from you? 3. How will you get to your prospective customers? 4. Where will you get the monetary resources to create your business? 5 There is surely no scarcity of competition as regards the fitness industry, and it is significant that your business plan recognizes the existence of such competition and includes ideas to make your fitness center the best in the locality. While we can see that having a fitness center is paramount for your start-up business, it is necessary to have a concrete fitness center business plan in hand. The business plan is the first document any prospective investor will want to view. It is imperative, therefore, that the business plan you generate be a manifestation of the professional and sober approach you bring to all other facets of the fitness center business. The fitness center business plan is a great tool to generate funds. However, it is also handy when the time comes to do tax planning for your business. While no one enjoys taxes, a competent business plan lowers the tax burden and build-up your business in a way that future tax liability is lowered. The importance of a good fitness center business plan is imperative to your success. Whether you require start-up funding, capital infusions or a smaller tax bill, your business dictates in all those regards. [2] Shaunta Pleasant There are several health and fitness clubs that offer exercise facilities for millions of Americans. However, in the haste for making a fast buck, most do not test new customers for potentially life threatening diseases. Boston researchers reported at the American Heart Association's 69th Scientific Sessions that most fitness centers do not pre-screen new members who may be susceptible to fatal blood vessel diseases. These findings also relate to exercise centers hosting special programs for people with diagnosed heart disease, or elderly citizens. Kyle J. McInnis, Sc.D., and his colleagues at Boston University Medical Center, researched the strategies of 204 arbitrarily selected health clubs in Massachusetts that had a total of more than 76,000 members. In a stunning revelation, it was discovered that found that just over 50 percent of 110 facilities researched review their emergency plans. In addition to that it was discovered that less than four percent of clubs that offering special programs for people with heart disease possess a defibrillator, a machine that can stabilize a wildly beating heart. Moreover, 30 percent of clubs stated that less than half of their staff have a professional degree in exercise science or a similar field. Ten percent on the clubs responded that no staff member has such a degree. "The American Heart Association and other groups recognize that lack of exercise is a major risk factor for heart disease… There's also a big push nationally to promote physical activity, and membership in fitness clubs is growing by tens of thousands each year. We need to do more to ensure that these people are working out in a safe exercise environment, especially people who are elderly or at high risk of heart attack," says McInnis. Statistics from the American Heart Association show that less than 25 percent of the American population engages in sufficient regular physical activity to attain cardiovascular fitness. One quandary in this fast-growing fitness industry is that in several local health clubs are not subject to licensing. Though the guidelines are there, no regulatory authorization is present. Essentially, anybody with the desire and the money to open a health club can do so. There is a lack of proper screening methods among the country’s physical fitness centers. Those wanting to open a physical fitness center must be morally obliged to set up the business are per proper standards. Of the health clubs that were surveyed, about 40 percent did not consistently screen clients for cardiovascular problems before beginning an exercise program. 25 percent of the health clubs that did screened their patients, allowed customers with diagnosed coronary heart disease to exercise without receiving a written consent form a physician. There have been several cases where people have died while exercising at a fitness center. Some deaths have led to lawsuits. Thus, a club needs to have proper screening standards for their own safety. [3] Sitoko Hayakawa, M.S., and Gary J. Balady The need for coming up with a good business plan is an essential reality check for fitness professionals who want to go into business for themselves. Other things aside, the completed business plan offers the required foundation for gaining financing. By taking a purposeful look at your business plans, recognizing areas of weakness and strength become clearer and uncomplicated to see. You will see decisive components that may have been unnoticed, apprehend problems and set up plans to meet business objectives. A market study is essential before opening a health center. There are several questions to address. How good are the fitness centers around the locality? What kind of equipment is popular? What is the membership fee? Who are there customers? Where and how do they promote themselves? What is the number of have? What is the percentage of their clients seeking specialized programs? What certifications do they necessitate of staff? Does the staff take pleasure in working at the club? What is the turn over of the staff? Another important aspect of the study is the instructors in the area. What do the instructors in the locality offer? Are they (personal trainers, aerobics instructors, et al? What do they specialize in (yoga, nutrition)? What services do they provide? What do they charge their clients? How long have they been in the fitness business? What are their pros and cons? Where do they go for advertisement? Also, find out the prospective clients in the area. You should look at certain aspects, like the population density of the locality? Would you like to work chiefly with men or women? Do you prefer to work with retirees or business executives? Are you interested in the inactive person, reasonably active person, a weekend client, or the elite athlete? You must establish the specific group of clients that you want as customers and persist with that group. A lack of focus can be damaging. Upon starting a company, one will be ready to cater to all prospective customers; however, you will be able to offer better service to your clientele if you persevere with your area of specialty. The there is the matter of how much one should charge. When conducting an examination of the market and the services offered by the competition in your area, you should also look at their fee structures. Your fees will be determined by your education, specialties, certifications, and the variety of programs offered. You should also discern what others in your locality charge for services that are similar to the ones you are offering. Nonetheless, the biggest factor in what you will be able to charge your customers will be what the market can accept. The final word in this regard lies with the people: are they willing to pay for your service? Another huge factor that will shape your fee considerations is the locality of your physical health business. Based on your financial requirements, there might determine the nature and success your business. As an example, meeting clients in their homes is less expensive than opening your facility and a more sensible way to start the business. Chapter 3: Methodology A year and a half before the date you plan to effectively start your business, a thorough preliminary investigation is required. That includes a comprehensive research and what is essential for the industry. A competent feasibility study should include analyzing aspects like location, the capital needed to start, the training you require and the types of clients you need to target. A year before the proposed opening, get yourself certified. A formal education would mean three years. However, if you already happen to hold a degree in this field, specific certification is needed. If you do not have proper certification, prepare yourself for the next certification examination. Certification enhances marketability and credibility. 10 to 12 months before the start, prepare a good business plan, which should include your business structure, marketing strategies and financial planning. Make sure that you consult your bank manager, your accountant and your lawyer. You need to register your business and company name 8 to 10 months prior to the start of the business. If you have adequate money, hire a professional who can help you make flyers, business cards, introductory letters, client service kits, and Web site design. Start your program development 4 to 8 months before the opening of the physical fitness center. Discuss at length your ideas with your group of advisors. Look at the specific equipment suppliers you want to do business with. Also, create your personal job description and as well as of the staff you plan to hire. Establish a professional look. Make the necessary appointments to meet with representatives of local businesses. Meet with a number of professionals in the area and get acquainted with them. Notify them of the kinds of programs and services you will be offering. Also, start job interviews for positions necessary during opening time. Set aside a date for the opening event three months prior to the actual opening. This will guarantee that you give yourself enough to deal with any issues wit the business or system services. 1 to 3 months before the big day, send out invites to local businesses and residences. Finally, as the big day beckons, send out flyers about the opening of the fitness center. Go through procedures and policies with your staff. Establish your training space and your office space. Reference Read More