StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Business Description of the Shapes Company - Case Study Example

Cite this document
Summary
The paper "Business Description of the Shapes Company" highlights that the start-up costs for the business are at $25,000. This includes the purchase of the initial exercise equipment required at launch, the rent for the first month of operations, and cash required on hand when the doors open…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER98.8% of users find it useful
Business Description of the Shapes Company
Read Text Preview

Extract of sample "Business Description of the Shapes Company"

BUSINESS PLAN: The Foremost Leader in Alternative Exercise and Therapy™ Business Plan: Shapes! Executive Summary Shapes! is a business which provides exercise and alternative health therapy through massage in an environment which caters to the heavy-set consumer or older market demographic looking for alternatives to gym membership. Shapes! provides exercise equipment of multiple varieties, offering the convenience of walk-in use on a pay-as-you-go business model, along with monthly membership options. Shapes! will provide low cost therapy and exercise options in the local community, designed to outperform the costlier competition. Using innovation in marketing and promotion, Shapes! hopes to be a competitive success in providing alternative exercise environments. Business Description Shapes! has a mission: To be the foremost leader in alternative exercise and personal therapy, providing a combination of in-house exercise equipment for the heavy-set or health-conscious consumer who does not necessarily enjoy working out in large gym environments. Shapes! recognizes that large competing gyms can be intimidating to consumers with average to heavy-set body frames, especially when comparing to more developed customers with better physiques, therefore Shapes! is the solution. Shapes will provide in-house massage therapy from a reputable and qualified massage therapist, offering everything from aromatherapy to deep penetrating massage treatments. Shapes! also provides a variety of exercise equipment, on an hourly or monthly membership basis, thus giving consumers options and flexibility in the ability to schedule exercise or conduct spontaneous, walk-in use of Shapes! equipment. Shapes! will be a local success due to the limited volume of competition specializing in alternative exercise and therapy. Additionally, there is a growing trend in consumer behavior toward healthy eating and exercise as part of a balanced lifestyle habit, therefore making our desired target markets more dedicated and focused toward exercise. Shapes! is a relatively low cost model, in terms of operating expenses, therefore the majority of sales are retained as profit. Below is the expected revenues earned at Shapes! in the first three years of operation: Industry and market analysis Growth rate in this industry is quite favorable as consumers of many different demographics have become focused on using exercise as a means to enhance lifestyle and personal health. These trends are noticeable in the national business focus reducing saturated fats and offerings of healthier food options, and Shapes! can capitalize on these social trends by using innovative marketing to appeal to this new lifestyle focus. Curves, a like competitor on this market, has found massive success with their lower-cost business model by offering in-house equipment in a mall environment and Shapes! will benchmark many of their best practices on the historical successes of Curves. There is little risk of new entrants in this marketplace because of the high costs of operations associated with owning a building and because the local region cannot support anymore large-scale competitors based on consumer demographics. Again, this is an advantage for Shapes! low-cost business model. Below is an estimate of the available consumers who will be willing to experience Shapes! along with expected growth rates for each market segment (CAGR): This projection spans five years. Market Analysis     2010 2011 2012 2013 2014   Potential Customers Growth           CAGR Men 1% 2,500 2,525 2,550 2,576 2,602 1.00% 40+ Females 10% 10,000 11,000 12,100 13,310 14,641 10.00% Women 18-30 5% 6,000 6,300 6,615 6,946 7,293 5.00% Total 7.31% 18,500 19,825 21,265 22,832 24,536 7.31% These numbers take into consideration that many customer demographics represent niche markets of obese or physician-referred clients, as well as the more dedicated consumer with a desire for alternative, low-cost exercise and therapy. The baby boomer generation, especially female, will consist of the largest consumer audience and will therefore make up the most profitability if brand loyalty can be established and a positive local reputation. Competitor Analysis In the region, there are higher-priced competitors including Gold’s Gym, Curves and Bally’s. These competitors typically charge between $150 and $500 per month, based on individual membership dues and plan options. This does not represent a high volume of competition and both of these businesses have very high operating costs as they own their own buildings and equipment. Unlike our competition, Shapes! will be utilizing low-cost rental property in a strip mall environment with adequate square footage, taking advantage of discounted monthly rent provided in the local community as a means to invite consumerism during a period of economic downturn. Shapes! has a much better operating margin than competition. Competitors also promote their products based on the end user: The customer. Gold’s and Bally’s attempts to link beauty with consumer attributes, therefore positioning their businesses in terms of user. This represents a significant competitive advantage for Shapes! as it can give a perception of value in the local community, to desired target audiences, therefore ensuring higher sales volumes and customer interest. The cost-savings against competition is substantial to both the walk-in patron and the monthly membership-focused client. Gold’s Gym typically caters to the strength-focused client, mostly men, who are dedicated to maintaining a quality physical appearance and appreciate a traditional gym environment. Their competitive strength is being able to link professionalism with lifestyle in a way that meets with consumer lifestyle needs and preferences. Bally’s competitive strength lies in its ability to position the company as a business which is an expert in exercise, thus appealing to consumers who enjoy sessions with personal trainers and consultants. However, these services cost more to the payroll budget, giving Shapes! the competitive advantage in terms of reducing labor payouts. Curves’ largest competitive strength is the company’s ability to use in-house and television advertisements which makes the environment appear to be fun-focused and team-based at the peer and colleague level. Curves is more of a social exercise business that appeals to psychology of consumers and their needs at the foundational levels such as belonging and self-esteem. This competitive strength has given Curves considerable loyalty, therefore some of these concepts will be adopted into Shapes! business and promotional models to appeal to these same lifestyle values in the baby boomer (over 40) customer segment. Using specialized knowledge in promotion on healthy eating and obesity, this will give Shapes! a superior competitive position by relating knowledge with expertise in a way that is meaningful and relevant to consumers in the desired segments. Marketing Strategy Shapes! provides exercise equipment paid for by the hour or through membership fees. Use of Shapes! equipment entails exercise products such as stationary bicycles, personalized trampolines, use of company mats and towels, free weights, treadmills, and all-in-one exercise systems manufactured by Bowflex and other reputable exercise machine manufacturers. The target market for this business is the heavyset consumer or the more reserved over 40’s who tend to prefer at-home exercise options or alternative exercise options such as the competitor Curves, which has already experienced sales and marketing success for these markets. Additionally, the male consumer is expected to make up a fraction of the clientele, with most of these being obese individuals who have been commanded by their medical practitioner to explore healthier eating and exercise as a lifestyle improvement function. This market will provide revenues through personal memberships or walk-in basis, as well as various insurance-related payments which will be processed by Shapes! customer service processing division. Promotion for Shapes! will be key to its success and its ability to grow throughout its first years of operation. Shapes! must differentiate itself over any competition in the region, offering consumers’ perception of extended value and competence in service delivery and exercise know-how. The promotional mix will consist of print advertising, in the form of direct mailers and incentives (coupon) marketing which gives consumers information on healthier eating trends and how Shapes! can be a lifestyle advocate for the improvement of the physical condition. Using before-and-after testimonials, along with coupon incentives and health knowledge, Shapes! can position itself as a leader in exercise alternatives and gain higher consumer interest. Promotion will also rely a great deal on word-of-mouth advertising, as many customers who would frequent Shapes! are more socially-focused and tend to rely on the word of peers and colleagues when making future decisions. Therefore, the key strategy in all marketing, including promotion, is to ensure that walk-ins and members receive top-notch service and reliability in exercise equipment function so that people will consistently refer their friends to Shapes! and build a higher profit model from increased consumer visitations. This will rely on using the customer service representatives as a promotional tool to show the human capital and efficiency of Shapes!, making them the alternative exercise facility of choice. Because this is a small-sized business, just starting its first year of operations, marketing costs and promotion must be kept within reason and at a price which does not strain the operating budget. Pricing is a major consideration in marketing, as the pricing must remain competitive over regional high-priced gyms (to focus on providing value in service delivery) while also guaranteeing a return on all internal investments in equipment and labor. Promotional materials will also include a description and pricing guide of the business’ services which spotlight the credentials of in-house massage therapists, who will be providing services at a price much lower than medically-related therapy. For those consumers paying for massage services out-of-pocket, Shapes! represents a new way to stay relaxed and healthy without paying a premium price tag. Pricing will be set below market on all exercise and therapy services to maintain a competitive edge Price structure: $85 Massage Therapy - $100 monthly membership - $20 walk-in hourly Fortunately for Shapes!, distribution is not an issue in relation to the marketing mix. The business offers no sale of products, only the provision of services in both areas of therapy and exercise. Therefore, issues of supply chain and purchasing of towels and other oil and scents can be coordinated at the front desk administrative level, using basic computer software and spreadsheet technologies. Distribution will involve direct shipments of various products direct to the business through B2B ordering principles and stored in-house. Operational Issues The provision of service is relatively easy at Shapes!, yet another competitive advantage in terms of reducing the costs of goods sold to the business. Once the equipment has been purchased, either in lease or through direct buying by wholesale manufacturers, the equipment requires little other than upkeep and basic maintenance. Delivery of services will give customers the autonomy to use all in-house equipment on a first-come, first-served basis. This self-regulation within the business, which will be promoted to all clients, will reduce the costs of having in-house expertise available to coordinate or provide assistance. The facility will be a large 1,800 square foot rental space in the local commercial district, utilizing low cost interior décor in order to save on operational costs. Low-cost, yet aesthetically-pleasing artwork, chairs, and relaxation areas will be established and purchased from discount vendors in the commercial region. To support the business at the administrative and accounting level, basic software such as Microsoft Office and Excel, along with Quicken, will be the accounting and service delivery tools necessary. These are relatively low-cost software systems and will give the business ownership the ability to manage expenses versus revenues in a system that is easy-to-use. Other software will be incorporated as the business grows and the need for better communications and purchasing software (such as for client or B2B invoicing) increases. These operational aspects of service delivery will be considered after the first year of operations and the business has time to measure which aspects of technology require upgrade or improvement. Human Resources Requirement In order to successfully operate Shapes!, the team will require four dedicated individuals at the expert, administrative, and service levels. Two full time sales representatives are required to ensure the business can operate on its intended 9am to 8pm operating cycle, five days weekly. These representatives will handle the upkeep and cleaning of exercise equipment, field phone calls and other in-house client issues, and will have extended duties at the administrative level such as purchasing. The positions will be recruited in local newspapers and online recruitment websites, with these positions requiring only a high school degree or equivalent business experience in administration at a small company. The owner will maintain a flexible position within the business, offering the company experience with different skills such as management, accounting, marketing, and strategy. A fourth expert massage therapist will be in-house five days weekly, from 10am to 5pm, offering the therapy services to clients on walk-in or schedule basis. This individual will be recruited from reputable sourcing specialists who are experts in medical and holistic staffing. The business will outsource this function until a dedicated therapist can be secured at the company. Financial Projections The start-up costs for this business are at $25,000. This includes the purchase of the initial exercise equipment required at launch, the rent for the first month of operations, cash required on hand when the doors open, and other operational aspects. The cash flow statement, for the first year and projected next two years, is below. Total profit for the first year is estimated at $59,735, after all operational costs including labor are considered. Cash Flow   2010 2011 2012 Cash Received               Cash from Operations       Cash Sales $161,625 $180,375 $194,813 Cash from Receivables $45,045 $59,101 $64,149 Subtotal Cash from Operations $206,670 $239,476 $258,961               Subtotal Cash Received $206,670 $239,476 $258,961         Expenditures 2010 2011 2012         Expenditures from Operations       Cash spending $60,000 $70,000 $80,000 Bill Payments $87,936 $102,881 $109,071 Subtotal Spent on Operations $147,936 $172,881 $189,071         Additional Cash Spent       Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 Principal Repayment of Current Borrowing $0 $0 $0 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $0 $0 $0 Purchase Other Current Assets $0 $0 $0 Purchase Long-term Assets $0 $0 $0 Dividends $0 $0 $0 Subtotal Cash Spent $147,936 $172,881 $189,071         Net Cash Flow $58,735 $66,594 $69,890 Cash Balance $59,735 $126,329 $196,219 Start-up Funding Start-up Expenses to Fund $22,500 Start-up Assets to Fund $2,500 Total Funding Required $25,000     Assets   Non-cash Assets from Start-up $1,500 Cash Requirements from Start-up $1,000 Additional Cash Raised $0 Cash Balance on Starting Date $1,000 Total Assets $2,500         Liabilities and Capital       Liabilities   Current Borrowing $0 Long-term Liabilities $0 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities $0 Total Liabilities $0     Capital       Planned Investment   Owner $0 Investor $0 Additional Investment Requirement $25,000 Total Planned Investment $25,000     Loss at Start-up (Start-up Expenses) ($22,500) Total Capital $2,500         Total Capital and Liabilities $2,500     Total Funding $25,000 During each month, it is necessary for Shapes! to earn $10,129 in sales for the business to break-even on all costs. Most of the costs to the business are fixed costs. This is attainable considering the higher profit of massage therapy rates and monthly memberships. At an average price, per service, of $45 a client, only requires 225 clients per month to attain this goal. Break-even Analysis     Monthly Units Break-even 202 Monthly Revenue Break-even $10,129     Assumptions:   Average Per-Unit Revenue $50.12 Average Per-Unit Variable Cost $4.43 Estimated Monthly Fixed Cost $9,233 References: U.S. Census Bureau. (2009). Consumer Demographic Profiles. www.census.gov. Bally’s. (2008). Bally’s Total Fitness Program. www.ballys.com. Curves. (2008). Buy a curves franchise. www.curves.com. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Business plan Case Study Example | Topics and Well Written Essays - 2500 words”, n.d.)
Retrieved from https://studentshare.org/miscellaneous/1559078-business-plan
(Business Plan Case Study Example | Topics and Well Written Essays - 2500 Words)
https://studentshare.org/miscellaneous/1559078-business-plan.
“Business Plan Case Study Example | Topics and Well Written Essays - 2500 Words”, n.d. https://studentshare.org/miscellaneous/1559078-business-plan.
  • Cited: 0 times

CHECK THESE SAMPLES OF Business Description of the Shapes Company

Online Business Technologies

E-business models detail description from the work process that has been employed in virtual or electronic environments such as the world-wide-web.... As the paper outlines, the traditional business processes have constantly evolved to encompass supply chain and electronic business.... Successful organizations have been at the forefront of implementing e-commerce to integrate business processes and enhance work operations within the organization....
16 Pages (4000 words) Term Paper

Situation Analysis of Tiny Teddy Biscuits

the shapes and the use of names denoting facial expressions are the main features that make this product unique and different from competing brands.... Tiny Teddy is a brand of biscuits manufactured by Arnott's Biscuits Holdings, an Australian-based company.... The manufacture of this brand of sweet biscuits begun in 1991 and recently, the company has been trying to transform its brand image.... Arnott's Biscuits Holdings have an online shop through which customers can make their purchases and where possible, the company delivers the product to them (Boag, 1993)....
9 Pages (2250 words) Essay

Registrability of Trademarks

ll goods and services are classified into 45 internationally recognized classes to identify a company's rights in respect of goods or services.... The holder of a patent or copyright may inhibit its usage by keeping the creation for himself, whereas a company obtaining a trademark and failing to use it or failing to look after it from being used in the breach, is likely to lose the right to it.... In the case of a business that provides a service and not a product, such a mark is termed a service mark....
9 Pages (2250 words) Essay

Descriptive Trademarks and the UK Law

A particularly interesting area covered by the law is that of trademarks, designed and used for the branding and advertising of a particular company, product, or idea.... For example, in the Procter & Gamble company v Office for Harmonisation in the Internal Market, a registration was applied for a square tablet with slightly rounded edges and corners, but the registrar refused the application under Article 38 of Regulation No 40/94 on the ground that the mark applied for was devoid of any distinctive character....
6 Pages (1500 words) Essay

Can GPS-Guided Earthworks Construction Reduce or Eliminate Golf Course Shaper Costs

The company had been offering shaping services for several years already, which makes it a skilled and highly respected company.... According to the report the company uses machineries that aid in the endeavor of shaping golf courses.... This essay discusses construction companies whcih offer golf shaping exist like Greens and Tees Construction Limited....
6 Pages (1500 words) Dissertation

Business Plan-Eco Plastic & Mould Company

This term paper 'Business Plan-Eco Plastic & Mould company' highlights the Industrial revolution has made various resources scarce thus the need to develop new products.... Eco plastic and mold company concentrates in the manufacture of plastic products.... In developing this business plan, the company wishes to introduce a new production unit.... Therefore, Eco- plastic and Mould company provides new plastic containers that replace traditional metal containers....
7 Pages (1750 words) Term Paper

Business Plan-Eco Plastic & Mould Company

This paper outlines business description, business environment analysis, competitive analysis, market analysis, and plan, operation plan.... The case study "Business Plan-Eco Plastic & Mould company" describes the business of the plastics manufacturing industry.... Eco plastic and mold company concentrates in the manufacture of plastic products.... In developing this business plan, the company wishes to introduce a new production unit....
7 Pages (1750 words) Case Study

Finance and Accounting at Leading Company of Clean Energy

The paper 'Finance and Accounting at Leading company of Clean Energy' is a relevant example finance & accounting report.... The company in question is a leading company of clean energy which has consolidated revenue to the tune of $17.... The company has an electricity generating capacity of 46,400 MW.... The paper 'Finance and Accounting at Leading company of Clean Energy' is a relevant example finance & accounting report....
6 Pages (1500 words)
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us