Business overview
After carrying out a survey in the state of Florida, I realized that the state has many physical fitness clubs where people go for exercising. I bet this is because of the increasing concern for the increasing rate of diseases that are related to obesity.
Obesity is a disease that is caused by unhealthy eating and lack of exercises; people with this condition have a high risk of developing heart diseases, high blood pressure, and even diabetes (Zimmerman 136). Doing exercises and eating healthy foods are among the recommended activities to keep the disease at bay.
Having exercise is a healthy thing to do; however, they should be accompanied by health services such as personal advices on healthy eating, recommended exercises as well as healthy practices.
This realization led me to a plan to join with John Lewis to start “Stay Fit and Healthy Club”. This club was started in June 2011 with an aim of providing fitness as well as health services to the people of Coral Gambles region; these services will be of high quality and at a low cost.
Mission
Mission of Stay Fit and Healthy Club is to provide training programs that relate to health care services and come up with strategies that will promote healthy living among the people of Florida, as well as creating awareness on the diseases caused by obesity and overweight
Strengths of Stay Fit and Healthy
- The club is committed to providing health care services to its customers.
- The club has qualified trainers with high reputation.
- The club provides services at a cost that is lower than its competitors.
Challenges
Stay Fit and Healthy has a challenges of attracting more customers to experience the new services; this is because this region has a lot of Gyms and training clubs which are more established and have permanent customers. The competitors include Coral Gables and Gold’s Gym.
Industry assessment
This is a health service facility and it intends to give health care services as well as services using specialized equipment. This facility will serve customers of all genders; however, customers of female gender will have special attention of being treated with training with female trainers.
This does not mean that men customers will not be treated to quality services, because the environment in the facility gives the customer a comfortable experience during the exercising session.
In 2006, there was a survey carried out, according to the survey, there were 29,069 health clubs and this clubs has approximately 41.3 million members. Approximately 49.9% of the health clubs were recorded in Alabama, Michigan, Massachusetts, Illinois, Ohio, Pennsylvania, Florida, Texas, New York and California, with California having a highest percentage of 11%, while Florida has only 6%.
This means that there is still untapped potential both in the State of Florida and other states. The industry has no strict regulations, however, a license is required for its operation, and as usual, payment of tax on the profit earned is mandatory.
Scope of services
Stay Fit and Healthy club’s customers will experience a wide variety of services related to health, this services will include obesity control, diabetes control, training of muscles, pilates, yoga, boxing, cycling and aerobics. These services will be provided using the latest equipment that are installed in the facility and are bought from quality manufacturers.
The costs will be on monthly, quarterly and annual basis, and customers are guaranteed to have low costs on each of these subscription plan.
The qualified personnel of this facility will help members achieve their set goals within a short time. for those who prefer exercising at home, we will also sell to them training equipments at an affordable price. The sales will be accompanied by training manual as well as the use of the purchased equipment.
The necessity of the facility to the people
Many people visiting health care and physical fitness clubs in Florida consists of high income earners; this means that most of the middle income earners as well as low income earners are left out of this vital service (Sherrill 396).
Also according to research, most people affected by obesity and overweight are the low income earners, this is because of their poor eating habits, lack of exercising, and most of them do not take health care as a priority (Zimmerman 140).
Those who are diagnosed with obesity do not seek medical attention because, they cannot afford the treatment, therefore, they live with the condition, which eventually resulted to chronic diseases such as diabetes and cardiovascular disease.
This club looks forward to alleviate the situation; Stay Fit and Healthy Club will make sure that the needs of the population that has been left out will be met by providing health care and physical services at a lower cost, making it affordable to the majority.
Market of Health and Physical fitness industry
America has 29,636 health clubs and approximately 41.5 million people visit these clubs, among the clubs in the United States of America, there are 20.4 million members visiting commercial health clubs, and 17.2 million visit non-profit health clubs (American Bureau of Statistics 176).
Florida approximately 6% of the 29,069 clubs in the United States, in 1995, the state had 863 clubs which grew by approximately 9.59% as recorded in 2007. This shows that the health and fitness industry is still in the stage of growth; currently customers in this industry have grown to 41.3 millions, and the market penetration is only 14% in the whole America American Bureau of Statistics.
This is an indication that there is still a huge potential in this industry now and in the future. In addition, this is a business that runs smoothly, therefore, there should be no worries on the business low and high season; this means that any established club should have a constant number of customers throughout the year.
Health and physical fitness industry in America has recorded a high growth rate for the last 10 years, and according to survey in 2007, the number of people visiting health and physical fitness rose to 2007 and the number is said to be increasing each year. Among the 41.3 million, 52% are female and 48% are male, and the average income per year, per member is 76,000.
Each member attends health club sessions for approximately 92 days per year, and for those who visit the club, they mostly use personal training program. The health and physical industry in the United States has d in the use of cardiovascular equipment; this means that almost every health club has the equipment (Wilson 312).
Market scope
The City of Miami has approximately 1.28 million members, and when Miami-Dante County is included the population becomes 2.82 million; Stay Fit and Healthy Club is expected to reach this population, although at the moment, only 45.3% are recorded as health club attendants.
The health and physical fitness club has grown rapidly during the last decade, in the year 2007, the market recorded $17.6 billion; this was more than double the market in 1995, which was at %7.8 billion (American Bureau of Statistics 196), and in the year 2010, the market was at $19.6 billion.
This trend only shows that the market is growing at a fair rate and investment in this industry is promising an increase in the number of people visiting health clubs.
The growth is triggered by the health care expenditure among the people of America; in 1997, the nation spent approximately 1.1 trillion, in 2007, the expenditure grew at 9.92%, this translated to 2.24 trillion. This shows that the health care expenditure for United States increases to more than double after a decade, and therefore, in the year 2017, the nation’s expenditure will increase to more than 4.4 trillion.
Looking at the expenditure in details, records shows that obesity takes up, 10% of the expenditure, this means that the number of people with obesity in the United States also increases each year, and therefore, more people are seeking help in health clubs.
Demand for health and fitness services
The demand for health club is really increasing more and more as time goes by. Many people are already members of health clubs and other are willing to join the clubs, while others are also interested in subscribing at least to one of the programs offered in health clubs.
This is because most of these people have been recommended by medical professionals to join health clubs and others feel that they require some time in a health club to improve or maintain their health status. Also, most people do not like vigorous exercises; therefore, they are seeking to have exercises in health clubs because they are adoptable and the exercise sessions are aided by professional trainers.
As people join health clubs they are committed to improving the whatever situation that compelled them to join the club, therefore, they are so demanding, and they expect results within a short time.
Such cases are sorted out quickly by professional trainers who set up a plan for each member according to the requirements and demand, and this helps them achieve results as expected. Many people, therefore, choose to be members of health clubs so as to meet their health and physical fitness requirements.
The demand for health clubs has been increasing since the last decade; this is attributed to the increasing income per capita in the United States. The increase in income per capital has made many American focus more on issues affecting their health, therefore, lack of exercise being one of the issues, and more people are subscribing to gyms and health clubs to eliminate the menace of obesity and diseases related to obesity.
The only thing that is making other people shy away from seeking help in gyms and health clubs is the issue of cost of services offered. Many are willing to visit these facilities but, the extra money they have for such services is not enough to secure then a one-quarter a year or even a one-month subscription; this is affecting the growth of health and physical fitness industry.
Looking at the market trend on health clubs in the United States, it is evident that the trend is changing rapidly; many people have resolved to using equipment to do their training and exercises, and most of the consider exercising as a daily routine.
This has led to the increasing memberships in health clubs, also, in companies have decided to make health membership as a package in the employee remuneration, thus making the market trend take an increasing trend.
Market potential
Those people in the health care club industry still have a bright future for their business, this is because of the untapped potential in this industry, and the same applies to those who still want to join the industry as new investors.
The market in this industry has reached close to 60 million registered members, which translates to $31.8 billion revenue per year; the increase is overwhelming considering that in the year 2005, the market had revenue of $17.6 billion (Piers 275). This growth is attributed to the increasing health care expenditure, this year; the expenditure is expected to increase to $2.93 trillion.
Market opportunities
The industry has a lot of opportunities; these opportunities are enough for those who have established in health care club business, as well as those who want to join the industry.
According to the survey carried out in 2007, 300 million people around the globe have been affected by obesity, and considering those affected by overweight in United States, the number is approximately 130 million, and among these people 61 million are obese.
The issue does not only affect adults, but also young children, according to the 2007 survey, 15% of children living in America are overweight (Powell, 136). Obesity is a condition that leads to other chronic health conditions such as diabetes, and according to research, 18 million of the United States people living with diabetes suffer from heart diseases and are affected by high blood pressure.
Future plans in service provision
Stay Fit and Healthy Club wants to provide health care as well as fitness services, however, the club is not limited to these two major services.
In the future, this facility plans to expand on its services to public awareness creation on chronic diseases, particularly those influenced by obesity and overweight; these services will be like an after sell service, whereby, members who have subscribed at the facility will receive the service free of charge. In the future, this business will not only offer health and physical services in Coral and Gamble, but also in other parts of America.
Target group
The club operates in Miami; however, it serves 21.7 of the population, which has 1,691 clubs of the same kind. According to the census report carried out in 2007, Miami had a population of 2,828,649, this was an increase when it is compared to the census carried out in 1990; the 1990 population was 2,295,937, the increase was equal to 1.36%.
The population of this town is estimated to 3 million by the end of this year. The average income of the household in this town is estimated as $53,408, this is according to the government of Miami.
This club targets the market in Coral Gable town, which has 42,794 people, however, only 2,636 are potential customers, and their earnings are below $25,000 per year. Potential customer takes about 15.51% of 16,994 households in the city of Coral Gambles.
This section of the population in this city is untouched by the great health clubs, therefore, Stay Fit and Healthy club will work hard to first capture the untouched population before embarking on attracting customers from its competitors.
Competitors
Stay Fit and Healthy Club is not the only club offering health and fitness services, there are other clubs offering the services, therefore we understand that there is competition.
The club includes Coral Gamble and Gold’s Gym among others, Coral Gambles offers services such as pilates, fitness kick boxing, short distance running, core conditioning, sport yoga, hiking, circuit training, jumping rope, muscular strength.
The Gold’s Gym offers services such as youth fitness, senior, fitness, sports training, medical information related to fitness, pilates, yoga, group spinning, diet and training, strength training, pre and post natal.
Focusing on Coral Gambles, Stay Fit and Healthy Club will aim at providing to low income population, which are not provided by the competitors. The low income earners, as we have seen they are about 6.1% of the population in Coral Gambles (Kelly 212). Stay Fit and Healthy Club, plans to attract masses more members by providing low prices at the beginning, and then later set a price that is more competitors.
Marketing strategy
First, we all know that people places that have value and low cost on services they offer, therefore, we shall use this strategy to more customers. We will make sure to have the latest equipment in the club; to ensure quality of the equipment; we shall make our purchases from quality manufacturers.
Members will be required to subscribe on annual, quarterly, and monthly basis, and this subscription will be at a lower cost. For the start, we plan to charge $95 for the body workout exercises. We plan not to waste no one’s time; therefore, we plan on concentrating on efficiency by use of qualified trainers to meet our customers’ needs in time.
Technology is of the essence in marketing, and because most people communicate more using the internet, we plan to utilize a website as a marketing media; we will create a website to create an image as well as brand for the company, this will help the club to have an identity (Active marketing group 406).
In addition, using the website, the club will give the new members and old members to make their subscription; this will save them all the procedure that might come with subscribing at the club’s offices.
Stay Fit and Healthy Club will first target the population with the low income in the Coral Gamble area. This people will be taught the benefits of health and fitness programs.
This will be a bit tasking because we have to arrange for small public gatherings and send letters and emails to those we cannot reach personally or in gatherings. Marketing of Stay Fit and Healthy Club will use approximately $5,000; these funds will be used for posting advertisement on radio, television and newspaper.
SWOT Analysis
Strength of Stay Fit and Healthy Club
Stay Fit and Healthy Club is committed to providing services that are result oriented strategy to attract new members and maintain the old ones. The club’s programs are designed to meet the needs of a layman, and services are affordable and of a high quality. The club will also hire well trained and qualified trainers, who will guide customers during their training or exercising sessions.
Weaknesses
We plan to provide high quality services at a low cost, these might cost us a lot because high quality equipments are costly, and hiring of highly qualified trainers is expensive and costly to maintain them; they demand high salaries, and any failure to satisfy them make them seek greener pastures.
Stay Fit and Healthy Club, also has a weakness in the number of members it has; the staff cannot provide services to the expected large number of people in the club. This might lead to the provision of services that are not of good quality, and the members might feel neglected and later quit using our services.
This club also needs to be advertised widely; the club is expected to serve a wide area, therefore, the club should be advertised well within the area and beyond.
This club is challenged in terms of marketing budget, especially marketing to clients who have large businesses; it is a challenge because most of them are used to going to already established health clubs, while those who do not go to these clubs claimed to lack enough time to go for practice attend our public awareness campaign meetings.
This is an untapped market and to capture this market we need more funds to arrange for even personal meetings with the large business clients.
Opportunities
The health and fitness industry is growing at a high rate, and opportunities are increasing as well. America has an increase in the cases of obesity and diseases that are related to it; it is the increase in this cases that are compelling people to pay more attention to health care activities and exercising.
Therefore, we are going to take advantage of their increasing concern on health to give them with a club that will meet their health care and exercise needs. We are also glad that American People take visiting health clubs and gym as part of their daily routine, and this a behavior that is favoring our business idea; I think we should work extra hard to make more and more people to make a visit to our club a daily routine.
We still lucky that the market of health care and physical fitness in Miami and most parts in the United States is still untapped, the target in this case will be low income earners, who seem to be left out in health care activities and physical exercises because of high costs.
Threats
When starting a business there are some things, which are beyond one’s control; this things include recession and economic downfall. These are things slow down the growth of Stay Fit and Healthy Club, as well as other clubs; recession and economic downfall, changes the spending of people and this will be the same to the people visiting health care clubs, and this will slow down the growth.
Another thing is that we promise to offer low costs for our services, however, our competitor might choose to lower their prices as well, and this might not work well on our side because we are still new in this industry.
If this happens, then it means that we might not even be noticed, however, we do not consider it as a big threat because we have other strategies. Additionally, most health care equipments are cheap, and most people have them at home for their exercise; this is a threat to the growth of Stay Fit and Healthy Club and other health clubs because those who have exercise equipments would not go to health care clubs.
Marketing mix
Stay Fit and Healthy Club need to have a good market mix, which will include cost, product, advertising and publicity. In the case of services, Stay Fit and Healthy Club will offer health care services such as obesity and diabetes control, muscle training, pilates, yoga, kick boxing, cycling and aerobics.
Pricing of services offered by Stay Fit and Healthy Club is a challenge because of the high competition for health care and physical activities market in the Coral Gambles region.
Therefore, for Stay Fit and Healthy Club to survive the competition, it has to offer quality services at a lower cost than its competitors. We have chosen $95 for basic exercises and body workout, and the cost for other services will be lower than the cost offered by competitors.
Stay Fit and Healthy Club, is strategically placed near the city’s main street, this is to make the club visible by anyone using the road network. Stay Fit and Healthy Club will also be promoted well to make sure that it is known by people living in the Coral Gable region; this will be done using radio, television, magazines and newspapers, as well as use of the internet.
We will also use brochures to create awareness on the health care services provided by Stay Fit and Healthy Club.; the brochures will be distributed in public gatherings and seminars organized by officials from Stay Fit and Healthy Club.
Management of the Club
John Lewis
John will be the overall operational manager of Stay Fit and Healthy Club; he has an MBA in health Care management from Texas University. This is an individual who is inspired by health care as well as physical fitness activities, and has a passion of helping other people to live a healthy life. John was a general manager in a hospital in California.
This hospital was for people who needed therapy as well as nutritional advices; the people who visited the Hospital were those with diabetes, obesity and overweight, and also those who were recommended to do particular exercises for their limbs to function normally. During his contract at this hospital, he did an excellent work, which earned him a contract extension.
He has also been a financial analyst of 5 years, in Coca Cola Company, and during his five year term, he managed to help the company make good investment decisions that led to huge profits and growth. Apart from Coca Cola Company, he has also worked with companies in line of Health care services; these companies include Health Care IT Transition and Dentimax.
Jimmy Johnson
This is a co-owner of the club and is also a sales manager. Jimmy has an MBA in sales and marketing; this is a qualification he acquired from the University of California. John has an eight-year experience as a sales and marketing manager in the following companies; Gentiva Health Services and Apria Healthcare Group.
We also plan to include bankers in the club, however, this will depend on the feasibility of the business; all in all we expect the club to be a success.
The club will not be complete with advisors, this is because we expect to create health awareness to the people before and after their fitness exercise, therefore, we will need two advisors, a female, who will be advising members who are ladies and a male advisor who will advise male members.
A nutritionist is also an important in this club, the members of the club need to be advised on healthy eating and living to avoid developing obesity and obesity related diseases. Therefore, the club has hired Whitney White, a professional nutritionist and a doctor who has been working at Jefferson Health System as a nutritionist advisor.
Financial plan
Initial Capital
Stay Fit and Healthy Club has an investment of $1,000,000; the owners raised this through savings.
Initial Expenses
Expenses for starting the club included
Expected revenue
During the first year, Stay Fit and Healthy club, expects to have 25,000 members, this will translate to $1,225,000. The revenues might be low because people are not yet used to the club and others are still visiting the health club they are used to.
The number of people visiting Stay Fit and Healthy club is expected to rise to 100,000 which will translate to the revenues of $4,900,000. The third year anticipated an increase that was more than that of the previous year; within three years, we expect to capture the market of the low income earners and the subsequent years will be focused on maintaining them and attracting those visiting the well established health clubs.
The club also plans to sale training equipment, we have realized that we might not attract all people to come to clubs for exercise, there are people who only like exercising at home, and to benefit from them as we help them out, we have decided to sell training equipment.
This will boost our revenue, because this will not only target those training from home, but also the other training and health clubs. This plan will take effect during the second financial year, and the revenue from the sales will bring to the business revenue of $35,000. The revenue from these sales is expected to increase to $42,000 in the third year of operation.
Operating expenses for the three years
Promotion
Expenditures for promotion for the first year will be $5,000, in the second year and the third year, the club will increase the cost of promotion to $6000. This is a crucial time and the club increases its expenditure to sensitize more people on the benefits of attending health clubs.
Consulting services
The club will have to consult a lot from the other clubs or those who have been in the health and fitness business; this will help the club to understand the dynamics experienced by businesses in this industry.
During the first year consulting expenses will be $90,000, and during the second year and the first year, consultation expenses will increase as the number of customers increase; more consultation will be to know much about the customers’ cases and needs. The consultation services will be $480,000 for the second and third year.
Expenditure on personnel is expected to increase as the business activities of the club progresses, and this would be $290,000, $840,000 and $940,000 for the first, second and third year respectively. Other expenses amount to $1,227,290, $2,474,580 and $4,073,500, for the first, second and third respectively. The club is expected to make a profit and during the first year the pre-tax profit will be at $322,900, the following year is anticipated to have a profit of $3,385,800, and the third year will have a pre-tax profit of $13,025,000.
Conclusion
According to the cash-flows I have given above, Stay Fit and Healthy club business is viable. If the business goes as planned and becomes successful, the expansion to other areas in the United States is a dream I would like to pursue.
The issue of obesity and obesity related diseases is not only experienced by individuals in the State of Florida, but also other parts of the United States, therefore, Stay Fit and Healthy is not a service meant for only people living in Florida, but Florida has been chosen as a starting point.
Works Cited
Active marketing group. Health club industry review, New York, USA: Active marketing group, 2007. Print.
American Bureau of Statistics. Population census 1995, Washington, USA: American Bureau of Statistics, 1995. Print.
American Bureau of Statistics. Population census 2007, Washington, USA: American Bureau of Statistics, 2007. Print.
Kelly, Peterson. “Health and fitness industry.” Business Journal, 2.3 (2006): 210-217. Print.
Piers, Elias. “Business opportunities in America.” Western business, 6.4 (2003): 267- 278. Print.
Powell, Gerry. Heath and Business, California,USA: SAGE Publications, 2010. Print.
Sherrill, Ally. Physical health industry analysis, New York, USA: United States Government Accountability Office, 2011. Print.
Wilson, Felix. Health alleviation in America, London, UK: Ashgate Publishing Limited, 2003. Print.
Zimmerman, Maurice. “Obesity in America.” Medical journal, 26.2 (2003): 117-141. Print.