Uptown Fitness Center
General Lifecycle of a Trend
60%
50%
40%
30%
20% 10%
0%
3.2 Porter’s Five-Force Analysis
Porter’s Five-Force model is an excellent tool that will help analyze the future profits of Uptown Fitness Center. The analysis relies on the environment the business will operate in. The model is suitable in determining if the services offered in our facility will result in revenue as we operate in the industry and consequently determine where the power is (Jurevicuis, 2013). Our organization can utilize this tool to find potential gaps in the market and eventually take full advantage of the strengths we have in the market. This will be vital in ensuring the success of our facility.
- Threat of Potential Entrants (Medium-High)
The threat of new facilities venturing in the industry is between medium and high since the industry has been in existence for a long time, and the cost to venture is high. The difference among players in the sector Uptown Fitness Center operates in is the different services each facility offers to its clients, which differs in capacity. Some facilities deal purely online while others serve its members on the ground, offering a wide range of services to clients. For a business to enter the industry, they would need franchising fees, licensing fees, and marketing fees, which at this moment of the Covid-19 pandemic would be quite hard to raise unless the organization had the funds before the onset of the epidemic. Our target market has not been fully exploited. Therefore, a low-cost threat exists. Switching costs for new entrants may be high, which makes us believe a serious threat may not be considered once we take off.
- Power of Suppliers (Weak)
Suppliers of Uptown Fitness Center include the manufacturers of various gym equipment, restaurant owners, and water supply companies. When the suppliers have strong bargaining power, they will sell their products at a high price with a reduced quality. This will impact our profits since we will have to pay more for the supplies. To counter this, we will need to diversify our supply chain to have a variety of suppliers, which will reduce their power. Due to the increased number of suppliers in the industry, their bargaining power will drop as competition increases. Due to the Covid-19 pandemic, the suppliers will not have enough facilities to supply their materials, which will reduce their bargaining power since most facilities are temporarily closed. At this point, suppliers are considered to have weak bargaining power.
- Bargaining Power of Buyers (High)
A large number of buyers in the fitness industry display a high buyer group concentration, which raises the buyer’s bargaining power. Buyers range from university students to middle-aged working-class individuals to the few older people. Athletes, as well as sports personalities, are also part of our facility buyers. The industry has a lot of buyers who engage in fitness activities. When our facility tries to increase the enrolment prices, most of the buyers will shy away from visiting us. This is because of the country’s current status, where individuals would want to spend the least amount of money on secondary activities, due to the Covid-19 pandemic. Another reason is because of the individuals would want to seek cheaper alternatives to carry out their fitness programs. Therefore, the strong bargaining power of the buyers will be a massive threat to the existence of our organization.
- Threat of Substitutes (Medium)
The threat of substitutes is medium in the industry Uptown Fitness Center operates in. This is because while the buyers can seek alternatives when other facilities offer low prices, they will not be able to get the same quality service our center offers. This will make it hard for the buyers to switch to other facilities since our service delivery will be of better quality as well as the equipment out facility will have. We consider our facility as a high performing center in the industry, thus attracting and retaining many clients.
- Rivalry among Existing Competitors (High)
Many dominant facilities already exist in the industry around Tampa, including Anytime Fitness, Seminole Heights Athletic Center, Bayshore Fit, and Powerhouse Gym. All these facilities have been in existence for an extended period, and they determine the competition and profitability of the industry. Uptown Fitness Center will have to compete strongly to gain a share of the market and obtain high revenue. The sector has also been growing rapidly over the past two decades due to the increased awareness of the importance of staying fit. This means the growth rate in the industry is intense; therefore, an increase in rivalry among the current industry players. For us to maintain our customers, we will need to ensure they are loyal to our brand through quality customer service and provision of extra services, including massage and sporting activities.
3.3 Market Timeliness
The window of opportunity for our organization to venture into the fitness industry is still wide. Over the past few decades, the industry has been growing steadily, and through the various analyses carried out, we believe that the trend will continue as years go by (Climbing Business Journal, 2015). This has been driven by the continued sensitization on the importance of keeping fit to maintain healthy bodies over the past few decades. Due to that, many individuals are now including exercises to their daily routines as well as maintain a healthy diet, which is also an essential factor in maintaining a healthy body. Changing lifestyles, an increase in income levels and the emphasis on maintaining a healthy lifestyle are several factors that are also driving the demand for fitness and exercising. Due to this, the fitness industry is said to have grown at a tremendous rate in America, with a market size worth $39.0 billion and a growth of 2.6% as of 2020 (IBISWorld, 2020). This has been boosted by the increased purchase of gyms as well as more individuals registering themselves as club members. The increased income per capita has also influenced more customers in affording the fitness memberships, which has been beneficial in the whole industry. This is anticipated to rise as the year continues, which presents an opportunity for the development of the industry, with America depicting high numbers compared to other economies.
Fitness centers in the state of Florida incur investment costs an average of between $10,000 and $100,000. The start-up cost for a successful fitness center in Uptown Tampa requires an asset intensity between medium and high. With the asset intensity, there comes a high exit barrier, which includes the ability and cost of selling all equipment, considering the current Covid-19 pandemic that is affecting the economy of Uptown Tampa. The mentioned factors should be considered as well as the basis of competition Uptown Fitness Center will be competing with. The competition will be based on the quality of service we provide to our customers, but not on cost. Uptown Fitness Center will offer several services specializing mainly in the quality of delivering services to our clients and the use of the latest technology and equipment while providing the services. Our center will also offer extra activities, including massage services, child care, and a pool which will be used by our members. This will allow as to ensure we are ahead of our competitors in Uptown Tampa, therefore, improving our revenue. Aside from the Covid-19 pandemic, this would be a great opportunity for Uptown Fitness Center to venture the market, due to the quality services our center is set to provide. With the growth being depicted, it will be wise for us to enter the market after the pandemic is over, and businesses are running normally.
3.4 Niche Market Analysis
Uptown Fitness Center is trying to capture a niche market of offering quality fitness training and exercises to our clients. Members are allowed to choose their specific trainings schedule, which will be favourable to their routines and plans. Every individual living in and out of Uptown Tampa is our target market, including university students, athletes, children, and any person who considers himself/herself as either fit or unfit. People who are passionate about working out are also encouraged to enroll with us to continue living a healthy lifestyle. We will also be working close with all our clients amidst the Covid-19 virus through our online platforms to ensure every client’s needs are met due to the lockdown that has been implemented in the state. Uptown Fitness center will develop this niche market through offering personalized trainers to all our clients at their agreed timelines. As a fitness center, we hope to empower and enable all our members to achieve their targets as far as fitness is concerned. This will be vital in ensuring both mental and physical wellness, therefore, better production in the areas economy.
3.5 Industry Market Assessment Conclusion
The fitness industry is expanding quickly and it will continue to do so in the years to come (Jurevicius, 2013). The market’s attractiveness extends from the numerous driving forces that maintain the development as well as the huge number of present and future customers. By including the extra services offered to our members, including massage and childcare services, our facility will easily win the hearts of many individuals who are willing to join into fitness programs. Together with the two extra services, physical therapy will be an additional service, which will aim to cater for individuals who undergo various injuries while in the process of working out. This program will be exclusive to all our members despite of their subscription fee, and instead of them visiting healthcare facilities, they will have a chance of getting medical attention from our center. This niche will be a boost to the attraction of more clients to our facility, and it will allow as to differentiate from other fitness centers around Uptown Area, therefore, giving us a competitive advantage.
The need to offer additional services to our members while maintaining quality service delivery has driven Uptown Fitness Center toward the final planning stages. Competition from rival facilities, bargaining power of both buyers and suppliers, and the attractiveness of the industry has been researched on, which will help formulate a strategy for the growth of our organization. Despite the existence of threats from other facilities and competition still exists, quality service delivery to all our customers will assist Uptown Fitness Center sustain our profitability. With the high bargaining power of buyers, our facility will counter this through emphasizing on the importance of meeting our buyers’ needs before the profitability of our facility. This will be key in ensuring more customers are retained which will be beneficial to our center. With the analyses and figures arrived at previously, the fitness industry is highly exploitable. Our services will be highly beneficial to all our clients and we therefore, remain optimistic as we plan to execute our plan.
4.0 Organizational Feasibility
4.1 Resource Sufficiency
Intellectual property rights
5
Office space
5
Contract manufacturers availability
4
Key management employees attainment
5
Key support personnel attainment
5
Key equipment attainment
5
Local government support
4
Local business support
5
Future business partnership potential
3
Space to launch a service business
5
Resource sufficiency ratings
Resource Concern Current Rating
Classifications
5 = Very Likely/ Completely Definite
4 = Somewhat Likely/ Somewhat Definite
3 = Neutral
2 = Somewhat Unlikely/ Somewhat Indefinite
1 = Very Unlikely/ Completely Indefinite
From the table, we see that resource sufficiency for Uptown Fitness Center is generally high. Some areas of concern include office space, key management employees’ attainment, and key equipment attainment. Due to the type of business Uptown Fitness Center plans to open, an office is a very likely resource that has to be included in the property we rent. Key management employees constitutes of the team included in planning of the project. Several equipment will be needed for the project to begin including training equipment and personal gear for our employees. These products will be acquired from our local suppliers, and they will all be used in the fitness training programs that we plan to offer to our clients.
4.2 Management Prowess
Given below are assessment tables for key management members.
Nick Homberg, CEO and Founder
Weak, Neutral, Strong
Passion for the business idea
Strong: being the developer of the idea to start Uptown Fitness Center, Nick Homberg possesses and firm passion for fitness and the business generally. He has always emphasized on the importance of working out to for the purpose of fitness, which helps promote physical and emotional development. Providing an opportunity for the people of Uptown Tampa and its environs to get fitness services was a long-time dream for Nick and the implementation of the idea would mean a great deal to him.
Prior entrepreneurial experience
Strong: Nick has been in the entrepreneurial industry for a while now. He established a restaurant in the local environs of Uptown Tampa 10 years ago, and business has been booming since its inception. He has gained experience in management of businesses and employees due to his past track record. He has the dedication and drive to run the facility and he is a great fit for the position of CEO.
Prior industry experience
Neutral: Nick has a moderate experience in the fitness industry. He previously worked as a trainer after completing his college studies at a local gym. He learned the importance of fitness to people and he saw how many people enroll in such facilities, which was one of the reasons for the birth of Uptown Fitness Center idea. He learned how to relate with clients and the importance of delivering quality services to customers. This helped him have an idea of how the industry works.
Depth of professional and social network
Strong: Nick is creating a strong professional and social network which runs throughout the whole of Uptown Tampa. He applies social; networking sites such as Instagram, Facebook and Twitter to widen his social network. He has also attained a significant depth of key professional contacts who work in the fitness industry, widening his social networks.
Creativity
Strong: Nick has always been a creative individual in both his academic life and personal life. This led him to think of starting up Uptown Fitness Center as a business that will help boost the health of people in the local area.
Leadership
Strong: Nick has portrayed utmost leadership skills especially when it comes to running of business. His experience in restaurant management has earned him the skill of leading other workers. This will therefore, be beneficial in helping him run Uptown Fitness Center.
Educational background
Strong: Nick graduated with a bachelor in Finance and Accounting in the University of South Florida two years ago. The degree has been an important factor in his business life and it will be beneficial as he plans to venture into the fitness industry.
Bronx Wander, VP of Marketing
Weak, Neutral, Strong
Passion for the business idea
Strong: Bronx is a strong believer in fitness and working out among all age groups. He sees the importance of starting Uptown Fitness Center which will valuable to all citizens staying in Uptown Tampa as well as its environs. He believes the best way of reducing obesity and other weight-related diseases is through working out and having a proper diet. Bronx is also a team player and a hardworking individual, which makes him a perfect fit for the position.
Prior entrepreneurial experience
Neutral: Bronx has not yet engaged in his own business. He has strengths in marketing and writing, which will be a valuable asset as we launch Uptown Fitness Center.
Prior experience in the industry that business is proposing to enter
Neutral: Through consultants meeting and research for 2 years, Bronx has gained knowledge on the importance of living a fit and healthy life.
Depth of profession and social network
Strong: Bronx has obtained several strong connections with various influential people, including athletes. This will help Uptown Fitness Center gain popularity among the athletes and their counterparts, which will be a boost in marketing our organization. His social media connections in Twitter and Facebook will be beneficial in marketing our facility at a wider market.
Creativity
Strong: Bronx is a creative individual with vast problem-solving skills which will be vital in the development of Uptown Fitness Center in the future.
Leadership
Strong: Bronx has always been a leader, where he gained the skills from managing several employees at a local business hub in Tampa.
Joseph Brian, VP of Finance
Weak, Neutral, Strong
Passion for the business idea
Strong: Brian is enthusiastic about making his business a reality. Being a fitness trainer for 5 years, he believes that working out and exercising is the key to a healthy life. he believes that will be of importance to individuals who will enroll to it, helping those individuals struggling with weight issues solve them, despite the hard economic times of Covid-19
Prior entrepreneurial experience
Neutral: Brian has never executed his own business idea, even though she had a great deal of experience birthing ideas into other businesses where she used to work.
Depth of professional and social network
Strong: Brian comes from a well-connected family with large business owners. He loves meeting new people as well as networking.
Leadership
Strong: Brain brings strong leadership and management skills in Uptown Fitness Center and he knows how to get things done.
Educational background
Strong: Brian is graduating in a few months with a bachelor of science in Finance and he believes the experience he gained in university will be essential in running the business.
Grace Ciara, VP of Operations
Weak, Neutral, Strong
Passion for business idea
Strong: Grace believes that Uptown Fitness Center is a great venture that will succeed in the fitness industry. She is excited to be part of the organization that will help individuals become healthier.
Prior entrepreneurial experience
Weak: Grace has never had any entrepreneurial experience since she is still a student at the University of South Florida. However, her skills in entrepreneurship from what she studies will benefit the development of Uptown Fitness Center.
Prior industry experience
Neutral: Grace does not have any experience in the fitness industry since she is still a student. However, she is a fitness enthusiast and is determined to see other people live a healthy life from working out.
Depth of professional and social networking
Strong: Grace is a social person both in school and in Uptown Tampa. She has many friends in both areas which will be beneficial in bringing new individuals to our center.
4.3 Organizational Chart
4.4 Organizational Sufficiency Conclusion
The management capacity of Uptown Fitness Center is high, having passionate and enthusiastic members about our business model. However, our team lacks significant experience and credentials in the industry we are about to venture in. Once every member obtains the required credentials, we will be able to have a fully competent team ready to take over the fitness industry. We are also planning on hiring qualified personnel who will help our management team in running the facility.
5.0 Financial Feasibility
5.1 Start-up Cash Analysis
Start-up requirements
Legal fees
$15000
Lawyer
$3000
Accountant
$1500
Facility costs
$6500
Gym equipment
$10,000
Employee salaries
$2000
Furniture
$2000
Utilities
$1000
Website development
$300
Total start-up expenses
41,300
Cash balance on starting date
20,000
Total Requirements
61,300
5.2 3 Year Pro Forma Financials
5.3 Benchmarking to Industry Competitors
Uptown Fitness Center will offer personalized training to members and amidst the Covid-19 pandemic, we will offer online training services. This will be a perfect way to differentiate ourselves from other fitness facilities in the industry. We will have a competitive advantage over other facilities in the quality of services we offer to our clients as well as the sophisticated gym equipment used. We will also concentrate on providing an efficient environment to our employees. This will be vital in ensuring our workers provide quality services to our clients. As a result, Uptown Fitness Center will be ahead of other fitness centers in the industry considering our client-based service delivery.
5.4 Overall Financial Attractiveness
From the analyses carried out on our financial forecast on the years to come, the financial feasibility of Uptown Fitness Center is coming to light. We expect increased finances as years go by through increased revenue and decreased costs. The management team has also agreed upon low income in the first few years, and the finances will be directed towards providing improved services to our clients. With a strong level of financial stability in the long run, Uptown Fitness Center’s financial attractiveness will be better.
5.5 Financial Assessment Conclusion
There is a niche to be filled and if we venture into the market, we will be among the front-runners due to our abilities. The cash-flow would be much less than what has been projected if we enter the market right now due to the effects of the Covid-19 virus. The pandemic has paralyzed the whole industry, making businesses close indefinitely due to the measures the state has taken on combating the disease. After the pandemic is over and businesses are back to normal, there will be a much greater cash flow, which will mean more revenue of Uptown Fitness Center.
6.0 Results
6.1 Weighing the Four Feasibility Components
Product/Market Feasibility
Feasible
Industry Feasibility
Not Feasible
Organizational Feasibility
Not Feasible
Financial Feasibility
Feasible
6.2 Numerical Assessment of Concept
Product/Market Feasibility
4
Industry Feasibility
1
Organizational Feasibility
2
Financial Feasibility
4
6.3 Overall Conclusion: Not Feasible
Based on the numerical assessment analysis, Uptown Fitness Center is considered to be not feasible. The market feasibility is questionable considering high numbers of fitness facilities present in Uptown Tampa, even though the idea of bringing up a Fitness Center in Uptown offering unique facilities was mentioned. From the industry analysis, we can conclude that it will be hard for Uptown Fitness Center to venture into the business amidst the Covid-19 pandemic. The virus has made most fitness facilities shut down due to the lockdown adopted by the state and the low turn-out that would have been expected. For this reasons, it would be wise for our organization to implement the idea later on when the pandemic has subsided since most people will be at liberty to participate in normal fitness programs. Nevertheless, as the business concept currently stands, feasibility is not ascertainable.
References
Climbing Business Journal. (2015, October 19). Climbing Business Journal. Retrieved from Fitness Industry Trends Report 2015: https://www.climbingbusinessjournal.com/fitness-industry-trends-report-2015/
IBISWorld. (2020). IBISWorld. Retrieved from Gym, Health & Fitness Clubs in the US Market size 2003-2026: https://www.ibisworld.com/industry-statistics/market-size/gym-health-fitness-clubs-united-states/
Jurevicuis, O. (2013, May 27). Strategic Management Insight. Retrieved from Porter’s Five Forces: https://www.strategicmanagemevt insight.com/tools/porters-five-forces.html/