According to Dr. Thomas Stanley, there are approximately three and a half million millionaires in the
Thus, entrepreneurs are no strangers to risk. The Small Business Association estimates that 95% of all businesses fail within the first five years of operation. In order to minimize risk and maximize the chances of success, a business needs to start with a clear plan. According to research conducted by AT&T, only 42% of all small business owners ever create a formal business plan. Of those who do, 69% credit the plan
as being significantly related to their success. A business plan is usually comprised of six major components: an executive summary, business description, market strategies, competitive analysis, operations and management plan as well as the financial components.
Executive Summary This is the basic description of what you do. What are your products and services? If you are looking for investors, this is the first part of the business plan they will see. Therefore, the executive summary must be clear, compelling and specific in regards to the financing you require.
Business Description In your business description, you will explain your business in greater depth and detail. When writing this section, you will need to answer the following questions: How big is the fitness or wellness industry? What trends or socio-economic factors will affect its growth within the future? Project your businesses growth potential based on these factors. When stating your projections, it's imperative that you utilize available facts and statistics as well as anecdotal evidence to support your forecasts.
Market Strategies Define your market according to variables such as size, growth, demographics (who are your prospects?), psychographics (what do they want?), geographics (where are they?), emerging trends and overall sales potential. Identify the strategy you will utilize to fulfill these initiatives such as:
Price: What are you going to charge for your services? What are your margins going to be? (Margins are simply the difference between the money you make and the profit you keep.) When figuring out your margins, factor in costs such as materials, distribution, marketing costs and overhead.
Distribution: How do you move your product from where it is housed to the customer? What are the costs associated with this? Study the distribution systems that are utilized by your competitors. Is there any way you can modify your distribution system to either save costs as well as create a unique advantage for your customer?
Sales: What processes do you have in place to meet your sales goals? How will you generate leads? What does your sales process look like start to finish? If you are planning to employ a sales force, what is their compensation structure?
Competitive Analysis According to infoUSA, there are 29,065 health clubs in the
Operations and Management Plan This describes your standard operating procedures or how your business will run day-to-day. Create a job description for each member of the management team. What support staff will you and/or your management team need?
Financial Factors Financial statements indicate the profitability of your business in the short- and long-term. You will need a detailed income statement detailing your business's ability to generate revenue. You will need to project revenue as well as operating expenses.
Finding a Space Bill Paris, founder and owner of the Paris Speed School franchise, recommends these tips to his franchisees: Shop around for a real estate agent and real estate attorney that is (1) well-known and respected in the community, (2) hired by you and has your best interests (not your landlord's) in mind and (3) with whom you feel comfortable working. This will pay off enormously in the end. Regardless of the advice you receive, drive through the neighborhoods that have the best demographics to get a first-hand look and feel. Consider looking for space that is industrial but is close to or part of an office park. This is known as a flex space. Taking the time to look at multiple options could bring the rent per square foot down into the single digits, which makes profitability easier. Additionally, your world exists within a 12- to 15-minute drive time or a five-mile radius. You should look for a location that has at least 100,000 people living within that radius.
Things to Consider Consider the following before signing a lease agreement:
Make sure that your lease includes a bail-out clause if your business does not perform to the measure that has been predetermined by you and your landlord. Additionally, you can gain considerable piece-of-mind by adequately insuring your business. Generally, a business insurance package will consist of a worker's compensation, general liability, auto and property casualty. In addition, many insurance policies will also offer what is called an umbrella policy, which provides an extra degree of protection. Keep in mind that while the policies listed above can protect you from loss incurred from repairs and reconstruction, they do not cover lost income from the moment your business is inoperable (or if you're injured, for that matter). Therefore, it's prudent to consider both a Business Interruption Policy and Personal Disability Insurance.
Look for the fifth installment of our 9-part Wellness Center Development series in the June/July issue covering the best process of selecting the machines to go in your fitness facility.
Robert Cappuccio is President of the consulting firm Legacy Performance Solutions and has designed and implemented sales, customer relations, management as well as personal training systems for leading industry organizations. For more information, visit www.livealegacy.com.