Body Talk Fitness Club: A Business Plan

This article presents a hypothetical business plan for a fitness centre, named Body Talk fitness club, which will be situated in Muscat city centre. Body Talk fitness club will focus on providing cost-effective training facilities to Omani youth, both men and women, who represent 46.7% of the total population of Oman, and are between the age of 18 to 29 (Oman Observer, 2017). Obesity rates both in men have women have risen in past years, and heart-related mortalities have also increased in the country, ranking Oman at 45th in cardiac-related deaths (WHO, 2018). Due to these health-related issues, a rise has been seen in young people joining gyms and fitness centres around Oman, and an increase of 7% has been recorded during 2012 to 2017 (Ken research private limited, 2017).

Body Talk fitness club will offer services of professional personal trainers who will be highly qualified and issue monthly, quarterly, half-yearly and annual subscriptions with easy payment terms. The club will remain open seven days a week between 11 am to 11 pm. By hiring professional trainers and offering personal training services at low cost, the company expects to attract more people to join the club in its first year of operation.

Body Talk fitness club will be a privately owned and run by a partnership of three partners X, Y, Z. The club will initially operate as a gym only but later expand to a spa centre and other physical activities. The partners will make personal investment in equal proportions as well as loans will also be taken for business purpose.

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Mission

Our mission is to provide quality and easily accessible training facilities to young people at low cost by using services of professional trainers.

Vision

Our vision is to be gradually become the market leader in city of Muscat and later expand to other cities of Oman and neighboring countries.

Business goals

  • Build a strong reputation of being the best fitness center in the region
  • Try to get 20-30 members per month in first year of operation and become profitable inside three years (including recovering opening costs)
  • Become a green entity by utilizing renewable energy resources, i.e. solar panels for electricity needs of the gym
  • Look after the community by offering job opportunities to local graduates and workforce
  • To provide training sessions to customers at their desired time

Market Segmentation

Body Talk fitness club will target following contrasting segments.

  1. Age

The age group on which body talk will focus on will be 18-42. This is because young people are mostly motivated in becoming more fit and attaining peak physical condition, and middle-aged people are motivated to join fitness centres due to various health-related problems such as diabetes, heart diseases etc.

  1. Demographic

The focus will be on working-class, for example, people who work for 8 hours a day as well as college and university students. It is because these people get tired after long hours of work and study and are highly motivated to release the pressure of workload by doing physical activities (Harvard, 2020). Continuous work creates excessive stress in the people, and they often become obese by doing chair work for long hours.

Besides, Body Talk will also focus on working ladies and housewives because they are also significant customers of fitness centres.

  1. Geographic

Our geographic target will be the urban population of Muscat. We will focus on city population close to the city centre to provide them with easy access to physical training. Muscat has the greatest number of gyms around Oman because of its young and rich population which prefers a healthy and balanced lifestyle. This makes the urban centre of Muscat an excellent target for this business.

Market and Industry Analysis

The fitness market is divided into two segments, i.e. organized and unorganized fitness centres. Organized fitness centres have historically dominated the market due to the high demand for professional trainers for personal training. Also, people tend to trust the qualified trainers, which is why they are highly demanded by Oman’s fitness sector and are also a significant source of revenue the industry earns (Ken Research, 2018).

Massive surge is expected in Oman’s fitness service industry, both volume and intensity. Women memberships are expected to reach new heights, and the fitness service industry may touch the figure of OMR 22m, income through females memberships is anticipated to grow by 16%, and overall growth of 10% is forecasted by 2022 (Ken Research, 2018). Membership packages on offer are 1, 3, 6 and 12 months and the most subscribed package is 12 months package due to comparatively low cost and ease of payment terms. One-third of the total members in Oman’s gyms subscribed the annual package due to it being economical (Ken Research, 2018).

In 2019, Oman ranked 68 in Ease of Doing Business ranking, jumping ten positions from the previous year. Moreover, the country ranks 5th in the MENA region. When it comes to starting a new business, Oman ranks 32 in worldwide rankings while it ranks 64 in trading across borders. All these factors make Oman an interesting proposition for opening a business (Doing Business, 2019).

Porter`s Five Forces Analysis

Following analysis is conducted to evaluate Body Talk`s competitive environment:

Threats of potential new entrants

The threat of new entrants is high as opening a new fitness centre does not relatively require huge capital. A small fitness centre entertaining 150–300 members requires low staff for maintenance which means that payroll costs for new entrants would not be much high, this will encourage new players to enter booming fitness business. Also, no major legal and regulatory requirements need to be fulfilled before operations, and a gym starts from scratch within a month. Hence, this indicates that new entrants have high penetration ability.

Threats of substitutes

Due to a vast number of options, i.e. aerobic centres, yoga centres, athletic clubs, and country clubs working in fitness markets, customers have high bargaining power. Customers may shift to these substitutes if they do not feel satisfied or think that value is provided equivalent to money they are paying.

Bargaining power of buyers

Gyms often work on the tight cost model, which does not allow them to give excessive discounts. Most of the gyms have fixed price, and they follow a take it or leave it approach. Since Body Talk will be providing services at an already low-cost, customers will have little to bargain because other gyms cost much higher for similar services. Moreover, the switching cost to new gyms is high. Correspondingly, this is because customers must pay a new membership fee, and previously paid fee is non-refundable. All of these factors lower the bargaining powers of buyers.

Bargaining power of suppliers

The boom in the fitness industry of Oman means that demand for fitness equipment is as high as ever, thereby placing suppliers in a dominant position. They may force new entrants to pay the price they are willing to charge due to increased demand. This means that suppliers have significant power.

Competitive rivalry

Competitive rivalry is moderate in the fitness industry due to various gyms offering similar services in the same price range. Moreover, every fitness centre attracts the population of its nearby population and people generally go to the nearest available gym to save time which means that despite a huge number of gyms already operating (Ken Research, 2018). Body Talk will have an equal chance of attracting customers because of a vast number of consumers and easy accessibility.

From the above analysis, it can be derived that competitive environment of Body Talk is moderately intense.

Figure 1: Five forces analysis of fitness industry business in Muscat.

Customer and Value Proposition

Body Talk plans to cater to the needs of individuals mentally and physically stressed by workload, people with health-related issues and poor physical shape by providing them personalized weight loss plans at a low cost as well as adding an element of personal care of every member.

Value Proposition

Body Talk will provide members with an extensive range of workout facilities under exceptional trainers. They will look after the members’ schedule and make sure that workouts are not much hectic for members and ensure that client’s physical condition progresses gradually. Furthermore, customers are given easy payment plans so that they exercise without worrying about deadline dates of submission of membership fees. Moreover, the members will experience a friendly environment of socially well-trained staff members.

Marketing Strategy

Body Talk will consider the following factors in its marketing strategy:

Product

Body Talk will primarily start with training activities only which include members training on their own as well as offering personal training sessions to clients who subscribe to services of personal trainers. Later, Body Talk will sell various fitness-related products such as food supplements, energy drinks, and fitness accessories, i.e. mobile phone holders, pedometer, duffle bag, yoga mats and exercise bands.

Price

Body Talk will adopt a cost-leadership strategy by offering the lowest-possible prices to its customers in order to increase its customer base and consequently, the market share of the fitness industry.

Placement

Since the club focuses on working-class people and those who work at 9-5 jobs, Body Talk will be placed near the commercial hub of Muscat, at a location where a large number of offices and academic centres are located, providing easy access to these people so that they directly head to gym after work. The added benefit for customers is that the members save their time and money as they do not have to travel because the gym will be on a walking distance from offices/universities.

Promotion

Body Talk will advertise its business mainly through social media, but there will be adverts on billboards near schools and offices as well. In order to attract as many university students as possible, there will be interactive sessions held inside the university campus and free training classes will also be organized as a form of awareness tool among students. The main marketing campaign will be carried out via social media as trends have suggested that Oman ranks third in terms of mobile infiltration at a 152.3% rate (Muscat Daily, 2018).

Moreover, internet usage rate jumped to 60.1% in the country in 2018 (Muscat Daily, 2018). Other marketing techniques which will be applied are as follows

  • Making enquires through social media about customer preferences
  • Advertising the upcoming events via email to current and potential members
  • Sponsoring sports events of universities to attract students
  • Spreading awareness about poor physical conditions and obesity by organizing health walks
  • Organizing free of cost stress management session for workforce of nearby businesses

Marketing Objectives

  • To enhance brand awareness of venture among customers by the end of 2021 with the help of digital influencers and micro celebrities
  • To maintain a customer retention rate of more than 50%
  • Create a website of the company that features training videos and healthy meal recipes for the customers by the mid of 2021
  • To increase the followers on company’s social media pages by 300k till the end of 2021

Operational Plan

Body Talk will start with hiring professional trainers and other gym support staff crew necessary to run the day to day activities such as cleaning staff, front desk staff etc. All the trainers hired will have a level-2 certificate in fitness instruction, i.e. gym. Also, a website of Body Talk will be developed which will feature the services offered by the club and profiles of trainers. It will help clients assess the faculty and be informed about the qualifications of trainers beforehand. Contact details of trainers will be shared on the website as well so that customers can contact the trainers and set meeting details. The website will be advertised in every promotional campaign.

In addition, the trainers will be educated about ethical principles employed by Body Talk, and they will be asked to follow these principles all the time. The customers would be asked to fill the satisfaction and suggestions form at the end of every month.

Organizational Structure

Body Talk will operate as a simple entrepreneurial organization, where X, Y, Z will be partners in equal proportion. X and Y will be managing partners while Z will be sleeping partner and have no say in organizational activities and get his share of profit only. X and Y will make strategic decisions relating to the Body Talk, such as hiring, pricing, and promotional activities. Trainers will run core activities of the business while operating staff will manage other activities of the gym.

Resources required

To start the fitness club, the following resources will be required:

  • Training equipment such as exercise bikes, treadmills, elliptical, stepper, multifunctional training machines
  • Arm, chest, leg, back and full body exercise machines
  • Sound system
  • Computer information systems
  • Members’ personal lockers
  • Stationery etc.

Financing

In order to open the fitness club, an initial investment of OMR 30,000 will be required. Capital will be injected in equal proportion by X, Y and Z. OMR 20,000 will cover the cost of exercise machines while OMR 3,000 will be used for the purchase of accessories such as computers, LED screens, lockers and stationery while the remaining OMR 7,000 will be held for rentals, insurance costs and payroll.

Fitness industry generally accepted principle for assigning space is 10 square feet per member (Heat line fitness, 2020). Body Talk is planning to establish a gym for 100 members in its first year of operation, and later, the gym space will be expanded based on the influx of customers. This means that a property of 1000 square feet will be rented at a rent of OMR 7 per square feet.

Financial assumptions

Financial assumptions related to the Body Talk are as follows:

  • Body Talk expects to persuade at least 15 customers to join the gym by marketing and promotional campaigns prior to the commencement of operations
  • The customers will be offered personal training sessions at a price of OMR 13 per session, one of the lowest rates in Oman (Fitness Guru Oman, 2020)
  • The club expects 30 members in aggregate by the end of the month and a total of 100 training sessions to be held by the end of first month due to members choosing different plans which include 8,12,16 and 20 sessions per month
  • A 10% per month rise in demand of training sessions is expected in first year of operation
  • Trainers will be paid OMR 5 per training session, trainers will be hired according to demand
  • OMR 2 will be withheld for utilities payment, i.e. other operating staff etc.
  • 100 square meter office space will be acquired on rent. This space is available at OMR 13 per square meter per month (Savills Oman, 2020)
  • All the payments will be taken in advance and shall be non-refundable

MONTHLY CASH FORECAST:

Month Session held Amount received Payment to trainers Utilities and other expense payment Rent paid Balance
January 100 1,300 (500) (200) (1,300) (700)
February 110 1,430 (550) (220) (1,300) (640)
March 121 1,573 (605) (242) (1,300) (574)
April 135 1,755 (675) (270) (1,300) (490)
May 148 1,924 (740) (296) (1,300) (412)
June 165 2,145 (825) (330) (1,300) (310)
July 180 2,340 (900) (360) (1,300) (220)
August 200 2,600 (1000) (400) (1,300) (100)
September 220 2,860 (1100) (440) (1,300) (20)
October 242 3,146 (1210) (484) (1,300) 150
November 265 3,445 (1325) (530) (1,300) 290
December 290 3,770 (1450) (580) (1,300) 440
(2,586)

Accumulated losses will be dealt with against profits of year 2

BREAKEVEN ANALYSIS:

Breakeven would be achieved by selling 216 personal training sessions and the club will start making profit by 10th month of operation.

BALANCE SHEET:

Balance sheet of the Body Talk as at the end of year 1

Assets OMR OMR
Gym training equipment 20,000
Other operating equipment 3,000
Less: depreciation (2,300)
License 3,000
Cash 4,000
Accounts receivable net of doubtful debts 2,700
Total assets 30,000
Liabilities
Account payable
Owners’ equity
Paid in capital 30,000
Retained earnings
Total liabilities and equity 30,880

Material Risk and their Mitigation

Body Talk may be exposed to numerous risks involving social, economic, political, and competitive and operational risks. These risks and their mitigation process are discussed in detail below.

Competitive Risk

Every business always faces the risk of competition. There may emerge a new competitor in the market, or an existing fitness centre may adopt the procedures followed by Body Talk, thus endangering the competitive edge of the company. In order to encounter this risk, the USPs of the major competitors will be studied to identify a strategy to deal with them (Michelle et al., 2012). Additionally, customer demands and preferences will be taken into account at the end of every month, and fitness market trends will be studied to ensure that Body talk remains up to date with the provision of services and maintains its competitive advantage.

Economic Risks

Inflation and extraordinary circumstances such as pandemic may lessen the buying power of customers. In order to ensure that customers do not quit the gym memberships during such times, prices will be revised even if the company has to incur short term losses. By doing this, customers will be loyal towards the club and will eventually payback when normal circumstances prevail.

Reduced Demand

Reduction in demand may be caused by several factors, such as a drop in income of buyers, competitors reducing prices and a decrease in the volume of clients (Gillespie, 2013). This decreased demand will be dealt with offering special discounts to new and existing clients, aggressive marketing campaigns, identifying unused market potential.

Operational Risks

Operational risks involve mismanagement, rude behaviour of gym staff and trainers, theft, misappropriation of physical assets and embezzlement of cash. To deal with these risks, gym staff and trainers will be taught ethical principles observed by Body Talk. Moreover, to mitigate the risk of threat and embezzlement, CCTV cameras will be used to monitor activities at the gym which will have back of 3 months, the principle employed by most businesses (FSS Technologies, 2020).

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Critical Success and Growth Factors

Several factors are involved in the successful implementation of fitness business such as the selection of right location, hiring suitable profiles, deciding fitness centre type related to your concept, managing customer expectations, proper handling of employee’s issues etc.

Body Talk will stand out among its competitors and grow due to the following characteristics:

  • Clear identification of the target population. Body Talk’s management has identified the population segment it will target, i.e. people working 9-5 and college/university students.
  • Provision of services at lowest rates. Body talk provides its services at one of the lowest rates in Oman, i.e. OMR 13 per training session. Customers will be tempted to join due to low price and good services.
  • Since Body Talk will be a green entity (using solar energy for power needs of the gym), this will provide a positive reputation to the club and customers motivated by a reduction in wastage will be tempted to join
  • Body Talk will be innovative in its usage of technology and fitness market patterns will be studied to ensure the latest machines are available all the time.
  • Body Talk will study competitors to look out for any new methods employed by them.

References

Doing Business Oman (2019). Available at: https://www.doingbusiness.org/content/dam/doingBusiness/country/o/oman/OMN.pdf (Accessed: 8 December 2020).

Exercising to relax (2011), Harvard Health. Available at: https://www.health.harvard.edu/staying-healthy/exercising-to-relax (Accessed: 8 December 2020).

Heart disease a leading killer in Oman (2017), Times of Oman, 6 August. Available at: https://timesofoman.com/article/heart-disease-a-leading-killer-in-oman (Accessed: 8 December 2020).

Observer, O. (2018) ‘Young Omanis represent 46.7%’, Oman Observer, 26 November. Available at: https://www.omanobserver.om/young-omanis-represent-46-7/ (Accessed: 8 December 2020).

Oman Fitness Services Market, Market Segmentation, Oman Fitness Services Market Research Report, Industry Research Report, Fitness Services Industry In Oman – Ken Research (2018). Available at: https://www.kenresearch.com/healthcare/general-healthcare/oman-fitness-services-market/171306-91.html (Accessed: 8 December 2020).

Savills | Properties to rent in Muscat (All), Oman (no date). Available at: https://search.savills.com/list?SearchList=Id_1191+Category_RegionCountyCountry&Tenure=GRS_T_R&SortOrder=SO_PCDD&Currency=GBP&Period=Week&Bedrooms=-1&Bathrooms=-1&CarSpaces=-1&Receptions=-1&ResidentialSizeUnit=SquareFeet&LandAreaUnit=Acre&SaleableAreaUnit=SquareMeter&AvailableSizeUnit=SquareFeet&Category=GRS_CAT_RES&Shapes=W10&_ga=2.150325310.904751660.1604938182-934863346.1603685083 (Accessed: 8 December 2020).

What Is CCTV Footage? (2019) | FSS Technologies, 24 January. Available at: https://www.fsstechnologies.com/blog/january-2019/what-is-cctv-footage (Accessed: 8 December 2020).

5 Basic Rules of Thumb For Sizing Fitness Centers and Clubs (2015) Heartline Fitness. Available at: https://heartlinefitness.com/5-basic-rules-thumb-sizing-fitness-centers-clubs/ (Accessed: 8 December 2020).

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