Business Plan Report

BUSINESS PLAN REPORT Business plan on (Sculpture Fitness Club)

Submitted in partial fulfillment for the Award of degree of Master of Business Administration (2017-2019)

Submitted by NEHA SHARMA

MAHARSHI DAYANAND SARASWATI UNIVERSITY, AJMER

1

ACKNOWLEDGEMENT

A project would not be successfully completed without the assistance and guidance from appropriate persons. So, it is a time to express my sincere gratitude towards all persons who have helped me to complete this project. First and foremost, I would like to thank DR. DEEPIKA UPADHYAYA and PROF. R.S. MATHUR for providing a worthy opportunity to undergo a BUSINESS PLAN REPORT. I express my deep sense of gratitude and sincere thanks to my teachers for the endeavor throughout the course confidence which helped me. In timely completion of this report, under whose guidance this project has become reality. I am extremely grateful to them for taking pains in checking preliminary reports and giving valuable suggestion, help and encouragement, thank you all for co-operation and guidance without which the project would not have been successfully completed.

Date:

NEHA SHARMA M.B.A.(DS) – PART II

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DECLARATION

I hereby certify that the business plan report on badminton academy, submitted in partial fulfillment for the award of Masters of Business Administration at Center for Entrepreneurship and Small Business Management, Maharshi Dayanand Saraswati University, Ajmer is an authentic record of work carried out by me. The matter embodied in this report has not been submitted for the award of any other degree or diploma.

Date:

Signature of the student (NEHA SHARMA)

3

FACULTY CERTIFICATE

This is to certify that Ms. Neha Sharma student of class MBA (DS) semester III 20172019 has completed her BUSINESS PLAN REPORT under my supervision. To best of my knowledge and belief that it is an original work by the candidate and based on her efforts and that this work has not been submitted in any other university or institution for any award of degree or diploma. I am satisfied with the quality and the standard of this work and recommend its acceptance in partial fulfillment for the award of MBA (DS) semester III degree.

Dr. Deepika Upadhyaya Center for entrepreneurship and small business management Maharshi Dayanand University Ajmer.

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Sculpture

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EXECUTIVE SUMMARY

Sculpture Fitness Club is an organization of ensuring that people stay fit by exercising regularly and maintain healthy lifestyle. We are going to be located at Choti Nagfani, Boraj Road, Ajmer.

We are able to secure a standard facility along the road in the heart of the city. Our facility will be equipped with modern technology. We will work towards ensuring that we provide our clients /members with a daily program of exercise and diet that perfectly suit their lifestyle and also to help them achieve their desired results and to help them create lasting healthy habits that will last them for life.

One of our major goals of starting Sculpture Fitness Club is to encourage adults and teenagers, to cultivate the habit of regularly exercising and to stay healthy. Our gym facility is specifically designed and built to take care of adults and teenagers, we have membership packages that is highly discounted for our regular clients.

We will run a fitness club that will help members who want to lose weight to achieve their desire without little stress. We have a weight management consultant who will work with individual based on customized fitness and nutrition needs.

Sculpture Fitness Club is an organization to provide all round health and fitness services to the residence of Choti Nagfani, Ajmer, which is why we have been able to put up a facility that can help us achieve the goal. We are optimistic that everyone who enrolled in our gym and fitness club will definitely derive huge value for their money.

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BUSINESS PLAN ON “Sculpture Fitness Club” TABLE OF CONTENT SERIAL NO.

PARTICULARS

PAGE NO.

1

Introduction to the organization

8

Comparison with others

9

About the venture

9

3

Operation strategy

10

4

Marketing strategy

11

5

Financial plan

13

Investment plan

13

Forecasted Financial Statements

16

NPV and IRR of Venture

18

Sensitivity analysis of NPV

19

6

SWOT analysis

20

7

Growth prospective

22

7

INTRODUCTION OF THE ORGANIZATION Gym business is gaining more grounds in recent times as it was in the 20th century. People are now more aware of the immeasurable benefits they stand to gain when they enroll in a gym. It is now obvious to a myriad of people that they can stay healthy, improve their lifestyle and live longer if they exercised regularly.

Statistics has it that there is a steady increase in the number of people that enroll in gyms and the fact that gym facilities is now closer to residential areas make this possible. In order words, with the increase in the number of people that enroll in gyms, comes the increase in the revenue generated by gyms.

Some people enroll in gyms not because they don’t have the money to purchase some of the basic gym equipment, but because exercising regularly requires discipline and that is part of what they stand to get when they enroll in a gym with an instructor at hand.

Different people visit gyms and fitness centers for various reasons. Some people register in the gym basically to shed some weight through proper exercising, whilst others go to the gym to train and increase their biceps (muscles) i.e. body building and other enroll in gym for cardio sessions et al.

These are the services and amenities that will be made available to our clients;      

Personal Training Group Fitness Classes Spinning Classes Weight Management Nutrition Counseling First Aid Facility

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OUR COMPETITIVE ADVANTAGE Sculpture Fitness Club is centrally located in a densely populated – residential area in Choti Nagfani, Ajmer; this is obviously going to give us an edge amongst our competitors. We equally have a team of highly qualified professionals who will work with all our clients to achieve their aims or enrolling in our gym and lastly our membership package is one of the best that anybody living in Ajmer can get; it is cheap and affordable.

We can confidently say that the location of our gym will definitely count as a positive for us amongst any competitor that might start a gym and fitness business in same location where ours is located. We will continue to work hard to ensure continuous improvement in our facility and service delivery.

ABOUT THE VENTURE Our Vision Statement Our Vision is to contribute our quota to encourage families and residence in Choti Nagfani, Ajmer, to engage in the regular exercising of their bodies, so as to enable them stay healthy. Our Mission Statement The mission of Sculpture Fitness Club is to build a best gym and fitness club in Choti Nagfani, Ajmer, where residents can comfortably train for health and for fitness; a place where residents can connect whilst achieving their health goals.

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OPERATIONAL STRATEGY Sculpture Fitness Club is in business to become the leading family gym facility in Choti Nagfani, Ajmer, and we are fully aware that it will take the right facility, management and organization – structure to achieve our goal. We will ensure that we recruit only the best hands that can help us achieve all that we are set to achieve. Our business will not be built only for the purpose of giving our members / customers value for their money, but also we will ensure that we make our work environment highly conducive for all our employees. We will provide them with facilities that will help them stay motivated and deliver on their various tasks and goals. In view of that, we have made provisions for the following positions to be occupied by highly qualified and experienced staff:  

Gym Manager (Owner) Trainers (2)

ROLES AND RESPONSIBILITIES Manager (Owner):  

       

Responsible for providing direction for the business Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy. Responsible for fixing prices and signing business deals Responsible for recruitment Responsible for payment of salaries Responsible for signing checks and documents on behalf of the organization Evaluates the success of the organization Responsible for managing the daily activities in the gym Prepares budget and reports for the organization Responsible for payment of tax, levies and utility bills

Training Instructors (2)   

Creates training rosters for members Assists members during exercise session Guides members on how to make use of gym and fitness equipment.

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MARKETING STRATEGY Market research: No matter how good the product or service is, the venture cannot succeed without effective marketing. This begins with the careful, systematic research. It is very dangerous to assume that you already about your intended market. Thus market research is conducted to ensure the right track. For this purpose, an observation technique is being used and it has been analyzed that there is a need to open up a fitness club in Choti Nagfani. Target customer: The target market for gym and fitness centers can be categorized into three various groups. The first group is the people who are looking towards shedding some weight through proper exercising and under the guidance of a qualified instructor. The other group of people are those who are interested in building their biceps (body building), and the last group of people are those who just want to enroll for cardio sessions under the watchful eyes of a qualified trainer. These sessions are a combination of light weights, treadmills and bikes. Sculpture Fitness Club will work towards providing services, facilities and environment that will help us reach out to our target market. These are the category of people that we intend marketing our gym and fitness club to;      

Corporate Executives Business People Household Sportsmen and Sportswomen Young Couples Teenagers.

Main focus will be in providing great opportunities to the middle class or upper middle class section of the society in Ajmer.

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Marketing aspect/ channels: The marketing channel that would be considered by the club would be simple and will aim to satisfy and fulfill the customers need through the following –  Word-of-mouth publicity  Small social groups like friends, relatives, students etc.  Social media like website of the club, page on face book. SATISFIED CUSTOMER IS THE BEST MARKETING TOOL. THE PURPOSE IS ACHIEVED IF THE CUSTOMERS ARE HAPPY WITH THE SERVICES THEY HAVE RECEIVED.

Pricing strategy: The pricing strategy is the mix of both – penetration pricing + psychological pricing. Penetration pricing - The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. Psychological Pricing. - This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis.

Promotional strategy: To promote the club, I will be using social and print media advertising techniques. Ads will be given in local news channels of Ajmer i.e. sare raah and swami TV and using pamphlets and ad in local newspapers to promote the club.

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FINANCIAL PLAN

The Venture will be funded by my father solely from his savings. Initial Investment: Particulars

Amount(Rs.)

Renovation (F)

2,00,000

Machinery (F)

5,61,920

Furniture (F)

61,000

Rent deposit (F)

90,000

Electricity deposit (F)

3,000

Total

915920

Expected expenses which would occur: Particulars

Amount (Rs.)

Rent P.M.

30000

Salary P.M.

24000

Electricity P.M.

3000

Maintenance P.A.

3000

Advertisement expenses (Annual)

20000

Administrative expenses P.m. 1000 The rent and salary will be increased by 10% every Year and other expenses will increase by 4% i.e. inflation rate of the Indian economy. 13

Revenue generation: S.No.

Particulars

Amount(Rs.)

1.

For one month (1000*10*12)

1,20,000

2.

For three month (2500*30*4)

3,00,000

3.

For six month (4800*15*2)

1,44,000

4.

For one year membership (8500*12)

1,02,000

5.

For PT (9000*15*4)

5,40,000

TOTAL

12,06,000

Gym membership fees will stay constant for the following 2 years after commencement of venture and then will increase by 15% on yearly basis.

Amounts 12,500 5,500 9,500 17,400 8,100 5,000 3,000

Furniture Details Counter Chairs Water Cooler Music System Fans Led Lights Switches & Boards

This is estimated to be a total of Rs. 61000 and will be annually depreciated by straight line method with 10 % depreciation rate.

14

Amounts 1,00,000 28,000 32,000 12,000 20,000 40,000 20,000 12,000 15,000 7,500 5,200 5,200 5,200 4,200 4,000 2,000 2,200 30,000 95,040 46,980 2,000 5,000 3,600 800 900 1,000 2,600 2,700 40,000 15,000 1,800

Machinery & Equipment Details Treadmill Leg Press Cable cross station Chin-up + Parallel Bar Squat stand Leg Extensions + Leg Curls Pec Deck Fly Lat Machine Seated Rowing Preacher Bench Decline Bench Flat Bench Incline Bench Dumbbell Stand Weight Stand Flat Bench Individual Incline Bench Individual Spinners Dumbbells Plates Twister Rod Stand 3 Olympic Rods 3 Feet 4 Feet 6 Feet Yoga Mat Stepper Mirrors Exercise Mat Exercise Ball

The Machinery and Equipment are estimated to be cost around Rs. 561920 and have an estimated life of total 7 years and after that their scarp value is estimated to be 10% of their original cost. And at the end of 7th year new machinery and equipment will be purchased of worth 50% of the year ending Capital.

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The Followings are the forecasted Income Statement and balance Sheet of the said Venture:

Particulars Revenue

Year 0 0

Income and Expenditure Account Year 1 Year 2 Year 3 Year 4

Year 5

Year 6

Year 7

1,206,000 1,206,000 1,386,900 1,594,935 1,834,175 2,109,302 2,425,697 Less: Operating Expenses Rent

0

Salary

0

Electricity

0

Maintenance Expenses Advertisement expenses Administrative Expenses EBITDA

0

Depreciation

0

(360,000)

(396,000)

(435,600)

(479,160)

(527,076)

(579,784)

(637,762)

(288,000)

(316,800)

(348,480)

(383,328)

(421,661)

(463,827)

(510,210)

(36,000)

(37,440)

(38,938)

(40,495)

(42,115)

(43,800)

(45,551)

(3,000)

(3,120)

(3,245)

(3,375)

(3,510)

(3,650)

(3,796)

(20,000)

(20,800)

(21,632)

(22,497)

(23,397)

(24,333)

(25,306)

(12,000)

(12,480)

(12,979)

(13,498)

(14,038)

(14,600)

(15,184)

487,000

419,360

526,026

652,582

802,378

979,309 1,187,888

(78,347)

(78,347)

(78,347)

(78,347)

(78,347)

(78,347)

408,653

341,013

447,680

574,235

724,032

900,962 1,109,541

(7,933)

(4,551)

(9,884)

(27,347)

(57,306)

(92,692)

(145,362)

400,720

336,462

437,796

546,888

666,725

808,269

964,179

0 0 0

(78,347)

EBT Tax

0

PAT -

16

Liabilities Capital Add: Current Year Profit Total Assets Machinery & Equipments Less: Sales Less: Accumulated Depreciation Add: Purchases Net Machinery & Equipment furniture Less: Accumulated Depreciation Net Furniture

Year 0

Year 1

Balance Sheet Year 2 Year 3

Year 4

Year 5

Year 6

Year 7

915,920 915,920

1,316,640

1,653,103 2,090,899 2,637,786 3,304,512 4,112,781

-

336,462

437,796

915,920 1,316,640

1,653,103

2,090,899 2,637,786 3,304,512 4,112,781 5,076,960

561,920 561,920

561,920

561,920

561,920

561,920

561,920

561,920

-

-

-

-

-

-

-

56,192

-

72,247

144,494

216,741

288,987

361,234

433,481

505,728

-

-

-

-

-

-

-

2,538,480

561,920 489,673

417,426

345,179

272,933

200,686

128,439

2,538,480

61,000

61,000

61,000

61,000

61,000

61,000

61,000

61,000

-

6,100

12,200

18,300

24,400

30,500

36,600

42,700

61,000

54,900

48,800

42,700

36,600

30,500

24,400

18,300

93,000

93,000

93,000

93,000

93,000

93,000

93,000

-

200,000 200,000

200,000

200,000

200,000

200,000

200,000

200,000

-

893,877

1,410,019 2,035,254 2,780,326 3,666,942 2,320,180

1,653,103

2,090,899 2,637,786 3,304,512 4,112,781 5,076,960

400,720

546,888

666,725

808,269

964,179

Deposits Misc. Expenditure Cash & Bank 479,067

Total 915,920 1,316,640

If the same amount is invested in market, then the return would generate a return of 12% of the total investment made i.e. Rs. 109910 yearly. The proposed venture promises to provide a return of 44% on the total investment and 33% net profit margin on Revenue. 17

The net present value of the project is calculated as below: All the Future Cash inflows are discounted by 12% (market rate of return) i.e. expected rate of return if the sum is invested in market. After discounting all of the cash inflows NPV of the whole Project is 2,934,184.00 and the Internal Rate of return of the said Particulars

Year0

Year1

Revenue

Year2

Year3

Year4

Year5

Year6

Year7

1,206,000 1,206,000 1,386,900 1,594,935 1,834,175 2,109,302 2,425,697

Rent

360,000

396,000

435,600

479,160

527,076

579,784

637,762

Salary

288,000

316,800

348,480

383,328

421,661

463,827

510,210

36,000

37,440

38,938

40,495

42,115

43,800

45,551

3,000

3,120

3,245

3,375

3,510

3,650

3,796

Advertisement expenses

20,000

20,800

21,632

22,497

23,397

24,333

25,306

Administrative Expenses

12,000

12,480

12,979

13,498

14,038

14,600

15,184

Contribution

487,000

419,360

526,026

652,582

802,378

Depreciation

78,347

78,347

78,347

78,347

78,347

78,347

78,347

7,933

4,551

9,884

27,347

57,306

92,692

145,362

400,720

336,462

437,796

546,888

666,725

808,269

964,179

487,000

419,360

526,026

652,582

802,378

979,309 1,187,888

(7,933)

(4,551)

(9,884)

(27,347)

(57,306)

(92,692)

(145,362)

-

-

-

-

-

-

-

93,000

-

-

-

-

-

-

-

56,192

(915,920)

479,067

414,809

516,142

625,235

745,072

Electricity Maintenance Expenses

Tax Net Profit Free Cash Flow Less Tax Add Deposits Add Scrap Value Cash inflow

(915,920)

979,309 1,187,888

886,616 1,191,717

project is estimated to be 55.90%. And the Pay-Back Period of Investment is 2 Years 15 days.

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Following shows the sensitivity analysis when the two core variables fluctuate i.e. 1. Market Rate of return or expected rate of return 2. Rate by which the membership fee is going to be increased after two years.

NPV Sensitivity analysis Market Return NPV

Increase in Fees

2,934,183.90

9%

10%

11%

12%

13%

15%

11% 2,818,146

2,714,876

2,617,203

2,524,756

2,437,190

2,275,451

12% 2,933,211

2,824,199

2,721,134

2,623,618

2,531,284

2,360,831

13% 3,050,997

2,936,095

2,827,497

2,724,780

2,627,555

2,448,164

14% 3,171,560

3,050,613

2,936,338

2,828,286

2,726,044

2,537,487

15% 3,294,953

3,167,805

3,047,707

2,934,184

2,826,796

2,628,840

16% 3,421,234

3,287,725

3,161,654

3,042,519

2,929,855

2,722,261

17% 3,550,458

3,410,425

3,278,229

3,153,339

3,035,265

2,817,791

18% 3,682,684

3,535,960

3,397,483

3,266,693

3,143,072

2,915,469

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SWOT ANALYSIS Sculpture Fitness Club is in business to help its clients achieve their health and fitness goals and at the same time to make profit. We are aware that there is competition in the gym and fitness industry which is why we took out time to conduct an effective SWOT Analysis, here is a preview of the result we got from the SWOT analysis:

 Strength: One of the obvious strength that will definitely stand as a plus for Sculpture Fitness Club is the fact that our facility is centrally located in a densely populated – residential area Choti Nagfani, Ajmer; our location is in fact one of our major strength. We equally have a team of highly qualified professionals who will work with all our clients to achieve their aims or enrolling in our gym and lastly our membership package is one of the best that anybody living in Choti Nagfani can get; it is cheap and affordable

 Weakness: Having critically looked into our business model, we were able to identify two major weaknesses. One is the fact that we are a new business and the second is the fact that we may not have the financial resources required to match up with existing gyms in Ajmer when it comes to acquiring latest gym equipment and generating the needed hypes that can drive traffic towards our facility.

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

Opportunities:

 Growing demand for fitness: People are extremely focused on fitness and more and more people have started frequenting the gym. This growing demand for fitness is an opportunity that gyms can capitalize on.  Value-added services: The gym can no longer afford to exist by just providing fitness services. There is a strong need for value-added services like diet and nutrition and also cafes and food courts. All this can be charged a premium which helps to improve revenue prospects.  Growing health concerns: With changing lifestyles like increased consumption of fast food, obesity, lifestyle diseases etc. more and more people are trying to become part of weight loss programs. This has created a growing need for gyms.



Threat:

Some of the threats that are likely going to confront Fit as Fiddle Gym and Fitness Club is unfavorable government policies, demographic / social factors, downturn in the economy which is likely going to affect consumers spending and lastly, the emergence of new competitors within the same location where our gym and fitness club is located.

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GROWTH PROSPECTIVE / THE PATH AHEAD

Healthy diet and daily exercise are key things to stay fit and healthy in old age. The awareness of the new generation about keeping a healthy body is far better from the previous generations. As more and more population gets enlighten towards the necessities of working out and keeping our bodies fit for better future the business of Gym is expected to be grow on a rapid growth rate.

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