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Business idea Fitness center
Arnold Fit is a fitness center with a modern, reliable and safe equipment. Each training is held in a comfortable and relaxed atmosphere under the guidance of a professional coach. Arnold Fit is a clearly divided space, perfect internal infrastructure and the most modern equipment.
The company believes the following factors will greatly contribute to its market success: - a constant inflow of the loyal clients - a high quality of services - convenient location of the club - a flexible pricing policy - the introduction of additional services.
The year of 2016 has marked the arrival of significant factors facilitating the rapid growth of the gym, health and fitness clubs industry.
In particular, the following factors are especially important: 
- the popularity of the fitness clubs industry was ramped up due to many marketing campaigns dedicated to fighting obesity which received a nationwide coverage;
- the major consumer trends have shifted towards the healthier lifestyle which entails healthy food and exercise;
- the generation of baby boomers are much more likely to join the fitness clubs memberships as they become more conscious of their age and the need to stay physically active;
- public health initiatives provided a great aid to popularizing exercise for preventing diabetes, heart diseases and obesity among people of all ages;
- population growth and high levels of employment activated larger demand for the fitness club membership.
The above factors are expected to provide a revenue growth at an annualized rate of 2.5% to $30.3 billion, including 3.2% growth in 2016 alone.
What do we need to realize business-idea
- capital assets;
- work assets;
- pr strategy.
The company requires an amount of 516.60 k$ in the first year including:
- fixed assets - 459 k$;
- intangible assets - 7.0 k$;
- stocks 2.0 k$;
- money on a current account 3.0 k$;
- capital investments 30.0 k$;
- additional amount in cash to register the business 3.0 k$
- reserve capital to repay the costs 12.60 k$
The company may use both its own capital and the attracted one for the purchase of assets and reimbursement of expenses. Equity is the share capital, due to which assets may be acquired. Let's say our company's amount of equity is 50.0 k$. Thus, the organization needs a loan in the amount of 466.60 k$ (516.60 - 50.0).
2. Capital assets:
- Buildings - 200.0 k$
- Transportation means - 4.0 k$
- Equipment - 220.0 k$
- Furniture - 30.0 k$
- Computers - 4.50 k$
- Software - 7.0 k$
- Others - 0.50 k$
2. Work assets
Apart from investments in fixed assets, the company also needs some other kinds of investments. For instance, the registration of the organization requires the amount of 3.0 k$. It is also necessary to collect funds for the purchase of raw materials. The predicted amount for this purpose is 2.0 k$. Additional funds in the amount of 3.0 k$ are needed to organize mutual payments at the initial stage. To make facilities function well, it is necessary to carry out repair. According to the preliminary estimates repair cost is 30.0 k$.
To organize the activity, it is necessary to involve additional labor resources. The number of staff in the early stages will be 2 employees. If the average salary in the initial stages of activity is planned to be 4.0 k$, then the annual salary expenses would amount to 124.80 k$.
The planned salary budget in Arnold Fit for 2016 is 124.80 k$.
In 2018 it is planned to increase expenses by 109.20 k$ compared to 2017.
In 2019 it is planned to decrease expenses by 0 k$ compared to 2018.
Before 2020 the number of employees at Arnold Fit is expected to count 3 staff, while the salary budget amounts to 234 k$, which decreases by 0 k$ percent compared to the previous year’s indicator.
As the fitness club is a newly established business, the need for a strong advertising exposure to attract the first clients is the primary advertising goal. It can be achieved by the following means:
- an extensive advertising campaign in the local media: the most popular newspapers and magazines, radio stations and TV. Further stages of the fitness club promotion won’t include these tools due to their high cost;
- establishment of a strong digital presence due to the growing importance of the Internet and social media in the consumers’ buying habits. The major efforts will be focused on creating a meaningful social media presence and high rankings in the search results;
- production of the handout outlets and flyers containing the information about the fitness club and a compelling call to action. Club memberships will be encouraged by offering a discount to the early participants.
The above measures are expected to provide a positive word of mouth which will produce a continuous influx of new customers.
Margin is a main source of profit for the company. Arnold Fit establishes the margin of 40.0% for its services. Let’s carry out the planning of the company incomes, adding the margin’s percentage to the expenses.
The following conclusions can be made according to the table data. The company will be profitable in the next year. The planned net profit is 104.46 k$. The calculations took the income tax into account, which will be 10% in 2016.
In 2017, the planned income before tax will amount to 120.24 k$. Net profit after paying taxes will be 108.21 k$. A profit growth is planned for the next years, i.e. the growth rate will be 40.20% in 2018, 2.99% in 2019 and -4.76% in 2020.The planned net profit after 5 years is expected to be 148.81 k$.
Evaluation of the investment project effectiveness has shown that under given forecasts a payback period is 5.38 years while a net present value is -35.19 k$ for a period of 5 years.