You have been given a business plan for an Australian Fitness Business named Bounce. This business plan is in the resources section of your presentation. You are to download the business plan and answer the following questions about it.
1. According the business plan, what actions and expectations are proposed for the ‘personal trainers’, in order to keep overheads low?
Bounce Fitness can appoint some part time trainers and 1 full time trainer for their member of the fitness and gymnasium. The company has projected to increase the number of their centers. The investment per center would be $300000 per. Margaret house herself is a physical fitness trainer. She can also hire a few full time trainers. The fitness company targets low cost strategy by keeping the overheads low. Reducing the personal trainer cost would be of the actions. It she must be careful that it doesn’t affect the quality of the service.
2. What are the four (4) essential components outlined in the Bounce business plan and what ‘main points/content’ can you identify that are contained within each essential component?
Margaret house has done research on the growth of holistic life management and Personal training " fitness. She found that the geographic markets she planned to serve are a emerging market. It has begun to expand. The individuals are more concerned about the personal transformations. The results were very encouraging. She decided to develop a business plan which will make the business successful.
The four main components of Bounce business are described below:
1. Low cost-price strategy: The main focus of the company is to keep the price low by keeping the overheads low. Bounce fitness pursues to develop unique classes, one-stop-shop approach for health enhancement and personal training. It targets to gain substantially the largest segment of the growing market.
2. Better quality personal training: The Company offers better quality personal training than its competitors. Bounce provides it for a reasonable price. It also focuses on the quality of other services such as staffs, equipment and convenient of the centers.
3. Pricing and advertising strategy: The Company advertises in several lifestyle magazines. The estimated expense for advertising is $250 per month. Ms House has selected three main magazines from three largest industries. The magazines will publish half or full page ad in each week or month. It will depend on the frequency of the publication. Bounce will also arrange informative seminars on chamber of commerce luncheons. Ms House has also started to write articles in lifestyle publication to reach the larger businesses. In a longer term Bounce Fitness has a plan to approach the medical centers, age care centers to offer special arrangements to improve the mental and physical health through diet. This is a very tender process and it will be subsidized as the community service.
4. Personnel and expenses: Bounce Fitness gives their personal trainer fixed salaries. The objective is to keep the wage and expenses low. The company expects the trainers to involve in delivering classes, volunteering training services to hospitals, schools and other community. The company collects the payment from members through cash and credit cards. The financial analysis showed that leasing would be a better option than buying and renting. Buying would outlay a large chunk of money and renting will only cause monthly expense. Leasing would enable the company to use the sophisticated tool for their customers. The company has taken a three-year lease with three-year renewal option. In the renewal period the rent will increase by 5%.
3. What are the business goals and objectives that you can identify from this business plan?
Bounce Fitness is a newly established business. The objective of the business is to provide quality services to meet the growing need of training, personal coaching and other related health enhancement services. The goal of the business is to be the first priority for physical fitness and personal training in all the regions. Margaret House, the CEO of the company will lead the company so that it can be the quality fitness provider in three capital cities and one regional centre of Australia.
The primary objective of the company is to build a customer base by serving quality fitness training and counseling for a healthy lifestyle. The company provides membership for a minimum amount. It has some premium features which includes many add-ons options of life coaching and health enhancements.
The company has taken marketing strategy to improve its brand image. To create the market presence the company advertises in lifestyle magazines. It seeks the response from the local community. The focused approach will make it easier for Bounce Fitness to retain the position of market leader in the industry. The second objective of the company is to capture the substantial market share in the service industry.
5. What methods will be used to promote the market exposure of the business, according to the business plan?
The substantial research prior establishing the business shows that to increase the market exposure the company needs to communicate with the communicate through journals and magazines. To advertize the company has selected three major lifestyle magazines of three industries. It will cost $250 per month. Magazines will provide half page advertisement in weekly publication and one page advertisement in monthly publication. The contract is for 6 month period. After 6 months the company is also considering to run a full-page ad for $350 per month. The word of mouth is a preferred mode for brand presence. It hopes to hold seminars in schools, colleges within 30 mile radius of the business. Ms House will also personally communicate with the human resource managers of larger businesses and national lifestyle publications to publish several written articles. Bounce Fitness also intends to approach the aged care centers and medical centers to offer special arrangements for the aged and sick people to improve mental and physical health. This company will not only depend on sale to run the business.
6. What type of staff (aside from managers) and specialist services are required for this business, according to the business plan?
The business needs personal trainer, unit manager, supporting stuffs. Personal trainers will help the members to maintain their fitness. They will also give counseling on maintaining good health. Bounce Fitness plans to keep the wages and salary expense low. That is why they hired personal trainers on fixed salaries. Margaret house the owner of Bounce Fitness has significant experience and management skills as the centre manager. Bounce Fitness needs some supporting stuffs such as receptionist, office assistant and It assistance. Ms House herself was a remedial therapist and training instructor for 8 years. She holds a degree in sports and physiotherapy. She will play a great role as a fitness consultant for the premium members.
7. Who are the specific/key people and their roles in the Bounce Fitness Business, as described in the business plan?
1. Chief executive Officer: Margaret house the owner of the company will act as the CEO of Bounce Fitness. The CEO holds all the executive power to run the business. She is the leader of this company. Under her direction the business will try to achieve its goals and objectives. She will delegate the company and present the company in front of the customers.
2. Personal Trainers: Personal trainers will play the active role to train the members of Bounce Fitness. Their day to day activities are to instruct the members on their workouts, giving suggestions about to keep good health and fitness. They can also suggest them necessary supplements besides their diets.
3. Supporting staffs: Supporting staffs are important personnel for an organization. They will maintain the sophisticated machines. They will maintain the schedules and receive the guests. Some staffs are needed to keep the center and the premise neat and clean.
4. Professional consultant: Bounce Fitness can also hire the professional consultants to give professional advises to the members. It may hire professional physiotherapist, psychologists, Doctors etc. Professionals can play a critical role improving the reputation of the company. Good consultant makes a customer loyal and satisfied.
8. Identify any business risks that you could foresee from the business plan, and include how you would manage these risks and what contingency plans you could implement if necessary?
Risk of Price change: Price risk can create damage for a business organization. Price pressure can reduce the growth of sales and profit. If the Competitors are many and large in size price battle may reduce the growth of market share.
Change in Demand: The change in demand may create uncertainty. If Bounce Fitness doesn’t have enough buffer resources to battle the demand shock it may affect the business adversely. Sometimes people may prefer other ways to improve health and fitness such as personal trainer contract at home. Economic distress can reduce the demand of fitness training. Fitness training is not a basic need for people
Number of personal trainer: Skilled and professional personal trainer may be scarce to appoint. Bounce Fitness might have to hire professional at a higher salary. If the expenditure increases the cost leadership strategy of the company will fail. If the company tries to maintain the quality of the service it can’t ignore the professional assistance from physicians and personal trainers.
9. According to the financial forecast within the Bounce Fitness plan:
a) describe three (3) specific methods you could use to monitor business performance and
b) explain two (2) ways you could implement improvements to performance
A
1. Preparation of key financial statements: Bounce Fitness should prepare balance sheet and profit and loss statement. They are statutorily essential documents of business’s performance. A pro-forma financial statement helps to predict the future variables of business. The business can compare the actual result with the pro-forma financial statement. This is how a business can monitor its operations.
2. Preparing budgets: Budget is a quantitative expression of the plan of a business. Business planning cannot ignore the financial planning. Budget is an integral part of financial planning. It is also an effective tool a business can use to monitor performance. Budget includes capital budgets and operating budgets. Capital budgets involves with finance the business and investment of the resources. Operating budgets involve sales budget, expense budget etc. Budgets are prepared so that a firm can get a direction. It shows how a business should use its resources. The actual income and expenditures are compared with budge. Positive or negative result is analyzed to find out the actual reason of deviation. If the deviation crosses the tolerable level the business will take necessary actions for remedy.
3. Competitors Analysis: The performance a business cannot be understood if it is not compared with other similar business. A business needs a standard to evaluate its performance (profit, Return on Sales, Asset, and Equity). If the industry is large a business can compare with the industry average. Sometimes a business can be comparatively smaller than most of the large firms. Competitor’s analysis helps the business to track its performance. The sales and profit can be compared with the competitors using various tools and techniques. The pricing and marketing strategy should also be analyzed.
B
There is many ways a business can improve its performance. Two of these ways are given here,
Improving customer visibility: The clients need personal attention. Sometimes mere advertising doesn’t fetch the desired attention of the customers. The clients need personal contact. A business can strategically communicate with customers. Such as visit in hospitals, youth community festivals, age care center. This is how Bounce Fitness can manage the information about their clients. They can open their account instantly. Advertising and personal communication will certainly improve the customer visibility. If a business doesn’t communicate its client personally it will never understand what they are actually expecting from a business.
Nurturing and Updating the competitive Advantage: Every successful business has a competitive advance. Every business should have a competitive advantage. Competitive advantage is an advantage over its competitors. Competitive advantage is gained by offering greater value to the customers. According to Michael Porter competitive advantage can be gained through four ways. It is wise to lead the business to a position where the business will be the one providing the specific benefits.
10. According to Bounce Fitness performance summary, you are to review the outcomes and provide a brief report (200-250 words) on how the business has performed in relation to the business plan goals
The company’s net earnings have increased by 4% and sales increase is 2%. The company’s financial performance should be improved. As a new business the sales and income growth is low. Moreover the company is losing its clients. The client drop off percentage is 35%. The company’s staff retention rate has decreased. Average employees are leaving the company after 3 months. It is mainly the main concern for the company. The company can’t maintain the low cost strategy if the employee turnover is high. The return on investment is 11%. It shows that the company has efficiently used its resources to generate return. The company expects the growth of gross revenue. It has projected that it will increase more than 3000000. The calculation was based on the average gross revenue per month. The company’s 9% revenue comes from new membership account. It plans to increase the revenue to 15%. So the company will increase the media presence through advertising in lifestyle magazines, holding free seminars, communicating
11. According to Bounce Fitness performance summary, what operating problems were you able to identify?
The main problem of bounce fitness is employee turnover. The company’s average employee retention rate is 15%. Every 3 months employees leave the job. Moreover the client’s drop off percentage is 35%. It shows that both clients and employees are not satisfied with the company. The employees seek a better job in other large companies with a higher remuneration. There are certainly some discrepancies between the advertisements of quality of services and the actual service provided by the company. The company is gaining 30 new clients in every months and the retention rate is 15%. The main problem is if the company focuses more on its media presence rather than its service quality it will lose the customers. The company will not be able to follow cost leadership approach and differentiation approach at the same time.
12. What are three (3) suggestions you could make to their quality and performance systems in order to improve business performance?
1. Following integrated strategy. In this approach Bounce fitness will follow cost leadership approach. For this extra effort in creating brand presence should be reduced. Advertising expense should be reduced to save resources for further investment. The company may not be able to increase profits but in the long run a large number of clients will generate enough profit for the company. In this approach the company should set the price below the market standard. But the quality of the service will be standard.
2. The company may take focused differentiation approach. In this case the company would select a particular market segment. The company may select the physical fitness of middle aged and aged people. In this case the company will provide fitness training for people of all ages but this particular market segment would be selected for massive advertisement and branding. The company can communicate with local age centers and community clinics. People who have not suffered any chronic diseases can be a member of the company at a very minimum membership fee. There can be some categories such as general, economic and premium membership services. The company would charge highly for the premium members. The personal training will also be available for general people but to save money it may not to choose advertise highly about it.
3. The customer retention policy of the company is poor. It creates barriers in providing quality services to the customers. The company may give performance based bonus and yearly bonus on profit. Experienced employees are productive and retain the customers.
13. Using the above 3 suggestions from question 12, you are to amend the business plan by modifying or implementing one (1) operational procedure to reflect your suggestion/s.
I will suggest implementing plan 2. Focused differentiation approach combines the elements of two or three porter’s business strategies. In a focused differentiation strategy a business targets a small group of customers with differentiated products. Middle aged people to aged people will be the core customers of Bounce Fitness. The heart of the focused differentiation strategy is strong customer loyalty. It tailors the services according to the need of the target group. The needs of the target group of Bounce Fitness can be special care for aged people, healthy diet chart and training session for the middle aged clients. A firm will try to provide best quality valued product and services to the niche market segment.
Bounce Fitness is facing the customer retention problem. Only 15 out of 100 clients are coming to this company for further services. Following the focused differentiation strategy can improve the situation. Loyal customer group can be created through segmented marketing and service quality sophistication.
Bounce fitness will be able to charge premium prices for premium services. The premium services will be better than that of the competitors. Customers will also be willing to pay higher prices if they perceive that the company is providing extra values. The premium services will create brand image in this particular market segment.
In this way the company can strategically avoid the large competitors of the industry. The large competitors will go after the broader market which consists of young generation. One the Fitness center is entrenched as the leader of the niche market it will be able to look another market segment. The competitors will move away from that particular niche market. In response to the meeting of the needs of the niche market the focused differentiators can quickly adapt to the changing needs and expectations of services. The customer interaction and awareness increases through the service.
14. You are to research the fitness industry to find a new business opportunity that could support Bounce Fitness operations, and outline in 150-200 words how you would adjust the business goals to reflect this new opportunity.
Bounce Fitness can create new business opportunity by creating a separate business. Bounce Fitness is a physical training center which works to improve the health and fitness of people. This business organization can work for mental health. The service center can appoint educational and family counseling psychologists to give professional advice to the clients. The company can create a separate wing. The company can accommodate the service inside the center as a new service for the members. To open the business Ms House must prepare herself in respect of feasibility of specific services, the market for the service, the competitors and the skills of the employees.
For this assessment task, you will be required to answer questions based on a FITNESS BUSINESS that you wish to develop.
Some Recommended resources for additional research include:
http://australia.gov.au/topics/business-and-industry/abn-acn-business-management/small- business
http://www.business.qld.gov.au/business/starting/legal-obligations/meeting-legal- obligations/legal-requirements
http://www.business.gov.au/Howtoguides/Startingabusiness/Startinganewbusiness/Pages/ Whatarethelegalrequirements.aspx
http://finance.ninemsn.com.au/smallbusiness/planning/8124625/checklist-starting-a-small- business-from-scratch
http://www.asic.gov.au/asic/asic.nsf/byheadline/Your+company+and+the+law
Determining the Legal Considerations of the Business
1. Decide on the business structure for your business. What are the legal implications and risks associated with this decision? Note: Freelance trainer is not a business structure.
I would form a business name Elegant Fitness. This is a sole proprietorship business. Sole proprietorship is the simplest form of all business structures. As the owner of this business I will operate the business. The advantage of this form of business is I can establish this business with a low capital. Any personal income from the business is included in tax return. The advantage of the structure is it is easy to supervise the business. I will be able to take all business decisions. The owner has the full control over assets and decisions. Individual Tax File Number can be used. The risk of operating such business is the unlimited liability. The personal assets will be at risk. Assets can be seized to recover the debt. Bank account is not separate from the personal account. To employ workers an entrepreneur must comply with worker’s compensation insurance and superannuation contributions.
2. What licenses or registrations are necessary to operate your personal training/fitness business? Note: Cert III or IV in Fitness and Insurance are not licenses or registrations necessary
I need to register the name of Elegant Fitness. Registration of business name will give legal protection on trade mark. Australian Securities and Investment commission will provide the registration service. Australian Business number (ABN) is an 11 digit unique number which is provided to every business. The application can be filled up in online and it will be reviewed after a certain time. Tax File Number can also be obtained with ABN. Australian Taxation office issues the TFN number.
3. Who would you contact to apply for each of the registrations or licenses you have identified in the previous question?
A company in Australia is registered through Australian Securities and Investments Commission. The commission will register the name of the company and address and give an ABN (Australian Business Number) number for fitness center. I will contact Australian Taxation office for TFN (Tax File Number). ACT Revenue Office will register for payroll tax for the employees.
4. Do you need to register your business name or apply for trademark registration?
I need to register the business name. I want to protect the name of the business and I need to register to get ABN from the authority. Trademark registration is used to protect the intellectual property of any business.
5. What insurance(s) will be necessary to protect your business?
The professionals need professional liability insurance. It is also known as errors and omissions insurance. It covers the damages of the negligence claim due to the harm or mistakes or failure to perform. The industry may have own set of concerns; there is no one-size-fits policy. Professional indemnity limit is given in policy statement.
The business may cover public liability through public liability insurance. The insurance covers equipment, furniture, event of fire and damages by theft or storm. Large natural disaster such as flood, earthquake is normally not covered by the insurance.
Another essential insurance the business needs is business interruption insurance. Business operations would likely be interrupted through disaster and catastrophic events. It is applicable to the business which holds physical location to do business such as retail stores. This insurance compensates the lost income during the events.
6. Prepare a summary of the laws, legislations and codes of practice that apply to your personal training/fitness business.
The fitness industry has some laws, regulations and code of practice. Subordinate legislation act 2003 and fair trading act 1989 includes
1. Objective of code, definition of fitness service, compliance of the parties.
2. Claiming endorsement or membership, high pressure tactics, harassment or unquestionable conduct. A service provider can’t force anyone to get a membership.
3. Soliciting through false or misleading advertisement. A business can’t falsify or overstate the services provided by the business.
4. A business must provide the conspicuous façade and name fitness center in front of the business center.
5. The business must disclose the fees of the membership. Membership will be in writing and signed
6. Client confidentiality: The professional may obtain confidential information about clients such as contacts, bank details and personal information. The commonwealth’s Privacy Act 1988 clarifies that a professional is bound not to disclose information to others.
7. The professional trainer must give the trainee truthful information. He cannot mislead the trainee or give false information to increase the sales or for advertisement. The boundaries are consistent with fair trading act.
8. The professional must not misrepresent his qualification by falsely claiming to be a member or be endorsed by an organization.
8. Identify at least four (4) of the tools and systems that you will use to make sure you are complying with these laws, legislations and codes of practice. For example: Hazard/risk analysis and management procedures.
Organizations use various tools and techniques to comply with laws and regulations. These are more or less same. Each technique uses a different way to handle it. Four useful tools for regulatory compliance are given below:
1. Balance scorecard
2. Hazard/risk management
3. Firewall audit tools
4. ERP security challenge
8. How would you ensure you have an adequate record keeping system to support your compliance with laws that apply to your business (e.g. taxation, etc.)
Record management for business management is a very key to maintain against the risk of non-compliance of laws and regulations. Bounce mental support is a new business which needs to avoid possible, lawsuits, loss, data-breaches and damages.
Automated data and record management system will ensure:
An easy and smooth transition of paper records to electronic records through document scanning system.
It gives fast access to information so that a business can handle complaints rapidly
Safety and security of the sensitive documents are maintained
A single system save the time of employees and reduce the chance of errors.
9. What options exist for the location of a business premises that would be suitable for your business? (I.e. could you buy a studio, rent space in a gym etc.)
The location of a business organization is a very important factor for success. The location of the business should be chosen in a way that is auspicious for business. Elegant Fitness will require a building and premise that will not be too far or near to the city. The company should consider the transportation facilities and other convenience. It can rent space is any supermall, community center. It can be a residential house, shared commercial office or home-office (Used for home business).
10. As a small fitness business, you may consider offering client’s towels, drink bottles, etc with your business’s name on it as a form of marketing. Consider what steps you would take to negotiate the supply of these items to clients from the manufacturer. E.g. would you send an inquiry, get quotes, etc?
After forming a business Elegant Fitness will need utilities and other supplies such as hand towels, fresh drinking water, office supplies. It may order it to the local producers. If the producer can print the name of the company on bottles, glasses and hand towel the company will send enquiry through its representatives and get quotes. The company can collect the supplies and send it to other firms for these printings. After getting the quotes from the suppliers it must assess which option will be cost saving.
11. What steps would you have to take to?
a) Create relevant legal contract and agreements for your business (5 steps)
A contract or consent is a legal binding agreement between two parties. The purpose of the written contract is the outline of responsibilities and obligations of each party.
1. The first step is the intention of two parties to create a contract that has legal binding.
2. The business must offer the other party to enter into contract.
3. There must be a time frame for the contract.
4. The mode of consideration must also be written.
5. Acceptance of other party is the last step of creating a legal contract.
6.
b) Terminate relevant legal contracts and agreements for your business (6 steps)
1. Ensuring the parties has completed the contracts by performance duly.
2. Agreement to end the contract
3. Any party can’t perform the contract anymore due to inability to perform.
4. If the terms allows the either party to end the contract anytime
5. The breach of the contract is the sole reason to end a contract.
6. Damages are met and close the deal.
Develop a marketing plan for your product or service.
12. You are to carry out a SWOT analysis on the business that you plan to operate. You should identify the required information below.
Strengths
1. The demand for the service is high
2. Highly qualified professionals will provide services
3. Convenient location for clients
4. Low cost for single segmented market
5. Premium service at a fair value
Weaknesses
1. New business will suffer to cover its expenses
2. Profit will be lower to grow the business
3. Employee experience is low
4. Client turnover can be a major problem
5. Lack of prior experience of operating business
Opportunities
1. The firm may open many fitness centers to other regions
2. Growing demand of fitness
3. Focused market segment
Threats
1. A low barrier to for entry to this business
2. Large competitors will force the price down
3. There are many fitness business in the region.
13. Describe your marketing mix and strategies for product, promotion, price and place.
Marketing mix is the set of marketing tools a business use to pursue its marketing objectives. The marketing objectives of Bounce Mental support centre are
Obtain 50 clients monthly
Advertise in local media
Gain a 5% sales growth per month
5% net profit on marketing
Marketing mix is composed of 4 components: Price, product, place and promotion. The marketing mix strategy of the company is given below:
Price: The price of the services will be 5% lower than that of average fitness businesses.
Product: the company will provide professional counseling to students, service holders, aged person. The product categories will be: family counseling, personal counseling and educational counseling.
Place: The place will be nearer to the Bounce Fitness.
Promotion: The Company will promote the business through various media channel such as magazines, local newspapers, journals and personal selling.
14. How will you research your potential market?
There are mainly two ways to research on potential market: Primary research and secondary research. The goal primary research is to gather data from analyzing the current sales and effectiveness of the practices. Primary research includes:
Interviews: Interview on the people of a region
Online surveys on potential customers
Focus group discussion and sampling of potential clients.
Secondary research is performed from the published data. From secondary research I will be able to know the socio-economic aspect of a region, demographic of that region, income distribution and demand of fitness training services. Behavioral pattern and price/demand pattern can be identified through this.
15. How will you analyze your research?
Data analysis is the systematic application of statistical and logical techniques to describe and illustrate condense and large volume of data. For qualitative information many times it becomes a iterative process where data is analyzed simultaneously. For the qualitative data I will use rating and ranking system. There a
