I.

Table of Contents

I. II. III. IV. V. VI. VII. VIII. IX.

Table of Contents .. 1 General Company Description . 2 Products and Services .. 3 Marketing Plan . 6 Operational Plan .. 15 Management and Organization 18 Startup Expenses and Capitalization 18 Executive Summary .. 19 Appendices 20

II.

General Company Description

The Elite Fitness Center will be competing in the fitness centers industry. It will be located in downtown Cleveland, Ohio. The goal of the Elite Fitness Center is to provide the means, expertise, motivation, and atmosphere that will enable people, of all fitness levels, the ability to achieve their individual fitness goals and simply feel better about themselves. The centers business philosophy is to provide elite services to customers with excellent customer service. The Elite Fitness center will provide its services to all individuals who are interested in becoming fit and healthy. The center will offer special discounts to students and to corporations with corporate membership. The main target corporations will be banks, considering the fact there are more than 20 banks in downtown Cleveland. The U.S. fitness centers industry includes about 22,000 companies and nonprofits in the U.S. that operate about 30,000 fitness and recreation centers with combined annual revenue of around $22 billion. Major companies include Curves, Life Time Fitness, Spectrum Club, and Town Sports International, operator of the Sports Club brand. About 2,600 centers are operated by YMCAS and another 2,500 by community centers. The industry is fragmented: the 50 largest companies account for about 30 percent revenue, and only a few dozen companies own more than 10 centers. ("First Research") The Elite Fitness Center will provide various fitness services with high level tech equipment. Its location will allow easy access to customers in Cleveland and surrounding suburbs. The legal form of ownership for the Elite Fitness Center will be sole proprietorship. I chose this form of ownership because the proprietorship has three important advantages: It is easily and inexpensively formed It is subject to few government regulations Its income is not subject to corporate taxation but is taxed as part of the proprietors personal income. (Ehrhardt 5-6)

III.

Products and Services

The Elite Fitness Center will provide a full range of fitness training programs and services to customers. The latest cardio equipment including Treadmills, Elliptical Cross-Trainers, Stair Machines, Rowers, and Recumbent and Upright Bikes Strength Training, Circuit Training and Free Weight Equipment Group Fitness Classes Private Womens Workout Areas Warm-Up and Stretching Areas Play-land Childcare Centers Personal Training Full Service Locker Room and Shower Facilities Saunas and Steam Rooms TRX Suspension Training Chiropractic Services Tanning Services Physical Therapy Massage Therapy Business Center with free Wi Fi Internet Cardio Cinema Rooms featuring enormous theater screens to watch movies and/or TV while working out Plate loaded machines Step Aerobics Yoga Nutrition Program Smoothie Bars Vitamins and Supplements
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Membership Options

Becoming a member of The Elite Fitness Center is painless! The fitness center offers a variety of membership options allowing our customers the opportunity to choose the plan and payment option that best suits their specific needs.

Month-to-month: Our month-to-month automatic debit option allows the customer to cancel his/her monthly membership with just 30 days notice. The Elite Fitness Center guarantees the customers monthly dues will never be increased providing his/her membership remains current and in good standing.

One Year Commitment: The customer can get our month-to-month automatic debit option at a reduced rate simply by committing for 1 year! After the year is up, the customer can continue as long as he/she would like and cancel any time with just 30 days notice. The Elite Fitness Center guarantees the customers monthly dues will never be increased providing his/her membership remains current and in good standing.

One Year Paid in Full: If the customers preference is to pay in full, the center will accept all his/her money at one time! If the customer renews before his/her year is up then his/her membership will be renewed at the original rate.

Short Term Paid in Full: The Elite Fitness Center offers a variety of short term paid in full plans for those individuals who may be visiting the area temporarily or those whose plans may frequently change.

Student Membership: The Elite Fitness Center offers a variety of plans for students with valid college IDs. Seniors Membership: The Elite Fitness Center offers a variety of plans for seniors who are older than 65 years

Corporate Memberships: Companies interested in establishing a corporate discount for their employees should contact The Elite Fitness Center to discuss available options. The level of participation required from the company is entirely up to the individual company and as everyone knows, fit employees pay huge dividends. There will be special discounts for banks. There are more than 20 banks locations in Cleveland and to have corporate memberships with any of those banks will benefit both; the bank, and the Elite Fitness Center.

IV.

Marketing Plan

The Fitness Centers Industry: The Gym, Health and Fitness Clubs industry grew at an average annualized rate of 1.7 percent. The U.S. fitness centers industry includes about 22,000 companies and nonprofits in the U.S. that operate about 30,000 fitness and recreation centers with combined annual revenue of around $22 billion. Prior to 2008, an increasingly health-conscious population, generally strong economic conditions and healthy consumer confidence all benefited the industry. The industry faced greater challenges from 2008 onward as economic growth slowed and income levels dropped significantly. However, gyms and fitness centers have been remarkably resilient. The economic downturn has had little impact on the industry, and some of the lower-priced franchise model gyms were even able to expand operations in 2008 and 2009. Even in the midst of the economic downturn, the industry has maintained steady growth, with membership rates growing consistently and profits remaining solid. Demand for gyms and health and fitness centers will continue to rise, as the general public becomes more health-conscious and the aging population places a greater emphasis on staying fit. Additionally, the amount of leisure time and growth in household incomes will positively affect the business, leading operators to expand into larger facilities. ("IBIS World") The impact of the media: On annual basis, the fitness centers industry receives hundreds of thousands of pages of free promotion, extolling the myriad of benefits of regular exercise. This extends from the nations most prestigious publications (such as the Journal of the American Medical Association) to tabloids. Regarding the power of the media relative to the business, three factors stand out: Every major media outlet, whether print or electronic, has a health journalist whose job is to report on new research that points out the benefits of regular exercise. American lifestyle journalists are continually reporting how the nations most prominent celebrities whether they be political figures, TV personalities, Hollywood stars, sports celebrities, or music mavens are all involved in regular exercise on a
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daily basis and who consider their involvement with exercise to be essential to their performance. Any issue of any major womens magazine will have numerous articles that either implicitly or explicitly advise and encourage its readers that the path to health and happiness passes through the door of regular exercise.

Corporate and HMO (Health Maintenance Organization): In recent years, two factors begun to change the industrys exclusive reliance on retail sales. The involvement of corporations. Today, approximately 31 percent of Americas larger corporations subsidize the fitness centers memberships of their employees. The percentage of companies that are providing such subsidies has increased significantly in the past several years. The involvement of health insurers. An increasing number of HMOs, including Blue Cross, Pacificare, Aetna, Oxford, and Wellpoint, either reward their subscribers for their involvement in exercise programs or make payments to fitness centers based on their subscribers usage of these facilities. The industry is the beneficiary of an increasingly health-conscious, weight conscious nation. Numerous studies show that Americans prize health their own and that of their loved ones as the most important value in their lives. The industry enjoys significant landlord and equipment financing. Because this a fixed cost business, landlord financing can be a key success factor. Landlords who are looking to fill new retail malls and/or commercial buildings maybe especially interested in health clubs and fitness centers as anchor tenants, due to the daily off-hours traffic clubs generate for retail areas and the amenity value of the club to their businesses. The industrys working capital requirements are stable. Unlike other industries where working capital requirements increase as the business grows, in the fitness centers industry this is not the case. For example, as the business of a restaurant or manufacturer grows, the business will be required to tie up more and more capital to service its expanding book of business. In the fitness

centers industry, on the other hand, once the center is developed, working capital requirements do not significantly increase even as the membership grows. (IHRSA) By entering the fitness centers industry, I will face several challenges. I will need a loan to cover the high capital costs, and to buy all the equipment needed for the center. I will need to find professional trainers and skilled instructors. I will need to find suppliers for the vitamins and supplements that I will be selling in the center. I will try to overcome those challenges by (1) finding a bank that is willing to give me a loan so as to pay for all the necessary expenses, and (2) looking for, interviewing, and then hiring professional trainers and skilled instructors. A change in technology would not affect The Elite Fitness Center significantly, as it will have the most up to date equipment. A change in government regulations wouldnt have significant effect on the center either. However a change in economy could affect the business and prohibit some customers from attending fitness centers as they try to cut out their extra expenses.

Products and Services

The Elite Fitness Center will strive to provide elite services with excellent customer service. The center will make exercising great fun for its customers. The centers cardio cinema rooms combine fitness with entertainment, and the customer can watch movies on enormous theater screens while getting fit. The customers will get ample quantities of cardio equipment, strength training equipment, and free weights so that they can get in and out quickly without a wait. The Elite Fitness Center will also offer group fitness classes, private women workout areas, warm-up and stretching areas, a play-land childcare center, personal training, full service locker room and shower facilities, saunas and steam rooms, TRX suspension system, chiropractic services, tanning services, physical therapy, massage therapy, business center with free Wi Fi Internet, plate loaded machines, step aerobics, and yoga classes. The Elite Fitness Center will also offer smoothie bars, vitamins and supplements, and a nutrition program. The Elite Fitness Center will also offer a 60-Day Money-Back Results Guarantee. If after 60 days of the customers join date, he or she has failed to achieve a positive change in at least one of these categories: (Body Mass Index, Resting Heart Rate, and Thigh Circumference), he or she may discontinue his/her membership with a complete refund. Complete Money Back Results Guarantee details will be available at the center.

Customers

The Elite Fitness Center will target customers of both genders within different groups of age: (18- 24) years, ( 24-40) years, and those who are 41 years old and above. The center will target each age-group differently with its various membership plans. The Elite Fitness Center will offer other amenities such as maintenance and monitoring like checks for blood sugar, blood pressure, and bone density. There also will be various plans for students with valid college IDs. For the corporate memberships, the main target customers for the center will be bankers in Cleveland and surrounding suburbs. There are more than 20 bank locations in downtown Cleveland, and the center will offer special membership plans for bankers. Most of the banks in Cleveland have major locations in the downtown area, for example Key Bank, U.S. Bank, PNC Bank, Chase Bank, Fifth Third Bank, Huntington Bank, and Dollar Bank. If The Elite Fitness Center succeeds in attracting area banks into subscribing to one of the centers corporate membership plans, then this will bring huge benefits to both sides the bank and the center. The Elite Fitness Center will benefit from more subscribers, and the banks management will benefit from having healthy employees. Studies show that a healthy employee is more productive. Banks managements will also benefit from having healthy employees by having huge savings from the employees health insurance expenses. It is a win-win situation. The center will have an increasing number of subscribers, and hence generating more revenue and the bank management will have healthy employees that are more productive, and will have huge savings in health insurance expense.

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Competition

The Elite Fitness Center will face two types of competition: 1- Direct Competition: from other fitness centers and health clubs in the area. 2- Indirect competition from: Increases in people running for exercise with the appeal being that is free, similar to online exercise plans. Consumers can decide to buy their own home fitness equipment, such as treadmills and elliptical machines that can steer them away from gyms and fitness centers altogether. Some residential buildings offer gyms for their residents, such as Statler Arms, The Chesterfield, and Reserve Square. Most schools offer fitness centers to their students with no membership fees required, such as the recreation center at Cleveland State University.

The two major competitors are: FITWORKS 530 Euclid Ave. Suite 23A Cleveland, OH 44115 (216) 344-9267 Web page: http://www.fitworks.com/trainerfinder/websites/60101/colonialmarket/index.html

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Club Hours: Monday Thursday Friday Saturday Sunday 5am 9pm 5am 8pm 8am 5pm Closed

It is located in the middle of downtown Cleveland, close to several banks in the area and it is possible it will give The Elite Fitness Center strong competition. (Fitworks)

Rezults Downtown: 1500 West 3rd Street #550 Cleveland, OH 44113 (216) 771-6900 Web page: http://rezultsdowntown.com/

Hours of Operation: Monday Thursday: Friday: Saturday: Sunday: 5:30am 9:00pm 5:30am 8:00pm 9:00am 5:00pm 1:00pm 5:00pm

Because of its location, Rezults Downtown might give the Elite Fitness Center less severe competition than Fitworks. (Rezults Downtown)

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Factor Products Price Quality Selection Service Reliability Stability Expertise Company Reputation Location Appearance Advertising Image

Me Better than competitors Not better Better than competitors better better better better Not better Not better better better better Not better

Strength /

Weakness

Fitworks better

Rezults Downtown good better good less selection Good service good good good good good good good good

Importance to Customer 2 1 1 2 1 1 2 2 2 2 3 4 4

/ / / / / / / / / / / /

better good more selection good service good good good better better better good better

The Elite Fitness Center will have several advantages over its competitors such as product selection, amenities, services offered, various membership plans, quality of equipment, and accessible location. However, it will have some disadvantages such as pricing, expertise, and company reputation. The center will be new to the business and it will need a reasonable amount of time to establish a decent reputation.

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Strategy

The Elite Fitness Center will adopt a strategy in attracting customers by offering a full range of services at various membership plans. The center will have professional trainers and skilled instructors. It will also offer other services such as play-land for children, maintenance and monitoring checks for blood sugar, blood pressure, and bone density. The Center will use these extra amenities as advantages over its competitors, as they do not offer them.

Promotion

The Elite Fitness Center will use different type of advertising to attract customers and to have the name of the center recognized. On an annual basis, the fitness centers industry receives hundreds of thousands of pages of free promotion, extolling the myriad of benefits of regular exercise. Many people already know how important exercising is, so the question is where do they go to get exercise? With effective advertising, Elite Fitness Center will attract those who are interested in exercising to its facility. The center will use printed ads, special logo design, cards, brochures, newspaper ads, (The Plain Dealer), interior design, and TV ads. I will spend approximately $50,000 before start up, and I will specify a monthly advertising budget of $7,500 for ongoing advertising. The Elite Fitness Center will have a system to identify repeat customers and then systematically contact them.

Pricing

The Elite Fitness Center will offer various membership plans. The price of membership will be slightly higher than the average prices in the industry. The prices will range from 10 percent to 20 percent higher than the industry average. The center may not attract customers who are price sensitive and will seek out other health clubs with lower fees. With effective advertising the customers will be aware that the increased price is reasonable, considering the numerous amenities and the excellent services The Elite Fitness Center offers. Even though the center will have prices slightly higher than those of its competitors, customers will still find it reasonable to pay a little extra to get additional amenities and better service.
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V.

Operating Plans

Products and Services

The Elite Fitness Center will offer a variety of services to its clients. Keeping the centers customers happy is important. Customer satisfaction is guaranteed. There will be a 60-Day Money Back guarantee. The center will have up to date equipment, and well trained friendly staff. The center will not have huge inventory as it is only going to sell vitamins and supplements. However the center will make sure to offer quality products and excellent services to customers. The center will try to reach an agreement with vitamins and supplements providers such as GNC. The trainers will be professional and will use the latest training programs in order to provide the customers with the best expected results.

Location

The proposed location for the Elite Fitness Center is downtown Cleveland, on Superior Avenue, specifically between East 9th and East 4th Streets. This location is in the middle of downtown Cleveland. There are many banks within either walking distance or a few minute commute. With special promotion and effective advertising, some banks will be willing to subscribe to one of the centers corporate membership plans. This location has several advantages such as: it is easily accessible, it is in the middle of downtown which means people from either side of Cleveland will not have problems getting to the center, it is close to many banks, to Cleveland State University, and to major hotels and buildings in the city. With the centers various short term membership plans, even visitors who are staying at nearby hotels might be willing to become customers to the center during their visit. There is noticeable potential growth in the city such as the building of the new convention center on Superior Avenue, the expansion of Cleveland State University, and the building of Clevelands Casino. However, there are few disadvantages with this location such as traffic in the city. Sometimes construction work in the city creates congestion. The weather of Cleveland also creates
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congestion, often in the case of heavy snow, and blizzards. The Elite Fitness Center will have a decent size building, or it can occupy an entire floor in one of nearby buildings. There are several parking lots in the area, which will save the customers the hassle of looking for places to park their cars. There is also a bus route close to the center. The two competitors are located in downtown as well. Fitworks is located on Euclid Avenue, and Rezults Downtown is on West 3rd Street. Having the two competitors close to Elite Fitness Center might not affect its business significantly. With effective advertising, customers will have several reasons why to choose the center, such as: the amenities, the services, skilled personal trainers, and up to date equipment.

Legal Environment

The Elite Fitness Center will obtain the required licensing and authorizations. It will follow all the regulations and rules imposed by the state of Ohio. The center will make sure all the equipment in its facility is proven and safe. The center will run background checks, and drug testing checks for all members of its staff. The center will try to get the required licensing from suppliers for selling their vitamins and supplements. The center will obtain full insurance for its building and equipment.

Personnel

The Elite Fitness Centers staff will consist of skilled trainers, professional instructors, such as yoga instructor, cleaning personnel, and front desk customer service representatives. The total number of staff members will be 12. Every member of the staff will be paid on a salary basis, twice a month. At the beginning, I will hire contract workers to do all the necessary installation, and interior design work, but once it is all done I will hire workers, trainers and instructors to work at the center.

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Inventory

The Elite Fitness Center will not have a huge inventory. It will primarily offer services. Its inventory will consist of the vitamins and supplements, and the smoothie bar items.

Suppliers

The Elite Fitness Center will have suppliers from which it will buy all the necessary equipment. Then, the center will have regular suppliers from which it will buy all the vitamins, supplements and the smoothie bar supplies. The center will look for high quality products from reputable suppliers. Below is the contact information for some of the centers suppliers:

1- Sole Fitness 866-780-Sole (7653) http://www.soletreadmills.com/Ellipticals 2- Treadmill World 1-800-928-1258 http://www.treadmill-world.com/ 3- American Fitness.net 8630 SW Scholls Ferry Road Suite 323 Beaverton, OR 97008 800-895-4181 http://www.americanfitness.net/wholesalefitnessequipment.html

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VI.

Management and Organization

The structure of the Elite Fitness Center will consist of instructors, personal trainers, customer service representatives, cleaning staff, and child care employees. I will be the one in charge of managing the center.

VII.

Startup Expenses and Capitalization

The Elite Fitness Center will need a startup budget of about $1,500,000. This budget can be broken down as follows:

Equipment Expense $600,000 Installation and interior design expenses Rental expense (one year) ... Advertising Expense 600,000 250,000

.. 50,000 $1,500,000

Total Startup expenses .

The prices of the equipment were obtained from the suppliers websites. I will apply for a loan of $2,250,000 to cover the startup expense and the ongoing (operational) expenses such as salaries expense, insurance expense, inventory expense, utilities expense, and ongoing advertising expense.

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VIII. Executive Summary

This business plan is to open a fitness center in downtown Cleveland. The center will be called The Elite Fitness Center. It will be located in the middle of downtown, Cleveland on Superior Avenue (check the attached map to see the proposed location). The center will offer a full range of services to customers with various membership plans. Customers can enjoy the numerous amenities the center offers. The center will offer many services such as: the latest cardio equipment, group fitness classes, private women workout areas, play-land childcare centers, personal training, saunas and steam rooms, tanning services, physical therapy, massage therapy, yoga classes, nutrition program, and other services. The center will offer corporate membership plans. The main target companies for the center will be banks. There are more than 20 banks located in downtown, Cleveland. Most of the banks in Cleveland have major locations in the downtown area, for example Key Bank, U.S. Bank, PNC Bank, Chase Bank, Fifth Third Bank, and Dollar Bank. The Elite Fitness Center will use effective advertising to attract area banks into subscribing to one of the centers corporate membership plans. The center will benefit from more subscribers, and the banks management will benefit from having healthy employees. Studies show that a healthy employee is more productive. Banks management will also benefit from having healthy employees by having huge savings from the employees health insurance expense. It is a win-win situation. The center will have an increasing number of subscribers, and hence generating more revenue and the bank management will have healthy employees that are more productive, and will have huge savings in health insurance expense. The center will face two types of competition, direct competition from other health clubs and fitness center in the area, and indirect competition. The direct competition will primarily come from two fitness centers in downtown: Fitworks and Rezults Downtown. The indirect competition will come from some residential buildings in the area which offer gyms to their residents, and from the increasing number of people who prefer running as an exercise. The center will use different type of advertising to attract customers and to have the name of the center recognized. The center will use printed ads, special logo design, cards, brochures, newspaper ads, interior design, and TV ads. I will spend approximately $50,000 before start up, and I will specify a monthly advertising budget of $7,500 for ongoing advertising. The center will have a system to identify repeat customers and then systematically contact them. The center will look for high quality products from reputable suppliers. The Elite Fitness Center will need a startup budget of about $1,500,000. This budget is needed to cover the total startup expense which includes equipment expense, installation and interior design expense, rental expense, and advertising expense. I want to apply for a loan of $2,250,00 to cover the startup expense and the ongoing (operational) expense such as: salaries expense, insurance expense, inventory expense, utilities expense, and ongoing advertising expense.

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