crossfit ozona pp final
TRANSCRIPT
Industry Problem
Convincing prospective members that an intense, unconventional style of training is possible for everyone.
You do not have to be fit to attain fitness!
Pain Point StoryIt is possible for everyone!
Of all of the people I spoke to about the idea of joining a Crossfit gym, one was extremely against the idea. His name is John, and he has progressively gained weight since college ended. He has been announcing lifestyle changes for weeks and says he is working out again. This means 2 or 3 days in the gym, with light weights and a treadmill for 10 minutes. He complains about no results every day. Our discussion about Crossfit was very short. I explained what we do, how effective it is, and that its incredibly fun. He disagrees, however, and cuts me off insisting that he cannot do the lifts that we perform. He “has no desire to work that hard and climb ropes and stuff”. This is the perfect example of the problem facing a new Crossfit gym. John is worried and ashamed to try new, difficult ways of training, even though his current workouts admittedly do not work. Convincing people to at least try a workout might be the most difficult part. We have to empower our customers! The picture above says it all. We have to ask, “How bad do you want it?”
Mission
Enhanced lifestyle through unique fitness.
Values
● Community● Determination
● Passion● Humility
● Transparency
Vision
Safe, fun community of athletes
Crossfit Key Performance Indicators
Customer Satisfaction Services Offered/Capabilities
Staff Memberships
Crossfit Market
We're not serving Globo-Gym junkies. We serve the people who want to get fit, and who aren't afraid of the work that's
involved!
Crossfit Market
There are 4 Crossfit Affiliates in a 15 mile radius of our location in the Palm Harbor/Clearwater area.
There are two LA Fitness gyms in the same radius. There are no Crossfit gyms within 5 miles of our location. Results of an internet survey we held via Facebook yielded
that 67% of Ozona and Palm Harbor residents that took it were interested in trying Crossfit.
Crossfit Pain Point Quote
“You know what releases endorphins and is addictive? Fun. If you are having fun while exercising, not only will you be less focused on your labored breathing and heavy limbs, but you will come to associate exercise with fun, further increasing the likelihood that you will re-engage in said
activity.”
Top Competition
Crossfit Triumph Market: North Pinellas County Cost: $150 per month Advertising: Blog, Facebook, Word of mouth Weakness: Lack of clientele in No. Pinellas, Tarpon Area
Top Competition
Crossfit RebelsMarket: Clearwater/Dunedin/Largo
Cost: $189 per month
Advertising: Website, Blog, Word of Mouth
Weakness: Location tucked in industrial warehouse park. Hard to find out about.
Top Competition
LA FitnessMarket: Palm Harbor, North Pinellas County
Cost: Roughly $55 per month
Advertising: Viral Fliers, Internet, Radio, Television, Newspaper, Mass Marketing
Weakness: Same “large gym” feel. More of a social club than fitness center. No sense of community. Members are more of a number, less of a person. This leads to lack of accountability and use.
SWOT
STRENGTHS Educated and passionate owners/trainers Team work outs Community/family environment Developed unique fitness program Appeals to serious/dedicated athletes Consumer goal oriented Short effective workouts leave time for customers daily
tasks/priorities
SWOT
WEAKNESSES Small business Name not well known Membership is small No traditional promotion/advertising Program design may not appeal to all athletes
SWOT
OPPORTUNITIES Build brand loyal consumers Appeal to all fitness levels Provide consumers with the means to better their fitness
and life Word of mouth advertising and paid advertising to enhance
business Increase membership and locations
SWOT
THREATS Large corporation/24hr/Large Gym Companies in the area Pricey membership compared to said Large Gyms May be intimidating to the casual fitness consumer People prefer own workout routine, fitness alone, or on own
time Consumers locked into other memberships Lack of knowledge of programs has reputation for causing
injuries
Business ModelDeliver excellence in 3 areas:
Coaching
Training experience
Everything else (billing systems, foundations classes, facility, etc.)
Be inclusive
Make sure our culture welcomes new athletes and doesn't become a clique of cool people that puts off the neophyte.
Play together - do community events, Crossfit events, have parties, have fun!
Do business with athletes once - we want to feel like a sports team not a gym where we're constantly selling to our athletes. For us this means no supplement sales, membership promotions, upsells, contracts, etc. This philosophy underlies so many things we do.
Be Principal based:
Go the extra mile for our clients
Treat people the same way I'd want to be treated, even if it involves tough feedback or the answer "no.”
Business Model
The three areas of the business model are inclusive of everything to run a gym based on integrity.
We will not market the same way most business do. We will let our athletes testimony be our biggest ally.
We will run a blog with the Workout of the Day(WOD), member stories, pictures and videos, as well as nutritional tips and healthy lifestyle promotion.
Social media will be a tool used to connect with current and prospective members.
There will be no commercials or ads. We will grow through word of mouth. Delivering a great product is what drives our business model.
Business Model
Memberships will be all inclusive of the gym at $125 per month.
Inexperienced members will go through classes to learn the exercises which are an additional $50 per class.
There is no sign up fee and no hidden charges.
Pro Forma Statement
Expense Cost ($)
Security Deposit on Warehouse $2000.00
First 6 Months Rent $6000.00
Computer Systems/Office Furniture $1000.00
Crossfit Affiliation $3000.00
Weight Equipment $17,000.00
Insurance $1000.00
Legal $100.00
Office Supplies $600.00
Slush Fund(Unexpected) $10000.00
Total Start Up Expenses $40,700.00
Projected Income
We have set a goal of 20 members in the first three months.
At $125 per month this comes to $2,500 a month, not including any more growth or the introduction classes.
Classes come out to around $2,000 if each member takes at least 2 intro classes.
20 members for the first full year would cover $30,000 of the opening expenses. If we project to at least 30 loyal members in the first year, we would be making money.
30 members would equal $45,000 without introduction classes. This is a realistic goal that we can reach.
We plan for high expenses and lower sales in hopes that we are pleasantly surprised by the success that we have.
Projected Income
We have set a goal of 20 members in the first three months.
At $125 per month this comes to $2,500 a month, not including any more growth or the introduction classes.
Classes come out to around $2,000 if each member takes at least 2 intro classes.
20 members for the first full year would cover $30,000 of the opening expenses. If we project to at least 30 loyal members in the first year, we would be making money.
30 members would equal $45,000 without introduction classes. This is a realistic goal that we can reach.
We plan for high expenses and lower sales in hopes that we are pleasantly surprised by the success that we have.
Quarter 1 RevenueProjections● In our first three months we initially projected 20 new
members. For the sake of caution, our projections will assume only 10 members in those three months.
● We will assume each new member will take an average of two introduction classes at $50 per class.
New Members(Q1)
10
Monthly Dues $125 per month ( x 3 months)
Classes $50 (x 20 classes)
Total Revenue (Q1)
$4750
Quarter 2 RevenueProjections● In the coming quarters we temper our expectations.
We will expect 2 new members per month, making a total of 6 new members for Q2.
New Members(Q2)
6
Monthly Dues $125 per month ( x 3 months)
Classes $50 (x 12 classes)
Total Revenue (Q1)
$2850
Quarter 3 RevenueProjections● For Q3, we are expecting the same growth. Six more
new customers over the three month span.
New Members(Q3)
6
Monthly Dues $125 per month ( x 3 months)
Classes $50 (x 12 classes)
Total Revenue (Q3)
$2850
Quarter 4 RevenueProjections● For Q4, we have factored in the holidays and project 5
new members for the final three months of the year.
New5 Members(Q4)
5
Monthly Dues $125 per month ( x 3 months)
Classes $50 (x 10 classes)
Total Revenue (Q4)
$2375
First Year Revenue Totals
● The first year total income is $12825.
Q1 Total $4750
Q2 Total $2850
Q3 Total $2850
Q4 Total $2375
Full Year Revenue $12825
Losses Over 3 Years
● We have projected the first year to cost $10,200 per quarter.● For the years that follow, running the gym is a minimal cost.
Years two and three are as follows:
● Years two and three would cost $4500 per quarter. As the gym does not require AC, the power bill is minimal and is included in the rent.
● This allows for our second year to have a large amount of potential to make money.
Rent/Year $12000
Crossfit Affiliation/Year $3000
Insurance/Year $2000
Slush Fund/Year $2000
Total Yearly Costs $18000
Projections Summary
● While the first year may prove to be difficult, a business like this has much potential in the years to come. Year two we will reach our break even point even with no new growth.
● And with word of mouth and reputation being built, growth is inevitable.
● All projections are “worst case” scenarios. Losses are as high as possible and profits as low as possible.
● We want to be prepared for anything.● Eventually other things such as t-shirt sales will help to
boost profits, as well as affiliating with local sports teams, first responder departments and working with charities will grow our brand and bring new members.
Crossfit Ozona
The following is a break down of Crossfit Ozona's cash flows for the next three years, quarterly.
This factors in our income, as well as cash we have set aside to invest into the start of the gym which is represented as “cash”.
All three years are realistic goals. In year two we account for actually losing members over that time. In year three we expect to have established ourselves in the community enough to see large gains in membership.
Year 1 Cash Flows
Cash Flows Q1 Q2 Q3 Q4 Year 1
Operations
Net Income 4750 2850 2850 2375 $12825
Cash 6000 6000 6000 6000 $24,000
Investing
Equipment 3750 3750 3750 3750 $15,000
Office 200 200 200 200 $800
Financing
Rent 3000 3000 3000 3000 $12,000
NET CASH FLOW
$3800 $1900 $1900 $1425 $9025
Year 2 Cash Flows
Cash Flows Q1 Q2 Q3 Q4 Year 2
Operations
Net Income 8750 8750 8750 8750 $35,000
Cash 3000 3000 3000 3000 $12,000
Investing
Equipment 3750 3750 3750 3750 $15,000
Office 200 200 200 200 $800
Financing
Rent 3000 3000 3000 3000 $12,000
NET CASH FLOW
$4800 $4800 $4800 $4800 $19,200
Year 3 Cash Flows
Cash Flows Q1 Q2 Q3 Q4 Year 3
Operations
Net Income 12,500 12,500 12,500 12,500 $50,000
Cash 1500 1500 1500 1500 $6,000
Investing
Equipment 2250 2250 2250 2250 $9,000
Office 200 200 200 200 $800
Financing
Rent 3000 3000 3000 3000 $12,000
NET CASH FLOW
$8550 $8550 $8550 $8550 $34,200
Balance SheetOpening Day End Y1 End Y2 End Y3
ASSETS
Current
Cash 9000 10,000 20,000 40,000
Equipment(Depreciated Worth)
15000 10,000 20,000 25,000
TOTAL ASSETS
24,000 20,000 40,000 65,000
LIABILITIES
Facilities(Rent) 2,000 12,000 12,000 12,000
Crossfit Affiliation
3,000 3,000 3,000
New Equipment 15,000 15,000 9,000
Wages 10,000 25,000
TOTAL LIABILITIES
$20,000 12,000 40,000 49,000
Net Worth $4,000 $8,000 $0 $16,000
Crossfit Ozona
The balance sheet for a crossfit gym is fairly simple. The only true asset we have other than cash is our equipment. In the first two years we will spend $30,000 and another $9,000 in year 3, and assume its depreciation in the Assets columns.
Our liabilities are limited as well as we have saved the majority of the money needed to open the gym. Therefore, we have no loans or any real debt.
Financial Ratios
● The following slides will include the key ratios Crossfit Ozona will be using to keep track of its business.
● As the first year is a bit of a struggle, the following will include the next three years of projected ratios.
Gross Margin Percentage
Gross Margin
Year 1 Year 2 Year 3
0% 35% 55%
As you can see, in years two and three, the gym begins to profit and our margins skyrocket. Costs will stay low, and revenue increases.
Net Operating Income
Year 1 Year 2 Year 3
($9725) $12,400 $27,400
Net Operating Income
While we lose money in the first year, in the following years our operating expenses stay the same and profits increase. As a result, the Net Operating Loss in year one becomes a Net Operating Income.
Net Profit Margin
Another good indication that the business will grow rapidly following year one. In year two, $.35 of each dollar goes to the bottom line, while it is $.55 in year three.
Net Profit Margin Year 1 Year 2 Year 3
(.76) 35% 55%
Liquidity Ratios
Knowing the liquidity of our business is important. The current ratio is more in line with our business, however, using our gym equipment as “inventory”, it gives us a good idea of short term ability to pay for debts including our most expensive asset.
Year 1 Year 2 Year 3
Current Ratio 2.3 1.1 1.3
Quick Ratio 1.5 .63 .82
Formulas for Ratios
Key Financial Ratios Formula
Gross Margin Gross Margin = Gross Profit/Revenue
Net Operating Income NOI = Gross Income – Operating Expenses
Net Profit Margin Net Profit Margin = Net Income/Revenue
Current Ratio Current Ratio = Current Assets/Current Liabilities
Quick Ratio Quick Ratio = Assets – Inventories / Liabilities
Milestones
Level 1 Crossfit certification
Create Business Plan
Handle Legal Work
Develop Website
Negotiate Lease
Order Equipment
Apply/Pay for Crossfit Affiliation
Set up Equipment
Finishing touches to gym
Grand Opening
1st member
20 members
Open for 1 year
Break even/Earn profits
Call to Action
Crossfit is changing the way people exercise everyday. It is revolutionizing the fitness world and the key to its success is its simplicity. At Crossfit Ozona we use this “back to basics” approach, along with a strong sense of community and encouragement to ensure all of our members are reaching and exceeding their goals. Take a chance and step out of your comfort zone. Come check out our facility and people, and we promise your workouts, and possibly your life, will never be the same.