micro enterprise management

7/28/2019 micro enterprise management

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MICROENTERPRISEMANAGEMENT


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Key Issues

whether or not it is a good idea to open anew training facility in downtown London

whether or not is a venture that will proveto be financially sustainable.


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Situation Analysis

The goals of partners Martin Menard and MirellaCraciun are well defined in the presented case. Inpoint form, the four main goals are:

Earn a profit of $10 000 in the first year to bereinvested into the business.

Register four to eight new clients every month(beginning in year 2).

Establish Elite Personal training as the premium

training facility in London. Provide high-quality customer service and long-

lasting results.


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Environmental factors are not as evident in the case asother factors are, however there are a few main points totake out.

The city of London, Ontario is Canadas 10th

largest citywith a population of 356 000 Since 1998, there have been 2000 more people moving into

the downtown district due to a commitment by the city torevitalize its downtown core.

these new downtown residents are young professionals. The business sector in London has also grown substantially

with 74 new stores opening and two major constructionprojects being completed The average annual income of people living in London is

$27 100. This gives an idea of the economic situation in thearea.


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The target market outlined by the partnersconsists of the following four groups:

Business professionals

Sports professionals

Women

University of Western Ontario students.


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The following is a brief size upof the main competitors in theLondon area:

Goodlife

11 London locations (one location fiveminutes away)

Average of 2000 members per gym

5 of these locations are women only

Personal training sessions range from $43to $60, dependant on several factors

Not all trainers certified


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The Athletic Club

2 London locations

Women only sections included

Approximately 8000 at each gym (150taking advantage of personal training)

Personal training sessions range from $43to $60, dependant on several factors


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YMCA

5 London locations

Several personal training packages available,$40 per session, then several packages

TrueStar Health for Women

2 London locations

Approximately 1000 members

One-on-one specialists, $38 to $67 per month,dependant on program


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Herbal Magic

800 customers

Focus on supplements, and nutrition, notpersonal training

Curves

6 London locations 500 women at each location

No personal training programs


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Personal trainers

3 personal training facilities, and 20-25personal trainers working out of theirhome

$50- $85 per sessionCompetition is very high in the London area for fitness

facilities and personal trainers. All options offer

different services and price ranges.


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Financial projections The financial projections for Elite Personal Training

are focused around the fee for each personaltraining session. The hope is that each client willpurchase 48 sessions, and that a certain retentionrate would apply.

They acknowledge that there would be a certainnumber not return after they complete so manysessions and accounted for this.

The partners are willing to be flexible based on theneeds of the client. The decision on pricing isbased on competitions pricing, and the neededrevenue to cover costs and create a profit.


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The financing for the business in the initial stagesinclude $14 000 equity and $24 000 loan from thebank.

The bank is hesitant to give more money until there isany cash generated from operations.

This may not be enough as there are high start upand monthly costs of operating a fitness facility.

Additional personal may be needed and this wouldincrease costs even more, but may increase revenue

The marketing will also prove to be expensive, aspromotion is so important in the success of a newbusiness. Low cost strategies to bring in cliental willhave to be explored.


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The business strength andweaknesses Strengths

Highly qualified trainers that are consistently

updating certification Loyal client base already established Previous management experience Downtown location Diverse skill set between partners

Experience training a wide demographic ofpeople (ages, sexes, etc.) Solid knowledge of the business


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Weaknesses

One partner has no prior funds

All financial liability on one partners shoulders Unsure of the target market

Low cost and low quality equipment in thebeginning

Service could prove to be unaffordable

No price set yet on personal training services

High start up costs


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Alternatives

The decision criteria will be based on profitability, theattractiveness to the target market, the demand for theservice, the intensity of competition, and the overallchance of success.

Opening in a larger market, such as Toronto, would giveaccess to a larger number of people and wealthybusinessmen. The downside if this is the personal costincurred and the inconvenience of moving. Further marketresearch would also be necessary.

Rethinking the entire business plan is a solid alternative. Thiswould require looking at the target market again, and

redefining the short and long term goals. Group rates anddifferent promotional strategies may be in their bestinterest.


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Seeking further financing would help theirchances of success as well. Not having

enough start up money can really handcuff abusiness early and cause the business tocease operations before ever really starting.This would ensure a bigger pool of money togo towards properly equipping the gym andpromoting the business the proper way.

Obtaining additional finance would requirefurther work and may raise monthly costs dueto increases interest payments.

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