Gear for Fitness, Business Plan Example
Words: 3844Business Plan
The purpose of this business plan is to determine the potential profitability of Gear for Fitness. It also serves as a proposal to secure the remaining start-up funds from Angel Investors. Gear for Fitness is a sole-proprietorship that will be owner operated. The business will open for business in January 2016, in Philadelphia, Pennsylvania.
Gear for Fitness will sell all types of fitness gear for the entire family. It will focus on sports specific activities such as running, cross country, hiking, and many other team sports. The athletic gear retailer will sell apparel, footwear, equipment, and accessories. The key brands will be Nike, Adidas, Under Armor, North Face, Asics, New Balance, Saucony, Timberland, and Uggs. This is a start-up company and will open its doors in a centrally located strip mall. The projected sales are significant from the grand opening and throughout the first year.
The company has future plans to open additional locations and to even make their product available online. The growth potential will be directly dependent on the success that the first location of Gear for Fitness has. The company will focus on key opportunities such as expert sales staff and customer service priorities. It will distinguish this athletic gear company from the existing, established competition.
The business will be managed by the owner who will be actively involved in the day-to-day operations. The owner has an extensive educational basis and experience in managing an athletic market. The assistant manager will also provide a vast amount of professional experience and will aid in handling the day to day operations and with building the business. Gear for Fitness has a great potential to be successful in the Philadelphia market. The company will focus on taking business back to a different time when the primary focus was on customer satisfaction.
Gear for Fitness is a new retailer that will offer a vast variety of athletic gear for their consumers. The company will focus on apparel, shoes, and a minimal amount of equipment. We will not only sell the gear to participate in a vast variety of athletic activities, we will also serve as an advisor for the athlete in efforts to answer any potential questions and accommodate their athletic needs.
Mission Statement: to inspire the inner athlete of every individual regardless of age, gender or physical capability and to provide the necessary gear to initiate the start of their own athletic accomplishments.
Company Goals and Objectives: the goals of Gear for Fitness is to turn a profit within the first year of business. Within three years, the goal is to have expanded to two locations as well as entered the online market. The company’s goal it so be a leader in customers service and to have built a solid basis of loyal customers from the moment they open their doors. It is hard to measure customer satisfaction, however each sales receipt will have a phone number for feedback and overall customer experience.
Business Philosophy: the business philosophy is pride, integrity, and determination.
To whom will you market your products? The target market is vast, however the primary focus of this location will be the young professionals.
Describe your industry. The athletic industry in Philadelphia, Pennsylvania is vast and growing. The short-term and long-term changes will include new athletic opportunities and focuses of the target demographic. The company will be poised to take advantage of these changes because they carry not only a basic line, but they provide gear for a vast variety of sporting activities.
The most important strengths that Gear for Fitness will the employees and knowledge they bring to the store. The gear that the company will carry also provides a strong basis for the company to succeed. There are many large athletic retailers in the market, and they have established their reputability which is a significant strength for the competitors. However the experience that Gear for Fitness will provide for their consumers with their knowledge, customer service priority, and athletic background will create a significant advantage for this new venture.
Legal form of ownership: Sole proprietor. This formation was selected because it has a single owner and the best option for Gear for Fitness. “A sole proprietorship is basically an unincorporated business owned and run by one individual (no partners are involved), with no distinction between the business and its owner. As a sole proprietor, you are entitled to all profits and are responsible for all your business’s debts, losses and liabilities” (Beesley).
The products that Gear for Fitness will carry includes athletic shoes for all types of sports, athletic apparel, and select equipment. The company will have a foot image machine with will help determine the best type of footwear and accessories that will best fit the consumer. The company carries only performance gear that has built a reputation with their brand. The services include friendly knowledgeable staff that can guide a first-time consumer to the most novice athlete.
The product and services provided by Gear for Fitness provides a significant advantages for the company in their new market. Each employee will go through an extensive training program which will provide them knowledge on a vast variety of athletic equipment. The level of customer service, product knowledge, and enthusiasm to encourage the athletes regardless of the level of expertise is unique in the athletic gear industry. It is the primary factor that will distinguish Gear for Fitness from its competition.
The pricing of product or services is reasonable. Gear for Fitness will offer a hand-picked selection of high-end gear for the novice customer, however the primary focus of the company is to provide quality, affordable products. The price range for shoes range from $49.99 – 119.99. The price range for clothing is as broad as the shoes. The customer service and product expertise is a free service offered by Gear for Fitness and provided to every customer that enters the building.
Philadelphia is a great place to open a new athletic gear retailer. The city of brotherly love has created several initiatives to push their city into being more active and healthier. “Our focus on Healthy Communities in Philadelphia2035 is the result of an exciting new partnership with the Philadelphia Department of Public Health, which engaged the City Planning Commission to be a part of Get Healthy Philly. This $25.4 million dollar initiative is made possible by funding from the Department of Health and Human Services, and involves a number of city agencies and private partners working together for a healthy, active, and smoke-free Philadelphia” (Healthy Communities).
A survey was compiled from students who attend Philadelphia University. Of the three hundred students interviewed the results showed a significant lean towards an active lifestyle over those who choose to not participate in athletics. The following are the results of the survey:
Do you participate in any type of athletic activities more than four times a week? 62% answered yes.
Do you look for new activities which you can join to stay fit? 58% answered yes.
Do you own athletic gear and equipment? 75% answered yes.
Is staying healthy important to you? 65% answered yes.
Do you have an athletic gear store that you always go to? 69% answered no.
Would you return to a retailer if they provided excellent customer service and reasonable prices? 52% answered yes. (the majority of the 300 individuals who were interviewed provided a side note that brand and fashion were also important for finding a retailer they would favor over others)
Do you think there is a need for a new athletic retailer in Philadelphia? 72% answered yes.
Philadelphia is a host of many athletic activities. The city is full of walkers, runners, bikers, roller bladders, and so on. They are host to many races and events for causes and recreation. “For visitors to Philadelphia who are passionate about the great outdoors, a visit to Fairmount Park — the world’s largest municipal park — is just the beginning. Opportunities for everything from hiking and biking to blading, boating and floating are all within easy reach of Center City” (Philadelphia Union). The University hosts many intermediate games which are open to the general public. The city has hundreds of gyms in the area that host a variety of classes to meet a variety of fitness needs. The city has hundreds of organized sports groups of ages from children all the way to senior citizens.
What is the total size of your market: there are 1,553,000 million people living in Philadelphia.
The current demand in the target market demands having access to fitness gear for all different activities.
The trends in target market is to remain active. The latest and greatest in sporting events seems to attract a large crowd. Reaching the consumer is as easy as promoting Gear for Fitness at the local recreational center or the University.
The Growth potential and opportunity for a small athletic retail store is significant. Take for example Bob Roncker in Cincinnati, Ohio. They focus only on running shoes and gear, and their business has demanded that they expand to four locations. The potential for growth is promising if business is operated positively.
High capital necessary for start up
High level of inventory on-hand
Reaching the vast target market
Training and skills of employees
Creating a name for the company
The plan to overcome the barriers are to raise the capital through an angel investor and obtain a short-term loan to purchase the inventory and operate for the first few months. This will also cover marketing costs which will create company name awareness and reach the vast target market.
There are select factors that will affect Gear for Fitness.
Change in technology is not a significant concern facing Gear for Fitness.
Change in government regulations will require that the company follows up with the legalities that are mandated for doing business in Philadelphia.
Change in the economy will require Gear for Fitness to change with their consumer demands. If the economy is struggling, carrying a larger selection of lower-priced athletic gear would be an effective response to the change in the economy.
Gear for Fitness has a variety of athletic gear and equipment that meets the demands of the consumers in their Philadelphia market.
Features and Benefits
A variety of brands and athletic performance recommendations.
It benefits the customer because regardless if they are running, walking, training, there is variety of brands and selection options for the customer to choose from.
Gear for Fitness has a variety of athletic apparel for fashion and performance needs.
The benefit of purchasing athletic gear at Gear for Fitness is they can purchase apparel and footwear at the same location. The price is reasonable and selection is significant.
Gear for Fitness will have select equipment such as tennis rackets, balls, roller blades, indoor equipment such as treadmills, and bike stands. The equipment will be expanded dependent upon market demands and needs.
The benefit of purchasing equipment from Gear for Fitness is the ability to purchase all the products under one roof and at a price that is lower than their competitors.
The company will sell water bottles, workout towels, ipod and phone holders, headphones, and bags along with other misc. gear that is needed for all different activities.
The benefit of one stop shopping and the availability of misc. gear that the athlete may not think of needing prior to shopping at Gear for Fitness.
The after-sale services will include a 30 day satisfaction guarantee, a 30 day full-refund policy, and any defects that fall outside the 30 day in store return will be shipped to the manufacturer for the customer.
The targeted customer of Gear for Fitness will focus on the 20-24 and 25-29 demographic. These brackets represent a significant amount of the population as shown in the chart below.
The characteristics is these are the young professionals who have the residual income to spend on athletic equipment. They are also the target customer who would most likely participate in a variety of athletic events. They are located in Philadelphia County and have easy access to Gear for Fitness.
The demographic profile includes:
- Male and Female
- Philadelphia County
- 30,000 and up
- College Students to Young Professionals
- Philadelphia University
There are many existing athletic retail shops in the Philadelphia market. These include large athletic gear retailers and sports specific small box stores.
- Dicks Sporting Goods 20 Franklin Mills Blvd, Philadelphia, PA
- Mitchell & Ness 1318 Chestnut St, Market East Philadelphia, PA
- Wayne Sporting Goods 124 E Lancaster Ave, Wayne, PA
- Fitness Exchange multiple locations
- Modell’s Sporting Goods 3400 Aramingo Ave, Philadelphia, PA
These are the major competitors which will compete across the board with athletic gear including shoes and apparel. The locations are all centrally located in Philadelphia which provides easy access for consumers.
There are many indirect competitors that sell athletic gear and equipment that specialize in a specific sport such as biking, hiking, scuba, and other sports specific focuses.
The product and services provided by Gear for Fitness will be highly competitive with other retailers. The niche is that we will provide the latest and greatest in athletic gear at an affordable price. The expertise that the staff will provide will set Gear for Fitness apart from the big store competitors who typically employ individuals to clerk the customers instead of being able to provide education and advice.
The marketing strategy is to get the customer into the store, and to allow the customer service and product selection to speak for itself.
The promotion for Gear for Fitness will be to set up coupons at local gyms, sporting facilities, and the University.
Advertising: We will utilize social media as our primary form of advertising. It is low-cost and has substantial customer reach. The company will place a few radio advertisements and one television ad prior to the grand opening. Gear for Fitness will depend on work of mouth and customer referrals for the main source of advertising.
The image of the project is to show how accomplished one feels when they take their health and athletic participation to a new level. The customers need to see through every avenue of advertising that Gear for Fitness takes their goals seriously and will aid them in reaching their outcome by ensuring they have the proper equipment.
The graphic support will include logos on letters, brochures, signage and business cards. We will use two or three core logos that inspire athletes to participate and perform.
The startup promotional budget is set at $15,000. The promotional budget is low because the primary form of advertising will be through social media and low-cost advertising methods.
The ongoing promotional budget will be $10,000 yearly. This can be reevaluated depending on the company success and need for more or less advertising.
Gear for Fitness has taken the position of quality product at affordable prices. In order to remain price competitive while maximizing product, the company would analyze the best potential price bracket. “Analyze your cost pool structure and cost elements, bidding practices related to these pools, and disclosure statement details to determine if you are competitive in a particular market” (Five Key Components). The prices will be set competitively so that it provides an opportunity to maximize profit and still stay remain within their affordable pricing policy.
The pricing strategy fits directly with the competitive analysis. The majority of the competitors mark their product up significantly, so remaining competitive with pricing should be easily accessible. Pricing provides a significant competitive factor. Customers will go to Gear for Fitness because of their pricing. The customer service and product selection will sell itself.
The customer service will dictate that the customer is always right. The training and knowledge of our employees will provide a customer experience that is unlike the majority of our competition.
The location of Gear for Fitness is located in a strip mall in central Philadelphia.
Location is important to the customer because it needs to be easily accessible. The location is right off the highway and provides ample parking for the strip mall shoppers. There is also street parking right in front of the building. The image of Gear for Fitness is supported by the strip mall location. There is competition located within miles of the selected location however this does not pose a threat to Gear for Fitness.
The distribution channels is that the manufacturers send the product directly to the retail store. The retail store sells the product directly to the customers. Gear for Fitness has not considered a virtual site at this point, however it is a consideration in the three year plan based on the success of the store.
Now that you have described your products, services, customers, markets, and marketing plans in detail, it’s time to attach some numbers to your plan. Use a sales forecast spreadsheet (this one or a spreadsheet that is of your own making) to prepare a month-by-month projection. The forecast should be based on your historical sales, the marketing strategies that you have just described your market research, and industry data, if available.
Remember to keep notes on your research and your assumptions as you build this sales forecast and all subsequent spreadsheets in the plan. This is critical if you are going to present it to funding sources.
All product carried in Gear for Fitness is shipped in from various manufacturers. The company has contracts with all their vendors which will ensure that product will be replenished quickly.
Each style of product will have at least one of each size available for immediate purchase, and core sizes will have multiple available to prevent customers from having to wait for their product.
The size of the building is 15,000 square foot including showroom and back stock area.
The store will be in a free standing strip mall
All zoning regulations have been complied with in accordance to the CITY OF PHILADELPHIA DEPARTMENT OF LICENSES & INSPECTIONS
All power and utilities are included in the lease of the location
Gear for Fitness is located in Central Philadelphia and has easy access in the front for their customers, and a backdoor for shipment and receiving.
There is street parking and a parking lot close to the strip mall which makes it easily accessible for their consumers. It is close to the freeway and provides many shopping opportunities in one location.
The occupational expense includes a rent of $2,000 monthly which includes utilities and maintenance. Insurance yearly will cost $800. The remodeling costs are limited to changing fixtures and cosmetic adjustments which will not reach more than $10,000.
The hours of operation are Tuesday through Sunday 9:00 am – 6:00pm
Licensing and bonding requirements: Gear for Fitness has complied with their licensing requirements for a retail sales location. They have also acquired 100k surety bond.
Permits: the State of Pennsylvania has provided Gear for Fitness with a general business license. The company has also registered for all state and local taxes.
Health, workplace, or environmental regulations: The workplace environment will comply will all regulations dictated by the State of Pennsylvania and the City of Philadelphia. This includes health compliance, employment compliance, and safety compliance.
There are no special regulations covering your industry or profession
Zoning or building code requirements are regulated by the strip mall owners
Insurance coverage: Gear for Fitness has insurance covering the product inside their locations.
Trademarks, copyrights, or patents: the name Gear for Fitness is registered in Pennsylvania so it cannot be duplicated without owner consent.
Number of employees: the company has six sales people, an assistant manager, and an owner.
Type of labor: young professionals who are familiar with athletics and are willing to comply with extensive training.
The employees were recruited from the local university.
The young professionals are in college and depend on a job to provide income. They also know enough about sports and the product that training should not be too difficult for them.
Employees will be paid hourly, Assistant manager hourly, Owner salary.
The company will contract professional help such as lawyers, accountants, and other professional services that will surface for the company.
The company has a back stock area where the product will be stored until the customer purchases it. The majority of the stock will be replenished automatically based on product purchased.
The company has invested $355,000 in merchandise for the grand opening of the store.
Key suppliers are Nike, Adidas, Under Armor, North Face, Asics, New Balance, Saucony, Timberland, and Uggs.
Each product line will have at least one of each size in stock, and two for more popular sizes and styles.
All product is shipped directly from the manufacturer. There are existing agreements in place for each vendor. The product is shipped with an invoice and is due within 30 days of receipt.
Gear for Fitness will be owner operated. As owner of the new retail chain, the primary responsibilities of day-to-day operation will be individually determined. Holding a Bachelor’s degree in Business and a minor in finance, there is a strong educational basis for the management of this new retail store. In addition, having worked in management of a large retail store for over five years, the basic functions of business have been mastered. Gear for Fitness will also employ an assistant manager who will oversee all areas of operation with the owner. The plan of continuation if the owner is unable to continue operation, the responsibility will then become the responsibility of the assistant manager. It will ensure there is no lapse in business and both parties can utilize their time off as mandating.
Professional and Advisory Support
- Assistant Manager
- Attorney (Contract)
- Accountant (Contract)
- Insurance agent (Contract)
- Key Advisors
The proposed startup expense is to reach out to two Angel Investors for a total investment of $290,300. The pros of “Angels are a good fit for many startups – typical investments are between $25,000 and $1.5 million. An angel could be your neighbor. Accessibility isn’t a big issue with angel investors; most cities and larger towns have angel groups or associations. The Wall Street Journal offers a great tutorial on finding angel groups here. Due diligence is usually fast, and the investment also usually comes in the form of a lump sum” (Connell). The investors will have no controlling interest and will have a repayment of five years. The reserve for contingencies will be set at $50,000. This reserve was recommended by Bob Roncker, a running store owner who has successfully opened four locations around Cincinnati Ohio. On his advice, this amount will cover any unforeseen expenses including inventory and labor in the event the store does not generate the sales expected immediately.
Beesley, Caron. Sole Proprietorship—Is this Popular Business Structure Right for You? 27 Feb. 2013. Web. 20 Mar. 2015.
Connell, O’Brian. Pros and cons of venture capital and angel investing. 2014. Web. 10 Mar. 2015.
Davison, James. Athletic Retail Owner. Interview. 10 Mar. 2015.
Five Key Components of Competitive Pricing. 1 Apr 2014. Web. 15 Mar. 2015.
Healthy Communities: Get Healthy Philly. 2015. Web. 19 Mar. 2015.
Philadelphia Union. Visit Philadelphia. 2015. Web. 19 Mar. 2015.
Profile of General Population and Housing Characteristics: 2010 Philadelphia. 2010. 20 Mar. 2015.
Roncker, Bob. Bob Roncker’s Running Spot Owner. Interview 24 Mar. 2015.
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