- ABSTRACT
This document is a Financial Plan for a firm intended to offer physical health and fitness services commonly referred to as a gym. The document contains a summary of the following major components of the proposed business plan: Business background, source of funds to fund the firm and financial projections for the first three years after opening its doors to the first customer. The Financial Plans therefore gives at a glance the financial feasibility of starting the proposed business entity and its projected financial expenses and revenues for the first three years (Sinha 23).
- BUSINESS SUMMARY
- Establishment
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The proposed name for the gym shall be Raynic Inc. This a family owned business whose idea was triggered by the change of lifestyle among the young working class people in Florida who have shown interest in maintaining their physical health. It is anticipated that upon opening its doors to the first clients, Rayinc Inc. shall satisfy this increasing need for keeping fit at a fitness centre that is located conveniently within Florida Town.
- Target customers
The firm will be targeting high income earners within Florida aged between 18-54 years who drive to work and often have little or no exercise. This class of customers is interested in maintaining their physical fitness while at the same time, having an opportunity to network and socialize.
- Range of services
Besides providing facilities for body building and physical fitness, the gym shall offer other services such as swimming, zumba, tanning, Pilates, nutritional programs, personal training and life fitness. This range of service will however be broadened and customized so as to meet any changes in customer needs.
- Competitors
There are many gyms already established in Florida but the anticipated competitors other than gyms include Kids gym, fun centers, Adrenaline Naples, All American Youth Activities and American All Stars. The firm however intends to mitigate such potential competition through innovation in its services and equipment.
- Competitive advantage
Raynic Inc. shall achieve competitive advantage through investing in modern fitness equipment and training its employees to offer high quality personalized services through regular training and adequate compensation.
- SOURCE OF FUNDS FOR FUNDING
Funds play an important role in any given entity that is in business of either providing services, manufacturing or selling finished products (Kotler 48). Although investing and running a gym is less costly, there is need for an evaluation of sources of funding so as to procure funds from the most appropriate source at any given time because of the cost implication and other risks involved.
Bose in his book Principals of Management and Administration describes source of funds as the agencies from which funds are procured (316). The source of funds to fund Raynic Inc. shall fall under the following three categories:
- Long-term Finance
These are sources of funds from which the firm shall procure funds for acquiring fixed assets such as lease and fitness equipments like the treadmills. The long term sources of funds shall include shares, debentures and retained earning repayable over a period of not less than ten years.
- Medium-term Finance
This shall be the category of funds that the firm shall require so as to meet its medium term needs of working capital. The medium term sources of funds shall be debenture holders, financial institutions within Florida, loan from commercial banks and public deposits. The choice of any of these sources of funding shall be to a great extent determined by the prevailing interest rates and other related cost. The lower the interest rates or sourcing costs, the better the option of funding.
- Short-term Finance
This shall be the category of funds that the firm shall require to finance its working capital for a short term, not exceeding one year. Similar to medium- term sources, the anticipated short term sources of funding shall include trade credits, savings, and daily revenue from client’s subscription and commercial banks overdrafts.
- Amount of Money required to start the business venture
The following is a summary of the projected amounts required to start Raynic Inc.
The above start up funds shall be utilized as follows: Capital expenses shall cover procurement of fitness equipment such as treadmills, weight lifting facilities, hot showers, office furniture and assorted consumable. Prepaid expenses shall cover cost such as Start up advertisement, employee training, Electricity bills, water bills, telephone bills, internet connectivity and web hosting services and insurance services. Leasehold will cover rent for the first six months while contingencies shall cover costs such as salaries, replenishing consumables and meeting the day to day short term cash requirement. Given that the business name shall generate an almost immediate cash flow, the amount required to launch and run the gym will be modest.
- How the above projected money shall be raised
The family intending to start the proposed business already has a savings of $63,000.00 which is almost 50% of the required amount to cover Capital expenses. A deficit of $83,735.00 shall be raised as follows:
The amounts required at any given point and the purpose for which they are required shall determine the choice of source funding to be adopted. The cost of obtaining funds from a given source shall also be considered.
- FINANCIAL PROJECTIONS FOR THE FIRST THREE YEARS
The revenue financial projections will be as follows:
- ASSUMPTIONS USED TO COMPILE FINANCIAL PROJECTIONS
The following assumptions have been used to compile the financial projections above;
- Timing of specific expenses or receipts
This is a service provision entity and its highest expense shall be cost of labor. The projected expenses are therefore payments to be made as salaries to employees at 75% of the cash expenses, whereas the remaining 25% shall be day to day operational expenses.
- Changes in specific expense categories
The projection provides for an increase in both revenue and expense. However, revenue growth is expected to be at a higher percentage than that of expense, leading to high profits.
- Trending expenses and revenue items
The projected trend of revenue and expenses is anticipated to retain the trend of growth especially with a strategy of customer retention expected to be applied to grow the customer base.
- ATTACHMENTS
Description Fig#
6.1 Income Statement (Year 1, Quarter 1) 1
6.2 Income Statement (Year 1, Quarter 2) 2
6.3 Income Statement (Year 1, Quarter 3) 3
6.4 Income Statement (Year 1, Quarter 4) 4
6.5 Income Statement (Year 2) 5
6.6 Income Statement (Year 3) 6
6.7 Balance Sheet (Prior to Year 1) 7
6.8 Balance Sheet (Year 1) 8
6.9 Balance Sheet (Year 2) 9
6.10 Balance Sheet (Year 3) 10
Works Cited
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Johnson, W. Powerhouse Marketing Plans: Fourteen Outstanding Real-life Plans and what You Can Learn from Them to Supercharge Your Own Campaigns. AMACOM Div American Mgmt Assn, 2004
Kotler, Philip. Principles of Marketing. New York: Prentice Hall. 1984
Mc Carthy, Jerome. & Pervaleut, William. Applications in Basic Marketing: Clipping from the Popular Business Place. Massachusetts: Irwin Inc. 1994
Peterson, Pamela. Analysis of Financial Statements. New York: John Wiley & Sons, 1999
Rapp, Birger. Understanding Competitive Advantage: The Importance of Strategic Congruence and Integrated Control. New York: Springer. 2005
Simkin, Lyndon. Marketing planning: a workbook for marketing managers. Belmont: Cengage Learning EMEA, 2008
Sinha, Kumar. Financial Statement Analysis. New Delhi: PHI Learning Pvt. Ltd, 2008
