King's Fellowship

Business Plan:

Treign Fit LLC.

Executive Summary 

Jordan Alturas, Pastor at The Fellowship Church, a CrossFit coach and former owner-operator of a Chick-fil-A, is opening a CrossFit gym in State College, where he will serve as the owner as well as the head coach and will run it with his wife Chantel.  The following business plan will focus on the business, however the main purpose of this business is to make The Fellowship Church financially sustainable, and provide opportunities for community engagement.  The gym, Treign Fit, is already a registered LLC in the state of Pennsylvania. There are multiple fitness centers/gyms in the area, but only one other CrossFit gym, which doesn’t stand out from the competition. These gyms cater to the locals as well as the University Campus of Penn State. 

Jordan used to coach at a local gym that was previously affiliated with CrossFit. He understands the competition, and the customer pool, and has a well-thought-out plan to bring the best of CrossFit fitness to the State College area. The CrossFit name already carries recognition and respect, therefore this will augment our marketing plan with residents as well as students.

The primary focus of the gym will be group fitness classes, a hallmark of CrossFit fitness. The fitness programs/plans are inspired by two premier fitness centers in the country. The gym will be equipped with a comprehensive range of fitness gear, best-in-line and extensive enough to facilitate rich programming, as well as a diverse range of fitness activities. The owner aims to capture the market by ensuring a consistent and communal approach to fitness, which is missing from the competition. The pricing is also highly competitive, and easily accessible, unlike most fitness centers in the area that require an appointment to listen to a sales pitch before being able to access pricing. We will communicate prices and make joining a painless process vía our website and potential clients will see multiple fitness services, including group coaching, high-intensity bodybuilding, personal training, etc., in order to attract the largest possible customer pool.

We are planning on offering a full-free week of group classes to bring in as many people as possible to experience our gym and get a feel for the place and our programming. We are also introducing very generous membership discounts for the first two months and a permanent 20% discount for students, teachers, and first responders. This will make our already attractive pricing even more compelling. Our easy-to-access location will also add to our attraction.

Our primary income source would be the membership fees, and we are planning three different tiers: $100, $125, and $150 per month. The secondary income source would come from our sales of gym swag, proteins, and some other products our members are likely to buy. Based on our conservative projections, we expect to reach around 240 members by the end of our first year and will be cash-flow positive from the fourth month onward. 

Market Analysis

Target Market

Our target market will consist of two main pools: State College residents and students in the area. If we consider the students living in State College, there is a significant overlap between the two populations. However, one major difference is “flux.” The State College population is fairly consistent while the University creates a cyclic situation where new students will replenish the pool as old students graduate and leave the area.  This works to our advantage as there is always a constant stream of new potential customers moving into the area from all over the world.  

State College

State College – The central Pennsylvania municipality which is at the center of the area we are establishing this fitness center in has a population of about 40,500. The population estimate for the Centre Region, which includes several surrounding Burroughs which carry the State College address, would be as high as 105,000 people.

Some factors point towards a population skewed quite heavily towards students. One is the median age of 21.6, which is over 16 years below the national average. Another is relatively low median income. This is quite promising since it indicates that the bulk of the overall population can be our target market. As per the government estimate, only about 13% of the population is above 65 or under 18, so about 87% or 35,235 people are between the ages of 18 and 65, within the borough, and an additional 40,000 if we include the surrounding boroughs of Patton, Ferguson, and College, which are all within a 10 minute drive from the furthest borders.   

Even within this select pool, about 52,500 are under the age of 45 and more likely to join a gym than the older population. 

Students In Penn State – University Park

State College is home to the main campus, i.e., the University campus of Penn State, which has the highest enrollment numbers in the state. The university campus has roughly 40,000 undergrads, and 6,000 graduate students enrolled, bringing the total to a bit over 46,000. 

The university park campus provides on-campus housing to about 14,000 students (mostly first-years), which translates to about 30.4% of the total population. The rest, 69.6%, have to find accommodation elsewhere, and State College is usually the first choice thanks to proximity. 

There are three in-house fitness centers. Two of them have the capacity of 240 and 250, respectively, and the third one is expected to have a similar capacity. So on-campus residents are highly unlikely to come out to State College for their fitness needs, which leaves approx 32,000 students living off campus in the area. 

Size Of The Target Market 

Being that 52,500 people are under 45 and 32,000 of them are college students living off campus we feel this is a great target market. And if we extrapolate an estimate based on the 2019 fitness center enrollments in the country (64 million or 19.5% of the total population) that about one in five people have a gym membership, that would be about 10,200. This number doesn’t take into account the skewed younger age of this area’s population, and if we correct that, it can easily be as high as 13,000 to 15,000. 

The 13,000 is a conservative estimate (of the potential members) and points towards a promising fact – If we assume that one decent-sized fitness center can be considered financially healthy with 300 enrollments (significantly higher than what we’ve found the average to be in the area), the market will be saturated by 30 fitness centers of such size, which leaves us plenty of room for a strong market share. 

It’s important to note that this is an oversimplification, and there are numerous other factors involved, but it’s a good snapshot of the target market pool size and competitive landscape.

Competitive Landscape

Even though our closest competitors will be identified once we have chosen the property for the fitness center, there are a few names that stand out once we take the whole State College into account.

State College YMCA: It’s a non-profit that offers multiple health and wellness programs, and though it’s also coveted for its sports gyms and pool, the gym is quite popular thanks to its decent equipment. It also has trained coaches and group fitness programs. Their main strength is perhaps the low fee, and the main weakness is the distance from the city center.

State College Strength & Conditioning: It’s a well-regarded and highly-rated fitness center with six personal trainers (currently) and offers group classes, and life coaching. However, it doesn’t offer CrossFit coaching (disaffiliated 2 years ago), which is one area where we will stand out from it. It also comes with a heavier price tag, and high turnover in staff. The membership almost never pushed beyond the early 300s. 

LionHeart Fitness & Tanning: LionHeart Fitness is relatively old and a well-known name in the area, but its ratings are quite low compared to most other fitness centers in the area. The main problems identified in those reviews were cleanliness, equipment service, and sauna. Its overlap with our business is primarily CrossFit, but it also offers martial arts. It’s also massive compared to what we are seeking (15,000 square feet). 

Orangetheory Fitness: It’s located right in the center of State College. Other strengths include an impeccable rating, very decent reviews, and affordable programs. Coaches are one of the most beloved parts of this establishment. The environment is quite motivating, and the establishment has cast a decently wide net when it comes to its members and includes everyone from students to seniors. It’s also quite clean and has good equipment. The only minor problems are the membership cancellation, and lack of parking.

Ki’netik Fitness: Ki’netik is another well-regarded fitness center in University Park. It doesn’t offer CrossFit group classes, but its fitness classes are quite ingenious and unique and tend to keep people engaged and following through longer than they would have with relatively boring programs. It offers multiple individual and group activities, including Yoga. Its trainers are beloved for their niceness and accommodation.

F45 Training State College: The F45 Training stands out not just from other local fitness centers but also from other F45s. It’s definitely costlier than many other options (including ours, by a sizeable margin), but its workout is considered worth it, both for its trainers’ expertise and the ingenuity of different workouts. They are well-known for their 45 minutes workout (hence the name), and being part of a massive chain of “boxes” benefits them with both reputation and resources.

Planet Fitness: The Planet Fitness in State College is one of 2,000+ locations that the chain owns. It’s clean, has plenty of equipment, and the staff is quite professional, but this is solely a big box gym with no programming or coaching.  

Many of our competitors are not local SMBs, but rather franchises/branches of larger chains. They have their strengths and their weaknesses, which sometimes include drastic personnel and policy change. The strengths are mainly resources and mature business practices, and great reputations, which new students might carry along from their homes. 

This is something we will have to compete against. We will learn from and try to replicate as best as we can the best practices of our competitors. We will also learn from their mistakes and try to offer what they can’t to their customers. 

Most importantly, we would make the most of our CrossFit affiliation. Since it’s an internationally recognized name, many of the students and people moving into the area will be searching for CrossFit. Since we will be one of the only two options, we have a strong chance of attracting an already predisposed audience. We have the strength of locally-owned decision-making with the marketing presence and recognition of an international giant. The CrossFit Open that engages people of all ages and fitness levels is designed to be experienced in an affiliate, and since the games are celebrated and watched every year, they will naturally draw attention to the local affiliates – Us and one other gym.

Organization, Management, And Affiliations

Affiliations And Inspirations

Our primary (and official) affiliation would be with CrossFit, which comes with a powerful set of primary and secondary benefits. The primary/tangible benefits that come with the affiliation is the access to CrossFit resources, use of the CrossFit trademark, participation in games, support, etc. The CrossFit name alone, with its familiarity, brand presence, and a positive image in the fitness community, can give us a stronger footing than a typical local fitness center. The secondary benefits like being part of a supportive community, which motivates and accelerates fitness through group activities, are just as compelling (if not more). 

We will also be affiliating with CrossFit Mayhem for their programming, which is internationally recognized for its effectiveness and engagement through fun. Mayhem Nation is a CrossFit brand which its own motto, mission, and mindset and offers its own programs. We may adopt some of their programs as-is and modify others to better fit the needs of our target market. 

One of the reasons we chose CrossFit Mayhem and why this affiliate stands out from the crowd is its stellar history at the CrossFit games. Led by a well-known CrossFit athlete (Rich Froning Jr.), the team(s) from this gym has won five out of the last six annual CrossFit games. They haven’t just embodied and followed CrossFit; they excel at it as few other affiliates have. 

We are getting more than just a simple affiliation from Mayhem. We are also getting inspiration from their motto: Faith, Family, Fitness, and Service. Our guiding force and focus would be the same.

Our facility will have an open layout with minimal physical divisions for different types of workouts and machines. All the permanent machines (exercise bikes, treadmills, etc.) will have their own places on the sides, while the middle of the hall will be dedicated to group activities. 

The idea here is to offer confidence to the members and prevent them from feeling self-conscious about their workout routine and limitations. However, they won’t be thrown into the deep, and we will help them ease into their exercise and routines. 

Management

The two founding managers of our fitness center will be Jordan Alturas, and his wife Chantel. Out of the two, Jordan Alturas will have more management responsibilities because of his experience in business and leadership which has positioned him well for spearheading its growth.

The Owner/Head Coach: The owner, Jordan Alturas, will wear multiple hats, including that of the head coach or head trainer, that will be responsible for preparing workouts, coming up with regimens, and developing training sessions. Their experience (fitness industry and others) makes them an ideal person for the job.

All of these reflect a person that’s tenacious, adaptable, confident, and has ample experience with groups/crowds. His varied business and management experience endorse his ability to run a successful and organized fitness business.

Fitness Equipment

We will stock our fitness center with equipment needed by both the members in our group fitness classes and the members that are focused on their individual fitness routines and choose our gym based on proximity or personal trainers. The latter group will be a minority, and since ours will be a CrossFit fitness center, we will have more units of CrossFit-related equipment. That would include (but is not limited to):

Barbells and Weight Plates: It’s a necessary element of CrossFit and will be used for high-intensity bodybuilding and body sculpting. We will exclusively use bumper plates for weights, thanks to the safety and practicality they offer. 

Dumbbells: Crucial for strengthening the arms, joint-isolation exercises, muscle toning, etc. 

Plyo-Boxes: Many of our group exercises would require the use of sturdy plyo-boxes. 

Kettle Bells: We will get one or two full sets and multiple pairs of the most used weights. Kettle Bells will be used on multiple occasions/stages in our group fitness programs.

Medicine Balls: Medicine balls are affordable and can be a surprisingly versatile addition to fitness equipment. 

Monster Lite Rig:  The Rig is a common necessity for CrossFit and functional fitness gyms. Our rig will be equipped with eight stations used for squatting, benching, and pressing. The rig is also equipped with 12 pull-up stations used for various gymnastics movements such as pull-ups, toes to bar, muscle-ups, etc.  

Jump Ropes: Affordable and useful equipment. 

Ab Mats: We will keep at least a few ab mats ready in the gym for people who have back issues (or are susceptible) yet want to do exercises for abs. 

There are several accessories and other equipment (like benches) that will come as a necessary part of the equipment above. 

For cardio, we will get:

Treadmills: We will buy multiple self-propelled treadmills for the fitness center. This will help us schedule our group sessions with running workouts, regardless of the weather outside.  

Echo Bikes: Thanks to their sturdier frame and a better drivetrain than an assault bike, Echo Bikes tend to be a safer, more lasting option. It’s a powerful and versatile equipment for building endurance. 

BikeErg: Another piece of equipment common in most CrossFit gyms is the BikeErg, which focuses primarily on the lower body. It allows you to build your lower body muscles without unnecessarily pushing your cardiovascular system.

SkiErgs: Skiing is a powerful, low-impact yet high-calorie burning exercise that people of most ages and various health conditions/strengths can enjoy, and SkiErgs will allow our members to tap into the benefits of that physical activity from within our fitness center.

RowErgs: For a full-body, low-impact workout and cardio, a few pieces of equipment might work as well as RowErgs, which stimulates rowing.

The last four pieces of equipment are standard in most CrossFit programming and great tools for safely adding amazing variety to our cardio pieces in programming. We are planning on adding about eight of each for our fitness center. This will give us a way to keep our programming fresh yet potent. It will also help us stand out from the combination because almost none of our competitors have all of these in enough quantity to engage a whole group. 

Fitness Services

We are planning on offering a relatively small set of fitness services to our clients, as apt for a fitness center. That will ensure that the owner and head coach will have adequate time and energy to engage most of the members at any given time, with the help of temporary coaches that will be hired once there is enough traction. Too many options and services are likely to distract and confuse our members, especially in the beginning. 

Once our membership numbers are up, we may start offering different services and specialized group activities for different member segments. 

CrossFit Training/Workouts For Beginners

While most, if not all, of our group fitness activities, will be inspired by and imbued with the essence of CrossFit, we will prepare CrossFit workouts and training programs for beginners. These can be daily workouts for new members or people checking us online. Members that are interested in these workouts will be pivoted towards group coaching but will be given a choice. 

The idea behind this service is that it would require relatively little supervision or engagement from the coach/trainers. It will also give newcomers that are not comfortable committing themselves to group activities and want to take things at their own pace ample time to get settled in the environment.

High-Intensity Body-Building

It’s inspired by the training program developed and taught by Ryan Fischer from Chalk Performance Training. Despite being a renowned CrossFit athlete, Ryan developed a characteristically different bodybuilding program that focuses on “functional movements in a high-volume format.” These moves/exercise segments target different body parts. The difference comes from the combination of these exercises with cardio, which allows you to burn fat and build muscle simultaneously. We aim to introduce similar, less intense versions of the high-intensity bodybuilding programs that spread out the gains over a relatively long period and give more time to members to get settled in.

Personal Training

In the beginning, when there are not enough group coaching classes to fully engage the head coach, he may offer personal training sessions. However, as members start growing, more coaches might be brought into the fold (CrossFit certified) to offer personal training as well as lead some group sessions (if needed). Personal training services will be different from the rest, thanks to their exclusivity. These programs will differ drastically from person to person and will be created around the fitness/bodybuilding goals and routine of the member. The pricing will be determined by the time and dedication of the coach that would be required by the program. 

Nutrition Training

Without the right nutritional intake, even the best fitness programs might not offer adequate results. And sometimes, if members are not careful, they may seriously damage their bodies by not ingesting the right things, especially during the high-intensity training sessions. For most group programs, this service will be part of the sessions, and the group, as a whole, will be informed of the recommended intake. However, it will be an extra service with personal training. 

Products

In the beginning, we are planning on starting small and will only have a few items for sale by the gym. That would include:

Gym Swag (Clothing): In the beginning, we may offer it as a complementary part of longer memberships. But if there is enough interest, we will get a small stock prepared and will keep it handy for members at a reasonable price. We will start with tees (for both men and women). We may also include gym shorts and trousers.

Gym Swag (Others): With enough members, we may start putting up other promotional items for sales like water bottles, resistance bands, and even yoga mats. We may also prepare full kits if we see enough anticipation.

Energy Drinks: We will offer a small selection of energy drinks in the gym for our members, recommended/endorsed by the head coach.

Protein Powders/Supplements: For members focused on bodybuilding and gaining muscles, we will offer a variety of protein powders. The members might prefer buying from the gym because their trainers will be able to recommend adequate intake amount and routine.

As we grow, we might start experimenting with other products as well, like CrossFit shoes, perfectly designed meal kits, and small exercise equipment. We will keep the initial investments in these products small, so even if there isn’t enough demand, the losses would be minimal. 

Marketing Highlights

Apart from addressing the customer’s pain point, our marketing will also showcase some of our primary strengths, including:

Our CrossFit Affiliation And Programming: Not only would we be the premier CrossFit gym in the State College area (a “message” that we want cemented in our target market’s mind), but we are also drawing inspiration for our fitness programs and practice regimens from some of the best-in-class CrossFit gyms in the country. We want our audience to know from the outset that our programming will be a unique blend of innovation and time-tested routines, guaranteed to offer our members a one-of-a-kind fitness experience/journey. 

Full Range Of Equipment: We are not just investing in quality but range as well when it comes to fitness equipment, and we will boast that range in our marketing as well. We will showcase the advantage of becoming a member of such a fully-stocked fitness center that doesn’t have to plan its routines/fitness programming to circumvent the equipment limitation (a common practice). More equipment also means that we will be able to accommodate a wider range of fitness goals and preferences (low-impact, upper-body toning, endurance, etc.). 

Group Activities: We will help our target market understand through both short-form (impactful) and long-form (detailed) marketing the benefits of group activities and fitness regimens. This is a slightly different approach than many of our competitors in the area are taking (even though many offer innovative group activities), but we believe if more people understand what the benefits and goals of group fitness activities are, they might be better inclined to join. 

Competitive Pricing: We will highlight our competitive and easy-to-understand pricing structure in our marketing. Transparency has proven to be a useful tool. We will also showcase our discount for the students (the largest target market pool), which, in addition to the already competitive pricing, might lower the cost by a sizeable margin for most of our potential members. 

Modes Of Marketing/Marketing Channels

We are planning on subscribing to PushPress, a gym management system that offers a wide variety of useful tools and allows fitness centers like ours to consolidate all the digital data related to the gym, like workout tracking, lead tracking, and website traffic, in one place. This will allow us the put the best foot forward from a digital business management perspective from the outset. 

As the world’s most effective & optimized website and CRM solution for fitness centers and gyms, PushPress is not just a potent choice from a back-of-the-house software perspective, but it’s also a growth catalyst. We’ve chosen the PushPress Grow plan for our business, which comes with a “Full-Stack Gym Lead Generation System,” which is perfectly optimized for digital outreach and lead building. It also comes with extensive automation options that will allow the owner to focus on their core competency while PushPress will pick up the bulk of marketing responsibility. 

Some of the primary marketing channels and avenues we might pursue are:

Website

A website is the core of the digital presence of any business. For our website, our main goal is simplicity. Many of our competitors, especially the ones that are franchises of larger chains, have relatively confusing websites. There is usually more information for existing members than potential members. This is something we plan on addressing through our website. Our website will clearly state our core strengths and affiliation and give precise information about our programs. We will also offer as much clarification and information as we can without essentially giving our programs away. 

Social Media Marketing

We will establish a presence on multiple social media platforms and publish posts that are in keeping with the platform’s format. Most of our posts would be short and to the point. We will offer fitness advice and useful tips through our social media accounts as well. We will also spread the word through our social media channels if we arrange any community fitness events (with broader participation goals) on special occasions.  

The goal of our social media presence would be more than just one-way marketing, but two-way communication. Once we develop enough following online, we may start conducting simple polls and initiating Q&A sessions to better engage with the target market. We plan on starting our Instagram with professional photos of our fitness center and new equipment to create a strong first impression (visually at least). 

Incentivized Marketing

When we open, we are planning on the first week of free classes without any commitment. The goal is to get as many people through the door, and coach group classes to that people can actually experience what CrossFit fitness feels like, how our programming is, and get a taste of our coaching approach. Potential members will also get to use our new equipment and can experience first-hand how we maintain our premises. Our focus will be to offer as compelling an experience as possible to the members without pushing them to join. This way, even if they don’t become members after the free week, they will at least become decent word-of-mouth advocates. We also hope to see positive social media feedback and online reviews. 

Funding Request

Startup Cost – Equipment 

A fitness center is, by necessity, an asset-heavy business. However, a CrossFit gym has much cheaper and fewer equipment pieces than your normal box gym, also unlike most other businesses where payroll tends to be the most substantial item in both startup and running expenses, the fitness center will have minimal employee headcount. The bulk of the startup costs will be diverted to the equipment. The price estimations below are taken from multiple websites, many of which offer free shipment for orders over a specific amount of heavy equipment like the rig. We will also look for discounts and deals for buying in bulk (multiple units at once) in order to keep this startup cost as low as possible. So the price below is to be taken as an estimation, not an accurate number:

The estimate we got for all the equipment (from Rougefitness) collectively (with the shipment) was about $70,000. We may look at other vendors and other avenues to bring down the equipment cost without compromising on quality. 

Startup Cost – Premises 

The next important startup cost would be securing the premises. From the properties we’ve looked up so far, we are expected to land a monthly rent of somewhere between $5,000 to $8,000 for properties that meet the minimum size requirement (3,000 to 4,000 square feet). For an estimate, let’s assume we land a $7,000 a month rent. We would need at least $21,000 to cover the deposit (two-months rent) and the first month’s rent. Ideally, we would like to have at least two months’ additional rent on hand since we don’t expect to generate enough income to fully cover our rent for the first few months. And this cash on hand will help us fill the gap. 

Startup Cost – Miscellaneous  

Apart from equipment and premises, the one main expense would be CrossFit affiliation, which currently costs $3,000 annually. Operationally, it’s not a major cost since it would be spread out over a whole year, but it’s a sizeable startup cost. 

We would also need to spend on the PushPress Grow setup – $699.This is in addition to the monthly cost of PushPress Pro and PushPress Grow. However, the cost would be incurred monthly and will be easily covered even if we gain a small number of members in the first two or three months. 

For now, we are not accounting for significant investment in branding, furnishing/altering the space we lease, and marketing expenses other than what we would spend on the PushPress. These costs can be substantial, but a lot of them can also be spread out/stretched out to a later date when we have the decent operational income to cover our regular expenses and gradually fund our growth.

Note that we haven’t added payroll expenses to the startup expenses because in the first few months or until we gain enough traction, we are not planning on bringing anyone into the fold. The only two members/employees of the business would be the owner/head coach and his wife, that would not be on the payroll. Once we get enough members and anticipate enough demand, we will bring on coaches, mostly on an hourly basis (short-term contracts). 

Funding Requirement And Nature 

We are expecting to secure funding of $120,000 to start our business. Based on even the most conservative projections, we expect to be financially viable with $100,000 in funding, but we would be cutting it very close and will have almost no financial safety net to fall on. The $120,000 amount gives us some breathing room. It would cover most of the startup expenses and allow us to stay afloat for at least three months from inception, even with very little business income.  We are seeking investors for this start up offering up to 20% share in the company.  The minimum buy in will be $10,000 for 1% share in the business.  Payouts for shares will be made on a monthly basis, % of shares multiplied by business net income.  Share owners may also opt to be bought back out at original investment amount after 5 years. 

Financial Projections 

Please note that the financial projections are made using local estimates, research (both online and offline), and personal experience in the industry. We’ve done our best to ensure the numbers are as accurate as possible, but there will still be a degree of variance for some projections more than others. 

Monthly/Regular Expenses 

We anticipate several different monthly and recurring expenses in our fitness center operations. There would also be quarterly and annual expenses, but for the sake of simplicity, we will spread them out over a monthly period for a more accurate estimation. 

Rent/Lease 

We are estimating about $7,000 a month for the premises we secure. We chose closer to the high-end of the $5,000 to $8,000 range since we expect to choose the best possible location with decent parking and access to transportation since that can directly impact our cash inflow. 

Utilities

We don’t expect the cost of utilities to exceed $1,000 a month. That’s based on a $3 per square foot estimate (for 4,000 square feet of premises), higher than the state average of $2.1 per square foot. That’s because the actual number varies drastically from business to business, and due to our open space, the need for lighting, and some of our equipment, we may run a utility cost slightly higher than average. 

Payroll

That’s not an expense we will start incurring right away since we don’t plan on bringing in other coaches for the first few months. When we do, we expect to pay our part-time coaches about $30 an hour. Assuming we have two coaches working four hours a day, five days a week, the total payroll cost would be around $4,800 a month ($2,400 per coach per month). These would be CrossFit-trained and experienced coaches, hence the high cost. However, we only hire the coaches once we have enough members, so the cost would be justified. 

 PushPress Subscription 

Since we are opting for both PushPress Pro ($159/month) and PushPress Grow ($299/month), the monthly fees would be $458. 

Marketing 

An initial marketing cost we will be bearing would be the first free week we offer to potential members to generate interest. We will bear all the necessary operational costs (rent, utilities, etc.) without generating any income. However, this is also expected to help us rapidly grow our membership numbers.

Apart from the fixed marketing cost of a PushPress subscription, we plan on allocating at least $500 a month to the marketing budget, at least for the first few months. This will be spent on additions to our website (blogs/articles), promotional videos, posters, etc. For now, we are not adding expenses related to secondary marketing material like gym swags. 

Miscellaneous Costs

The miscellaneous costs would include: 

Cleaning – The cost associated with daily, weekly, and monthly cleaning of equipment and premises. That would include supplies and the cost of professional cleaning services (when needed). 

Insurance – Despite the LLC model, we plan on purchasing general business and liability insurance as an added layer of safety for our business interests. 

Unexpected Costs – The costs of replacing/repairing broken or non-functional equipment are just one of the unexpected costs we foresee. It might be a once-a-year expense, but we plan on setting aside a small amount every month to fund these expenses. 

There might be several other costs that we haven’t accounted for yet. Even at the most lenient estimate, we expect to spend between $1,000 to $1,500 a month on miscellaneous monthly expenses. We are choosing $1,500 for our estimations. 

Income Projections

Our primary income source would be membership subscriptions. The secondary income source would be gym swag, fitness food products, protein, juices, etc. In the future, we may add another income stream, i.e., online subscriptions for a fitness consultancy that would include fitness plans, exercise, nutritional guidance, training regimens, etc. This is just in the ideation phase right now, so we are not using its potential income for our cash flow projections, but it is an avenue we plan on exploring in the future.

Membership

The membership numbers are the core of both our primary and secondary income sources since the more members we have, the higher the sales we can anticipate. The membership projections are based on the owner’s experience in a State College gym that was originally affiliated with CrossFit. The owner served as one of the head coaches and has an intimate understanding of the membership trends. 

The membership of the gym varies seasonally – The numbers are usually low in the summers and significantly higher (by about 52%) between the months of September and May. However, for the sake of a comprehensive estimation, we will consider an equal number of members for each month of the year, though it will grow from year to year. For the first year, we are estimating three different scenarios:

Worst-Case Scenario: 180 members 

Average/Realistic Scenario: 240 members

Best Case Scenario: 300 members

For the first-year cash flow projections, we will use the average/realistic scenario. Though for the five-year income and growth projections, we will look into all three scenarios. 

These numbers are based on the membership patterns the owner saw at the other CrossFit gym (now de-affiliated) serving the same population (State College), and we expect to reach the numbers by the end of the first year. 

Membership Fees

There are three membership tiers:

Open Gym Only: $100/month

Three Classes/Week: $125/month

Open Gym plus Unlimited Classes: $150/month

We may create other membership tiers if we anticipate the need/demand from existing or potential members (based on their queries and requests). 

First Year Income Projection

We are also expecting a relatively higher number for the unlimited memberships, roughly 50%. The next largest segment would be the three classes a week segment, with around 40% of the members. We are assuming only around 10% would opt for open gym only. So for the first month, we anticipate:

Ten members at the $150/month subscription.

Eight members at a $125/month subscription. 

Two members at a $100/month subscription. 

Total monthly income of $2,700.

Similarly, for the last month, the numbers would be: 

One hundred and twenty members at a $150/month subscription.

Ninety-six members at a $125/month subscription. 

Twenty-four members at a $100/month subscription. 

Total monthly income of about $32,400.

We are also offering a standard discount:

A 20% discount for students, first responders, and teachers would be offered for the unlimited membership only. We anticipate it would make up between 30% and 40% of our total members (about 35% on average).

We are pricing in the introductory discount in the marketing. The two standard discounts, i.e., 20% for students, first responders, etc., and about 8.3% for people who buy a year’s membership up front will affect the income projections. About 35% of our members would be eligible for a 20% discount, and we believe about 5% would opt for the whole year pre-payment plan each month. So collectively, about 40% of our unlimited members would be getting a discount of around 21.5% (about $32.25). Applying that to the income projections, we get: 

                           Month 1  Month 2  Month 3  Month 4  Month 5  Month 6  Month 7   Month 8  Month  9   Month 10  Month 11  Month 12
Member Count          20           40              60          80            100          120          140            160          180              200             220          240
Primary Income    $2,700    $5,400    $8,100   $10,800   $13,500   $16,200   $18,900   $21,600   $24,300   $27,000  $29,700   $32,400
Discounted           $2,571   $5,142    $7,713   $10,284   $12,855   $15,426   $17,997   $20,568   $23,139    $25,710  $28,281  $30,852
Primary Income

This is for the primary income sources. As for the secondary income, we have to take into account the profit margin and purchase frequency of different items. For example, protein powders might be more frequent sellers, but even if we buy in bulk, the profit margin cannot be exceeded by a certain level as members would simply opt for delivery from Amazon or other sources. There might be a sizeable profit margin when it comes to gym swag, but these would be very slow sellers. Many members might not even buy it more than once a year. 

A relatively arbitrary but conservative estimate we came up with is that every month, every fourth member might trigger a $40 income for the gym through the purchase of secondary items. This is similar to every member generating a $10 income for the gym every month through secondary items. 

Cashflow Estimates For The First Year

Note that the payroll part is adjusted for the assumption that we will not need part-time coaches for the first four or five months of operations (based on the member count). We have divided the first year into three steps: No additional coach for the first four months, one coach for the next four, and two coaches for the next four.

Based on the estimations above, we will be in deficit for the first four months of the business but will start generating a positive net income from the fifth month onwards. Then we will grow it at a healthy rate, reaching an early five-digit net income in the ninth month of the first fiscal year. The total “loss” we expect to bear, as per the estimations above, would be around $14,750, which we will have to cover with our startup capital. If we take into account the total startup cost of around $84,700 (equipment – $70,000, Deposit – $14,000, and PushPress Grow setup – $699) and the most stringent funding request of about $100,000, we are just within the limit. That’s why we are opting for a goal of $120,000 to give us a sizeable safety net.  

Also, thanks to the discounted offer, the cash flow spread would be slightly different. Even if a relatively small number of new members opt for our pre-paid memberships, we will have a decent amount of extra capital to work with for the first few months (in which we expect the financial deficit). 

It’s also important to note that we’ve started with a very conservative estimate of about 20 members for the first months, and the number can easily reach between 40 and 60. This can tip the financial scales in our favor.

Five-Year Income Projections

For five-year income projections, we’ve made the following assumptions:

Average Scenario 

Five-year revenue and net income growth for the average scenario, for which we projected the first year’s cash flows, would be:

Worst-Case Scenario

In the worst-case scenario, we anticipate a slow growth and a lower maximum number of members by the end of the first year (180). 

                                                                                   

Best-Case Scenario

In the best-case scenario, we anticipate starting with 25 members each month and reaching 300 members by the end of the first year. In this case, we will be in deficit for only the first three months of the first year. 

                                                                                   

SWOT Analysis 

We have tried to be as objective as possible in our SWOT analysis.

Strengths