Health Club Business Plan

• Consulting revenue will make up approximately 85 to 90 percent of total revenue, with the rest coming from service revenue.
• Salaries and rent are the two major expenses, while depreciation is another significant cost. Although the purchasing of fitness, medical, and office equipment is expensive, constant replacement will be needed to maintain a competitive edge.
• In order to maintain steady gross margins, salaries and advertising expenses are not likely to increase within the first two years of operation, unless cash flows significantly increase.

7.1 Important Assumptions

Three assumptions for Corporate Fitness are:

1. A constantly growing economy without any major recession or boom.
2. No unpredictable changes in fitness, medical, or office equipment.
3. No major national or global events that threaten the stability and health of the country and its citizens.

7.2 Key Financial Indicators

The most important financial indicators are net increase in cash and net income. Net increase from cash will exemplify the relationship between net income and net cash from operating activities. The greater the increase is, Corporate Fitness has that level of financial strength at that point in time.

7.3 Break-even Analysis

Corporate Fitness’ break-even point is computed in the table below, comparing sales and monthly expenses. Sales forecasts indicate that units sold and monthly sales are expected to be much greater than the break-even point mentioned in the table.

7.4 Projected Profit and Loss

Sales are predicted to increase each month with first year annual sales totaling close to a half-million dollars. Gross margin, likewise, is expected to increase correspondingly.

Compared to total sales, net profit will increase each month and is predicted to increase for 1995 through 1997.

7.5 Projected Cash Flow

Ordinary cash flow will increase significantly while expenses remain relatively static, with only minimal increases. We plan to take out a short-term loan to cover our receivables and other contingencies in month one, and repay it in month 12.

7.6 Projected Balance Sheet

The balance sheet indicates that at the end of the first year of operation, net worth will be positive and constantly increasing through the end of 1997.

7.7 Business Ratios

The following table outlines some of Corporate Fitness’ more important business ratios. The final column, Industry Profile, details specific ratios based on the Physical Fitness Facilities industry as it is classified by the Standard Industry Classification (SIC) code, 7991. These ratios indicate strong financial growth and an impressive chance for investment opportunities, making expansion and further development both very possible.