A New Fitness Facility’s Strategic Analysis

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Table of Contents

Introduction: Description of the Company
SWOT Analysis
Monetary Information
Evaluation
References

Introduction: Description of the Company

The new business venture that I will evaluate is a fitness facility that caters to elite fitness in all sport modalities. The facility will open three months from now, and it is necessary to conduct a thorough SWOT analysis to investigate its strengths and opportunities and learn from its weaknesses and threats. The fitness center will not be too large, and it will be able to host 100 people simultaneously in different departments. To arrange the workflow in the facility successfully, it will be necessary to hire several people, including administrators, trainers, masseuses, a dietician, a physician, and cleaning people.

The venture will offer a variety of services to its clients. First of all, visitors will be able to exercise on the most modern equipment under the guidance of experienced fitness trainers. Secondly, each client will be able to consult the dietician and discuss the best dietary options to make exercises effective. Thirdly, there will be a pool where visitors will be able to swim for relaxation, weight loss, or health improvement. Finally, there will be a small shop next to the administrators’ desk with sports nutrition for those interested in a complex fitness program.

Hence, the major source of profit will be the gym itself, where clients will do exercise and work on specialized equipment alone or under the guidance of trainers. Other sources of income will include the swimming pool, dieticians’ consultancy services, and the sports nutrition shop. The facility will employ ten trainers, two administrators, two masseuses, a dietician, a physician, and two cleaning people. The dietician and physician will be part-time workers, and all the other staff members will work full-time in shifts. The business is expected to be profitable due to a variety of services offered, flexible working hours, convenient locations, referral programs, and attractive discounts for regular members and family members.

SWOT Analysis

A SWOT analysis covers the strengths, weaknesses, opportunities, and threats of a prospective business. This analytical tool helps to understand one’s strategic capabilities and to explore the impact of the external environment (Johnson, Whittington, Scholes, Angwin, & Regnér, 2014). Careful consideration of the venture’s benefits and limitations will allow increasing its competitive advantage (Brooks, Heffner, & Henderson, 2014). The chart below shows the SWOT analysis of the fitness center (see Table 1).

Positive		Negative
Internal	Strengths	Weaknesses
Internal	A new facility will attract young people and those who recently moved to the area A variety of services The possibility to combine exercising and swimming The availability of massage services Convenient location (next to several public transport stops) Discounts for family visits and regular clients Friendly staff who have the necessary qualifications	It is unlikely that loyal customers of well-established gyms and sports centers will choose our facility No website No possibility to register online No free parking space
External	Opportunities	Threats
External	We could sign a contract with the company owning the parking lot nearby and arrange for some free parking spaces for regular customers In the nearest future, we could hire an IT professional to create a website or at least create Facebook and Instagram accounts for the center We could open new fitness classes per customers’ needs	There may be high staff turnover Low attendance, especially during holidays The lack of funding Equipment might get damaged or broken Competition may increase if other new ventures open nearby

Table 1. SWOT Analysis Quad Chart

Strengths

An undoubted strength of the new venture is it’s being a new and yet undiscovered facility with various promising options for its prospective clients. Having performed the analysis of nearby sports centers, we have found that none of them combines a gym, a swimming pool, a shop, and a massage room. Hence, a wide range of opportunities will be our principal advantage. Another benefit is the venture’s location, which allows many people from different parts of the city to get there easily. There are up to ten public transport stops within a short distance, so it is not hard for people to commute. Furthermore, we plan to implement a system of bonuses and discounts for regular and family visits. Finally, we are going to hire professionals with the highest qualifications.

Weaknesses

Prospective limitations in the venture’s work are largely associated with technical issues. The major problem seems to be the lack of a free parking area. There is a parking lot nearby, but clients will have to pay hourly for keeping their vehicles there. As a result, people may feel discouraged to join the facility or leave earlier for fear of having to pay extra money for parking. Another problem is that we do not have a website, so people will not be able to register for our services or find out about our advantages quickly. Finally, there is a rather crucial weakness associated with the human sector. It seems highly unlikely that people who are already attending other sports facilities will leave them and join us. Hence, we will have to focus on obtaining the client base from a fresh start.

Opportunities

Along with current benefits, there are also those we can gain in the nearest future. First of all, we could make some arrangements with the parking lot owner and allow our regular customers to leave their cars there for free. This approach would increase the loyalty of clients and also inspire others to attend regularly to obtain bonuses. Another opportunity lies in the IT sector: we might either hire a professional to create a website for us or create Facebook and Instagram pages advertising our services. The latter task could be carried out by our administrators and trainers. Some of them could take photos of people training, and others could post news, images, and other relevant data on social websites. Lastly, there is always a chance of expanding the business through the creation of new classes on clients’ demand or per their request. We are open to new things, and we will be happy if our clients show initiative and promote the opening of new options.

Threats

The most challenging aspects of any sports center’s work are high employee turnover and customer attrition rates. Statistics indicate that about 63% of fitness center clients are likely to quit before the third month of attendance (Sperandei, Vieira, & Reis, 2016). Hence, it might be difficult to encourage people to stay with us for a long time. Additionally, many people stop going to fitness centers in summer and during the winter holidays. These aspects can damage the financial matters of the venture. What concerns employees, they are likely to quit because of long shifts or low pay (De Lyon, Neville, & Armour, 2016). Furthermore, the costly equipment can become damaged or even broken, and we might not have enough money to pay for its replacement. Another threat is that some investors may turn away from us and stop supporting us financially. Finally, there is always a threat of new competitors entering the market.

Monetary Information

The approximate startup cost of the project is $50,000, which includes the following:

Renting a location with a pool: $2,000 per month (we need to pay for the first three months plus a deposit) = $8,000;
Buying equipment: $25,000;
Purchasing the goods to sell at the shop: $3,000;
Making uniforms for the staff: $2,700 ($150 per one uniform);
Employees’ salary: $10,000 (from $900 to $1,500 depending on the position);
Miscellaneous: $4,300 (stationery, laptops, cleaning items, business cards, phone and Internet bills).

The startup money will come from my savings ($12,000) and investments. The best scenario is that we have 30 working days, ten working hours in each. During these hours, a maximum of 100 people can be engaged in the facility’s various departments. If every person pays $25 on average, we will earn $750,000 monthly. After paying the wages and rent, as well as repairing equipment and purchasing any other necessary things, the expected revenue is about $700,000. However, this is the most favorable scenario, while there is always a possibility of a power cut, employees being on sick leave, and clients not attending in the expected quantity.

Evaluation

Having measured the existing strengths and weaknesses, as well as having evaluated future opportunities and threats, I can conclude that the business venture may be continued. If the facility develops in the most beneficial scenario, the money invested in it will be compensated soon. Furthermore, it will become possible to make a good profit from the fitness center. If any unexpected difficulties occur in the future, the money earned will be enough to manage the complications and remain profitable.

References

Brooks, G., Heffner, A., & Henderson, D. (2014). A SWOT analysis of competitive knowledge from social media for a small start-up business. Review of Business Information Systems, 18(1), 23-33.

De Lyon, A. T. C., Neville, R. D., & Armour, K. M. (2016). The role of fitness professionals in public health: A review of the literature. Quest, 69(3), 313-330.

Johnson, G., Whittington, R., Scholes, K., Angwin, D., & Regnér, P. (2014). Exploring strategy: Text and cases (10th ed.). Harlow, England: Pearson Education.

Sperandei, S., Vieira, M. C., & Reis, A. C. (2016). Adherence to physical activity in an unsupervised setting: Explanatory variables for high attrition rates among fitness center members. Journal of Science and Medicine in Sport, 19(11), 916-920.

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