FamilyFit: A Unique CrossFit Facility - edwards.usask.ca Painter... · Web viewThis facility will provide coached classes that integrate weightlifting, functional movement, powerlifting

Janyce Yuzbasheva

MBA 992

7/7/2017

2017FamilyFit: A Unique CrossFit Facility

FamilyFit: A Unique CrossFit Facility July 7, 2017

Executive Summary

This business plan will go through the Operations Plan, Human Resources Plan, Marketing Plan and Financial Plan for FamilyFit. FamilyFit is a unique CrossFit experience, with a focus on family and kids’ fitness, as well as individual athletes.

This plan will show in the Operations Plan that there is very low start up costs, as well as few expenses. It will also show the breakdown of debt and equity.

The Human Resources Plan will break down the staff requirements and class schedule. The plan focuses on retaining the right kind of staff and creating the community atmosphere that FamiyFit wants to be known for.

The Marketing Plan outlines an aggressive online and social media marketing plan, and plans to include word of mouth advertising. This plan outlines the need to get, maintain and grow the membership numbers, as this is the only critical element to the success of this business.

Finally, the Financial Plan will outline the Capital and Financing Budget, Dividend Policy, Profitability, Cash Balance, Risk and Sensitivity Analysis, Breakeven Analysis and Owners Compensation. The Financial Plan shows that, even with loses in the first few years, FamilyFit’s projections show increases growth which leads to an increase in owners’ compensation in years 5 and onward.

A complete Financial Model is attached.

1 | P a g e


Table of ContentsExecutive Summary..............................................................................................................................................1

Introduction..........................................................................................................................................................4

Operations Plan....................................................................................................................................................4

What is CrossFit?..............................................................................................................................................4

Who We Are and What We Do.........................................................................................................................4

The Schedule....................................................................................................................................................4

Group Classes...............................................................................................................................................5

Family Classes...............................................................................................................................................5

Kids Classes...................................................................................................................................................5

Floor Plan..........................................................................................................................................................5

Day to Day Operations......................................................................................................................................5

Capital Budget..................................................................................................................................................6

Operating Budget.............................................................................................................................................6

Human Resources Plan.........................................................................................................................................7

The Organization Chart.....................................................................................................................................7

Year 1&2 Staff Requirements:......................................................................................................................7

Year 3-5 Staff Requirements:.......................................................................................................................7

Staffing Job Descriptions..................................................................................................................................7

Owner/Manager...............................................................................................................................................7

Job Description – Main Coach..........................................................................................................................8

Job Description – Assistant Coach....................................................................................................................8

Job Description – Administrative Assistant/Bookkeeper.................................................................................9

Salaries and Wages Expenses.........................................................................................................................10

Staff Training and Retention...........................................................................................................................10

Marketing Plan...................................................................................................................................................12

Positioning Statement....................................................................................................................................12

Value Proposition...........................................................................................................................................12

Product...........................................................................................................................................................12

Place...............................................................................................................................................................13

Location......................................................................................................................................................13

2 | P a g e


Target Segment..........................................................................................................................................13

Membership Growth..................................................................................................................................13

Price................................................................................................................................................................13

Promotion.......................................................................................................................................................13

Website......................................................................................................................................................13

Social Media Advertising............................................................................................................................14

Word of Mouth Advertising.......................................................................................................................14

Marketing Expenses.......................................................................................................................................14

Financial Plan......................................................................................................................................................15

Capital Budget and Financing Budget.............................................................................................................15

Dividend Policy...............................................................................................................................................15

Profitability.....................................................................................................................................................15

Cash Balance...................................................................................................................................................15

Risk & Sensitivity Analysis...............................................................................................................................15

Break Even Analysis and Cushion...................................................................................................................16

Owners Compensation...................................................................................................................................16

Tables and Appendices.......................................................................................................................................17

Table 1 – Membership Prices.........................................................................................................................17

Table 2 - Class and Coaching Schedule...........................................................................................................17

Table 3 – Capital Budget.................................................................................................................................17

Table 4 - Financing Budget.............................................................................................................................18

Table 5 - Operating Expenses.........................................................................................................................18

Table 6 - Salaries and Wages Expenses..........................................................................................................19

Table 7 - Membership Growth and Revenues................................................................................................19

Table 8 - Net Income......................................................................................................................................19

Table 9 - Cash Balance with Financing Activities............................................................................................20

Table 10 - Risk & Sensitivity Analysis..............................................................................................................20

Table 11 - Breakeven Analysis........................................................................................................................21

Table 12 - Owners’ Compensation.................................................................................................................22

Appendix 1 – Floor Plan..................................................................................................................................23

Appendix 2 - Organizational Chart.................................................................................................................23

3 | P a g e


Introduction FamilyFit is a unique CrossFit facility that incorporates regular CrossFit fitness with a family friendly atmosphere. This unique facility caters to busy family’s who want to both work out together and have a high standard for fitness. FamilyFit is for everyone, any skill level, and any fitness level. FamilyFit offers a unique and fun community atmosphere and expert coaching.

Community is at the heart of what this facility does. It offers a unique family fitness atmosphere, great programming and competitive pricing, and tonnes of fun through community events, a great workout atmosphere, and inclusion in the bigger CrossFit community events, such as the Open and the CrossFit games.

Operations PlanWhat is CrossFit?CrossFit is described by CrossFit Inc as “constantly varied functional movements performed at high intensity. All CrossFit workouts are based on functional movements, and these movements reflect the best aspects of gymnastics, weightlifting, running, rowing and more. These are the core movements of life. They have the largest loads the longest distances, so they are ideal for maximizing the amount of work done in the shortest time”. Yet CrossFit is more than just movements by the body. It is a movement of like minded people that have come together the share in the work, the defeat, the wins, the pain and the achievements that all come with doing CrossFit workouts. CrossFit is a community, and this community is the reason that CrossFit is as effective as it is.

Who We Are and What We DoCommunity is at the heart of who we are and what we do. FamilyFit offers a unique community and family workout environment, inclusive of all age groups, fitness levels, skills and abilities. We do great workouts, with great coaches and great people, and we have fun doing it! In addition to unique and dynamic group classes, the facility also offers family classes and a dedicated kids area for kid’s classes. The kids’ area is viewable from the main gym area, and will be equipped with gymnastic equipment, barbells (for kids), weights, kettlebells and a fun zone! The kid’s classes will be geared towards having fun and learning functional movements, along with the basics of weightlifting. All coaches will be equipped to work with the kid’s classes.

The business is set up as a sole proprietorship, with myself, Janyce Yuzbasheva, as the sole owner and manager of the facility.

The ScheduleThe group classes, kids’ classes and family classes schedule is outlined in Table 2. This will be anticipated class and coaching schedule for the fist year. It is anticipated that this schedule will have changes with the ebb and flow of the business, as some days and times become more active or less active, and with the increase of

4 | P a g e


memberships. This schedule also serves as the anticipated coaching schedule fore the first year, with the anticipated number of hours required for each coach.

All classes are one hour in duration. A description of the classes are as follows:

Group ClassesThese consist of regular member classes. These classes offer warm up, in class movement coaching and group workout.

Family ClassesThese consist of regular members and their families. Family members include anyone who is a member who is an immediate family members – parents, kids, grandparents, aunts and uncles. These classes will be specially targeted to families, scalable, and aimed for great family fun while working on CrossFit and fitness skills.

Kids ClassesThese consist of kids ages 6-11. These classes target basic movement skills, including weightlifting, gymnastic and functional movements. Games will be played, with a focus on fun!

It is important to note that CrossFit class schedules are often fluid, and are dependant on the times members are available and willing to attend. The schedule above reflects a full working schedule, that will adjust with the fluidity of the membership and community.

Floor PlanThe floor plan can be found on Appendix 1. The facility is a 2000 square foot warehouse-style facility, in Saskatoon’s north end. The facility will need minimal leasehold improvements the make it ready for members use. There will be some building required to make sure the bathroom and warehouse areas are acceptable, as well as including an office and staffroom space. Most of the 2000 square feet will be dedicated to a main workout area, kid’s area, gymnastic area and open equipment storage. There would also be some dedicated rubber gym flooring that will be laid. There is no special ceiling or painting that will be required.

The layout of the facility will include a main training area, with a detached rig that allows for members use on either side. The main workout area will also have the standard overhead door that can be found in most CrossFit gyms. There is a dedicated kid’s training area, complete with a kid’s rig, gymnastic equipment, and kids training equipment. This will be separated by a chain link fence. There will also be a kid’s play space, for those times when they aren’t training.

The bathrooms/change rooms, staff area, offices and reception area will be renovated with appropriate flooring and furniture. The costs of all this is included in the leasehold improvements show on the Capital Budget in Table 3.

Day to Day OperationsThe facility will be open from 6am – 9pm Monday to Friday, and from 10am to 1pm Saturday and Sunday. This schedule allows for 8 group classes, as well as some down time between the busier periods of the day.

During class time, the class will be coached by whoever is scheduled for that day. Other daily operations will be tended to in the off hours of the day. This will include any office related tasks, bookkeeping,

5 | P a g e


administration, marketing and advertising, and anything else that could arise. All the office related tasks will be looked after by the Owner/Manager, until year 3, when it is anticipated the facility will be busy enough to hire an administrative assistant/bookkeeper. The owner/manager will also assist in coaching duties as required.

Walk-ins will be welcome at the facility, and will be tended to on an as needed basis by whoever is scheduled to work that day.

Capital BudgetThe Capital Budget is broken down into leasehold improvements and equipment and flooring. There is $40/square foot for the 2000 square foot facility, for a total of $80,000, as well as $31,000 for equipment and flooring. Roughly $8000 is allowed for the special flooring and the rest is an equipment package that can be purchased through Rogue Fitness Canada. It is anticipated that will minimal leasehold improvements needed, that $80,000 will be more than enough to cover all requires expenses for bathrooms and changerooms, staff room, office and reception area. A complete Capital Budget can be found in Table 3.

Operating Budget 5 years of Operating Expenses are outlines in Table 5. The expenses are standard, and include the accounting and legal, advertising, utility costs, lease and occupancy costs, insurance, salaries for the owner/manager, main coach and assistant coaches, capital costs and debt interest. The one additional costs that will be a recurring $3000 fee year after year is the CrossFit affiliate fees. These fees are paid to CrossFit headquarters, and allow the facility to register itself as a licenced CrossFit gym.

6 | P a g e


Human Resources PlanThe Organization ChartThe organization chart can be found in Appendix 2. The organizational chart illustrates the positions of the various staff members, as well as the year of their anticipated employment. These are anticipated based on projected increases in memberships over a 5-year period.

The Owner/Manager position will be myself. I will oversee and operate the day-to-day operations of the facility. Additional staffing requirements are anticipated to be as follows:

Year 1&2 Staff Requirements: Owner/Manager Main Coach (Coach 1) Assistant Coaches – 2 required (Coach 2 & 3)

Year 3-5 Staff Requirements: Owner/Manager Main Coach (Coach 1) Assistant Coaches – 2 required (Coach 2 & 3) Assistant Coaches –Added in Year 3 (Coach 4) Assistant Coaches - Added in Year 4 (Coach 5) Administrative Assistant/bookkeeper – added in Year 3

It’s important to note here that class and coaching schedule will change over a 5-year period based on changes in membership numbers, need for additional classes, and the need for additional services for members. These changes could happen sooner or later than the plan indicates, as the needs of the community change.

Staffing Job DescriptionsVarious levels of coaches will be required to cover all the class times offered. As indicated above there will be one main coach, and up to 4 additional assistant coaches anticipated over the next 5 years. One administrative/bookkeep position is also anticipated in the third year. Descriptions of their positions and what will be required are as follows:

Owner/ManagerThis position will be filled by Janyce Yuzbasheva, the sole owner of this business. All the day-to-day operations of the business will fall within this job description, including all the bookkeeping, marketing and memberships and human resources. She has a Bachelors Degree in English and Russian (Double Honors), and an MBA (being completed summer 2017), both obtained from the University of Saskatchewan. She is also an owner/shareholder and director at Lambert Distributing since 2007. She has held multiple positions within various non-profit organizations since obtaining her undergraduate degree in 2005. She also sits on her daycare Board of Directors, and holds the position of Vice-President.

7 | P a g e


Job Description – Main Coach The FamilyFit Experience:

FamilyFit is a unique CrossFit community that wants to continue the tradition started at CrossFit headquarters. The goal of this facility is to carry the tradition of CrossFitting in to a family dynamic, providing the whole family with a unique shared family fitness experience. FamilyFit is the right fit for every active family, and for newly active families to come together, to learn about fitness and functional movement using multiple modalities. This facility will provide coached classes that integrate weightlifting, functional movement, powerlifting movements, gymnastics, endurance, stability enhancing movements, and fun!

This family centered facility offers group classes, kids classes, and combined family classes. There is a dedicated kid’s area, viewable from the main gym area, equipped with gymnastic equipment, barbells, weights, kettlebells, and a fun zone! The main gym area is fully equipped for adults to WOD. Family classes with combine fun with a great CrossFit workout scaled to all levels of the family.

Community is center of our facility. It is the reason we CrossFit. Fitness is the result of doing something you love in a community you love.

Coaching Position Requirements:

Must be able to work with multiple levels of fitness. A background in weightlifting, gymnastics, and multiple fitness modalities an asset, but can be taught. A passion for leading and motivating required. Must be able to work in a team, and foster a team atmosphere. Must have a passion for mentoring new and veteran CrossFitters, and come with a family focused mindset.

Coaches will be required to coach scheduled classes, providing top notch assistance to members on scaling’s, movements, and direction on the movements themselves.

Flexibility will be available.

Required Experience:

CrossFit Level 1 certification. A background in Kinesiology is required, but not essential. A background in fitness coaching required, and other skills can be taught. A passion for fitness and working in a community oriented gym required.

Hours required: up to 80 hours per month, with the opportunity for advancement as the community grows. The hours will be shared with the assistant coaches and determined by the weekly class schedule.

Wage: $26.00/hour Main Training Coach

Job Description – Assistant Coach The FamilyFit Experience:

FamilyFit is a unique CrossFit community that wants to continue the tradition started at CrossFit headquarters. The goal of this facility is to carry the tradition of CrossFitting in to a family dynamic, providing the whole family with a unique shared family fitness experience. FamilyFit is the right fit for every active family, and for newly active families to come together, to learn about fitness and functional movement using

8 | P a g e


multiple modalities. This facility will provide coached classes that integrate weightlifting, functional movement, powerlifting movements, gymnastics, endurance, stability enhancing movements, and fun!



Coaching Position Requirements:

Must be able to work with multiple levels of fitness. A background in weightlifting, gymnastics, and multiple fitness modalities an asset, but can be taught. A passion for leading and motivating required. Must be able to work in a team, and foster a team atmosphere. Must have a passion for mentoring new and veteran CrossFitters, and come with a family focused mindset.

Coaches will be required to coach scheduled classes, providing top notch assistance to members on scaling’s, movements, and direction on the movements themselves.

Flexibility will be available.


CrossFit Level 1 certification. A background in Kinesiology is required, but not essential. A background in fitness coaching required, and other skills can be taught. A passion for fitness and working in a community oriented gym required.

Hours required: up to 48 hours per month, with the opportunity for advancement as the community grows. The hours will be shared with other coaches and determined by the weekly class schedule.

Wage: $24.00/hour Assistant Coaches

Job Description – Administrative Assistant/BookkeeperThe FamilyFit Experience:

FamilyFit is a unique CrossFit community that wants to continue the tradition started at CrossFit headquarters. The goal of this facility is to carry the tradition of CrossFitting in to a family dynamic, providing the whole family with a unique shared family fitness experience. FamilyFit is the right fit for every active family, and for newly active families to come together, to learn about fitness and functional movement using multiple modalities. This facility will provide coached classes that integrate weightlifting, functional movement, powerlifting movements, gymnastics, endurance, stability enhancing movements, and fun!


9 | P a g e



Administrative Assistant/Bookkeeper Position Requirements:

This position is for a dynamic professional who can assist with office duties, working with new and current members, as well as fulfill the duties required for the day to day bookkeeping. Administrative duties include answering phones, taking payments, managing members questions and needs, other office duties as required. Bookkeeping duties include working with accounts payables and receivables, general ledgers and bank statements.

On the job training will be available for all software that is used at FamilyFit, however a working knowledge of Word, Excel and email are essential.


Candidate must have basic administrative skills, including answering phones, working with computer systems including Word, Excel and email, dealing with the public and taking payments.

Candidate must also have basic accounting experience, including Accounts Payables and Accounts Receivables, General Ledgers, balancing bank reconciliations and daily cash.

Must have a passion for fitness, specifically CrossFit and want to be a part of our CrossFit community. Must be able to work within a dynamic team environment.

Hours required: up to 30 hours, with the opportunity for advancement as the community grows.

Wage: $21.50/hour

Salaries and Wages ExpensesThe staff salaries are listed in Table 6. A standard inflationary increase has been built into each of the salaries and wages, as well as their benefits.

Staff Training and RetentionIt is vital to for the members and the community that the staff receive continuous training. The CrossFit industry is evolving and changing and growing, as is the entire fitness industry. Offering the staff continuous learning opportunities will help them grow, and help the members grow within their own needs as members.

Staff will receive regular continuous training that consists of:

- Ongoing training on weightlifting technique and movement- Ongoing training on functional movements, including powerlifting technique and movement- Ongoing training on gymnastic movements and progressions- Staff will be required to maintain their CrossFit Level 1 certification- Ongoing training on nutritional counselling- Ongoing training in athlete mental toughness, personalities and motivation, to provide a great

training experience to the members - Administrative staff will receive regular refreshers on topics related to office management.

10 | P a g e


- Bookkeeping staff will receive regular refreshers on topics related to bookkeeping, as well as software training.

It is anticipated that there will be other training and related information courses that will be of great value to the staff. All opportunities for continuous learning in the fields of CrossFit and fitness will be utilized for the staff, as they are our members’ most important link to the community that we are building. Staff will also be encouraged to participate in regular Saskatchewan Weightlifting Association (SWA) and Saskatchewan Powerlifting Association (SPA) competitions.

11 | P a g e


Marketing PlanPositioning StatementFamilyFit is a unique CrossFit Facility that offers an exceptional community atmosphere, quality programming, a family friendly atmosphere with individual, kids and family classes, and great competitive rates.

Value Proposition The value proposition of this facility is its offer of community. Great workouts can be achieved in many places doing many things. But this facility, in addition to offering a great workout for the entire family, which can be done solo or together as a family, is the great community atmosphere that comes with a CrossFit facility. No where else can one find an inclusive, caring, supporting atmosphere where no athlete is left behind, and no workout is too hard to finish. In this facility, everyone is part of the community, a pat of the family. Everyone from the owner down through the coaches, and members, to even the youngest member, is a part of the over community that makes working out here a place you find hard to leave even after your workout is finished.

They offer a great family atmosphere, where kids and parents are welcome to workout together, or separately. There is a dedicated kid’s workout area for kids only workouts, complete with all the equipment they would need. If the family chooses to WOD (work out of the day) together, the coaches are fully equipped to make sure that all athletes are comfortable at their level.

The programming is top notch. All the coaches will have their CrossFit Level 1 certification, and will be maintaining those standards. They will also be training regularly on new methods, safety, nutrition, athlete mental toughness, and other areas. This additional training helps all the coaches to know their members’ best and worst moments, and help them to have a better workout everyday.

FamilyFit also offers competitive pricing. Most CrossFit facilities have standard pricing. In Saskatchewan, the prices as outlined in Table 1, the Membership Prices table, are comparable to the prices found at other CrossFit gyms in Saskatoon and surrounding areas.

ProductThe product being offered is a community based CrossFit fitness program. The community is at the heart of this facility, and the fitness is the fun that comes with it. FamilyFit offers individual group classes, kids classes and family classes.

The individual group classes are fully scalable to any fitness level, and will focus on the fundamentals of CrossFit work outs. They are based on functional movements, and these movements reflect the best aspects of gymnastics, weightlifting, running, and rowing, the core movements of life.

The kid’s classes are specifically geared towards teaching functional movement and learning the basics of weightlifting, gymnastics and other core movements. These specialized classes are based on perfection of the movement, not on adding weight to movement. They are also based around having a whole lot of fun moving and being fit.

12 | P a g e


The family classes are a special class geared towards allowing parents and kids, as well as any other family members, to work out together. The classes are based on the same CrossFit fundamental movements, and having fun together as a family. These classes are great for anyone wanting to try CrossFit for the first time, as well as any kids that want to workout with their parents. This class can be as intense or scaled back as needed for the members participating.

PlaceLocationSaskatoon is an ideal location for a new family focused CrossFit facility. The market indicates that even with four CrossFit facilities located in and around Saskatoon, that there is still a market for expansion and growth in the CrossFit industry. Since its inception in 2006, CrossFit has had steady growth in Canada, and specifically in Saskatoon. While all CrossFit facilities offer Kids classes to some degree, this would be the only facility that offers family only classes, in addition to individual group classes and kids classes.

Target SegmentFamilyFit’s ideal target segment is anyone looking to become fitter and healthier. More specifically, FamilyFit is targeting men and women aged 18-65 who may have families and children that want to improve their health and fitness level. These men and women may or may not have a knowledge of CrossFit and its modalities, and may or may not have an previous fitness experience. FamilyFit is also targeting kids who want to learn the principles of functional movement and the fundamentals of weightlifting. FamilyFit is also targeting men and women who want to learn about and improve their health and fitness ins a dynamic and inclusive community.

Membership GrowthFamilyFit has projected its growth over 5 years, based on its aggressive online and social media marketing plan, as well as word of mouth marketing. Acquiring memberships are the key to the success of this business, and its major risk factor. And membership revenue is the only revenue stream. The initial membership numbers are key to the first year of this business, with a projected growth pattern of more than 50% in the second year, and approximately 30% growth in years 3 -5. A complete table of the membership numbers and revenues with projected growth can be found in Table 7.

PriceMembership prices are based on standard pricing in similar CrossFit gyms in Saskatoon and surrounding area. See Table 1 for a full breakdown of the membership pricing.

It is anticipated that membership pricing could shift and adjust over the next 5 years, based on new membership groupings, possible new discounts, or the need to stay competitive if the price rises in other nearby facilities.

PromotionThe promotional plan for FamilyFit revolves around an aggressive and successful online, social media and word of mouth platform. Traditional advertising, such as radio and print ads will not be used initially, and potentially not at all.

13 | P a g e


WebsiteA professional website will be created, which will include all the information members and potential members would want to know about FamilyFit. It will include information about CrossFit, about FamilyFit’s facility and community, class schedule, membership pricing, links to CrossFit Headquarters and any information they post about CrossFit, the larger CrossFit community, the Open, the CrossFit Games, athlete profiles and other relevant information. The website will be members and potential members’ first point of contact for information about FamilyFit. It will be supplemental to any information posted on social media sites.

Social Media AdvertisingSocial media is one of the most effective ways to connect with members and share information about FamilyFit and the community. It is also extremely effective methods for creating community events, posting work outs, and sharing online media content about the larger CrossFit community.

The social media campaign will include Facebook, Instagram, email and potentially Snapchat to start. These are the most popular and widely used social media platforms. The campaign will have to be aggressive in sharing information and community content, especially in the early days of the business. This will help to create a buzz about the business, and create business for FamilyFit.

The social media campaign will also take advantage of Facebook advertising ads.

Word of Mouth AdvertisingThe next most efficient way of creating recognition and business for FamilyFit will be successful work of mouth advertising. If members like being there, and like the community and the work outs, and feel they are successful, then they will tell their friends about their experience. FamilyFit’s main goal is to create an amazing community and fitness experience that members and potential members will want to talk about.

Marketing ExpensesThe main marketing expenses are related to the website and Facebook advertising. There is an initial cost to creating the website and then yearly expenses for maintenance and advertising. A complete breakdown of advertising expenses totaling $27,535 over 5 years, can be found in the Operating Expenses in Table 5.

14 | P a g e


Financial PlanCapital Budget and Financing BudgetAs mentioned in the Operations Plan, the Capital Budget for FamilyFit is $110,000. This includes the Leasehold Improvements and Equipment and Flooring costs. This breakdown for these can be found in the Capital Budget in Table 3.

The financing budget is split between debt and equity. $51,000 will come from the owners’ personal equity, with the remaining $160,000 coming from debt. Note that there is an additional $100,000 in debt financing, to finance some initial losses in the first two years of operation. Also note that in the third year of operations the business is no longer making losses, and continues to grow its revenues in the remaining 5 years. The debt will come from a combination of bank loans, loans for women in business and loans for Aboriginal People starting new businesses. The loans will be amortized over 10 years at a finance rate of 7%.

A complete explanation of the Capital Budget can be found in Table 3, and the Financing Budget can be found in Table 4.

Dividend PolicyThere is a $30,000 dividend policy that kicks in in year 5. It is set a $30,000 to allow any extra net income to be reinvested back into the business to assist in growing the business.

ProfitabilityFamilyFit is not profitable in the first 2 year of operation. In the third year, there is a small profit, and substantially more profit in years 4 and 5. To mitigate this lack of profit in the first two years, an additional $100,000 in debt financing will be secured. It is important to note that it is common in this industry to not have any positive net profits in the first couple year’s of operations. Table 8 shows the net profits for all 5 years, including any taxes paid.

Cash BalanceThe breakdown of the cash balance cab be seen in Table 9. The significance of this information is to show that there is some initial net cash flow in the first year, but then that decreases in years 2 and 3, and then picks up again. This is due to the increase of some expenses in those years. As mentioned earlier, this is common in the first couple of years, and an additional $100,000 of debt financing is borrowed to mitigate these losses in the first couple years.

It is important to note that there is very little actual cash coming into the business. Memberships are paid for on a month to month basis (or multiple months at a time, if the members choose). Generally, these will be paid electronically, through debit or credit.

Risk & Sensitivity AnalysisThe greatest risk to the success of FamilyFit is membership revenues. The sole revenue stream is based on memberships being sold, and without memberships, the business will fail. The analysis shows that the financial model is very sensitive to how many memberships are purchased and at what price. The model

15 | P a g e


shows that even a decrease in first year membership numbers from 65 to 60 shows a significant decrease of 61% in the average 5 year profits. The second part of the model shows what happens when the number of first year memberships remains the same, but a slight decrease in the membership price also shows a 30% decrease in the average 5 year profits. So reasonably, the third part of the model shows that a decrease in both membership prices as well as first year memberships shows a 66% decrease in the average 5 year profits. The changes in these numbers also shows up in the Net Payback, 5 Year Owners Compensation and the overall Value of the Equity. The complete Sensitivity Analysis can be found in Table 10.

Break Even Analysis and CushionThe Breakeven Analysis is based on the number of customers per month. As indicated in the Profitability and Cash Balances section, the first two years of FamilyFit’s operations are a negative net income. This is due to the amount of membership revenues collected in those first two years. As Table 11 shows, year one is 56% below the required breakeven numbers, and year two is 8.7% below the required membership numbers. However, based on the growth projections, years 3-5 show incredible growth, with a 37.3% cushion by the end of year 5. Note, as already mentioned, negative net profits are common in the first couple of years of this industry, followed by growth.

Owners Compensation Owners compensation is a great way to show the value of this business. With the $30,000 dividend policy, the financial model shows that the first 4 years of owners’ compensation consists only of the owners’ salary, with inflationary increases. This is to ensure that any profits in the first years are put back into the business. It is clear from the financial model that once the dividend policy kicks in, meaning that the business is making enough money to cover all its expenses, that the owners’ compensation grows. The complete owners’ compensation can be found in Table 12.

16 | P a g e


Tables and Appendices

Table 1 – Membership PricesMembership Level PriceIndividual $175Kids (18 & under) $75Family - (4-6 people) $450

Table 2 - Class and Coaching Schedule Class Time Day Class Coach*Weekday Schedule6.30am Monday – Friday Group Coach 17.30am Monday – Friday Group Coach 18.30am Monday – Friday Group Coach 112.00pm Monday – Friday Family & Group Coach 34.30pm Monday – Friday Kids & Group Coach 25.30pm Monday – Friday Family & Group Coach 27.00pm Monday – Friday Family & Group Coach 18.00pm Monday – Friday Group Coach 1Weekend Schedule10.00am Saturday Family & Group Coach 311.00am Saturday & Sunday Family & Group Coach 312.00pm Saturday & Sunday Kids & Group Coach 2

Table 3 – Capital Budget

Schedule 4: Capital Budget 2018 2019 2020 2021 2022

Leasehold Improvements 2000 sq ft 80,000 - - - - Equipment & Flooring 31,000 8,346 1,168 169 26 Total 111,000 8,346 1,168 169 26

17 | P a g e


Table 4 - Financing Budget

Schedule 6: Financing Budget 2018 2019

2020 2021 2022

Bank debt & Other Debt 76% 160,00

0 Equity 51,000

Total 211,00

0

Table 5 - Operating Expenses

Operating Expenses 2018 2019 2020 2021 2022

Accounting and Legal 4,500 4,590 4,682 4,775 4,871 Advertising (Marketing) 5,291 5,397 5,505 5,615 5,727 Affiliate Fees 3,000 3,000 3,000 3,000 3,000 Insurance 2,500 2,550 2,601 2,653 2,706 Lease 18,000 18,360 18,727 19,102 19,484 Telephone & Internet 3,000 3,060 3,121 3,184 3,247 Utilities 7,800 7,956 8,115 8,277 8,443 Occupancy Cost 6,000 6,120 6,242 6,367 6,495 Wages and Salaries 102,608 105,409 122,686 125,965 144,315 Employee Benefits (salaries) 8.23% 4,115 4,197 4,281 4,367 4,454 Employee Benefits (wages) 14.0% 7,365 7,617 9,893 10,207 12,627 Misc Variable Costs % Sales 0.5% 557 840 1,074 1,388 1,808 Capital Cost Allowance 4,700 9,551 9,094 7,890 6,794 Debt Interest 11,200 10,389 9,522 8,594 7,601 Total Operating Expenses 180,636 189,036 208,544 211,384 231,571

18 | P a g e


Table 6 - Salaries and Wages Expenses

Salary and Wage Costs 2018 2019 2020 2021 2022

Manager 50,000 51,000 52,020 53,060 54,122

Main Coaches 24,960 26,208 27,518 28,894 30,339

Assistant Coaches 27,648 28,201 43,147 44,010 59,854

Admin/Bookkeeper - - 34,895 35,593 36,305

Total Salaries and Wages102,608 105,409

122,686 125,965 144,315

Employee Benefits (salaries) 8.23% 4,115 4,197 4,281 4,367 4,454

Employee Benefits (wages) 14.0% 7,365 7,617 9,893 10,207 12,627

Table 7 - Membership Growth and Revenues

Membership Growth & Revenues 2018 2019 2020 2021 2022

Number of Customers/month 65 100 128 165 215Number of Months/year 12 12 12 12 12

Average Purchase/customer $142.6

9 $140.00 $139.84 $140.15 $140.12 Total Sales 111,300 168,000 214,800 277,500 361,500

Growth Rate Number of Customers 54% 28% 29% 30%

Table 8 - Net Income

2018 2019 2020 2021 2022Taxable Income (69,336) (21,036) 6,256

66,116 129,929

Income Taxes - - - - 13,991

Net Income (69,336) (21,036) 6,256 66,11

6 115,937

19 | P a g e


Table 9 - Cash Balance with Financing Activities

Financing Activities 2018 2019 2020 2021 2022Long Term debt 148,420 (12,391) (13,258) (14,186) (15,180)Common Shares 51,000 - - - - Dividends - - - - (22,136)Total 199,420 (12,391) (13,258) (14,186) (37,315)

Net Cash Flow 23,784 (32,223) 923 59,651 85,391 Cash Bal Beg of Year - 23,784 (8,439) (7,516) 52,136 Cash Bal End of Year 23,784 (8,439) (7,516) 52,136 137,526

Table 10 - Risk & Sensitivity Analysis

Sensitivity Analysis

Average 5 Year 5 Year 6Value of

the

Number Cust/day year Profit Net PaybackOwner Comp

Owner Comp Equity

45 (40,966) 187,121 54,122 55,204 (100,731)50 (23,641) 761,658 54,122 55,204 3,647 55 (6,391) 1,338,905 54,122 55,204 108,155 60 9,585 2,153,911 54,122 76,474 238,925

65/215 24,762 3,853,970 62,356 152,359 472,776 75 55,116 4,634,494 135,706 222,545 630,637 85 85,470 5,459,808 193,413 270,965 792,871

Average 5 Year 5 Year 6Value of

the

Average Purchase/Customer year Profit Net PaybackOwner Comp

Owner Comp Equity

100.00 36,475 348,060 54,122 55,240 (72,611)125.00 3,240 1,637,860 54,122 55,204 163,587 135.00 17,302 3,018,952 54,122 115,062 357,415 142.69 24,762 3,853,970 62,356 152,359 472,776 155.00 45,427 4,652,616 102,250 207,557 611,233 165.00 59,489 4,663,558 150099.0% 230,019 642,820

20 | P a g e


Customers/Month and Average 5 Year 5 Year 6Value of

theAvg Purchase/Customer year Profit Net Payback Owner

CompOwner Comp

Equity

200/8.0050/125 (42,657) 142,993 54,122 55,204 (109,832)50/130 (36,475) 348,060 54,122 55,204 (72,611)55/135 (13,605) 1,106,808 54,122 55,204 65,107

65/142.69 24,762 3,853,970 62,356 152,359 472,776 65/175 73,552 5,006,142 179,148 252,481 713,314 75/150 70,847 4,900,199 175,833 248,161 695,037 85/155 112,493 6,531,716 226,885 314,684 975,856

Table 11 - Breakeven Analysis

Breakeven Analysis

Base Case Cust/month 65 100 128 165 215Breakeven Cust/month 101 109 121 122 135

Cushion % -56.0% -8.7%5.7% 25.8% 37.3%

1 2 3 4 50

50

100

150

200

250

65

100

128

165

215

101109

121 122135

Net Income Breakeven

Year

Num

ber o

f Cus

tom

ers p

er

day

NPV =

IRR = Average 5 year Net Income =

Table 12 - Owners’ Compensation

21 | P a g e


Average Owners' Compensation Year 1 Year 2 Year 3 Year 4 Year 5

Owner Salary 50,00

0 51,000 52,02

0 53,060 54,122 Dividends - - - - 22,136

Total Owners' Compensation 50,00

0 51,000 52,02

0 53,060 76,257

Average Owners' Compensation Year 6 Year 7 Year 8 Year 9 Year 10Owner Salary 55,204 56,308 57,434 58,583 59,755 Dividends 107,526 109,677 111,871 114,108 116,390 Total Owners' Compensation 162,731 165,985 169,305 172,691 176,145

22 | P a g e


Appendix 1 – Floor Plan

Appendix 2 - Organizational Chart

JanyceOwner/Manager

Year 3

Admin Assistant/Bookkeeper

Year 1Coach

Year 3Coach

Year 1Coach

Year 4Coach

Year 1Main Coach

23 | P a g e

KIDS

AR

EA

GYM

NAST

ICS

AREA EQ

UIPM

ENT

GYM

ARE

A

Documents

FamilyFit: A Unique CrossFit Facility - edwards.usask.ca Painter... · Web viewThis facility will provide coached classes that integrate weightlifting, functional movement, powerlifting