Feasibility essay

Location

Theestablished business, 7/24 fitness centre, will be located inToronto, near the metro station or bus stop. This fitness centreprovides day and night training services, innovative group exerciseclasses and a variety of strength, cardio and functional trainingequipment. The reason behind setting this business in Toronto, nearthe metro station or bus stop is due to the fact that, this is a busyarea with an approximate over 2 million peoples (City of Toronto,n.d). Consequently, it will be easier to tap lots of customers and tomarket the new business. For instance, a billboard which is notcostly can effectively be applied to market the business since thearea is congested. Apart from density population, majority of peoplenormally use this routine while going to work and home, thus this isthe best place they can start their fitness activities prior to goingto work and at home during the evenings. Moreover, since the businessis adjusted to rail station as well as bus stop, it will be easier totap a huge number of customers. Another key factor for choosing thisarea is security. As noted by CBC News (2016), there are securityofficers guarding the area all the day and nights near the bus stopand railway, thus customers will feel secure while visiting thebusiness.

Site

Itis worth noting that the area is densely populated as it is locatedin Toronto near a railway and bus stop. Consequently, there is heavytraffic of human being as well as vehicles (Torstar News Service,2014). In addition, there is an ample parking for several number ofcustomers. However, since the business is adjusted to railway and busstop, we expect majority of customers to come without their own cars.This is due to the fact that fitness center normally accommodate lotsof peoples, especially during aerobic season where there is hugenumber of customers and during early in the morning and evenings.Therefore, parking will not be a setback to the business.

However,despite having the best position for setting the business, there aresome similar businesses in the neighborhood. Since they startedearlier than us, the expected level of competition will be toughconsidering we are new entrance. Consequently, we will introducestrong strategies that can assist the business to win some customers.This will be aided by good services and thorough marketingstrategies. Moreover, we will only hire professional employees inorder to maintain the high standards of a fitness center that meetscustomers’ expectations as well as demands.

Whencomes to visibility, it is worth noting that the business can beclearly observed, as it is adjusted to a railway and bus stop.Therefore, we will only need a billboard outside the premises tocreate awareness to the customers that there is a new fitness centerin the region. In addition, we can hire marketing personnel who willmarket the business by giving leaflets to the arriving and departingcustomers on bus stop and railway. This will greatly assist topenetrate the market at a rapid speed. It is worth noting that theregion has traffic of over 1 million peoples who either comes throughrailway, busses and personal cars among other means.

SiteExpenses

Overthe recent years, the price for renting a business house in Torontohas increased at a high rate. As noted from CBS News (2016), the costfor renting a house in Toronto is currently at an average of $2.53per square foot, which is an equivalent to $1,891monthly. The following will be our fitness area

Ifone square foot will cost $2.53, then 7,076 square foot will cost$17,902.28 per month. Apart from rental expenses, there will be amaintenance cost for equipments, which will be approximate $1000 permonth. The other maintenance cost will be for the premises, since thefitness center must always be up to standards in order to maintainthe customers. The premises maintenance fee will be on contractbasses, like painting and floor repair among other facilities in thepremises. On other hand, due to the nature of business, we will optfor long term renewals. This is due to the fact we cannot keep ontransferring fitness equipments from one place to another. Inaddition, we will need time in order to build customers’ base aswell as reputation. Therefore, we will opt for 5 years and aboverenewal terms.

MarketPotential

Thiswill be an open fitness center to all ages, thus there is hugepotential of tapping lots of customers considering most of gyms donot offer services to all ages. As noted by Nguyen (2015), there arethree categories of fitness center in Canada. The first category islow-cost gym, which cost around $10-40 per month. The second categoryis middle-range gym, which cost $40-60 per month and the last one ishigh-end gym, which cost $100-250 per month. In our case, we areplanning to offer the middle-range gym, as it is affordable to manypeople. It is worth noting that we cannot establish a high-end gymand expect to gain customer we must start from humble begging andbuild reputation with time, then afterward, we can establish ahigh-end fitness center.

SalesForecast

Weare optimistic to get 30 percent of customers in the first year, and50 percent in the second year. This means that if we have 5,000customers in the first year, charging at the rate of $60, then wewill be able to make $300,000 per month. This will be a loss bearingin mind that there is a rental cost of $17,902.28per month plus employees salary and maintenance fee. However, with anincrease of 50 percent, the amount will be able to cater forexpenditures. For the third year, the business will be able to makeprofit.

Protectingthe Business

Mybusiness will go for premium services that cover liability andproperty. This will cover the gym equipments as well as thecustomers. In case a customer is injured or an employee, he or shewill be under the cover. Additionally, when equipment is broken, theinsurance company will cover it. The insurance cost will be estimatedto be $2,500to $2,800 annually. If I will be paying $2,500 annually, then itmeans I will be paying $208.3 per month (UCCIG,2016).For a starter, we will not need a vehicle. To ensure the security ismaintained, we will install CCTV cameras and a security guard. Thecost for installing CCTV cameras will be approximate $1000 (FIXR,n.d)and the security guard will be paid $10.25 per hour, which is aminimum wage in Toronto (Shum,2015).Since the business will be operating 24hrs, this means we will bepaying $246 per day. Considering this will be affordable services, wewill not extend the credit. As stated earlier, the site isappropriate for setting this business since it is a busy place withlots of peoples and security.

References

CBCNews, (2016). Brusselsattacks prompt heightened security at Toronto`s Union Station.Retrieved from,http://www.cbc.ca/news/canada/toronto/security-ttc-brussels-terror-1.3501962[Accessed on May 25, 2016].

CBSNews, (2016). Torontocondo rents jump, driven by higher prices.Retrieved from, http://www.cbc.ca/news/business/condo-rent-1.3535678[Accessed on May 25, 2016].

Cityof Toronto, (n.d). TorontoFacts. Retrieved from,http://www1.toronto.ca/wps/portal/contentonly?vgnextoid=dbe867b42d853410VgnVCM10000071d60f89RCRD[Accessed on May 25, 2016].

FIXR,(n.d). How much does itcost to install security cameras?Retrieved from, [Accessed on May 25, 2016].

Nguyen,M. (2015). Charting therise of discount gyms in Canada.Retrieved from,http://www.canadianbusiness.com/innovation/the-rise-of-discount-gyms-in-canada/[Accessed on May 25, 2016].

Shum,D. (2015). Ontariominimum wage to go up 25 cents in October.Retrieved from,http://globalnews.ca/news/1891618/ontario-minimum-wage-to-go-up-25-cents-in-october/[Accessed on May 25, 2016].

TorstarNews Service, (2014). Toweringoffice buildings planned across from Union Station.Retrieved from,http://www.metronews.ca/news/toronto/2014/08/14/towering-office-buildings-planned-across-from-union-station.html[Accessed on May 25, 2016].

UCCIG,(2016). Eastern OntarioFitness Insurance.Retrieved from,http://www.uccig.com/business/health-fitness-business-insurance[Accessed on May 25, 2016].