THE UNIVERSITY OF TEXAS AT AUSTIN Cuernavaca Community Fitness Center A feasibility study for Dr. Kathy Edwards Pedram Rahmanian | Tatiana Noroozian 12/5/2012 The following report is a feasibility study on the possibility of opening a gym in the Lake Hills neighborhood in Austin, Texas 78733.
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THE UNIVERSITY OF TEXAS AT AUSTIN
Cuernavaca Community Fitness Center
A feasibility study for Dr. Kathy Edwards
Pedram Rahmanian | Tatiana Noroozian
12/5/2012
The following report is a feasibility study on the possibility of opening a gym in the Lake Hills neighborhood in Austin, Texas 78733.
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Copyright 2012 | Pedram Rahmanian and Tatiana Noroozian
Copyright 2012 | Pedram Rahmanian and Tatiana Noroozian
Flooring and General Construction
Insurance Consultation Provided By:
Jim Anderson
Mondo Flooring
D: 630.242.4729 W: www.mondoworldwide.com
Local Dealer: Mondo USA Southwest
Michelle Music
C: 512.410.9655
202 Walton Way, Suite 192
Cedar Park, TX 78613
Mondo is an international flooring supplier of fitness facilities. They even do the flooring for the
Olympics. The have various specific products for specialized needs. For the sake of simplicity,
we looked at their multi-purpose indoor flooring products, specifically the Mondosport II which
comes in both a vinyl and wood finish. This flooring can be used in fitness/cardio rooms, indoor
basketball and volleyball courts and gymnasiums in general. Thus, the same flooring can be used
across our entire facility.
MondoSport II - Texture MondoSport II - Backing MondoSport II Wood
Jim gave us a quote of $5.25/ square foot. This price includes delivery, the laminate over the
foundation and the actual flooring, and installation.
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Multi-Purpose Court Requirements
Multi-purpose courts are designed around the basketball court. All courts for high school and
beyond have a width of 50 ft. and a length of 84 ft. for high school divisions and 94 ft. for
collegiate and above. Additionally, you need a 3 foot minimum unobstructed space (preferably
10 ft.) bordering the court. .
Dimensions (L x W) Area Cost at $5.25/sq. ft.
No Border 94 ft. x 50 ft. 4,700 sq. ft. $24,,675
3 Foot Border 100 ft. x 56 ft. 5,600 sq. ft. $29,400
10 Foot Border 114 ft. x 70 ft. 7,980 sq. ft. $41,865
15 Foot Border 124 ft. x 80 ft. 9,920 sq. ft. $52,080
Installations of lines: $3,500
Goals and Backboards: $2,000 - $2,500 depending on the brand and quality.
2 Row Tip n’ Roll Bleachers: BSNSports.com
Length Seats Price
8 Foot 10 $675
15 Foot 20 $1,035
21 Foot 28 $1,395
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Indoor Volleyball Equipment from Sports Imports
Upright Storage cart (holds 4) $810
International Official Stand $850
Safety Pad for Uprights $245
Net $355
Uprights >$360
Fitness Room Equipment Suppliers There are a number of manufacturers to consider in purchasing gym equipment. These companies vary in their product offerings, service, warranties, pricing, support, and overall value proposition. It is important to do detailed research and contact different companies to find the best fit for your needs. Equipment costs are benchmarked in Appendix C.
The information in the following company profiles are clippings directly from the respective company websites.
Selecting a manufacturer is a very personal decision, and is dependent upon specific needs that are difficult to predetermine. On a very broad level, we believe LifeFitness is a great candidate. They are the market leader and set standards for other companies to strive for. They’ve been around for a long time and have been a leader in product innovation. Most importantly, they have a cooperative philosophy of business. They view their customers as ‘fitness entrepreneurs’ and strive to help them succeed. An example of one of their services is equipment financing, to help you reduce the initial investment hurdle. This has led them to be used by countless businesses across the globe, including mega-chain LifeTime Fitness. An in-depth overview of their service offerings is provided in Appendix B.
M-Th 7 AM – 7 PM CST Friday 7 AM – 5 PM CST Saturday 9 AM – 3 PM CST (Sept. - April)
Local Retailer:
Fitness in Motion
10900 Research Blvd.
Austin, Texas, 78759 United States
512-345-2333
Vision Fitness is part of Johnson Health Tech (JHT), a name synonymous with quality fitness solutions for more than 30 years. In addition to Vision Fitness, the JHT family consists of some of the most respected brands in the industry, including Matrix, LIVESTRONG, AFG and Horizon. From high-end health clubs to specialty fitness retailers to sporting goods stores, JHT products are sold in over 60 countries. A strong commitment to product innovation, superior value and unmatched customer service has made JHT a leading provider of high-quality home and commercial fitness equipment around the world.
Precor www.precor.com
Virtual Room Planner:
http://precor.icovia.com/icovia.aspx
20031 142nd Avenue NE
P.O. Box 7202
Woodinville, WA 98072
T: (425) 486-9292
T: (800) 786-8404
Local Retailer:
Fitness in Motion
10900 Research Blvd.
Austin, Texas, 78759 United States
512-345-2333
THE PRECOR VISION:
To be the world's most recognized and respected brand in health and fitness.
Precor designs and builds premium fitness equipment for effective workouts that feel smooth and
natural. Our equipment is chosen by health clubs, hotels and spas, universities, and individuals
all over the world. For nearly three decades, we've driven fitness forward with a passionate focus
on ergonomic motion, proven science, and superior engineering. We constantly study and
anticipate the needs of the people and organizations we serve, and continually redefine the levels
of innovation, quality, and service necessary to deliver the very best fitness experiences – all
with the goal of improving the ways people improve themselves.
Also known as excess liability or commercial umbrella insurance, this policy provides
additional protection when the business exceeds insurance limits on an underlying policy.
For a single premium, umbrella policies add another layer of protection to any of several
other policies that are held. It is generally the most affordable way to get higher policy limits
on several other small business insurance policies.
Personnel Needs Starting a gym will demand a number of human resources. Determining how to staff these needs
is very flexible. The general needs include:
Administrative/ Supervisory position – Make sure member needs are served.
Maintenance/ Custodial – Make sure the facility is clean and safe. This can be
outsourced.
Coaching for sport leagues – This can be on a volunteer basis.
Class instructors – This depends on the classes offered, and typically you can
establish a partnership or contract agreement with independent instructors.
Personal Trainers – They can be hired full-time, part-time, or on an independent
contractor basis.
Many of these roles can be filled on a part-time basis, outsourced to other companies for a fee,
fulfilled by contractors, or filled on a volunteer basis. You can further gain value by offering
internships for the local youth. Any of these options would allow you to fulfill your needs
without having to have full-time employees and therefore have to offer benefits and pay
additional taxes.
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Recommendations We have identified several options for our client, Dr. Edwards to consider. The final decision has
to be a personal reflection considering her financial circumstances, her desired level of
commitment and her level of risk tolerance.
Option 1: Build a multi-purpose court first and add other amenities in phases. This is our first option because we believe it to be the most versatile. While any aspect of a gym
will have significant start-up costs, the multipurpose court requires much less than a fitness
room. They have the same cost per square foot in terms of flooring/construction, but a court
requires much less equipment. In addition, the space is much more versatile and can be used for
many different purposes, each of which presents a revenue driver.
For example:
1. Membership fees for open court access
2. After school youth activities
3. Group classes
4. Seasonal sporting leagues
5. Tournaments
6. Court reservations (Hourly)
7. Special event space rentals (dances, concerts, community festivals, etc.)
In addition, we believe this fits into your passion and experience well. You stated that you have
coached basketball, have tremendous nostalgia for your coach, and have experience running
tournaments. This gives you the ability to tap into the identified youth market and bring new
services to the community that is not already offered by the competitors in the area. The social
element of this option can help you succeed with the future expansions.
The downside of this option is that it does not directly give you a place to workout close to
home.
Option 2: Build a fitness room first and add other amenities in phases. This is our second option because it requires a significant upfront investment in terms of flooring
and equipment. Furthermore, this need is somewhat already met in the neighborhood by the
presence of Gold’s gym at the end of Cuernavaca. Therefore, leading with this amenity will
impose a greater challenge of breaking into the market and gaining market share in the
community. Additionally, it has less possible revenue drivers than the multi-purpose court.
Revenue Drivers:
1. Membership access to the room
2. Personal training with certified trainers
The advantage of this option is that it satisfies the client’s personal needs more directly.
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For example:
1. It provides her with a place to workout.
2. It eliminates the need for her to make long drives into town to exercise.
3. It gives her nephew, Mark, a place to work as a personal trainer.
Option 3: Build the group exercise room first and add the other amenities in
phases. While this option has the least start-up expenditure, we do not believe it is a feasible option. It
does not resonate with the client’s personal objectives or experience. The revenue drivers are
dependent on offering fitness classes, which our client does not want to do personally, and must
therefore rely on outside sources for the core value of the business. This is not a smart way to
start a business. Furthermore, the need is well met by Westlake CrossFit.
Option 4: Build the multi-purpose court, fitness room, and group exercise
room at once and add other amenities as desired. This option is the most risky due to having the highest up-front costs; however it also gives the
community the highest value proposition and has the most possible revenue drivers. This will
help break into the market faster and gain membership quicker. Further expansion could include
adding the following features:
1. Structured Activities:
a. Racquetball
b. Squash
c. Rock wall
d. Spinning class
e. Yoga and pilates studios
2. Vending Area, Juice/Shake bar, Café, or other food service
3. Retail shop (sales of athletic clothing and equipment)
4. Spectator seating in the gymnasium
5. Child care services
6. Fitness assessment spaces
7. Message or physical therapy spaces
8. Spa/tanning salon
9. Pool/Aquatic Center
10. Outdoor spaces /fields
11. Community special events /meeting rooms
If you outsource these services, you can gain revenue from rent, increase the value of your
facility in comparison to the competitors, better serve the community, and recover your
investment quicker.
Option 5: Do nothing and join one of the identified gyms. If the client decides that this venture is unfeasible for her, she can still meet some of her
objectives by joining one of the other gyms in the area. This can give her space to workout closer
to home, even though it is not her ideal situation.
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Appendix A: Interview with Professor Edwards Wednesday, October 10, 2012 at 5 PM CST
1. What type of gym were you thinking of? - Um, what I have had in mind for a while is kind of a community gym for all ages, you know—
really for the neighborhood I live in. Let me just give you some of the threads of my thoughts.
One is that I started my life, my career as an athlete and was a real gym rat. I just want to stay in
shape, for one thing—especially as I get older. And it’s costing me a fortune to drive into town
and work with a personal trainer and all that. And so that’s one thing influencing me. The other is
my nephew, um, is thinking about becoming a personal trainer. He, uh, he’s kind of had a hard
time figuring out what direction he wanted to go in his life and so forth, and he got all into fitness
and lost a hundred pounds on his own and trimmed down to, you know, about as good as it can
get. So, he works out every day, so he’s seriously considering getting his certification for training.
And I thought, well, you know that might be cool to have a place for Mark to work.
2. Similar to a YMCA? - Kind of like that. And then also, you know, the weights and all that so that you could do Little
Dribblers for five year olds one night, and you could have a volleyball league going the next, and
basketball tournaments. So, a pretty good size gym.
3. For the area that you’re in, is there a building or a facility that you have your eye
on? Or would you build? - Uh, no, the main road that when you cut off Bee Caves Road, that goes down two or three miles,
is a road called Cuernavaca—it’s the name of the street, and it’s mixed residential and
commercial. And there’s still some property along there.
4. Are you interested in amenities? - Yes, the other thing going through my mind was for other people as I’m watching people in my
family now, who are in their 80’s—of all of the aches and pains and stuff like that. And I thought,
well you know, wouldn’t it be cool even to do like a medical spa or something, where you had a
whirlpool, or maybe you rented out some space to a chiropractor or physical therapist. You
know—that kind of thing; a medical thing. So of course, now I’m just talking strictly fantasy. So
beyond that, that’s as far as my thinking has gone. To say, you know, there’s a lot of different
needs out there—both for the community, for older people, for little kids, for medical purposes
and things, and that there’s just nothing—you know we’re probably...360 is the nearest big road
to us, which is 3 or 4 miles back into town and then it’s further than that. Now if you go all the
way out to Bee Caves there’s a Gold’s Gym out there, but they don’t have an indoor pool or
anything like that. They’re mostly weights. It may just be totally prohibitive financially, at this
moment. The most money I could put together in a short period of time would be maybe $50,000,
you know, from one source or another. But, this is, you know, this is probably millions—I don’t
know.
5. Is your vision more to own this business, or just to have this center to exist? - Just to have it there. And so, one of the questions, to me, would be the possibilities of either
putting together a corporation versus making it non-profit, and my role just being kind of to get it
going and maybe doing some of the management to get it started…let Mark have a place to have
a job and so forth, you know.
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6. You don’t want to be too involved after you set it up, but you do want to retain
ownership of it? - Not necessarily. If it could be a nonprofit, then... Also, someone was telling me the other day—
you guys may know more about this—organizations where it’s kind of a combination of nonprofit
and profit. So, what I’m thinking is that area is in the Eanes school district, and the taxes are
pretty substantial out there. And so that’s one of the things kind of holding me back: what would
a commercial building out in that area—what would the taxes be? And would it be better to build
the building as a nonprofit, and then maybe manage it for profit or nonprofit. I’m not so interested
in money. I don’t want to lose money. But you know, I want it to be worth my while. But I don’t
want to be personally stuck in debt for 20 years. I want to set it up so that it would be sustainable
without me. So those are all the thoughts I’ve had so far.
7. And how set are you on the location? - I would be flexible within about 10 miles.
8. So, is this a situation, where maybe this facility doesn’t need to focus on machines
more so than maybe group activities? -Yeah, I think we’d want to have a weight room and machine space of some kind. But, I also
think group classes would be nice: yoga or body sculpting. My assumption is that there’s a lot
instructors who, if they had space, would be happy to you know, do that. So that would be part of
my…you know, I have no interest in the teaching or training part of it. I’m past those days, but I
think that would be an interesting win-win to offer space for those classes.
9. What do you typically do when you go to the gym? -Well, it just depends on what the facilities are. Uh, when I was at Gold’s, it was just strictly
weights, and I didn’t do the group classes at all.
10. So, to recap, are you looking for simply a facility and things to fill that facility? -In terms of data: like just knowing like in that Cuernavaca area what land is going for. Who
builds gyms and what does it cost to build a gym? What does a weight room cost? What does,
you know, the whole basketball/pool thing cost? Breaking that down—what do those elements
cost to build and maintain?
11. You mentioned the areas by the lake. There is a YMCA off the old 183. It has like 2
lakes so they have kayaking and stuff. So would that be something you want to do
too? -Um, I probably wouldn’t go that far, just because there’s not a lot of space in that area. And the
clubhouse, they do let people store their kayaks and stuff there. So, people store their stuff
there—the storage costs something, but they store their stuff there for free. So I would probably
stay away from that since that need is pretty well met. Probably wouldn’t be able to get too close
to the lake since the clubhouse is right on the lake, and Cuernavaca runs up probably 3 or 4 miles
back so it will probably end up being a couple of miles from the lake. Because right next to the
lake is pretty built up.
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The following information is clipped from the company website.
Our Mission
We're called Life Fitness for a reason, because helping people live healthier lives is more than just our business, it's our passion. Commitment, it's what sets us apart. And it doesn't end with the equipment, that's just the beginning. Life Fitness. It's more than just our name, it's What We Live For.
Our Enduring Commitment
Life Fitness began over 40 years ago with an idea, and a vision - Create a different kind of fitness equipment. Something that will engage and inspire exercisers to do more, to push themselves further.
Out of this vision was born the world’s first electronic piece of fitness equipment, the LifeCycle Exercise Bike. Our long-standing commitment to thoughtful product development and partnership has resulted in the global leader in the commercial fitness industry with over 400 different products delivered to thousands of commercial and home fitness customers worldwide.
Throughout our history, Life Fitness’ dedication to constantly develop better, more effective fitness equipment is rivaled only by our desire to be a partner to help our customers who choose to become fit, or to provide a healthy lifestyle to others.
Commitment to the Best in Product Development and Innovation
Investment in great products means more than just innovation for innovation's sake. It means thoughtful creation of products and product features so our customers have the right choice of equipment that is right for them, not the newest fad the will be hyped today and gone tomorrow.
Our commitment to product leadership is displayed each and every day, by dedicating more people and resources to make sure our product feel great and perform safely. That they have the best industrial design on the market, with unsurpassed reliability and durability built in.
A Partnership for Success
Whatever it takes to help our customers. As the top-selling and most trusted fitness equipment manufacturer in the world, Life Fitness supports your success in ways no other company can. Our global sales and distribution teams are known world-over for going beyond just bringing you great fitness equipment, by developing a true partnership to help you achieve your business goals.
Copyright 2012 | Pedram Rahmanian and Tatiana Noroozian
LifeFitness Provides the Following Additional Services: Equipment Selection Our two industry-leading brands, Life Fitness and Hammer Strength empower you to create a fitness floor tailored to your exercisers. We offer variety in our two cardio lines and 12 different strength lines, because we know that having choices helps you choose the right equipment to best suit your needs. A variety that also helps exercisers avoid boredom, plow through plateaus and achieve their goals—which they will attribute to your facility. Because the best exercise plan is one with room to grow, the best facilities enable that growth and thoughtful owners are rewarded for their foresight with very loyal members. Including:
Experienced sales consultants
Life Fitness and Hammer Strength brands
Life Fitness Journey
Facility Layout Services Creating a safe and inviting facility floor plan that maximizes your space is the first step in creating a successful fitness facility. Whether you are adding new equipment, expanding an existing facility or building a new one, Life Fitness has unsurpassed facility layout services and expertise to set your facility apart. Including:
2D and 3D layout services
Visio and CAD resources on media website
Online facility planner
Equipment Financing Life Fitness finances more fitness equipment than anyone in the world, including banks and leasing companies. We help our customers grow by investing in their future. Several of our customers have started out with us as single-club operators and after we took a chance on them, expanded to become multiple-club owners. Life Fitness understands club operations, and this allows us to not only assist with financing, but to help you avoid common—and costly—mistakes. Including:
Equipment financing team
Leasing and financing options
Pre-Sales Office Support Channeling the energy of a bustling exercise facility in a sales office is fairly daunting. We offer promotional videos to create visual excitement that also educates on the features of Life Fitness equipment. This way, exercisers immediately connect the idea of your facility helping them reach their fitness goals. Including:
Product/promotional posters
Life Fitness and Hammer Strength promotional DVD
2D and 3D layout posters
Staff Education Tools The Life Fitness Academy has devised a multi-step learning solution with options that benefit every fitness professional. It all begins with e-learning where staff and trainers can conveniently gain and test their knowledge. Fun, dynamic live and on-demand webinars comprise the next level of available training. Including:
On-Site training
E-learning
Webinars
Grand opening on-site trainer support
Product education videos
Member Education Tools For those facilities that have limited staff, having great instructional materials to help train your members on features and proper usage of your Life Fitness and Hammer Strength equipment can be a big help. The Life Fitness website Fitness Advisor section is a great place to direct your exercisers for fitness articles instructional videos and other tips on how to get the most from their workout. Our Life Fitness Academy trainers can further personalize equipment training for your exercisers by providing in-person instruction for your members, in your own facility. Including:
Copyright 2012 | Pedram Rahmanian and Tatiana Noroozian
Membership Sales Tools We understand selling memberships or promoting your facility to prospective exercisers is critical to your success. That's why Life Fitness wants to help you maximize your equipment investment, by giving you the tools to promote your equipment and it benefits, and give you unique ways to distinguish your facility. Things like the Life Fitness Journey Concept and unique workout tools like Life Fitness Virtual Trainer website. And staff education tools, so your trainers and staff can highlight all the features that help sell the equipment's benefits - and ultimately those of your club - to prospective members. Including:
Life Fitness quick product reference guide
Life Fitness Virtual Trainer website
Life Fitness Journey
Product education videos
Marketing Support - Print and Online Our marketing teams support 120 countries around the globe from headquarters and regional offices. We work hard to understand your specific needs from a point of view that will resonate with the exercisers you're trying to attract. We offer custom and ready-made solutions and collaborate with our customers to create the ultimate fitness experience. In addition to our capabilities in creating printed marketing materials, we recognize that the world is changing and moving to an ever more interactive existence. We can help you with website content and online resources to reach your exercisers before they ever walk through the door. Including:
Business solutions website
Media assets website
Video content
In-Facility Promotional Materials Keeping your facility looking and feeling fresh and exciting can be as easy as adding some new visual elements. We believe that these can be both eye-catching and educational. Many of our posters call out relevant information that makes exercisers feel comfortable. Including:
"Coming soon" posters
2D and 3D layout posters
POS promotional items
Public Relations You’re out there in your area, supporting area residents and their desire to live healthier lives. Public relations, both through the media and community, is a great way to spread the word about your accomplishments and attract new members. Including: