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Climbing wall business plan for your own gym
Are you thinking of how to open a climbing gym? Well, this is an excellent venture considering rock climbing has become a popular gym activity with many people gaining more interest. With people now fully aware of the benefits associated with going to the gym, the number of people patronizing gyms has increased. The fact that you can maintain a healthy lifestyle while at the same time, have fun has contributed to many rock climbing gym patrons. For this reason, it is a great business idea to venture. Initial capital required is intensive but you can be assured to recover your costs within the first three years of business.
Executive Summary
2.1 The Business
The climbing gym business will be registered under the name Spark Rock Gym, and will be situated in Enos Park, Springfield Illinois. The business will be owned and managed by Thomas Mulez, an experienced fitness professional.
2.2 Management Team
Thomas Mulez is a fitness instructor who has been the fitness industry for over ten years. Before starting a climbing gym, Thomas worked for many popular and large fitness brands across the United States acquiring extensive knowledge and experience.
2.3 Customer Focus
Spark Rock Gym intends to offer a modern, spacious and well equipped climbing gym for residents of Enos Park and the entire city of Springfield.
2.4 Business Target
Being the first such kind of business in Enos Park neighborhood, the entire immediate community and residents of Springfield will benefit from a modern, professionally managed facility.
Company Summary
3.1 Company Owner
Thomas Mulez is fitness instructor who has worked with top U.S. fitness household brands such as Curves International and 24 Hour Fitness. He has contributed immensely to ensuring the growth of the fitness industry by working in various capacities in the course of his career.
3.2 Aim of Starting the Business
Making your own rock climbing wall business requires expert understanding of how the business works in order to correctly identify priorities and set goals. Thomas has previously managed rock climbing gyms and therefore, understands the nitty-gritty details of rock climbing gyms.
3.3 How the Business will be Started
As a professional fitness instructor with rock climbing gyms, Thomas knows well what it entails to begin this enterprise. To actualize his vision, he has hired professionals to come up with a financial roadmap to guide the business. The following is core financial data for Spark Rock Gym.
| Start-up Expenses | |
| Legal | $5,000 |
| Consultants | $10,000 |
| Insurance | $14,000 |
| Rent | $25,000 |
| Research and Development | $8,000 |
| Expensed Equipment | $20,000 |
| Signs | $4,000 |
| TOTAL START-UP EXPENSES | $91,000 |
| Start-up Assets | $0 |
| Cash Required | $13,000 |
| Start-up Inventory | $60,000 |
| Other Current Assets | $15,000 |
| Long-term Assets | $8,000 |
| TOTAL ASSETS | $0 |
| Total Requirements | $96,000 |
| START-UP FUNDING | $0 |
| START-UP FUNDING | $100,000 |
| Start-up Expenses to Fund | $45,000 |
| Start-up Assets to Fund | $40,000 |
| TOTAL FUNDING REQUIRED | $0 |
| Assets | $5,000 |
| Non-cash Assets from Start-up | $12,000 |
| Cash Requirements from Start-up | $0 |
| Additional Cash Raised | $40,000 |
| Cash Balance on Starting Date | $25,000 |
| TOTAL ASSETS | $0 |
| Liabilities and Capital | $0 |
| Liabilities | $0 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $0 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $0 |
| Capital | $0 |
| Planned Investment | $0 |
| Investor 1 | $8,000 |
| Investor 2 | $10,000 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $80,000 |
| Loss at Start-up (Start-up Expenses) | $35,000 |
| TOTAL CAPITAL | $40,000 |
| TOTAL CAPITAL AND LIABILITIES | $30,000 |
| Total Funding | $280,000 |
Services for Customers
Spark Rock Gym is keen to offer professional and modern rock climbing facilities for patrons. When starting a rock climbing gym in Enos Park, the business will focus on building long lasting client relationships as it offers the following services.
- Offer indoor wall rock climbing facilities and training teams for outdoor climbing expeditions
- Provide a wide variety of facilities for children fun and games
- Amusement and recreation services for patrons and guests
- Offer indoor playground facilities
Marketing Analysis for Climbing Gym Business
For Spark Rock Gym to meet its market obligations, an extensive market analysis to find out market trends was initiated to help the business effectively tap into the market. This rock climbing gym business plan has elaborates the strategy the business intends to use to accomplish its goals. With the rapid popularity and growing trend of rock climbing sports, there’s definitely great potential for Spark Rock Gym to leverage on.
Note
Considering the strategic business location, demographic statistics and prevailing competition, it is guaranteed the gym will enjoy high patronage.
5.1 Market Segmentation
Building a rock climbing gym in Enos Park, Springfield is an excellent idea considering it is the first of its kind in the area. Spark Rock Gym therefore has the best opportunity to engage in vigorous marketing campaigns to command a larger market share. One doesn’t need to have any previous climbing experience to come to this gym which opens up the customer segment. Based on its market findings, the gym intends to target the following groups of customers.
Franchise Business Planning
5.1.1 Children
Many rock climbing gyms earn a giant share of their revenue and profits from having children fun related activities. Spark Rock Gym intends to have a wide array of children’s programs that will make the facility more attractive for children. Springfield has a large population of children between ages of five and eighteen which is key revenue potential for the business. Parents are nowadays encouraging their children to take part in recreation activities and sports in order to encourage healthy living. With a rock climbing gym in the community, the biggest beneficiaries and most lucrative customers for the business are children.
5.1.2 Adults (Age 18-44)
As rock climbing sport awareness increases, adults are also joining the excitement and want to participate in rock climbing for fun. This climbing gym business plan also incorporates adults since the business intends to put in place nice facilities that will appeal to the adult population between 18 -44 years. Since a majority of this age group are working and in active careers, they’re likely to pay for membership which generates a steady revenue channel for the gym.
5.1.3 Schools and College Students
Rock climbing is an emerging popular sport in various educational institutions. As such, many schools tend to organize indoor rock climbing competitions. Spark Rock Gym stands a great chance to benefit as these schools and their students will need a modern, well-equipped and safe venue where they can compete and have fun. Considering the high number of educational institutions in the neighboring areas, the prospects look bright. Spark Rock Gym plans to effectively market its services to schools and the general student population that loves to hang out and have fun.
5.1.4 Churches and Religious Centers
Springfield has many churches and religious institutions that occasionally organize fun events for their congregations. With a modern indoor rock climbing facility, Spark Rock Gym offers an exciting venue where religious institutions can host different types of social events as well as various religious events.
| Market Analysis | |||||||||
| Potential Customers | Growth | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 | CAGR | ||
| Adults | 18% | 20,000 | 25,000 | 30,000 | 35,000 | 40,000 | 10.00% | ||
| Children | 35% | 30,000 | 35,000 | 40,000 | 45,000 | 50,000 | 14.00% | ||
| School and College students | 30% | 25,000 | 30,000 | 35,000 | 40,000 | 45,000 | 15.00% | ||
| Churches and religious centers | 17% | 15,000 | 20,000 | 25,000 | 30,000 | 35,000 | 13.00% | ||
| Total | 100% | 90,000 | 95,000 130,000 | 150,000 | 170,000 | 18.00% | |||
5.2 Business Target
Spark Rock Gym is set to operate in strategic location where it faces no competition from similar establishments. The high population is a source of ready market for the rock climbing gym. When determining how much does it cost to open a climbing gym, the business knows it is expensive to open a rock climbing gym and therefore, adequate plans are needed to recover the initial investment. Spark Rock Gym hopes to have fully recovered the entire startup investment after three years since opening. The gym has predicted 20-25% annual increase in sales.
5.3 Product Pricing
A sustainable climbing gym business model should carefully and accurately determine prices of its services as this is the foundation of business success. Despite having no competition, Spark Rock Gym has put in place a competitive pricing approach to attract and retain customers.
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Strategy
To open a rock climbing gym, you need to come up with a well-defined and executable strategy. Thomas Mulez has worked closely with experts to create a customized rock climbing gym strategy that will be the blueprint of attracting business revenue. The following is Spark Rock Gym sales strategy.
6.1 Competitive Analysis
Spark Rock Gym is situated in a strategic and easily accessible location serving a huge population. In addition, this is the first rock climbing gym business in the area and therefore, the business anticipates a high demand.
6.2 Sales Strategy
To ensure Spark Rock Gym captures its intended customers, the following strategies will be used to boost sales.
- The business will use word of mouth marketing as it is one of the most powerful gym marketing techniques. Being an exciting sport, it is expected referrals will play a great role in bringing more customers to the business.
- Advertise the gym on local media channels such as Television, radio and print media.
- Organize a much publicized grand opening party to create awareness about the new rock climbing gym.
- Advertise the business on digital media platforms such as Facebook, Instagram and Twitter.
- Introduce a loyalty program and incentives to award regular clients.
- Reach out directly to institutions such as schools and religious centers.
- Organize numerous children activities such as birthday parties and rock climbing children teams.
- Engage in road shows and post signage at strategic places.
6.3 Sales Forecast
Spark Rock Gym is focused on implementing a wide variety of sales strategies to attain its targets. Below is a summary of sales forecasts based on the rock climbing business start up costs.
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Indoor wall rock climbing | 400,000 | 440,000 | 480,000 |
| Children fun and games | 210,000 | 250,000 | 290,000 |
| Amusement & recreation services | 200,000 | 240,000 | 280,000 |
| Indoor playground facilities | 300,000 | 330,000 | 360,000 |
| TOTAL UNIT SALES | 1,110,000 | 1,260,000 | 1,410,000 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Indoor wall rock climbing | $280.00 | $300.00 | $320.00 |
| Children fun and games | $220.00 | $240.00 | $260.00 |
| Amusement & recreation services | $240.00 | $260.00 | $280.00 |
| Indoor playground facilities | $260.00 | $280.00 | $300.00 |
| Sales | |||
| Indoor wall rock climbing | $300,000 | $350,000 | $400,000 |
| Children fun and games | $250,000 | $300,000 | $350,000 |
| Amusement & recreation services | $180,000 | $220,000 | $260,000 |
| Indoor playground facilities | $200,000 | $230,000 | $260,000 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Indoor wall rock climbing | $2.20 | $3.20 | $5.20 |
| Children fun and games | $2.10 | $3.00 | $4.10 |
| Amusement & recreation services | $0.50 | $1.50 | $3.50 |
| Indoor playground facilities | $4.00 | $6.00 | $8.00 |
| Direct Cost of Sales | |||
| Indoor wall rock climbing | $120,000 | $140,000 | $170,000 |
| Children fun and games | $100,000 | $120,000 | $140,000 |
| Amusement & recreation services | $70,000 | $100,000 | $130,000 |
| Indoor playground facilities | $120,000 | $140,000 | $160,000 |
| Subtotal Direct Cost of Sales | $210,000 | $250,000 | $280,000 |
Personnel Plan
Spark Rock Gym offers various services as opposed to only proving the core service in order to boost the income stream. How the business intends to pay salaries is spelt out in this start a climbing gym business plan.
7.1 Personnel Plan
Spark Rock gym is owned by Thomas Mulez who will also be the manager of the rock climbing gym business. The business intends to hire the following staff to serve customers.
- Business Manager
- Administrator
- Three Instructors
- Two Marketing Executives
- One Cashier
Successful applicants will be trained effectively and participate in an induction session before the gym opens its doors to the public.
7.2 Average Staff Salaries
Spark Rock Gym intends plans to spend the following amounts on staff salaries for the first three years.
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Business Manager | $70,000 | $75,000 | $80,000 |
| Cashier | $25,000 | $30,000 | $35,000 |
| Administrator | $22,000 | $27,000 | $32,000 |
| 2 Sales and Marketing Executive | $80,000 | $120,000 | $140,000 |
| 3 Instructors | $120,000 | $140,000 | $160,000 |
| Total Salaries | $317,000 | $392,000 | $447,000 |
Financial Plan
Spark Rock Gym has come up with a sound financial plan that will offer guidance on how the business should run to be successful. Opening a rock climbing gym will be facilitated by Mulez’s personal savings and two investors. In addition, a business plan for bank loan will be secured to help cater for initial costs and expenses. Key financial information for the business has been shown in the sections below.
8.1 Important Assumptions
Financial forecasts of Spark Rock Gym will be based on these assumptions.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 22.00% | 24.00% | 26.00% |
| Long-term Interest Rate | 14.00% | 14.00% | 14.00% |
| Tax Rate | 15.00% | 17.00% | 19.00% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
Spark Rock Gym Brake-even Analysis is show in the graph below.
| Brake-Even Analysis | |
| Monthly Units Break-even | 15000 |
| Monthly Revenue Break-even | $325,000 |
| Assumptions: | |
| Average Per-Unit Revenue | $150.50 |
| Average Per-Unit Variable Cost | $3.60 |
| Estimated Monthly Fixed Cost | $450,000 |
8.3 Projected Profit and Loss
Profit and Loss information for Spark Rock Gym computed on an annual and monthly basis is as shown below.
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $600,000 | $670,000 | $740,000 |
| Direct Cost of Sales | $40,000 | $60,000 | $80,000 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $40,000 | $60,000 | $80,000 |
| Gross Margin | $340,000 | $400,000 | $460,000 |
| Gross Margin % | 40.00% | 54.00% | 68.00% |
| Expenses | |||
| Payroll | $240,000 | $340,000 | $440,000 |
| Sales and Marketing and Other Expenses | $6,000 | $8,000 | $10,000 |
| Depreciation | $8,000 | $6,000 | $4,000 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $8,000 | $10,000 | $12,000 |
| Insurance | $2,000 | $4,000 | $6,000 |
| Rent | $25,000 | $25,000 | $25,000 |
| Payroll Taxes | $20,000 | $25,000 | $30,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $260,000 | $300,000 | $340,000 |
| Profit Before Interest and Taxes | $30,000 | $50,000 | $70,000 |
| EBITDA | $10,000 | $10,000 | $10,000 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $15,000 | $19,000 | $23,000 |
| Net Profit | $150,000 | $200,000 | $250,000 |
| Net Profit/Sales | 20.00% | 35.00% | 45.00% |
8.3.1 Monthly Profit
8.3.2 Yearly Profit
8.3.3 Monthly Gross Margin
8.3.4 Yearly Gross Margin
Below is the Profit and Loss Analysis for Spark Rock Gym.
8.4 Projected Cash Flow
The diagram below summarizes pro forma cash flow, subtotal cash spent, subtotal cash received, subtotal cash from operations and subtotal cash spent on operations.
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $80,000 | $65,000 | $50,000 |
| Cash from Receivables | $18,000 | $15,000 | $12,000 |
| SUBTOTAL CASH FROM OPERATIONS | $98,000 | $75,000 | $62,000 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $98,000 | $75,000 | $62,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $12,000 | $18,000 | $23,000 |
| Bill Payments | $25,000 | $28,000 | $32,000 |
| SUBTOTAL SPENT ON OPERATIONS | $37,000 | $46,000 | $55,000 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $37,000 | $46,000 | $55,000 |
| Net Cash Flow | $10,000 | $13,000 | $16,000 |
| Cash Balance | $20,000 | $24,000 | $28,000 |
8.5 Projected Balance Sheet
Illustrated below is the Projected Balance Sheet for Spark Rock Gym that indicates capital, liabilities, assets, current liabilities and long term assets.
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $280,000 | $230,000 | $310,000 |
| Accounts Receivable | $9,000 | $11,000 | $14,000 |
| Inventory | $2,000 | $4,000 | $6,000 |
| Other Current Assets | $1,500 | $2,500 | $3,500 |
| TOTAL CURRENT ASSETS | $292,000 | $307,500 | $333,500 |
| Long-term Assets | |||
| Long-term Assets | $12,000 | $14,000 | $16,000 |
| Accumulated Depreciation | $10,000 | $13,000 | $16,000 |
| TOTAL LONG-TERM ASSETS | $5,000 | $3,000 | $1,500 |
| TOTAL ASSETS | $312,000 | $400,500 | $362,000 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $12,000 | $15,000 | $18,000 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $12,000 | $15,000 | $18,000 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $12,000 | $15,000 | $18,000 |
| Paid-in Capital | $22,000 | $22,000 | $22,000 |
| Retained Earnings | $26,000 | $35,000 | $40,000 |
| Earnings | $110,000 | $130,000 | $150,000 |
| TOTAL CAPITAL | $300,000 | $330,000 | $360,000 |
| TOTAL LIABILITIES AND CAPITAL | $380,000 | $310,000 | $200,000 |
| Net Worth | $320,000 | $535,000 | $580,000 |
8.6 Business Ratios
Spark Rock Gym Ration Analysis, Business New Worth and Business Ratios are shown below.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 16.00% | 25.00% | 40.00% | 6.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 16.00% | 15.00% | 14.00% | 20.00% |
| Inventory | 23.00% | 22.80. % | 22.60% | 21.00% |
| Other Current Assets | 20.00% | 30.00% | 25.95% | 35.00% |
| Total Current Assets | 90.20% | 110.10% | 120.30% | 64.00% |
| Long-term Assets | -14.00% | -16.00% | -24.00% | 50.50% |
| TOTAL ASSETS | 80.00% | 80.00% | 80.00% | 80.00% |
| Current Liabilities | 15.00% | 14.00% | 13.50% | 34.50% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 20.00% |
| Total Liabilities | 15.10% | 10.00% | 10.50% | 52.10% |
| NET WORTH | 80.00% | 89.00% | 95.00% | 46.00% |
| Percent of Sales | ||||
| Sales | 90.00% | 90.00% | 90.00% | 90.00% |
| Gross Margin | 60.00% | 73.00% | 82.00% | 0.00% |
| Selling, General & Administrative Expenses | 50.00% | 65.00% | 75.00% | 55.00% |
| Advertising Expenses | 5.00% | 4.00% | 2.50% | 3.20% |
| Profit Before Interest and Taxes | 23.00% | 24.00% | 27.40% | 11.50% |
| Main Ratios | ||||
| Current | 19 | 16 | 14 | 3 |
| Quick | 35 | 30 | 25 | 2.6 |
| Total Debt to Total Assets | 13.05% | 12.00% | 11.65% | 65.00% |
| Pre-tax Return on Net Worth | 70.00% | 80.00% | 90.00% | 20.20% |
| Pre-tax Return on Assets | 74.30% | 78.00% | 86.00% | 17.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 26.00% | 29.20% | 33.00% | N.A. |
| Return on Equity | 70.00% | 84.00% | 89.00% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 7 | 4 | 2.5 | N.A. |
| Collection Days | 100 | 110 | 120 | N.A. |
| Inventory Turnover | 20 | 17 | 14 | N.A. |
| Accounts Payable Turnover | 17 | 19 | 21.1 | N.A. |
| Payment Days | 25 | 25 | 25 | N.A. |
| Total Asset Turnover | 3.6 | 3.4 | 3.2 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0.1 | -0.08 | N.A. |
| Current Liab. to Liab. | 0 | 0 | 0 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $300,000 | $320,000 | $340,000 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 2.46 | 2.47 | 2.33 | N.A. |
| Current Debt/Total Assets | 15% | 13% | 12% | N.A. |
| Acid Test | 33 | 36 | 39 | N.A. |
| Sales/Net Worth | 3.4 | 2.7 | 1.5 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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