Cuernavaca fitness center final report

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  • 1. THE UNIVERSITY OF TEXAS AT AUSTINCuernavaca CommunityFitness CenterA feasibility study for Dr. Kathy EdwardsPedram Rahmanian | Tatiana Noroozian12/5/2012The following report is a feasibility study on the possibility of opening a gym in the Lake Hillsneighborhood in Austin, Texas 78733.
  • 2. Page | 1Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianContentsExecutive Summary........................................................................................................................ 3Project Proposal .............................................................................................................................. 4About the Client .......................................................................................................................... 4Desired Outcomes ....................................................................................................................... 4Project Scope............................................................................................................................... 4Client and Consultant Responsibilities ....................................................................................... 4Project Costs................................................................................................................................ 4Work Schedule............................................................................................................................ 5Deliverables................................................................................................................................. 5About the Consultants................................................................................................................. 6Signature Page............................................................................................................................. 7Research Methodology ................................................................................................................... 8Interviews.................................................................................................................................... 8Secondary Research .................................................................................................................... 8Benchmarking ............................................................................................................................. 9Action Learning........................................................................................................................... 9Fitness Center Spatial Component Overview............................................................................... 10Proposed Amenities ...................................................................................................................... 12Physical Fitness (Exercise) Room:............................................................................................ 12Multi-Purpose Court (Gymnasium): ......................................................................................... 13Group Exercise Room:.............................................................................................................. 14Locker Rooms and Associated Functions................................................................................. 15Lake Hills Demographics ............................................................................................................. 16Competitive Landscape................................................................................................................. 19Locations................................................................................................................................... 19Competitor Overview and Analysis .......................................................................................... 20Competitor Benchmarking........................................................................................................ 21Anytime Fitness..................................................................................................................... 21Gold’s Gym ........................................................................................................................... 21The Hills Health Club............................................................................................................ 21Westlake CrossFit Model ...................................................................................................... 22Real Estate Options....................................................................................................................... 23Start-Up Requirements.................................................................................................................. 25
  • 3. Page | 2Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianFlooring and General Construction........................................................................................... 26Multi-Purpose Court Requirements .......................................................................................... 27Fitness Room Equipment Suppliers.......................................................................................... 28LifeFitness................................................................................................................................. 28Vision Fitness............................................................................................................................ 29Precor ........................................................................................................................................ 29Overview of Insurance Needs....................................................................................................... 30Personnel Needs............................................................................................................................ 32Recommendations......................................................................................................................... 33Option 1: Build a multi-purpose court first and add other amenities in phases........................ 33Option 2: Build a fitness room first and add other amenities in phases.................................... 33Option 3: Build the group exercise room first and add the other amenities in phases.............. 34Option 4: Build the multi-purpose court, fitness room, and group exercise room at once andadd other amenities as desired................................................................................................... 34Option 5: Do nothing and join one of the identified gyms. ...................................................... 34Appendix A: Interview with Professor Edwards .......................................................................... 35Appendix B: LifeFitness In-Depth Overview............................................................................... 37Appendix C: Equipment Costs..................................................................................................... 40
  • 4. Page | 3Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianExecutive SummaryOverview of ProjectDr. Edwards is a faculty member in the Management Department of the University of Texas atAustin. Dr. Edwards brings a wide variety of organizational experience to her work. In additionto her work as a faculty member, she has held executive leadership positions in business, non-profit and governmental organizations, and entrepreneurial ventures. Her current consultinginterests include conflict management, mediation, negotiation, and team facilitation. Dr.Edwards, a lifelong athlete, is interested in starting up a gym within a 10-mile radius of herneighborhood. She currently drives into town to take boxing lessons from a local gym, andwould like to have an option that gives her closer access to a workout. She envisions a place forthe community to come together and to host classes. She also desires to provide her nephew withan opportunity to work as a personal trainer. She does not necessarily wish to own the facility orto maintain its operations.Desired OutcomeAs a team, we came up with a way to test the feasibility of starting a gym in the West Austinarea. Our client, Dr. Edwards, wishes to establish a fitness center for her community so that shedoes not have to drive so far to get her desired workout. We consulted with Dr. Edwards todetermine what type of gym she aspires to open, as well as what services she hopes to provide toclients.Research Methods Conducted interviews with Dr. Edwards (client), Brian Fahey (realtor), Brenda Starr(realtor), Allison Van Leeuwen (Assistant Director-Facility Operations Gregory Gym),Jim Anderson (Mondo Sports Flooring Agent). Benchmarked with other gyms within a 5-mile radius to see what services and amenitiesthey offer to their clients. Conducted research on the demographics of the 78733 zip code area.ResultsOur team will create a scalability tool (excel model) that will allow the client to change severalvariables (features and amenities as well as their scale) and see the financial impact of thesechanges on the feasibility of the venture. We gathered useful benchmarking information ofnearby gyms to give our client an idea of the competitive landscape.RecommendationsWe have identified several options for our client to consider. Option 1: Build a multipurpose court first; add amenities inphases Option 2: Build a fitness room first; add amenities in phases Option 3: Build a group exercise room first; add amenities inphases Option 4: Build a multipurpose court, fitness room, and groupexercise room simultaneously; add amenities as desired Option 5: Do nothing and join one of the identified gyms.
  • 5. Page | 4Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianProject ProposalAbout the ClientDr. Edwards is a faculty member in the Management Department of the University of Texas atAustin. She is also involved in supervising independent research. Dr. Edwards is the founder ofThe Training Institute, a consulting firm that just celebrated its 18th year in business. Dr.Edwards brings a wide variety of organizational experience to her work. In addition to her workas a faculty member, she has held executive leadership positions in business, non-profit andgovernmental organizations, and entrepreneurial ventures. A sample of her consulting clientsinclude: Alcoa, Austin Police Academy, Dell, 3M, National Rural Electric Cooperatives, TexasMHMR, Texas Pharmaceutical Association, etc. Her current consulting interests include conflictmanagement, mediation, negotiation, and team facilitation.Desired OutcomesThe desired outcome of this project is to test the feasibility of starting a gym in West Austin area.The client wishes to establish a fitness center for her community so that she does not have todrive 12 miles to a gym. She envisions a place for the community to come together and to hostclasses. She also desires to provide her nephew with an opportunity to work as a personal trainer.She does not necessarily wish to own the facility or to maintain its operations.Project ScopeOur team will research the specific costs of real estate based on the clients preferred location. Wewill base several assumptions for equipment, revenue, and utilization by benchmarking withseveral gyms in close proximity to the preferred location. Our aim is to provide a relevant anduseful tool for the client to test the feasibility of her visions.We shall base our model on the up front and operational costs of the envisioned fitness center. Inthe model we will include a fitness room, a group fitness space, a multipurpose gym, and retailspace for additional services (e.g. a café/ smoothie stand).We will also provide 3 options or types of gyms, listing the average up front cost as well asoperating cost. In addition, we will include the types of services and activities for eachrespective option.Client and Consultant ResponsibilitiesWe expect to establish and maintain an honest collaborative relationship with opencommunication. The consultants are expected to conduct thorough research using relevantestablishments as benchmarking tools in order to create the feasibility model. The client isexpected to be willing to meet on an as-needed basis in order to assist in the establishment of keyassumptions and to keep the momentum of the project flowing without interruption. Theconsultants are expected to deliver accurate and relevant information to the best of their abilities.The client understands that the deliverables are an estimate and not exact, and are meant to be atool to test feasibility should she choose to pursue the venture.Project CostsThe consulting team will provide services free of charge to Dr. Edwards.
  • 6. Page | 5Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianWork ScheduleThe consultant team will meet twice a week for one hour prior to class. Friday is an independentworkday. We will meet with the client as needed.DeliverablesOur team will create a scalability tool (excel model) that will allow the client to change severalvariables (features and amenities as well as their scale) and see the financial impact of thesechanges on the feasibility of the venture.
  • 7. Page | 6Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianAbout the ConsultantsPedram Matthew Rahmanian | BBA’14The University of Texas at Austin | McCombs School of BusinessBachelor of Business Administration, Management | Pre-MedicineCertificate in Innovation, Creativity, and EntrepreneurshipPedram has a strong passion for personal health and fitness. He hasnumerous entrepreneurial and consulting experiences that span thisindustry, including a project with the Brushy Creek CommunityCenter.Tatiana Noroozian | BBA’12The University of Texas at Austin | McCombs School of BusinessBachelor of Business Administration, Management | Pre-MedicineTatiana is a business/pre-med major at the University of Texas atAustin. She is a novice consultant but is very passionate in anyproject she undertakes. With her science background, she is capableof acquiring necessary information for the research needed for thisproject.
  • 8. Page | 7Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianSignature PageYour signature below indicates acceptance of this proposal and the terms and conditionsherein.Consultants ClientName: Pedram Matthew Rahmanian Name: Dr. Kathy EdwardsTitle: Independent Consultant Title: ProfessorDate: ___/___/______ Date: ___/___/______Signature: ____________________________________ Signature: ____________________________________Name: Tatiana NoroozianTitle: Independent ConsultantDate: ___/___/______Signature: ____________________________________
  • 9. Page | 8Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianResearch MethodologyInterviewsFor our project, the main method of research we will use will be conducting interviews with ourclient as well as with various individuals that have started their own gym, have experiencerunning a gym, or others who have expertise in certain aspects of starting a company. Since bothof us are students in Dr. Edward’s class, this will enable us to be in contact with her (our client)more easily. This will also allow us to get to know her better, since we get to see her every otherday of the week. Pedram has done a lot of networking with startup companies, and he currentlyhas a working relationship with SoZo Global (a nutritional and wellness company) and ETMGInsurance Management Solutions, so he has developed contacts with relevant industries, whichwill enable us to interview some individuals who could provide important information.As far as our interviews and meetings with Dr. Edwards, we will focus on her desired outcomefor this consultation. To narrow our scope and avoid scope creep, we will ask her to define themain issues she is interested in for starting up a gym. The components of a gym that she woulddefinitely want to be included in a start-up gym, all the way up to a dream gym—as one of ourteam members said, “From a shanty to the Taj Mahal”. The information we would like to obtainfrom our client is cataloged as follows:1. What type of a gym are you interested in starting?2. In what area of Austin would you like to open a gym?3. Who is your target market?4. Are you interested in renting an existing facility, or do you want to build a facility?5. Do you think you want to offer amenities? And if so, what types?6. How do you plan on financing this?7. Who will run the facility?8. How involved would you like to be?Other interviews we plan to conduct will involve realtors, and individuals who currently areinvolved in running a gym. We will be able to find out a lot of pricing estimates and informationfrom these sources. Examples of data we will collect include: cost of land, possible availablecommercial property on Cuernavaca, cost of flooring and installation of a basketball court, costof exercise machines, maintenance costs, etc.Secondary ResearchThe second research method we will use: will be to gather resource information from secondarysources, such as property listings and the Internet. Also, we will gather demographic data recordson the area of Austin that Dr. Edwards is interested in.The information that we would like to acquire from these sources are as follows: What is the average price of land in ‘west of Westlake’ area, specifically theneighborhood on Cuernavaca Street? Are there any commercial properties around that area that have existing buildings thatcould be turned into a gym? What are the demographics of that area of Austin: population, employment, householdinformation, education, and income, among others.
  • 10. Page | 9Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianBenchmarkingThe third method we will employ: benchmarking. By identifying and evaluating other gyms inthe desired vicinity, we will be able to provide our client an idea of how to develop her ownplans, with the aim of bringing her dream to fruition. This will also give our client an idea ofwhat the components of a gym she is interested in actually looks like, as well as provide her withguidance for making her final decisions.Action LearningFinally, we will use action research. Dr. Edwards presented this method to us in the classroom,and we will put it to use in hopes of improving our strategy and practices of gatheringinformation for our project. By using this collaborative inquiry method, we hope to get theopinions and advice of other fellow students who might open our eyes to an aspect of the projector a particular tool that we may potentially overlook.
  • 11. Page | 10Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianFitness Center Spatial Component OverviewA Fitness Center is a health, recreational, and social facility geared towards active lifestyles. It isa place for exercise, sports, and physical activities in general. A successful facility canaccommodate both the serious athlete and the casual recreational user.The center can be either a for-profit commercial facility or a community/institutionally supportedcenter.The social component of a fitness center is an important secondary function. It supports thepatrons’ fitness goals but also encourages social interaction. This is in line with Dr. Edward’svision of a place for the community to interact and lead active lifestyles. The social aspect isrepresented by elements such as a juice or snack bar, sport spectator seating, and common places.There are several spatial aspects of a fitness center. Three will be analyzed in detail as they arethe basis of establishing the business model and form the core revenue drivers – a fitness center,a multi-purpose court, and group exercise rooms.I. Physical Fitness (Exercise) Room:This space is specifically designed for exercise, fitness training, and physical wellnessactivities. This space provides a comprehensive and varied program of activities to meetthe individual training regiments of its patrons. These programs can be divided into fourcategories: warm-up/cool down, free weights, circuit training, and cardiovasculartraining.II. Multi-Purpose Court (Gymnasium):This space is a diverse asset. The space is characterized by a large open space withimpact resistant flooring such as hardwood. The fixtures put in place can alter thecharacteristics of the space and outfit it for various activities such as basketball,volleyball, indoor soccer, badminton, flag football, various youth activities, dance,crossfit, boot camp instruction, group fitness, or even rental for special events such asbanquets, or meetings.III. Group Exercise Room:This room accommodates organized fitness class activities. It is characterized by an openspace with movable fixtures and equipment, impact resistant flooring, and mirrored walls.This space can be used for group class instruction, personal training, crossfit, boxingequipment, yoga, various dance classes, various martial arts classes etc.The space options above are optional and design the core aspects of the fitness center model. Acenter can have any combination of these facilities and in different proportions. It could excludevarious aspects altogether. How the fitness center is designed with respect to the three amenitiesabove shapes the value proposition and offerings of the fitness center as a whole. In addition tothese spaces, there are some general spatial aspects that any fitness center should incorporate.
  • 12. Page | 11Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianIV. Locker Rooms and Associated FunctionsThis space is typically separated by gender - possibly adding a third space for families.This space accommodates the basic functions of changing, storing clothes, and patronhygiene, including showers and restrooms. Additional optional spaces include: saunas,steam rooms, and hot tubs.V. Administrative and Support SpacesThese spaces include general lobbies, social spaces, and staff spaces accommodating theoperation and administration of the facility. It includes: Reception counter and equipment rental space Offices Storage and custodial services Staff Support Receiving and equipment repairThe potentially hazardous nature of a fitness center requires that facility access must becontrolled even in non-profit facilities. This requires a primary entrance controlled by acheck-in point that has visual access to much of the facility. Ideally the various aspects ofthe fitness center should naturally extend out of the main lobby, past the control desk.There are also various optional enhanced spaces that offer additional value propositions andpresent additional revenue streams. These spaces can enhance the patron’s social and overallexperience at the fitness center, which is crucial to maintain membership, increase word-of-mouth referrals and establishing goodwill within the community. These intangible factors arecrucial to the success of a community fitness center.i. Structured Activities: Include a variety of well-defined activities.a. Racquetballb. Squashc. Rock Walld. Spinning classe. Yoga and Pilates Studiosii. Vending Area, Juice/Shake bar, Café, or other food serviceiii. Retail shop (sales of athletic clothing and equipment)iv. Spectator Seating in the Gymnasiumv. Child Care Servicesvi. Fitness Assessment Spacesvii. Message or Physical Therapy Spacesviii. Spa / Tanning Salonix. Pool / Aquatic Centerx. Outdoor Spaces / Fieldsxi. Community Special Events / Meeting Rooms
  • 13. Page | 12Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianProposed AmenitiesPhysical Fitness (Exercise) Room:This space is specifically designed for exercise, fitness training, and physical wellness activities.This space provides a comprehensive and varied program of activities to meet the individualtraining regiments of its patrons. These programs can be divided into four categories: warm-up/cool down, free weights, circuit training, and cardiovascular training. These are typically theheart of a fitness facility and include the following components: Cardiovascular equipment (treadmills, elliptical, stationary bikes, etc.) Free and plate-loaded weights Selectorized weights (e.g. cable operated weight machines) Stretching spaces Running trackValue Proposition:This space provides patrons with the opportunity to build and maintain their physical fitness. It isa space for members of the communities to work out without having to drive into town orpurchase expensive home fitness equipment. It is also a social place for community members tosupport each other in meeting their fitness goals.Relation to Dr. Edward’s Objectives:This amenity would give Dr. Edwards a place to workout and stay active closer to home. Shewould no longer need to drive into town to workout. It also gives her a chance to help hercommunity get more active.Revenue Drivers:There are two main revenue drivers of this amenity.A. Membership Access to the roomB. Personal Training with certified trainersCost Drivers: Equipment Start-up Investment – This requires a large upfront expense to purchasecommercial grade fitness equipment. This can be depreciated over time, but a largecapital investment is needed upfront. A percentage of equipment purchase price isexpensed monthly for maintenance needs. (See Appendix C for research data and costbreakdown).o Equipment depreciationo Equipment maintenance Utilities – Commercial cardiovascular equipment, lights, air conditioning, and optionalfeatures such as televisions or speaker systems will require a large amount of electricpower on a monthly basis. Custodial and General Maintenance Services – The space needs to be cleaned andserviced regularly to maintain a clean and enjoyable environment. Supervision and Support Staff Wages – We need general support staff to provide patronswith support and administrative help. These staff members could be simultaneously
  • 14. Page | 13Copyright 2012 | Pedram Rahmanian and Tatiana Noroozianserving other parts of the fitness center, making this expense non-controllable for thisoption. Personal Trainer Staffo General – These trainers can be paid hourly to give general support to all patrons.o Private – These trainers provide private instruction to individual patrons and arepaid by the patrons individually.Multi-Purpose Court (Gymnasium):This space is a diverse asset. The space is characterized by a large open space with impactresistant flooring such as hardwood. The fixtures put in place can alter the characteristics of thespace and outfit it for various activities such as basketball, volleyball, indoor soccer, badminton,flag football, various youth activities, dance, crossfit, boot camp instruction, group fitness, oreven rental for special events such as banquets, or meetings.Value Proposition:This multi-purpose facility offers patrons with a wide variety of social and group activityoptions. It’s a place for playing team sports, or to participate in various sporting leagues andtournaments. It’s a place for the youth to participate in after-school activities and have fun withfriends. It’s a space to have group classes or crossfit/bootcamp sessions. Essentially it is a way toadd a social dimension to their personal fitness goals. Community members could also use thebig covered open space for special events.Relation to Dr. Edward’s Objectives:This amenity gives Dr. Edwards the ability to foster a lot of community activity. It gives herspace to workout, and the opportunity to use her coaching and administrative experience withteam sports to host various tournaments and leagues.Revenue Drivers:There are numerous revenue drivers associated with this space, as it is a very versatile space.A. Membership Fees for Open Court Accessa. Basketballb. Volleyballc. Indoor Soccerd. BadmintonB. After School Youth ActivitiesC. Group Classes (CrossFit, Bootcamp, Dance, Yoga, Cheerleading, etc.)D. Seasonal Sporting Leagues (For Adults and Youth)a. Basketballb. Volleyballc. Indoor Soccerd. Flag FootballE. TournamentsF. Court Reservations (Hourly)G. Special Event Space Rentals (Dances, Concerts, Community Festivals, etc.)
  • 15. Page | 14Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianCost Drivers:This space has a significant up front construction cost, but has very little operational overhead. Upfront Investmento Constructiono Equipment (Balls, hoops, jerseys, cones, volleyball net, badminton net, etc.) Operational Overheado Maintenance and Custodial Services – Need to maintain a clean and safeenvironment.o Administrative and Support Staff – Needed to setup various outfits in the gym.These staff members are shared with the rest of the facility.o Utilities – Electricity for the light system and speaker system.o Coaching Staff for Leagues (Volunteer basis)o Class Instructors (varied with class offering)Group Exercise Room:This room accommodates organized fitness class activities. It is characterized by an open spacewith movable fixtures and equipment, impact resistant flooring, and mirrored walls. This spacecan be used for group class instruction, personal training, crossfit, boxing equipment, yoga,various dance classes, various martial arts classes etc.Value Proposition:The group exercise room offers patrons with a space to do various aerobic activities such asyoga, warm-up/cool down activities, calisthenics, etc. It is also a place where they can takevarious group fitness classes to meet various interests such as various dance classes, yogaclasses, various martial arts classes, Cross Fit and boot camp classes. It is also a place to dospecialty activities such as boxing workouts or sparring.Relation to Dr. Edward’s Objectives:This amenity fits into Dr. Edward’s vision to have group fitness classes. It also satisfies herdesire to have specialty workouts, giving her the opportunity to keep up with her passion forboxing without having to go to into town and visiting the specialized boxing gym.Revenue Drivers:A. General membership access to open spaceB. Class fees for in-house hosted classesC. Rental Fees for external hosted classesCost Drivers:This space has a small up front construction costs, small equipment investments, and littleoperational overhead. Upfront Investmento Constructiono Equipment (Yoga balls, mats, boxing equipment, various other equipment, etc.)
  • 16. Page | 15Copyright 2012 | Pedram Rahmanian and Tatiana Noroozian Operational Overheado Maintenance and Custodial Services – Need to maintain a clean and safeenvironment.o Supervisory and Support Staff – These staff members are shared with the rest ofthe facility.o Utilities – Electricity for the light system and speaker system.o Instructor Fees for In-House hosted classesLocker Rooms and Associated FunctionsThis space is typically separated by gender - possibly adding a third space for families. Thisspace accommodates the basic functions of changing, storing clothes, and patron hygiene,including showers and restrooms.Revenue Drivers:A. Locker Reservation FeesB. Towel Service FeesCost Drivers: Upfront Investmento Construction Operational Overheado Maintenance and Custodial Services – Need to maintain a clean and safeenvironment.o Supervisory and Support Staff – These staff members are shared with the rest ofthe facility.o Utilities – Electricity for the light system and speaker system. Water for therestrooms and showers.
  • 17. Page | 16Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianLake Hills Demographics1Lake Hills Community Association: www.lakehillsca.org2012 President of the Board of Directors:Joe Gimenez512.358.1041jgimeneziii@yahoo.comGeneral Facts2: 90% Owner Occupied 90% White (7,878 people) 50% Female (4,548 people) 50% Male (4,596 people)Observations:1. There is a sizable youth population that would possibly be interested in sport leagues andother youth targeted activities.2. The majority of the population consists of adults between 25 and 64. Convenience wouldbe a significant issue for this group.1For a very detailed demographic breakdown of the 78733 zip code, visit:http://www.city-data.com/zips/78733.html#b2According to Movoto.com Neighborhood information for 78733 zip code115122282931943333019905001000150020002500300035006 or younger 7 to 18 19 to 24 25 to 39 40 to 64 65+Population by Age
  • 18. Page | 17Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianThe majority of the population in this neighborhood is well educated and employed.148, 3%1294, 23%2512, 46%1518, 28%Population by Education LevelHigh School or LessHigh School GraduateBachelors or Associate DegreesGraduate Degrees0, 0%4321, 69%1777, 29%123, 2%Employment StatusEmployed (Armed Forces)Employed (civilian)Not in Labor ForceUnemployed
  • 19. Page | 18Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianObservations:1. There is a significant number of households with children, indicating a significant need for afamily environment.2. There is a niche market of single parent households with children that could possibly use asafe place for their children to go after school.39614525150313139635326821310 200 400 600 800 1000 1200 1400 16001 Person HouseholdFemale HouseholdMale HouseholdMarried HouseholdNon-Family Households1 PersonHouseholdFemaleHouseholdMaleHouseholdMarriedHouseholdNon-FamilyHouseholdsWithout Children 396 35 32 682 131With Children 396 145 25 1503 131Household Type by Children Presence2197791108843020040060080010001200<$30,000 $30,000 to $74,999 $75,000 to $149,000 $150,000+Household Income Levels
  • 20. Page | 19Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianCompetitive LandscapeView Interactive Map Here: http://goo.gl/maps/jVDvvLocationsThere are four competitors within a geographic proximity to the Lake Hills neighborhood:Competitor Locations:A. Westlake CrossFitB. Gold’s GymC. Anytime FitnessD. The Hills Health ClubLots Available for SaleI. 810 Tumbleweed Tr.II. 1604 Lipan Tr.
  • 21. Page | 20Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianCompetitor Overview and AnalysisThe Hills Health Club and Wellness Center(D)4615 Bee Cave Rd.West Lake Hills, TX 78746512.327.4881www.thehillsfitness.comThis Center Competes with: Physical Fitness (exercise) room Multi-Purpose Court Group Exercise RoomThis country club offers everything to its clients:Swimming pools (outdoor and indoor), basketball gym, racquetball courts, outdoor running trail, a wide variety ofcardio equipment, child care, and a café. They also offer a variety of programs and classes, including: generalfitness, group fitness, and water aerobics. This club also offers personal training programs and Pilates classes.Additionally, they offer massage services to their clients.Westlake CrossFit (A)1302 Cuernavaca DriveAustin, TX 78733512.364.0365http://www.westlakecrossfit.com/ This Center Competes with: Group Exercise RoomThis training center offers group training and personal training. They offer workshops to their clients, specificallytargeted at improving your deficiencies and optimizing your strengths. The facility includes Olympic liftingequipment, as well as simple training tools necessary to give clients the most intense and complete training.Gold’s Gym (B)12480 FM 2244Bee Cave, TX 78738512.263.0700www.goldsgym.comThis Center Competes with: Physical Fitness (exercise) room Group Exercise RoomAt Golds Gym youll find all of the latest cardio and strength training equipment along with a dynamic groupexercise program that includes classes like yoga, group cycling, mixed martial arts, muscle endurance training andPilates.Anytime Fitness (C)6317 Bee Caves RoadAustin, TX 78746512.327.9300www.anytimefitness.comThis Center Competes with: Physical Fitness (exercise) roomAnytime Fitness is open 24 hours a day, 365 days a year. Membership gives access to thousands of clubs and isaffordable. The focus of attention is on affordable convenience. Inside, members have access to a wide variety ofcardio and strength equipment.
  • 22. Page | 21Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianCompetitor BenchmarkingAnytime Fitness3Gold’s Gym The Hills Health ClubContact: Jim Schuppenhauer Anthony MichelleMembership: 5200 2700>Contract? No Yes>Enrollment Fee No $195>Monthly Fee $30-$35 $79 + tax (12 mo.Contract)>Access toMultiple Locations?Yes Yes No>What doesmembership feeinclude?24/7 Access Everythingincluding classesAccess to center except: Pilates Personal training Child care Massage CaféAmenities:-Fitness Room? Yes Yes Yes>PersonalTraining?Yes Yes Yes-Multi-PurposeCourt?No No Yes-Group ExerciseRoom?Yes Yes>Classes? Yes Numerous, Variesby Month andLocation Cardio andStrength Pilates Cycling Mind and Body Circuit Senior Water Aerobics-Swimming Pool? No No Yes- Locker Room? Yes Yes Yes-Childcare? No No Yes-Café? No No Yes-Spa/Massage? No No Yes3We were unsuccessful in establishing contact with Anytime Fitness and obtain specific information about theirbusiness model. We obtained the information above through research on their website.
  • 23. Page | 22Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianWestlake CrossFit ModelContact: AmandaWestlake Crossfit operates on a model unique from the gyms aforementioned. They have apersonal element to their value proposition. The class sizes are limited and there is always atrainer present. It is not a gym to workout at on your own. They have a three step memberacquisition process outlined below:1st step: One-on-One ConsultationThey walk you through a short workout (1hr long consultation) and its FREE.2nd step: A one-on-one (3-session) "Elements Course" (each 1 hour long)They walk you through the basic movements of the crossfit workouts and they will do a smallsample workout with you. This 3 session package is $1503rd step: Sign up for a monthly program (depends on two things: duration of your workout andduration of your contract).A basic package (3 times a week, one hour each time) ranges from $120-160 per month. BUT, ifyou sign up for longer than a one year contract, you could get a cheaper package.Benefits of Westlake Crossfit: You are working with a personal trainer at ALL TIMES There is a maximum of only 12 people per class (and usually only 3-10 show up)o Small trainer to client ratio Classes offered all day, from 6 am-6:30 pm. These classes are one hour long each.
  • 24. Page | 23Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianReal Estate Optionswww.BrianFaheyRealtor.comReal-Estate Consultation Provided By:Brian FaheyRealtorColdwell Banker UnitedContacted on November 4, 2012D: 512.970.8772 E: bfahey@austin.rr.com609 Castle Ridge Rd. Austin, TX 78746Brian provided us with a ballpark estimate cost of a commercial acre of land in the Lake Hillsneighborhood to be between $200,000 and $250,000.www.bstarraustin.comReal-Estate Consultation Provided By:Brenda StarrRealtor, License #535034Sky RealtyContacted on November 4 and 5, 2012D: 512.940.3353 E: golfrealtor@yahoo.comhttp://BrendaStarr.actris.mlxchange.com/?r=1017050994&id=31363534323838.370Brenda found two available lots for sale in the Lake Hills neighborhood. The link above willdirect you to an online posting of the two lots. You can see the geographical location on the mapin the competitive landscape overview. Both of these lots are competitively located in theneighborhood and provide a high level of accessibility to the residents. They could possibly evenwalk to the gym.
  • 25. Page | 24Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianOption I.Address: 1604 LipanML# 6414249List Price: $787,000Type: Multiple Lots (Adjacent)1.95 Acres @ $402,763/acreView: GreenbeltZone: UnknownOption II.Address: 810 TumbleweedTrailML# 9091256List Price: $450,000Type: Single Lot, Cul-De-Sac, Backs to Greenbelt,Open5 Acres @ $90,000/acreView: Greenbelt,Creek/StreamZone: UnknownThese two lots require a much greater level of due diligence. A concern we want to point out istheir unclear zoning. This may be negotiable and there is the possibility to get the land rezoned ifneed be. Otherwise, Option II presents a great opportunity. The land is priced lower than theaverage given by Brian Fahey, and the sizable lot gives the opportunity to grow considerably, oreven to provide a hike and bike trail to the community.
  • 26. Page | 25Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianStart-Up RequirementsGym Consultation Provided By:Allison Van LeeuwenAssistant Director – Facility OperationsDivision of Recreational SportsGregory Gym (D7500)Austin, Texas 78712Contacted from November 1 - 5, 2012D: 512.471.6045E: allisonvl@austin.utexas.eduAllison gave us an estimate average cost per machine for treadmills, ellipticals, etc. to be around$5,000. She explained that the operational costs such as maintenance, utilities, and operationalexpenses such as payroll are too specific to each company and are not easily generalized.Therefore, we excluded such figures from our project scope. Furthermore, Allison led us tospecific vendors to research for flooring and gym startup expenses. We describe these elementsin detail below.Mondo Flooring : www.MondoUSA.comThis vendor provides various flooring products.Sports Imports: www.sportsimports.comThis vendor supplies indoor volleyball, badminton, and tennis equipment.BSN Sports: www.bsnsports.comThis vendor supplies various sporting equipment, including basketball equipment,bleachers, and fitness equipment.
  • 27. Page | 26Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianFlooring and General ConstructionInsurance Consultation Provided By:Jim AndersonMondo FlooringD: 630.242.4729 W: www.mondoworldwide.comLocal Dealer: Mondo USA SouthwestMichelle MusicC: 512.410.9655202 Walton Way, Suite 192Cedar Park, TX 78613Mondo is an international flooring supplier of fitness facilities. They even do the flooring for theOlympics. 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 whichcomes in both a vinyl and wood finish. This flooring can be used in fitness/cardio rooms, indoorbasketball and volleyball courts and gymnasiums in general. Thus, the same flooring can be usedacross our entire facility.MondoSport II - Texture MondoSport II - Backing MondoSport II WoodJim gave us a quote of $5.25/ square foot. This price includes delivery, the laminate over thefoundation and the actual flooring, and installation.
  • 28. Page | 27Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianMulti-Purpose Court RequirementsMulti-purpose courts are designed around the basketball court. All courts for high school andbeyond have a width of 50 ft. and a length of 84 ft. for high school divisions and 94 ft. forcollegiate and above. Additionally, you need a 3 foot minimum unobstructed space (preferably10 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,,6753 Foot Border 100 ft. x 56 ft. 5,600 sq. ft. $29,40010 Foot Border 114 ft. x 70 ft. 7,980 sq. ft. $41,86515 Foot Border 124 ft. x 80 ft. 9,920 sq. ft. $52,080Installations of lines: $3,500Goals and Backboards: $2,000 - $2,500 depending on the brand and quality.2 Row Tip n’ Roll Bleachers: BSNSports.comLength Seats Price8 Foot 10 $67515 Foot 20 $1,03521 Foot 28 $1,395
  • 29. Page | 28Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianIndoor Volleyball Equipment from Sports ImportsUpright Storage cart (holds 4) $810International Official Stand $850Safety Pad for Uprights $245Net $355Uprights >$360Fitness Room Equipment SuppliersThere are a number of manufacturers to consider in purchasing gym equipment. Thesecompanies vary in their product offerings, service, warranties, pricing, support, and overallvalue proposition. It is important to do detailed research and contact different companiesto 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 respectivecompany websites.Selecting a manufacturer is a very personal decision, and is dependent upon specific needsthat are difficult to predetermine. On a very broad level, we believe LifeFitness is a greatcandidate. 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. Mostimportantly, 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 servicesis equipment financing, to help you reduce the initial investment hurdle. This has led themto 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.LifeFitnesswww.lifefitness.comVirtual Room Planner:http://lifefitness-commercial.icovia.com/5100 North River RoadSchiller Park, IL 60176customersupport@lifefitness.comCommercial SalesPhone: 800.527.6065Available Monday-Friday, 8 am to 5 pm CSTcommercialsales@lifefitness.comIt is a point of pride that the history of the company effectively mirrors the timeline of the fitnessmovement. While many were still calling it a craze, we were deepening our understanding ofexercise in order to make it easier for people to enjoy the benefits of a healthy lifestyle.As a fitness entrepreneur, we know you share our commitment to helping people live healthierlives.There has never been a better time to invest in your club. By working together, we can help youimprove your business. Together, we’ll keep helping people get the most out of their workouts.
  • 30. Page | 29Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianVision Fitnesswww.vision fitness.comVirtual Room Planner:http://visionfitness.icovia.com/icovia.aspx1600 Landmark DriveCottage Grove, WI 53527Toll free 800-335-4348Fax 608-839-8994info@visionfitness.comM-Th 7 AM – 7 PM CSTFriday 7 AM – 5 PMCSTSaturday 9 AM – 3 PMCST (Sept. - April)Local Retailer:Fitness in Motion10900 Research Blvd.Austin, Texas, 78759 United States512-345-2333Vision Fitness is part of Johnson Health Tech (JHT), a name synonymous with qualityfitness solutions for more than 30 years. In addition to Vision Fitness, the JHT familyconsists 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 tosporting goods stores, JHT products are sold in over 60 countries. A strong commitment toproduct innovation, superior value and unmatched customer service has made JHT aleading provider of high-quality home and commercial fitness equipment around theworld.Precorwww.precor.comVirtual Room Planner:http://precor.icovia.com/icovia.aspx20031 142nd Avenue NEP.O. Box 7202Woodinville, WA 98072T: (425) 486-9292T: (800) 786-8404Local Retailer:Fitness in Motion10900 Research Blvd.Austin, Texas, 78759 United States512-345-2333THE PRECOR VISION:To be the worlds most recognized and respected brand in health and fitness.Precor designs and builds premium fitness equipment for effective workouts that feel smooth andnatural. Our equipment is chosen by health clubs, hotels and spas, universities, and individualsall over the world. For nearly three decades, weve driven fitness forward with a passionate focuson ergonomic motion, proven science, and superior engineering. We constantly study andanticipate the needs of the people and organizations we serve, and continually redefine the levelsof innovation, quality, and service necessary to deliver the very best fitness experiences – allwith the goal of improving the ways people improve themselves.
  • 31. Page | 30Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianOverview of Insurance Needswww.etmg.usInsurance Consultation Provided By:Thomas J. SmithCPA,CPCU, ARM, AReMember, Board of DirectorsD: 512.279.5611 M: 512.680.6195 E: tsmith@etmg.us6300 Bridgepoint Parkway Bldg. One, Suite 480 Austin, Texas 78730Your business needs business insurance because of the many risks and potential threats to itssuccessful and continued operation. By its nature, a fitness center is subject to heightened risksas people are in a physically risky environment. A good, tailored business insurance plan canhelp protect you and your venture as much as possible.An exact quote on the premiums cannot be given in a theoretical situation. The estimatedpremium figures presented below are estimates from Thomas Smith based on his vast experienceand historical data.Types of Insurance Coverage to Consider:1. Employee Benefits [Est. $445 per employee per month]Health Insurance is now one of the key factors in the decision of a skilled employee toaccept a job. This insurance offers a health coverage benefit. It can either beparticipatory (in which the employee shares a portion of the premium payment) or non-participatory (in which the employer pays the full premium). Aspects of this benefitinclude:a. Health Insurance (Major Medical) [Est. $400 per employee per month]b. Vision Coverage [Est. $10 per employee per month]c. Dental Coverage [Est. $30 per employee per month]d. Supplemental Riders [Volunteer basis, employee pays premium]e. Group Life insurance [Est. $5 per employee per month]2. Key Employee Life Insurance [Est. $2,000 monthly]This policy is used to protect the business from interruptions caused by the death of a keyemployee or executive. This person could be any person whose contributions to theoperations and success of the business are essential, such as the owner and operator. Thebusiness is the owner, beneficiary, and premium payer of this policy. In the event that theperson dies, the business receives the proceeds of the policy which gives it the flexibilityto continue operations.
  • 32. Page | 31Copyright 2012 | Pedram Rahmanian and Tatiana Noroozian3. Premises Liability [Est. $1,500 Annual Premium]This coverage provides protection from unexpected expense liability arising fromaccidents or injuries of guests arising on the premises of our facility. It also covers costsarising from law suits related to such incidents. Possible scenarios where this coveragecould come into play include: A guest slips on the bathroom floor and is injured A guest falls down the stairs and is injuredWhen a claim is made over injuries sustained on the premises by guest on the premisesnot covered under other insurance policies, premises liability insurance covers costsrelated to the primary injury such as the doctor visits, medical bills and surgery,permanent physical disfigurement, inability to work as well as pain and suffering. Thereis liability only if the injured party was injured on the business’ property.4. Property Coverage [Est. $750 Annual Premium]Business property insurance is a must to protect the company assets (the building,fixtures, computers, gym equipment etc.) and limit liability in the event of a naturaldisaster or other calamity. Business property insurance can be either basic form policieswhich provide coverage for damages from such events as fires and storms, or specialform coverage which offers broader coverage. This policy covers damage to theproperty, the property of the gym guests that was in the building at the time of theincident, and the lost income due to the disaster.5. Crime Policy [Est. $200 Annual Premium]Crime insurance is usually sold separately because regular property insurance does notusually cover losses caused by dishonest employees. Businesses use crime insurancepolicies to file claims for employee thefts and other offenses with the potential to causefinancial harm, such as: embezzlement theft forgery computer fraud counterfeiting breaking into a safe general crime and dishonesty6. Workers Compensation [Est. $1,500 Annual Premium]This policy insures a business’ employees from on-the-job injuries. Employees cannot suethe employer for on-the-job injuries by statute, and in return the employer must participate inthe workers compensation system that triggers payment to the employee in case of injury formedical bills and damages.
  • 33. Page | 32Copyright 2012 | Pedram Rahmanian and Tatiana Noroozian7. Commercial Automobile [Est. $2,000 Annual Premium per vehicle]Personal automobile policies do not cover vehicles used by the business. If the business usesvehicles or anything that is required to be titled by the state, then a commercial auto policy isneeded. This policy insures against property damage to vehicles and damage caused to othersby those vehicles.8. Umbrella Liability Insurance [Est. $250 Annual Premium]Also known as excess liability or commercial umbrella insurance, this policy providesadditional 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 severalother policies that are held. It is generally the most affordable way to get higher policy limitson several other small business insurance policies.Personnel NeedsStarting a gym will demand a number of human resources. Determining how to staff these needsis 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 beoutsourced. Coaching for sport leagues – This can be on a volunteer basis. Class instructors – This depends on the classes offered, and typically you canestablish a partnership or contract agreement with independent instructors. Personal Trainers – They can be hired full-time, part-time, or on an independentcontractor 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 offeringinternships for the local youth. Any of these options would allow you to fulfill your needswithout having to have full-time employees and therefore have to offer benefits and payadditional taxes.
  • 34. Page | 33Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianRecommendationsWe have identified several options for our client, Dr. Edwards to consider. The final decision hasto be a personal reflection considering her financial circumstances, her desired level ofcommitment 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 gymwill have significant start-up costs, the multipurpose court requires much less than a fitnessroom. They have the same cost per square foot in terms of flooring/construction, but a courtrequires much less equipment. In addition, the space is much more versatile and can be used formany different purposes, each of which presents a revenue driver.For example:1. Membership fees for open court access2. After school youth activities3. Group classes4. Seasonal sporting leagues5. Tournaments6. 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 havecoached basketball, have tremendous nostalgia for your coach, and have experience runningtournaments. This gives you the ability to tap into the identified youth market and bring newservices to the community that is not already offered by the competitors in the area. The socialelement 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 tohome.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 flooringand equipment. Furthermore, this need is somewhat already met in the neighborhood by thepresence of Gold’s gym at the end of Cuernavaca. Therefore, leading with this amenity willimpose a greater challenge of breaking into the market and gaining market share in thecommunity. Additionally, it has less possible revenue drivers than the multi-purpose court.Revenue Drivers:1. Membership access to the room2. Personal training with certified trainersThe advantage of this option is that it satisfies the client’s personal needs more directly.
  • 35. Page | 34Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianFor 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 inphases.While this option has the least start-up expenditure, we do not believe it is a feasible option. Itdoes not resonate with the client’s personal objectives or experience. The revenue drivers aredependent on offering fitness classes, which our client does not want to do personally, and musttherefore rely on outside sources for the core value of the business. This is not a smart way tostart a business. Furthermore, the need is well met by Westlake CrossFit.Option 4: Build the multi-purpose court, fitness room, and group exerciseroom 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 thecommunity the highest value proposition and has the most possible revenue drivers. This willhelp break into the market faster and gain membership quicker. Further expansion could includeadding the following features:1. Structured Activities:a. Racquetballb. Squashc. Rock walld. Spinning classe. Yoga and pilates studios2. Vending Area, Juice/Shake bar, Café, or other food service3. Retail shop (sales of athletic clothing and equipment)4. Spectator seating in the gymnasium5. Child care services6. Fitness assessment spaces7. Message or physical therapy spaces8. Spa/tanning salon9. Pool/Aquatic Center10. Outdoor spaces /fields11. Community special events /meeting roomsIf you outsource these services, you can gain revenue from rent, increase the value of yourfacility in comparison to the competitors, better serve the community, and recover yourinvestment 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 herobjectives by joining one of the other gyms in the area. This can give her space to workout closerto home, even though it is not her ideal situation.
  • 36. Page | 35Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianAppendix A: Interview with Professor EdwardsWednesday, October 10, 2012 at 5 PM CST1. 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 inshape, for one thing—especially as I get older. And it’s costing me a fortune to drive into townand work with a personal trainer and all that. And so that’s one thing influencing me. The other ismy nephew, um, is thinking about becoming a personal trainer. He, uh, he’s kind of had a hardtime figuring out what direction he wanted to go in his life and so forth, and he got all into fitnessand lost a hundred pounds on his own and trimmed down to, you know, about as good as it canget. 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 LittleDribblers for five year olds one night, and you could have a volleyball league going the next, andbasketball 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 eyeon? 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 andcommercial. 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 myfamily 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 awhirlpool, or maybe you rented out some space to a chiropractor or physical therapist. Youknow—that kind of thing; a medical thing. So of course, now I’m just talking strictly fantasy. Sobeyond that, that’s as far as my thinking has gone. To say, you know, there’s a lot of differentneeds out there—both for the community, for older people, for little kids, for medical purposesand things, and that there’s just nothing—you know we’re probably...360 is the nearest big roadto us, which is 3 or 4 miles back into town and then it’s further than that. Now if you go all theway out to Bee Caves there’s a Gold’s Gym out there, but they don’t have an indoor pool oranything like that. They’re mostly weights. It may just be totally prohibitive financially, at thismoment. 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’tknow.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 eitherputting together a corporation versus making it non-profit, and my role just being kind of to get itgoing and maybe doing some of the management to get it started…let Mark have a place to havea job and so forth, you know.
  • 37. Page | 36Copyright 2012 | Pedram Rahmanian and Tatiana Noroozian6. You don’t want to be too involved after you set it up, but you do want to retainownership 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 nonprofitand profit. So, what I’m thinking is that area is in the Eanes school district, and the taxes arepretty substantial out there. And so that’s one of the things kind of holding me back: what woulda commercial building out in that area—what would the taxes be? And would it be better to buildthe building as a nonprofit, and then maybe manage it for profit or nonprofit. I’m not so interestedin money. I don’t want to lose money. But you know, I want it to be worth my while. But I don’twant to be personally stuck in debt for 20 years. I want to set it up so that it would be sustainablewithout 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 machinesmore so than maybe group activities?-Yeah, I think we’d want to have a weight room and machine space of some kind. But, I alsothink group classes would be nice: yoga or body sculpting. My assumption is that there’s a lotinstructors who, if they had space, would be happy to you know, do that. So that would be part ofmy…you know, I have no interest in the teaching or training part of it. I’m past those days, but Ithink 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 strictlyweights, 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. Whobuilds 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 elementscost to build and maintain?11. You mentioned the areas by the lake. There is a YMCA off the old 183. It has like 2lakes so they have kayaking and stuff. So would that be something you want to dotoo?-Um, I probably wouldn’t go that far, just because there’s not a lot of space in that area. And theclubhouse, they do let people store their kayaks and stuff there. So, people store their stuffthere—the storage costs something, but they store their stuff there for free. So I would probablystay away from that since that need is pretty well met. Probably wouldn’t be able to get too closeto the lake since the clubhouse is right on the lake, and Cuernavaca runs up probably 3 or 4 milesback so it will probably end up being a couple of miles from the lake. Because right next to thelake is pretty built up.
  • 38. Page | 37Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianAppendix B: LifeFitness In-Depth OverviewLifeFitnesswww.lifefitness.comVirtual Room Planner:http://lifefitness-commercial.icovia.com/5100 North River RoadSchiller Park, IL 60176customersupport@lifefitness.comCommercial SalesPhone: 800.527.6065Available Monday-Friday, 8 am to 5 pm CSTcommercialsales@lifefitness.comThe following information is clipped from the company website.Our MissionWere called Life Fitness for a reason, because helping people live healthier lives is more than just our business, its our passion.Commitment, its what sets us apart. And it doesnt end with the equipment, thats just the beginning. Life Fitness. Its morethan just our name, its What We Live For.Our Enduring CommitmentLife Fitness began over 40 years ago with an idea, and a vision - Create a different kind of fitness equipment. Something thatwill 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-standingcommitment to thoughtful product development and partnership has resulted in the global leader in the commercial fitnessindustry 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 onlyby 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 InnovationInvestment in great products means more than just innovation for innovations sake. It means thoughtful creation of productsand product features so our customers have the right choice of equipment that is right for them, not the newest fad the will behyped today and gone tomorrow.Our commitment to product leadership is displayed each and every day, by dedicating more people and resources to make sureour product feel great and perform safely. That they have the best industrial design on the market, with unsurpassed reliabilityand durability built in.A Partnership for SuccessWhatever it takes to help our customers. As the top-selling and most trusted fitness equipment manufacturer in the world, LifeFitness supports your success in ways no other company can. Our global sales and distribution teams are known world-over forgoing beyond just bringing you great fitness equipment, by developing a true partnership to help you achieve your businessgoals.
  • 39. Page | 38Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianLifeFitness Provides the Following Additional Services:Equipment SelectionOur two industry-leading brands, Life Fitness andHammer Strength empower you to create a fitness floortailored to your exercisers. We offer variety in our twocardio lines and 12 different strength lines, because weknow that having choices helps you choose the rightequipment to best suit your needs. A variety that alsohelps exercisers avoid boredom, plow through plateausand achieve their goals—which they will attribute toyour facility. Because the best exercise plan is one withroom to grow, the best facilities enable that growth andthoughtful owners are rewarded for their foresight withvery loyal members.Including: Experienced sales consultants Life Fitness and Hammer Strength brands Life Fitness JourneyFacility Layout ServicesCreating a safe and inviting facility floor plan thatmaximizes your space is the first step in creating asuccessful fitness facility. Whether you are adding newequipment, expanding an existing facility or building anew one, Life Fitness has unsurpassed facility layoutservices and expertise to set your facility apart.Including: 2D and 3D layout services Visio and CAD resources on media website Online facility plannerEquipment FinancingLife Fitness finances more fitness equipment thananyone in the world, including banks and leasingcompanies. We help our customers grow by investing intheir future. Several of our customers have started outwith us as single-club operators and after we took achance on them, expanded to become multiple-clubowners. Life Fitness understands club operations, andthis allows us to not only assist with financing, but tohelp you avoid common—and costly—mistakes.Including: Equipment financing team Leasing and financing optionsPre-Sales Office SupportChanneling the energy of a bustling exercise facility in asales office is fairly daunting. We offer promotionalvideos to create visual excitement that also educates onthe features of Life Fitness equipment. This way,exercisers immediately connect the idea of your facilityhelping them reach their fitness goals.Including: Product/promotional posters Life Fitness and Hammer Strength promotionalDVD 2D and 3D layout postersStaff Education ToolsThe Life Fitness Academy has devised a multi-steplearning solution with options that benefit every fitnessprofessional. It all begins with e-learning where staffand trainers can conveniently gain and test theirknowledge. Fun, dynamic live and on-demand webinarscomprise the next level of available training.Including: On-Site training E-learning Webinars Grand opening on-site trainer support Product education videosMember Education ToolsFor those facilities that have limited staff, having greatinstructional materials to help train your members onfeatures and proper usage of your Life Fitness andHammer Strength equipment can be a big help. The LifeFitness website Fitness Advisor section is a great placeto direct your exercisers for fitness articles instructionalvideos and other tips on how to get the most from theirworkout. Our Life Fitness Academy trainers can furtherpersonalize equipment training for your exercisers byproviding in-person instruction for your members, inyour own facility.Including: Educational video content Grand opening on-site trainer support
  • 40. Page | 39Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianMembership Sales ToolsWe understand selling memberships or promoting yourfacility to prospective exercisers is critical to yoursuccess. Thats why Life Fitness wants to help youmaximize your equipment investment, by giving you thetools to promote your equipment and it benefits, andgive you unique ways to distinguish your facility. Thingslike the Life Fitness Journey Concept and uniqueworkout tools like Life Fitness Virtual Trainer website.And staff education tools, so your trainers and staff canhighlight all the features that help sell the equipmentsbenefits - and ultimately those of your club - toprospective members.Including: Life Fitness quick product reference guide Life Fitness Virtual Trainer website Life Fitness Journey Product education videosMarketing Support - Print and OnlineOur marketing teams support 120 countries around theglobe from headquarters and regional offices. We workhard to understand your specific needs from a point ofview that will resonate with the exercisers youre tryingto attract. We offer custom and ready-made solutionsand collaborate with our customers to create theultimate fitness experience. In addition to ourcapabilities in creating printed marketing materials, werecognize that the world is changing and moving to anever more interactive existence. We can help you withwebsite content and online resources to reach yourexercisers before they ever walk through the door.Including: Business solutions website Media assets website Video contentIn-Facility Promotional MaterialsKeeping your facility looking and feeling fresh andexciting can be as easy as adding some new visualelements. We believe that these can be both eye-catching and educational. Many of our posters call outrelevant information that makes exercisers feelcomfortable.Including: "Coming soon" posters 2D and 3D layout posters POS promotional itemsPublic RelationsYou’re out there in your area, supporting area residentsand their desire to live healthier lives. Public relations,both through the media and community, is a great wayto spread the word about your accomplishments andattract new members.Including: Public relations guide
  • 41. Page | 40Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianAppendix C: Equipment CostsManufacturer Treadmills MSRPLength(in.) Width (in.)Footprint(ft2)LifeFitness F1 Smart $2,499 77 34 18.2LifeFitness F3 $2,999 79.5 34.5 19.0LifeFitness T3 $2,999 78.5 34.5 18.8LifeFitness T5-0 $3,699 80.25 32 17.8LifeFitness T5-5 $4,199 80.25 32 17.8LifeFitness T7-0 $4,699 80.25 32 17.8LifeFitness Club Series $5,499 83 37 21.3LifeFitnessPlatinumClub $5,999 80 37 20.6VisionFitness T80 Classic $4,599 80 43.5 24.2Average: $4,132 79.9 35.2 19.5Manufacturer Exercise Bikes MSRPLength(in.)Width(in.)Footprint(ft2)LifeFitness R1 Lifecycle $1,599 57 26 10.3LifeFitness R3 Lifecycle $2,599 57 26 10.3LifeFitnessClub Series RecumbentLifecycle $2,999 54 26 9.8LifeFitnessPlatinum Club SeriesRecumbent Lifecycle $3,499 65 27 12.2LifeFitness C1 Lifecycle $1,399 45 27 8.4LifeFitness C3 Lifecycle $2,299 45 27 8.4LifeFitnessClub Series UprightLifecycle $2,699 48 24 8.0LifeFitnessPlatinum Club Seriesupright Lifecycle $2,999 43.5 21 6.3Vision Fitness V-Series Indoor Cycle $1,199 56 21 8.2Vision Fitness U70 Upright Bike $2,499 41 26 7.4Vision Fitness R70 Recumbent $2,999 67 28 13.0Average: $2,435 52.6 25.4 9.3
  • 42. Page | 41Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianManufacturer Ellipticals MSRPLength(in.) Width (in.)Footprint(ft2)LifeFitness X1 $2,199 81 30 16.9LifeFitness X3 $3,099 81 30 16.9LifeFitness X5 $3,899 83 26 15.0LifeFitness X8 $4,699 83 26 15.0LifeFitnessClubSeries $4,299 83 28 16.1VisionFitness S60 $3,999 73.2 29.5 15.0VisionFitness S70 $4,999 75 35 18.2Average: $3,885 79.9 29.2 16.2ManufacturerSummitTrainer MSRPLength(in.) Width (in.)Footprint(ft2)LifeFitnessIntegritySeries $4,699 68 33 15.6Average: $4,699 68 33 15.6Manufacturer MultiStation MSRPLength(in.) Width (in.)Footprint(ft2)Vision Fitness ST710 111 87 67.1Vision Fitness ST700 57 62 24.5Vision Fitness ST780 Bench 61 26 11.0PreCor S3.45 $5,799 117 92 74.8PreCor S3.23 $3,199 53 38 14.0PreCor S3.15 $1,299 108 72 54.0LifeFitness G7 $2,999 68.5 70 33.3LifeFitness G4 $2,499 80 53 29.4LifeFitness G3 $1,999 80 53 29.4LifeFitness G2 $1,499 71 48 23.7Average: $2,756 80.7 60.1 36.1
  • 43. Page | 42Copyright 2012 | Pedram Rahmanian and Tatiana NoroozianManufacturer Bench MSRPLength(in.) Width (in.)Footprint(ft2)VisionFitnessST780Bench 61 26 11.0PreCor Multi-angle $329 52 24 8.7PreCorSuperBench $1,050 54.3 26 9.8Average: $690 55.8 25.3 9.8Manufacturer Core MSRPLength(in.) Width (in.)Footprint(ft2)PreCor240i StretchTrainer $895 53 16 5.9PreCor Ab-X $1,195 57 32 12.7Average: $1,045 55.0 24.0 9.3ManufacturerBodyShape MSRPLifeFitness Regular $299LifeFitness Plus $399Average: $349