Business Opportunity Proposal Sample
Introduction
Health and fitness services are widely consumed services not only in Australia but all over the world. Soul Vida (2019) maintains that the industry relating to healthcare and wellness in the world creates an annual revenue worth billions of dollars. In Australia, the Health and Fitness industry has registered tremendous growth as advanced by (AISC, 2020) For example, Physical Activity Australia, (2019) submits that the industry has grown by 5.7 per cent from 2014 to 2017. The massive growth in the industry is attributable to wealthy and poor diet consumers. The revenue is expected to grow annually by 3.8 per cent for the next five years, including 2019/2020 to $2.9 billion (Physical Activity Australia, 2019). Currently, as presented by Physical Activity Australia (2019), the market size in the industry stands at $3 billion, the number of the business is 6,646, and the industry employment accounts for 21, 865. The health and fitness industry primarily comprises of gymnasiums, fitness centres and health clubs.
As illustrated above, health and fitness is big business in Australia. Despite the continuous growth, the services have been expensive, forcing consumers to look for cheap alternatives. This is happening when about 67 per cent of the Australians aged 18 years and above are either obese or overweight as reported by (Stepz Fitness, 2019). The emerging health crisis brings a profitable business opportunity that is worth investing. Offering fitness services will offer a cost-effective way for people to enhance their health and fitness. It is an alternative for Australians to become proactive rather than reactive. This is because the fitness will avail them with the opportunity to enhance their physical fitness, and in return, reduce the level of obesity and overweight that are known for causing chronic diseases such as diabetes and cardiovascular diseases. It is for this reason that we have decided to form a start-up facility in the healthcare and wellness niche.
Gym and Fitness Industry Growth Trend in Australia
Source: (Physical Activity Australia, 2019)
Product/Services Hypothesis
Physical fitness was not considered part of health and wellbeing in the 20th century. This is because of the strenuous and stressful activities involved in a bid to get fit. According to Collins and Lekkas (2011), maintaining fitness meant extended hours in boot-camps as well as spending significant cash in physical fitness classes. Despite that, people would still need to purchase the required apparel from other firms, thus increasing the overall cost of achieving health and fitness goals. YogaSubscribe focuses on assisting the clients in taking control of their health fitness by using their bodies, spirit and mind. The service will also offer health diet education to the customers. It is a cost-effective venture for both low income and high-income customers to maintain their physical fitness by using their body parts.
Product Analysis
YogaSubscribe is a private facility that will offer physical fitness services and lessons and health diet education to Australians. It is an online-based platform that will provide training lessons to consumers through the company website. YogaSubscribe strives to keep up with marketing trends by providing the latest Yoga techniques that enhance peoples’ health and fitness. According to Hoeger et al. (2019), Yoga is a physical activity that has amassed a significant reputation in the decade. Soul Vida (2019) submits that at least one out of every ten people are engaged in Yoga. Besides, YogaSubscribe will also strive to continue offering aerobics despite being the second most preferred activity to Yoga (Soul Vida, 2019). In keeping up with the physical fitness developments, YogaSubscribe will offer the latest Yoga styles as opposed to the typical ones offered by the gymnasium facilities. The facility will mainly focus on women as they make the largest market segment of people seeking the services.
Our Customers
While physical fitness is a prerogative for any individual, YogaSubscribe targets people who are eighteen years and above. This age bracket has been considered as topping the list of the most overweight and obese population in Australia. In addition, YogaSubscribe will also target the elderly and those with underlying healthcare issues such as diabetes. The elderly will be offered with unique lessons on how they can perform Yoga without much straining. The Yoga services will be supplemented with health diet education. The reason stems from the fact that most physical fitness centres target average Australian adults and wealthy consumers. YogaSubscribe is a cost-effective service provider that targets all customers, ranging from students to business people. Following the vast number of physical fitness centres, then it becomes imperative to obliterate the competition by differentiating our products. This will be achieved by taking our Yoga lessons online whereby customers will purchase our services through daily, weekly, monthly, quarterly and annual subscriptions.
The reason for targeting customers via the online platform is to reach those who are unable to attain health and fitness wellbeing from the existing fitness centres in Australia due to high costs involved. The majority of the Australians, cannot afford these services, influencing the need for the cheap physical fitness services. From the statistical insight, over sixty-three per cent of Australians are overweight (PR Newswire, 2019). YogaSubscribe also targets individuals in the age group of thirty-five and fifty-five years. This age group does not prefer going to the gym as they are often in their working centres. The number of elderly in Australia is also bound to increase sharply in the next five years, making it vital to offer nutrition education services to the senior population.
Distribution Chain
At YogaSubscribe, we intend to use the direct distribution approach. The services will be provided to consumers directly through live and recorded training sessions. Customers who are unable to attend online live sessions will be sent the recorded sessions through their emails. The training will also involve health diet education whereby customers will be provided with the list of foods they should eat to stay healthy.
Potential Solutions
The start-up offers a series of solutions to several health issues facing Australians. YogaSubscribe provides weight-loss solutions to the high number of obese individuals in Australia. With the lockdown in the wake of Covid-19 pandemic, many people stay indoors, and they would like to engage in physical activities. YogaSubscribe comes as a solution for the Australians to continue staying fit by using their body parts during this season.
Value Proposition
YogaSubscribe will create value for the customers by making them take charge of their bodies. The services also strive to offer healthy diet education to Australians to curb the increasing trend of obesity and overweight that might bust to a serious health crisis. The diversified product portfolio offered by YogaSubscribe and the online mode of delivery ensures that our services remain relevant amidst the Covid-19 outbreak. The provision of excellent services at affordable costs is also the start-up’s core objective. Besides, the pricing strategy will also put into consideration the needs of the target market and offer competitive prices that are also affordable.
Our Business Model Canvas
| Key Partners
· Suppliers and manufactures · Vendors of equipment · Healthy lifestyle social media influencers · Individuals and business entities manufacturing active physical fitness clothes · Vendors of nutritional supplements · Vendors of Fitness and health books · Firms dealing with advertisement through diverse platforms including social media · Australian international shipping business entities · Web hosting firms to host the website relating to the holistic Health and Fitness
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Key Activities
· Marketing the service · Offering the requisite training to potential physical fitness instructors · Developing our dynamic product range by increasing innovation · Website management and distribution · Maintaining an excellent partnership with revered manufacturers · Incorporating excellent prices |
Value Propositions
· The fitness and wellness centre focuses on ensuring that members’ are trained based on their pertinent needs · Focusing on increasing the feel-good experience for Australian clients · Saving the cost for the client by ensuring the prices are competitive · We are offering unique products such as healthy diet education. · Integrating the latest technology trends · Fostering convenience for our clients in that they can train even from home by subscribing online · Increasing flexibility for our customers especially during the COVID 19 menace by having a digital platform that clients can download and use at their convenience
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Customer Relationships
· Providing exclusive membership services · Offering self-service option · Automation of services · Offering personal assistance · 1-Day Pass for new clients · Offering student discounts · Provision of online applications · Fostering company reputation through blogs and magazines · Use loyalty programs such as providing free shipping if they purchase the physical fitness apparels and nutrition books from the company · Digitally tracking clients · Social media enhancement mainly during this pandemic · Fostering a positive facility reputation |
Customer Segments
· Men and women above eighteen years and seek to maintain their health · Athletes and active gym members · All persons interested in fitness more so the elderly · Working-class personalities that lack time to purchase the products
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| Channels
· The facility’s website- The aim is to each all customer segments not only through the website but also through magazines and links to the active site website · Using blogs to market the health and wellness facility · Using several social media platforms such as Facebook, Instagram, and Tik-Tok. Here, Facebook Ads would come in handy · Using a mobile application to make it easy for Smartphone users in Australia to access the fitness centre · Other partner retailers selling apparels and nutrition literature
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| Cost Structure
· Initial capital: 10000 dollars raised from last year’s profits of 8000 and 2000 bank loan · Projected selling and distribution costs 700 dollars · Projected overhead costs (first month) 200 dollars
· Projected labour costs (first month) 1000 dollars · The projected cost of yoga services provision and nutritional education 800 dollars Regulatory expenses 300 dollars
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| Key Resources
· Team of experts in physical fitness · Excellent intellectual property such as trademarking the business entity · Available capital to commence the start-up · Excellent network with diverse partners
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Revenue Streams
· Direct sales of physical fitness products such as healthy diet and nutrition and supplements magazines. · Revenue from partnering with other business entities and the liberty for them to market themselves on the facility’s website · Subscriptions from the customers. and
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Validation
The value proposition for YogaSubscribe business entity shows that it has a competitive advantage over its competitors. This stems from the fact that YogaSubscribe is using the most recent health and fitness strategies and is cost-effective compared to competitors. It also encompasses a package of products such as health diet education that is not limited to weight lifting, gym equipment under a physical fitness trainer, aerobics, and dancing. YogaSubscribe brings people fitness and health education at their doorsteps, particularly at this season of Covid-19 pandemic. Most consumers are currently staying at home and practising social distancing to prevent the spread of Coronavirus (Chang et al., 2020)Testing
In testing the product offered by YogaSubscribe, we will extensively seek inputs from the customers. It will be through social media platforms whereby the customers will have a chance to rate the quality of our services. The surveys will also be conducted to obtain useful feedback on the quality of the free services that will be provided under a promotional campaign.
Financial Model
YogaSubscribe will maintain a DCF (discounted cash flow model). Ideally, the DCF model uses the three statement model consisting of the cash flow statement, the statement of financial position, and the statement of income to value a firm based on the NPV (net present value) of its future cash flow (Sawyer, 2009). Using this model, we will extract the cash flows from the three statements, make some adjustments, and use net present value Excel function to discount them back to the present amount at the firm’s WACC (Weighted Average Capital Cost). The whole project requires 10000 dollars, which is our initial capital. We expect to generate income by delivering our training services to various customers all over Australia. Our expected costs and revenues have been shown in figure 2.
| Details | Amount |
| Initial capital | 10000 Dollars |
| Projected Revenues from sales | 20000 dollars |
| Selling and distribution costs | 700 dollars |
| Projected overhead costs (first month) | 200 dollars |
| Projected labour costs (first month) | 1000 dollars |
| The projected training service | 800 dollars |
| Regulatory expenses | 300 dollars |
| Expected Gross Profit for the Month | 7000 dollars |
Figure 2. Expected Revenue
Challenges and Assumptions
The challenges we expect to face related to proving the viability of our product and implementing an effective post-launch refinement.
Proving the Product’s Viability: It may be difficult for businesses to prove the viability of their products (Moogk, 2012). Thus, we need to do in-depth market research to gauge whether our product harmoniously integrates with our brand and to avoid developing unrealistic expectations. We have to identify whether our product is different from the ones existing in the market and whether it satisfies the customer needs. However, we assume that the product is unique, and it will be accepted by the target audience.
Implementing an Effective Post-Release Refinement: The immediate days or weeks after the product launch have the greatest impact on how we will refine our product. We can update the product effectively to boost its profitability. However, this will depend on whether the consumers accept it or reject it. Nonetheless, we have to remain vigilant to gain consumer-based information and effective post-launch sales.
Product Development Model
The (BAH) Booz, Allen, and Hamilton Model will guide us in developing our YogaSubscribe services and introducing it into the market. The model is one of the most well-known and earliest for the development of new products (Bhuiyan, 2011). Many scholars consider it as foundational for all other theories proposed to the present day in various industries. The model has been shown in figure 3.
Figure 3. New Product Development Model.
The first stage in the above model is idea generation. We will use internal sources such as our research and development department to develop creative ideas regarding the product and how it will be launched. The ideas generated in the first stage should be screened and assessed to limit them to manageable levels in the screening and evaluation stage (Hamidizadeh, Hoseini, Akhavan, & Shojaeefard, 2018). The most useful ideas will be used to develop the product concept in the next phase. The other activities we will engage in include the development of business and marketing approaches, product development and test marketing, and commercialization. Commercialization entails introducing the product into the market (Yeh & Ramirez, 2016). We will introduce YogaSubscribe on a large scale because online delivery offers reduced distribution costs.
Conclusion
YogaSubscribe is bound to thrive in the Australian business context. It stems from the rise in the number of people seeking healthcare and wellness services. A surge in the number of people seeking physical fitness is bound to increase significantly, resulting in the rise in physical fitness centres and trainers. Also, the manifestation of the Corona Virus health tragedy has prompted a paradigm shift in business operations. As a result, YogaSubscribe brings people health and fitness services to people at the comfort of their homes. Overall, YogaSubscribe has a high potential of thriving in the health and fitness industry as the statistics show that majority of Australians are obese and overweight, forming part of our main clientele.
References
Britton, Ú., Issartel, J., Fahey, G., Conyngham, G., & Belton, S. (2019). What is health-related Fitness? Investigating the underlying factor structure of Fitness in youth. European Physical Education Review, 1356336X1988206. https://doi.org/10.1177/1356336×19882060
Bhuiyan, N. (2011). A framework for successful new product development. Journal of Industrial Engineering and Management (JIEM), 4(4), 746-770.
Collins, J. A., & Lekkas, P. (2011). Fit for purpose: Australia’s National Fitness Campaign. Medical Journal of Australia, 195(11–12), 714–716. https://doi.org/10.5694/mja11.10336
Chang, S. L., Harding, N., Zachreson, C., Cliff, O. M., & Prokopenko, M. (2020). Modelling transmission and control of the COVID-19 pandemic in Australia. arXiv preprint arXiv:2003.10218.
Hamidizadeh, M., Hoseini, M., Akhavan, M., & Shojaeefard, H. (2018). A New Consideration on New Product Development Models. International Journal of Automotive Engineering, 8(1), 2666-2671.
Hoeger, W. W. K., Hoeger, S. A., Hoeger, C. I., & Fawson, A. L. (2019). Lifetime physical fitness & wellness : a personalized program. Cengage Learning.
Moogk, D. R. (2012). Minimum viable product and the importance of experimentation in technology start-ups. Technology Innovation Management Review, 2(3).
Physical Activity Australia . (2019, November 15). Gyms and Fitness Centres in Australia – Market Research Report. Retrieved from https://www.physicalactivityaustralia.org.au/gyms-and-fitness-centres-in-australia-market-research-report/
PR Newswire. (2019). Australia Fitness Centres Revenue Driven by Demand for Efficient Fitness Based Niche Models and Technological Upgradation: Ken Research. Www.Prnewswire.Com. https://www.prnewswire.com/news-releases/australia-fitness-centres-revenue-driven-by-demand-for-efficient-fitness-based-niche-models-and-technological-upgradation-ken-research-300896170.html
Sawyer, T. Y. (2009). Modelling Valuation and Investment with the FIN Model. Pro Excel Financial Modeling: Building Models for Technology Startups, 215-242.
Soul Vida. (2019, September 2). Growing trends and statistics in Fitness and wellbeing in the 21st century | SoulVida. Soul Vida. https://soulvidafit.com.au/growing-trends-and-statistics-in-fitness-and-wellbeing-in-the-21st-century/
Stepz Fitness. (2019). How Large is the Fitness Industry? Retrieved from https://stepzfitness.com.au/franchising/large-fitness-industry/
Yeh, S. T., & Ramirez, R. (2016). A conceptual model of service innovation: The case of academic libraries.