Business Analysis and Feasibility of a New Gym

Some friends of mine are personal trainers and had been thinking about opening their own gym about a year ago and had asked me to help. Thus, for Module II written assignment, I chose Mountain Brook Fitness Center as it is in the same line of business. It is an interesting case with a lot of information but missing some critical details which would help with the decision.

The business plan mentions annual membership fee of $800, current member count of 900 and a staff of 23. The town has a population of 600,000 people with a 15% projected growth. Mountain Brook is a family friendly facility and open 24 hours a day. The current capacity of the child care center is 30 children and 5 infants with a goal to expand it by taking a short term loan. However, there was some contradicting information in the business plan which would impact the decision.

With these facts and a lot of questions in mind, I reached out to Robert O’Connell (Bob), General Manager, Robert Wood Johnson Fitness and Wellness Center in Scotch Plains, NJ. Mountain Brook is somewhat similar to the RWJ in terms of location, fees, number of members, amenities, etc. except on a smaller scale. Prior to RWJ, Bob was the general manager at Equinox in NY and helped setup the first Equinox in London. He has similar experience as Robert Sinclair and is focused on expanding membership for RWJ. I interviewed Bob with the goal of expanding Mountain Brook facility and increasing customer base. We could not go into certain details like pricing or profit margin but discussed the fitness center business in general.

Q: What should be the top three goals for a facility?

A: My goals generally are: 1) increase membership, 2) sell more training, 3) improve program offerings

Q: What are some of the steps we could take to increase membership?

A: First step is to know your target customers and what differentiates your facility from the competitors. Offer referral bonus to existing members. Offer sign-on incentives which can be low cost- like free trial or open house.

Q: How would you segment your members?

A: About 50 percent retirees or over 60, 40 percent families, and remaining is young professionals.

Q: What kinds of services would you offer the over 60 population?

A: We offer physical therapy program which is integrated with the local hospital. The program accepts major insurance as well as Medicare plans which is attractive to the members as they feel better about visiting a wellness facility and not have to go to a doctor’s office. While they are here, they can enjoy the aqua classes with heated pool and stretch and strengthen. We have many day time classes geared towards older adults like Tai Chi and Foam Rolling as they are low impact. Additionally, we have a nurse available on weekdays and the consultation is free.