Business Proposal on "Feasibility Plan for the Youth Sports Development Center"

Business Proposal 6 pages (1739 words) Sources: 0

[EXCERPT] . . . .

Business

Fitness and nutrition are basic skills in life, and the YSDC aims to promote fitness and nutrition among today's youth. The school system does not teach these fundamental skills, and in this way does not truly prepare our youth for the adult world, where fitness and nutrition are of critical importance. For those youth seeking to improve their fitness, the center will have beginner's programs and provide an environment where youth can learn about fitness and begin to get fit under the supervision of experts in the field. In addition, they can learn about better nutritional practices, to prepare them for when they begin to live on their own. The teenage years are a critical component in the life of a youth, where habits are formed that will stay with the child throughout his or her life. It is important that the best habits are formed during this period.

In addition, there are a number of opportunities for youth if they manage their fitness and their nutrition correctly. While most student athletes are unlikely to make a living at sport, many can earn college scholarships from athletics that can give them the educational foundation for a better life. For these youth, the teenage years are key to their development. With proper education about nutrition and workout techniques from an early age, our children will be better equipped to pursue their dreams to the highest level, in turn becoming an inspiration for the next generation of children.

Feasibility Study

One of the first steps in the creation of a business plan is to undertake a feasibility study. The feasibility study should uncover the strengths and weaknesses of a business idea, before the full business plan is created. It will allow the founder to better understand the business idea that he or she has, and can uncover areas of concern before too much time and money has been invested in the idea. There are a number of elements to the feasibility study -- legal, technical, economic, operational and cultural. This report will analyze the core idea of Youth Sports Development Center from each of these perspectives. The objective is that upon completion of the feasibility study, the authors will have a better sense of whether or not this business idea is going to work.

Legal Feasibility

The natural starting point for a feasibility study is the legal aspect. Is the product or service legal? In this case, fitness and nutritional advice is a perfectly legal business model. There are, however, some concerns that the company should be aware of when creating its business plan. The first is that the target market consists of children aged 7-17, or more specifically the end user group is children and the target market is the parents of those children. Dealing with children exposes the company to a unique set of legal issues. The first is with respect to contract law. Children cannot enter into legally binding contracts, so all contractual arrangements -- even with 17-year-olds -- must be made with the parents. The second legal issue pertaining to children is that the child may face injury or other adverse consequence as a result of being a customer of Youth Sport and Development Center. The Center can mitigate some of this risk with expertise in youth fitness and nutrition (i.e. promoting only the safest of best practices). The Center will also want to explore insurance options. This is of particular importance for dealing with elite-level athletes, where injury suffered at the Center could compromise future earnings. The Center must engage a legal team in order to ensure that it offers no stated or implicit guarantee of health, performance improvement or injury-free completion of the any program offered. If adequate means are not undertaken to reduce legal risk, the business idea may not be feasible. As it stands, if the adequate measures are taken, the legal situation need not mean that the business is not feasible -- it can be, provided appropriate measures are taken to protect the Center from legal action.

Technical Feasibility

There is little obstacle on the technical side to starting this business. There is sufficient knowledge in the world about fitness and nutrition for youth, and the Center's proprietors are experts in this field. The facility itself is a basic building with exercise equipment and a kitchen installed. From a technical perspective, nothing the Center wants to do as part of its normal business is going to be difficult, much less a genuine obstacle to opening and successfully running the business.

Economic Feasibility

A critical question for anybody thinking of opening a business has to be "Am I going to make money?" For a person starting a small business, the revenue earned needs to pay for all of the operating costs, pay the owner a salary and hopefully earn a return for all shareholders on top of that. In this case, the target market is relatively large. For basic youth programs, there are tens of thousands of youths in the area whose parents are part of the target market. The cost structure of the business is largely going to be fixed costs associated with the facility itself and fixed-variable costs associated with the staff. The staff for the basic programs will be younger, less experienced and cheaper than the senior staff in the Elite program. Thus, the basic nutrition and fitness programs will be priced at a cost leadership level, to attract a high volume of customers. It is believed that 50% of the business' revenues and 30% of its profits can come from this group. Based on the rough assessment of costs associated with building and operating the facility, 2000 students per year will need to be enrolled in the basic program.

The Elite program is a premium program that operates on a low-volume, high-margin business model. As our best instructors will work with these customers and dedicate significant amounts of time to them, the cost of providing this service will be 50% higher than the basic service, but the price will be 2-3% higher. This should allow for 50% of the revenues to come from a basic core of around 200-300 elite-level student athletes and 70% of the revenues to come from this group. An informal survey has shown that from the local area high schools, a total of twenty-two student athletes have received some form of college scholarship as a result of their athletic prowess. We believe this signals that the market is robust for our Elite service. These student-athletes are role models for today's high school and junior-high student athletes. The value proposition for the Elite program is strong. The value of a college scholarship to a student's post-educational earnings is significant. We expect that parents will be willing to invest more in their student-athlete's success, knowing the financial benefits of a college education.

Operational Feasibility

The biggest challenge with respect to operational feasibility is staffing. The programs are designed to be based on building relationships with youth and teenagers over the course of many years in the program. This means two things. The first is that the staff we hire should be permanent, rather than transitory. In the fitness industry, low-end workers tend to be transitory, regardless of financial incentive. This is because many are students who are not yet living settled adult lives. Thus, our ability to hire long-term staff and retain their services is a critical element of operational feasibility. The second thing is that we will need a relatively high staffing level. This not only places more emphasis on recruiting and retention, but it also increases the cost structure of the company. We believe that prices for the Elite program in particular will help to offset this cost structure.

Cultural feasibility

The Youth Sport Development Center will only succeed if there are enough parents in the local market willing to invest in the health of their children. Cultural norms are divided. While the United States in general has a high obesity rate and poor state of health, there is a large segment of the population that is becoming aware of the importance of good fitness habits and healthy eating. This segment is growing, as evidenced by movements around the country towards organic food, local food and towards building bicycle infrastructure and other elements of a fitness-based lifestyle. Part of this is a backlash against the elements of society that have poor exercise and consumption habits. The most important aspect of the culture is that healthy culture is growing. It is already a large enough market in our area to support our business, but the fact that it is growing is an encouraging sign. There is little doubt that this growth will spur new businesses to enter the market, which is one of the reasons we want to start now, so that we can gain first-mover advantage.

Conclusion

The purpose of the feasibility report is to understand just how feasible the business idea is,… READ MORE

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