Do you want to start climbing gym business?

Are you thinking of how to open a climbing gym? Well, this is an excellent venture considering rock climbing has become a popular gym activity with many people gaining more interest. With people now fully aware of the benefits associated with going to the gym, the number of people patronizing gyms has increased. The fact that you can maintain a healthy lifestyle while at the same time, have fun has contributed to many rock climbing gym patrons. For this reason, it is a great business idea to venture. Initial capital required is intensive but you can be assured to recover your costs within the first three years of business.

Executive Summary

2.1 The Business

The climbing gym business will be registered under the name Spark Rock Gym, and will be situated in Enos Park, Springfield Illinois. The business will be owned and managed by Thomas Mulez, an experienced fitness professional.

2.2 Management Team

Thomas Mulez is a fitness instructor who has been the fitness industry for over ten years. Before starting a climbing gym, Thomas worked for many popular and large fitness brands across the United States acquiring extensive knowledge and experience.

2.3 Customer Focus

Spark Rock Gym intends to offer a modern, spacious and well equipped climbing gym for residents of Enos Park and the entire city of Springfield.

2.4 Business Target

Being the first such kind of business in Enos Park neighborhood, the entire immediate community and residents of Springfield will benefit from a modern, professionally managed facility.

Climbing Gym Business Plan - 3 Years Profit Forecast

Company Summary

3.1 Company Owner

Thomas Mulez is fitness instructor who has worked with top U.S. fitness household brands such as Curves International and 24 Hour Fitness. He has contributed immensely to ensuring the growth of the fitness industry by working in various capacities in the course of his career.

3.2 Aim of Starting the Business

Making your own rock climbing wall business requires expert understanding of how the business works in order to correctly identify priorities and set goals. Thomas has previously managed rock climbing gyms and therefore, understands the nitty-gritty details of rock climbing gyms.

3.3 How the Business will be Started

As a professional fitness instructor with rock climbing gyms, Thomas knows well what it entails to begin this enterprise. To actualize his vision, he has hired professionals to come up with a financial roadmap to guide the business. The following is core financial data for Spark Rock Gym.

Climbing Gym Business Plan - Startup cost

Start-up Expenses 
Legal$5,000
Consultants$10,000
Insurance$14,000
Rent$25,000
Research and Development$8,000
Expensed Equipment$20,000
Signs$4,000
TOTAL START-UP EXPENSES$91,000
Start-up Assets$0
Cash Required$13,000
Start-up Inventory$60,000
Other Current Assets$15,000
Long-term Assets$8,000
TOTAL ASSETS$0
Total Requirements$96,000
START-UP FUNDING$0
START-UP FUNDING$100,000
Start-up Expenses to Fund$45,000
Start-up Assets to Fund$40,000
TOTAL FUNDING REQUIRED$0
Assets$5,000
Non-cash Assets from Start-up$12,000
Cash Requirements from Start-up$0
Additional Cash Raised$40,000
Cash Balance on Starting Date$25,000
TOTAL ASSETS$0
Liabilities and Capital$0
Liabilities$0
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
TOTAL LIABILITIES$0
Capital$0
Planned Investment$0
Investor 1$8,000
Investor 2$10,000
Other$0
Additional Investment Requirement$0
TOTAL PLANNED INVESTMENT$80,000
Loss at Start-up (Start-up Expenses)$35,000
TOTAL CAPITAL$40,000
TOTAL CAPITAL AND LIABILITIES$30,000
Total Funding$280,000

Services for Customers

Spark Rock Gym is keen to offer professional and modern rock climbing facilities for patrons. When starting a rock climbing gym in Enos Park, the business will focus on building long lasting client relationships as it offers the following services.

  • Offer indoor wall rock climbing facilities and training teams for outdoor climbing expeditions
  • Provide a wide variety of facilities for children fun and games
  • Amusement and recreation services for patrons and guests
  • Offer indoor playground facilities

Marketing Analysis for Climbing Gym Business

For Spark Rock Gym to meet its market obligations, an extensive market analysis to find out market trends was initiated to help the business effectively tap into the market. This rock climbing gym business plan has elaborates the strategy the business intends to use to accomplish its goals. With the rapid popularity and growing trend of rock climbing sports, there’s definitely great potential for Spark Rock Gym to leverage on. Considering the strategic business location, demographic statistics and prevailing competition, it is guaranteed the gym will enjoy high patronage.

5.1 Market Segmentation

Building a rock climbing gym in Enos Park, Springfield is an excellent idea considering it is the first of its kind in the area. Spark Rock Gym therefore has the best opportunity to engage in vigorous marketing campaigns to command a larger market share. One doesn’t need to have any previous climbing experience to come to this gym which opens up the customer segment. Based on its market findings, the gym intends to target the following groups of customers.

Climbing Gym Business Plan - Market Segmentation

5.1.1 Children

Many rock climbing gyms earn a giant share of their revenue and profits from having children fun related activities. Spark Rock Gym intends to have a wide array of children’s programs that will make the facility more attractive for children. Springfield has a large population of children between ages of five and eighteen which is key revenue potential for the business. Parents are nowadays encouraging their children to take part in recreation activities and sports in order to encourage healthy living. With a rock climbing gym in the community, the biggest beneficiaries and most lucrative customers for the business are children.

5.1.2 Adults (Age 18-44)

As rock climbing sport awareness increases, adults are also joining the excitement and want to participate in rock climbing for fun. This climbing gym business plan also incorporates adults since the business intends to put in place nice facilities that will appeal to the adult population between 18 -44 years. Since a majority of this age group are working and in active careers, they’re likely to pay for membership which generates a steady revenue channel for the gym.

5.1.3 Schools and College Students

Rock climbing is an emerging popular sport in various educational institutions. As such, many schools tend to organize indoor rock climbing competitions. Spark Rock Gym stands a great chance to benefit as these schools and their students will need a modern, well-equipped and safe venue where they can compete and have fun. Considering the high number of educational institutions in the neighboring areas, the prospects look bright. Spark Rock Gym plans to effectively market its services to schools and the general student population that loves to hang out and have fun.

5.1.4 Churches and Religious Centers

Springfield has many churches and religious institutions that occasionally organize fun events for their congregations. With a modern indoor rock climbing facility, Spark Rock Gym offers an exciting venue where religious institutions can host different types of social events as well as various religious events.

Market Analysis
Potential CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5CAGR
Adults18%20,00025,00030,00035,00040,00010.00%
Children35%30,00035,00040,00045,00050,00014.00%
School and College students30%25,00030,00035,00040,00045,00015.00%
Churches and religious centers17%15,00020,00025,00030,00035,00013.00%
Total100%90,00095,000              130,000150,000170,00018.00%

5.2 Business Target

Spark Rock Gym is set to operate in strategic location where it faces no competition from similar establishments. The high population is a source of ready market for the rock climbing gym. When determining how much does it cost to open a climbing gym, the business knows it is expensive to open a rock climbing gym and therefore, adequate plans are needed to recover the initial investment. Spark Rock Gym hopes to have fully recovered the entire startup investment after three years since opening. The gym has predicted 20-25% annual increase in sales.

5.3 Product Pricing

A sustainable climbing gym business model should carefully and accurately determine prices of its services as this is the foundation of business success. Despite having no competition, Spark Rock Gym has put in place a competitive pricing approach to attract and retain customers.

Strategy

To open a rock climbing gym, you need to come up with a well-defined and executable strategy. Thomas Mulez has worked closely with experts to create a customized rock climbing gym strategy that will be the blueprint of attracting business revenue. The following is Spark Rock Gym sales strategy.

6.1 Competitive Analysis

Spark Rock Gym is situated in a strategic and easily accessible location serving a huge population. In addition, this is the first rock climbing gym business in the area and therefore, the business anticipates a high demand.

6.2 Sales Strategy

To ensure Spark Rock Gym captures its intended customers, the following strategies will be used to boost sales.

  • The business will use word of mouth marketing as it is one of the most powerful gym marketing techniques. Being an exciting sport, it is expected referrals will play a great role in bringing more customers to the business.
  • Advertise the gym on local media channels such as Television, radio and print media.
  • Organize a much publicized grand opening party to create awareness about the new rock climbing gym.
  • Advertise the business on digital media platforms such as Facebook, Instagram and Twitter.
  • Introduce a loyalty program and incentives to award regular clients.
  • Reach out directly to institutions such as schools and religious centers.
  • Organize numerous children activities such as birthday parties and rock climbing children teams.
  • Engage in road shows and post signage at strategic places.

6.3 Sales Forecast

Spark Rock Gym is focused on implementing a wide variety of sales strategies to attain its targets. Below is a summary of sales forecasts based on the rock climbing business start up costs.

Climbing Gym Business Plan - Unit Sales

Sales Forecast   
Unit SalesYear 1Year 2Year 3
Indoor wall rock climbing400,000440,000480,000
Children fun and games210,000250,000290,000
Amusement & recreation services200,000240,000280,000
Indoor playground facilities300,000330,000360,000
TOTAL UNIT SALES1,110,0001,260,0001,410,000
Unit PricesYear 1Year 2Year 3
Indoor wall rock climbing$280.00$300.00$320.00
Children fun and games$220.00$240.00$260.00
Amusement & recreation services$240.00$260.00$280.00
Indoor playground facilities$260.00$280.00$300.00
Sales
Indoor wall rock climbing$300,000$350,000$400,000
Children fun and games$250,000$300,000$350,000
Amusement & recreation services$180,000$220,000$260,000
Indoor playground facilities$200,000$230,000$260,000
TOTAL SALES
Direct Unit CostsYear 1Year 2Year 3
Indoor wall rock climbing$2.20$3.20$5.20
Children fun and games$2.10$3.00$4.10
Amusement & recreation services$0.50$1.50$3.50
Indoor playground facilities$4.00$6.00$8.00
Direct Cost of Sales
Indoor wall rock climbing$120,000$140,000$170,000
Children fun and games$100,000$120,000$140,000
Amusement & recreation services$70,000$100,000$130,000
Indoor playground facilities$120,000$140,000$160,000
Subtotal Direct Cost of Sales$210,000$250,000$280,000

Personnel Plan

Spark Rock Gym offers various services as opposed to only proving the core service in order to boost the income stream. How the business intends to pay salaries is spelt out in this start a climbing gym business plan.

7.1 Personnel Plan

Spark Rock gym is owned by Thomas Mulez who will also be the manager of the rock climbing gym business. The business intends to hire the following staff to serve customers.

  • Business Manager
  • Administrator
  • Three Instructors
  • Two Marketing Executives
  • One Cashier

Successful applicants will be trained effectively and participate in an induction session before the gym opens its doors to the public.

7.2 Average Staff Salaries

Spark Rock Gym intends plans to spend the following amounts on staff salaries for the first three years.

 Personnel Plan   
Year 1Year 2Year 3
Business Manager$70,000$75,000$80,000
Cashier$25,000$30,000$35,000
Administrator$22,000$27,000$32,000
2 Sales and Marketing Executive$80,000$120,000$140,000
3 Instructors$120,000$140,000$160,000
Total Salaries$317,000$392,000$447,000

Financial Plan

Spark Rock Gym has come up with a sound financial plan that will offer guidance on how the business should run to be successful. Opening a rock climbing gym will be facilitated by Mulez’s personal savings and two investors. In addition, a loan will be secured to help cater for initial costs and expenses. Key financial information for the business has been shown in the sections below.

8.1 Important Assumptions

Financial forecasts of Spark Rock Gym will be based on these assumptions.

 General Assumptions   
Year 1Year 2Year 3
Plan Month123
Current Interest Rate22.00%24.00%26.00%
Long-term Interest Rate14.00%14.00%14.00%
Tax Rate15.00%17.00%19.00%
Other000

8.2 Brake-even Analysis

Spark Rock Gym Brake-even Analysis is show in the graph below.

Climbing Gym Business Plan - Brake-even Analysis

 Brake-Even Analysis 
Monthly Units Break-even15000
Monthly Revenue Break-even$325,000
Assumptions:
Average Per-Unit Revenue$150.50
Average Per-Unit Variable Cost$3.60
Estimated Monthly Fixed Cost$450,000

8.3 Projected Profit and Loss

Profit and Loss information for Spark Rock Gym computed on an annual and monthly basis is as shown below.

 Pro Forma Profit And Loss   
Year 1Year 2Year 3
Sales$600,000$670,000$740,000
Direct Cost of Sales$40,000$60,000$80,000
Other$0$0$0
TOTAL COST OF SALES$40,000 $60,000 $80,000
Gross Margin$340,000$400,000$460,000
Gross Margin %40.00%54.00%68.00%
Expenses
Payroll$240,000$340,000$440,000
Sales and Marketing and Other Expenses$6,000$8,000$10,000
Depreciation$8,000$6,000$4,000
Leased Equipment$0$0$0
Utilities$8,000$10,000$12,000
Insurance$2,000$4,000$6,000
Rent$25,000$25,000$25,000
Payroll Taxes$20,000$25,000$30,000
Other$0$0$0
Total Operating Expenses$260,000$300,000$340,000
Profit Before Interest and Taxes$30,000$50,000$70,000
EBITDA$10,000$10,000$10,000
Interest Expense$0$0$0
Taxes Incurred$15,000$19,000$23,000
Net Profit$150,000$200,000$250,000
Net Profit/Sales20.00%35.00%45.00%

8.3.1 Monthly Profit

Climbing Gym Business Plan - PROFIT MONTHLY

8.3.2 Yearly Profit

Climbing Gym Business Plan - PROFIT YEARLY

8.3.3 Monthly Gross Margin

Climbing Gym Business Plan - GROSS MARGIN MONTHLY

8.3.4 Yearly Gross Margin

Below is the Profit and Loss Analysis for Spark Rock Gym.

Climbing Gym Business Plan - GROSS MARGIN YEARLY

8.4 Projected Cash Flow

The diagram below summarizes pro forma cash flow, subtotal cash spent, subtotal cash received, subtotal cash from operations and subtotal cash spent on operations.

Climbing Gym Business Plan - Projected Cash Flow

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 3
Cash from Operations
Cash Sales$80,000$65,000$50,000
Cash from Receivables$18,000$15,000$12,000
SUBTOTAL CASH FROM OPERATIONS$98,000 $75,000 $62,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received$0$0$0
New Current Borrowing$0$0$0
New Other Liabilities (interest-free)$0$0$0
New Long-term Liabilities$0$0$0
Sales of Other Current Assets$0$0$0
Sales of Long-term Assets$0$0$0
New Investment Received$0$0$0
SUBTOTAL CASH RECEIVED$98,000 $75,000 $62,000
ExpendituresYear 1Year 2Year 3
Expenditures from Operations
Cash Spending$12,000$18,000$23,000
Bill Payments$25,000$28,000$32,000
SUBTOTAL SPENT ON OPERATIONS$37,000 $46,000 $55,000
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out$0$0$0
Principal Repayment of Current Borrowing$0$0$0
Other Liabilities Principal Repayment$0$0$0
Long-term Liabilities Principal Repayment$0$0$0
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
Dividends$0$0$0
SUBTOTAL CASH SPENT$37,000 $46,000 $55,000
Net Cash Flow$10,000$13,000$16,000
Cash Balance$20,000$24,000$28,000

8.5 Projected Balance Sheet

Illustrated below is the Projected Balance Sheet for Spark Rock Gym that indicates capital, liabilities, assets, current liabilities and long term assets.

 Pro Forma Balance Sheet   
AssetsYear 1Year 2Year 3
Current Assets
Cash$280,000$230,000$310,000
Accounts Receivable$9,000$11,000$14,000
Inventory$2,000$4,000$6,000
Other Current Assets$1,500$2,500$3,500
TOTAL CURRENT ASSETS$292,000 $307,500 $333,500
Long-term Assets
Long-term Assets$12,000$14,000$16,000
Accumulated Depreciation$10,000$13,000$16,000
TOTAL LONG-TERM ASSETS$5,000 $3,000 $1,500
TOTAL ASSETS$312,000 $400,500 $362,000
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable$12,000$15,000$18,000
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
SUBTOTAL CURRENT LIABILITIES$12,000 $15,000 $18,000
Long-term Liabilities$0$0$0
TOTAL LIABILITIES$12,000 $15,000 $18,000
Paid-in Capital$22,000$22,000$22,000
Retained Earnings$26,000$35,000$40,000
Earnings$110,000$130,000$150,000
TOTAL CAPITAL$300,000 $330,000 $360,000
TOTAL LIABILITIES AND CAPITAL$380,000 $310,000 $200,000
Net Worth$320,000$535,000$580,000

8.6 Business Ratios

Spark Rock Gym Ration Analysis, Business New Worth and Business Ratios are shown below.

 Ratio Analysis    
Year 1Year 2Year 3INDUSTRY PROFILE
Sales Growth16.00%25.00%40.00%6.00%
Percent of Total Assets
Accounts Receivable16.00%15.00%14.00%20.00%
Inventory23.00%22.80. %22.60%21.00%
Other Current Assets20.00%30.00%25.95%35.00%
Total Current Assets90.20%110.10%120.30%64.00%
Long-term Assets-14.00%-16.00%-24.00%50.50%
TOTAL ASSETS80.00%80.00%80.00%80.00%
Current Liabilities15.00%14.00%13.50%34.50%
Long-term Liabilities0.00%0.00%0.00%20.00%
Total Liabilities15.10%10.00%10.50%52.10%
NET WORTH80.00%89.00%95.00%46.00%
Percent of Sales
Sales90.00%90.00%90.00%90.00%
Gross Margin60.00%73.00%82.00%0.00%
Selling, General & Administrative Expenses50.00%65.00%75.00%55.00%
Advertising Expenses5.00%4.00%2.50%3.20%
Profit Before Interest and Taxes23.00%24.00%27.40%11.50%
Main Ratios
Current1916143
Quick3530252.6
Total Debt to Total Assets13.05%12.00%11.65%65.00%
Pre-tax Return on Net Worth70.00%80.00%90.00%20.20%
Pre-tax Return on Assets74.30%78.00%86.00%17.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin26.00%29.20%33.00%N.A.
Return on Equity70.00%84.00%89.00%N.A.
Activity Ratios
Accounts Receivable Turnover742.5N.A.
Collection Days100110120N.A.
Inventory Turnover201714N.A.
Accounts Payable Turnover171921.1N.A.
Payment Days252525N.A.
Total Asset Turnover3.63.43.2N.A.
Debt Ratios
Debt to Net Worth0-0.1-0.08N.A.
Current Liab. to Liab.000N.A.
Liquidity Ratios
Net Working Capital$300,000$320,000$340,000N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales2.462.472.33N.A.
Current Debt/Total Assets15%13%12%N.A.
Acid Test333639N.A.
Sales/Net Worth3.42.71.5N.A.
Dividend Payout000N.A.