Do you want to start an indoor sport complex business

Are you thinking about how to open an indoor sports facility? This is no doubt one of the best and most lucrative ventures you can ever think of. Given the popularity and global recognition of sports, the demand modern and sophisticated indoor sports facilities has drastically increased. Nowadays, people are keen to access a fully equipped indoor facility that allows them to participate in a wide array of sporting activities. Setting up an indoor sports facility is a huge investment so you need to be adequately prepared. However, you can be sure you will recover all your initial investment within a few years of starting the business.

Executive Summary

2.1 The Business

The indoor sports facility will be registered under the name BJ Sports Hub, and will be situated in Brookland, Washington. BJ Sports Hub will be owned and managed by Zack Phil who is famous Baseball Coach. The sports facility is intended to offer a unique, unforgettable, entertaining and welcoming ambience for guests.

2.2 Management Team

BJ Sports Hub will be managed by Zack Phil who is a Baseball Coach with cumulative experience that spans over two decades. His passion for sports is the main reason why he has decided to invest in an exclusive indoor sports facility building.

2.3 Customer Focus

BJ Sports Hub will aims to offer a nice, spacious and well equipped sporting facility for both residents, corporates and sports stakeholders including teams. The business will attract customers of various ages, social and cultural backgrounds.

2.4 Business Target

The business plans to invest heavily in modern facilities to create an impressive sports recreation facility that offers customers value for their money

Indoor Sports Complex Proposal Plan - 3 Years Profit Forecast

Company Summary

3.1 Company Owner

Zack Phil is an experienced, well-respected and award winning baseball coach who has steered several teams he has coached to victory. During his career, Zack has had the privilege to coach some of the most popular baseball teams in the United States.

3.2 Aim of Starting the Business

Because of his passion for sports, Zack always envisioned having starting a sports complex business where he could offer an affordable and the perfect environment to facilitate various kinds of sports. Even though Brookland has many similar facilities, Phil knew his approach was innovative and different.

3.3 How the Business will be Started

To ensure BJ Sports Hub becomes a household name and trendsetter, Zack with the help of experts well versed in business startups has formulated a sound business plan to drive success. Key financial data pertaining to the sports facility is show below.

Indoor Sports Complex Proposal Plan - Startup Cost

Start-up Expenses  
Legal $4,000
Consultants $8,000
Insurance $30,000
Rent $70,000
Research and Development $20,000
Expensed Equipment $500,000
Signs $10,000
TOTAL START-UP EXPENSES $700,000
Start-up Assets $0
Cash Required $800,000
Start-up Inventory $500,000
Other Current Assets $100,000
Long-term Assets $40,000
TOTAL ASSETS $120,000
Total Requirements $250,000
START-UP FUNDING $0
START-UP FUNDING $500,000
Start-up Expenses to Fund $200,000
Start-up Assets to Fund $220,000
TOTAL FUNDING REQUIRED $0
Assets $120,000
Non-cash Assets from Start-up $70,000
Cash Requirements from Start-up $0
Additional Cash Raised $300,000
Cash Balance on Starting Date $100,000
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 $80,000
Investor 2 $50,000
Other $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $700,000
Loss at Start-up (Start-up Expenses) $500,000
TOTAL CAPITAL $900,000
TOTAL CAPITAL AND LIABILITIES $400,000
Total Funding $1,400,000

Services for Customers

BJ Sports Hub is a large, fully serviced and diverse indoor sports facility that will avail numerous services for customers which include:

  • Fully equipped weight and fitness center with state-of-the art aerobic equipment
  • Different courts for games such as basketball, volleyball, badminton, tennis and indoor soccer
  • Massage parlor center
  • Dancing and yoga rooms
  • Food and beverage restaurant
  • Modern conferencing facilities

With these amazing facilities, Zack has managed to figure out how to start an indoor sports facility that offers a wide range of tailored services to clientele.

Marketing Analysis of an Indoor Sports Complex

For BJ Sports Hub to meet its targets; customer satisfaction and financial targets, a detailed market analysis was researched and documented. This indoor sports complex business plan has put in place a systematic strategy that will be incorporated into the sports complex to help it achieve its mandate. The business has identified an action plan to follow once operations commence.

5.1 Market Segmentation

Findings of the market research revealed the following customers as the main targets for BJ Sports hub.

Indoor Sports Complex Proposal Plan - Market Segmentation

5.1.1 Fitness Lovers

Many people these days want to keep fit and for this reason, the demand for fitness facilities has gone up. This group includes those looking for a well-established workout facility they can visit in the morning, evening or on weekends. This target group is wide and covers different ages such as working class adults and seniors.

5.1.2 Sport Clubs

Sports clubs include team involved in various disciplines such as soccer teams, tennis teams and athletics teams among others. This is a lucrative market segment in an indoor sports facility business plan. Since these teams always need somewhere to train and have their tournaments, BJ Sports Hub is set to benefit a great deal.

5.1.3 Sports Men and Women

Sports professionals always require a nice and well-equipped facility where they can train and prepare themselves for various competitions. Washington D.C. is known to host many sports personalities creating a ready market for the indoor sports complex.

5.1.4 Business Travellers and Tourists

Washington D.C. is the state capital and therefore, receives a lot of visitors from around the world. Business travellers and tourists will be attracted to BJ Sports Hub to enjoy the various facilities such as gyms without having to sign up for resident membership. The size and unique appearance of the venue is expected to attract a sizeable number of tourists.

5.1.5 Religious Groups and Schools

A successful indoor sports facility business plan includes religious organization who at times, need to book an indoor sports facility to hold religious events such as crusades. In addition, schools will also be targeted by the business as they frequently look for venues to host their school games and championships.

Market Analysis
Potential Customers Growth YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 CAGR
Fitness lovers 30% 400,000 420,000 440,000 480,000 520,000 14.00%
Sports clubs 30% 300,000 320,000 340,000 360,000 400,000 12.00%
Sports men and women 15% 350000 370,000 390,000 410,000 430,000 14.00%
Religious groups and schools 10% 250000 270,000 290,000 310,000 330,000 10.00%
Business travellers and tourists 15% 150000 170,000 190,000 210,000 230,000 9.00%
Total 100% 1,200,000 1,550,000        1,650,000 1,770,00 1,910,000 20.00%

5.2 Business Target

BJ Sports Hub targets to offer a unique, well-equipped and social facility in Brookland, Washington D.C. Even though the initial capital is high, the business hopes to recover its capital within the first three years of operations. It is expected the indoor sports complex sales will grow between 20-25% annually.

5.3 Product Pricing

Pricing included in this indoor sports arena business plan have been done after carefully evaluating what other competitors are offering their customers. The idea is to keep prices at the standard market rate but offer unique membership packages with added benefits.

Strategy

Zack has worked closely with experts to formulate a comprehensive market oriented sales strategy to assist in growing customer numbers and boosting sales revenue. After taking into account the cost of building an indoor sports complex, the following sales strategy has been identified to support the business.

6.1 Competitive Analysis

The facility’s strategic location, large size, modern state-of-the-art equipment, customized membership packages and nearness to public transport facilities will give the facility a competitive advantage.

6.2 Sales Strategy

In order to attract more customers to the indoor sports complex, the following sales strategies will be implemented.

  • Reach out to both established and upcoming sportsmen and women looking for a well-equipped and easily accessible training facility.
  • Offer customized and attractive membership packages with exciting features.
  • Roll out intensive marketing campaigns on both local as well as digital platforms.
  • Incorporate cutting-edge technologies and modern equipment to satisfy customer needs.
  • Utilize the business central location to attract walk- in customer
  • Offer personalized and exemplary customer service.

6.3 Sales Forecast

BJ Sports Hub intends to focus on implement its sales strategies and keenly monitor its financial books to grow annual sales. A basic representation of what is expected is shown below.

Indoor Sports Complex Proposal Plan - Unit Sales

Sales Forecast      
Unit Sales Year 1 Year 2 Year 3
Weight & Fitness Center 500,000 540,000 580,000
Court Games 400,000 450,000 500,000
Modern conferencing facility 150,000 200,000 250,000
Dancing and yoga center 500,000 550,000 600,000
TOTAL UNIT SALES 1,550,000 1,750,000 1,850,000
Weight & Fitness Center Year 1 Year 2 Year 3
Court Games $100.00 $120.00 $130.00
Dancing and yoga center $120.00 $140.00 $160.00
Modern conferencing facility $300.00 $320.00 $350.00
Sales
Weight & Fitness Center $450,000 $200,000 $300,000
Court Games $300,000 $120,000 $200,000
Dancing and yoga center $100,000 $150,000 $210,000
Modern conferencing facility $150,000 $180,000 $230,000
TOTAL SALES Year 1 Year 2 Year 3
Weight & Fitness Center $0.80 $0.70 $0.65
Court Games $0.60 $0.70 $0.80
Dancing and yoga center $0.30 $0.40 $0.50
Modern conferencing facility $0.40 $0.47 $0.55
Direct Cost of Sales
Weight & Fitness Center $800,000 $1,000,00 $1,500,00
Court Games $450,000 $700,000 $1,050,00
Dancing and yoga center $250,000 $280,000 $320,000
Modern conferencing facility $300,000 $330,000 $360,000
Subtotal Direct Cost of Sales $1,540,000 $2,310,000 $3,652,000

Personnel Plan

BJ Sports Hubs is a large facility that will have diverse personnel with various backgrounds. The business intends to hire the following staff to offer business support.

7.1 Personnel Plan

BJ Sports Hub is owned by Zack Phil who will be the sports complex manager. In this indoor sports business plan, the business will also have a manager, an administrator, three training assistants, three fitness instructors, two marketing officers, four cleaners, one cashier and two customer care executives. Comprehensive training will be done before staff resumes duty.

7.2 Average Staff Salaries

In the first three years, BJ Sports Hub intends to pay staff the following salaries.

 Personnel Plan      
Year 1 Year 2 Year 3
Manager $70,000 $75,000 $80,000
Administrator $45,000 $48,000 $52,000
3 Training Instructors $300,000 $350,000 $370,000
2 Sales and Marketing Executives $105,000 $130,000 $140,000
3 Fitness Instructors $300,000 $350,000 $370,000
1 Cashier $30,000 $40,000 $50,000
4 Cleaners $100,000 $120,000 $140,000
2 Customers care executives $150,000 $155,000 $160,000
Total Salaries $500,000 $598,300 $665,500

Financial Plan

BJ Sports Hub has a detailed financial plan that will steer the business towards the path of financial success. The indoor sports complex will be financed by Zack Phil and two investors. The available funding is expected to meet the cost to build an indoor sports facility, but an addition loan will be required to supplement funding. The following is a breakdown that computes various financial parameters for the business.

8.1 Important Assumptions

BJ Sports Hub has calculated its financial expectations based on the assumptions below.

 General Assumptions      
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 15.00% 17.00% 19.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 25.00% 22.00% 20.00%
Other 0 0 0

8.2 Brake-even Analysis

The graph below shows Brake-even Analysis for the indoor sports complex.

Indoor Sports Complex Proposal Plan - Brake-even Analysis

 Brake-Even Analysis  
Monthly Units Break-even 60000
Monthly Revenue Break-even $400,000
Assumptions:
Average Per-Unit Revenue $400.20
Average Per-Unit Variable Cost $1.20
Estimated Monthly Fixed Cost $520,000

8.3 Projected Profit and Loss

See below the Profit and Loss data for BJ Sports Hub calculated on an annual and monthly basis.

 Pro Forma Profit And Loss      
Year 1 Year 2 Year 3
Sales $800,000 $850,000 $910,000
Direct Cost of Sales $450,000 $500,000 $600,000
Other $0 $0 $0
TOTAL COST OF SALES $450,000 $500,000 $600,000
Gross Margin $320,000 $370,000 $410,000
Gross Margin % 70.00% 74.00% 78.00%
Expenses
Payroll $510,000 $620,000 $730,000
Sales and Marketing and Other Expenses $20,000 $40,000 $60,000
Depreciation $10,000 $20,000 $30,000
Leased Equipment $0 $0 $0
Utilities $30,000 $50,000 $70,000
Insurance $10,000 $15,000 $17,000
Rent $50,000 $60,000 $70,000
Payroll Taxes $20,000 $15,000 $10,000
Other $0 $0 $0
Total Operating Expenses $170,000 $220,000 $270,000
Profit Before Interest and Taxes $21,000 $25,000 $30,000
EBITDA $10,000 $15,000 $20,000
Interest Expense $0 $0 $0
Taxes Incurred $22,000 $25,000 $28,000
Net Profit $160,000 $175,000 $190,000
Net Profit/Sales 40.00% 430.00% 46.00%

8.3.1 Monthly Profit

Indoor Sports Complex Proposal Plan - PROFIT MONTHLY

8.3.2 Yearly Profit

Indoor Sports Complex Proposal Plan - PROFIT YEARLY

8.3.3 Monthly Gross Margin

Indoor Sports Complex Proposal Plan - GROSS MARGIN MONTHLY

8.3.4 Yearly Gross Margin

See the analysis of Profit and Loss in the table below.

Indoor Sports Complex Proposal Plan - GROSS MARGIN YEARLY

8.4 Projected Cash Flow

Diagram below shows pro forma cash flow, subtotal cash received, subtotal cash from operations, subtotal cash spent on operations and subtotal cash spent.

Indoor Sports Complex Proposal Plan - Projected Cash Flow

 Pro Forma Cash Flow      
Cash Received Year 1 Year 2 Year 3
Cash from Operations
Cash Sales $600,000 $650,000 $700,000
Cash from Receivables $50,000 $70,000 $90,000
SUBTOTAL CASH FROM OPERATIONS $350,000 $420,000 $490,000
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 $350,000 $420,000 $490,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $150,000 $170,000 $190,000
Bill Payments $120,000 $200,000 $350,000
SUBTOTAL SPENT ON OPERATIONS $270,000 $370,000 $540,000
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 $280,000 $400,000 $560,000
Net Cash Flow $100,000 $140,000 $160,000
Cash Balance $180,000 $200,000 $220,000

8.5 Projected Balance Sheet

This projected balance sheet shows BJ Sports Hub capital, assets, liabilities, long-term assets and current liabilities.

 Pro Forma Balance Sheet      
Assets Year 1 Year 2 Year 3
Current Assets
Cash $400,000 $440,000 $480,000
Accounts Receivable $100,000 $110,000 $140,000
Inventory $150,000 $300,000 $450,000
Other Current Assets $200,000 $200,000 $210,000
TOTAL CURRENT ASSETS $870,000 $1,050,000 $1,280,000
Long-term Assets
Long-term Assets $80,000 $100,000 $120,000
Accumulated Depreciation $110,000 $130,000 $150,000
TOTAL LONG-TERM ASSETS $100,000 $50,000 $30,000
TOTAL ASSETS $250,000 $280,000 $310,000
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $100,000 $120,000 $140,000
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $100,000 $120,000 $140,000
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $100,000 $120,000 $140,000
Paid-in Capital $205,000 $210,000 $220,000
Retained Earnings $250,000 $500,000 $750,000
Earnings $130,000 $140,000 $150,000
TOTAL CAPITAL $160,000 $205,000 $190,000
TOTAL LIABILITIES AND CAPITAL $160,000 $205,000 $190,000
Net Worth $490,000 $521,000 $550,000

8.6 Business Ratios

Business net worth, business ratios and ratio analysis for BJ Sports Hub are indicated in the table below.

 Ratio Analysis        
Year 1 Year 2 Year 3 INDUSTRY PROFILE
Sales Growth 10.00% 25.00% 35.00% 4.00%
Percent of Total Assets
Accounts Receivable 6.00% 5.00% 4.00% 7.00%
Inventory 3.00% 2.00% 1.00% 8.00%
Other Current Assets 1.50% 2.20% 3.00% 15.00%
Total Current Assets 90.20% 100.10% 120.25% 34.00%
Long-term Assets -6.00% -15.00% -17.30% 30.40%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 5.00% 4.00% 3.20% 21.70%
Long-term Liabilities 0.00% 0.00% 0.00% 19.50%
Total Liabilities 5.10% 3.00% 2.50% 40.10%
NET WORTH 70.00% 80.00% 90.70% 25.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 70.10% 62.00% 54.00% 0.00%
Selling, General & Administrative Expenses 63.00% 60.00% 55.00% 72.00%
Advertising Expenses 3.00% 2.00% 1.20% 2.20%
Profit Before Interest and Taxes 20.00% 23.00% 26.00% 2.50%
Main Ratios
Current 8.2 10 15 0.7
Quick 20 23.1 26.4 0.5
Total Debt to Total Assets 3.20% 2.00% 0.55% 5.00%
Pre-tax Return on Net Worth 50.00% 60.00% 62.20% 3.20%
Pre-tax Return on Assets 4420.00% 50.00% 56.00% 4.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 14.20% 17.60% 23.00% N.A.
Return on Equity 30.00% 33.00% 36.00% N.A.
Activity Ratios
Accounts Receivable Turnover 1 2 3 N.A.
Collection Days 70 77 78 N.A.
Inventory Turnover 13 17 21 N.A.
Accounts Payable Turnover 12.1 14.4 16.1 N.A.
Payment Days 18 18 18 N.A.
Total Asset Turnover 1.7 1.5 1 N.A.
Debt Ratios
Debt to Net Worth 0 -0.05 -0.04 N.A.
Current Liab. to Liab. 0 0 0 N.A.
Liquidity Ratios
Net Working Capital $300,000 $320,000 $340,000 N.A.
Interest Coverage 0 0 0 N.A.
Additional Ratios
Assets to Sales 0.25 0.28 0.31 N.A.
Current Debt/Total Assets 4% 3% 200% N.A.
Acid Test 15 19 23 N.A.
Sales/Net Worth 2.3 1.8 0.7 N.A.
Dividend Payout 0 0 0 N.A.

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