1. Unique Training Business Plan Muhammad Heza Dvalishvili Shalva Dominguez Del Villar Jose Juhola Tytti Jia Minshu Sarivaara Aslak Silvennoinen Elina 7.11.2008

2. Personal Training Summary HAAGA-HELIA University of Applied Sciences Business Plan Group 4 23.5.2009 SummaryThe fitness industry is one of the fastest growing industries in the world, so we feel like the potential for growth is definitely there with the right implementa- tion of our plan. We are offering two main products that are similar but for dif- ferent target groups, we feel like the Finnish market is untapped concerning our industry, so we want to cover a fairly large number of people with our unique and new online personal training combined with audio training which is totally new in Finland, but we are still keeping the wealthy customers in mind by offer- ing the traditional face-to-face personal training also to complement our prod- uct mix.The proper implementation of our promotional plan mentioned in the market- ing mix will be important for our success and reaching our sales forecast men- tioned in the financial chapter, however we feel that there is even more room for profit in the following years after the first year.Unique training thrives on being unique as the name implies, but also being pro- fessional and satisfying the ever-growing need of our customers, with growth plans in mind nationally and internationally. 3. Table of contents 1 Business Purpose and Aims ......................................................................................... 1 1.1 Introduction .......................................................................................................... 1 1.2 Mission Statement ................................................................................................ 1 1.3 Objectives .............................................................................................................. 1 1.4 Success Factors ..................................................................................................... 2 2 Description of the Business ......................................................................................... 3 2.1 Name ...................................................................................................................... 3 2.2 Skills........................................................................................................................ 3 2.3 Responsibility / Function ................................................................................... 3 2.4 Motivation ............................................................................................................. 4 2.5 Structure of business operations ........................................................................ 5 3 Market .............................................................................................................................. 6 3.1 Market of Operations .......................................................................................... 6 3.2 Business Environment......................................................................................... 63.2.1 Microenvironment SWOT Analysis .................................................. 6 3.2.2 Macro Environment PEST Analysis ................................................. 73.3 Market Trends....................................................................................................... 9 3.4 Market Size .......................................................................................................... 10 4 Customers ..................................................................................................................... 12 4.1 Market Segment .................................................................................................. 12 4.2 Target Segments ................................................................................................. 12 4.3 Market Positioning ............................................................................................. 14 4.4 Customer Buying Process ................................................................................. 14 5 Competitors .................................................................................................................. 15 5.1 Direct competitors: ............................................................................................ 15 5.2 Indirect competitors:.......................................................................................... 16 5.3 Methods of Analysis .......................................................................................... 16 5.4 Competitor Analysis Grip: ................................................................................ 17 5.5 Grip analysis: ....................................................................................................... 17 5.6 Competitive Strategies ....................................................................................... 17 6 Marketing Mix .............................................................................................................. 19 6.1 Product/Service .................................................................................................. 196.1.1 Face-to-face Personal Training............................................................ 19 6.1.2 Online Personal Training ..................................................................... 19 4. 6.2 Promotional plan ................................................................................................ 216.2.1 Fairs ......................................................................................................... 21 6.2.2 Magazines ............................................................................................... 22 6.2.3 Internet.................................................................................................... 236.3 Marketing Budget ............................................................................................... 256.3.1 Place ........................................................................................................ 25 6.3.2 Price ......................................................................................................... 26 6.3.3 Approach ................................................................................................ 26 6.3.4 Strategy.................................................................................................... 267 Operation Management .............................................................................................. 28 7.1 Supply chain management ................................................................................ 28 7.2 Divisions and responsibilities ........................................................................... 28 7.3 Training Facilities - Gyms ................................................................................. 29 7.4 Order Fulfillment Process................................................................................. 30 7.5 Face-to-face Personal Training......................................................................... 30 7.6 Online Personal Training .................................................................................. 317.6.1 Reverse Logistics in Online Personal Training ................................. 327.7 Trainers week program ..................................................................................... 32 8 Financial ........................................................................................................................ 35 8.1 Sales Budget for 2009 ........................................................................................ 35 8.2 Sales Volume Forecast for Online Personal Training................................... 36 8.3 Balance Sheet ...................................................................................................... 38 8.4 Income Statement .............................................................................................. 40 8.5 Break Even Point Analysis ................................................................................ 41 5. 1 Business Purpose and Aims 1.1IntroductionBusiness idea is offering personal training services to customers with different needs and health conditions. A personal trainer is a professional who educates people about physical fitness. Personal trainers typically design exercise routines and teach physical exercises to their clients. While some personal trainers work with only one client each session, others also teach groups of clients.Personal trainers typically work with clients to improve body composition (weight loss or muscle gain). They may also be hired for more specific goals, such as an increase in strength, muscular endurance, cardiovascular endurance, or flexibility. Some trainers are qualified to improve sports performance, including speed and power. While not as common, some train- ers may also be qualified to work with people who need help with physical dysfunction, in- cluding the improvement of balance, range of motion, knee and shoulder issues, and those released from physical therapy.Personal trainers often also have a specific method of motivating clients. Common techniques for motivation include demeanour (some trainers have an aggressive and commanding de- meanour; others are more calm and supportive; incentives for reaching goals; and positive re- framing or visualization.1.2Mission StatementUnique Training is committed to offering everybody a way of exercising and staying healthy on the individuals own terms, based on preference of exercise and time frame. Unique training understands that most of people are always on the run, we want to create programs which are fun, motivating and easy to get whenever you want it.1.3ObjectivesThe initial objectives for Unique Training are as follows:To raise seed capital for start-up, which is approximately 60000 to ensure the proper execution of our plans for our first year of operations To have 1000 online personal training subscribers by the end of year one through in- ternet marketing1 6. To have at least 10 customers for each of our active face-to-face personal trainers byyear oneAcquire the awareness of potential customers of our company and attaining credibilityfrom our first 1000 customers.1.4 Success FactorsThe keys to success are: Creating effective marketing means to reach our customer via internet advertisementsand promotions along with direct marketingControlling costs while spending the maximum on online personal training subscrip-tion marketing in year one.Carefully monitoring response rates of all marketing executions.Keeping our website always updated and offering new products and services regularlyEducating our personal trainers to the latest training methods and equipments, to keepup with the constant development 2 7. 2 Description of the Business 2.1 NameOur companys name is Unique Training. The team has decided on that name because we all believe that it gives the potential customers a clear idea of what our purpose as a company is. Bring new innovating ways of training to a market full of possibilities.2.2 SkillsAs every new company Unique Training is going to have a lot of strong sides as well as weak sides. On the strong side we have the experience of some of our members in a similar project, and almost everyone involve in the company has had some kind of training experience. The members of the team also have the advantage of being about in the same status than the de- sire target market which gives us a clear concept of what people our age and with similar life style is missing in the youth experience.As every good side has its bad side, we are also lacking on some areas. Unique training, at the moment has only one person with experience as a personal trainer, and is not certified yet. All the other members that are going to be taking part as trainers have to start from point blank and become trainers. So the whole personal training staff has to get certified, a process that can be done in a weekend. Unique Training team has also thought about hiring certified per- sonal trainers to also do the job as one trainer can only handle a limited amount of customers at a time. The hiring staff process will be done as the company starts to grow and we feel like the extra staff is going to be required. As a provider of personal work-out on the web we are also going to need some kind of software that combines the description of the customer with the correct set of exercises. We are in the process of solving all this details, and everything is going as planned.2.3 Responsibility / FunctionPersonal Trainers:Muhammad Heza Dominguez Del Villar Sarivaara Aslak And more upon request/demandWeb Maintenance3 8. Muhammad Heza Dominguez Del Villar Juhola Tytti Sarivaara AslakAccounting Juhola Tytti (basic double-entry) Outsources accounting firmMarketing and Promotion Muhammad Heza Dominguez Del Villar Sarivaara Aslak And more upon request/demand2.4 MotivationUnique Training has a simple rewarding method. Everybody in the company is going to get an equal reward of a salary raise after certain amount of customers have joined a continued ser- vice, in that way everyone is eager to work as hard as possible to get new customers and keep them satisfy. With this rewarding technique we also help the team to help each other and not try to look for individual goals and rewards. At the same time that it makes us work together is going to make us aware of the work everyone in doing so that we make sure there are no free riders. We make the company grow as a team, and we get rewarded as a team.Another way of motivating the personnel is to creating group consensus and knowing that we are not just providing a service, we are helping people achieve their goals as individuals whether they are for health, social, or career purposes. 4 9. 2.5 Structure of business operations5 10. 3 Market 3.1Market of OperationsWe are going to operate mainly in the Finnish market nationally, catering to the fitness needs of individuals residing in Finland, however keeping the international market at our scope for the future, since as we expand in Finland and if we have the desire for further growth, we have to tap into other markets outside Finland, closest being other Nordic countries. Expan- sion to other countries would happen in the way of online personal training, since the internet allows greater flexibility without having to physically be in a specific market to do business there.Service division Face-to-face personal training- Concentrating mainly in the capital region (Helsinki, Espoo, Vantaa and other nearby cities) Online personal training (including audio training)- Ability to operate nationwide, because of the flexibility of the internet3.2Business Environment 3.2.1 Microenvironment SWOT AnalysisSWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specify- ing the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.Strengths Knowledge about successful and proven training methods Competitive advantages - offering the customer results and guaranteeing them. Innovative & unique - Online personal training (video and audio) Competitive Price because of limited overheadsWeaknesses 6 11. Accreditation our trainers are accredited through certification programs that are na- tionally unknown. Lack of reputation and credibility because our company is new, it lacks the reputa- tion and awareness. Fragile image Lack of expansion possibilities in the face-to-face personal training due to lack of adequate staffing.Opportunities Huge growth and potential in the fitness market top 5 growing industries in the world. Technological developments can create new distribution mediums and the products. Partnership with gyms, corporations and sports teams, etc.Threats Demand might decrease in face-to-face personal training in economic downturns be- cause of services high cost. Low barrier for entry into the market. Possible IT software difficulties in our online personal training services.3.2.2 Macro Environment PEST AnalysisIt is very important that an organization considers its environment before beginning the mar- keting process. We have the micro and macro environment to consider, the micro environ- ment can be classified in the SWOT analysis made previously. While the macro-environment e.g. Political (and legal) forces, Economic forces, Socio-cultural forces, and Technological forces, these we are going to cover in the following. These previously mentioned aspects make what are known as PEST factors.Political & Legal The political & legal environment are fairly stable in Finland however some changes might occur o Requiring personal trainers to go through extensive training & education (notdemanded anywhere at the moment)7 12. Marketing regulation is fairly strict in Finland, which means companies cant make exaggerated marketing claims about their service or products The fact that our company resides in the EU, so our online personal training service has the benefit of dealing with other EU customers, without worrying about legislation or taxation issues too much, since the EU is very integratedEconomic Economic downturns and booms can affect our business positively or negatively, since we offer a so called luxury service and as people have less income to spend, they are likely to cut those luxury services/products first. Increased income will have a positive effect. However since our online personal training is affordable, we feel that an economic downturn could possibly improve that section of our business, while having a negative effect on the more expensive face-to-face personal trainingSociocultural Younger Finnish customers are willing to try new products/services which are good for our new online personal training service with audio training. Leisure time is important, because as people have less time to spend, we have to make our programs modified to their schedule and be reachable when they need us by offering flexible communication and distribution channels People in Finland are very health conscious, which is proved by the fact that 72 % of the population exercises at least 3 times a weekTechnologicalTechnological advancement can create excellent opportunities and threats, since there is a possibility of having new products to offer, however if the competitor gets them before us and protect them. Then we are being put at competitive risk Technology has made is possible for us to reach our customers worldwide through the internet and the customer database can be easily constructed as the customers use our online services, where we can store their consumer behavior, personal information etc. The internet has allowed companies to reduce their marketing costs dramatically and it will continue to do so in the future8 13. 3.3 Market TrendsSince we are going to operate in two mediums, the first being personal contact with the cus- tomer which makes it national, mainly operating in the capital region. While our online per- sonal training makes us international and the national borders dont confine us.We have to look at the overall fitness industry trends, to identify what are the most popular trends in todays society. But before indentifying the trends in 2008, we have to make the distinction between a fad and a trend, since a trend is something that has remained for longer and a fad is something new and hasnt proved itself yet, although it might have great potential.Our business is going to follow the trends in the market to the best of our ability, but also trying to have some fads in our offering, since they become very successful sometimes and we dont want to miss out on the opportunity.The following are the trends of 2008 according to The American College of Sports Medicine (ACSM) in their worldwide survey for fitness trends:1. Educated and experienced fitness professionals 2. Exercise programs for children to fight childhood and adolescent obesity 3. Personal training 4. Strength training 5. Core training 6. Special fitness programs for older adults 7. Pilates 8. Functional fitness 9. Swiss ball 10. Yoga 11. Exercise and weight loss 12. Spinning (indoor cycling) 13. Sport-specific training 14. Balance training 15. Group personal training 16. Outcome measurements 17. Comprehensive health promotion programming at the worksite 18. Reaching new markets 19. Worker incentive programs9 14. 20. Wellness coachingAs can be seen from the trends, that having an educated fitness professional with some previ- ous experience is of at most importance, so we have to always have the best certifications available, while keeping the knowledge updated as to be informed with new training methods etc.We can see from the trends, that the top 5 trends are consisting of activities that are not very unique, meaning majority look for training for their overall health improvement, with a con- centration on strength training and core training (abdominals and lower back) with the help of personal trainers and other fitness professionals expertise. Health and Fitness is a $14.1 billion industry, serving nearly 40 million members in the USA According to IHRSA (the premier health club industry association) health club mem- berships are projected to reach 50 million by 2010, representing a 25% growth rate from current levels Nutrition and Weight Loss is a $44 billion industry National trends toward obesity and heart disease point to demand for healthy living and exercise Nationally, there is an increased awareness of exercise as an integral component to health and fitness Globally, there is a greater focus on health and fitness and a strong demand for a branded fitness center with international standards of serviceThese numbers mentioned previously also relate to the European and Finnish markets, so the growth rates are very good, which is one of the reasons that the Fitness industry as a whole is one of the top 5 growing businesses in the world.3.4Market SizeSince the market of the fitness service industry is still fairly unknown and new in Finland and the rest of Europe, its hard to have exact information about the market size. But we can make a fairly reliable estimation of the market share given the information about:Persons exercising in Finland Exercise frequency 10 15. Preferred exercise method Competitive exercisersNational sports survey conducted in 2005-2006 by the Finnish sports exercise association (Suomen kuntoliikuntaliitto ry), Young Finland (Nuori Suomi ry), Finnish Olympic commit- tee, Helsinki city with co-operation with the education ministry of Finland, the actual research was conducted by TNS Gallup Ltd. The survey shows that about 72 % of the entire Finnish population exercise 3 or more times per week in some shape or form. The research has a 95% confidence level and it had over 5500 respondents, so we can say with very good confidence that the data is reliable.However in order to adequately call for the estimation of market size appropriate to our busi- ness, we had to look at which sports/activities were the Finnish population doing. Taking only the following activities into account: Gym training Aerobics Power lifting and bodybuildingThe overall market is estimated to consist of about 742 000 customers. There are also approx- imately 200 000 potential customers, as they have expressed their willingness and desire to start gym training.11 16. 4 Customers 4.1 Market SegmentThere is no single way to segment a market and the major variables are geography, demogra- phy, psychographic and behavioral variables.Geography variables are mainly including nations, regions, states, counties, cities and so on. Personal training program mainly focus on people who live in great capital area. Of course, we have online personal training which can reach more potential customers. We still pay most attention on urban area in Helsinki, Vantaa and Espoo.Our company targets our customers between 18 50 years old mainly. As we are providing two kinds of service: online personal training and face-to-face personal training program, we can manage different kinds of people based on their situation. For instance, students cant afford the personal training because of the expensive price. They can get our innovative ser- vice from internet and help them to take care of their health. On the other hand, some people do love the traditional training process which asks for higher price. They have stable income and willing to pay money to keep fit.Psychographic segmentation divides the customers into different groups based on social class, lifestyle, or personal characteristics. What we offering is the social health care service which is personal training. Our service laid emphasis on health care. Those people who love sports and willing to pay the health care service are our target customers. They would love to have pro- fessional advice during the work out.Many marketers believe that behavioral variables are the best starting point for building mar- ket segments. Usually customers get some kind of certain image of the product or service at the first sight. After they have tried the product, they will have reflection of how it works. Our company will establish our own website. It will have some audio samples for our custom- ers to try on our website. After they check it, they will get some thoughts about our service. For example, how much motivated after they try the samples, do they feel it is useful. We can see what our customers responses are from their feedbacks.4.2 Target SegmentsObviously, we have to know how fitness market is going currently. What are our competitors providing now and how much market share did they conquer already. Then we will select the most suitable segments for our business. Once we decide which segments to use, it should be 12 17. for long-term use. It affects our business a lot. Even if a segment has the right size and growth is structurally attractive, the company must consider its own objectives and resources in rela- tion to that segment.Applying this theory to our case, we divide our target customers into two groups: senior citi- zens, wealthy professional individuals and young adults.Senior citizens, wealthy professional individuals (face-to-face personal training)higher income office workers having free time health concious baby boomersYoung adults (online personal training)lower income students less free time foreigners (English version) hectic lifestyleSo the segments we choose are income, location, attitude and time. The face-to-face personal training package costs approximately 600 for 2 months in Finland. As it asks for a lot of money, so we are target the higher income people who can afford this service. Our company will provide it in our partner gyms which locate near our potential customers. It is a good choice for those people who have time to go to gyms and meet in their personal trainers. Whats more, for the young adults we are providing the lower price training program via In- ternet. Although we mainly target the Finnish people, we will also offer the English version audios. There are more and more out comers in Helsinki area nowadays, such as business people, international students and so on. We can target them with our English version training program in order to enlarge our customer range. This unique service is also for those people who dont have much time in the gyms. They can download the audio training from our web- site.13 18. 4.3 Market PositioningWe divided our customers into two groups. What senior citizens and wealthy professional individuals pay more attention is the professional advice based on their own health situation. They would love to have some qualified personal trainers who can improve their health situations. However, from the young adults point of view, they appreciate the time-saving and lower price training program. The unique online personal training program represents lower price, time-saving and high quality to our customers.We make the online personal training to be time-saving and affordable for young adults. Since this is unique and promising service in Finland, we have good competitive advantages in this fitness market. On another side, the face-to-face personal training is more about luxury, professional and traditional training model service. In order to keep the customer, we will make it exciting and have a good relationship with our customers. The services what we are offering build up an image which concentrates on giving professional training advice based on different situation people to satisfy their needs.4.4 Customer Buying ProcessThe buying process starts when the buyer recognizes a problem or need. Applying to our spe- cific case, the desire to keep fit is the recognition of problem. Customers who are really eager to have this kind of service will seek the information from the Internet and related magazines. Once they have found the some alternative choices, they will compare them and try to figure out which one is more suitable for them. Finally they will make a decision to purchase the product. Our online personal training service is highly differentiated in the fitness market. Based on the current market circumstance, there arent many competitors in Finland. This is our big competitive advantage to make people choosing our product. For our face-to-face personal training, there are some competitors in Finland, but just slight difference in our process. After purchasing the product, the consumer will get certain reflection of product or service about the function quality and so on. It matters building up relationship with custom- ers and customer loyalty. We will offer the pre-customized training program in order to satisfy the customer needs.14 19. 5 CompetitorsAs was mentioned above, Finnish fitness industry market consists of approximate 750 000 customers. The demand on the fitness products increases within an increase of peoples health awareness. As a demand on the fitness products is considerably high in this specific industry, the competition among players is high. Fitness market with its industry structure belongs to monopolistic competition, meaning that the entry to the market is comparably easy, with no need of high investments (at least in our business case), special licenses or permissions. The products or services offered by market players are differentiated, making it easy for new busi- nesses to enter the market with no major difficulties, and providing chances to create competi- tive advantage by presenting the innovative products or services.When deepening into the competitor analyzes, were going to discuss our direct and indirect competitors the enterprises posing the threats to our future market share.As we have two different products face-to-face personal training and online/audio personal training, we accordingly target two different market segments. Within our fist product we tar- get the senior citizens, with stable income, emphasized to improving their physical capabilities and health. The online/audio personal training targets younger class of citizens, students for instance - the individuals with low income level and lack of free time.For our product - face-to-face personal training, the direct competitors are the organizations or personal trainers offering the same services of personal training (Kuntokompassi, Unique Fitness, Elite Trainers), but in case of online/audio personal training there are no direct com- petitors in the market (we should beware of threat of substitutes).5.1 Direct competitors: Organizations Personal TrainersKuntokompassi Katarina Tunturi Unique FitnessPaula Kujala Elite TrainersHanna Hirvonen SATS MTV3 - Keventjt Move Wellness Motivus Happy Training 15 20. SPARRA Fitness & Body ConsultingFor some of our competitors, personal training is more an additional service from the product range that they offer rather than a core product, offering personal training programs as an additional service in their GYMs. But organizations like Kuntokompassi, Unique Fitness, and Elite Trainers are basically concentrated on making unique training programs for individual customers or groups, and providing personal trainers guiding and motivating the customers through the stages of those programs. These organizations are our biggest direct competitors.5.2 Indirect competitors:When thinking about the possible indirect competitors, we would mention the organizations in sport and health care industries. Personal Training as product mainly belongs to the lux- urious product group and even a slice economical downfall could result in customers change to the substitutes. But our goal is to build a strong brand value and good image, to make our customers less price sensitive.5.3 Methods of AnalysisFor depth analyze of competitors we list the main key success factors in fitness industry and try to evaluate each our and our competitors strengths and weaknesses by a methodical analy- sis. The evaluation process is conducted by creating a competitor analysis grip. We find com- petitor analysis grip to be a valuable tool to compare competitors from a number of perspec- tives - company information, product/service information, customer information, and sources of competitive advantage.The actual process of scaling: Each company (our main direct competitors) is given a score on each success factor The scale ranges from 1 (very poor) to 5 (very good) The results will be used for identifying possible competitive strategies In Importance to Customer box we apply our vision of which success factors are the most important ones from customer point of view (scaling from 1 (most impor- tant) to 10 (least important)).16 21. 5.4 Competitor Analysis Grip: MTV3Importance to Success FactorsOurKuntoUniqueKeventjCustomerin Fitness Industry Company KompassiFitnesstface to face OnlineProduct Quality 4 453 11 Innovation5 233 33 Visibility3 334 45 Company Image 1 455 22 Financial Strength1 555 710 Well-qualified Workforce3 553 58 Advertising 3 335 87 Multilingual Availability 4 111109 Distribution4 333 66 Price 4 224 94TOTAL SCORE32 32 35 36-- The evaluation was performed after viewing different information about competitors perfor- mances, and/or studying their annual reports by visiting their information sources (web-sites, etc.)5.5 Grip analysis:Mainly, our advantages over the competitors are based on innovation, comparably low price, multilingual availability of our service (English/Finnish), and distribution. When looking at our weaknesses, we should mention the factors like financial strengths, company image, and advertising.5.6 Competitive StrategiesFor creating competitive strategy we concentrate on issues like: cost leadershipdifferentiationinnovationdistribution.17 22. The personal training is expensive service, but making it accessible through internet cuts down operational costs and decreases the actual price of the product. This allows us to have cost leadership over competitors. By introducing online and audio personal training we not only differentiate the product, but also offer something completely new. The distribution by inter- net will allow the customers to receive our products (training programs and audio samples) within minutes. Advantage in delivery speed could be a crucial success factor. We believe to be the pioneers of the idea in Finland, and that our customers find the innovative product effec- tive and useful.18 23. 6 Marketing MixThe marketing mix is generally accepted as the use and specification of 'the four Ps' describing the strategic position of a product in the marketplace. The four Ps stand for: Product - A tangible object or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units. Price The amount a customer pays for the product. It is determined by a number of factors including market share, competition, material costs, prod- uct identity and the customer's perceived value of the product. Place Represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet. Promotion Represents all of the communications that a marketer may use in the marketplace. Next we define every step of the four Ps based on our business plan and describe the methods that are going to be use to achieve the desire goal of having a high quality product/service.6.1 Product/ServiceWe are going to have two main service options; face-to-face personal training and online per- sonal training with a sub-category of audio training. We believe that with these different kinds of service options people are able to find something they feel comfortable with. We are also able to have different kind of people as our customers and we can larger target market.6.1.1Face-to-face Personal TrainingOur organization offers the traditional face-to-face personal training. In this service option the customer will contact our personal trainer and plan their first meeting. The first meeting works as a consultation where the personal trainer and the client will get together to know each other and see if this service is right for them. This first consultation will be free of charge. When the client has decided that this service is right for them then the personal trainer will do a fully personalize program to the client which will be done according to the needs and wants of the customer. The personal trainer and customer will make a program/timetable and they will be meeting each other according to it.6.1.2Online Personal TrainingWe are offering an option to people to have an instructed workout program online that will also include an audio training program that will be giving instructions during the workouts. Our customers will register to our web site and fill out a questionnaire which will ask relevant questions regarding their personal heath, their preference of exercise, exercising experience19 24. and lifestyle. After the questionnaire is done by the client the web site will give the right wor- kout option for the client and the client will have the opportunity to choose the audio training that fits their work out the best. The online personal training system will have detailed instruc- tions, video and picture, and the audio training will have a full training session with detailed instructions played on your mp3 or iPod. This gives the client the best possible tools to do the given exercises in the correct way.Audio Training ServiceThis is not a service we offer on its own, it comes along with the online personal training ser- vice. This part of the online training is new to the Finnish training market. On our web site we are going to have a variety of audio training services and our clients will have the option to choose the one that better suits the online training the system have given them. We are going to have an audio training service for different kinds of works outs; cardio work out and weight lifting. The audio training system will have male or female voice to motivate and tell what to do during their exercise. Our clients will also have the option to add the music which they prefer to listen during their work out. This audio training system cannot be found in the Fin- nish market yet and we believe that this could bring us customers who do not have the time or money to have a personal face-to-face trainer.The Benefits and Features of Online Personal TrainingThe website would be done in a very appealing, health promoting style. With easy options to use and to navigate through.Customer would create their own profile, which includes their own username and password that they will use to login to the service as our customers. At the end of the registration, they would complete the process by paying the fee online (bank card, credit card, bank transfer & paypal).Inside the members section, there would be weekly articles about training, nutrition etc.The customer would have a chart that would monitor their physical measurements, where they could simply see their current condition compared to their beginning condition when tey first joined the system. Also the customers can load pictures to their own space where only themselves and the personal trainer can see and make evaluations. 20 25. Every member would have their own space, which has a calendar, journal, pre-made programs to choose from based on preference or to have the personal trainer make a specific program specially for the client.There would be a exercise library, which would contain over 500 exercises to choose from, with full descriptions, instructions, photo and video displaying the proper way of doing the exercise.Ready-made nutrition programs based on different goals and every customer gets a specifically made nutrition plan from the personal trainer.As it was just mentioned we have a variety of services which all have the same goal; to offer people easy and motivating way to exercise. Today, people have started to pay more and more attention on their personal health and looks. However, many of them do not have the time or the money to exercise the way they want to. With our Business Plan we are offering people the tools on how to get the results they want to have. The variety of our products gives people the choice to choose the method of exercise which fits the best on their lifestyle.6.2 Promotional planThe promotional plan Unique Training is going to have is based on potential customer reach that is why all the promotion is going to be done through channels that we believe are going to be directed specifically to potential customers.6.2.1FairsWe are going to promote our personal training products on fairs concentrated on our field of business such as Terveysmessut and Fitnessn Expo. Fairs are a good tool for public relations and personal selling. We are able to tell people about our business and the products we are offering. It is also a way to start building personal relationship with the future customers. The fairs are interactive affairs where people are able to ask questions and experiment some of our products such as online personal training service.One fair we are going to participate on is Terveysmessut. This fair is located in Helsingin Mes- sukeskus at 13.-15.112009. It is one of the biggest health and well being fairs in North- Europe. The price for participating to this fair is 101 euro/m2 and the registration is 300 euro. There is also a discount available if you reserve your place early enough. We are going to take this advantage which is 10% discount of the booth rent.21 26. An average 36 554 visitors 85% of them are females Visitors average age 44 years 82% form downtown area Average time spend at the fair 3,7 hours 34% of the visitors are most likely to revisit 90% were satisfied with the fair 90% of the companies attending the fair were satisfied 393 journalist visited the fair and media volume was high(www.terveysmessut.fi) 6.2.2 MagazinesBodylehti.fiBodylehti has the widest distribution in Finland in fitness- and bodybuilding field. Magazine is published 8 times a year and each edition size is on average 17 800. Its index is constructed from nutrition- and training advices, and from relevant topics on fitness industry.SIZE SIZE (mm) PRICE () 2/1 Page 434 x 2804 400,00 Back Cover 217 x 2802 800,00 1/1 Page 200 x 2682 700,00 1/2 page, Horizontal 205 x 1221 500,00 1/4 Page, Vertical 100 x 122 850,00 1/8 Page, Horizontal100 x 66 450,00 From these options we are using the 1/4 page advertisement sixed 100 x 122 cost 850.On bodylehti we are advertising six times a year every second month starting from January.6 x 850 = 5100, 00 / year.Kuntosali &Fitness magazineK&F is a circular magazine for health- and fitness centres. It reaches over 100.000 readers eight times a year. SIZE SIZE (mm) PRICE ()22 27. 1/1 Page260 x 370 2 750,00 1/2 Page, Horizontal260 x 183 1 500,00 1/2 Page, Vertical128 x 370 1 500,00 1/3 Page, Vertical84 x 3701 150,00 1/3 Page, Horizontal260 x 123 1 150,00 1/4 Page128 x 183 875,00 Back Cover260 x 370 3 250,00 Front Page260 x 265 3 250,00 Spread Out540 x 370 4 750,00 From these options we have chosen to take;1/4 Page size 128 x 183 - Price 875,006.2.3 InternetGoogle Ad WordsAdvertising at Google web pages opens a large market. Most of the people in Finland are us- ing Google almost weekly or even daily. It will give us a large visibility with appropriate price. With the Google ad words people are going to see on the right hand side a link to our web sites when they are doing a search with particular word. These particular words which will bring up our website, we have to decide before hand. We are also paying a certain amount according to the enters to our websites.Here are some examples of the words we could use and their pricing. fitness1,36/ per click personal trainer 2,16/ per click kuntoilu 0,67/ per click health and fitness 1,62/ per clickThe prices are 1 per click in average.We can also set limits on the clicks we are paying for, as an example; we can set area to Hel- sinki downtown which means that the computers located in the Helsinki downtown will get our ad when they are searching with words we are paying for 23 28. With the Google ad words we are focusing on the mass market. It does not guarantee any- thing, but we believe that it will bring major visibility. It will also do the work by itself without any bigger effort and it is not taking a large part of our advertising budget.Pakkotoimisto.fiPakkotoisto.com is going to be one of the web-pages where we are advertising. TNS Metrix which keeps records of the visitors of web-pages has made a survey on week 41/07 that shows that there are 91215 users and 242546 visitors per week on pakkotoisto.com.This web-site represents its users lifestyle. Pakkotoisto.com is concentrated on gym exercising and life around it. Its users and visitors are committed on training and know what they are seeking from the web-site.Advertising price200x40 size banner shown every page. Prices with VAT. 0%1 week 400 2 week 600 4 week 800 From these options we are going to use the 4 week period advertising. On pakkotoisto.com we are advertising every third month starting from January as being the first advertising month.Pakkotoisto.com has conducted their own survey about their average users and visitors. The survey analysis is attached as Appendix 3.24 29. 6.3 Marketing BudgetBelow you can see our marketing budget divided monthly for the year 2009. It also indicates the amounts used in each Promotion channel. Our marketing budget is 36 000,00 for the year and at this point we have channelled 28 850,00 . We left 7 150,00 for other promotion channels which might occur during the year. 6.3.1 PlaceThe nature of our business provides us a possibility to reduce costs in facilities. There are no premises provided for consumers, because there is no need of that. Naturally Unique Training has facilities for office work where we do the consulting and all the needed processes in order to run the business.Unique training is going to be located virtually for the customers. Our company is going to a have web-site where we are available for our customers 24/7. This way we have a wide range in reaching consumers and have competitive advantage compared to the traditional system.All the services, reservations, and programs directed to consumers is handled through our web-site. Depending of the nature of service it varies how the procedure proceeds.On face-to-face training we need to make partnerships with the gyms where we are willing to perform our services. Naturally commercial gyms want to have compensation for using their premises. Having an agreement with a gym which has a large variety of options where to work out expands also our work territory and gives our customer flexibility in choosing the training facility.25 30. Online training includes the audio-training and the training programs. Online training is han- dled via our web-sites and the trainee can use any gym he / she wish, since it does not require our presence, hence no partnerships are needed with the customers gyms. In this form of training our part is only to provide the programs to the customer and follow customers progress via internet. The online program which is appropriate for the customer is down- loaded from the web-site.6.3.2 PricePrice is defined by Kotler (2003) as the amount of money charged for a product or service in order to cover production expenses and profit. Every company is obligated to set a minimum floor price which covers the cost of production, distribution, and sells, and leave the business some profit.6.3.3 ApproachThe general approach we are going to use at Unique Training is the Value-based pricing. We have decided to take this approach because there is already a set consumer value for the ser- vice we are offering. With this approach we are not going to set our price according to the cost of production, we are going to use the studies and information to find out how much the customers value the service has and then put a matching price to it.Using the Value-based pricing the whole process of pricing goes backwards. Instead of start- ing by the production cost and ending on the customer, we have to start from the customer and see how much is the product valued for in the market, and from then we start developing the product, already knowing what the price is going to be.We are confident that the Value-base pricing is the right approach for our service because services are often in the low production cost side of the table, which does not mean that it has low customer value.6.3.4 StrategyThe pricing strategies that Unique Training is going to use are based on the cost-plus pricing method, this means that we first calculated all the expenses of the company, and then add a substantial amount to represent the desire profit. The cost-plus pricing is the right method for us because as a new company in a growing market there is not a lot of information. 26 31. As we offer two services at Unique Training we should also have to use more than one pricing strategy, one for the online personal training and one for the fate-to-face personal training.The pricing strategy at Unique Training for the online personal training is going to be the Market-skimming pricing. This means we are planning to start at a relatively high price be- cause of the lack of competition on online personal training services and generate bigger prof- its to get a solid start in the business. After a while we would start lowering the prices when the market gets bigger, and keep doing that until we get to the point where we have cover all the possible market layers that are wheeling to pay for the online personal training services offered at Unique Training.The pricing strategy for the face-to-face personal training is going to be a mix of Premium pricing, meaning that we are keeping the price of the product or service artificially high in or- der to encourage favourable perceptions and perceived value of a luxury service among buyers based only on the price. And Competition-based pricing, meaning that the price is going to be based upon prices of the similar competitor products. This combination of strategies is very suitable for the face-to-face personal training due to the low production cost and growing demand on the service which is where the premium pricing helps and also because there is already a market for the service and we need to be at the same level as them, at least at the beginning until we can add some more value to our service, where the competition-based pric- ing comes into place.The beginning prices for the products are going to be: 30 for the online personal training that includes the training program and the audio training program. 600 for the face-to-face per- sonal training that includes the training program, and 10 meeting with the personal trainer that includes the training facilities (only for the meetings with the personal training) in a 8 weeks period. If the customer decides to meet the trainer where else than the established facilities, the customer will be charge any extra expenses this might cost the trainer or the company. 27 32. 7 Operation Management 7.1 Supply chain managementOur company, Unique Training, is a service which provides different kinds of training pro- grams. We do not manufacture any product therefore there is no need for actual supply chain management. We have the online ordering process which happens online and the software will take care of the ordering, receiving the payment and sending the actual product to the cus- tomer. In the online ordering process there is no need for the actual physical product and that is why everything happens online. The online system needs only a good design and occasional maintenance which will be done by the member of our company.The personal training requires a lot of organizing and scheduling. The personal trainer has to actually move physically to place to place which requires a timetable so that the customer does not have to wait and that the trainer can move smoothly. In order, to achieve a good organiza- tion all the members of our business plan has to have their own responsibilities which assures that everything will be done and everything will be done according to the timetable.7.2 Divisions and responsibilitiesPersonal Trainers They are the ones who are actually seeing the customers in a regular basis. They are meeting the customers according to the time table they have created together with the customer. The personal trainers also have to physically move from place to place. They also need to prepare the work out plans for the face to face training sessions.Web Maintenance It is very important to make sure that our server and software works without any problems. The online service is a large part of our service selection and we do not want that our customers will have to wait a long period of time to download our website. The member who is in charge of the web maintenance will be Jose Dominguez Del Villar. They are required to update the training programs and the web site itself at least two times a week.Organization It is important that our personal trainers can move without having any wor- ries from gym to gym. Trainers are in charge of planning their own routes and different trans- portation modes. Our trainers will mostly use companys cars which are chosen based on them being environmental friendly. Most of the gyms the personal trainers are training are located in the centre of Helsinki which makes moving from place to place easy.28 33. Accounting - Secretary is going to do the basic double-entry but accounting is going to be outsourced. Outsourcing accountings are going to cost us on average one hundred euro per month (100).7.3 Training Facilities - GymsAs a personal training company Unique Training is going to send customers to the customers training facilities, but also have the option of providing the customer with training facilities all over Helsinki with no extra cost. The gyms that are going to serve as training facilities facili- tated by Unique Training are: Motivus, with locations in Tl, Kamppi shopping center, Kamppi metro station, and Stockman in the center of Helsinki. Another one is Elixia, with locations in the city center, Ruoholahti, Tali, It-Keskus, Matinkyl in Espoo, and Sello also in Espoo. Unique training is also using Idealfit gyms with locations in Eira, Hakaniemi, and Ku- losaari. These gyms have been chosen because our customer are mainly from main Helsinki area and all of the training locations are of easy access for the customers, and with a lot of transportation facilities for the trainers to get to the facility chosen by the customer. Our trainers can also work with the customers in other gym facilities that the customer might be- long to, but the one mentioned above are the ones we provide.Unique training does not own any training facilities at the time which force the company to make deals with other companies that do own gyms and training facilities. Unique Training has agreed with the gyms mentioned before to a fourteen percent (14%) share of every cus- tomer per session. That means that Unique Training is going to pay 10.5 per customer per session to the training facility with no hour restrictions. This kind of service would cost a regular person somewhere between 10 and 20 with some hour restrictions that do not let the customer use the facilities during really busy hours. Unique Training does not have a single gym facilitator company because we want to give the customers options to choose from in our company instead of many training companies to choose from.The uses of the gyms starts when we give the customer a list of the gyms that we have availa- ble and he/she can use with no extra cost. After the customer decides which gym fits the best, we make a reservation if needed, and if reservation is not needed the personal trainer meet the customer at the gym facility and register the session in the front desk which will later be charge to the Unique training account. Unique training is planning to stop paying for the use of facilities in the future. One way of doing that is to get a lot of customers and make a new agreement with the gym owners where Unique fitness does not have to pay anymore for the sessions because of the promotion the company is giving to the gym. Also, Unique training29 34. will be recommending its customers to work out in regular basis and it will probably be done in the same facility. In other words the gym will gain new customers that are not paid by Unique Training.The final goal of Unique Training related to the gym facilities is to build our own training fa- cilities in the future. Having our own facilities is going to expand the business in multiple ways, one of them being the addition of a new service to the company, the training facility provider. Having our own facility should be cost effective at the point we get it because of the amount of customers we are going to have at that point. If the amount of customers is not big enough, or they would not be whiling to change gyms, then Unique Training will not make the expanding step7.4 Order Fulfillment Process 7.5 Face-to-face Personal TrainingThe whole fulfilment process starts after the customers find out about our company and de- cide to contact Unique Training. The first step is the contact between the customer and a rep- resentative of Unique Training through the internet or phone and shows interest on our free consultation, after this an appointment is schedule. Because the customer and the trainer have different time schedules, the appointment might be some time in the next two to four days after the customer has reached us. During the consultation the trainer is going to explain the different options and packages available in Unique Training. The consultation meeting is mostly use to explain the customer what we do, and go through the prices and options avail- able for that specific customer. After the meeting is the second delay. The customer might take somewhere between two to four days deciding if Unique Training is the right choice. If the customer decides not to get our services the process is over. On the other hand, if the customer decides to acquire our services the process continues.After the customer decides the hire us as their personal trainers, and decides which package to get, the customer proceeds and makes the order of the desired service. The ordering process takes face-to-face with filling the contract between the parties involved. After the order is placed, a questionnaire is given where we get all information necessary about the customers current state of health and goals for us to design the appropriate program. After the question- naire is done the trainer proceeds to do some testing on the customer. The test are done to find out the actual strength, resistance, endurance, and other necessary physical limits so that the trainer can elaborate an adequate training program with the right weights and times for the customer in question. Preceding the questionnaire and the test, the customer and the trainer30 35. decide on a date that fits both for their next meeting when the actual training is going to be- gin. The trainer is going to create the training program, which takes three to five days. After the program is designed, the agreed schedule of training will be started. The final step is meet- ing the customer on the agreed date and start the training in the gym that we have partner- ships with.Cross Functional Flow Chart for Face-to-face Personal Training Ordering Process CustomerPARTS INVOLVEDleaves CUSTOMERNo1st contactCustomerwith2Yes places ancustomer order Scheduling Customer fills the programCustomer has 1the with training questionnairecustomer session VISIBLE PERSONALTRAINER Consultations with customer Customer hasTestingtraining atcustomers GYM with physical PARTNER GYM Personal conditionTrainer INVISIBLE Personal PERSONALTRAINER trainercreates thetraining program TIME 2-4 DAYS60 MINUTES 2-4 DAYS 90 MINUTES 3-5 DAYS60 MINUTES1Arranging the meeting with the customer might take from 2-4 days (finding appropriate schedule).2Decision making by customer needs time because of commitment and high price of the service. 7.6 Online Personal TrainingThe whole fulfillment process starts when the customer enters Unique Training websites and gets familiar with our online training products. The whole ordering and receiving process happens online. The first step might take to most time because it includes that the customer gets familiar with Unique Training and they have to decide on what kind of service they want to order. When the customer decides to order our online training program they have to fill out a questionnaire on our web sites. The questionnaire asks questions related to the customers lifestyle, personal heath and exercising experience. The questionnaire is not that long it takes only 10 minutes. The purpose of the questionnaire is to provide the right exercise programs for that particular customer. After the customer has filled out the questioner the computer software handles the received information. The software then prepares the training program according to the filled out questionnaire. When the software has the training program ready then the customer will receive an email which notifies that the ordered training program is31 36. ready to be downloaded. After the customer has received the notice email then there might be a little delay because it is not always certain that the customer is available to download the program right after the email. When the customer is free to download the program which takes only few minutes then the customer is ready to start the training process.Cross Functional Flow Chart for Online Personal Training Ordering Process Cross Functional Flow Chart Online Training Ordering Process The Customer Customer is not happy Customercustomerreceives the with the product and hasCustomer receives downloads leavesrefund14 days to return thean email that their the trainingCustomerproducttraining program is program starts training Customer ready to be from our downloadedCustomer Customer website Customer NOdecides tofills out the visits our web YESorder the ready made siteonlinequestionairetraining program ComputerComputersoftware choosessoftware the right training Virtual Process process theprograms for that guestionaireparticular customer2 3 Hours10 Minutes 10 Minutes 1-3 minutes LeadTime 3-4 hours Decision symbol indicates that the customer has to make a decision if they want to order the online personal training product or notDelay symbol indicates that there might be a delay before the cutomer is available to download the online training product they prefer. 7.6.1Reverse Logistics in Online Personal TrainingThe ordering process follows the same steps as mentioned before until the customer receives the ordered program. When the customer is not happy with the received program he or she has 14 days time to return it. After the customer has returned the program he or she will re- ceived half of the paid price. When these steps are completed customer leaves.7.7 Trainers week programScheduling Face-to-Face trainers week program depends on how many trainees the trainer has at the same time. Trainers can handle averagely 10-15 trainees during the same period of time. The average trainer has 1.3 contact hours with the customer per week.32 37. On the following page is a sample description of one trainers week schedule, which consists on the following elements;Preparation of the training. Preparing for the training means creating and adjusting the cor- rect program and training methods for the customerTransportation to training location. Unique Training owns two cars which are going to be available for the trainers to transport to the training sessions with the customers. Two cars should be enough, but if the company gets many more customers that all three trainers have to go to training sessions at the same time, then the company will buy another car.Contact hour with C (customer). Is the actual training session between the trainer and the trainees. The training session last one hour. This part of the training work is visible for the customer. Here we start the training programs and evaluate alternatives and training methods for the customer.Analysis of the training. Based on the trainees performance at the contact session the train- er makes the adjustments in to the programs in order to achieve best possible outcome of the training.Handling customer communications. This means handling the received emails and phone calls and generally taking care of customer needs.The schedule does not indicate a specific lunch break, but it is flexible enough so that the trainer can find his own time to have lunch.Generally the schedule needs to flexible because we are offering a service to people. The train- er needs to be able to make some changes to the timetable according to the customers needs for example; if the customer cannot make it to the scheduled meeting then the trainer needs to be able to arrange a time for the contact hour.33 38. 34 39. 8 Financial 8.1 Sales Budget for 2009Unique TrainingSales Budget ScheduleFor Year Ending December 31, 2009 1st quarter2nd quarter 3rd quarter4th quarter Online Personal TrainingMonthly payments 670 11301785 2709 Sales price /month30,00 30,00 30,00 30,00 Estimated sales 20 100,00 33 900,00 53 550,00 81 270,00 Total sales from online personal 188 820,00 training: Face-to-face Personal TrainingPackage purchases 16 2441 49 Sales price /package 600,00 600,00 600,00 600,00 Estimated sales 9 720,00 14 580,00 24 300,00 29 160,00 Total sales from face-to-face per-77 760,00 sonal training: Total sales estimate for Unique266 580,00 training with VAT 22 % Total sales estimate for Unique207 932,00 training without VATOur sales budget has been made taking into consideration the seasonal factors along with re- tention rates, assuming that all of our customers will not remain with us all the time. We have divided the sales budget to online personal training and face-to-face personal training depart- ments. Also our sales budget has the estimations made for each quarter of the year separately.We have the total revenue of both departments with value added tax and also without it, as these figures are based on the cost-plus strategy approach. Since the market for online person- al training is new, it is hard to identify the sales forecast through secondary information, since there was none. So we took our fixed costs and added the desired mark-up profit to know how much we need to sell to reach that profit target, hence the creation of our sales budget and its figures. 35 40. 8.2 Sales Volume Forecast for Online Personal Training Above you see the sales volume forecast for the first year of our business operations, this is about the online personal training department. About the figures, you can see from the chart that the biggest sales months for us in the year are presumed to be January and November, this is due to the seasonal factor also along with our marketing activities, previously we have mentioned in our marketing mix, that we plan on having a intensive marketing campaign in the first year, due to lack of image because of being a new company. So assuming our market- ing objectives are reached, first month of the year should bring good amount of customers in due to intensive marketing but more so because January is a time known for new years resolu- tions etc, so people make promises about getting in shape for the summer, from experience we have found that the membership rates in health centers, gyms etc. go up drastically because of this seasonal factor. The month of May is also another time when people want to get quick- ly in shape for the summer, since its very near at that time. However because people are on vacation and abroad possibly, we feel like the summer months will be fairly quiet with little to 36 41. no growth compared to other months. Then people come back from their vacation and back to work, so September will be a good month for our online personal training product. No- vember is seen as a positive month for us because we are participating in fairs as mentioned previously in the promotional plan, so we are assuming growth in the new customer acquisi- tion number.The chart for the sales volume forecast also includes the fact, that we can not retain all of our customers, due to several factors such as not being pleased with our product, going to a com- petitors products etc. So since we cant assume 100 % retained customer, we are assuming that due to our unique product along with good customer service that we can keep 75 % of our customer base. The goal is to have 1000 customers by the end of the year of 2009.37 42. 8.3 Balance Sheet Balance sheet as of January 1, 2009EQUITY AND LIABIL-ASSETS AmountAmountITIESNon Current assets Own equityProperty,plant and equipment Active partners investments 20 000,00 -Two cars 22 000,00 Silent partners investments12 000,00 -Website design & launch5 000,00 -Audio mixer2 000,00 Loan capital28 400,00 -Furniture5 000,00 -Computer + software3 000,00 Grant-Start-up grant from unem- -Personal training tools and clothing 1 500,00 ployment office 20 400,00 Total Non Current Assets38 500,00 Current assetsCash and cash equivalents-Marketing budget cash9 000,00 -Office premise (3 months down payment + 3 month rent) 3 900,00 -Cash reserve for first 3 months of active partner salaries 9 000,00 -Start-up grant from unemployment office20 400,00 Total Current Assets42 300,00 Total Assets80 800,00 Total equity and liabilities 80 800,00 Our biggest investments are two cars that we need for the movement of personal trainer from one place to another with the least amount of time, so there are no delays for the next face-to- face personal training client meeting. We have enough cash to cover our biggest costs for the first 3 months, such as salaries for active partners to complement the start-up grant they will all be receiving from the unemployment office, marketing budget for 3 months, along with the 38 43. down payment of the rental premise with 3 months rent money prepared in reserve. All 4 ac- tive partners will invest 5000 each making a total of 20000 , we also have 3 silent partners that only invest 4000 each, making a total of 12000. They will be promised a dividend of 10% from annual profits. From our sales budget forecast, that would mean our silent partners would get their investment back in about 1,3 years, which we think is a great investment.The remaining of capital will be loan capital from Finnvera for a amount of 28400 with 5 years payment plan and 6 % interest on the loan, if needed we can have the entire first year free of payments to relieve some of the expenses if we cant cover them.Start-up grant (starttiraha) from unemployment office will be received for each active partner participating in the company operations full-time. The amount of the start-up grant is between 527 - 670 /month/partner for a maximum of 10 months. So we are taking the minimum amount into our calculations just to be on the safe side.39 44. 8.4 Income Statement % from total INCOME STATEMENT (period 1.1-31.12.2009)revenue Total revenue207 932,00 100,00 % Cost of revenue 12 995,75 6,25 % Gross Profit 194 936,25 93,75 %Operating expenses *YEL-insurance 5 304,00 2,55 % Other insurances 2 400,00 1,15 % Salary ( 4 active partners) 96 000,00 46,17 % **Salary expenses (0%) Rent 7 800,00 3,75 % Communication; phone; internet 1 800,00 0,87 % Accounting 1 200,00 0,58 % Office supplies600,00 0,29 % Travel expenses6 000,00 2,89 % Advertising 28 980,00 13,94 % Other expenses - Entrepreneur unemployment insurance1 800,00 0,87 % - Website maintenance600,00 0,29 % Total operating expenses 152 484,00 73,33 %Operating income or loss42 452,25 20,42 %Non-Operating or Other ***Depreciations 9 625,00 4,63 % ****Loan payment 5 604,00 2,70 %Earnings before tax & income (EBIT) 27 223,25 13,09 % Interest expenses140,00 0,07 %Net income27 083,25 13,03 %Note. *YEL-insurance amount is from the announced 8500 an- nual income/active partner, we want to keep this low. **no extra expenses for salaries such as social costs, since these are paid to active partners. ***Depreciations are made of all the Non-Current assets with a 4 year plan, depreciation of 25% per year. ****Annual loan payment amount of loan capital40 45. 8.5 Break Even Point Analysis Breakeven in sales % of sales Sales207 932,40 100,00 % Cost of sales 12 995,75 6,25 % Contribution margin194 936,65 93,75 % Breakeven calculation Fixed costs152 484,00 73,33 % Contribution margin ratio 93,75 % Breakeven in sales162 650 78,22 % Margin of safety 45 283 21,78 %Breakeven point can tell us how much our company should sell theoretically in order to make profit. In our case, we combine the face-to-face personal training and online personal training because its hard to allocate the costs. Since we are offering two different kinds of services, the price per unit must be different. Whats more, taking yearly as our criteria is easier for us to analyze the information.The breakeven point is 162650 for the whole year. Our fixed costs are 152484 a year and variable costs are 12995 a year. Since our sales budget is based on a cost-plus pricing strate- gy, it doesnt take the actual demand into consideration since we dont have information about it, our product being so unique and new to the Finnish market, but we have done our esti- mates being fairly conservative and still we have a margin of safety of 45283 or 21,78 %, so our estimates can be wrong by that much and we still wouldnt make any losses and all of our expenses would be covered, which is why we feel very positive about the outlook based on potential and forecast calculations. 41