RE 383-201: Microeconomics. Develop a START-UP manual using Microeconomic concepts and theories

Business Start-up Manual: Outlook Fitness
Fitness Center
Name
Institutional Affiliation
* Business Description
‘Outlook Fitness’ is an all-inclusive fitness center that offers services like gym, health clubs and social & charity events promoting fitness. The fitness club will be located in Manhattan in New York. Its services are centralized to suit young adults with the main focus being the high student population in the lower part of the city. The facility will be a new hub for services like sports, gym programs, and entertainment integration as well as lifestyle promotions.
Manhattan is the most densely populated county in the US making it very viable for business compared to other districts in New York. This is the comparative population according to data published on current population estimates in 2018.
City

Population

Per capita income (US$)

Density / sq. km

The Bronx

1,471,1601q23

19,570

13,231

Brooklyn

2,648,471

23,900

14,649

Manhattan

1,664,727

378,250

27,828

The comparatively higher per capita income and density makes it more attractive for business.
Universities like Columbia, New York, Pace, Yeshiva among others are the main reasons for the high student population in the area. According to data published by the United States Census Bureau, the city has a very comprehensive racial composition with the whites making up most of the populations with 64.5% against 35.5% for the other races.
Manhattan has a vibrant and dynamic health and fitness programs. Most of the facilities are closed by 9 PM which makes a 24-hour service attractive for product differentiation. Diversified services like sports and health programs are common with the facilities. Manhattan Plaza Health Club, 927 May Center for health, fitness and sport and Mercedes Club are some of the popular fitness centers in the area offering extra services. The Manhattan Health Club combines the gym with swimming and tennis. Success Fitness offers lifestyle programs according to their website. Campus fitness programs also claim most of the student population in the district.
Type of business organization
Establishing a business can be a tedious process because of the decision making involved. Starting and managing a sole proprietorship will ensure effective management and decision making power for the gym facility. Starting a sole proprietorship is easier than which makes the establishment more feasible especially concerning licensing matters. Finding a partner who is interested in starting a fitness facility in Manhattan would also require a lot of research which made the choice for a sole proprietorship more attractive. AllBusiness.com cited that the commonality of sole proprietorships in the US was because of the few bureaucratic requirements for the set up.
The prospective of changing the set up of the business to a partnership or corporate in order to attract external investors is easier which makes starting solo and building on the legal change due to liability factors as a business grows makes a proprietorship better than the other set ups because of adaptability. Despite the sole benefits from profits incurred costs in case of liabilities can invade personal property but that was a risk I was willing to take.
Factors requirements
A fitness facility has numerous requirements for the initial installations and subsequent maintenance. The following are the fixed and variable costs that are needed for a start-up gym facility.
Fixed costs
Acquiring a rental hall is the biggest challenge. The Associated Press, (2019) noted that mortgage rates in the US were falling with the fixed-rate falling to 3.82%. Other costs include insurance costs and informative advertising among other first entities to acquire. The gym equipment and electricity for lighting and heating are also basic requirements for the business. Security installations and personnel are also part of the fixed costs of starting a gym.
Fixed costs will account for 60% ($30,000) of the initial capital. This is the breakdown of the fixed costs:
* Rent or mortgage- $10,000
* Gym equipment - $8,000
* Electricity and security installation- $8,000
* Advertising and insurance - $4,000
Variable costs
Employee wages, benefits and other employer-specific offers to the workforce. Office, janitorial and bathroom supplies for customers and trainers are other variable costs needed occasionally. Water, laundry and other cleaning services are other costs that will build depending on the customer's turn out to the business. Equipment repair and maintenance is a variable cost to the facility as equipment in use is prone to breakage. A total of $15,000 will be allocated for all the current variable costs. The remaining $5,000 is for unforeseen variable costs and risks.
Market structure
Manhattan has numerous facilities that are usually differentiated by the services they offer depending on geography and class. The use of popular sports stars is common in most centers. For instance, according to Business Insider, Equinox uses Olympians for training and offers spa treatments in the range of its services. Manhattan Plaza Health Club is another center that offers sporty action to entice customers. Hotel services and spa are some extra services Equinox offers according to information on their website.
The integration of health services into the fitness facilities for healthy lifestyle promotions and product differentiation is also practiced by the sector's established facilities. La Palestra is one of the medically themed facilities which offer standards and alternative medical practices with fitness modalities and programs. The facility also offers kids’ special programs in its range of service exclusion. Online reviews show that most of the centers close by 9 PM.
* Economic applications
Market analysis
Globally, the fitness industry has noted a growth rate of 8.7%. This is indicating that the industry is not stagnant and the potential of growth is exponential. A larger portion of the American population, more than 55%, notes that they lead a healthy lifestyle with 74% of the population cites regular exercise as the major determinant in leading a healthy lifestyle. Time, money and motivation are the major reasons for the low numbers of people exercising. This shows the issue of income as one of the factors that characterize the population.New York has more than 2,000 health clubs with a population of more than 4 million having regular subscriptions. Stateofchildhoodobesity.org ranked the state as the ninth obese state with 25% of the population being obese.
Forbes (2018) listed technology as one of the reasons the fitness industry has been booming for the last decade. It is easier to keep track of one's health with the use of wearables e.g. Fitbits and smartphones. Using the existing technology to create a lasting impact t...