FITTraction
Final Team Paper
Ludomir Wanot, Christian Taylor, Justin Lee, Ian Turner, Josh Chinn
December 9th, 2014
Our bit: “Building relationships between trainers and trainees.”
Our model: Our product allows trainers and trainees to start and maintain a relationship for
their mutual benefit. Trainers can create and offer subsets of their training services, can oversee
and provide feedback on workouts, and can record and monitor their clients’ progress knowing
they have their trainer to hold them accountable and motivate them. While these trainers and
trainees will be our main users, our direct customers will be the gyms and health clubs they
belong to, in order to take their existing networks and help them grow. Gyms and health clubs
will pay for our product on a monthly or yearly subscription fee with an adjustable scale based
on the gym’s membership size. We are a five-man team of business and computer science
students who are passionate about fitness and technology and how they can work together to
shape a healthier future for everyone.
1) Definition - What is your unique Product or Service?
Our product allows trainers and trainees to connect for the first time, gives trainers a way
to offer subsets of their service, allows trainees to view their workouts at all times, and
track these workouts, and lets trainers monitor their clients workouts at all times.
2) Who is your Customer? – Target market? Customer Experience?
Our customer is gyms and health clubs. Our main users are trainers and trainees
3) How will you reach your customer? – Marketing, Sales, and Advertising Strategies
We plan on selling FitTraction directly to gyms and health clubs, and allowing them to
white label the product.
4) How will you make money? – Financial Model
Subscription fee either monthly or yearly, based on the size of the gym
5) Who are you? – Right team? Compensation? Contract Employees? Outsourcing?
We are a five person team with three business students and two CSE students. We are
passionate about fitness and technology. Our team includes visionaries, thinkers, doers,
sales people, and realists.
The Customer & The Market
Total Available Market: All gyms, all people who currently workout, people who would
like to become more fit, all personal trainers. 51.4 million Americans are health clubs members,
and 267,000 people are personal trainers. There are also many people who are trying to
become stronger, and healthier that are not gym members, and their are many freelance
personal trainers not included in the number above.
Serviceable Available Market: Gyms and health clubs of all sizes, and freelance
personal trainers. In 2012 there were 30,500 Health Clubs in America, and this number is
growing. There are 6.4 million personal trainer users in America.
Serviceable Obtainable Market: Local and small gyms. This segment makes up about
80% of the total gyms and health clubs market, while chains such as 24 Hour Fitness only make
up about 20% of the market.
Who is your Customer? Our direct customer is the smaller local gym or health club as
a whole, so that they can take our product and make it available to their personal trainers and
gym members and build and enhance their network of trainers and possible trainees.
Personas: Listed Below
Proof Of Concept
Competitive Ecosystem - Competitors for their attention and money
Comparison Checklist:
Perceptual Map:
Social Proof:
We have spoken to many people and have noticed some recurring trends.
Will your customers buy your product at the intended selling price?
100 dollars for a small gym, pays for itself with only a few occurring memberships.
Based on examples from existing gym software as well as office collaboration software.
Surveys:
Through surveys of potentials users (gym owners, gym members, potential gym
members, trainers etc.) we have seen that people are willing to work harder given personified
accountability. We learned that fitness is very important to people and it has a lot to do with
accountability and motivation.
Here is some data we received from our surveys:
Who did we talk to?
What kind of people are they?
For FULL survey results go to:
https://docs.google.com/forms/d/1Y7xMd1JU2K49gDA7fDqYYe6I4qXkPtuKv2rNSdCJNj
o/viewanalytics
Desire
From our research and surveys, we conclude gym goers desire a fitness app that
doesn't require much interaction, and it is easy to use and wont be dropped because they forgot
about it. From interviews, trainers desire a way to digitize the cumbersome tasks that go with
running a personal training business, as well as a medium for providing outside the gym
motivation and support to clients and prospective clients. In addition budding trainers have a
professional incentive to use this product, with the subset of services approach, to reach a wider
market. In addition gym members who otherwise could afford training services can now optimize
their fitness training by being connected with personal trainers in a customized service package.
Intent to Buy:
We believe, from our market research, that gyms are way in
the past as far at automating and digitizing their business.
In addition, the leading cause of non-retention in existing fitness apps
is simply that they are forgotten about. Therefore, an easy to use
workout interface developed by fitness enthusiasts and powered by
trainers has potential in the fitness sector.
Can you legitimately reach them?
Our strategy is to take the traveling salesman approach and handle sales ourselves. By target
major players in the market (fitness centers) we can attract a large client pools with a single
sale.
Financial Metrics & “Descriptive Financials”
We used 3 financial metrics to determine our profitability of this product in the next 5 years and
how we plan to use them to bring our product/service to the market. Our 3 financial metrics
include: Revenue growth, net income, and gross margin. We used these metrics in order to
capture the attention of potential investors and determine if the FitTraction app is a feasible
business.
We used revenue growth to determine how quickly our company can grow under certain
financial constraints and circumstances. Based on our analysis, our revenues will slowly start to
increase in the first 2 years and rapidly gain momentum as our marketing efforts increase in
years 3-5. We plan to see this increase when our local marketing efforts increase in small to
medium sized gyms. Our estimated sells for small and medium sized gyms from year 0-2 will be
25 and 10, respectively. After 2 years, we plan on targeting larger gyms for our services such as
la fitness and 24-hour fitness. This will dramatically increase our revenue by over 1000% if only
1 of these gyms decide to implement our services. If our idea doesn't go as planned, our
business will still reach a steady 150% increase in revenue growth in year 3-5, due to higher
marketing efforts, publicity, and development of our new prototype model.
Our net income is useful in indicating the minimum amount we will need to raise to
become profitable. Based on our analysis, our revenues are high and expenses are low, thus
allowing us to have a much high net income than usual for a startup. Our net income for the first
5 years of our business will move consistently with our sales. For the first year, our profitability
analysis will show a negative income due to high startup costs, including marketing efforts,
sales, and building our beta application. In year 2, we estimate a 16,000 net income due to a
significant increase in sales in local businesses. From years 3-5 we estimate a similar net
income increase to revenues because of our marketing efforts to target larger corporate gyms.
Software businesses typically have gross margins of 80% or greater because they their
costs are usually extremely low, which make them attractive to investors. Gross margin will
allow us to measure how expensive our product will be to make and the amount of return we will
receive on our investment. Gross margin is calculated by taking the revenue and subtracting the
costs of goods sold. In our business model, this includes serving and software licenses, hosting
costs, and revenue share agreements. Based on our profitability analysis, we predict our sales
will be 12,000 in year 1 and 35,000 in year 2 due to maintaining relationships and servicing 40
small-medium sized gyms. Our costs of sales will increase from 2,200 in year 1 to 5,600 in year
2, due to an increase in traffic and server costs. This means that our gross profit margins will
maintain that 80% or great margin from years 1 to 2
Main Costs
Our businesses main costs from year 1-2
consist of App development, advertising,
hiring a sales team, and legal fees. App
development will consist of hiring 2
professional for 25 hours and cost 2,500 in
year 1 and 5,000 in year 2, respectively.
Advertising which will be build off a national
campaign will consist of Google ads, fb, local
gyms and fitness centers. These costs will be
1,500 in year 1 and 2,500 in year 2. Our sales
force will include 2 interns which we plan on
finding at the University of WA and 1
professional we plan on paying up to $50 per
hour. Our legal fees of 2,000 in year 1 and
4,000 in year 2 will be based off of a $100
average estimate from Marks legal services in
Seattle, Wa.
Break Even Analysis
Our Break Even analysis shows us when our business will be profitable and our sales will cover
our expenses (Appendix 1). Our only variable cost will be advertising and our fixed costs (app
development/sales team) will stay the same for the first year. Our sales per unit average will be
determined by the size of gym (small, medium, large) and the cost per unit. Based on our
analysis, we will see a break-even point early in the game. We predict that this will occur in the
first 8 months of our business and after we successfully run our beta module for 2 months.
Safe Harbor Page and Next Steps
Major Tasks Undone:
After Hell Night, our group realized that if we want to take this to the next level and make
it successful, we’ll have to do a lot more than just make the application. Working with gyms is
crucial, as well as doing our research on the legality of our product. We will plan to work with
lawyers as provided through the prize of Hell Night to take our next steps forward.
Tasks: Development: Will we develop the product in house? How long until we need to
hire outside developers? What will the upkeep costs be? (server racks, on call rotation)
We plan to develop most of the product ourselves, as much as we can. We believe we
can bootstrap out company up from the ground and that we are fully capable of making this a
live product with our own hands. We will have assistance from a similar program, which helps
measure insurance accountability. Because we have a personal connection with someone who
has experience in working with this application, we believe we can move forward with ease.
There will be little to no upkeep costs other than any sort of application hosting or percentage
fee
Appendix 1
References
Doctors Take Note: 70 Percent of People Track Their Health and Fitness Daily With Mobile Apps.
Mobiquity. BOSTON, MA – April 17, 2014
http://www.mobiquityinc.com/doctors-take-note-70-percent-people-track-their-healthand-fitness-daily-mobile-apps
Gyms Downtown, Seattle WA. Yelp Reviews. 2014
http://www.yelp.com/search?cflt=gyms&find_loc=Downtown%2C+Seattle%2C+WA#find
_desc&start=60
Health and Fitness Apps Finally Take Off, Fueled by Fitness Fanatics. Khalaf, Simon. June 19,
2014
http://www.flurry.com/blog/flurry-insights/health-and-fitness-apps-finally-take-fueledfitness-fanatics#.VFrUlFvdJvA
Nutrition, Physical Activity, & Obesity Prevention Program, Washington State
Department of Health. February 2009
http://www.doh.wa.gov/portals/1/Documents/Pubs/345-291ObesityInWashingtonState.pdf
Occupation Outlook handbook. U.S. Bureau of Labor Statistics | Office of Occupational Statistics
and Employment Projections, 2 Massachusetts Avenue, NE Washington, DC.
2014.http://www.bls.gov/ooh/personal-care-and-service/fitness-trainers-and-instructors.htm
Top 10 fitness apps for 2014. Men’s Fitness. 2010
http://www.mensfitness.com/life/gearandtech/the-top-10-fitness-apps-for-2014