Business Plan for
July 2011
Prepared by GH Consulting:
Joseph D Muzzin
Jeffrey W Burt
Alyssa Lochbaum
David M Colleran
Nicholas JB Purich
Table of Contents
1.0 Executive Summary
2.0 The Concept of Generation Health
3.0 Our Members
4.0 Operations
5.0 Initial Capital Outlays
6.0 Human Resources
7.0 Sales & Marketing
8.0 Financial Plan
9.0 Additional Products
10.0 Summary of the Business Plan
Appendices
IIIIIIIVVVIVIIVIIIIX-
Organization Chart
Proposed Location
Costs of Location & Facility Construction
Floor Plan
HR: Job Descriptions
Projected Income Statement
Projected Balance Sheet
Projected Cash Flows
Support for Costs
1.0 Executive Summary
The underlying value of Generation Health is a safe environment for those aged 50 and above to
improve their health. Our objective is to raise the debt and equity financing required to open a health
club facility in Saskatoon.
Generation Health will employ a differentiation strategy by providing superior, targeted equipment and
instruction for men and women aged 50 and above. Our clients are educated, community oriented, and
health focused individuals. By focusing on the core principles of Geriatric health and wellness and by
being a first-mover offering a health club catered to this population, Generation Health will be a sure
success.
The company will be incorporated and the management team will consist of the three equity owners:
Joseph Muzzin as Director of Finance and Accounting (B.Econ, CA), Jeffrey Burt (B.A. CA) as Director of
Sales & Marketing and David Colleran (HKin, CA) Director of Operations. The owner-manager team will
be actively involved in the business throughout the start-up phase and continuing operations. Currently,
there are two additional equity investors holding board positions.
The facility will be built in the University Heights district of Saskatoon in close proximity to a large
population of fifty-plus aged households with annual incomes averaging $80,000. The land will be
purchased in July 2011, construction will begin late July and the facility open for operations January 1,
2012.
Promotional activities will include using an active marketing strategy to pursue advertising that targets
the population aged 50 and above. Advertising will include print, radio and billboards. Our partnership
marketing program will include brochures and visits to doctor’s offices, physiotherapy clinics and the
Kinsmen Center. In addition, the facility will be free for anyone 50 and above for the month of January
2011 to stimulate interest and get members into the club.
The financial projections for Generation Health assume that club membership will increase on average
by 32% per year for the first 5 years. The financial goal of the owner-managers is to earn a 25% return
on investment. Based on growth projections, Generation Health will operate at 100% of capacity by
2018.
There are three key success factors:



Selling our clients on the value of a health club created for their specific age group
Justifying our premium price by providing a first-class facility and quality instruction
Maintaining member loyalty
2.0 The Concept Behind Generation Health
While working as a kinesiologist, David Colleran found that mainstream fitness facilities not only lacked
the specialized equipment to work with his elderly clients, but that many of his clients also felt
intimidated by the gym atmosphere. It these issues that inspired the concept of Generation Health.
Generation Health is based on the belief that those aged 50 and above want and require a nonintimidating environment along with specialized equipment & instruction. There are no fitness facilities
or health clubs that have specifically catered to these requirements; therefore, we believe that this
segment of the market is a blue ocean opportunity.
3.0 Our Members
Generation Health will target those aged 50-85 years of age who are educated, community oriented and
looking to improve their health and well-being. Our members have high disposable income, free-time
and are looking to meet like-minded individuals in a safe, caring environment.
The baby boomer generation is the fastest growing segment of our population in Canada so the growth
potential of the business is incredible. Generation Health with start as one location in Saskatoon, SK and
has the potential to grow to include franchises all over North America. Our locations will be strategically
located in retirement communities and neighbourhoods that have a high proportion of those aged 50
and above.
4.0 The Operations Plan
How Generation Health Operates
Service we provide
Generation Fitness will be providing customized health programs and rehabilitation services to an older
population. We are an alternative to visiting a physiotherapy clinic and a place where members can
continue to achieve fitness goals beyond just rehabilitation. Onsite we provide experienced registered
physiotherapists capable of assessing and administering rehabilitation programs. Every member is
provided a minimum of one monthly session with our physiotherapists beyond their first physical
assessment.
We expect our members to visit the gym on average 3 times per week. All members will be greeted and
started on their regular workouts by our staff trainers. Our trainers are a mix of kinesiology graduates
and general fitness trainers. Our kinesiology graduates will administer programs developed with the
client and our physiotherapists, keeping track of the client progress. As our clients become more mobile,
we will transition them to work more with our general fitness staff and get them more involved with our
group classes. The goal is to give member the added attention they need to get motivated, encourage
them to get involved with other members and develop to the point where they are confident, able
bodied and self-motivated to live healthy lives.
Onsite, Generation Health will have low-impact, strength and balance focused equipment. The facility
will house a pool to focus on developing healthy bodies in a safe environment. We will provide group
classes, including spin, core strength, and aerobics. Our facility is unique in that it utilizes distinctive
equipment and highly educated and qualified staff to provide training and rehabilitation.
The lockers rooms at Generation Health will also have steam rooms for members to relax after their
workouts.
Legal Structure
Generation Health will be incorporated to allow for increased protection against liability, ease in transfer
of ownership as well as to utilize the deferral of taxes and the use of the small business deduction on
active business income.
Location
Our Gym will be located in University Heights Square. This location is new and has not yet been
developed which allows us the freedom to design an optimal facility. The location was chosen because
of its accessibility, and the surrounding demographics. University Heights Square is located on the
corner of Attridge Dr. and McOrmond Rd. making it easy to access by both car and public transit. There
is ample parking with a ratio of one spot per five square feet of space.
The location is surrounded by six established neighbourhoods and one proposed high income
neighbourhood within a three kilometre radius. See Appendix II for location map.
Floor Plan
The proposed facility is currently a vacant lot, the lot purchase ($700,000) and construction costs ($1.3
million) for the facility will be $1.93 million including legal, permitting, and all other related costs. The
equipment costs ($102,000), pool installation ($225,000) for the facility, and all internal work on the
facility ($19,000) will cost $0.35 million. Basic construction plans showing the gym layout are shown in
the attached floor plan (Appendix IV). The Gym will be a clean, welcoming and energized environment
where members will be motivated and encouraged to succeed in developing their health and well-being.
The Building provides the following functionality within the 11,600 square feet of space:
Fitness Studio (860sqft):


Area for group classes:
o Spin
o Core and Sculpt
o Yoga
o Aerobics
The room has a capacity of 20 people for a class
Stretching Area (700sqft):


Area for stretching, core work, and fitness assessments
The area is between the gym and lockers rooms and is the last area member will walk by before
they leave to remind them to stretch out before leaving. All of the mobile equipment such as,
medicine balls, Thera bands, balance boards, etc. are kept here.
General Gym Area (2,750sqft)


Area for larger equipment.
There are three distinct subareas
o Aerobic equipment
o Balance equipment
o Strength training equipment
Locker Rooms (2,400sqft)


Area for member to shower change and have a steam
This area has adequate storage for the full 2,000 members to store belongings between visits
and lock up their belongings while they work out.
Pool Area (3,200sqft)


Area for aqua-classes including:
o Water running
o Water weight training
o Swimming classes
The pool area provides a low weight bearing environment for rehabilitation and training. This
allows Generation Health to provide rehabilitation and exercise training to a wider spectrum of
people at different fitness levels.
Capacity Limits
The gym itself has a membership capacity of 2,000 members.
Fitness classes are not registered therefore customers attend on a first-come, first-serve basis. There is
room for 20 -25 members per class. We will run 3 classes per day, which will be led by a general fitness
instructor.
Changes in the future
Based on gym enrolment, Generation Health will adapt and scale our staff to our member’s needs.
5.0 Initial Capital Outlays
Land
After assessing the available real estate in the University Heights area, it has been determined that the
best available option for the new facility is an empty lot at 1804 McOrmond Rd. The location and
capacity at this proposed location will allow Generation Health to adequately capture its market. The lot
is situated between a mature neighbourhood and newly developed rapidly growing region of Saskatoon
to the North East of Downtown. The total cost of the land is estimated to be $700,000 based on recent
sales of similar lots (one acre commercial property) in University Heights that have sold for $600,000$800,000
Construction
The facility will be built from scratch and will include a new pool. Construction costs are estimated at
$1.2 million (see Appendix III).
Computer Hardware and Software
One stand-alone system and a cash drawer will be at the front of desk to track member’ attendance and
payment methods as well as contact information. This front desk system will be linked to the 5 office
computers behind the front desk. The office computers are for the 3 managers, sales agent, and the
physiotherapists and will be used for administrative purposes. All systems will run QuickBooks and Total
Security Anti-virus software. Using QuickBooks allows for all computers to easily be integrated. The
QuickBooks software we have purchased is capable of tracking all purchases and customer information.
We anticipated the computers and software will be upgraded every two years. A printer/scanner/fax will
also be purchased for use in the office.
Furniture and Fixtures
The budget for furniture and fixtures will be $5,000. Desks and chairs will be purchased for the office
and reception area. Members will be able to sit, relax and interact with other members or instructors
before or after their workouts and classes. Decorative fixtures will be purchased to enhance the
aesthetics of the facility. Cost Information is detailed in Appendix IX.
Equipment
Equipment expenditures will include the purchase of various aerobic, strength trainings and balance
equipment, as well as electronics. Cost Information is detailed in Appendix IX.
Working Capital
The Facility will require minimal working capital as we do not focus on front desk supplement sales but
instead on our gym membership for revenues. We will have supplements, and home gym equipment
available for sale, which will constitute our working capital. The initial payment of initiation fees and
prepayment of memberships will create negative working capital and will actually provide financing.
6.0 The Human Resources Plan
Organizational Structure:
Initially, Generation Health will operate with the three key executives leading Finance & Accounting,
Sales & Marketing, and Operations. Please refer to Appendix I for organizational structure for the first 6
months of start-up.
Staffing levels are scalable and the club will aim to have a ratio of 1 employee to 8 members on average
throughout the day (excluding times with group classes where the ratio will be closer to 1 employee to
12 members). Position descriptions are detailed in Appendix V.
Staffing Levels:
Sales and administrative positions will operate on a standard 40 hour work week with some flexibility
over work hours provided they are completing their duties. Fitness positions will be staffed in such a
way that there is always either a kinesiologist or physiotherapist on duty. Both structures allow some
flexibility for staff.
The staffing levels are projected to support a membership base of 1,500-2,000. Administrative and sales
staff will support for up to 4,000 members. Membership growth beyond 2,000 will require one of each
type of fitness professional (ie. Physiotherapist, Kinesiologist, General Trainer) per 1,000 members.
Training & Development:
Training
Initial training will consist of a weeklong seminar style workshop where participants are directed in how
to utilize the range of in-house resources to provide high quality service to all patrons. This training will
involve all staff to build a sense of camaraderie amongst them. It will be led by the management team
and will provide a relaxed atmosphere to help all staff understand the business strategy.
Subsequent training of new or replacement staff will be conducted on the job through shadowing
existing staff for one to two full weeks as needed.
Additional training programs will not be needed as professional staff will be qualified and/or
experienced in their specific field. The company will support field specific education delivered externally
as needed.
Development
Each staff member will be mentored and coached by their direct manager. Managers will provide onthe-job feedback monthly and as needed as well as formal annual feedback. Staff will be encourage to
pursue relevant certifications such as offered through the Certified Professional Trainer Network.
HR Strategy:
The company will focus on hiring and retaining top Geriatric health and fitness training personnel. Our
value proposition to these staff is the opportunity to work in their chosen field while working with
customers who benefit greatly from their services – more so than a younger demographic. Further, we
provide higher fixed compensation than many mainstream fitness facilities and clinics, adding to the
level of income security.
To encourage all staff to achieve high performance, the company anticipates using a bonus pool to be
allocated based on a percentage of salaries and contingent on performance. The bonus pool will also
encourage staff retention.
Our staff will have a standard benefit package (Health and Dental Insurance valued at approximately 5%
of salary each) with the added benefit of full gym and service access.
As the business will be open fewer hours than many competitors, staff will have a more predictable
work week compared to similar positions in the industry. Further, our plan to offer non-fitness staff
flexibility in their work week will encourage a balanced lifestyle.
Shareholders’ Agreement:
Key Features
- Buyout Clause
 Current shareholders have first right of refusal to purchase a proportionate share of the
company ownership being sold
 If a sale price cannot be agreed upon, the parties will mutually appoint a business
valuator who will provide a binding valuation
- Board of Directors
 The board of directors will consist of five individuals, at least three of whom are
independent of management
 Each shareholder is entitled to nominate and elect directors by vote
- Expenditures
 All expenditures over $50,000 must be approved by the board
 The board approves annual bonus allocations
 The board approves all management salaries
- Financing
 Any new share issuances must be approved by the board
 All borrowing agreements must be approved by the board
7.0 The Marketing Plan
Industry Overview
Opening a business in Saskatoon is an opportunity that we are very excited about. According to Colliers
Canada’s Real Estate Review and Forecast Highlights, Saskatoon had Canada’s second largest GDP
growth in 2010 at 4.5%. Saskatoon has experience d steady growth over the past years and is projected
to be a leader in Canada into 2011. We have looked at the demographic of the city and feel that our
health club will be great alternative for the aging demographic in Saskatoon.
Furthermore, there has been a growing awareness of the importance of a health in order to maintain an
active lifestyle into retirement. We have focused our marketing campaign as a promotion of a healthy
lifestyle that will allow members to fully embrace their pursuits in life.
As part of our market entrance strategy evaluation, we have provided a detailed analysis of the market
we are entering, our main competitors and how they will react. We have identified the risks that we will
need to mitigate, and the risks that we believe are inherent in the business and we will have to
overcome with our unique experience that we provide to members.
Products and Services
Generation Health will be differentiated from other fitness facilities in the fact that we are providing an
experience to customers that will be unique from other competitors. Our services will be increased from
our competitors as we are providing kinesiologists, physiotherapists and personal trainers on site at all
times. This will enable our members to have access to the newest techniques in maintaining a healthy
lifestyle, and the support necessary to ensure member safety.
Our facility will include the latest professional cardio, aerobic, balance, water fitness, and core strength
equipment. As seen in our gym floor plan, our facility will include a fitness pool that will enable our
members to work out in a low impact manner. This facility will meet the needs of some of our members
that cannot workout in a traditional manner due to their joints or other injuries that they have
accumulated throughout their life.
Our fitness staff are fully qualified fitness professionals that will be provide our members with
personalized workout plans and will be present to motivate members to continually focus on their
health and well being. Our staff will be hired based on personality and experience in order to provide
members with a positive and fun atmosphere in the health club.
Demographics
Our pricing strategy is based on the demographics of the population that we are targeting. We have
selected the location of our facility based on the availability of open land in affluent neighbourhood with
an elderly population. The location has been chosen in a central location in University Heights. We
gathered data from the 2006 census which is the most recent census data available. The average
household income from the data in the neighbourhood was $77,000 which would equate to $81,000
with inflation of 1% per year. The location has had significant development and the prospect for future
development is strong with new surrounding subdivisions planned.
We also expect that we will be targeting elderly populations in the neighbouring districts of Nutana,
Lakewood and Lawson Heights. These demographics are all have income levels above the average in
Saskatoon and have a total population over 45 years old of 57,680. We are looking to capture 3.5% of
this market in our facility.
Price
We have based the pricing of our facility at rates higher than our competitors due to the fact that we are
catering to a more affluent population and providing increased services. The cost of physiotherapy can
be upwards of $100 per session and we are including physiotherapy with our membership. The services
will be provided on a reserved basis. The pricing will also reflect the group fitness classes included as
well as the structured work out plans for each individual member.
Our pricing will be $150 per month and an initiation fee of $250 to join the gym. We feel that the
demographic that we are targeting will not be concerned with the premium price due to increased
services, knowledge of staff, the facility amenities and the atmosphere that we are creating at the
health club.
Promotion
Our promotion strategy at Generation Fitness will be very front loaded in the first year. The following
years will be reflective of 2013 adjusted for 1% of inflation. The following table outlines the costs we are
planning for Generation Health.
Marketing and Advertising Costs:
Newspaper Advertisements
Online Newspaper Advertisements
Radio Advertisements
Radio Advertisements year airtime costs
Brochures
Business Cards
Website set-up
Website maintenance
TOTAL MARKETING COSTS
2012 (beginning Nov. 2011)
$10,000
$10,000
$1,000
$8,000
$1,500
$490
$10,000
$1,250
$42,240.00
2013
$5,000
$5,050
$0
$8,080
$1,515
$494.90
$0
$1,262.50
$21,402.40
We plan on an intense marketing campaign prior to opening the facility to gain a strong base for the
business to get off the ground. In order to get our base membership up to 270 people in year 1 and 500
in year 2 we will need a strong advertising campaign in the first year. After the first initial push we feel
that the experience we provide to members will be a positive experience that will spread through word
of mouth. The experience that we provide and the reputation we develop will be that of a premium
health and fitness club that will provide us with increased memberships.
In addition to the costs that are above, we plan to have a strong internal marketing campaign whereby
our employees will use word of mouth with contacts in their industry. We plan on providing free use of
the facilities to doctors in the area with the hope that doctors will begin to refer patients to our facility
for the physiotherapy services and the ongoing benefits of maintaining a healthy and active lifestyle
when people get older.
Competitor Analysis
The following diagram shows our main competitors in the market:
Competitor Map
High Price
Physiotherapists
Generation
Health
World Gym
Mawson Health & Fitness
Generic
Unique
Goodlife Fitness
The U of S PAC
Low
Price
We feel that we are providing a premium health club facility that is unique from all other facilities in the
area. There is no other facility that caters to the demographics we are targeting. Our facility provides
physiotherapy services to our members which is unique to our club. Our price is higher than our fitness
competitors; however, the cost of purchasing a membership to a competitor and paying for
physiotherapy services and personal training sessions is far in excess of our membership prices.
The following table outlines the costs of each of our competitors:
Competitors
U of S PAC
Location
87 Campus Drive, SK
World Gym
431 Nelson Rd
3110 Clarence Ave S
Mawson Health &
Fitness
119 105th Street East
Physiotherapists
Various Locations
Services
Cardio equipment, free
weights, machines,
pool, racquetball
courts, core strength
equipment, few classes
Fitness classes, Yoga,
tanning, steam room,
towel service, cardio
equipment, free
weights
Group fitness, Cardio
equipment, free
weights, Child care,
yoga and Pilates,
personal training, Iron
Core workouts, 4
studios and health
advice
Structured to the needs
of the client
Price
$45 per month
$100 initiation and $90
per month
$75 per month
$70 - $100 per visit
We feel that we have priced our memberships reasonably according to the services we will provide.
Once we enter the market, we do not anticipate that our competitors will change their operations
significantly. The U of S PAC will not change any of their operations as the facility is catering to university
athletes, students, faculty and staff. The demographics they are targeting are outside of our focus.
World Gym also has a different target market that focuses on a younger generation of extremely fit
individuals that are focused on performance rather than maintenance fitness.
Physiotherapists will not have a reaction as they rely on doctor referrals. Their business is entirely based
on injury and recovery. Our facility will also be available for injury and recovery purposes; however we
are also providing a general and preventative fitness focus.
Mawson Health & Fitness is anticipated to have the greatest reaction to Generation Health entering the
market. They focus their club on group fitness activities and they may begin to cater some of their
classes to the elderly groups. We feel that the risk that Mawson changes the programs they offer to
target our demographic can mitigated with the additional services that we have that directly cater to our
focus demographic. Our facility will be available our focus market at all times, not just at specific times
when classes have been scheduled. Furthermore our facility provides more focused training and
individual interaction with our fitness professionals.
8.0 The Financial Plan
Financing
Generation health will initially be financed with $1 million equity and $1.35 million long-term bank debt.
We have obtained $100,000 from each of the five investors that comprise GH Consulting. We are
offering to sell 49.9% ownership of the business to an additional investor for $500,000.
We have prepared pro-forma financial statements based on operational and marketing plans previously
discussed. The first spreadsheet represents our sales and cost of sales projections based on our
marketing research. Additionally, we have researched industry accepted gross margin rates for
Physiotherapy and pro-shop sales which we have included in our projections. Refer to the monthly first
year sales projections and 10 year sales projection spreadsheets in Appendix VI.
Operations
Revenues and costs of sales have been derived from our marketing plan while all operational expenses
and our capital budget have been derived from our operations plan. Additionally, our payroll expenses
have been derived from our detailed human resources plan. We have incorporated inflation rates of 1%
into our operation expenses. It should also be noted that we have included tax loss carry-forward
amounts, in addition to qualifying for the small business tax discount (16%) on the first $500,000 of
annual income.
Cost of Sales
Cost of merchandise sales is immaterial as the sale of merchandise is not part of Generation Health’ core
business. The cost of sales from membership revenues includes an allocation of overhead, staff wages,
and an allocation of physiotherapist’s salaries.
Operating Expense
A 10 year projection of the expected operating costs for Generation Health has been prepared in
Appendix VI. Notes in the spreadsheet explain how the item is calculated and what it relates to.
Expected annual operating expenses begin in 2012 with $1.2 Million and increased each year for
inflation estimated at 1%. The major expenses are as follows:


Amortization: All capital assets will be amortized using estimated useful lives:
 Building: 30 years
 Equipment and furniture: 5 -10 year
 Computer Equipment: 2 years
Salaries and wages: The staff at Generation Fitness is essential to providing customers with the
quality healthcare and motivation to develop the overall experience of the gym. A summary of
management salaries can be seen in the organization chart (Appendix 1). The staff will be paid
$20, $17, or $15 per hour based on their role. The number of waged employees will be scaled
up based on enrolment. Both salaried and wage based employees’ remuneration will increase
1% annually for inflation.

Interest on long term debt: The debt service costs are associated with the bank loan attained for
$1,350,000 for the building and the land and a $780,000 line of credit. The interest rate for the
10 year mortgage is prime + 7%, which is 10%. The interest rate for our line of credit is prime +
9%, which is 12%. These rates are conservative and we will likely be able to negotiate lower
rates.
Refer to the attached Amortization and CCA schedules for all supporting calculations (Appendix IX).
From a capital budgeting perspective, equipment will be replaced after its useful life. As can be seen in
the cash flow statement, we have included capital replacement costs for our 2 year, and 5 year
depreciable capital assets.
As discussed earlier, we have provided $500,000 of equity financing ourselves, and are asking for an
additional $500,000 for 44% of our business. With this paid-in capital, we will require an additional
$1.35 million in long term debt (10% interest rate) and $780,000 (12% interest rate) of short term
financing over the first 2 full years of operation. As displayed by the cash flow appended (Appendix
VIII), we intend to pay the entire amount of debt by our 6th year of operation (2017).
Our payback period will be in our 7th year of operation as we will have paid our entire debt principal in
the previous year and will have earned additional income greater than our initial $1 million equity
investment.
After initial losses during the membership building phase, we project return on equity ranging from 15%
(year three) to 37% (year four). See Appendix VI for details.
Based on our projected cash flows during the initial ten years of operations, our IRR is 28%, and our NPV
at 25% is $161,000 (Appendix VI). These projected results are driven by the significant cash flow that
Generation Health will produce after the initial capital outlays.
Sensitivity Analysis
Interest Rate
IRR
Payback Period
Worst
Case
14%
32%
Year 7
Conservative
Base
10%
33%
Year 7
Best Case
6%
35%
Year 6
Membership Fee
IRR
Payback Period
100
17%
Year 9
150
33%
Year 7
175
42%
Year 6
Enrollment Growth
15%
25%
40%
IRR
18%
33%
34%
Payback Period
Year 9
Year 7
Year 6
*Sustainable growth rate after 2nd year of operations, up to capacity of
2000
Referring to the above analysis, the variables that will most affect the return on investment are
Membership Fees and Enrolment. Interest costs did not significantly affect our analysis because our
initial estimates of 10% and 12% were fairly conservative given that they are secured with capital assets.
The majority of the costs are fixed (or largely fixed) so changes in costs do not pose a significant risk to
the success of Generation Health.
We will be undertaking significant marketing efforts as detailed in the marketing plan in order to
mitigate the risk that we do not attain our target membership numbers. We will train staff to deliver
exceptional service and provide high-end equipment to justify our position as a premium health club.
9.0 Additional Services
Other products that will be available at the health club will be from our pro-shop at the front desk of the
facility. We will sell health supplements that promote healthy eating and making sure that members are
getting the daily vitamin and nutrient intake. Our fitness professionals will be able to recommend
supplements that can help our member’s daily lives. Furthermore, we will sell work-out attire (t-shirts,
shorts, sweaters, jackets, ect.) at reasonable prices that will also help to contribute to our marketing of
Generation Health. Finally we will sell mats, rubber tension bands, and bosu balls that members may
wish to purchase for use at home or when are away out of town or cannot make it to the gym.
10.0
Business Plan Summary & Conclusion
Generation Health is a business concept that will take Saskatoon by storm. It offers premium health
services to a growing demographic and faces virtually no competition. Due to the high degree of
operating leverage, the business will offer very strong operating cash flow once capital asset financing is
repaid.
The initial financing require to start the business will be $2.35 million comprised of $1 million equity an
$1.35 million debt. We will require an additional $800,000 of short-term financing to fund losses in the
first three years of operations, at which point the business will become cash flow positive. Through our
use of both debt and equity financing, we will be able to generate a high return on equity.
The business will be managed by an experienced group of professionals, with a strong board of directors
to provide oversight. Each member of the management team and the initial two independent directors
have made significant personal investments in Generation Health demonstrating their commitment to
the business and dedication to its success. The risk of the business is further mitigated by the versatility
of the capital assets, and the high value of the land and building in a popular and growing area of
Saskatoon.
With an IRR of 28%, Generation Health is an exciting investment opportunity that offers significant
growth opportunities with a risk-mitigating asset base.
Appendix I- Organizational Chart at Inception
Board of Directors
Investors
$5,000 per year meeting costs
Operations Management
$75K
Physiotherapist
$65K
Physiotherapist
$65K
Kinesiologist
$20 per hour
Kinesiologist
$20 per hour
General Trainer
$17 per hour
General Trainer
$17 per hour
Customer Service
Rep
$10.50/ hour
Customer Service
Rep
$10.50/ hour
Marketing & Sales
$55K incl commissions
Finance and Accounting
$75K
Sales Agent
$45 incl commissions
Outside Bookkeeper
$2K/ Month
Appendix II- Location in Saskatoon, SK
Appendix III- Cost of Location & Facility Construction
Appendix IV- Floor Plan
Appendix V - Job Descriptions
Board of Directors
Monthly
- Monitor customer satisfaction
- Approve any significant capital expenditures
- Approve financial reporting package
Annually
- Review the performance of the management team
- Review corporate strategy and market position for any necessary changes
Director of Finance & Accounting
Daily
- Oversee and approve the work of the staff accountant
- Process payments of bills and invoices
Monthly
- Process monthly payroll
- Prepare monthly reporting packages for the Board
- Manage cash balances and ensure company maintains adequate liquidity
- Schedule reception
Annually
- Review and approve annual financial statements
- Serve as a point of contact for the financial statement auditors
- Review and submit necessary tax filings
- Manage all necessary regulatory filings
- Review performance of Contract Bookkeeper and customer service/reception
Contract Bookkeeper
Daily
- Process basic accounting transactions
- Manage A/R and A/P
Monthly/Quarterly
- Support the Finance and Administration role in monthly reporting
- Prepare GST and PST returns
Annually
- Assist in the preparation of financial statements
- Assist with tax filings
Director of Sales & Marketing
Daily
- Develop and manage a marketing strategy
- Create content for the website
- Manage social media
- Provide oversight to sales staff
Monthly
- Establish strategic partnerships to generate revenue growth
- Seek new revenue generating products or services to compliment the gym’s core offerings
Annually
- Develop and manage a marketing strategy
- Review performance of sales agents
Sales Agent
Daily
- Generate new membership sales
- Attend community events with a high concentration of the gym’s key demographic
- Distribute promotional materials
- Provide support to all marketing initiatives
Monthly
- Develop plans to meet sales targets
Operations Manager
Daily
- Provide oversight and leadership over therapists, kinesiologists and trainers
- Address any customer concerns or problems
Monthly/As Needed
- Schedule fitness staff
- Hire/Fire fitness staff
- Schedule classes (assess customer preferences)
- Assess and coordinate equipment maintenance needs and additions
Annually
- Assess staff performance
- Participate in capital budgeting
Physiotherapist
Daily
- Provide basic physiotherapy services to customers
- Assess workout plans for customers with limiting injuries
Kinesiologist
Daily
- Develop workout plans for customers
- Review customers’ workout plans for progress
-
Monitor performance of customers and determine if their plans are appropriate
General Fitness trainer
Weekly
- Create class programs to be delivered
- Deliver weekly classes
Customer Service/Reception
Daily
- Greet customers
- Ensure all facility users have appropriately paid
- Address or direct customer queries to appropriate staff
- Handle telephone calls and general email inquiries
- Handle customer renewals and payments as needed