Business Plan for a Health Spa

VINCENT PRIVATE LIMITED COMPANY

Prepared for:
Syed Alamgir Jafar
Associate Professor

Prepared by
Asif Uddin Ahmed, Roll-12
Asif M Touhid, Roll-16
Faisal Saeed, Roll-24
Syed M Alam Khan, Roll-49
January 17,1999

INSTITUTE OF BUSINESS ADMINISTRATION

University of Dhaka
17.1.99

Syed Alamgir Jafar

Associate Professor
Institute of Business Administration
University of Dhaka

Dear Sir,

Here is the Business Plan that you have assigned us as the partial requirement for
the Small Business Management Course. This Business Plan helped us a lot to get
a practical exposure of the field of small business and real life business plan.

It was a great pleasure for us and we would be glad to furnish you with any details
if required.

Thank you,

Asif Uddin Ahmed, Roll-12

Asif M Touhid, Roll-16

Faisal Saeed, Roll-24

Syed M Alam Khan, Roll-49

 Table of Contents

ERROR: REFERENCE SOURCE NOT FOUND

I. EXECUTIVE SUMMARY I

II. DESCRIPTION OF VENTURE 1

III. INDUSTRY ANALYSIS 14

IV. MARKETING PLAN 22

V. ORGANIZATION PLAN 36

VI. TECHNICAL PLAN 61

VII. FINANCIAL PLAN 83

ANNEX
1.0 KEY DATA SUMMARY

1.1 The Organization at a Glance

Club Vincent will be incorporated on 31st March 1999 as a private limited

company. It is a service industry designed to give complete health facilities
with additional other facilities. The firm will start its operation from 1st May
1999.

Health Spa has become extremely popular in South Asian countries as well
as Bangladesh. Because of recent trends, free flow of information, satellite
television and sports craze, the demand for a complete health spa with all
the modern facilities has become extremely prominent. Moreover recent
trends in urbanization and lack of leisure sport has brighten its future.
People from all sector has become very health conscious and Club Vincent
will be dedicated to support their needs.

1.2 Demand Characteristic

If we look at the recent trends in health and the fitness sector of South Asia
as well as Bangladesh, we will see a big change in the mind setup of the
people. People from the lower income group are concerned with their basic
health rights and people from the middle and upper income groups are
devoting their time for overall fitness. The demand for a complete health
spa in a city like Dhaka is increasing in a rapid pace. Moreover recent craze
in sports especially in cricket has created a great demand for a fitness
center with all kind of facilities. It has been also found that there is no
proper fitness and treatment center for the sportsmen and women of our
country. There is also a huge vacuum in the leisure spots for the growing
executive class and young generation.

1.3 Activities of the Firm

Club Vincent will provide a complete health spa with facilities like well
equipped gym, sauna, physiotherapy, electronic massage, yoga, diet guide
and primary medical guide, physical training, a health store and side
facilities like grooming center, a restaurant with health foods, pool and

4
 billiard facility, and other related services.

1.4 Management and Technical Expertise

The Board of Directors of the company consists of persons with long

experience in running different businesses including hotel management,
world renowned restaurant management and gym management in foreign
countries. Additional professionals needed for such a health spa will be
hired from local experts as well as experts from Thailand, India and China.
Halvetia, a renowned fast food store, as a part of them, will manage the
restaurant and person will head the management with 16 years experience
in hotel management in Switzerland.

1.5 Cost of the Project

The estimated cost of the project is calculated Taka 76,00,000. Among

these Taka 2,000,000 for set up, Taka 8,96,000 for equipment, Taka
1,000,000 for marketing expenses for the first 18 months and Taka
2,000,000 for operating expenses for the first 18 months.

1.6 Specialty of the Project

The project has competitive advantages in every aspect compared to the

competitors in the industry because of professional management and
approach, financial plan, modern facilities, location and additional facilities.
The projected operated income of the plan is presented graphically below.

5
2.0 MAJOR INFORMATION OF THE PLAN

2.1 Particulars of the Key Personnel and The Company Related With The firm

Firms Location- House No-3, Road No-27, Dhanmondi, Dhaka-1207

Managing Director- Mr. Rashiduddin

Board of Directors- Mr. Asif M Touhid

Mr. Faisal Saeed

Mr. S M Alam Khan

Mr. Asif Uddin Ahmed

Mr. Ahsanul Haque Titu

Bankers- 1.Pubali Bank Limited, 26, Dilkusha Commercial area, Dhaka

2.ANZ Grindlayz Bank, Dhanmondi, Dhaka

Corporate Advisor- Mr. C.R. Mazumdar, FCA

2.2 Project Characteristic

Club Vincent will be primarily concerned with the health and fitness oriented
service like gym, sauna, physiotherapy etc. Moreover it will also try to
develop a image of leisure spot for a particular segment. For diversification
of service and more source of profitability it will incorporate facilities like
grooming center, a fast-food shop, pool and billiard facility and sales center
for health food which will be directly imported from United States. It will also
give dietary advice and primary medical facility for their members.

2.3 Capacity and Technology

Table 7: Rated Capacity

CAPACITY AREA
Gym- Total capacity 30 people at a time on various 2000 sq.ft

6
equipment
Sauna- Total capacity 10 people at a time 1300 sq.ft
Restaurant- Sitting capacity of 16-20 people at a time. 1000 sq.ft
Grooming center- 6 people at a time. 1000 sq.ft
Pool- Three pool tables will be installed 1000 sq.ft

2.3.2 Technology

The equipment for the gymnasium will be modern equipment from USA,
Korea and Taiwan. The sauna facility will be the best in town. The electric
massage equipment’s will be bought from Singapore. A firm from Delhi,
India will install pool tables. The trainer and physiotherapists will be brought
from Thailand, China and India.

2.7 Major Financial Ratios

-Table 7: Major financial ratios are given below

RATIOS YEAR1 YEAR2
Profit Margin -.2347 .2237
Return on Assets -.1217 .141
Return on Equity -.2177 .206
Fixed asset turnover .697 .8714
Total Asset Turnover .5187 .6305
Debt to Asset .4409 .3215

2.8 Risk Factors

The following are the major risk factors that may affect company
performance-

• Change in the habits of customers unfavorably.

• Entrance of the new local competitors.

• Change in the domestic socio-political environment.

• Negative trends in the economic condition.

2.9 Management Perception about Risk Factors

Among the risks outlined above, the management is concerned about the
negative trends in economic condition. though the targeted customer
segment of the firm is from a steady income level group it is important that

7
 they have enough disposable income in their hand. It is very unlikely that
the consumer habit will go in a opposite trend because of the influence of
satellite television and free flow of information. The firm plans to get a
competitive advantage through international standard service and huge
marketing campaign before any new firm enters the market.

2.10 Project Performance Plan

Table 7: The project performance plan is given below-

Serial No. Particulars Performance Time
1. Interior decoration and renovation of building. One month
2. Building the sauna facility. Fifteen days
3. Buying and setting up the gym equipment. Five Days
4. Setting up the pool tables. Two Days
5. Primary marketing One Month
6. Incorporate the experts. Fifteen Days
7. Arrival of the health products from USA One Month
8. Trial operation Three Days
9. Commercial operation After two months

8
3.0 SERVICES

Club Vincent will be primarily concerned with the health and fitness oriented
service like gym, sauna, physiotherapy etc. Moreover it will also try to
develop a image of leisure spot for a particular segment. For diversification
of service and more source of profitability it will incorporate facilities like
grooming center, a fast-food shop, pool and billiard facility and sales center
for health food which will be directly imported from United States. It will also
give dietary advice and primary medical facility for their members. A detail
description of the facilities and services are given below.

3.1 The Gymnasium

The primary business of Club Vincent is health and fitness. The firm plans
to provide the best possible facilities available for the executives, the young
generation, the sportsman and the health conscious people. The
gymnasium will be equipped with best available equipment. The
gymnasium can give facilities to thirty people at a time. There will be one
and half hour sessions and also special provision. There will be two mullet
station gym for eleven people, best quality warm up and slimming machine
with digital readings and all other necessary equipment essential for sports
man and health conscious people. The gym will be designed with the help
of Chinese athletic coach, national coach of Bangladesh cricket team and
other manuals from USA. The main purpose of this gym is to give health
facilities as well as prepare the next generation for the sports world.

3.2 The Sauna

Sauna and steam bath has become inevitable part of the health and fitness
program and Club Vincent does not want to deprive its customers from the
facilities. The same engineer that developed the sauna facility in Hotel
Sonargaon will develop the sauna facility and it will accommodate 10
people at a time.

3.3 The Physiotherapy and Electric Massage Facility

It was stated before that Club Vincent count sports people of this country as

9
 one of their major client and will be ready to provide any kind of facility to
them at any cost. It has been seen in the recent survey that there is no
facility of international standard for the sports people of this country. The
facilities that are badly needed by the are physiotherapy and massage. For
physiotherapy one person from Thailand will be always kept with us.
Chinese experts for assistance in physiotherapy will train two student of
Physical Training College for three months. In time we will take help from
the Indian experts and there will be special arrangements with Australian
and German physiotherapist for the national hockey and cricket team of the
country. There will be electric massage equipment from Singapore to help
these facilities run smoothly.

3.4 Diet and Medical Facilities

There will be resident MBBS doctor for this firm. He will regularly keep
basic health records of the members of the club. This will give our members
a feeling of security as well as importance. We also plan to arrange regular
meeting with qualified dietitian for the help our customers. It will also be
helpful for the sportsmen affiliated with the club.

3.5 Health Foods

It has been seen recently that food especially health foods play a vital role
for the professionals as well as the amateurs in case of their fitness. In USA
health foods companies make a big business by the food sold in the GNC
store and gyms of their country. These foods are very necessary for a
complete health and fitness program. Unfortunately no serious steps has
been taken to import these foods to our country and Club Vincent wants to
be pioneer in this. The main two sources of the foods will be imported from
American GNC stores.

3.6 Pool and Billiard Facility

Fitness is mot only health oriented but also mind oriented as a health and
fitness center we firmly believe in it. In western world pool and billiard is
highly recommended for mental relaxation and fitness. It may be mentioned

10
 here that few months back our national cricket coach also recommended
this for his team. We like to incorporate this service for four reasons. The
mental fitness, recreation for the waiting period, added attraction and a
small but important source or revenue generator. The pool tables will be
installed by Delhi based company.

3.7 Male’s Grooming Center

Success of a small business largely depends on the diversification of their

service and product. As a grooming center is not totally a out of track
product and very much associated with the look and physical neatness of a
man, so we also try to incorporate this with our business and in the market
survey it came out that this will pay off well. For now the facility will only for
four people at a time.

3.8 Other Facilities

The other facilities that will be given in this center are an exclusive fast food
center run by Halvetia, a small store for health magazine and customized
T-shirts and a small VCD club.

11
4.0 MARKETING ANALYSIS

A great care has to be taken in designing marketing strategy for service

industry like Club Vincent. Marketing for a service industry is quite different
from production oriented industry and here the main emphasis will be give
on building the image. Here to design our strategy we went through steps
like industry analysis with competitors analysis, market segmentation and
targeting, pricing of the service and the main focus of this chapter
promotion of the service with a promotional plan for 18 months.

4.1 Industry Analysis

If we look at the recent trends in health and the fitness sector of South Asia
as well as Bangladesh, we will see a big change in the mind setup of the
people. People from the lower income group are concerned with their basic
health rights and people from the middle and upper income groups are
devoting their time for overall fitness. The demand for a complete health
spa in a city like Dhaka is increasing in a rapid pace. Moreover recent craze
in sports especially in cricket has created a great demand for a fitness
center with all kind of facilities. It has been also found that there is no
proper fitness and treatment center for the sportsmen and women of our
country. There is also a huge vacuum in the leisure spots for the growing
executive class and young generation.

At one point of time only Hotel Sonargaon and Hotel Sheraton used to
provide the complete gym facility. It went for a long time with only one
another private sector gym Health and fitness. But in the last two years
three new gym was opened in Gulshan-Baridhara area and only one small
in the Dhanmondi area it is to be mentioned here the Health and Fitness
used to and still operate in the Dhanmondi area. As we did the market
survey we found out that there are another three in the construction phase
in the area like Mirpur, Uttara and Gulshan. If we also look at the slimming
centers that went into operation for the last two years, we will be surprised
at the numbers. All it depicts is a growing need for complete health spa but
unfortunately none of the firms except for Hotel Sonargaon could provide
the health care facility properly.

12
 4.2 Competitor’s Analysis

-Table 7: A detailed competitor’s analysis is given below

ORGANIZATION ADVANTAGES DISADVANTAGES
Hotel Sonargaon Image, Swimming pool, Trainer, Less promotion, high service
Equipment, Other attraction like charge, priorities to hotel residents,
tennis and massage, Car parking. no innovation.
Hotel Sheraton Image, Swimming pool Less or no promotional activities,
small capacity, high charge, no
facility to sports men and women.
Health and Fitness Only club with sauna in No promotional activity, no
Dhanmodi swimming pool, poor management.
No added attraction.
Life enrichment Modern technology, location, Again no kind of promotional
facilities for the sports people. activities, no added attraction, high
Medical Facilities Available. charges, far from some area.
Dhaka Billiard Center Added attraction of billiard, This is not at all a full-scale gym. 5
wonderful location. equipment’s
If we analyze the chart we will see that most of the firms have no
promotional activities and they badly suffer for bad management, lack of
innovation. Moreover there is no full-scale health spa in the area of
Dhanmondi that is the center for growing executive class and sports
people. There are at least three full-fledged cricket grounds in this area.
More over the other gyms suffer for the lack of added attraction. There is no
physiotherapy facility in any of the gym.

4.3 Target Market

We have segmented and selected our market with great care. The
segmentation was done on the basis of income, profession, interest in
sports and fitness, psychological upbringing etc. After detail analysis we
have selected four groups as our target market-

The health conscious people of the area of Dhanmondi and Lalmatia.

Especially people from the growing apartments in this area will be major
customers.

The growing executive class of the Dhaka city.

The young generation that spent their leisure time in various area of
Dhanmondi.

The sports people. This is a area where we will put great emphasis. The

13
20 teams of the premier division cricket league will be our major interest.
And all kind of necessary steps will be taken to ensure their membership.
Also other cricket player and those who are affiliated with various other
sports will be our major target.

Models. The trend and craze of modeling and show biz is very high and
health spa is an unavoidable part of a successful model.

14
5.0 MARKETING STRATEGIES

5.1 Basic Marketing Strategies

Until recently and still now service firm service firms specially health spa
lagged behind the manufacturing firms in our country. Furthermore service
businesses are more difficult to manage using a traditional marketing
approach. As the marketing survey among the current user of health clubs
has shown there is problems with the marketing of the firms. According to
the survey Vincent has determined its basic marketing strategies keeping in
mind the intangibility, inseparability and the variability of their service. First
of all we would like to clear the gaps of the health service providers and
their customers. These gaps are-

Gap between consumer expectation and management perception-

Management does not always perceive what customers want which Club
Vincent wants to be free from.

Gap between management perception and service quality

specification- Management might correctly perceive the customer’s want
but not set a specified performance standard.

Gap between service quality specifications and service delivery- The

personnel might be poorly trained or over worked and incapable or
unwilling to meet the standard. Or they may be held to conflicting standards
such as taking time to listen to customers and serving them fast.

Gap between service delivery and external communication- Consumer

expectations are effected by statements made by company representatives
and ads.

More over in the market survey the target market identified five major
categories of quality that they want from this firm and which our firm is
determined to fulfill and market. These are-

Reliability-The ability to perform the promised service accurately and

dependably.

15
 Responsiveness- The willingness to help customers and to provide
prompt services.

Assurance-The knowledge and courtesy of employ and their ability to

convey trust and confidence.

Empathy-The provision for caring individualized attention to customers.

Tangibles-The appearance of physical facilities, equipment, personnel and

communication materials.

Beside these the firm on its own will try to follow the following trends of
successful service industry-

• A strategic concept of customer obsession.

• Top management’s commitment to quality.

• The setting of high standards.

• Systems for monitoring service performance.

• Systems for satisfying complaining customers.

• Satisfying the employees as well as customers.

5.2 Pricing

The main strategy of the pricing of the firm is to provide high quality with
medium price thus maximizing sales. Though their will be various options
for payment for services in this firm the main method that will be
emphasized is yearly membership. The strategy is depicted below-

16
 The various payment methods is given below-

Yearly membership-Taka 15,000

Half yearly membership- Taka 9,000

Use and pay- Taka 50 for half an hour of gym and Taka 50 for half an hour
sauna. Use and pay user will have to pay for pool and billiard facility and
they wont get discount for grooming and other facility.

Player’s option- For any division league player the yearly membership will
be taka 7,000 for one year and taka 5,000 for half year.

Others-The usage fee for pool and billiard table will be taka 50 per game
for the nonmembers and taka 25 for the members. For the grooming center
the standard price list of centers like Hairobics and Cherokee will be used.
Halvetia will run the first food center and they will charge their usual price.
For the health foods and other commodities that will be sold in the center
will be priced with 20% markup with their total cost. It has been seen even
after that the rate will be lower than the market price by 10%.

5.3 Promotion and Advertising

The Board of Directors have detected promotion as the main competitive

tool and wants to emphasize on it a lot. For that reason there will be a huge
budget allocated in this sector and this investment is very much justified. In
promotion of a service industry, the main effective tools are personal selling
and promoting people with image. These are the two sectors along with
other where the promotional activities will concentrate.

5.3.1 Personal selling

The responsibility of personal selling will be directly on the directors and

few very well selected people. But initially the directors will carry the
responsibility. There are two customer segments that we want to reach
through the personal selling. Firstly the executives of MNC’s, local
company’s and other high paid professional. First we want to use our
personal contact and later use these contacts to reach others. The directors

17
 will personally visit the clients, communicate the services and facilities that
will be provided and give them a gift coupon of taka 200 that they can
exercise in Club Vincent. This coupon will cover one day free use of gym,
sauna, pool and taka 50 worth of any other facilities. After that we will try to
sell the yearly membership to these people. In the mean time we will
contact the coaches and captains of the club of the division cricket leagues,
We will also contact the director of the clubs. We will communicate our idea
and give the coaches membership of the club with a nominal token fee in
exchange of his commitment to communicate our massage to his player
and motivate them to join the club. After initial contact we will arrange one-
day free tour for the players of each club serial in the club and demonstrate
our facilities to this potential client. The points like Thai physiotherapist and
time to time foreign renowned consultants will be the main point of
emphasis.

5.3.2 Promotion

The main points that will be emphasized are discussed previously. And we
like to incorporate the best available people within our budget to convey our
massage. In the three years marketing plan the sports people will get the
highest emphasis and the executives and models will be treated as another
different group. Both the programs will cover the general members and the
young people though the firms definitely have separate plan for them.

For the sports people the firm plan to keep a close tie with the national
team coaches, specially cricket,, It is to be mentioned here in case of
service designing, the national coach will be cosulted and best efforts will
be given to follow his advice in the selection of physio and trainers. If not
all. the major national heros will be the spoksepersons for this firm, It is to
be mentioned here the national team player will get a free membership of
the club. In the first year we will try to bring two world reknowned figure to
speak for the necessity of fitness and the facilities of this club.They will both
come for a two days visit to the country. The club recently have one indian
national cricketer and famous coach Boby Simpson in mind as he is
currently residing in India. After three months we plan to bring Danis Lily for
a three day fast bowling training program for the young and under 19

18
 national team where he will speak for physical fitness and for the club. One
of our director Mr.Khaled Hassan Tito will arrange these visits. In
subsequent years we also plan to make similar arrangements for other
teams. Another marketing plan we like to take that sponsor a foreign physio
during the World Cup Tour of our National Team.

For the models and the general consumers, the firm plan to bring the
famous Indian model Milind Soman for one day visit, where he will talk to
the club members about the physical fitness and appearance. This will be
the only such program in the first year though the firm plan to take more in
the subsequent years.

5.4 Advirtising

The firm will mainly rely on ads in newspaper and magazines, billboards in
the sports grounds and few selected areas. The other facilities specially the
grooming falility will be advirtised heavily in the newspaper. Television ads
will be very nominal as it has been found that there is little impact of
television ads for this industry. But the firm will look for publicity for the
various promotional plans.

19
6.0 FINANCIAL PLAN

6 .1 SOURCES OF CAPITAL

Equity Capital: Tk 42,00,000 has been collected from the equity source
(each owner has contributed Tk 7,00,000)

Debt Capital: Tk 34,00,000 has been borrowed as long term loan from
Pubali Bank. This long-term loan has been collected from Pubali bank at
the interest rate of 15.5%.

The reason of taking long term bank loan:

Inability to issue debentures, Absence of specialized financial

intermediaries to finance small ventures, Convenience, Speed,
Confidentiality, Flexibility, Access to funding.

In the preparation of the financial statements the following assumptions

have been made:

It is assumed that present stable political and economic environment will

continue.

Financial projections are made under the historical cost convention based
on generally accepted accounting principle.

For projecting financial transactions relevent international accounting

standards together with the relevent laws and rules of the country are
followed.

Depreciation on fixec asset is calculated on the straight line method at the

rate of five years.

Growth in sales is calculated on the basis of reasonable forcast.

The long term loan of Tk 32,00,000 has been borrowed to be paid back
within ten years time at twenty installments.

20
 Table 7: Weighted-Average Cost of Capital
Cost (after tax @ 6%) Weights Weighted Cost
Debt 9.5% 44.74% 4.25%
Equity 14%1 55.26% 7.74%
Weighted average cost of capital 11.99%

Financial leverage impact of debt capital on the profit is shown on the

following table. This table also incorporates the consequence of forecasted
sales fluctuation on profits.

Table 7: Financial Leverage

100% Capital 44.74% Debt + 55.26% Equity Capital
Optimistic Expected Pessimistic Optimistic Expected Pessimistic
+20% -20% +20% -20%
Fluctuation of Revenues
Sales 4800000 4000000 3200000 4800000 4000000 3200000
revenues
Total cost 2458000 2458000 2458000 2458000 2458000 2458000
Earning before 2342000 1542000 742000 2342000 1542000 742000
interest and
tax
Less interest 1662000 862000 62000
Less tax 140520 92520 44520 99720 51720 3720
Net profit after 2201480 1449480 697480 1562280 810280 58280
taxes
Fluctuation of 51.88067 -51.8807 92.80742 -92.8074
profits

Table 7: Startup Fund requirement

Total fund
Equity Tk 42,00,000
Debt [@15.5%] Tk 34,00,000
Cash 119700
Equipment 2590300
Marketing 1000000
Salary 1140000
Interior decoration 2000000
Rent, utilities 480000
Miscellaneous supplies 10000
Inventory 50000
Office supplies 10000
Insurance 200000
Total = 7600000

Income Statement
Health Spa
1 Cost of equity has been held at 14% that is the interest of government bond with 8 years maturity period.

21
 Consolidated Income Statement
For the year ended December 31
1999 2000 2001
Net sales 32,00,000 40,00,000 45,00,000
Operating expenses
Advertising expenses 1000000 2,50,000 2,50,000
Sales salaries expenses 1020000 10,20,000 10,20,000
Depreciation expenses 225060 2,25,060 2,25,060
Rent 240000 2,40,000 2,40,000
Utilities 240000 2,40,000 2,40,000
Miscellaneous expenses 10000 10,000 10,000
Total operating expenses 2735060 19,85,060 19,85,060
General and administrative expenses
Office salaries expenses 120000 1,20,000 1,20,000
Office supplies expenses 10000 10,000 20,000
Insurance expenses 200000 50,000 50,000
Depreciation expenses, Office equip. 293000 2,93,000 2,93,000
Total general and admin. Expenses 623000 4,73,000 4,83,000
Operating Income (158060) 15,41,940 20,41,940
Non operating Income 87,000 90,000 106,600
Less Loan repayment (6,80,000) (6,80,000) (6,80,000)
Income before taxes (7,51,060) 9,51,940 14,68,540
Income taxes 0 (57,116) (88,087)
Net income (7,51,060) 8,94,824 13,80,453

22
 Balance Sheet
Jan 01, 1999 Dec 31, 1999 Dec 31, 2000
Assets
Current assets
Cash 10,09,700 2,41,000 5,47,184
Inventory 50,000 25,000 30,000
Prepaid Rent 60,000 20,000 20,000
Miscellaneous supplies 10,000 5,000 7,500
Office supplies 10,000 5,000 7,500
Prepaid Insurance expense 2,00,000 50,000 50,000
Marketable securities and deposits 16,70,000 16,87,000 20,00,000
Total current asset 30,09,700 20,33,000 26,62,184
Plant and equipment 45,90,300 45,90,300 45,90,300
Less accumulated depreciation 0 4,54,360 9,08,720
Total asset 76,00,000 61,68,940 63,43,764
Liabilities
Long term liabilities
Bank Loan 34,00,000 27,20,000 20,40,000
Total liabilities 34,00,000 27,20,000 20,40,000
Owners Equity
Rashid Uddin, Capital
Asif U. Ahmed, Capital 7,00,000 7,00,000 7,00,000
Asif M. Touhid, Capital 7,00,000 7,00,000 7,00,000
Faisal Syeed, Capital 7,00,000 7,00,000 7,00,000
S. M. Alam Khan, Capital 7,00,000 7,00,000 7,00,000
Ahsanul Haque Titu, Capital 7,00,000 7,00,000 7,00,000
Retained earnings (deficit) 7,00,000 7,00,000 7,00,000
Total owners equity 0 (7,51,060) 1,43,764
42,00,000 34,48,940 43,43,764
Total Liability and owners equity
76,00,000 61,68,940 63,43,764

23
 Cash Flow Statement

Cash flows from operating activities:

Net income (7,51,060)

Adjustments to determine cash flow from
operating activities:
Add depreciation 4,54,360

Decrease in inventory 25,000

Decrease in prepaid rent 40,000
Decrease in Misc. Supplies 5,000
Decrease in office supplies 5,000
Decrease in prepaid insurance expense 150,000
Increase in marketable securities and
deposits (17,000)

Net cash flow from operating activities (88,700)

Adjustment to determine cash flow from

investing activities:

Decrease in long term liabilities (6,80,000)

Net cash flow from investing activities (6,80,000)

Net (decrease) in cash flows (7,68,700)

Table 8: Major financial ratios are given below

RATIOS YEAR1 YEAR2
Profit Margin -23.47% 22.37%
Return on Assets -12.17% 14.1%
Return on Equity -21.77% 20.6%
Fixed asset turnover 69.7% 87.14%
Total Asset Turnover 51.87% 63.05%
Debt to Asset 44.09% 32.15%

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7.0 HUMAN RESOURCES PLAN

7.1 ORGANIZING

An organization structure is effective if it facilitates the contribution of

individuals in the attainment of enterprise objective. The application of the
principle of unity implies of course the existence of formulated and
understood enterprise objective. As the company’s objective is to make
profit over a period of time, the organization pattern that will help to
accomplish this conforms to the principle of unity of objective.

In looking organizing as a process several fundamental inputs must be

considered. In the first place the structure must reflect objectives and plans
because enterprise objectives derive from these. In the second place the
structure must reflect the authority available to enterprise managers. In the
third place organization structure like any plan must reflects its
environment. Fourthly the organization must be staffed with people.
Obviously the activity groupings and authority provisions of an organization
structure must take into account people’s limitations and customs. The
internal management of this company is developed keeping in the above-
mentioned matters into consideration.

7.2 MANAGEMENT

The management team will consist of board of directors, managing director

and the office manager. Among them only the office manager will be
involved with the operation on a day to day basis.

7.2.1 Board of Directors

Board of directors will consist of the six investing members. As this is a

small business the board of director will have additional responsibilities like
marketing plan implementation, image development, fund management and
operation management with their regular duties. They have their weekly
meeting to review, monitor and control the performance of the business.

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 7.2.2 Managing Director
One of the board members will be selected as the managing director with
the full consent of other members. He will full in charge of any
contingency and implementation of the decisions of the board of directors
through the office managers. He will also be responsible to see that all the
marketing objectives and the commitments to the customers are properly
fulfilled. Moreover, he will also be responsible to inform the board of
directors all the relevant information about the business performance,
present stand and the need of the business. He will guide the office
mangers time to time in performing his duties and maintaining the
committed quality.

7.2.3 Office Manager

As a paid employee he will be solely responsible of running the daily
operations. His responsibility will include managing the overall operation,
meeting the buyers, controlling all units in case of extra ordinary situation,
deciding on petty cash disbursement. He will be only liable to the
managing director for his operation. And report to him on weekly basis.
Another major responsibility of him is to maintain the accounts of the
organization, as no other person will be appointed for this purpose. He will
be aided with modern computer and software facilities for his operation.
He will consult the managing director in any case of extraordinary
situation.

7.3 Technical staff

There will be 17 employees employed of full-time/part-time basis to operate

the health spa. Job description of these employees follows-

7.3.1 Trainer
Head trainer will be appointed from Thailand for a three-year contract. The
organization will utilize the economic recession of Thailand to take
advantage in salary payment. He will be trained physiotherapist with the
responsibility of designing all the training programs, providing
physiotherapy facilities to the sports people and train two other assistant
in this period. He will also have secondary responsibilities to look after the
equipment so that they are properly used and maintained. He will inform

26
 the office managers about his operation.

7.3.2 Assistant trainers

His assistants will be two locals who are ex-body builders or graduates
from Physical Training Institute with stout figure. Their responsibilities will
include train, guide and assist the clients on how to exercise for better
health. They will be required to sign a five-year continuos service contract
with the firm. The head trainer will train them and the management has a
plan to train them abroad depending on their performance.

7.3.3 Attendant
Eight attendants will be appointed for miscellaneous need of the clients.
They will look after the games and equipment of the firm. One of them will
be responsible to maintain store. They will be trained primarily on
maintaining the equipment and other facilities. They will work on two shifts
of four on each shift. They will work under the office manager

7.3.4 Doctor
Two fully MBBS graduate will be appointed for regular health care of the
clients. They will also be responsible for keeping the client health record,
giving health advise and also helping physiotherapy. They will be given
proper training on database management and report generation. They will
have to sign a three-year service contract with the firm. They will report to
the office manager.

7.3.5 Barber
Four barbers will be appointed from recognized grooming centers. They
will be responsible for providing the grooming facility. They will report to
the office manager.

7.4 Training and development

The management has a development plan for the employees emphasizing
on the manners and etiquette. Management believes that it will create
motivation for the employees as well as shorten the gap between
expectation and provided service. The whole training facilities will be
designed to meet the marketing need of the organization. Training
facilities will include training by the foreign trainers and well as overseas
training.

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ANNEX – 1

Gym Equipment Cost Schedule

Equipment Type Price per unit Quantity required Total

Runner 6300 5 31500
Cycle 8800 5 44000
Multi station 130000 2 260000
Cycle Better 24800 5 124000
Multi station small 85000 2 170000
Bench Press 27000 2 54000
Rowing 6800 2 13600
Ski Walker 8800 2 17600
Stepper 3800 5 19000
Walker 12800 5 64000
Jumper 3000 3 9000
Power Ride 6000 2 12000
Thigh shaper 1800 2 3600
AB crunch 3200 5 16000
Massage equipment 60000 1 60000
Total cost = 8,98,300

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 Office Equipment Cost Schedule

Equipment Type Price per unit Quantity required Total

Furniture 50000 - 50000
Locker 1500 25 37500
Decoration material 100000 - 100000
Computer 25000 2 50000
Security system 100000 1 100000
Shower equipment 6500 5 32500
Basin equipment 4000 5 20000
Toilet equipment 6000 5 35000
Gizer 30000 1 30000
Television 20000 4 80000
Music system 120000 1 120000
Generator 150000 1 150000
Air Conditioner 300000 2 600000
Office Supplies 50000 - 50000
Cash registrar 10000 1 10000
Total cost = 14,65,000

Game Room Equipment Cost Schedule

Equipment Type Price per unit Quantity required Total

Pool Table 35,000 2 70000
Dart Board 1,000 5 5000
Video games 35,000 2 70000
Table Football 10,000 2 20000
Total cost = 1,65,000

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 Men’s Grooming Center Equipment Cost Schedule

Equipment Type Price per unit Quantity required Total

Armchair 4000 4 16000
Decoration Material 30000 - 30000
Barber tool set 1500 4 6000
Skin care tool set 5000 2 10000
Total cost = 62,000

Depreciation Schedule2

Item Cost Year 1 Year 2 Year 3 Year 4 Year 5

Gym equipment 8,98,300 179660 179660 179660 179660 179660
Game equipment 1,65,000 33000 33000 33000 33000 33000
Grooming equip. 62,000 12400 12400 12400 12400 12400
Total depreciation 11,25,300 225060 225060 225060 225060 225060
for operating
Office equipment 14,65,000 293000 293000 293000 293000 293000

Human Resources Salary Schedule

Work type Salary per month Required number Total [12 months]
Manager 10,000 1 120000
Head trainer 25,000 1 300000
Trainer 6,000 2 144000
Barber 5,000 4 240000
Doctor 5,000 2 120000
Attendant 2,000 6 144000
Doorkeeper 1,500 2 36000
Janitor 1,500 2 36000
Total cost = 11,40,000

2 Five year straight line depreciation calculation

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ANNEX – 2

Business Location

31
Perspective plan (Exterior)

32
Perspective Plan (Interior)

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ANNEX – 3

Questionnaire for Market Survey

Survey Data
1. What is the first word that comes to your mind when you hear the followings?
Model _____________
_____________ Balanced diet _____________
Health Yoga _____________
_____________ Smart _____________
Swimming pool Gifts _____________
_____________ Sports _____________
Sauna Dhanmondi _____________

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2. What are the elements that make a person look smart?
Manners Dress up Physical beauty Hair cut
Macho image It is god gifted Money Others
[pls. specify………………………….…………….
…………………………………………………….…………]
3. Which advertisement will catch your eye most?
In newspapers In billboards In magazines In neon
signs
4. How do you judge the quality of a service?
Consult friends Use personally Read a review Talk to users
Others [pls. specify…………………….
…………………………………………………….…………….]
5. How do you spend your free time?
Indoor games Outdoor games Chat with friends Stay in
home/TV
Exercise Outdoor activities Go to club Others
[pls. specify…..…………………….…………………………………………………….
……………………]
6. Why would you like to go to a gym?
Exercise Better health Status Time pass
New craze Build muscles Meet friends Others
[pls. specify…………………………..………………………………………………….
…………………….]
7. Do you already use any gym? if yes where?
Yes [in ……………………………………] No
8. When would you prefer to go to a gym?
Early morning Morning Noon Afternoon Night
9. How often do you think one should use the gym?
7 days a week 4-6 days a week 3 days a week 1/2 days week
10. What services would you want from a modern gymnasium?
Equipment Trainer Doctor Shower

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 Sauna Yoga Music
Television
Magazine Massage Toilet Locker
Exclusivity Food St. Game room Others
[pls. specify………………………….…….….…..……………………..………………….
…………………….]
11. How much are you willing to spend annually for a gym with all facilities
mentioned in question 10?
up to Tk. 5000 up to Tk. 10000 up to Tk. 15000 up to Tk.
20000
12. Which form of payment system would you like?
Annually Monthly Weekly Use and pay
(daily)
13. How would you feel if both male and female use the gym at the same time?
Hate it! Uncomfortable No difference Comfortable
14. How would you like to use a gym?
Personally With family
15. Please complete the following sentences:
I like the music of
___________________________________________________
My favorite film star is _____________________________________________
I feel more comfortable in _________________________________environment.
I think wrestling and football are
_______________________________________
I prefer to go to ___________________________________________
restaurant.
I buy most of my cloths from ___________________________________ market.
Things that I buy for myself are actually paid by __________________________
Personal Data [optional]
My name is ____________________________________________________
[m/f]
I live in _______________________ area. I often come near Dhanmondi area [Y/N]

36
Age: 12 to 18 19 to 25 26 to 35 36 to 45 46 +
Occupation: Student Business Service Others
[pls. specify………………………….………………………………………….
………………………..……….]
Income per month: Below Tk. 5000 Tk. 5000 to 10000
Tk. 10000 to 20000 Tk. 20000 to
30000
Tk. 30000 +

37
 Sampling Schedule

Category Number
Foreigners 20
English medium students
Boys 30
Girls 20
Bangla Medium
Boys 20
Girls 10
University
IBA 20
NSU 20
IUB 20
DU 20
Executives
Male 30
Female 20
Faculty 10

38