Business

    The paper presents a sports financial plan. In order to understand the critical sports financial issues, a hypothetical organization Apex Gym is being studied. Apex Gym is a fitness center for families that offers a vast range of services such exercise equipment, diet plans, physical therapy, yoga, massage, child care cafeteria. The basic financial objectives of the firm are to breakeven in the first year of operations and achieve the target of 300 memberships in the first year. Decreasing Ac payables and increasing inflow of cash are also its short term goals. Other than this long term plans include expanding of the child care centre and cafeteria facilities.

Apex Gym will basically operate as a partnership with 40 with Mr.Huang and 60 with Mr. Seng. Their responsibilities as partners are also discussed in the business structure.

Follows this is the elaboration of various sources of revenues and expenses for Apex Gym. The main sources of revenue are membership fees and sales from cafeteria. Then the projected financial statements for three years are discussed. According to these statements the company reports profit in the first year.

Fundraising will be done through promoting the business before the business actually starts. Customers will give discounts to register themselves with Apex Gym beforehand. This will have inflow of cash needed to fund the project.

Description
Apex Gym is a Fitness Centre that offers exercise equipment, fitness classes such as yoga, aerobics and other workout plans. It also offers a weight loss program. Apex Gym targets the whole family for its service and in order that parents spend their time peacefully and tension free in gym, a child care centre is also built. This child care centre wont charge extra. Itll be added benefit. It also offers massage and physical therapy sessions. There is also a small cafeteria which has light items such as juices and healthy sandwiches and salads.

Customers will be required to pay a membership fees to avail all these facilities. The membership fees would be based yearly with the option of paying fees in installments as well. The facilities of cafeteria will have additional charges.

Financial Planning Strategies
Objectives
Apex Gym aims to achieve the following objectives
To acquire approximately 300 memberships in the first year of operation.
To breakeven in the first year of operation.
To achieve the projected growth rate of 15.
To increase memberships by 25 by the end of second year of operation.
Short Term Planning
As all of the objectives mentioned above should be achieved in 2-3 years time, they come under short term planning. Apex Gym aims to invest heavily in marketing and promotion budgets to achieve its objectives. Unless and until marketing isnt strong, people wont be willing to register themselves with Apex Gym.

Computerized Financial Planning Models shall be used in order to forecast future sales and growth rates. Plans regarding paying of Ac payables and reducing the receivables will also be made here. Apex Gym also aims to maximize the inflow of cash and increase liquidity so that no loans are taken to pay off short term expenses.

Long Term Planning
Apex Gym intends to expand its child care facility in the near future. It plans to have facilities as a day care centre haves so that parents can easily follow their exercise routines and dont get disturbed due to their children. Funds for this plan will be arranged through retained earnings and additional investment. The additional investment will be done through obtaining long term loans.
Long Term Planning will be basically done after thorough analysis of financial statements and financial ratios. If the results seem fruitful then the company shall expand the day care centre and cafeteria. The cafeteria will sell various exercise and sports goods for additional revenues. If Apex Gym will take any loans then long term plans would be made to pay off loans as well.

Business Structure
The company will operate as a partnership between two partners namely Mr. Xiu Huang and Mr. Chang Seng. Mr.Huang will be responsible for overlooking the finance and accounting where Mr. Seng will be responsible for all other activities such as management, hiring, daily operations etc. As Mr. Huang is graduated in Information Technology (IT) he will also be responsible to make and run an automated system for accounting, daily expenses and data regarding customers and memberships.
The profit will be divided amongst Mr. Huang and Mr. Seng in a ratio of 40 and 60 respectively. They both hold the position of directors and are in the executive body. All the major decisions should have a mutual agreement of both the partners.

Revenue Sources and Expenses
The expenses are discussed in detail in the pro forma budget. The startup expenses would be the setup, marketing and rent expenses. Other running expenses that would occur are payroll, depreciation, utilities, interest and various miscellaneous expenses. Salaries would also be a major expense.

Apex Gym will earn its revenues from membership registrations. Membership is 300 a year. Other revenue source is from cafeteria from the sale of eatables. An estimate of 30,000 is taken as revenue from eatables from the cafeteria. Retained earnings and idle cash will be invested in stocks and various saving certificated to earn additional revenue.

Financial Statements
Financial Assumptions
Some important financial assumptions before projecting the income statement and balance sheets are
The economy is assumed to be stable and growing.
There are no significant changes in the health concerns of the citizens.

Income Statement
Year 1Year 2Year 3RevenuesMemberships90000112500140625Sales from Cafeteria300003450039675Total Revenues120000147000180300Operating Expenses Marketing and Promotional150015001500Insurance500500500Stationary500500500Rent250025002500Non Operating ExpensesInterest Expense000Interest Income000Total Expenses500050005000Earning before taxes115000142000175300Taxes402504970061355Net IncomeLoss7475092300113945Balance Sheet
Year 1Year 2Year 3Current AssetsCash20,00025,00030,000Office Supplies112502380040455Fixed AssetsEquipment80,00080,00080,000Total Assets111,250128,800150,455Liabilities000Owners EquityPaid in Capital365003650036500Earnings7475092300113945Total Liabilities and Capital111250128800150445Pro Forma Budget
The pro forma budget will incorporate all the startup expenses to calculate the amount of total expenses that need to be funded.

DescriptionAmountRent2,500Child Care Setup5,000Cafeteria Setup6,000Legal500Stationary etc.500Marketing1,500Insurance500Exercise Equipment80,000Total96,500Fundraising
Apex Gym intends to raise funds through promoting itself before the construction starts. An event in a form of physical fitness seminar will be conducted to attract people. A membership drive will be initiated in the seminar which will aim to register prospective members. These members will be offered a discount on their membership as theyll be the few first to get associated with Apex Gym. These members will be entitled to pay 300 for the first year and 200 for subsequent years. In this way if Apex Gym is able to get 200 memberships it will generate 60,000 which is good enough to start the business and construction. Both the partners will invest the remaining amount that is 36,500. Each partner will invest 18,250.

All the future funding will be done through retained earnings or personal investment. Acquiring loans will be the last option for the company. If the investment per person exceeds 10,000 then a bank will be pursued for loan.

Apex Gym will achieve success and profitability if its able to achieve its short term goals and long term goals. Financial planning gives an overview of the whole business and its future prospective as well. If it doesnt then there should be contingency plans as backup plans to minimize loss.