Ability Facility, LLC

Business Plan

May 4, 2004

Steve J. DiMichele

© Ability Facility, LLC, 2004

Table of Contents
Executive Summary……………………………………………………………...3

Vision, Mission & Goals…………………………………………………………6

Product Strategy……………………………………………………………........8

Service Strategy…………………………………………………………………..9

Market Analysis………………………………………………………………...11

Segmentation……………………………………………………………11

Industry………………………………………………………………….11

Competitor………………………………………………………………13

Economy…………………………………………………………………15

Marketing Plan…………………………………………….................................

16

Overall Strategy……………………………………………………….....16

Sales Strategy………………………………………………………….....17

Advertising & Promotions……………………………………………….19

Public Relations………………………………………………………….20

Financial Plan…………………………………………………………………...21

© Ability Facility, LLC, 2004

 3

Executive Summary

Company Direction

The Ability Facility will offer one-on-one physical training services for

anyone requiring them. The Ability Facility provides elite services to our

customers in a personal atmosphere where their safety and happiness is most

important to us. In five years, Ability Facility will expand into an Olympic

training center for amateurs and professional athletes alike. There will also be

dormitories to live in while training in five years. Ability Facilities’ ideal location

is in Southern New York. With our ideal location in place, we expect to be

profitable by the beginning of our third fiscal year.

Company Overview

• Steve J. DiMichele - CEO

• Ability Facility, Limited Liability Company (LLC)

• Industry: NAICS Code = 71394; Fitness and Recreational Sports Centers

• Current Status: Start-up

• Ed DiMichele - Physical Trainer

• Joe DiMichele - Wrestling Technician

Product/Services Strategy

The purpose is to promote a combination of exercise with dieting. Our

services are not only a support system; but also, we explain proper techniques.

Ability Facility believes the US as a country is the most obese in the world, yet

dieting alone is just not enough, so that is where exercise fits in. As far as

technology goes, we handle all invoices on a database of customers. We may need

© Ability Facility, LLC, 2004

 4

to purchase new nautilus equipment if innovations erupt. We use rubber weights

because they are safer.

Market Analysis

My market is the amateur or Olympic wrestler who lives in the geographic

North-East Region of the United States. My target age range would the 18 to 24

year-old, middle-class, white-collar, male and female workers. The size of my

customer base includes Ohio, Pennsylvania, Vermont, New Hampshire, New

York, Maine, Rhode Island, Massachusetts and Delaware. The customer exercises

at all different hours of the day but primarily before work or after work hours. The

customers may need a workout plan made up or just assistance on proper

technique. Besides Ability Facility applies personal interaction with strong and

meaningful relationships that competitors, such as Bally’s Total Fitness cannot

compete. We differentiate ourselves through having wrestling mats for instance to

train on. Start-up costs are high; however, a high volume of customers will help

tremendously with operations cash flow. The opportunities are endless due to

differentiating yourself in a way that makes it a core-competency.

Marketing Plan

We will use gorilla-marketing techniques to promote the Olympic training

facility at Amateur wrestling events through public announcements that are free.

The public announcements will promote at surrounding college matches. We will

advertise in various wrestling magazines. Our sales promotion strategy is to allow

them to try out the facility free for their first visit then sell them through one of

the many plans we offer. Once we have built up a significant base then word of

© Ability Facility, LLC, 2004

 5

mouth will continue to increase our customers. I plan to bring in past and current

Olympians to run wrestling camps when the training season is not at its peak.

Financial Plan

I currently own a home of which I am going to use as collateral for

building the fitness center. I am assuming my home is worth $100,000, which is

80% of its net worth. Friends and family are contributing another $50,000. Lastly,

I am taking out a bank note for $250,000, which is being backed by the SBA. The

purpose of this money is for the building and equipment expenses. The pro forma

income statement shows a gross profit margin of 12%. On a monthly basis, the

profit is used to pay on the principal and any interest accrued.

© Ability Facility, LLC, 2004

 6

Vision, Mission and Goals

Vision Statement

Ability Facility, LLC will offer one-on-one physical training sessions for

amateur and Olympic athletes requiring them. Within 5 years, Ability Facility will

expand into an Olympic training facility. We will provide a nutritionist, whom

will write nutrition plans set for the wrestlers but also for anyone wanting the

service. We will be a full service living facility within 5 years while in the training

season for all athletes. Wrestling campers will occupy dorm rooms a few weeks

throughout the summer months.

Mission Statement

The Ability Facility, LLC provides elite services to all customers in a

personal atmosphere where their safety and happiness is most important to us.

We will help amateurs and excellent athletes attain their peak performance goals

as we provide these services. Our customers will use all state of the art equipment

from nautilus equipment to free weights. Our motto is, “An effort today gives

results your way.”

Goals & Objectives

1.) Have statistics on our target markets by March 2004

2.) Have a feasibility study done by the end of April 2004

3.) To have the Ability Facilities' ideal location selected in the North-East Region

of the U.S. by the last week in May 2004

4.) To obtain a start-up note for $250,000 to help fund the equipment

5.) Open for business by May 2005

© Ability Facility, LLC, 2004

 7

6.) There will be nutritionists on staff by the winter of 2009

7.) Ability Facility will be profitable by the end of the second fiscal year.

8.) The installation of dorm style rooms will accompany the expansion of the

Olympic training facility by 2010

© Ability Facility, LLC, 2004

 8

Product/Service Strategies

Product Strategy

Our products are free weights and nautilus equipment. There are eight

bench press sets. These sets include a bench, an Olympic style bar and barbells

weighing anywhere from two and a half pounds all the way up to forty-five

pounds. One set has four two and a half pound barbells, four five pound barbells

and four ten pound barbells. Also, two twenty-five pound barbells, two thirty-five

pound barbells and two forty-five pound barbells. There are ten curling bars. The

dumbbells start at three pounds and go up to one-hundred and thirty pounds.

There are four power clean stations as well as military press benches. The nautilus

equipment includes curling machines, neck machines, leg press, leg curl, leg

extension, calf raise machine, weighted dip machine, peck deck machine, cable

crossovers, pull-up and chin-up bars and much more. During non-peak hours of

business the equipment will be inspected and if there are any problems we will fix

them that day.

The features are state of the art innovations in machine development. The

machines have had many hours of R & D, which with new designs allows more

targeting on the different muscle groups. The machines are ergonomically

designed to eliminate extra strain that past machines have caused. All free weights

are rubber so that they may be dropped. Safety is as important as the customers’

satisfaction. The benefits of our products are the equipment promotes health,

muscular functions and development. Exercising on a regular basis gives a person

© Ability Facility, LLC, 2004

 9

more energy throughout the day, enhances circulation and strengthens the heart

too.

The market includes both amateurs and excellent athletes. The need is for

athletes to be successful in their given sports especially wrestling. There is also a

problem with obesity in our country so the need is to live healthier lives. Our

customers include anyone with the desire to exercise. We compete with large

fitness chains including Bally’s Total Fitness and Gold’s Gym. The price to use

our product depends on the plan you choose. An all day pass is $7. A three month

membership is $120. A half-year is $250. The whole year costs $480 and we are

given two free months for a year membership so the real cost is $400. Currently

the product is still undergoing R & D but will be in the introductory phase as the

start-up gets underway.

Service Strategy

One service we offer is 24-hour access to the facility. If customers require

a physical trainer then they would need to plan out their schedule through one of

them. They will answer any questions you may have along with showing you

proper form for exercises. If you would like they will make workout plans for you

and guide you to your fitness goals. An additional service offered is nutrition

plans created by nutrition specialists. They will help you help yourself in the

battle against weight loss. The most significant service is the wrestling technique

and training camps offered. You will learn from past Olympians. The camps will

be designed for adolescents (ages 8-12), teens (ages 13-17) and adults (ages 18

and up). The price to have a physical trainer does not cost extra and is included in

© Ability Facility, LLC, 2004

 10

your membership. The extra services such as having a nutritionist will cost you

extra as well as the wrestling camps.

The features are having one-on-one sessions with your physical trainer.

This allows for more relationship based interaction. We treat each customer as if

they were family. The next service is having a nutritionist which is rear in most

workout facilities and I believe it is one of the keys differentiating us from our

competitors. The wrestling camps are still being researched and planned for in the

up and coming years. There are going to be dorms for housing and living while

our Olympic athletes are training. The best feature Ability Facility has is the

location of the workout center. This benefits many athletes because they no longer

have to travel across the US for an Olympic training center. Plus once the dorms

are open they will be able to live connected to the training center. The facility is

opened seven days a week, twenty-four hours per day and three-hundred and sixty

days per year. Access to the facility during non-business hours can only occur

with valid swipe identification (ID) card.

© Ability Facility, LLC, 2004

 11

Market Analysis

Segmentation

The target age range is 18 to 24 but ideal is a 24 year-old male. The

ideal gender targeted is males but females are a segment as well. The target

income level is between $24,000 and $40,000 and the ideal income is

$30,000. The reason for this income range is because statistics show more

people as being middle class. The target education level includes both high

school graduates as well as college graduates, but the more educated is better.

The target lifestyles are people that are health conscious and work late. The

behavior mindset of the target is focused around wrestling as well as other

Olympic sports. These athletes have an impeccable work ethic to achieve

success in their chosen sport. The average athlete’s workout plan is three to

seven days per week. The geographic location of Ability Facility is in

Southern New York because the distance from the targeted surrounding states

is more accessible based on distance traveled. The exact location is in a

suburb of Albany, New York. The target regions from which the athletes are

coming from are the Midwest and the North-East Region of the United States.

Broke down into states, they include: Indiana, Ohio, Pennsylvania, Tennessee,

New York, Maine, Vermont, New Hampshire, Connecticut, New Jersey,

Massachusetts, Delaware, Maryland, Rhode Island, West Virginia & Virginia.

Industry

The industry size of Olympic training facility’s is four all

across the United States. The closest is near Duquesne University and the

© Ability Facility, LLC, 2004

 12

others are in South Carolina, California and Oklahoma. Each location was

selected based on someone’s idea to target the Northern states, Western states

and Midwestern states. The assumption in this industry is that people choose

to exercise as a daily regiment. The barriers to entry are high start up costs but

generally low variable costs when referring to equipment. The available

market includes athletes and non-athletes that are obviously health conscious.

We provide services for the majority of the athletes and all the Olympic

athletes within the geographic segment. Most if not all training facilities are

legally limited liability companies (LLC) because of the growing concerns

with insurance. More today than ever before companies are subject to being

sued by their members for injuries incurred in their workout facilities. The

other big issue has to do with contract law in that many companies are

ambiguous. The meaning of ambiguity is that companies often try to cover

loop holes in the contract. It raises the question was it done on purpose? If this

is the case, how can you prove it? There are no real significant government

regulations on the exercise side of training facilities; however, the Food and

Drug Administration (FDA) controls the distribution of supplements on the

nutrition side. Technology in the fitness industry is constantly improving on

already existing products. Differentiation of these products is not profound

enough to cause facilities to change from the existing nautilus equipment. The

trends do need to be monitored from time to time and change is something

that will happen but only in time.

© Ability Facility, LLC, 2004

 13

Competitors

The competition offers relatively the same products, from the types of

nautilus equipment to free weights. Some gaps include not having enough of a

particular machine to meet customer’s availability needs and wants. This means

the time factor as well as being able to exercise a certain muscle group in a

particular way with a certain machine. Competitors are Bally’s Total Fitness,

Gold’s Gym, Fit Works and other large fitness chains all across Ability Facilities’

geographic segment. Not only does Ability Facility differentiate itself by having

wrestling mats; but also, they provide a personable service. By personable, Ability

Facility looks to create long lasting relationships with their clientele. The physical

trainers go out of their way to help you achieve your exercise goals. The

determinants of price include the services of a personal trainer, dietitian or a

combination of a nutrition plan and workout plan that would guide you towards

your fitness goals. These are luxuries that most competitors do not offer, but

Ability Facility does.

The chart below this paragraph lists Ability Facility’s message relative to

their major competitors along with whom the target audience is and then explains

why their strategy is superior. Ability Facility is unique and differentiated from its

competitors that create curiosity. All of the other three competitors offer different

messages and targets which betters their strategy in their direct segments. This

chart shows that the competition is indirect. Direct competition is not a major

factor because geographic location is a significant player in achieving market

saturation.

© Ability Facility, LLC, 2004

 14

Company Names Message Target Strategy is better

Ability Facility Differentiation Athletes No one else offers wrestling mats, extras
Competitors
Bally's low-cost solution to fitness non-athlete The best route without luxury
Fit Works Cardio the quick way Workforce Convenient time frame
Gold's Gym Competitiveness Power lifters Clear, concise segment
Competitors such as Bally’s Total Fitness have the image as the low cost

convenience center that gives the opportunity to have a personal trainer. As for Fit

Works, they have the image of the place to get cardio fitness that caters to those

people who squeeze in a quick workout before work, during lunch or even after

work. Lastly, Gold’s Gym, caters to the power lifting and bodybuilding markets.

In the competitor vs. competitor outlook, the strength of the competitors

at this point is name recognition. The weakness of my competitors is that they do

not differentiate themselves virtually at all. The customer vs. competitor outlook

strength is that customers are able to choose which fitness center or training

facility to workout at. The buying power is held in the customer’s hands. The

weakness is that customers show loyalty to those brands they know and trust

which means the experience of the chain stores will be hard to overcome. The last

relationship is the market vs. the competitor. The strength for the competitor

relative to the market is once you have incurred the start-up costs the variable

costs per month are not extraordinarily large. The weakness for the competitor is

that every once in awhile, they are going to need to update, maintain and process

the nautilus equipment. The capacity at any given point as far as the number of

© Ability Facility, LLC, 2004

 15

people in Bally’s for instance is 200; whereas, Ability Facility’s capacity will be

near 300.

Economy

Business is affected by interest rates, Gross Domestic Product (GDP) and

the various consumer indexes. When interest rates are down people generally

spend more of their disposable income. When interest rates are high people spend

less on their wants and that may include joining a gym in the worst possible

scenario. The facts on industry numbers show that exercise is a high priority in

many people’s lives so regardless of fluctuations they will still pay for the use of

our equipment, accessories and the service we provide. GDP measures all the

tangible products produced so the lower GDP the higher businesses must charge

given a lower demand for products. The higher the GDP is the better for the

consumers because businesses can afford to run sales and increase purchase

volume even more. The most detrimental measure is the consumer confidence

index. This statistically measures how optimistic a consumer is about the

economy as a whole and measures their spending and saving habits around the

number. The consumer confidence index is based on current conditions and future

outlook. These are the major business risks that are taken into account most often

when making decisions; however, few consumers are that picky when it comes to

wants which in their minds is something they need. The only concern that may

exist is that of zoning requirements. Statistics on places where natural disasters

occur are also an important factor to consider. The area of Southern New York is

not near any high risk natural disaster areas.

© Ability Facility, LLC, 2004

 Marketing Plan

Overall Strategy

The Ability Facility distinguishes itself in entering a market that we can

offer a wide range of fitness activities in. Olympic training facilities are limited to

their targets based on location; and Ability Facility is no different. What is

common is that the lifestyle of the target markets is all health conscious people.

The quality of are workout equipment is not so much improved compared to

everyone else but rather differentiated in the extras we offer. Some of the extras

we offer include wrestling mats and gymnast equipment to name a few things.

Our customer service is raised above everyone else because of the Total Quality

Management (TQM) strategy initiated. The price of personal trainer services is

included in our membership fee whereas for a majority if not all competitors

charge an additional fee. With all the stress training brings, we want to provide the

most convenience, so we have a membership identification card that can be

swiped for entry 24 hours a day. The computer software has a query tracking

system which determines the twenty percent of customers which are most

profitable. We plan to advertise and promote the Ability Facility through sporting

venues such as gymnastics meets, track and field events and of coarse wrestling

tournaments in the geographic area that we are segmenting to. We will also

promote through various publications including magazines and newspapers. Later

considerably close to the time of the Olympic Games, we plan on getting sponsors

to run press releases.

 17

Within our geographic location, we plan on gaining and then keeping loyal

customers through the extras we offer along with great customer service.

Uniqueness that catches the customer’s eye will bring people out of curiosity.

Once they have their first initial experience they will be hooked into all that is

available to them. The marketing mix we have allows us to gain name recognition

as well. Another way to get name recognition out in the industry is through trade

shows and possible strategic alliances. Logically the statistical results show

greater sales near the time when the Olympics begin.

Sales Strategies

The Ability Facility’s position in the market is not apparent as it is a new

start-up with a focus around building Olympic athletes for the United States. The

company image that Ability Facility holds dear is the extra mile is within the

reach of customer service. This extra mile refers to how the physical trainers work

with your time commitments allowing you to choose the time that is most

convenient to you. Also, Ability Facility wants to be seen as differentiated from

any other fitness center because they add non-conventional methods of getting

and staying fit to all the conventional ways. The non-conventional amenities

include the wrestling mats and gymnast equipment that competition lacks.

The pricing strategy that Ability Facility will use is market share pricing.

A significant and logical determinant is cost. The reality is that luxury does not

exist without a cost. Many people feel the need to exercise on a daily basis so they

will generally pay a little more; therefore, the pricing is not that sensitive.

However, there are always going to be some customers that will leave because

© Ability Facility, LLC, 2004

 18

they have a limit in the price that they are willing to pay. Being that Ability

Facility offers luxury service, the likelihood of losing customers due to price

increases is limited. The reasoning behind this is that customers see the value

added with the services we offer. The position of price is also important and the

best method would be price skimming. When the time is right even the segment of

people that do not want to pay more will eventually see the price decrease into

their price range. Added benefits are given to customers who pay their

membership up front in full. Typically they would receive two free months. The

membership is $40 per month but if paid in full the two free months is a value of

$80 they would save. Also, the customer would receive free day passes to invite

friends in an effort to increase the customer base. The other pricing option used is

segmented for a concentrated market. That market is the geographic segment that

lives in the dorms and trains year round.

The Ability Facility is a single retail unit currently but there is always a

possibility to expand depending on growth in sales and further market analysis.

The ease of entering and exiting Ability Facility is really convenient in that the

file system is all electronic. The customer has twenty-four hour access with a

membership swipe card. The sales strategies are going to be direct sales. The

future holds possible personal trainer services outside the recreational center.

Where a personal trainer would actually come and show exercises that you can do

without weight or few weights from your home.

The clothing lines offered are manufactured through Cliff Keen athletics,

whom of which have been strong supporters of wrestling for many years. The

© Ability Facility, LLC, 2004

 19

merchandise is sold as retail in the lobby of the facility. We are a retailer that has

teamed up with General Nutrition Centers (GNC) to offer supplements and both

low carbohydrate and protein bars. Other companies we teamed up with include

Pepsi who now owns Gatorade.

Advertising and Promotion

The Ability Facility advertises in many sporting magazines where their

profiled targets would be reached. Other promotional areas are offering a free trial

visit. This is to build positive relationships with prospective clientele while

tracking demographics. The results for Ability Facility are that they differentiated

themselves in a niche within the larger whole of the fitness market. The computer

software allows Ability Facility to be paperless; also, it makes tracking customers

easy by placing them in a database. This will show what customers purchase

goods as well as which customers use the facility the most. Knowing this

information we can give them discounts for every new member they can recruit

by word of mouth. We will purchase lead lists as well as create them. We plan on

purchasing leads from key magazines that we run advertisements in including

Wrestling USA, Gymnast Today and Runner. The leads we create will contain

both hot and cold leads which are determined by responses to a survey that is

filled out after their one free trial visit. The sales reps accounting for the most

sales will deal with the cold calling while the other representatives will work with

the hot leads. Anyone in between will be mixed into the contacts database. The

advertising budget is 10% of quarterly sales. The greatest cost to Ability Facility

will occur around the months preceding the Olympic Games. The higher sales will

© Ability Facility, LLC, 2004

 20

compensate for the increase in cost of additional promotions. To limit costs near

the time of the Olympics, the public relations committee will be working

diligently to receive publicity.

Public Relations

The Ability Facility’s public image in the eyes of the media is an Olympic

training facility where the “average Joe” will receive the same quality customer

service as our nation’s best athletes. The media will be reached by an invitation to

tour our facility and promote that Ability Facility is where many of the United

States athletes train, so why not you to. The best time to due this again is during

the preceding months when the public initially begins thinking about the Olympic

Games yet to come. The publications Ability Facility will reach include sports

focused magazines such as Wrestling USA, Sports Illustrated and men’s and

women’s health and fitness magazines. Those would be the primary places;

however, customer feedback will help us determine which types are attracting our

targets and which are not. The main events that we would advertise at include the

large national wrestling tournaments, gymnastics competitions and track and field

events within the geographic segment. The Ability Facility’s slogan will be placed

on billboards sponsored by Pepsi, featuring Gatorade. For example, Ability

Facility’s motto is, “An effort today gives results your way [so train, work and

win].” Then Gatorade adds to the motto by saying, “Quench your effort today by

staying hydrated your way…Drink Gatorade.”

© Ability Facility, LLC, 2004

 21

© Ability Facility, LLC, 2004