Laser Quest with Arcade, bowling lanes, food area etc.
Looking at this I have decided that this would be a good business to open in Northwich because I think it would be very popular. However I could not be a sole trader I would have to be in a partnership to raise the capital and run such a big multiplex.
Internet Café
I do not think this would be such a good idea to have in Northwich mainly for the reasons stated above, lots have people already have the Internet, there are lots of cafes, take-aways etc. In Northwich.
Italian Restaurant
I think an Italian Restaurant wouldn’t be a good idea because there are lots of other food places in Northwich, and Northwich isn’t the place where most people go out to eat, so it would probably be a flop.
Entertainment Superstore
This may be a possibility, and I am going to now choose 3 of these 6 ideas.
The 3 ideas I am going to pursue with are:
- Outdoor Activity Centre.
- Laser Quest with Arcade, bowling lanes, food area etc.
- Entertainment Superstore.
I think that the business I am going to pursue with is the leisure outdoor activity centre, as it had the best pros and cons, and will attract more attention than the others.
Research
Now that I have chosen one idea I will need to do research to find out what aspects of my business should be changed and what should be done so that the public will come and enjoy my leisure centre. I will do this in various ways, I will make a questionnaire, do some primary research by going into town and going into estate agents for location decisions (my questionnaire is also a form of primary research), and I will do some desk research on the internet for once again trying to find land and finding out about other leisure centres in the area i.e. Moss farm.
Primary Research
The first piece of primary research I am going to do is to do a questionnaire, I will ask 15 people, and then collate my results and make graphs for each question and decide on what I will do depending on the question and what the response to the question was.
Outdoor Activity Centre Questionnaire
Tick the circle to place your answer.
I then gave this questionnaire out to 20 people and recorded their results, this is what I got from the survey.
Question 1:
This shows that every person that did my questionnaire knew where moss farm was. This is good because most of my other questions are related to moss farm, so if people didn’t know where or what it was, they wouldn’t have been able to answer my questionnaire properly.
Question 2:
This shows that out of the 20 people, more people thought Moss farm was not a good leisure centre, this was relieving because I am going to be opening a new leisure centre, and if they thing that Moss Farm is a bad leisure centre, then more people might come to my new leisure centre, especially if it has better facilities.
Question 3:
This shows that more people would want a leisure centre with better facilities, so this helps me knowing what to add to my leisure centre, and this also tells me that if I had better facilities than Moss Farm, more people would come to my leisure centre because they want a leisure centre with better facilities, and that’s what my leisure centre will have.
Question 4:
By looking at this I can see what the priorities of the people are, and the options they wanted most will definitely be added, and others may or may not depending on the budget, I can also see what will be popular and what won’t, this question has given me good responses from which I can decide what to put in. Things that definitely will be included are a Multi-sports hall and a basketball court.
Question 5:
This is a very positive response for me as it shows that more people would like a new leisure centre, rather than not having a new leisure centre. This is good because a am hoping to open a new leisure centre, and this is showing me that the public would find it a good idea.
Question 6:
This graph is telling me that more people would prefer to come to my leisure centre, rather than Moss Farm. This is good because t is telling me that my leisure centre will be more popular than my competition, meaning I will not be drove out of business by them.
Question 7:
This is also very pleasing because it shows that I will be able to charge higher prices and still have plenty of people come to my leisure centre, because it shows that more people will be willing to pay higher prices for higher quality equipment, I will need to charge higher prices because my equipment is better and more expensive and my recreation centre will cost more to run.
Question 8:
This graph tells me that the best place to locate my leisure centre would be on the outskirts of town or in Hartford, either way it basically tells me that as long it is not miles away from Northwich or it isn’t in the centre of Northwich, it doesn’t matter where I put it, but, if I wanted to please the public most, then I would place it on the outskirts of town.
Question 9:
This graph is supposed to tell me whether or not I should make a bar and chill out area, it is not very helpful as most people said they weren’t bothered, it probably will depend on my capital or the demand from the public after the leisure centre opens.
Question 10:
These results show me that most of the public would like the leisure centre to sell merchandise, things like rackets, football boots etc.
The next bit of research I did was I visited moss farm and interviewed the manager and asked him a few questions.
Interview
I went on a trip to moss farm to talk to the manager about their pricing strategies, how many staff they have etc. And this is what I found out:
- I have found out that the average amount people pay when they visit the leisure centre is £3, but it is run by vale royal, my leisure centre will be private so I will have to charge £5, but my facilities should be better.
- I have found out that on average, around 1000-1500 people visit the leisure centre a day, which is good, but hopefully I will be able to attract more customers because of the better facilities I have.
- I found out that they have employed over 50 staff, and because of my larger centre, im guessing I will need to employ around 75-100 staff, to keep everything in order, and keep people happy.
- I also found out that the busier months were the summer months because more people come out around that time to do activities and sports, so he recommended I take advantage of this by adding in special deals to get more customers.
Location Decisions
Building and area
- For my Outdoor Activity Centre, I would not want it too be located in the town because there would be lots of kids around so it would be dangerous and it would be to busy, I would want it in a quite place, that is easy to find with lots of space.
- For an outdoor activity centre on the scale of mine, it would cost a lot of money to start up, and would need a lot of land, that is why I have decided to start my business up just outside of town, because inside the town, the land would be hard to find, and if I did find it, it would cost a lot of money to start up. Whereas just outside the town, land would be easier to find and would be cheaper.
- The only dis-advantage about having it outside the town is that there is no passing trade, meaning that if it was in Northwich, people walking buy would see it and maybe come in to have a look, in other words lots of people would see it. However outside of town, not many people would be passing by, so not many people would see my business.
- I will need only minimal storage space for selling equipment for people to buy and perhaps food or drink, so that is not going to be an issue.
- Most of my stock will be stored on display to the customers, as there won’t be much, but not all as some will have to be stored elsewhere.
- There will be no large items for sale.
- I will not need a staff room as all staff will be working and they can have rests etc. In the bar or other areas of the leisure centre.
- I will need toilets as well as changing rooms, showers, and perhaps saunas and things in the swimming pool area.
- It is going to be a big place with lots of people coming and going at all times, so a large car park will be needed with a well functioning entrance and exit system.
- There is not much competition of other leisure centres in Northwich, the only other leisure centre is moss farm, and I believe that will not pose much threat and it wouldn’t matter if I was next door to it or on the other side of town, however it might be useful to be near moss farm, so all the local people that go there will come to my leisure centre instead.
- Security would probably be a good idea in a big leisure centre as there will be many areas that cannot be used at night so the will need to be locked up, and there will be lots of valuable equipment inside so I will need CCTV to watch this, another thing that will need to be watched is vandals and people scuffling which will bring down the popularity of the centre, so I will have to keep them out.
- Because of the size of the centre, I will need to buy land so I will not be looking at properties. And as I said I am going to buy land as it will take a while for my leisure centre to come into profit, so I will not want to be forking out money every month or week.
- I am going to need to install lots of new equipment such as all weather pitches, astro-turf pitches, and I will be needing to build my centre so I will need to hire workers for that and get all the equipment to build it.
- And as I am buying my land I can do what I wish with it, and I will be building the whole thing from scratch do I can build whatever I want.
- I will not need a display as I will have nothing to display.
- My business as it is a leisure centre with both outdoor and indoor areas ,it will be creating a lot of noise ,but that is another reason I will be placing it outside the town, in a quiet area so there will be no-one there to bother.
- I do not believe my business will be creating a lot of litter
Property
I am now going to find 3 areas of land that I can buy or rent and analyse each one, then choose one that would be best suited to put my leisure centre on.
Product
I am going to make a leisure centre with all the normal things a leisure centre has, but also with a rock climbing wall and quad bikes, and much more.
For the leisure centre I will need to buy in all the appropriate things that a leisure centre needs, I will also need to buy in all the quad bikes and all the safety equipment it will need, I will also need all the harnesses etc. For the rock climbing wall. So I will be buying in all my equipment from a supplier.
My leisure centre’s USP (unique selling point) has to be its quad biking, rock climbing and just generally better and more modern equipment, as moss farms equipment is old and shabby, and mine will be brand new, and good quality, for example, the squash courts at moss farm are rubbish and so are the changing rooms, mine is going to brand new, and it is going to be serviced all the time to keep it at a good quality.
The only things that are going to be packaged are items I will be selling, whether it will be food (which actually will probably be sold from a vending machine), or equipment I will be selling to the public (equipment relative to the things they can do at my centre) all of these things will be pre-packaged.
The things I will be selling might be top brand names, however, because of where my centre is (Northwich!) I doubt I could use the names to promote my business, and they wouldn’t promote a little leisure centre in Northwich if they are a worldwide organisation.
Competition
As I am doing such a large scale business, I don’t have many competitors. The only real one is moss farm, which I have already spoken about, it is old and hasn’t got many things, and the things that you can do there aren’t very high quality, and also have a lot of problems. The only other things I can think of are LA.Fitness and Dave’s gym, these will not pose much of a threat as Dave's gym is just a gym, and LA.Fitness is very expensive, and is also just a gym with a swimming pool, so this also will not pose much of a threat.
How close will they be to my location?
Moss Farm will be different to my leisure centre because it does not have as much things to do as mine does, it is also older and has older equipment, however, one thing it does have is customers and the customers trust, so I will have to advertise my leisure centre a lot, and perhaps put a deal on when I first open my business.
Moss farm does exactly the same service as I am going to be doing, they also host rugby games and football games for local leagues etc. So I will have to give people a chance to do this at my leisure centre.
As I said moss farm doesn’t have much different to any other leisure centre, its USP is that it is the only leisure centre in the area, and it is council run, so everything is quite cheap to do there.
Moss farm are well established within the community, it is very popular and lots of people like it, but people are also complaining about the quality of things there, it is old and wearing and the council don’t have enough money to renovate it, so a new leisure centre not run by the council would be better.
I have never seen moss farm advertise at all, mainly because they don’t need to they are in an easy-to-find place, in amongst the local community, I also don’t think there would be much to advertise as they are a normal leisure centre.
I will compete with them by making a better and newer leisure centre, with better facilities, and more facilities, it may cost a little more because I will be running it not the council, but if people ant better quality things then they will probably be prepared to pay the extra 50p or so.
Promotion
Types of promotion I will consider are newspaper advertising as this wouldn’t cost too much and lots of people by the Northwich guardian so this would be helpful. Another thing I could do is hand out leaflets around the town as I then know that people know about it. I would consider advertising on a vale royal website or something as well so people would see it when they go on. And the final thing I would consider doing is advertising in local sports shops or something, as people going in would see it and think they might have to come to my leisure centre and test it out.
Types of promotion I will not be considering are TV and radio advertising as this will cost way too much money, I will also not be putting out billboards etc. As they will also cost too much and it wouldn’t help because I don’t think I could advertise a leisure centre on a billboard and if I did there isn’t much space for many in Northwich any way.
Promotion plan
To promote my business I will probably be handing out flyers in the town, and putting leaflets in the tourist information centre, I may also make a website. I will also be putting on an opening discount sale so things are cheaper to do etc.
When my business gets going I will have to try and increase my customers, I will do this by always putting deals on things to do depending on things like the holidays etc. So in summer I would place a discount on the quad bikes or swimming pool etc. This should keep the customers coming.
Then when my business is established, I will have to somehow keep my customers happy, I will probably do this by adding new attractions to my leisure centre and perhaps even having competition days, so say one Saturday I might have a football tournament on, and get all the local people to get teams and play in a tournament, the same goes for all other sports, this should keep my customers happy.
Ownership
Different types of Ownership
Sole Traders- A sole trader is a business that is both owned and controlled by one person. This person takes all the responsibility, and makes all the decisions, the sole trader can however hire staff.
Advantages for my business
- I own all the business so I get all the profit.
- I make all the decisions and no-one else can question them.
- I will have total control of the business.
- I will be able to open and close the centre when I want, although it will probably open morning till night every night.
Disadvantages for my business
- I will have unlimited liability and as it is a very big complex that will need a long-term loan from many banks, so paying this back if it is a flop will be extremely hard.
- As I will be a sole trader I won’t have much capital of my own to use, although I will be taking out several loans, it would be nice to have enough capital of my own to start-up.
- A leisure centre is a big business and it will be a big responsibility, with all that pressure on just me I could make wrong financial decisions, and I may not be able to cope with all the pressures.
- Because I will be on my own, there will be a lack of continuity, so when I am ill, there will be no-one to run the business, and this will make the public unhappy, and it will stop capital flowing into the business.
Partnerships- A partnership is an agreement between 2 or more people to take joint responsibility for the running of a business, to share the profits and the risks. This means shared ownership, Shared decision making, shared workload, shared profits and shared liability for debts.
Advantages for my business
- The leisure centre will be better run with more people than just me, and it will be set-up easier, and if I properly draw up a Partnership Agreement, then things will run smoothly.
- With more people running my leisure centre, then certain areas can be focused on by the different people, their will be shared workload and shared responsibilities.
- With more owners there will be people with more expertise and better range of ideas, so the business will benefit from that.
- There will be more capital for my business to start-up, expand, build new areas and buy new equipment, this will be better than me taking out more loans, as I will already have a few.
- The biggest advantage for my leisure centre of a partnership is that I will not have to pay everything off myself if the business folds in, then all the partners will have to muck in to pay it off.
Disadvantages for my business
- Even though there are more partners so I won’t have to pay as much if the business folds in, the leisure centre will still have unlimited liability, meaning every partner could lose their houses, cars etc.
- Partners could have different ideas about certain areas of the centre, some may want a new pool, as others may want a new astro-turf pitch, this could cause a dispute and may cause some partners to leave.
- Although it is a partnership my business would still have a lack of continuity, and if one partner died or left, then the partnership would be dissolved and it would have to be set-up again, this could cause the leisure centre to be closed for a while, which would stop capital coming in.
- As there are many partners, each partner will have equal rights, so your decisions may not always be appreciated my other partners and they may not be allowed to happen. On the other hand, partners can make decisions without consulting other partners, this could cause disputer among partners, and in the extreme may cause the partnership and the business to fold.
Limited Liability Company- A limited liability company is also known as a join stock company, because it’s shares or stock are held jointly by a number of people. It is an Enterprise that is established with a separate legal identity from its owners and with limited liability. This means that the company is owned jointly by shareholders, it has a separate legal identity and it has limited liability
Advantages for my business
- If my business fails, myself and each shareholders has limited liability, so they are not risking personal bankruptcy, this will be very helpful to me as it is such a large business, and a lot of money will have to paid back, but with limited liability will not have to pay everything back myself.
- It will be easier for me to borrow money as a limited company because, theses businesses are normally bigger, so their revenue will be higher, so banks will trust them more. This will be helpful because my business will need a lot of money, meaning I will be needing to borrow a lot of money.
- Because I am a limited company and I am able to sell shares, I am able to gain capital quickly and easily. This is also good because I might not even have to take out a loan, or if I did, I could pay the money back easily without eating into my own money, or the businesses money.
Disadvantages for my business
- Before I set my business up there are a lot of legal formalities that have to be carried out, this means I will be losing out on capital from the start.
- Because I will have shareholders I will have to pay out dividend to each one each year, this means I will be losing money, and stopping new additions happening to the business.
- The control is shared because I will have to hire directors, because these people will own quite a lot of the company in shares, they will have a big say in what happens inside the company, this could once again affect how the business is run and stop further expansions etc. To the business.
- Because I will be an owner, I will take the risk of being taken over by other companies and large shareholders, and I would not have a say in what happens this means I would lose everything.
Franchises- A franchise is when a business allows someone to sell its goods or services using its trade marks, brand name, image and system of operation. A fee will be charged for this. A franchise is a way for the franchisee to start a business, this means they have reduced outlay, reduced risk and they have massive popularity from the start, they have an established name, format and product.
Because I am a leisure centre there is no chance of me using a franchise as there are no franchise leisure centres anywhere.
My Decision
Looking at these I have decided that the best choice of ownership for my business would be a partnership with limited liability, so I can have extra capital and I will have limited liability, so a lot of money is going into the business, therefore limited liability will be helpful because I will not have to pay back any loans through personal possessions.
Costs
In the business world there are 2 different types of costs, these are fixed costs and variable costs.
Fixed Costs
Fixed costs are costs that stay the same no matter what the output of the product is or what the economy rate is (prices of things may rise etc). Examples of things that have a fixed cost are:
- Loan Repayments.
- Rent.
- Wages.
- Phone line rental.
- Taxes.
Variable Costs
Variable costs are costs that will change with the amount of output my business has, or with the change in economy rate and prices of items. So if I sell a product at £5 and sell 10, I get £50 however, if I sell 100, I get £500. Also if the price of this item increases because they are on higher demand, then I might be able to sell them at £6. Examples of variable costs are:
- Gas/Electricity bills.
- Prices of Products.
- Phone bills.
- Amount of Stock needed.
- Equipment.
Here is a list of costs that will be I effect in my business:
Break Even
A break even is a prediction of many of the product you are selling you will have to sell to break even (not be in debt or in profit) in a certain time period, here is my break even, providing each person that comes to my leisure centre spends a minimum of 5 pounds, which they should. I work my break even out by
Fixed costs/Contribution (contribution is Price per unit-Variable costs)
Here is my break even:
As you can see my break even point isn’t exactly 8000, it is more likely to be around 7600, however, this means that in 1 month, I will need to take in over 7600 customers to break even, and people may not spend 5 pounds each, so 8000 will be a more realistic amount.
Cash Flow Forecast
Here is a cash flow forecast for my business which lasts for 7 months, to predict the finance for the first 7 months of my business. I wok this out by adding in my cash sales and other income and add them together to make my total revenue. I then add in what I will pay out for stock, wages, electricity and add them together to get my total costs. For profit I take my total revenue and take the total cost off it. Then I to get my balance brought forward, I will add together profit and my balance from the previous month (which will be my loan in the first month) to get my balance carried forward, then my balance brought forward becomes the balance carried forward from the previous month, here is my cash flow:
From looking at this you can see that I will start to make money in June, and the busier months are June and July, because those are the summer months when people tend to do more outdoor activities.
Final Answer
After looking at all the evidence I have gathered, and all the factors I have researched, I can conclude that there is a scope for a new leisure centre in Northwich. I say this because I can see a good opening for my business in that area, as moss farm isn’t very good and I think my better, more advanced, leisure centre will be much more popular, and should take all the customers from moss farm.
