A Public Limited Company (PLC) can sell its shares on the Stock Market, while a Private Limited Company (LTD) cannot. Unlike a sole trader or a partnership, the owners of a Limited Company are not involved in the running of the business, unless they have been elected to the Board of Directors.
To become a limited company, applicants have to submit a Memorandum of Association which states the business' name, address and main purpose. It also describes the liability and amount of capital invested. The internal workings of the company including the number of directors, how they are elected and what their roles are described in The Articles. This also describes how profits will be divided.
When the Memorandum of Association has been submitted the Registrar of Companies issues a Certificate of Incorporation which allows a limited company to begin trading. A Public Limited Company first has to raise the sufficient capital, through selling its shares to the public. It has to produce a prospectus, which explains how the business is run, and what it intends to do in the future. Once all this has been done, the Registrar issues a Trading Certificate, which allows the newly formed PLC to start trading.
This is potentially good for my future business as I have rights to my assets. If my business goes bankrupt then I will not lose all my possessions. However as I said above, If I make my business into a Limited company then I will not be able to sell shares over the market.
(4) Public Limited Company
I might however choose to run my business as a PLC, which will give me advantages, like I will be able to sell shares over the stock market. This might be a god option for my business, but one thing I have to remember is that in every single option there are pro’s and con’s.
Advantages
- Raise large amount of capital from share issue.
- Benefit from economies of scale, e.g. bulk buying, cheaper borrowing.
- Produce goods at lower unit cost.
Disadvantages
- Become too large resulting in poor labour relations.
- Conflict of interest between shareholders and the Board of Directors.
- Possibility of takeover or merger because shares can be bought by anyone.
(5) Franchise
The last option for me is to opt for a Franchise. This will automatically associate me with a big name, such as York Gyms. I could use current household gyms as my choice for my business, which will almost certainly give me a head start. Below are advantages and disadvantage of starting up a franchise.
- Ownership of the business rests with the franchisor
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The may in turn be owned by a larger company or corporation.
Many franchisors own their own outlets and rent or lease (a legal agreement to transfer property for a definite fixed period). The then pays rent to the franchisor. For example McDonalds owns all its outlets.
- Control of the business to a large degree also rests with the franchisor.
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Strict control is kept on lines, packaging, use of the company's , slogans and brand names.
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The franchisor will provide and schemes. · Advertising at national level, and promotional schemes are all in the hands of the franchisor.
- The franchisee will usually have a limited control over the running of the day to day business procedures.
Even though there are a lot of negative sides to becoming a part of a Franchise, there is one advantage which by far outweighs all the disadvantages. This is the fact that you will automatically be a recognised, due to the fact that you are part of an already established business.
Which type of Ownership shall I opt for?
Upon researching business ownerships, balancing and weighing the pros and cons. I have found that a business in the public sector is best for me as I can sell shares on the stock market, which boosts capital for my business.
First of all, as I mentioned above I will go for a business ownership in the public sector. Into more detail, I will choose the Franchise option. I have chosen this, because I will be known from the moment my business starts and public awareness is a powerful tool in any business’s arson. The more people that are aware of by business, mean’s more people which will trust my business and use it instead of others.
What Franchise should I choose to be a part of?
Now I have chosen to become a franchisee, but to what Franchise should I be part of? I have researched into successful health centre franchises. The gym I would most likely choose to become part of a franchise is L.A Gyms.
I have chosen this as it is already a well respected and greatly established amongst the other gyms. Quite a lot of people like to train at L.A Gyms, because they feel that they can trust a ‘branded’ gym.
Here is some background on L.A gyms:
LA FITNESS health clubs are the most innovative and vibrant operator of health and fitness clubs in Europe, with over 40 sites. LA FITNESS health clubs offer quality at affordable prices with an emphasis on fun and relaxation.
Typical facilities
• Mixed gym
• Swimming pool
• Exercise studios
• Spa, steam room and sauna
• Personal training
• Lounge area and bar
• Car parking
• LA Fitness Kids
No. of UK health clubs
• 43 clubs in the UK
• 20 health clubs in and around London
Health club membership etc.
Includes options for Gold, Silver, Corporate, Premier, Partner and more.
LA Fitness health clubs online
Important Factor – Location
Location is vital to a business; below I have listed some location possibilities. I will asses each factor and see which is the best possible choice or way to go for my business.
Government Grants
Many parts of the UK suffer from high unemployment The Government offers grants (i.e. financial assistance) to firms if they are prepared to re-locate their factories etc to designated areas (e.g. the North East of England). By accepting these grants firms can lower their business costs and make themselves more competitive in the market place.
Availability of skilled workers
If a firm does re-locate to a new area, it will need to ensure that there are skilled workers it can employ. If there are not skilled workers available, it will either have to encourage its existing workers to move to the new area, and / or train new workers.
Availability of suppliers / access to customers
It may be very important for a firm to have close proximity to its suppliers. If it decides to move to a new area it must ensure that the suppliers within the locality can satisfy its needs. Otherwise it will have to use suppliers outside of the area. This could cause it many problems. It may also be very important for the firm to have close proximity to its customers. Will it have this if it moves the new area?
Transportation / communication facilities
Easy access to major road networks, international airports, and highly effective communication systems are all very important for any business. Does the new area offer these facilities?
What Shall I choose?
Having read through all the factors worth having when setting up a fitness centre, I do believe that it is so important to make the centre available to as much customers as possible. This at the end of the day will make me a healthy profit. I conclude that location is all important when setting up a business. The closer I have my business set up next to
My Business Objectives
My business objectives can be broken down into long term objectives and short term objectives. General business objectives are what the business wants to achieve. The most important objective is to make a profit, meaning receive more money than you put into the business.
Long Term Objective
A long term goal is something that you plan to achieve in the future. For example you as a company set your self a target of becoming one of the market leaders before the year 2012. My long term business on the other hand is to become the most popular fitness centre in my competitive area before the year 2010. This I feel gives me an incentive to strive to get the best out of my business.
Short Term Objective
A short objective is a goal you want to achieve in a shorter period of time. For example, I want to shift more than 67,000 CD’s before the end of the fiscal year. My short term objective will most obviously be about settling in to the market. It is to attract the attention of people and make them become aware of my business and I can tell this through the amount of membership cards that are taken. So I would want at least 100 gym members in my fitness centre in the first month.
Market Research
1) Is there a market for my fitness centre?
Before I start my business I need to know whether there is a market for my fitness centre. I know that there are a lot of fitness centres just like my potential fitness centre. I already know that there are lot of people who want to exercise due to the growing worry of obesity. (This is information I have enclosed with market research.)
2) What is the competition for my market?
The competition in my market lies in various market leaders such as York Gyms and Fitness First. My competition is pretty tough as they have been leaders for a long time and have a national awareness of their gyms.
3) What type of Customers will come to my gym?
The type of customers that will come to my gym are people who simply want to lose weight or just to have fun in their recreational time. They are usually people who are in the middle class and above, this shown in my primary and secondary research.
4) What facilities should I provide for my customers?
The facilities that I should provide for my customers should be up to date and easy to use, as people generally like that. My facilities should be of high quality and match, if not better those of my competitor.
5) What prices should I charge my customers?
I should charge a reasonable price. My price should be in the same price range as my competitors, preferably cheaper than my customers.
Interview with business person
In order to enhance my knowledge of fitness centres and such I have conducted an interview with a representative for the company L.A gyms. I will questions from this type of person, because his knowledge of fitness centres and how they are run is far greater than mine.
Me: Good Morning, I will begin by asking what factors were in place when setting a fitness centre?
Representative: “First and foremost it was whether or not people wanted or needed another fitness centre in their area and whether they would use it or not. Location played a big part in it, being close to a tube station really helped, because people can travel to the centre with a certain degree of ease.”
Me: How many people joined up on the first day?
Representative: “To tell the truth, not many people joined up on the first day. As you would expect people were simply curious of what the centre had to offer, they were just assessing the place and asking “is this the right place for me?” It was basically an induction day for all.”
Me: What age group generally use your gym?
Representative: “I would say mostly people in their mid twenties, but as you know this is generalisation, you do get the odd exception, for example we have a 72 year old member of our gym.”
Me: What does your centre offer to consumers?
Representative: “Our centre caters a lot for the health and well being of our consumers. We offer swimming pools, all kinds of gym equipment, yoga classes and a safe playhouse for younger children. Also we have one of very few restaurants which boast a “Fat Free” menu.”
Me: How often do you advertise?
Representative: “We don’t tend to advertise all too much, however we do appear in health magazines quite regularly, but we feel that we are well known as it is, and notice that a lot of other fitness centre’s don’t advertise too much as well.”
Me: What ways are there to join up?
Representative: “There are a lot of ways to join up with L.A gyms, you can on the spot in a centre itself (on account you have identification), you can phone us and join, or join up online, which has proved to be quite successful. We like to keep registration broadly accessible for all.”
Me: Are there people employed to help or give support to consumers at the centre?
Representative: “We employ a lot of people to give our consumers the best help and advice as they can get. We hire highly qualified personal trainers. We also have very well trained life guards, whom patrol the swimming pools at all times. We also have people who look after kids whilst parents use our facilities.”
Me: Do you get a lot of “Family Members” joining up?
Representative: “We do get quite a lot of family members, the reason for this is that we boast playhouses for children under the age of 9 and multi sports gyms for children aged between 10 and 14. So our centre caters for a broad range of people.”
Me: Thank you very much for answering my questions.
From conducting this interview I have learnt that successful centres and gyms a like usually cater for a broad age group. It is better to put extra “playhouses” and mini gyms for kids to play in as their parents use the facilities on offer. I have also learnt that the business starts slowly, like on the first day you are not expected to have a boom in the amount of people who want to sign up with you. You treat it more like a settling down period and a time to show off the various facilities of the centre.
Collecting more data - Questionnaire
I have decided to make up a questionnaire and make potential consumers and consumers of gyms a like to answer the questions. This way I have data on both sides of the business.
Questionnaire
This is a questionnaire I have designed to back up my secondary research. I have made most of the questions closed, as open questions do not tend to give me data that I can plot on to a graph.
Questionnaire
Thank you for taking part in this questionnaire. Your answers will help this fitness club become even better!
1) Gender – Male { } Female { }
2) Age – 15-18 { } 19-24 { } 25-35 { } 36-46 { } 47-57 { } 58 and above { }
On a scale of 1-5, with 1 being poor/strongly disagree and 5 being excellent/strongly agree, choose which best answers your question.
3) Are you happy with your current weight? – 1 { } 2 { } 3 { } 4 { } 5 { }
4) How regularly do you exercise? –
Once a week { } More than once a week { } rarely { }
5) How much time do you spend a week on exercise? –
More than an hour { } Less than an hour { }
6) Do you like the facilities in other gyms? – 1 { } 2 { } 3 { } 4 { } 5 { }
7) Do you think that they should be improved? – 1 { } 2 { } 3 { } 4 { } 5 { }
8) Do you think gym memberships are overpriced? –
1 { } 2 { } 3 { } 4 { } 5 { }
9) Where do you live? –
South London { } North London { } East London { } West London { } Outside London { }
10) How far from your place of residence is it to your nearest gym?
Less than a mile { } More than a mile { }
Continue Overleaf.
If you answered “No” in question 3 then please answer the questions below. If answered “Yes” then you have completed the questionnaire.
11) Do you think that gyms will make you lose weight fast? –
1 { } 2 { } 3 { } 4 { } 5 { }
12) Do you feel that gyms have adequate facilities in order for you to lose
1 { } 2 { } 3 { } 4 { } 5 { }
13) Do you feel comfortable in gyms when trying to lose weight? –
1 { } 2 { } 3 { } 4 { } 5 { }
14) Do you feel that healthy food is generally more expensive than “junk food”? – 1 { } 2 { } 3 { } 4 { } 5 { }
15) Do you feel that healthy food is generally less accessible than “junk food”? – 1 { } 2 { } 3 { } 4 { } 5 { }
Thank you for completing this questionnaire, your answers are greatly appreciated.
