1.Project summary
The goal of the project is to open a specialized boxing center in a city with a population of more than 500,000 people to provide sports and fitness services and make a profit. The business idea is to create and operate a commercial boxing club aimed at all population groups of any age, starting from 5 years old. The format of the institution will refer to the so-called “white collar boxing” (boxing for white collars), which implies the adaptation of professional boxing for ordinary people and affordability. Club services will include group and individual boxing and kickboxing classes, from one-time training sessions to sales of annual subscriptions.
Investments in the opening of the club will amount to 3,620,000 rubles. Source – own funds. The payback period of the project is 16 months.
| Key financial indicators of the project | |
| Discount rate, % | 20 |
| Net present value (NPV), rub. | 11 195 720 |
| Net profit of the project*, rub. | 227,000 – 550,000 |
| Return on sales, % | 11.36 |
| Payback period (PP), months | sixteen |
| Discounted payback period (DPP), months | eighteen |
| Profitability Index (PI)% | 3.09 |
*with club attendance of 200-300 people per month and an average bill of 3600 rubles.
2. Description of the industry and company
In recent years, boxing has been increasingly adapting to mass demand and opening its doors to non-professionals. The popularity of boxing clubs for middle-class citizens is increasing, as evidenced by the opening of more and more clubs and boxing centers in large cities of the country. It is believed that white collar boxing originated in the 80s in New York, where tournaments for office workers who sought to get emotional release in the ring began to be regularly held. White collar fights became so popular that in 2001 the International White Collar Boxing Association (IWCBA) was formed to establish clear rules and monitor the competition. Today there are more than 1500 clubs around the world, where anyone can try himself as a boxer, regardless of his age and status. Unlike professional clubs, the goal of these centers is to provide a boxing venue as an alternative to fitness. A person, attending classes, keeps himself in good physical shape, increases stress resistance and more easily endures all the hardships of life.
The purpose of this project is to open a specialized boxing center in a city with a population of more than 500 thousand people to provide sports and recreation services to the population and make a profit. The business idea is to create and operate a commercial boxing club aimed at all population groups of any age, starting from 5 years old. The format of the institution will refer to the so-called “white collar boxing” (boxing for white collars), which implies the adaptation of professional boxing for ordinary people and affordability.
The boxing club will be located in the central area of the city, close to large business centers and educational institutions. The club will operate on a daily basis: from 8:00 to 22:00 on Mon-Fri. and from 9:00 to 21:00 on Sat. – Sun. The total area of the club will be 250 square meters. meters.
Boxing classes will be conducted by professional coaches with sports achievements and sports categories (CMS, MS). The owner of the business will act as the manager of the club, part of the management and administration responsibilities will be transferred to the full-time administrator. Employees whose work is not related to making a profit (accountant, cleaner) will work for hire.
The legal form of activity will be an individual entrepreneur. The OKVED code for this business is 93.12 Services provided by sports clubs. The simplified taxation system (USN 6%) will be chosen in the forms of taxation.
3.Description of services
Boxing club services will include group and individual boxing and kickboxing classes, from one-time training sessions to sales of annual subscriptions. Under the guidance of experienced trainers, functional training, boxing and kickboxing training will be held. An indicative price list is presented in Table. 1. To ensure an advantage over competitors, emphasis will be placed on the professionalism of the trainers’ staff, the quality of service, and the affordability of services.
Table 1. List of services
| No. | Name | Description | Cost, rub. |
| Group adult training (16+) | |||
| Subscription for 3 months | Subscription for 3 months of group training | 9000 | |
| Subscription for 6 months | Subscription for 6 months of group training | 14 000 | |
| Subscription for 12 months | Subscription for 12 months of group training | 22 000 | |
| Package for 8 workouts | Attending 8 group workouts (1 month) | 3 600 | |
| Pack of 12 workouts | Attending 12 group workouts (1.5 months) | 4600 | |
| Group training for children (5-15) | |||
| Subscription for 3 months | Subscription for 3 months of group training | 8000 | |
| Subscription for 6 months | Subscription for 6 months of group training | 12 000 | |
| Subscription for 12 months | Subscription for 12 months of group training | 18 000 | |
| Package for 8 workouts | Attending 8 group workouts (1 month) | 2700 | |
| Pack of 12 workouts | Attending 12 group workouts (1.5 months) | 3 500 | |
| Personal training | |||
| 1 workout | 1 individual training | 1000 | |
| 10 workouts | 10 individual workouts (2 months) | 10,000 | |
| Other services | |||
| Visit to the boxing gym | Visit to the boxing gym (1 month) | 4000 | |
| One-time workout | One-time workout | 400 |
No special permits or licenses are required to provide such services. The activities of the institution will need to be coordinated with Rospotrebnadzor and Rospozhnadzor.
4.Sales and marketing
The target audience of boxing will be citizens with an average income level of various categories of the population. During the classes, groups of different ages will be formed, including children’s groups (5-9 years old, 9-15 years old) and groups for adults. A separate group, if there is an appropriate specialist, is planned to be created for girls and women. At the stage of preparation for the opening, work will be carried out to attract customers through social networks and pre-sale of subscriptions. On the first day of work, an open day will be held with master classes and drawings of certificates for free access to the club for a certain period.
The main channel for attracting new club members will be the Internet. The desire to sign up for sports is not like the impulsive purchase of clothes or food. A potential client has an idea of what he wants and seeks to find out more information about the sports sections he is interested in on the Internet, compare the prices of several clubs. Therefore, information about the services of the boxing center, prices, trainers and contact details will be posted on the website. According to the Yandex.Wordstat service, the request for “boxing section” is made 12,000 to 26,000 times a month, while there are many more requests that are similar in meaning (about 50-60 thousand). The leaders in terms of the number of requests are Moscow and St. Petersburg (3205 and 1245 requests “boxing section” as of April 2016), followed by Nizhny Novgorod, Yekaterinburg, Rostov-on-Don, Novosibirsk, Krasnodar, Voronezh, Samara and Kazan (170-338 requests). Taking into account related requests, the indicators increase by 2-3 times. At the same time, most of those who want to sign up for boxing are fixed from August to October after the end of the summer vacation season. In autumn, the peak of sales of fitness club subscriptions is recorded, so it is most expedient to open a club in August-September.
The main methods that will be used when promoting on the market will be:
– contextual advertising in search engines;
– maintaining groups/accounts in social networks;
– outdoor advertising (signboard);
– advertising in the media (at the opening stage);
– handout advertising (business cards, flyers).
In the process of activity, the management of the club will proceed from the principles of expanding the services provided, increasing the number of permanent members of the club, as well as improving the quality of service. To implement the first task, a search will be made for new partners of the club, including large employers interested in purchasing subscriptions in bulk. To implement the second, special seminars, master classes and other events for staff will be held under the guidance of invited experts. The management of the club will contribute to the creation of a trusting family atmosphere in the establishment with customer-oriented service. Attention will be paid to all the subtleties of work, from maintaining the general discipline of employees and creating a loyalty system,
5.Production plan
The location of the club will be the central area of the city with a large number of office and retail buildings (business center). The club will operate on a daily basis. Working hours from Monday to Friday – 08:00-22:00, weekends and holidays – from 09:00 to 21:00.
The club will be located on a rented area of 250 sq. meters. The boxing club will have two sports halls for competitions and training, administration, a locker room, a wardrobe area and a bathroom with a shower. It will take 1.8 million rubles to repair the premises, and 1.2 million rubles to equip it. Among other things, the room will need to be equipped with a ventilation system. More equipment costs can be seen in Table. 2.
Table 2 Equipment Costs
| No. | Name | price, rub. | Quantity, pcs. | Cost, rub. |
| one | Supply and exhaust ventilation system | 420 000 | one | 420 000 |
| 2 | Boxing ring | 250 000 | one | 250 000 |
| 3 | simulators | 190 000 | one | 190 000 |
| 4 | Equipment for training (pears, bags, etc.) | 120 000 | one | 120 000 |
| 5 | Office equipment, computers | 90 000 | one | 90 000 |
| 6 | Furniture for administration and reception | 45 000 | one | 45 000 |
| 7 | Plumbing | 35,000 | one | 35,000 |
| eight | Dressing room equipment | 20 000 | one | 20 000 |
| nine | Other | 30,000 | one | 30,000 |
| Total: | 1,200,000 |
The entrepreneur will take over the duties of the club manager. Also, at the initial stage, 5 staff positions will be required, including an administrator and four trainers (payroll, see Table 3). Bookkeeping, security and cleaning services will be transferred to third parties for a contractual payment. In the case of organizing competitions on the basis of the club, additional employees may be involved.
Table 3. Staffing and payroll
| No. | Position | Quantity, pers. | FOT, rub. |
| one | Administrator | one | 30,000 |
| 2 | boxing trainer | 3 | 30,000 |
| 3 | kickboxing coach | one | 30,000 |
| Total: | 150 000 | ||
| Deductions: | 45 000 | ||
| Total with deductions: | 195 000 |
The main income of the boxing club will be formed by the sale of subscriptions, additional – payment for one-time visits and individual lessons. Provided that on average one client will pay about 3600 rubles for services. per month, then if there are 200 regular customers, the net profit of the club will be 227,000 rubles. with a revenue of 720,000 rubles. This mark is planned to be reached at the initial stage (1-4 months). At the same time, the number of permanent clubs can subsequently be increased to 300 people, which will make it possible to count on profits of up to 550 thousand rubles. The club’s expenses will include: rent – 200 thousand rubles, payroll with deductions – 195 thousand rubles, advertising – up to 45 thousand rubles, other expenses (utilities, accounting, cleaning, etc.) – 23 thousand rubles
6. Organizational plan
Responsibilities for the management of the club will be assumed by an individual entrepreneur, who, together with another administrator who is subordinate to him, will form an administration link. The activities of the administration will include the solution of all organizational issues, document management, personnel management, scheduling, marketing promotion and development of social networks, the search for new partners, negotiations with the landlord, and conflict resolution with clients. Boxing trainers, who conduct group and individual training, will act as a production link.
7. Financial plan
Starting investments in the project will amount to 3,620,000 rubles. Investment cost items are given in Table. 4.
Table 4. Investment costs
| No. | Cost item | Amount, rub. |
| Investments in real estate | ||
| one | Premises renovation | 1 800 000 |
| Room equipment | ||
| 2 | Purchase of equipment | 1,200,000 |
| Intangible assets | ||
| 3 | Site creation | 70 000 |
| 4 | Launch advertising campaign | 150 000 |
| working capital | ||
| 5 | working capital | 350 000 |
| Total: | 3,620,000 |
The financial indicators of the project in terms of revenue, cash flow, costs, tax deductions and net profit are given in Appendix 1. The conditions adopted in the calculations were: the average bill for services is 3,600 rubles. achieving a sales volume of 720,000 rubles. for 4 months of work (200 clients), annual growth in the number of regular customers for 5 years (up to 300 per month).
8. Evaluation of the effectiveness of the project
The calculations made allow us to say that the project to organize a boxing club is a profitable business that can pay for itself within a short time (see Table 5). At the same time, the load indicators taken in the calculations are approximate and can be significantly increased if competent work is carried out to attract customers at the preparatory stage, which will positively affect the indicators. In conditions of weak competition, prices for services can change both downward and upward without significant impact on the level of demand.
Table 5. Project performance indicators
| No. | Indicator | Meaning |
| one | Discount rate, % | 20 |
| 2 | Net present value (NPV), rub. | 11 195 720 |
| 3 | Net profit of the project*, rub. | 227,000 – 550,000 |
| 4 | Return on sales, % | 11.36 |
| 5 | Payback period (PP), months | sixteen |
| 6 | Discounted payback period (DPP), months | eighteen |
| 7 | Profitability Index (PI)% | 3.09 |
*with club attendance of 200-300 people per month and an average bill of 3600 rubles.
9.Risks and warranties
A description of the key risks of the project and protective measures are presented in Table. 6.
Table 6. Assessment of project risks and measures to prevent their occurrence or their consequences
| No. | Risk | Probability of occurrence | The severity of the consequences | Prevention measures |
| one | Difficulties with recruitment | average | average | Posting information about vacancies on several sites, offering favorable working conditions |
| 2 | Growth of competitors / loss of clientele | average | average | Development of loyalty systems, customer-oriented service, revision of the price offer, hiring highly qualified personnel |
| 3 | A sharp drop in the solvency of the population | low | low | Reducing costs, developing loyalty programs, reviewing pricing policy |
| 4 | emergency, cataclysm | low | high | Use of fire and burglar alarms, insurance |
| 5 | Seasonal drop in demand for services | average | average | Providing discounts, selling annual subscriptions, creating a financial airbag |
10.Applications
APPENDIX 1
Production plan and main financial indicators of the project in a five-year perspective