Financial Feasibility Report on Aquva Spa - Analysis of Fi.

Hamdard Institute Of Managemen Managementt Sciences Analysis of Financial Statements Report

ANALYSIS OF FINANCIAL STATMENTS REPORT ON THE FINANCIAL MARKETING PLAN OF

AQUVA SPA & FITNESS CENTRE Submitted to: MR. S.M. SHUJA RIZVI Submitted by Group Six 1) Mr. M. Ashar Jameel 2) Mr. M.Faisal Panawala

(MEN-2200344) (MEN-2200649)

Submission Date: 16th September, 2007

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TABLE OF CONTENTS S/ NO.

DESCRIPTION DESCRIPTION

PAGE NO.

(i)

LETTER OF TRANSMETTAL

04

(ii)

PREFACE

05

(iii)

ACKNOWLDEGMENT

06

1

EXECUTIVE SUMMARY

07

2

FINANCIAL ANALYSIS

07

2.1

FINANCIAL OBJECTIVES

07

2.2

BREAK EVEN ANALYSIS

08

2.3

SALES FORECAST

08

2.4

MARKETING EXPENSE BUDGET

08

3

4

5

MARKET SUMMARY

09

3.1

MARKET NEEDS

10

3.2

MARKET TRENDS

10

3.3

MARKET GROWTH

10

MARKET STRATEGY

11

4.1

MISSION

11

4.2

MARKETING OBJECTIVES

11

4.3

TARGET MARKET

11

4.4

POSTIONING

12

4.5

MARKETING MIX

12

4.6

MARKETING RESEARCH

12

SWOT ANALYSIS

13

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nd

2 September. 2007 Mr. S. M SHUJA RIZVI Hamdard Institute of Management Sciences Hamdard University, City Campus Karachi. Subject: LETTER OF TRANSMITTAL TRANSMITTAL Dear Sir, With all due respect we are thankful to you for giving us a worth-while opportunity to have the new experience which is not only fruitful in our present but also will help us in future because of its practical nature and application. Enclosed find herewith a term report of Analysis of Financial Statement. This report is prepared on estimating Financial Marketing Plan for a Spa & Fitness Centre named “Aquva Spa & Fitness Centre”. In order to make this report, we tried our level best to get as much information from concerned people as we can. Report is submitted for your kind perusal please.

1. M. Faisal Panawala

____________________

2. Muhammad Ashar Jameel

____________________

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PREFACE To fulfill the requirement of our course outline of “Analysis of Financial Statement”, we both students combined together were asked to make a group and prepare a financial plan based report on Spa & Fitness Centre. We chose the area of Shara–e–Faisal to start our project.

Before starting the report, we worked on several factors that influence the plan of constructing the health centre; we matched the standard of construction that was maintained by other health resorts. So it would be easy for us to analysis the cost, competition around & service criteria.

During preparation of this report, we both as a group members completely cooperated with each other. Each of us tried our best to incorporate and implement all the aspects taught to us in the course.

Now, the decision about the authentication and standard of the report is in the hands of our respected teacher Mr. S.M Shuja Rizvi and we hope that our report will receive a favorable consideration at our teacher’s hands.

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ACKNOWLEDGEMENT

First of All we are grateful to Almighty Allah, for his blessings that enabled us to understand and undertake the opportunity for completing this report with the right approach and sense of direction.

We wish to express our sincere thanks to Mr. S.M Shuja Rizvi the respected teacher for giving us an opportunity to work on a practical approach project and giving us the guidance to complete the same.

We would also like to thank all the friends, colleagues and concerned persons like trainers, fitness centre owners, health resorts etc. who helped us in the preparation of this report.

Special thanks go to all of our supporters who contributed in the formation of this report in order to make it they tried their level best and each member collected as much information as they can.

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1. Executive Summary

Aquva Spa & Fitness Centre will serve Karachi-area residences & businesses, helping them to become more productive, healthy & fresh while lowering businesses costs with innovative Wellness programs and strategies to serve them. At Aquva Spa & Fitness Centre (ASFC), we tie your smartness & productivity directly to the health care issue. We believe that traditional approaches to the current health care crisis are misdirected. These traditional efforts wait until after you have been stricken with illness or injury, and then pay for the necessary treatments. Our approach, which emphasizes prevention and good health promotion, is much more proactive. The state of Pakistan’s healthcare healthcare crisis, coupled with current demographic changes, threaten to not only aggravate the crisis, but further corrode health as Well. For us these environmental factors coupled with the local competitive situation signal a favorable opportunity in this market. We feel the time is right for Aquva Spa & Fitness Centre .

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2

Financial Analysis

This section will offer a financial overview of Aquva Spa & Fitness Centre as it relates to the financial activities. We will address Break-even Analysis, sales forecasts, expense forecasts, and how they link to the marketing strategy

2.1 Financial Objectives 

Decrease customer acquisition costs by 4% every two quarters.



Lower the cost of service delivery by 1% a quarter.



Holding spending, as a percentage of sales, at a steady rate.

2.2 Break-even Analysis

Monthly Units Break-even

250

Monthly Revenue Break-even

Rs.625,000

Assumptions:

Average Per-Unit Revenue

Rs.2,500

Average Per-Unit Variable Cost

Rs.500

Estimated Monthly Fixed Cost

Rs.500,000

2.4 Marketing Expense Budget 2007

2008

2009

TV Ad Campaign

Rs. 1,250,000

Rs. 8,000,000

Rs. 8,000,000

Pamphlet Production

Rs. 350,000

Rs. 300,000

Rs. 300,000

Website

Rs. 250,000

Rs. 200,000

Rs. 200,000

Other

Rs. 100,000

Rs. 100,000

Rs. 75,000

Total Cost

Rs. 13,200,000

Rs. 8,600,000

Rs. 8,575,000

Percent of Sales

38.00%

15.00%

14.00%

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3.

Capital Structure

Classification of Equity & Debt

Capital of Sponsors

‘ Rs. in ‘000

Mr. Ashar Jameel

5,000

Mr. Faisal Panawala

5,000

Borrowed Capital First Meezan Murabaha Al-Jazaeer Investment

‘ Rs. in ‘000 10,000 5,000

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Income Statement of the project over 5 years

Rs. In '000

2007

2008

2009

2010

2011

Corporate Clients

17,500

20,000

22,000

22,000

21,000

Individual Clients

9,000

12,000

10,000

9,500

9,000

Total Revenues Cost of Sales

26,500

32,000

32,000

31,500

30,000

Payroll Room Expenses Telephone Expenses Dining/Parties Fitness/Spa/Gym Repair & Maintenance

7,000 5,000 1,000 4,000 1,000 1,000

7,000 5,000 1,000 4,000 1,000 1,000

7,500 5,000 1,000 4,000 1,000 1,000

7,500 5,000 1,000 4,000 1,000 1,000

8,000 5,000 1,000 4,000 1,000 1,000

Utilities

1,000

1,000

1,000

1,000

1,000

(20,000)

(20,000)

(20,500)

(20,500)

(21,000)

Gross Profit Marketing Expenses

6,500

12,000

11,500

11,000

9,000

TV Ad Campaign Web Site Pamphlet

1,250 250

800 250

800 250

800 250

800 250

100 1,600 2,500 (4,100)

75 1,125 2,500 (3,625)

50 1,100 2,800 (3,900)

50 1,100 2,800 (3,900)

50 1,100 2,600 (3,700)

2,400

8,375

7,600

7,100

5,300

0

(2,000)

(2,000)

(2,000)

(2,000)

Profit before Taxation

2,400

6,375

5,600

5,100

3,300

Taxes (10%)

(240)

(638)

(560)

(510)

(330)

Profit after Taxation

2,160

5,738

5,040

4,590

2,970

Revenues

Total Cost of Sales

Total Marketing Expenses Administrative Expenses

Operating Income Finance Cost

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4. Market Summary

Aquva Spa & Fitness Centre possesses good information about the market and knows a great deal about the common attributes of the prized and loyal customers. This information will be leveraged to better understand who is served, their specific needs, and how Aquva Spa & Fitness Centre can better communicate with them. The business model has been well received and marketing is especially important to maintain growth and market penetration. In addition to offering fitness facilities for Karachi corporations & residence, Aquva Spa & Fitness Centre' main activity is the recreation Spa Wellness programs. The basic market need for our corporate clients is the reduction of corporate costs and the increase in employee efficiency & to provide them & our individual customer Spa facilities to relax and health facility that can be achieved through long-term Wellness programs.

4.1 Market Needs

Aquva Spa & Fitness Centre is providing their customers with a health care cost management program for Individuals who seek relax environment to be taken care off & Corporate that will increase employee productivity and decrease overall business costs. We seek to fulfill the following benefits that are important to their customers. We will offer a totally customized solution for each company as well as to individuals. Our results-orientated strategy will improve a company's bottom line in order to attract and maintain customers. While we strive to address all of the customer's needs, the reality is that they must indeed provide significant value for the companies themselves in order to grow their market share.

4.2 Market Trends

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Recently there were widespread reports about an impeding health crisis & obesity. Pakistanis, relative to their Asian counterparts have higher incidents of obesity. To a large degree, this is correlated to Pakistani’s unhealthy diet of oily, fast food, and generally poor food choices, especially fried foods. There have been two significant market trends in the last five years. 1. Increased usage of fitness facilities on behalf of individuals. 2. Exercising and working out has become a more mainstream activity in Pakistanis lives over the last decade. Market Growth Trend

4.3 Market Growth

Important demographic changes are taking

60

place in Pakistan that point to the importance

40

of worker productivity in coming decades. The chart shows explosive growth in the health wellness program industry. The last

50 30 20 10 0 2005

2006

2007

2008

2009

five years has seen a 9% growth rate and the next five years are expected to achieve a 10% growth rate.

5. Marketing Strategy

Aquva Spa & Fitness Centre will begin by targeting small- to medium-sized businesses in the downtown Karachi area. The first task is to convince senior executives of the benefits and needs of wellness programs. This will be accomplished by aggressively pursuing interaction and relationships with business professionals who would profit from using this service.

5.1 Mission

Aquva Spa & Fitness Centre is a health service that helps businesses and individual to attain one of the greatest gifts of all “good health”. Personal gains, such as improved selfesteem and self-motivation, combined with measurable benefits & advantages.

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5.2 Marketing Objectives 

Generate a 10% yearly increase in sales.



Increase market penetration every quarter.



Continue to cultivate ASFC image as the premier long-term wellness program provider.

5.3 Target Market

The market for Aquva Spa & Fitness Centre is not particularly segmented, as potential customers include all downtown businesses that offer their employees some type of medical benefits, are experiencing escalating health care costs, and wish to more effectively manage those costs. ASFC will also target individuals who want to relax and want to take a breather in a friendly environment to use our spa & fitness facilities.

5.4 Positioning

Aquva Spa & Fitness Centre will position them selves as the most effective wellness strategy and program developer.

This positioning will be supported by statistics

indicating an increase in you productivity and a decrease in business operation expenses from the implementation of corporate wellness programs.

5.5 Marketing Mix

Aquva Spa & Fitness Centre marketing mix is comprised of the following approaches to pricing, distribution, advertising and promotion, and customer service. 

Pricing- Prices for using Aquva Spa & Fitness Centre services are comparable to

those of higher-end fitness centres. The prices reflect the quality of the equipment and service. 

Distribution- This will occur both at the company's worksite or individual

customers’ place as well as at ASFC facilities. 

Advertising and Promotion- Printed material, presentations, advertising in

industry specific journals, TV ad and a comprehensive website will be used.

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

Customer Service- Aquva Spa & Fitness Centre will operate on the principle that

it is imperative to achieve total customer satisfaction if the business is going to succeed. 5.6 Marketing Research

Two types of market research were used when we were collecting market research. 

Focus Group – The first type of research was focus groups. The focus groups

were collections of seven to nine people who were asked a series of predetermined questions with the responses recorded and discussed among the group members. 

Questionnaires – were used to collect market information from perspective

customers.

The questionnaires were submitted to a total of 100 HR

professionals. The response rate was 43, higher than expected. This research introduced several valuable perspectives that ASFC was not yet privy to. 6. SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing Aquva Spa & Fitness Centre. 6.1 Strengths o

Results-orientated approach to attracting and maintaining customers.

o

A well-researched, detailed health wellness program that is long-term in focus.

o

Intensively trained staff.

6.2 Weaknesses o

High costs associated with customized, personal service.

o

The inability to work on a high volume business model.

o

The costs of attracting a large corporate client.

5.3 Opportunities o

Participation within a growing market.

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o

The large increase in clients that follow with the acceptance of Aquva Spa & Fitness Centre Corporate Fitness’s program by a single company.

o

The ability to leverage future quantitative analysis that supports the contention that long-term wellness programs have a significant, positive impact on a company's bottom line.

5.4 Threats o

Lack of immunity to an economic downturn.

o

Potential competition from larger, well established competitors.

o

A change in society where the individual begins to take far more responsibility for his/her health maintenance.

6.3

Spa Services Overview

Advanced skin care, therapeutic body treatments, nutrition, exercise, and stress management are major components of our services. Bridging scientific research and advanced technologies with medical spa therapies originating from Europe and Asia, we are committed to providing exceptional services in a medically supervised spa. Our services include, acupuncture, nutrition, massage therapy, dermatology, exercise, stress management, and weight loss. We offer preventative and restorative therapies that improve your, health, appearance, lifestyle choices, and well-being.

6.4

6.5

Keys to Success are: 

Marketing services to companies and individuals.



Recruitment of experienced managerial talent.



Dedication and hard work of the founders.



Raising productivity.



Lowering overall costs.

Critical Issues

Critical issues faced by Aquva Spa & Fitness Centre are:

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1. Sign up a sufficient number of medium-sized companies. It is more cost effective for us to service a couple medium-sized companies than many small companies. 2. Continue to drive down the costs associated with serving individual

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Financial Feasibility Report on Aquva Spa - Analysis of Fi.

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