Circuit Fitness Importing is a start-up business that has been formed as an Oregon registered LLC. The company has been formed to become the exclusive importer of the Wega Corporation’s innovative Esercitazione Diritta (Exercise Standing) fitness equipment. Circuit Fitness Importing is poised to receive the exclusive license to sell this patented equipment, already very popular in Europe, in the U.S.A.
The American fitness market, a smaller subset of the sporting goods industry has sales of $5.8 billion. The last 10 years has seen significant spikes in membership and usage of this equipment. Americans, on a societal level are beginning to realize that their unhealthy eating habits and lack of physical activity can have a profound impact on their lives. Consequently, fitness participation is booming. Circuit Fitness Importing has identified three customer segments that are particularly attractive:
- Distributors– This distribution layer accounts for 60% of the sales of fitness equipment. These sales occur primarily to independent fitness clubs.
- Health Clubs– This is another huge customer segment that is expected to have $565 million in sales for Year 1.
- Vertical Markets– These non-fitness industry facilities have over 30,000 facilities.
Esercitazione Diritta, Wega Corporation’s flagship fitness equipment is a patented technology applicable to strength fitness equipment. All other strength fitness equipment manufacturers have users placed in a seated position when performing the exercises. Esercitazione Diritta, instead, has the user stand. This is advantageous for several reasons. First, this strengthens lower body muscles that hold the body upright. It also strengthens central motor skills needed to maintain an upright position relative to the offsetting forces generated from the weight lifting. Esercitazione Diritta is protected patented technology which provides Circuit Fitness Importing a competitive edge. Additionally, Esercitazione Diritta is built on casters allowing the units to be moved as necessary.
Circuit Fitness Importing will be led by Max Peruggio. Max has achieved numerous accomplishments that will provide him with the necessary skill set to execute on this well researched business model:
- Project manager for civilian and military projects in excess of $100 million.
- Accomplished sales manager, boosting sales of a design firm 10-fold in two years.
- Fluent in Italian and English.
- Successful importer of Italian goods into the U.S.A.
The combination of a exceptional products, the exclusive license to import the patented technology and an experienced sales and project manager will allow Circuit Fitness Importing to quickly gain market share. Revenue for years two and three have been forecasted to reach $1.0 million and $1.2 million respectively. For the same years net profit will be 6.0% and 6.98%.
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Circuit Fitness Importing’s mission is to offer the finest, most innovative fitness equipment to the U.S.A. market. Circuit Fitness Importing will ensure all of their customer’s expectations are exceeded. By only offering the highest quality product with premium support, Circuit Fitness Importing will become the premier fitness equipment importer.
1.2 Keys to Success
- Provide value to customers with the best, most innovative product.
- Develop strong relationships with distributors, anticipating their needs.
- Employ strict financial controls to ensure profitability.
- To become the sole U.S. importer of the revolutionary new Esercitazione Diritta exercise system.
- To generate revenue of $1 million within two years.
- Achieve profitability within the first year.
Esercitazione Diritta is a new and unique type of strength training fitness equipment. Unlike all other strength fitness equipment where you sit when you are doing your exercise, Esercitazione Diritta (Exercise Standing), as the name implies, has the user stand. Standing while doing exercises has many advantages.
- Develops a proper equilibrium with the central nervous system. This is accomplished because in addition to the user having to develop force to move the specific weight exercise, a standing posture must be maintained while exerting the force.
- In addition to working the specific muscle group, the lower body is being strengthened by having to use muscles to stand.
- Esercitazione Diritta replicates natural movements which are made throughout our daily life.
- Forcing the user to stand to perform the strength exercise enters the component of cardio into the workout.
All of the Esercitazione Diritta machines are commercial quality, crafted in Italy of the highest grade steels. In addition to being made to handle constant use, they have casters, allowing them to be easily moved anywhere in the club. Esercitazione Diritta has machines for a wide variety of body zones and muscle groups including:
- chest press– offers a choice of vertical or horizontal hand positions while the user performs forward extensions.
- tractions– the handgrips of the station are brought down to shoulder height just in front of the shoulders.
- shoulders– vertical lifts.
- legs– distances may vary between the feet. This station can perform squats, abductions, kicking motions and flexions of the hip.
- gluteus– while resting on the elbows and the arms, the user places the instep of one foot on the bar and pushes backwards.
- rowing– all of the muscles in the upper back are testing while avoiding the overloading that is is often associated with free movement.
- triceps– a variety of hand positions are possible to find the most natural movement.
- arm curl– arm muscles flex upwards while the legs are positioned one in front of the other.
Esercitazione Diritta is organized into a circuit of machines. Within a 45 minute period, a user can efficiently and effectively use all of the machines in a circuit for a complete workout.
Wega has received multiple international patents on their unique Esercitazione Diritta system of standing while performing strength exercise. Esercitazione Diritta is currently distributed in Europe and the manufacturer is interested in distribution into the U.S. fitness market. Wega has requested a importation proposal in the form of a business plan to choose a sole U.S. distributor.
Max Peruggio, founder of Circuit Fitness Importing has been requested by Wega to submit a proposal for the creation of an exclusive U.S. importer of Esercitazione Diritta. Because of Max’s Italian heritage, language skills, and past importation experience Wega is very interested in working with Max and Circuit Fitness Importing. It sounds as if the “proposal,” this business plan is a mere formality due to the good match of Max’s skills and Wega’s need for an importer.
Circuit Fitness Importing will be led by Max Peruggio. Max was born in Milan, Italy and received the equivalent of a U.S. law degree as an undergraduate education. Max’s career began early when he began to work for a design firm called Cootorcoli. At the age of 19, Max joined the firm and within two years was promoted to the head of sales. In this position Max increased sales from $1.5 million to $17 million. After this position Max moved onto project manager positions for numerous Italian civilian and military companies including being responsible for the following projects:
- Azzura III & IV– the first kevlar hulled boat to compete in Sailing’s World Cup. ($27 million)
- Terranova Antarctic Project– the Italian Antarctica based scientific research center ($54 million)
- Patriot Missile System– the missle defense system ($156 million)
Following these exciting projects max met an American woman and moved to the United States. Once in the U.S, Max started his own importation company for gourmet coffee beans, recognizing the absence of high quality Italian beans in America. After four years, Max transformed the importing company into a coffee roasting company and began roasting his own beans for sale using a decades old family recipe that uses blended recipes for the beans. Max pursued his dream of roasting coffee for nine years until he sold the business, looking for a new opportunity.
Through a close family friend, Max was told about the innovative Esercitazione Diritta equipment that Wega was producing and met with Wega representatives at a trade show in hope of developing an importing relationship. The Wega owners were so impressed with Max that the next month they flew him to Italy to check out the factory and meet more in depth with him. This was the beginning of Circuit Fitness Importing. Max is able to offer his Italian heritage and language skills which are invaluable when communicating with an Italian manufacturer. Max will also be able to leverage his superior project management skills as well as his Italy to U.S.A. importation skills to ensure that Circuit Fitness Importing is a success.
7.1 Personnel Plan
- Max– business development, marketing, sales
- Support– customer, training, operations (2)
- Repair technician (1)
- Sales agents (2)
Circuit Fitness Importing has been formed as an Oregon LLC with the express purpose of importing the finest fitness equipment from Italy into the U.S. The company was founded by Max Peruggio in January of this year.
2.1 Start-up Summary
Circuit Fitness Importing is in the process of opening an office in anticipation of receiving an exclusive importing contract from Wega regarding their innovative Esercitazione Diritta exercise equipment. The office is located in Portland and requires the following equipment and service provider expenses:
- Three computer workstations with the following equipment:
- three Microsoft Office licenses
- broadband Internet connection
- two laser printers
- Peachtree Accounting
- Fax machine
- Three sets of office furniture
- Large desk and chairs for meeting room
- Two line phone system
- Mobile phone
- Attorney fees for contract generation and LLC formation
- Accountant fees for accounting system set up
- Website development set up fees
- Brochure creation and printing
Market Analysis Summary
Circuit Fitness Importing has identified three distinct customer segments that will be targeted for sale of the fitness equipment:
- Fitness Clubs
- Vertical Markets
The following section provides detail regarding each respective segment as well as background information regarding the industry, a large growing industry. The competition that Circuit Fitness faces is also provided.
4.1 Market Segmentation
Fitness equipment is distributed in the U.S. through distributors or direct from the manufacturer/importer. The majority of sales are done through distributors. Distributors typically carry one (sometimes a couple of) vendor for each type of equipment (strength, cardiovascular, etc.) and this explains the large number of distributors in the U.S. Manufacturers will typically provide an exclusive geographic area for each distributor to sell the products.
Large corporations (whether fitness clubs, franchises, corporations, etc.) that have significant buying power are often able to sidestep the distributor layer of the distribution channel by buying direct from the manufacturer. This means that Circuit Fitness Importing will have distributors as well as end consumers as target customers.
As previously mentioned, distributors sell the bulk of fitness equipment. Data is sparse regarding distributors because the various industry associations (the primary association being IHRSA [International Health, Racquet and Sports club Association]) serve manufacturers more than distributors. The key information is that 60% of the fitness club market is composed of independent clubs, all of which purchase their equipment through distributors. The remaining 40% is composed of chains, franchises, etc., some of which purchase from distributors, some of which exert their superior buying power and purchase direct from the manufacturers.
Health clubs are the second largest market of fitness equipment behind home fitness equipment (of a lower grade and price point relative to commercial equipment). The 1990s saw a significant increase in health club membership, 76% or 30.6 million people from 1997 to 1999.
In addition to significant increases in membership, health clubs have seen a shift in their customer demographics.
The demographic shifts are significant. Fitness clubs were once populated primarily by 18-34 year olds who were interested in body building. As Americans have made a paradigm shift they are now making the cognitive connection of fitness and health. Consequently, there is far greater cross section of the population having fitness club memberships. This is evidenced by the huge increase in club membership for over 55 year olds who are intuitively more interested in overall health than just fitness and strength. Additional demographics includes:
- Active, fitness oriented people are more concentrated in urban areas.
- 22% of club members are considered enthusiasts, evidenced by exercising 50 days a year at home, 96 days at a club.
- In metropolitan areas, 16% of the people exercise at clubs versus 23% at home.
- 5% of the club market is female-only facilities.
Sales of fitness equipment to clubs in 1998 was approximately $445 million. The projected figure for 2003 is $565 million, representing a 21% increase. The typical useable life of the fitness equipment in a fitness club (variances include maintenance, initial quality, and use) is 7 years.
Another market that will be attractive to Circuit Fitness Importing is the vertical market which includes non-health club environments such as hotels, hospitals, apartment complexes, corporations, universities, and senior citizen centers. This relatively new market is growing fast as consumers are increasingly valuing convenient access to exercise facilities.