Cost/Profitability Analysis – Business Plan pt.2

 Image by: Scott Maxwell

This is an example of Cost/Profitability analysis. You need this to create a successful business plan.

D. Cost/Profitability Analysis:

Fact: Fitness and Recreational Sports Centers annual revenue in Canada is 3.329 Billion dollars.

Fact: Population of Canada 35.16 million people. Ontario 13.6 Million (38.68% of Canada).

Fact. Canada’s GDP (Millions) 1,893,759. Ontario, 695,705 (36.75% of Canada)

Fact. Population of Toronto is 2.503 (18.4% of Ontario)

Assumption # 1. We assumed that Ontario represents 50% of the annual revenue based on highest GDP, 3rd

highest density, highest population, and a more health conscious population.

50% of 3.329 Billion is 1.6645 Billion

Assumption # 2. We assumed that our location, ‘Young and St Clair’, represents 1/3 of our ward, because the

radius size of our target represents 1/3 or the area.

Population of our Target Area: 2,933 People

Fitness Area of Applied Strength:……………………. 1250 SQ FT

Competitors: Good Life Fitness:………………………8500 SQ FT

Balance Personal T:………………………………………..2400 SQ FT

Ultimate Athletics:………………………………………….1470 SQ FT

Total……………………………………………………………..12370 SQ FT

 

Market Share

Proposed Size / Total size in square footage of competitors + Proposed Size (FORMULA)

1250 SQ FT / 12370 SQ FT + 1250 SQ FT = 9.18% Market Share.

Market Potential

Population: 18,355: 3 = 6118 People

To get a more accurate number we will calculate the market potential for Toronto first.

Toronto Population / Ontario Population = 2.503M / 35.16M = 7.12%

7.12% * $1.6645 Billion = $118.49 potential Million Dollars

Our Market Potential

Target Market / Toronto Population = 2933 People / 2.503M

=.0011717938%

=.0011717938% * $118.49 Million = $ 138,271.67 potential dollars.

Applied Strength has the potential to make $138,271.67 annually in their market/target area.