Rock Climbing Gym Business Plan

In recent years, rock climbing has gone from extreme to mainstream. Every year, more and more people are trying this fun, adventurous sport. Igneous Rock Gym plans to take advantage of this rapid growth by being the first and only climbing gym in Igneous.

According to census.gov, the greater Igneous metropolitan area has a population in excess of 350,000 people. People in nearly all demographics can and do climb; therefore, it is realistic to use this figure as a starting point for the potential climbing customer market. The key to Igneous Rock Gym’s success will be to make indoor climbing appealing to the largest cross section of population. This will be achieved through the following means:

• Creating an ultra-safe environment with properly trained staff.
• Making the gym group friendly.
• Providing the new climber with instruction and encouragement.
• Ensuring that the ‘fun factor’ is high in order to generate strong word of mouth marketing.

More and more Americans are looking to pay for experiences rather than just products. Igneous Rock Gym will focus on providing each customer with an experience that will make them want to come back for more. 

Igneous Rock Gym will be a Limited Liability Company, with start-up funding provided in its entirety by the owners, Micah Quartz and Cole Granite. Quartz and Granite bring unique skills to the company with expertise in building design and construction, and over ten years in the climbing gym industry.

Climbing gyms have high start-up costs; however, once built, they enjoy extremely low cost of sales. These high margins will allow Igneous Rock Gym to generate strong profits during its first 12 months of operation. Sales for the first year will be just over $250,000, with a very solid net profit to sales ratio. During the next two fiscal years, profits are projected to increase.  A modest yearly growth in sales is used for these projections. If the fitness gym industry’s growth rate of 10% were used, the profits would be even higher.

1.1 Mission

Igneous Rock Gym’s mission is to provide patrons of all ages a fun, safe environment in which to exercise, socialize, and gain new climbing skills. By focusing on these fundamental qualities, the friendly and knowledgeable staff will create an environment that is welcoming to wanting to try climbing for the first time as well as the experienced climber. 

1.2 Objectives

Igneous Rock Gym plans on achieving three objectives:

1. Sales in the first 12 months of over $250,000.
2. Sales growth of at least 8% in the second and third years of operation.
3. Become the primary center for indoor climbing in the greater Igneous metropolitan area.

1.3 Keys to Success

The success of any climbing gym depends on four key factors:

1. A happy, friendly staff who create an inclusive environment.
2. Skilled route setters that take pride in their creations.
3. Positive word of mouth.
4. Ability to draw in groups.

Igneous Rock Gym is an indoor climbing gym located in Igneous, Oregon.  As the only gym of its kind in the greater Igneous metropolitan area, Igneous Rock Gym will offer bouldering, top-rope, and lead climbing. In addition, Igneous Rock Gym will have trained staff to provide instruction to climbers of every ability level. A major feature of Igneous Rock Gym will be its ability to draw in different groups by providing a unique environment in which to have a party, meeting, or team-building exercise. 

2.1 Company Ownership

Igneous Rock Gym is a privately held Limited Liability Corporation. Cole Granite and Micah Quartz share equal ownership in this corporation. Cole Granite has over ten years of experience in the climbing gym industry. Micah Quartz has experience and connections in the fields of design and construction.

2.2 Start-up Summary

Start-up expenses for Igneous Rock Gym will be $25,000 (see table for details). The largest expense will be from rent during the three-month construction period. 

The climbing gym’s long-term assets will be the key to future business success. Total long-term assets equal $90,000 and include the climbing walls, climbing holds, safety equipment, and floor coverings. Current assets of $2,000 will consist of furniture.

Initial cash on hand will be $23,000.  This figure reflects what is needed to run the business for a minimum of two months with no income.

2.3 Company Locations and Facilities

Igneous Rock Gym is housed in a 5,500 sq. ft. warehouse with 35′ high ceilings. The building is broken down into three zones: 600 sq. ft. of locker rooms, 500 sq. ft. of front desk/common area, and the remaining 4,400 sq. ft. is dedicated as the climbing zone. The climbing zone will include two platforms, at 400 sq. ft. each. One will be used for fitness equipment and the second used for group meeting areas. The building has twenty available parking spaces with additional free parking on the street.

This site was chosen due to its location near the University, city center, and easy access from the growing residential area. In addition, the warehouse has an open floor plan with no need for demolition. Other nearby tenants are long-term leaseholders, and their operations will provide added exposure to Igneous Rock Gym.

Igneous Rock Gym is a full-service climbing gym offering open climbing, lessons, kids’ programs, availability to groups, equipment rentals, and competitions.

In addition, Igneous Rock Gym will continue to look for fresh ways of drawing in new customers and providing new services to existing members. These services may include outdoor guiding, trip planning, yoga, pilates, and equipment sales.

Across the country, indoor climbing gyms have become a popular location for adults and children to exercise and socialize. One of the key attributes of a climbing gym is that a person does not need to have previous climbing experience in order to be a customer. This allows climbing gyms to draw customers from nearly every demographic.

Igneous Rock Gym recognizes the need for a climbing gym in the greater Igneous, Oregon area. A climbing gym is a destination business, therefore it is realistic to include the greater metropolitan area when looking at potential customers. According to the U.S. Census report found on www.census.gov the greater Igneous area has a population of 354,669. 

When looking at the potential market for a climbing gym in Igneous, it is important to analyze the number of children in the total population. Climbing gyms make a large portion of their profits from running children’s programs and hosting birthday parties. 27% of the town’s population is under the age of 18, which compares favorably to other current climbing gym locations.

4.1 Market Segmentation

Igneous Rock Gym will service the recreation and climbing needs for individuals and families in the greater Igneous area.  Customers will be broken into three focused segments consisting of children, college students, and adults 18-44.  It is important to note that experienced outdoor climbers will not be the focus of marketing for Igneous Rock Gym.  This is for two primary reasons.  First, as the only indoor climbing gym in the area, any outdoor climbers wanting to climb inside will naturally gravitate to Igneous Rock Gym. The second reason is that the total population of outdoor climbers is quite small compared to the total population of the area.

Children between the ages of five and 18 represent the greatest potential for revenue. The Igneous area has approximately 70,000 children in this age range. This compares favorably to the nearby metropolitan areas which are currently able to maintain a successful rock climbing gym. The metro area has a total of 52,000 children between the ages of five and 18.

College students are another focus group for Igneous Rock Gym. This is because they tend to do activities in social groups. By drawing in one college student, he or she will often return with one or more friends on the next visit.  Igneous has two colleges. Combined, the college population is at least 15,000.

college segment, in that they are all adults between the ages of 18-44. These are the main patrons of any climbing gym. In Igneous, there are 134,774 people that fit within this age group. This compares very favorably to the metro area, which has an 18-44 population of 119,550.

4.2 Target Market Segment Strategy

Capital Climbing will focus on providing a fun, safe environment for both new and experienced climbers to improve their climbing skills. All ages will be welcome to climb at the gym; however, children will be the major focus of the business.

In a traditional climbing gym the majority of members are between the ages of 18-44. Many of these members pay a monthly or annual membership. These memberships allow them to have unlimited visits to the climbing gym.  This lowers the price down to five dollars or less per visit.  In contrast, children’s programs typically bring in a minimum of $12 per child per two hour visit.  

Igneous Rock Gym will offer several different children’s programs. These will include a group for climbers ages 7-10 who are new to climbing. Another group will be for those 9-13 who are more mature and are able to learn advanced climbing skills. A competitive climbing team will be offered for children 10-18. In addition, Igneous Rock Gym will offer summer climbing camps for children age seven and up. Most importantly, children will be encouraged to host their birthday parties at Igneous Rock Gym. 

By focusing on bringing children into the gym, Capital Climbing, will not only increase current income streams, but will also establish a strong future customer base.  Climbing is often a life-long sport, and the earlier Igneous Rock Gym can bring in a potential climber, the longer they will have him or her as a customer.

4.2.1 Market Trends

Climbing has gone from something done by only a select few to an activity enjoyed by tens of thousands across the country.  Climbing walls are finding their way into public schools and universities, parks, and even on cruise ships.  Advertisements featuring climbers have become more and more prevalent. All of this has led to climbing becoming more of a mainstream activity. Igneous Rock Gym will be uniquely positioned to take advantage of this recent increase in climbing awareness among the general population. 

Igneous Rock Gym plans to take advantage of this increase in climbing awareness by offering introductory classes to all ages of climbers. In particular, Igneous Rock Gym will offer the gym as a place for groups to host both team-building activities and social gatherings. Igneous Rock Gym will position itself as a viable alternative to recreational activities such as bowling and miniature golf, while at the same time, taking people away from traditional fitness gyms.

The climbing industry continues to mature. This maturing has tended to be along the lines of making the sport more accessible to the general population. For example, equipment has improved over the decades to allow a much greater degree of climbing safety. The appeal of climbing is that it is considered an ‘extreme sport;’ however, most people want to limit the extreme part as much as possible. Sport climbing became popular in the 1990s because its pre placed bolts afforded the climber more protection. The climbing gym is the next logical step in this progression.  With padded floors, closely-spaced bolts, and a trained staff responsible for everyone’s safety, patrons have little to fear from their climbing experience.  

The number of climbing gyms in the United States will continue to grow as more and more people seek the thrill of climbing in a safe environment. The popularity of indoor climbing has far from peaked. This can be seen in part by the increase in both the number and organization of climbing competitions. There is even an international movement to make climbing an Olympic sport. 

4.2.2 Market Needs

The Igneous area is in desperate need of a business that can provide a solution to three primary needs. The first is the need for adult recreation and socializing, the second is the need to increase climbing fitness, and the third is the need of parents to find interesting activities for their children. Igneous Rock Gym is set up to fill all three of these needs.  

Our strategy depends on our position as the only climbing gym in the area. Although this gives us an advantage, with fewer direct competitors, it also means we are introducing a new sport to the area and will have a high PR/marketing burden to promote the concept.

We will offer a variety of membership levels and short-term passes, so potential customers can try out the services without having to make an immediate commitment. We will also give special deals to churches, schools, and other groups with children, to create a demand for the climbing experience among young people.

5.1 Marketing Strategy

Igneous Rock Gym plans on leveraging its unique position as the only climbing gym in Igneous to gain early positive PR. In addition, Igneous Rock Gym will capitalize on word of mouth to gain new clients. Occasionally a print ad will be bought in the local paper.

Literature will be passed out at local schools emphasizing the ability to host birthday parties at the gym. Staff members will volunteer at local charities, in order to build strong relationships in the community. Igneous Rock Gym will also build community awareness by being present at local events, such as street fairs.

5.1.1 Pricing Strategy

Igneous Rock Gym’s initial pricing strategy will be based on climbing gyms in other similar markets. This makes the most sense, because after the initial start-up costs climbing gyms have extremely low cost of sales. By using other gyms as benchmarks for pricing, Igneous Rock Gym can benefit from the the learning curve of others.

Group pricing will begin at $100 for up to six people and $15 for each additional person. This will include all equipment, and belay instruction for the designated belayers. In addition, each group will have the option of paying $30 to have an employee spend the entire two hours rental session with them.

Individuals will pay an entrance fee with an additional fee to rent equipment.  The following are prices with the total price with equipment rental in parentheses:

• Day Pass- $12 ($16)
• 10-Visit Punch card- $89 ($120)
• One-Month Membership- $55 ($70)
• One-Month College Membership- $39 ($55)
• Three-Month Membership-$135 ($165)
• Annual Membership- $385 ($435)
• College Annual Membership- $325 ($385)
• Annual Pay Plan- $39/month ($49) 12 month minimum contract
• Family Annual- $625 first two $150 each additional ($725 and $180)
• Family Annual Pay Plan- $70 first two $15 each additional ($80 and $20)

Introductory classes will be $45 and include a week’s membership with equipment rental.  Advanced classes will be offered for $45, but will not include the free week. Those only wanting a quick belay lesson will be charged $12.

Children’s classes will be offered Monday through Friday. One class a week for children 7-10 years old will be $60 for four consecutive weeks. One class a week for children 11-15 will be $225 for three months, and the price will include equipment rental as well as a three month pass to come into the gym during normal business hours.

5.1.2 Promotion Strategy

A climbing gym’s membership growth depends on good word of mouth. This is why groups are vital to the success of a gym, because they bring in people that would not normally try climbing. 

The key to the success of a climbing gym lies in the fact that climbing is both addictive and more fun when done with others. This creates a situation where one member will bring in many other people to try the sport. This leads to new members who in turn bring more people in to try it. 

In addition to word of mouth, Igneous Rock Gym will take advantage of its position as the only climbing gym in the Igneous area to gain access to free press. Television, radio, and print media are constantly looking for new and exciting subjects to bring to their customers. The climbing gym’s uniqueness can be leveraged to create opportunities for press events.

It is also important to approach schools, churches, and scouting groups to educate them on the possibilities of bringing groups to the gym. By showing them the advantages of having field trips and group outings at the climbing gym, many children will be given the opportunity to try climbing. This will lead to more birthday parties and individual memberships.

5.2 Sales Strategy

Igneous Rock Gym will pursue three types of revenue streams:  Groups, individual members, and classes. 

Groups will include birthday parties, boy scouts, church youth groups, and corporate team building. By being the only climbing gym in the area, Igneous Rock Gym offers each one of these groups a unique venue in which to meet. Trained staff will ensure that groups are properly outfitted and trained in order to fully enjoy their time at the climbing gym.  By providing a safe and fun time to customers, Igneous Rock Gym will be able to grow business exponentially as individual group members decide to bring other groups to the gym. This is also an excellent way of driving individual membership sales.

Not every person has the same financial resources. In order to accommodate the most people, different forms of memberships will be offered. These will include day passes, punch cards, one month, three month, annual, family, and college memberships. In addition, annual memberships will be sold on a monthly installment plan with a signed Electronic Funds Transfer (EFT) agreement.

Classes will be offered to those wanting to gain new skills and, more importantly, for children wanting to be part of a weekly climbing group.

Customer service and providing a unique experience will be the hallmarks of Igneous Rock Gym.

5.2.1 Sales Forecast

Sales are based on climbing gyms in similar markets. We expect that numbers will continue to grow significantly in the second and third years of business. Dollar amounts in each category reflect an average of the fee with and without gear.

The first month of business is expected to be slow. The novelty of the climbing gym will cause word to spread quickly and sales to increase rapidly the first couple of months. However, November and December are often slow months, as people try to save money for Christmas. January is typically one of the busier months with people looking for ways to exercise. 

5.3 Milestones

The most important goals and deadlines are shown below in the Milestones table and chart.

Igneous Rock Gym will use a combination of paid hourly staff and volunteers. Cole Granite will use his extensive experience in the climbing gym industry to manage the day to day affairs of Igneous Rock Gym.  In addition, we will hire four part-time, hourly staff members. Volunteers will be used to offset needs in route setting, kids programs, and groups.

The climbing gym industry enjoys a high rate of qualified applicants and volunteers. Potential employees are drawn by the lifestyle and atmosphere of climbing gyms. They also enjoy the added bonus of being able to pro deal equipment at a significant discount. This allows gyms to keep employees happy without having to pay high wages.

6.1 Personnel Plan

Forecasted personnel expenditures are based on the total hours worked each month by the manager and the front desk/instructor employees. Salaries for Igneous Rock Gym employees will be $15/hr for the manager, and $10/hr for the instructor/instructors.

Business hours for Igneous Rock Gym will be noon-10 PM Monday-Friday, and noon-6 PM on Saturday and Sunday.  In addition, employees will work during non-operating hours in order to route set, clean, do general maintenance, and supervise group rentals. 

During a normal business week, a total of 40 hrs will be scheduled for the manager and 91.5 hours combined for the front desk/instructors. 

Igneous Rock Gym sales are projected to grow at a conservative rate of 8% per year. The current gym’s size can sustain this rate for at least 10 years. 

After start-up, Igneous Rock Gym may look to create more opportunities for growth by opening a climbing gear retail shop or small coffee shop within its premises. Funding for this and other possible expansions will be done through loans to the owners. 

7.1 Start-up Funding

Cole Granite and Micah Quartz plan on personally funding the entire start-up cost. Their initial investments of $70,000 each will come from taking out second mortgages on their houses and supplementing this amount from personal saving accounts.

7.2 Break-even Analysis

Our monthly Break-even point is shown below. With extremely low variable costs, the primary monthly expense comes from fixed costs.

7.3 Projected Profit and Loss

In the first year of business, Igneous Rock Gym will see an initial strong growth in sales followed by a slow, steady growth. The sales spike in January is due to the increased focus on fitness that traditionally happens during this month. Summers tend to be slower months for memberships; however, summer camps and an increase in birthday parties will make up for this loss in revenue. 

Climbing gyms are expensive to start, but the cost of sales is very low. Due to the following reasons general operating expenses for a climbing gym are also low:

• Less than prime real estate is needed for site
• Staffing needs per customer are very low and volunteers are readily available
• High word-of-mouth marketing leads to less paid marketing
• Equipment and climbing walls have long lifespans

All of these factors combine to make it realistic that Igneous Rock Gym will be profitable in its first year of business.

7.4 Projected Cash Flow

As seen in the following chart, Igneous Rock Gym will enjoy a strong positive cash flow following its first month of operation. This is due to the fact that there is no need to purchase goods. It is also important to note that Igneous Rock Gym will have no need to give its members terms, and therefore, all payments will be made by cash, check, credit card, or EFT.

7.5 Projected Balance Sheet

The balance sheet shows the healthy growth of Igneous Rock Gym’s net worth, and its strong financial position.

7.6 Business Ratios

The following table outlines some of the more important ratios from the Athletic Clubs and Gymnasiums, Membership industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 7991.