Based on our trends, we came up with several business ideas for each trend. The next three posts (including this one) will each evaluate one of the ideas we brainstormed using our 4 key questions. Remember, this is just an initial evaluation to determine which idea we could want to write a full business plan for.
The 4 questions technique can help you put stucture and rigor into the process of looking at an idea. Will your final decision of which business idea be based solely on “structure and rigor”? No, of course not. There is, rather, there must be emotional excitement and investment (also know as passion) into the idea as well. However, neither of these alone is sufficient. You must have the emotional excitement and the structured research to help you pick an idea that has the potential to create a business that you will love and a business that has customers!
Ok, so let’s start with our baby boomer idea. Let’s assume that we are very excited about creating a business that caters to the baby boomer generation. We know the stats–they are 77 million strong, with the “oldest” of them just hitting the 60 mark as of January 1, 2006. They also control 67% of the country’s wealth (about $28 trillion–at least before the economic crisis).
The Idea
We have an idea to create a gym that is different from traditional gyms. This facility would cater to the boomer generation and it would focus on both physical and mental health. For example, there would be traditional machines and weights, but it would also have classes for yoga, stretching, massage therapy for arthritis relief, relaxation and meditation. Additionally, this facility would have “mental exercise” enrichments classes and events. This would include book clubs, soduku tournaments, and even video games. We would be combining the “body gym” and the “brain gym” into one.
The 4 Questions
1. Will customers buy it? (Does it fill a need? Is it attractive to them?)
Answer: Yes, because the boomer generation is different from their parents. They are active, engaged and they plan to stick around well into their 80s if they can:) They are more conscious of the mind-body connection and as they watch their parents succumb physically to cancers and heart disease and mentally to alzheimers/dimentia they are determine to take action.
2. What does the competitive landscape look like? (Are there too many competitors already? Do you have the resources to compete with them?)
Answer: It’s competitive, but that means there is a market! An initial search in google for “gym for baby boomers” gives us some interesting links and helpful information:
1. An MSNBC Article headlines by telling us the boomers account for almost 25% of health club members, a trend that has been increasing for almost 15 years. (http://www.msnbc.msn.com/id/9570162/)
2. A Medicinenet.com article also confirms the trend: http://www.medicinenet.com/script/main/art.asp?articlekey=56354
3. A Fitcommerce.com article is catering towards fitness center owners to help them attract more boomers: http://www.fitcommerce.com/Blueprint/Page.aspx?pageId=306&tabindex=5
Ok, so all the gyms are thinking about this. And how many gyms is that? According to the International Health, Racquet and Sportsclub Association (IHRSA), there are over 29,000 healthclubs in the US, with about 41.3 million members (about 19.1 million of whom are very active–100+ days per year).
Now you might be thinking that we’ve answered the question. It’s competitive, but maybe we have a shot. However, the question is not completely answered.
- First, you must remember that that we are thinking about combining the traditional gym with mental gym, so we need to look into that.
- Second, we see that the industry is very competitive, given the number of clubs, but is it still growing (i.e. is the pie that these clubs are tryingt to slice getting bigger. This is very important for anyone trying to enter a market).
- Third, we must identify the resources and skills that we have to bring to the table (this begins Overall Question #3).
Addressing the first bullet: Yes, the industry is growing. According to an article on BNET, the number of clubs has grew by 40% from 1992 to 2002. Additionally, the number of members grew by 60%. Additionally, when asked if there is a surplus of clubs, IHRSA President, Bill Howland, says:
No. It’s tempting not to think so when we look at a few, isolated markets that have a lot of competition. However, there are actually not enough clubs to serve the growing market of aging baby boomers and the coming wave of “echo boomers” or Generation Y, who will become the 18 to 34 year-old market over the next ten years. Health clubs are a prime market for the industry and their sheer numbers–comparable to the baby boomers in the ’80s–will place strains on existing health club facilities. Building more clubs is necessary to meet the growing demand.
For the second bullet, we can do a another google search on “brain gyms” and we get plenty of trends, including a May 2009 Wall Street Journal Article about brain gyms and brain game stores as the latest trend in mental health. Bam! We are on to something.
Since our third bullet also gets at overall question #3, let’s shift there.
3. Can you create the business or build the product and bring it to market? (Do you have the resources and skills? If not, where will you get them?)
Answer: This is not a question that we can just research or google. It gets at two things. First, what skills and experiences do you/we bring to the table to help get this brain gym off the ground? Have you ever run a gym? Are you a mental health professional, or is your business partner?
Secondly, are you passionate enough about this idea to compete and make your idea a reality? You have to be willing to work harder than you ever have and get the human, monetary and physical resources to make you idea happen. This might include:
1. Finding a business partner who has skills or expertise that you are lacking.
2. If you are not interested in a partner, then you will need mentors, consultants or others who can help you.
3. Starting a gym will take capital resources (building out a location, buying equipment, hiring staff) before you even open your doors. Do you have savings, investors, home equite, family and friends or other access to capital?
This is a critical question and may take you a bit of time to think through. However, remember this is an initial evaluation of one of your many business ideas, so you want to do the necessary research and investigation within a few weeks and not drag out this process for months (or years). You should know fairly quickly what skills and resources you have and what you are lacking.
And finally, question #4 (usually the hardest).
4. Can you make a profit off of it? (Will you be able to price it so that you can make money? Will it be too expensive to create?)
Answer: Question 4 is largely dependent on your answers to the prior 3 questions.
First, if it is not attractive to customers, then they will not buy it and therefore you won’t make any revenue, let alone any profit. Second, in a very competitive landscape, there may or may not be price wars. As a new company, positioning yourself primary on price from the start will put you out of business very quickly in a brick-and-mortar service based business like a gym. There are gyms at various price ranges, with some focusing on no-frills, cost effective customers and others trying to create a more intimate-spa like “experience” at the gym for clients willing to pay a premium. You may find yourself somewhere in the middle or you may be able to charge a premium because of the unique combination of physical and mental health.
We’ll probably need to do some in-person observation and research with potential customers to see how much they would be willing to pay. If they are willing to pay more than a typical gym membership then there is a likelihood that we could charge enough to cover our expenses and make a profit.
If they are not willing to pay more based on how we explain the idea to them, then we’ll have to think about how to lower our costs or how to create more value (maybe with on-site medical staff?).
Are you tired yet? Yes, this is a process, but it is very doable. We have posted this all at once, but you would actually spend from a few days to a few weeks trying to answer these questions.
Are you excited about the possibility of the MAPEG (Mental and Physical Exercise Gyms)? We are, but we’ve also got two other ideas to evaluate! So many opportunities, but we are ready to get focused!
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