TEST 2 Flashcards
What is a Sole Proprietorship?
A Single individual engages in a business activity without necessity of formal organization. Government can take personal assets
General partnership
a business structure where two or more people share the ownership, profits, and liabilities of a business. Little to assistance for formation, written oral or implied. Each Partner is fully liable. Each Partner can dissolve the partnership at any time.
Limited Partnership (LP)
a business structure that has at least one general partner and at least one limited partner. Requires a legal agreement and certificate of limited partnership. Have a general partner who manages the busness. General partner has the largest financial investment. limited partners have stake in the company but does not manage the company. All parties must agree to terminate.
C-Corps
a legal entity that exists separately from the people who own, manage, control, and operate it. Provides liability protection for the owners. Tend to be the legal structure for large corporations, disadvantage is double taxation. Must file articles of incorporation with the state.
S- Corp
corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Hybrid combining various business structures. Provides owners limited liability for corporate activities. Consult with legal professional and accountant before starting S-corp.
Limited Liability Corporation (LLC)
A business structure that combines aspects of corporations, partnerships, and sole proprietorships. Insulates the owners and terms them as members. Same tax benefit as S-corp. Owners can choose to be taxes as partners or as S-corp. Does not have to hold required meetings of shareholders.
What are somethings to consider when filing legal status?
Identify the legal name for the business. Identify a registered agent and registered office for the business. Identify the owners of the legal entity. Create a company agreement.
Federal Tax ID (EIN)
A business’s social security number. How the government keeps tabs on the business.
What do you need an EIN for?
Opening a bank account. Paying Employee taxes, Filing local, state, and federal tax returns for the business, completing W-9 and setting up accounts with suppliers.
building a club
Buy land (2 to 20 dollars per sq ft) and build the building (75 to 400 dollars per sq ft). Anywhere from 2 - 20 million spent . Must build membership from scratch.
Buying existing club
Can purchase the entire club or just assets. 3-6 times the earnings before interest, taxes, depreciation and amortization. Clubs sell for less than they cost to build. Purchasing the membership is a benefit.
3 Visions for the business
Mission, brand promise, and theme.
Culture
Traditions and practices that make a country, business or people unique.
Steps for creating Culture
Identifying core values and establish philosophies and practices that become traditions.
SFSWOT
Success, Failures, Strengths, Weaknesses, Opportunities, and Threats.
Long Term goals
10- 20 years out. Ultimate achievements
Short Term Goals
SMART Goals. 3-5 years out.
SMART goals
Simple, Measurable, Attainable, Realistic, and Trackable.
Establish Replicable Operating standards and systems
Uniforms, guest relations, tag lines, caring for the facility, and certification
Establish Accountable organizational structure
Structure of each position relation to the member, job descriptions, and open communication.
Hire the best
Certification, personality, and continuing education.
Umbrella Business Models
A large, generally successful brand name that oversees smaller companies belonging to the same corporation
Independent club/ Studio Operator
Vigor Active, currently. Designed to operate as a part of the local community.
Franchise Business Operation
Anytime Fitness, Snap Fitness, Curves. Most popular for entrepreneurs to enter the industry.
Multiple-Unit Operation
LA Fitness, Lifetime, 24 Hour Fitness
Budget Clubs
Under $20 a month
Economy Clubs
$20- $49 a month
Mid-market clubs
$50-$74 a month
Premium Clubs
$75- $99 a month
Premium-Plus Clubs
$100-$149 a month
Luxury and Boutique Clubs
Over $150 a month
Cash Accounting
Account for all revenues and expenses as they are incurred by the business
Accrual Accounting
Accounts for the revenues not as they are generated but how they are earned
Balance Sheet
Broad and general, Quick snapshot of the business, gives the financial health of the business at a given time. Shows : Assets, Liabilities, and Equity
Profit and Loss Statement
Reflects the club’s operating performance over time. Standard practice is to produce moth and year end profit and loss statements. Shows performance over a designated time period. Shows budget attainment. make decisions on charges needed.
Revenue Categories
Membership, fitness, spa. tennis, pro shop, food and beverage, youth services, other
Departmental Expenses
Payroll, Benefits, Education and training, total payroll, supplies, advertising, printing, dues and subscriptions, contract labor, maintenance.
Undistributed Expenses
Sales and Marketing, Utilities, Member Services, General Administrating and accounting, capital replacement and repair.
Fixed Expenses
Insurance, Rent, Property Taxes, Management Fees, Depreciation, Principal and interest.
Personal Equity
Cash the owner personally contributes, Entrepreneurs traditionally put in less. It is important for owners to put something in. Investors want to know the owner has “skin in the game”
Approaches to raising capital
Family and Friends, Angel Investors, Venture capital and Bank Loans
Family and Friends
Family members, Friends, Business Associates, Existing Clients.
Angel Investors
Outside individuals, Usually have a net worth of 200-300k for the past 2 years, individuals merely want to grow their wealth in businesses they will feel succeed. Have to be prepared to make sale.
Venture Capital
Businesses investing other peoples money, not their own. Your sale must be very good to convince these individuals. Seek higher returns than other investor streams
Bank Loans
Loans are reviews with a fine tooth comb. Need good credit. Expect a business plan. Requires a certain percentage of income. Prefer the owner have equity. SBA only provides loans to the business and not the person. Interest rate on SBA loan is negotiable.
Employee
Scheudle established by the club, abides by club policies, club sets fees and payouts, clock in, can get benifits.
W-2 form
Independent Contractor
No set schedule. Does not follow club policies. Sets fees and wages. Does not clock in/ out. No benefits.
1099 form
Part time
Cannot work over 1000 hours a year. Required to work less than 30 hours a week. Employees may lack commitment to the business
Full-Time
Works more than 1000 hours a year. Must work over 30 hours a week. Employee has more experience. more commitment and must be extended and offer for benefits.
Position Players in the Facility
Clubs must have employees who have appropriate blend of social / relationship skills and Technical Expertise.
Chief Executive Officer (CEO)
Leader of Company
Chief Operating Officer (COO)
Often same as the “president”
Chief Financial Officer (CFO)
All Financial Aspects
Chief Marketing Officer (CMO)
Marketing and Sales
Director of human resources
responsible for the planning, coordination, and leadership of an organization’s HR department
Chief Information Officer (CIO)
oversees the people, processes and technologies within a company’s IT organization to ensure they deliver outcomes that support the goals of the business
Chief Development Officer (CDO)
lead the design and implementation of strategies to identify funding sources needed to finance the growth and development activities of organizations
Types of benefits provided for employees
Medical insurance, Life insurance, Dental insurance, Educational Insurance, Employee discounts.
4 E’s of building a great team
Expectations, Equipping the Team though Education and Growth, Encouragement, Evaluate the Expected
Expectations
Set clear ideals for performance. Provide each team member with introduction to club values and Philosophies. provide each employee with job model, organization chart and listing of performance and goals. Have clear set of employee policies and rules. Personal development plan, regularity meetup with the team and develop new tools to share company expectation’s
Equipping the Team through Education and Growth
Institute a formal education program. Establish a external continuing education program. Provide empoloyees the tools they need to do thier jobs. Open communication lines. walk the talk
Encouragement
Have a formal employee recognition program. Leaders must be cheerleaders
Evaluate the Expected
Create objective performance evaluations. Evaluate at least twice a year, make it a habit to evaluate daily. Create a business scorecard, never let performance go without recognition.
Recruitment
Develop a hiring model and postings. Place postings in appropriate areas. Develop internship programs with colleges. Recruit from other service industries.
