Academic journal article Journal of the International Academy for Case Studies

Fitness Pro: Managing a Growing Business

Academic journal article Journal of the International Academy for Case Studies

Fitness Pro: Managing a Growing Business

Article excerpt

CASE DESCRIPTION

The primary subject matter of this case concerns entrepreneurship. Secondary issues examined include operations, finances, marketing, distribution, warehousing, policies, procedures, and information systems. The case has a difficulty level of four. The case is designed to be taught in one and one-halfr hours and is expected to require two hours of outside preparation by students.

CASE SYNOPSIS

The case examines how a physical therapist started an exercise equipment and personal fitness business: Fitness Pro. Eventually, the son takes over the business and moves it to the Hilton Head Island, South Carolina, and Savannah, Georgia, areas of the Southeast United States. As the business begins to grow, the founder's son looks for growth opportunities that fit his business model. He finds it in a similar business located in Tallahassee, Florida: Fitness Master. As these two businesses merge into one named Fitness Pro, they later start a new business in Jacksonville, Florida.

Within a few years, the business has three retail stores in Savannah, Tallahasee, and Jacksonville, and several outside sales staff who focus strictly on commercial accounts. With growth, however, comes growing pains. Major problems facing the two owners are what to do about rising shipping costs, warehousing, inventories, and financial control. The partners decide to bring in a more experienced partner to help them negotiate with their suppliers. Also, the new partner is trying to help the business develop accounting and financial information systems.

The case ends with the three partners attempting to develop a strategic plan for the future of the business.

INTRODUCTION

Fitness Pro, Inc., is a small company that specializes in selling and servicing high quality health and exercise equipment to residential and commercial customers. Fitness Pro operates out of three retail locations, Savannah, Georgia, Jacksonville, Florida, and Tallahassee, Florida, with the long-term goal of opening additional satellite stores.

COMPANY HISTORY

The original Fitness Pro was started in the 1970's in Lexington, Kentucky, by the father of one of the current owners, Paul Drake. The father, a physical therapist by occupation and training, saw a need for his clients and others to buy professional exercise equipment from knowledgeable people. Paul opened his first Fitness Pro store in 1990 in Charleston, West Virginia; however, Paul disliked living in Charleston, and so he closed the store and started looking for opportunities in other markets. He found the Savannah/Hilton Head area to be a good potential market and opened Savannah's Fitness Pro store in 1993, moving it to its current location in 1996.

By the late 1990's, Paul was looking to expand his business into other markets. He looked at a possible location in Tallahassee, Florida. At that time a fitness store, Fitness Master, was operating in Tallahassee. The owner of Fitness Master, Pat Sullivan, contacted Paul about his interest in joining up to open a store in North Florida. The two met and, from this meeting, a partnership formed, and a new store opened in Jacksonville, Florida. All stores took the name of Fitness Pro, with the corporate headquarters remaining in Savannah, Georgia.

In 2003, a third partner joined the organization, Lee Tompkins, Jr. Lee took over the financial and operational side of the business as chief financial officer. Lee joined as a partner to add additional capital, to bring business and financial management skills to the company, and to allow the other partners to focus on selling.

INDUSTRY TRENDS: SOCIO-CULTURAL FACTORS

The fitness industry will likely continue to benefit from health favorable socio-cultural trends as well as good demographic and economic conditions that are expected to maintain a steady level of growth in fitness equipment. This trend of healthier lifestyles creates a need for convenient methods of exercise, which, in turn, creates an increased demand for home fitness equipment as well as health and fitness clubs. …

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