ENTREPRENEURSHIP AND INNOVATION FINAL ASSIGNMENT THE ROCK GYM

VIETNAM NATIONAL UNIVERSITY HCMC UNIVERSITY OF TECHNOLOGY INTERNATIONAL MASTER PROGRAM ENTREPRENEURSHIP AND INNOVATION FINAL ASSIGNMENT THE ROCK GYM Group members: Truong Bao Thach – 2170312 – Leader Pham Thanh Trung – 2170297 Lecturer: Dr Truong Minh Chuong HCM City, 12/2021 TABLE OF CONTENTS Heading Page Question a) Question b) Question c) Question d) REFERENCES a) Assessing the contributions of your products and/or startup to the development of the economy in view of employment, labor income, tax, customers health/satisfactions, working conditions for labor in general, living conditions, contribution to other industries… Entrepreneurship is essential to the economy for numerous reasons, from promoting social change to driving innovation Being no exception, our startup “THE ROCK GYM” which aims to provide an element of uniqueness through combination of Fitness- and Powerlifting Center is expected to contribute to the development of the economy in several aspects First, in view of employment, we create jobs for Vietnamese people, thereby helping to reduce the unemployment rate which is currently quite high because of the Covid-19 epidemic, especially people whose specialty is in fitness industry, such as coaches or personal trainers/instructors, since several fitness and strength training centers have been closed or have had to have major staff cuts after the recent wave of Covid-19 in the summer of 2021 Although we only expect to hire 11 employees initially and this number seems too small and inconsiderable, but small businesses like ours account for a large or even overwhelming proportion of the total number of enterprises (in Vietnam, considering only registered enterprises, this rate is over 95%) Thus, the contribution of these businesses to total output and job creation is significant Second, our startup is expected to contribute to labor income as well The business’ expected base pays of around 6,500,000 VND/staff/month (excluding other benefits, bonuses, etc.), is relatively higher than the average income of Vietnam in 2020 which was about 4.2 million VND/person/month The average income in 2021 decreased by about 1% compared to that in 2019 (General Statistics Office, 2021) Among the working forces, service employees saw the most significant reduction in average income due to the long-lasting pandemic Therefore, with a considerably higher pay than the average income in the country, our business can help improve the living conditions of Vietnamese workforce generally and fitness workforce specifically The unemployment rate increased during and after the recent Covid-19 wave in Ho Chi Minh City This was not only because of businesses being shut down, but also because of the bad working condition for workers Several businesses required employees to work and live inside the companies or factories In some companies, employees were forced to work more hours In THE ROCK GYM, employees are the main focus and the core strength of the business, and in any circumstance, employees will work for the hours according to the signed contracts, unless they are willing to work more hours for more benefits Therefore, the third contribution of THE ROCK GYM will be working condition of employees Working condition will be better than most gyms, since we will acquire quality equipment, and the spacious room will give not only customers but also our employees comfortability Fourth, the business will contribute to the tax system of Vietnam When opening the gym business, there are some taxes that we must contribute such as excise tax, income tax, corporate tax, value-added tax, etc Taxes are contributed to help fund public works and services—and to build and maintain the infrastructure used in a country Taxes are used for the betterment of the economy and all who are living in it Understanding the importance of taxes to the economy, THE ROCK GYM will pay taxes in full and on time according to the law Fifth, THE ROCK GYM is anticipated to help satisfy the demand of customers for both fitness centers and powerlifting gyms For fitness centers, although the market is already saturated, some gaps still exist Several commercial fitness centers leave their customers unsatisfied, especially in the marketing and sales aspect In many centers, not only sales staff but also personal trainers also try to sell training packages For each different customer, staffs can sell at a different price because they have to achieve the target KPI, so they often sell at a lower price This sales method is unprofessional and many customers are dissatisfied ( Ruby Fitness, 2021) THE ROCK GYM provides the professional services, and the similar problems are not tolerated We give freedom to customers to choose from various packages with fair prices For powerlifting gyms, in the context that there is only one powerlifting gym in Ho Chi Minh City, one more gym will raise competition, thus reducing the price, creating more options, and improving service quality for customers Sixth, THE ROCK GYM’s important contribution is to improving the health of the community Better community health can provide a range of economic benefits Importantly, it can provide Vietnamese with the opportunities and freedom to lead more active, healthy and productive lives Improvements in community health radiate out to the rest of the economy by reducing health care costs, enhancing workforce productivity and increasing the amount of labor available (for example, through lifting the number of people participating in the workforce) The impact of gym and fitness industry has been researched in some countries such as Australia (Access Economics, 2009) However, statistics have not been studied or analyzed in Vietnam, so this is basically an idea and this idea needs further research to confirm Seventh, THE ROCK GYM will help the sport powerlifting be more popular in Vietnam, especially in the Southern of Vietnam Usually, when people lift weight, their main focus is the look of their bodies, therefore fitness and bodybuilding are widely known Powerlifting, on the other hand, focuses on ultimate strength Techniques are performed differently and more strictly than fitness and bodybuilding (but not as complicated as Olympic weightlifting) While Northern of Vietnam already knows powerlifting (amateur national powerlifting competitions are hosted annually in Hanoi), it is not as popular in Southern of Vietnam When popularity of the sport in this region increases, amateur competitions can be held more often, more new businesses or organizations will be formed, thus help the sport industry as a whole grow Powerlifting has been considered for SEA GAMES, but due to its not high popularity (compared to another strength sport Olympic weightlifting) and drug issues, it will not be competed officially in Vietnam in the near future However, global official federation for the sport exists, namely IPF (International Powerlifting Federation), and drug-tested world competition is held each year If an official powerlifting federation is created in Vietnam, THE ROCK GYM’s contribution to the sport industry will be even more significant b) What are the most critical points contributing to your startup success? And why are they critical? Time: It is reasonable to open a gym service at this time, when several small competitors have been wiped out after the quarantine due to the Covid 19 pandemic At the same time, after the pandemic, customers' health concerns have also been increased When customers have a greater interest in health values of products, customers will have a better attitude towards health care products/services, so that customers will increase purchase intention and then will have actual purchase behaviors (Tudoran et al., 2009) In addition, a survey in UK figured out that boom can be expected in post pandemic fitness Two-thirds (64%) of people surveyed say that exercising is a priority for improving their physical and mental health in the wake of coronavirus – up per cent compared to before the pandemic (Hickey-Mason, 2021) Market: In gym industry, especially in Powerlifting field, there is only one competitor that dedicates a powerlifting gym, and no competitor combines a powerlifting gym and a fitness gym as one brand, so that the niche market of powerlifting gym in Vietnam is at emergence phase In this niche industry, there is only one market leader in HCMC, Oldschool Barbell System, which has its prices relatively higher than the fitness industry, and is probably unable to meet increased competition on the market with price reductions because of its high cost If we choose to focus on powerlifting aspect and decide that the main revenue stream is from powerlifting gym, because this niche industry is still new, bargaining power is lower than the fitness industry as a whole, and we can get a higher profitability Core strengths: We have the competitive advantage of having no renting cost (which is one of the major expenses in fitness industry business), so that we have more capital to run the business The less expense can give us the ability to have more profit or we can cut down the cost to gain more customers c) As the startup founding team, what you have to prepare in view of personal psychology and professional knowledge for startup success (pls refer to your product/service)? Personal psychology: As a startup founding team, we are psychology-prepared to have the support of family and friends The co-founders are friends who have worked together on many projects for a long time since we understand each other well, we have the same problem solving and clear division of work In addition, our capital is mainly from ourselves, from family and friends with low risk and we have prepared for spending in year, so we will face less financial pressure leading to internal conflicts as well as family pressure However, we are both risk adverse, we consider the risks of starting a new business are much higher than the benefits of it Therefore, we always think that starting a business is not a right choice, leading to us being afraid of failure and having the mentality of giving up if we encounter difficulties in the process of building a business This is a huge challenge and this could put huge pressure on us Professional knowledge: The cofounders are both Business Administration graduates, therefore we can apply the knowledge from books in reality Finance, human resources and marketing are our main strengths in terms of university knowledge However, real experiences and working knowledge in the field matter in a great extent We started out in the gym industry from the inherent passion We have been in contact with the gym industry for a long time so that we are confident that we have the necessary professional knowledge about the gym industry We are both amateur lifters who have competed in some local competitions, so we have the knowledge about choosing gym equipment We have also spoken to several managers and supervisors in the gyms we have gone to about machine management and maintenance We know a few things about customer services since we have worked in customer service industry in as interns Although the field we worked was not the fitness field (we worked in hospitality – worked as supervisor and receptionist in a medium-sized hotel), there are similarities between the two fields, as hospitality includes recreation sector (meaning hotels having fitness rooms in it) We did not supervise the recreation sector during the internship, but we observed the way customer services were given to the hotel customers We believe through this observation we know basic things about customer services of gym industry In addition, familiarity with the gym industry as customers can help us establish relationships with industry experts from whom the experts have provided and trained us in the knowledge and experience of the gym industry, they give us knowledge of gym and environment design, providing knowledge on selection and training of staff and personal trainers In terms of management, both co-founders have degrees in business administration, one has strengths in financial management to help manage costs and financial resources effectively and one has strengths in human resources and marketing combined with a passion for the gym to identify potential customers from which to build advertising and communication plans for the gym as well as to train the staff professionally These can help our startup have a smooth and complementary management d) After learning the entrepreneurial process and performing the business plan you have the intention to startup? If yes, why you have that intention? If no, why you not have that intention? Although after learning the entrepreneurial process and performing the business plan, we not have real intention to startup The business plan we write is still lacking some ideas and information, such as the detailed financial projection, or the detailed overall schedule to execute the plan We not have enough experience or relationship with those who are in the gym business to get some help or learn from Nevertheless, the main reason we not want to try is not because of our business plan, it is because we consider the risks of establishing a new business are much higher than the benefits of it, as we are both risk adverse We believe startup is not for everyone, and not for us as well; we like to invest rather than running a new whole business Below are some of the reasons why we think starting up is risky and not worth a try First, when forming a new business, job security is uncertain In fact, starting a business is very risky and the failure rate is very high In 2020, the Nextrans fund made a very in-depth market study showing that the start-ups that are considered as successful in the Vietnamese market are only about 3% Vietnam has less than 5% of start-ups that celebrate their 2nd birthday, which is a very low rate These numbers show that the market for start-up is extremely fierce (Anh, 2021) For these reasons, startup often does not guarantee job stability or security If the startup fails in a short period of time, we have to look for another job, and it is unlikely that we will get hired by reputable employers since we have only failure experience of startups That is also an opportunity cost when we a startup, because we will not have experience of working in other businesses appropriate with our technical fields, thus missing the chance to accumulate working experience as employees Moreover, we, as founders, are not guaranteed to have permanent roles on the executive team 80% of entrepreneurs, as the research from Harvard Business School professor Wasserman shows, are forced to step down from the CEO position (Wasserman, 2008) This is usually because investors insist that founders relinquish control and hold firms’ progress down Thus, our jobs can be unstable and there is no guarantee that we will have full control during the operation Second, startup requires heavy workload We obviously are willing to work really hard at any job, but startups require too much pressure Usually, entrepreneurs have to have to work for an excessive number of hours each day because the startup is in a race to beat the clock, trying to create a product or service and establish a market before the money runs out For us, it is just not our preference, as we both want work-life balance Third, constant changes can happen when starting a new venture In an early-stage start-up, there are various options and decisions to be made Unforeseen situations occur, market trends change and aggressive competitors can suddenly enter the market Therefore, when the business is still in the process of forming a solid foundation, entrepreneurs may need to change quickly at one point or another As for us, we are the people who prefers stability In conclusion, we not think we want to open this business, even though we still think it is feasible and has a chance to succeed From our points of view, the risks outweigh the potential benefits of it Instead, we would like to keep doing our current jobs (working as employees) and invest in other businesses that already have a solid base and have the ability to give back an acceptable amount of return, rather than the high risk-high return approach of other risky investments or startups We are risk adverse and want to be stable, so startup may not be our choice Nonetheless, our business plan can be used if other entrepreneurs have the similar critical strengths like we have discussed in part b) REFERENCES [1] Access Economics (2009) Let's get physical: The economic contribution of fitness centres in Australia [PDF] Retrieved 22 December 2021, from https://bpfitnessaustraliaproduction.s3.amazonaws.com/uploads/uploaded_file/file/254/The-economiccontribution-of-fitness-centres-in-Australia-report-July09.pdf [2] Anh, P (2021) Vì 5% start-up Việt "được" tổ chức sinh nhật lần 2? VnEconomy Retrieved 22 December 2021, from https://vneconomy.vn/vi-sao-chiduoi-5-start-up-viet-duoc-to-chuc-sinh-nhat-lan-2.htm [3] General Statistics Office (2021) Thu nhập bình quân Việt Nam khoảng 4,2 triệu đồng/người/tháng Báo Tài nguyên & Môi trường Retrieved 22 December 2021, from https://baotainguyenmoitruong.vn/thu-nhap-binh-quan-cua-viet-namkhoang-4-2-trieu-dong-nguoi-thang-327235.html [4] Hickey-Mason, E (2021) Boom expected in post pandemic fitness according to our new survey BHF Retrieved 28 December https://www.bhf.org.uk/what-we-do/news-from-the-bhf/newsarchive/2021/may/boom-expected-in-post-pandemic-fitness 2021, from [5] Phân tích thị trường Fitness Việt Nam thời điểm Ruby Fitness (2021) Retrieved 22 December 2021, from https://rubyfitness.vn/phan-tich-thi-truongfitness-viet-nam-thoi-diem-hien-tai/ [6] Tudoran, A., Olsen, S., & Dopico, D (2009) The effect of health benefit information on consumers health value, attitudes and intentions Appetite, 52(3), 568-579 [7] Wasserman, N (2008) The founder’s dilemma Harvard Business Review Retrieved 22 December 2021, from https://hbr.org/2008/02/the-founders-dilemma ... taxes to the economy, THE ROCK GYM will pay taxes in full and on time according to the law Fifth, THE ROCK GYM is anticipated to help satisfy the demand of customers for both fitness centers and powerlifting... In THE ROCK GYM, employees are the main focus and the core strength of the business, and in any circumstance, employees will work for the hours according to the signed contracts, unless they are... public works and services? ?and to build and maintain the infrastructure used in a country Taxes are used for the betterment of the economy and all who are living in it Understanding the importance