Ascend Strength & Conditioning Business Plan — Key Assumptions

Every membership, churn, pricing, cost and funding assumption behind the model, and those most in need of verification.

Key Assumptions

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16.1 Capacity, membership and pricing
16.2 Capital, cost and funding
16.3 Assumptions most in need of independent verification

16.1 Capacity, membership and pricing

Assumption	Year 1	Year 5	Basis
Studio spaces	2	3	Third studio built in Year 3, gated on churn below 7%
Classes a day	7	7	Six days a week
Places a class	16	16	The coached small-group format. Larger classes are not supervisable
Weekly places offered	1 344	2 016	Studios times classes times days times places
Class occupancy	70%	70%	Average. Demand concentrates into early morning and the six o’clock evening slot
Visits per member per week	2.3	2.3	The attendance assumption that converts places into members
Timetable capacity	409 members	613 members	Places times occupancy divided by visits
Closing members	339	613	Capacity reached in Year 4
Monthly churn	8.5%	4.5%	Break-even at 5.07%. The number that decides the business
Average tenure	11.8 months	22.2 months	The inverse of churn
Average revenue per member	R1 090	R1 380	Roughly eight times the discounted big-box price, for a different product
Cost to acquire a member	R1 750	R1 750	Held flat. Payback is 5.8 months in Year 1 and 2.0 months by Year 5
Coaches	5	9	Phased with studio openings

16.2 Capital, cost and funding

Assumption	Value	Basis
Premises fit-out	R2 450 000	Flooring, rigging, mirrors, sound, ventilation, ablutions and showers
Strength and conditioning equipment	R1 780 000	Racks, barbells, plates, rowers, bikes, kettlebells; phased with studio openings
Third studio build-out	R1 320 000	Year 3 expansion including equipment, gated on churn below 7%
Solar, branding and member systems	R1 080 000	Trading-critical backup power, launch programme and the booking and collections platform
Fit-out, equipment and launch	R6 630 000
Working capital and pre-opening costs	R1 070 000	Coach salaries, rent and marketing ahead of trading, plus two loss-making years
Total capital deployed	R7 700 000
Direct costs	72% of revenue in Year 1 falling to 35%	Coach remuneration, personal training revenue share, acquisition and collection failure
Debit order failure provision	3.8% of collections	Presented and not recovered. Carried in direct costs
Overhead	R2 780 000 rising to R4 680 000	Rent, management, front of house, systems, marketing and compliance
Depreciation	Phased asset schedule	Solar over 10 years; fit-out and third studio over 8; equipment over 7; systems over 4; branding over 3
Promoter and investor equity	R5 300 000	69% of capital deployed
Term debt	R2 400 000	Five years at 13.5%; fully repaid by Year 5
Capital moratorium	Twelve months	Interest paid from Year 1; principal from Year 2
Corporate tax	27% with assessed losses carried forward	Section 20 limitation applied; no tax before Year 4
Debtor days	6 days	Largely a debit order business
Creditor days	30 days
Exit multiple	4.0x Year 5 EBITDA	Driven by the retention curve and the transferability of the coaching relationship

16.3 Assumptions most in need of independent verification

Assumption	Modelled	Verification required	Consequence if wrong
Monthly churn of 4.5% at maturity	22-month average tenure	Cohort retention data from comparable coached studios in the metro, not sector averages	Break-even is 5.07%. At 6.0% the five-year outcome is a R2.33m loss. Nothing else has comparable leverage
613 members at R1 380 a month	Full timetable at 70% occupancy	Pilot the price and format with a founding member cohort before the fit-out is committed	The price is eight times the discounted big-box alternative and must be earned through a different product
A studio manager who runs the attendance review	Appointed at Month 2	Direct market testing; references specifically on churn and retention intervention	One point of churn is worth R1 764 194 of Year 5 EBITDA and it runs through this appointment
Catchment supports 613 members at this price	Suburban node with established discretionary spend	Catchment income profile, competitor mapping and measured trial conversion	The timetable is fixed; a thin catchment means the studio never fills and the fixed cost carries anyway
Acquisition cost of R1 750 a member	Held flat across five years	Trial campaign in the chosen catchment with measured cost per signed member	Weak lever on EBITDA but it determines whether the studio can fill at all
Corporate wellness of R1 120 000 by Year 5	Contracted annual value	Documented engagement with at least three prospective employer clients	Counter-cyclical and capacity-light. A 35% shortfall removes R392 000 of Year 5 EBITDA
Term facility with a twelve-month moratorium	R2.4m at 13.5%	Written terms before the fit-out is committed	Principal cannot be serviced in Year 1 and Year 2 cover is 1.10 times

The list is ordered by consequence, and the first item is not close. Churn determines whether this is a business or a treadmill, and it is the one assumption that cannot be verified from a spreadsheet — it requires cohort data from studios actually operating this format in this market. The next three determine whether the studio fills. The last three determine the margin and the financing structure.

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