Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Mktg490 Business Plan Final


Published on

  • Login to see the comments

  • Be the first to like this

Mktg490 Business Plan Final

  1. 1. Marketing Plan Francisco Guerrero Meron Gurmu Giuliana Plut Juan Carlos Lomeli Izumi Hara Garrett Bogar
  2. 2. 2 Table of Contents I. Executive Summary…………………………………………………………….3 II. The industry, the company, and its products or services…………………...4 III. MarketResearchand Analysis………………………………………………6 IV. The Economics ofthe Business………………………………………………8 V. Marketing Plan………………………………………………………………...8 VI. Designand Development Plans………………………………………………9 VII. Manufacturing and Operations Plan……………………………………...10 VIII. ManagementTeam………………………………………………………..12 IX. Sustainability and Impact…………………………………………………..12 X. Overall Schedule……………………………………………………………...13 XI: Critical Risks, Problems, andAssumptions……………………………….14 XII. The Financial Plan………………………………………………………….15 XIII. ProposedCompany Offering……………………………………………..16
  3. 3. 3 I. Executive Summary Behind Closed Doors.1920’s Prohibition Era Speakeasy Bar. During the prohibition era illegal bars opened up in back rooms of restaurants, basements of buildings, and in other secret and easily hidden locations. These bars were called speakeasies. They allowed patrons to sneak in and enjoy alcohol and the entertainment of the roaring 20’s during a time when it was strictly outlawed. Often they were lavishly decorated and filled with people, and mobsters speaking in hushed tones and bands playing low blues music. Our idea is to open a bar in the spirit and theme of these old speakeasies. We will legally open one of these bars with, location, atmosphere, food, and drinks themed of the era. There is no other kind of experience here in the Palouse area, they are popular in big cities but we believe it is going to be a big hit here in Pullman. Our idea is going to change the way bar enthusiasts view bars. In Pullman, we have several bars with similar atmosphere but we want to provide a different kind of environment. Our styled bar is going to provide live entertainment and a representation of a speakeasy bar. We plan to bring something new to the Palouse area. We want to bring people together and have them experience a speakeasy bar. We surveyed several people and asked them various questions such as would they enjoy a prohibition themed bar and also if they enjoyed live entertainment. The majority said yes to both questions: Would you enjoy a prohibition themed bar?
  4. 4. 4 We have competitive advantage because there is no other bar in the area providing the same services as we are. Behind Closed Doors is distinctive against the other bars here in Pullman. The Behind Closed Doors team consists of a mix of different majors and different personalities, but we all have the same goal and motivation. Giuliana suggested the idea and we all liked it. Everyone has something different to bring to the table. We all have our own experiences and skills that will help and carry the business. We are focused and excited to plan, organize, and implement our ideas. II. The industry and the company and its products or services The industry The Bars and Nightclubs industry has experienced strong growth over the past five years. While revenue growth got off to a slow start over the early half of the five-year period, primarily as a result of shaky consumer confidence causing more people have been more content to drink at home rather than at bars or nightclubs, the industry is still expected to grow by 1.5% per year on average to $24.0 billion over the five years to 2015. Industry revenue is expected to grow by 1.2% in 2015 alone, as consumer confidence and disposable income pick up, allowing people to spend more of their pay at bars and nightclubs. Competitors The Bars and Nightclubs industry is highly competitive, with competition coming from both within the industry (internal competition) and from operators in similar industries (external competition). This owes to the relatively low barriers to entry associated with opening a bar or
  5. 5. 5 nightclub. There are a large number of small business establishments and the industry is highly fragmented. Internal competition Price is an important competitive factor. Operators that can serve food and beverages at the most value will normally attract and retain patrons, even during times of anemic economic growth. Location is another important competitive factor for a bar or nightclub. Establishments are usually located in areas where people congregate for entertainment purposes and businesses are prominent. Bars and nightclubs also take advantage of agglomeration, meaning they will usually benefit from being located within proximity to competitors. Service is one of the most important competitive factors for bars and nightclubs, especially those with a high-end focus. Upscale bars and nightclubs need to provide world-class service to guests that expect a seamless and enjoyable visit. Front-of-house staff like bartenders and wait staff are trained to be professional, courteous and accommodating and to portray concern for the well-being of patrons. It has become increasingly common for operators to chase higher earning patrons by renovating venues and providing higher quality beverages and menus. Within the changing alcohol consumption market, bars have moved toward providing cocktails and providing high-quality food in unique environments. External competition The industry also faces competition from the wider on-and-off premises alcohol consumption market. The industry exhibits a high level of external competition from licensed restaurants and cafes, to supermarkets, casinos and retail liquor stores. Many of these compete with bars off-premises alcohol sales on a price basis, particularly for high turnover products. Market Share Concentration The industry is highly fragmented and consists of a large number of small businesses that are often family owned and operated. The top four players in the industry account for well under 5.0% of total revenue. Census information indicates that just more than 77.6% of establishments are small businesses employing up to nine people, and a total of 98.3% employ less than 50 people. There are limited economies of scale to be found by owning more than one venue due to the labor intensive and location-specific nature of the industry. Also, the varying state liquor laws make it difficult for owners to form large chains. Due to the fragmented and small-business nature of this industry, especially in the way it operates, the level of concentration is not expected to change over the next five years. Concept Our concept is to start up a speakeasy styled bar in Pullman. We are trying to bring the 1920 Prohibition experience to a local bar. We will be offering unique cocktails to accommodate our style of bar. Our principal customers will be 21-35 years old, mainly college students since WSU is located in Pullman.
  6. 6. 6 Products/services We will not mainly be focused on providing products, rather provide services for customers. We hope to fulfill and provide customers needs with the speakeasy idea. We could have done any kind of theme for this bar, but the speakeasy idea is more cohesive and more enticing. From our venue to the music, all will be styled as if in the 1920 era. We will decorate the venue as a backroom. Inside the room, will be decorations, a live jazz band, 1920 wardrobe, and themed drinks. We will also provide a photo booth for customers, so they remember this memorable event. Unique features/added value Since we will be providing a service focused business rather than product, we are still going to focus on delivering value to the customer. We want them to feel comfortable and really enjoy the experience of a speakeasy bar. In Pullman, there is nothing like a speakeasy themed bar. We would be bringing something unique to the bar scene. The bar will have live entertainment and dancing that most bars don’t provide; we want to provide a memorable night for the customers. We know it is going to be successful and hope it expands and adapts to the bar that we choose to have this theme at. III. MarketResearchand Analysis Customers We surveyed several people around Pullman and family members; we have used this information to conclude our potential customers. From the information that we collected we have decided to move forward with opening the speakeasy bar. We surveyed 80 individuals who consisted of students and non-students. 90% of respondents were between 21-35 years old leading us to believe that to by our target age range. The remaining 10% will be our secondary target group consisting of those 36 years old and up. Since the age range corresponds to mostly college students and young adults, our customers will be easily reached because the bars are close to Washington State University campus and also Pullman is a small town so word of mouth will get out. College towns seems to have the same make up which leads us to believe our system will work state wide on other campuses. Market size and trends Market Size The Market size is large for bars. Specifically Pullman offers seven different competitors, Stubblefields, Valhalla, The Coug, The ZZU, Rico’s, My Office, and Sports Page. With WSU- Pullman students making up roughly 70% of those interested in our bar, and a WSU studying showing 68.8% of student having drank in the last 30 days, we estimate a market of about 13,592 students. We got this total by figuring out how much 68.8% of total WSU-Pullman students was. Total market share divided by our seven competitors gives us a 1,941 piece of the market. With
  7. 7. 7 time we expect our share to grow and become a dominant player. There is a large amount of bars opening and also closing. What makes a bar successful is dependent on various factors and one factor that ours focuses on is differentiation. Many bars are themed such as sports bars, but not many are speakeasy themed. The 1920 Era was hectic not only for the country but for the alcohol consumption. Alcohol was banned and made people sneak into bars to drink illegally. That secrecy was popular, now alcohol is available everywhere but if we bring back that time of secrecy and give the full experience of live jazz music, customers can enjoy their time as if they were back in time. Consumption trends After peaking in 1981, per capita alcohol consumption slowly declined until the mid-1990s, before undergoing a brief resurgence. Over the past five years, per capita alcohol consumption has remained flat, reflecting increased awareness of the harmful effects of overdrinking and "zero tolerance" laws in some states regarding underage drinking. Stricter laws for drunk driving and public intoxication have also influenced consumption patterns. Industry revenue has been hurt by an alcohol consumption trend toward consuming wine, spirits and ready-to-drink products at home or in other licensed venues instead of drinking at the bar. Rising consumer interest in higher quality food and beverages (known broadly as “premiumization”) has helped boost industry revenue, as hundreds of gastropubs, brewpubs, wine bars and other establishments with a focus on quality have opened at the expense of traditional dive bars and sports bars. The rising popularity of craft beer, cider, specialty cocktails and wine has helped sustain the industry. No longer a beer alternative limited only to local brewpubs and small-time hobbyists, craft beer has emerged as one of the fastest-growing alcoholic beverage industries in the United States. Consumers have increasingly purchased craft beer for its perceived higher quality, greater attention to detail, finer ingredients and wider variety of flavors than traditional light beers. Likewise, the market for hard cider, once considered a niche alcoholic beverage industries relegated to local cider houses across New England, has grown into a major competitive force in the market for alcoholic beverages. The factor that affects market growth is if the bars located in Pullman create similar services as ours or if new bars open and provide similar services for better incentives. C. Competition There are many bars in Pullman but each provides its own experience. Stubblefields, a big competitor, provides a large social environment as well a great location. It is located in the center of Greek row and food providers such as Dominos and a taco shop surrounds it. Also one of our main competitors is Ricos, it has a similar service as Behind Closed Doors. They also provide a calm social environment with live entertainment. They’re weakness is their location, it is too far off into town that college students wouldn’t want to drive all the way over there for a bar. Our bar will be located near campus, near our target market. We are a styled bar, so our disadvantage could be preference. Some people may not like the idea of a speakeasy bar, they just want to go out and get drunk. But a styled bar can be also our biggest advantage because we are the only bar that will have that back in time environment. It will be something new in the area and it is a unique idea.
  8. 8. 8 Our intention is not to worry mostly about profit, more of a positive review. We know that opening a bar is difficult and starting in the industry the first few years will be hard, but we want to start one and get the idea out and hopefully it catches on and we become big. IV. The Economics ofthe Business According to Ibisworld, revenue continues to increase in the bar industry as well as the growth percentage. I know to start up a bar; the first few years will not be about making revenue, more of breaking even. It will take approximately two to three years to break even and start making profit. All the start up costs is what leads to losing money the first year, but after the first year, if the business is successful. The bar will start making profit but we are teaming up with another bar to provide this experience. We will be avoiding all the start up costs such as equipment expenses. V. Marketing Plan Entry and growth strategy As a team, we asked Rico’s to use their location. We have chosen Pullman as our base location with the information that we collected from our surveys. 73% of those who took our survey said they would enjoy a prohibition themed bar, and were willing to pay $6.67 per drink on average. First location will be the official Behind Closed Doors in Pullman for about $8000 a year to rent a Main St Location. BCD has a unique theme, live music, classy-fun environment, serves specialty drinks, and offers an exclusive environment. As we expand to other college campuses we will begin with similar partner trial runs with use password, special drinks, jazz music and pool tables. Pricing Our pricing for cocktails was based on our survey information. We asked over 80 people how much they would be willing to pay for a cocktail, the answers ranged from zero dollars to ten
  9. 9. 9 and up. On average those surveyed were willing to pay $6.67 per drink, but decided on $7.00 per drink at our event and feel it appropriate to continue to do so. Our survey information also indicated 7% were willing to pay $10.00 and up with an average of $14.87 per drink. This indicates a very positive opportunity in providing high end drinks, and also vertical integration into premium liquor. Advertising and promotion We will be using the power of social media to promote our speakeasy themed bar. We will be posting on Facebook, Instagram, and Twitter about our events to better reach a larger market, WSU students, who heavily rely on these social media plat forms for communication. Our Facebook and Twitter pages have over 700 followers and growing.We will create an event page on Facebook and invite all our friends. We think this is effective because our friends will go because we are putting it on, so they’re going to tell their other friends to come and word of mouth will spread about this event. Hopefully it will create buzz and get a lot of people to come check out our bar. We will also be posting pictures on Instagram leading up to the event just so our followers will know what to expect and get them excited. We will be gaining followers by going to WSU groups of social media and posting on there about our Idea. We will be posting daily or weekly until opening day. We will also, when it gets closer to opening day, be passing out flyers at the Washington State University Campus and also posting posters all over campus with detailed information. We want to let the whole community know that this is a class project for an upper level class. Most people will go to support since students put it on and they know it will be affordable. This will be the most important step in getting a good turn out for our business. VI. Designand Development Plans Development tasks We will be developing a layout for the bar and how it will be set up. We have an idea of how it will be. We want to make a secret door like they had in the actual speakeasies back then, so it can be secretive and stick to our theme. Ultimately we are tying to recreate that moment in time into a bar. We are going to buy decorations to make the bar more 1920’s. We will also provide a section for the live jazz band, and also a dance floor. We are going to have photo-shoot set up, so customers can leave with a souvenir to remember the night that they went to a speakeasy bar. Also all the staff, which is the team, will be dressed up in style of the 1920’s. The only products we will be providing are the drinks but that’s collaborative with the bar. We will not be providing the alcohol, therefore all profits will go the bar provide us their venue. We will talk to the owner and bartender to make 1920 inspired drinks but we are not responsible for providing the supplies. No money will be going in or out from the alcohol consumption.
  10. 10. 10 Costs Our expenses are going to be all our decorations, the jazz band, costumes, and maybe if we have to pay rent for the venue. We are going to ask if we can use the venue for free, because we will not be interfering with their profitability with their alcohol. We are not sure if we are going to charge an additional entry fee, its up to change. all our total costs for everything should between $0-$300. We will be possibly fundraising for our business or we will be putting in money from our own pockets for costs. Our budget is limited. We will ask for donations during opening day during the speakeasy bar to raise money for a charity. We want to make this experience as selfless as possible. It is a business but we are trying to get experience running a business so we are not focused on making money for ourselves. We care more of putting the maximum effort to run a business but to give back to the community simultaneously. Proprietary issues Our contractual agreement will be with the bar we choose, we will agree to compliment their service not substitute their service. We plan to work with the bar rather than take their business. We are just renting the venue and providing our speakeasy experience, we don’t own any part of the bar we rent. Also, our staff will be qualified. If our team plans to serve alcohol, the member(s) will have licenses to legally do so. We will operate in legal terms and will follow every policy regulated to bars. Our ownership of the business is dividing as accordingly and is subject to change: Giuliana Plut 19% Francisco Guerrero 17% Meron Gurmu 16% Izumi Hara 16% JC Lomeli 16% Garrett Bogar 16% VII. Manufacturing and Operations Plan Operating Cycle Very important to the success of our business in the quick delivery of drinks and food to our customers. Servers will need to quickly take and deliver drink orders within the established 8 minute time period. As soon as food is prepared it should quickly follow. Alcohol should be properly stocked and accounted for using an electronic bar code system. Said system would require bar tenders to scan out alcohol thus increasing shrink accountability. During peak services times (10p.m. – 1a.m.) one extra bar tenders will be present to quickly fill drink orders. Weekends, holidays, and special events will be staffed with one extra server who will help with taking orders, cleaning and prep. Geographical location Behind Closed Doors should be located in a social-downtown area. Although the specific location has not yet been decided it is planned to be in the Spokane/Pullman area. Our survey
  11. 11. 11 found that about 40% of participants preferred Stubblefields in Pullman, 32% Valhalla, 16% The ZZu, 18% Rico’s, and 16% The Coug. Our two prime host-bar picks would be Stubblefields and Valhalla because of their large customer base. Both of our top picks are great locations because they are in high foot traffic area. Along with high foot traffic both bars have high brand recognition on campus. Proper licenses have been awarded to both establishments. Facilities and improvements. Any space would been to provide large enough space for a live band and dancing. A bar area and plenty of table space would be idea with an estimated 15 tables. During out startup period we plan to team up with another bar. This bar would already have the necessary equipment. Such equipment would include industrial grade kitchen grills, fryer, freezers, refrigerators, sinks, and comply with all state health regulations. Finding our own location would be considered after proven success. Our future location would require all stated kitchen equipment and dish wear along with proper health inspector approval. Tables and minimal stage equipment would also be of great advantage. Strategy and plans All food and drinks will be made in house by our qualified staff. Potential suppliers would include Sysco the food delivery service. They will do weekly food drops consisting of the needed supply list given to them. Several beer companies would be responsible in bringing our bar alcohol. Regulatory and legal issues Food handler licenses will be required by staff who fall under Washington state laws and regulations. The liquor control board will sign off on all necessary paper work and permits need for the sale of alcohol. During our partnership with a host bar there will be an established contract stating how much revenue will go to behind closed doors. This document will be legally binding and notarized by a licensed official. All members of management will be obligated to sign a non-compete contract. This contract will unsure the lively hood of Behind Closed Doors. Said contract would be legally enforceable and call for individual to reframe from managing any other bar with in a 50 mile radius for a three years period.
  12. 12. 12 VIII. ManagementTeam Organization General Manager: Giuliana Plut Photographer: Francisco Guerrero Social Media: Meron Gurmu Marketing: Izumi Hara Marketing & Time Period Specialist: Francisco Guerrero Business Operations Coordinator: JC Lomeli Event Promotion & Performance Coordination: Garrett Bogar Division of Business ownership: GP-19%, FG-17%, MG-16%,IH-16%, JC-16%, GB-16% Key management personnel All members of management will perform the roles they were assigned along with filling in for every other position. Each member of management (listed above) will double as servers, bar tenders, cooks, cleaners, and any other position with in the business. Giuliana Plut, our acting General Manager, would be in charge of overseeing all business operations along with every one under him. Mr. Guerrero will also be our photographer on nights the service is offered. Meron Gurmu will be in charge of Social media with in the business. Ms. Gurmu will update social media accounts and maintain Behind Closed Doors on social media platforms. Izumi Hara will act as or head of marketing. Ms. Hara will increase our market exposure through the use of various marketing avenues. Marketing and Time Period Specialist will help coordinate due dates and give aid in marketing as well. JC Lomeli our Business Operations Coordinator will manage and help organize all business functions. Garrett Bogar will be head of Event promotion and Performance Coordination. Mr. Bogar will make sure all live performances with in the business go according to plan. He will also make sure customer experience is up to par. Management compensation and ownership All workers including management will be paid state minimum wage. Members of management will earn bonuses depending of year-end revenues and percentage of business ownership. Because of our minimum wage policy most employees and members of management will be earning less than they had in previous jobs. IX. Sustainability and Impact Building a sustainable business with minimal impact to the environment is a core component of Behind Closed Doors. We believe that the key to business success is abiding by all environmental regulations all the while leading the way to a more profitable cleaner earth. At
  13. 13. 13 Behind Closed Doors we hope to spread the message of clean business practices by way of continued business expansion. Used oil left can pose as a huge problem for the environment that is way Behind Closed Doors will donate all of our used oil to bio-fuel refinery companies. By doing this we will be able to reduce waste and our overall carbon footprint. Another key element in our sustainability approach will be the use of recycling bins. All staff will separate plastics, cans, papers, and biodegradable material as such. Our Biomaterial will be donated to local community gardens to be used as compost. All other material will be taken to recycling facilities. Any proceeds from recycled material will be donated to local Boys and Girls Clubs. Behind Closed Doors will screen and only do business with individuals and organizations that abide by all environment safety laws. Our business will support select community cleanup efforts via staff volunteering and cash donations. As Behind Closed Doors begins to grow into a fruitful business it will continue to go above and beyond with matters of environmental conservation. Our business hopes to pave the way and establish procedures other business could follow. X. Overall Schedule Deadlines & Timelines  Incorporation of the Venture: Completed  Completion of design and development: a. Social Media Account Implementation: Completed b. Social Media Graphics Implementation: 02/27/2015 c. Social Media Promotion Frequency: Friday & Saturday of Every Week d. Hard Print Promotion Materials Obtained: 03/20/2015 e. Hard Print Promotion Materials Distributed: Friday & Saturday, Weekly  Event Trial Run: 04/13/2015  Interior Event Furnishings Obtained: 04/03/2015  Event Date: April 17th, 2015 Ramp-Up Consideration During peak services times (10p.m. – 1a.m.) one extra bar tenders will be present to quickly fill drink orders. Weekends, holidays, and special events will be staffed with one extra server who will help with taking orders, cleaning and prep. Schedule Slippage Schedule slippage will be of most concern regarding sufficient inventory. Potential slippage will occur if there are misallocated orders or deliveries with Sysco (our food delivery service), and/or with our local alcoholic beverage distributors. To counteract the potential for
  14. 14. 14 insufficient operation supplies, an overstock of 25% of food/alcoholic beverages will be perpetually maintained. XI: Critical Risks, Problems, andAssumptions Implicit Assumptions & Risks  Overconsumption of alcoholic beverages o Violence  Proper Bouncing Staff will be in constant supervision and regularly intervaled facility patrol to ensure patron safety; in the nearby outside facility, and within all spaces that reside within the facility. o Sexual Assault  Proper Bouncing Staff will be in constant supervision and regularly intervaled facility patrol to ensure patron safety; in the nearby outside facility, and within all spaces that reside within the facility. o Drunk Driving  Proper Bouncing Staff will be in constant supervision and regularly intervaled facility patrol to ensure patron safety; in the nearby outside facility, and within all spaces that reside within the facility. This includes expertise awareness for patrons intending to operate a motor vehicle while impaired. Supplemental taxi companies will be on standby to accommodate and taxi information will be readily available. o Alcohol Poisoning  Wait staff and bartenders are educated on recognizing patron limits, and will not over serve. The staff are required to attend mandatory bi-weekly training to remind and continually train on recognizing when patrons are reaching unsafe intoxication capacities and the severity that can ensue if not handled carefully. o Vandalism  Proper Bouncing Staff will be in constant supervision and regular ly intervaled facility patrol to prevent potential vandalism.  Food Safety o Necessary Certification  Cooks and wait staff are required to stay current with food handler permit certification guidelines pertinent to the business and state standards. Behind closed doors will remain compliant with the food and health administration and make it a point to keep it a high priority. o Proper equipment  Necessary industrial equipment will be utilized to keep all food products safe and ready for consumption. o Equipment maintenance
  15. 15. 15  Hill yard’s appliance maintenance corporation is regularly scheduled to ensure all food and beverage equipment is above condition standard.  Illegal Activity associated with the nature of a Speakeasy o All business interaction, communication to financial quality, as well as all patron interaction will be transparent in nature to deter any suspicion of illegal activity that may be associated with the nature of our business; such as illegal drug use or sales, or illegal gambling. Major problems or other risks Price cutting by competitors will not be of concern. The unique nature and environment that our business venture provides will allow us to be partially negligible to competitor pricing focuses. Design or manufacturing costs in excess of estimates: The company partners will plan for such an occurrence by establishing a minimum design and manufacturing cost of any essential items, while pursing an ideal cost on favorable items in hopes of over performing our set base. To counter balance the possibility of sales projections we will establish all costs of favorable production and operation material, buy material of lesser than desirable quality, and again, hope to over perform our projection. To counter the possibility of unmet product development schedules we have given all deadlines a grace period for management operation flexibility. Critical Assumptions, problems, and risks. The most critical assumption, problems, and risks that we have accounted for are low attendance, inaccurate food and beverage acquisition, and patron apathy towards a nuance in themed bar events such as ours. In hopes of a healthy attendance, we have focused our marketing efforts towards a strong social media campaign to raise awareness. We have conducted online surveys and in person questionnaire’s to research what the consumer wants at an event such as ours. To account for proper food and beverage allocation we have obtained expert advice from local bar owners and work to build a report with food and beverage distributors in the area to ensure accurate and timely delivery requests. To combat apathy our focus is on brining a more than sufficient quality live performance individuals. XII. The Financial Plan Behind Closed Doors plans to operate, and accrue revenue on a low-risk financial basis, for one calendar year. Partnering with existing venues and splitting profits will raise initial Capital. During our first year of operation, Behind Closed Doors intends to hold bi-weekly events, and strictly assumes a $200.00 sale and marketing expense per event. Profits will be reached only if drink sales exceed average unit sold at the partnering venue, and/or when drinks are purchased from our exclusive Behind Closed Door’s drink menu. Profits reached strictly from these sale circumstances will be our source of revenue. Profits will be invested towards purchasing our first location. Additional capital, if and how much needed will be acquired through small business loans, validated by sales records through partner events over the past
  16. 16. 16 year. Projected sales were calculated from past events, and expenses were calculated from balance sheets from bars with similar business plans, staffing, and expenses. Pro Forma Income Statement Shared Venue Purchased Location Sales (bi-weekly event) $41,600 Projected Sales $520,000 Direct Cost of Sales $0.00 Direct Cost of Sales $47,000 Other Cost of Goods $0.00 Other Cost of Goods $0.00 Total Cost of Sales $0.00 Total Cost of Sales $47,000 Gross Margin in $ $41,600 Gross Margin in $ $473,000 Gross Margin in % 0% Gross Margin in % 91% Expenses: Expenses: Payroll $0.00 Payroll $70,000 Sales & MKTG Exp. $5,200.00 Sales & MKTG Exp. $10,400 Rent $0.00 Rent $8,000 Utilities $0.00 Utilities $4,600 Insurance $0.00 Insurance $8,500 Payroll Taxes $0.00 Payroll Taxes $10,500 Total Operating Exp: $5,200 Total Operating Exp: $112,000 Net Profit/Sales in $ $36,400 Net Profit/Sales in $ $408,000 Net Profit/Sales in % 87.5% Net Profit/Sales in % 78.5% XIII. ProposedCompany Offering We know that in this type of market, being themed night life venues, have the propensity to fall short of expected revenue or surpass sales predictions. Our dollar figures in our pro forma income statement were comprised from one single event, and therefore lack a more precise projection that would be possible from aggregating over several events. Because of this, and other unforeseen variable fluctuations in cost of sales or operating expenses, we are seeking 75% of the net profit of sales in dollars during our first year with a purchased location totaling $302,000. During our first year partnering with local venues we fully expect to obtain, at the very least, $36,400 in net profit from sales. We are confidant in reaching this number because our market research strongly indicates there is a demand for our unique type of night life experience, barriers to entry are low, and competitive themed venues are minor. Net profit in sales for our year of partnering with local venues will serve the sole purpose of financing our first purchased location in the following year. If our $36,400 is reached and we can acquire small business loans than no outside investors will be sought. If it is the case that one of the two are not reached and we fall short of the capital we need to purchase our first location
  17. 17. 17 than we will look towards outside investment options. For every $25,000 acquired from outside investors, Behind Closed Doors is willing to offer 5% ownership of our business. 70% of net profit in sales, starting our first calendar year with our purchased location, will go towards paying our founders salaries relative to their ownership percentage, 15% is budgeted towards unexpected changes in expenses, and 15% will be budgeted and invested towards expansion to new Behind Closed Doors locations.