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Business plan
Carly Neil
MBA 992 Venture Management
1
Business Plan June 2016
Sand CitySport & Fitness
Business Plan
Prepared for: Professor Marvin Painter, Ph.D.University of SaskatchewanEdwards School of Business
Prepared by: Carly NeilMBA 992
Venture Management
June 2016
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Business Plan June 2016
Executive SummarySand City Sport and Fitness is Saskatchewan’s first ever indoor beach volleyball facility, and it is
open all year around. The business will have a strong focus on sport, fitness and fun, with an
emphasis on creating a social atmosphere for customers. There will be bright beach-like murals
on the walls, beach umbrellas, wooden chairs and beach décor to provide the beach
atmosphere that sets Sand City apart from any other business in the City of Saskatoon.
This facility will feature three indoor beach volleyball courts open 12 months of the year and
two outdoor beach volleyball courts open during the summer months, ideally open from May to
September. In order to successfully promote the social atmosphere and keep up with consumer
demands, this facility will also feature a kitchen and bar.
There are four sessions of beach volleyball offered each year, one for every season. Each session
will be run Sunday to Friday, with each day having a different league. Some leagues will be
competitive and some will be more recreational.
The facility will be located on the outskirts of Saskatoon, ideally the North End of Stonebridge.
These areas are easily accessed and allow for a spacious building and parking lot. The size of this
facility is about 22,000 square feet, and requires a capital investment of $4,600,000. Operating
expenses are between $720,000 - $800,000 each year, with the greatest expenses being wages,
Capital Cost Allowance and debt interest.
The organization will have a management team consisting of a CEO and an assistant manager.
There will be a full time kitchen employee, a full time bartender, and part-time employees will
be hired based on amount of sales of the kitchen and bar.
The primary target market of Sand City are the current beach volleyball players (competitive and
recreational) and University and high school students. The secondary target market will focus on
the general public who have an interest in sports and physical activity. Sand City will promote
that there are leagues for everyone, regardless of age of skill level.
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Business Plan June 2016
Focusing on the needs and wants of the customer, the value proposition is, “Bringing the Beach
to You. All Year Round”. The company will have a strong focus on the beach atmosphere, and
have a very ‘fun in the sun’ feel for customers. With this in mind, the positioning statement will
be, “Love at First Spike”. It is clever, catchy and fun, and will stick in people’s minds and bring
out the good thoughts that Sand City wants to promote. It is also memorable to use on
promotional materials, t-shirts, and anything that uses the logo.
The cost of volleyball is $500/team, which is a standard price in Saskatoon for a league. The food
menu is specifically appetizers and easy to make food, with an average price of $10. The
beverage menu offers hard alcohol and beer; there is a no glass rule, and draft beer options for
customers are pints ($6.00), pitchers ($20.00), and titanics ($30.00).
The number of customers visiting the facility per day and the amount that each customer
spends are very critical to the success of the business. There will be an aggressive awareness
campaign executed from three months before opening day right through Year 1. We want to
create a buzz and have people talking about Sand City and its offerings. We want people to think
of Sand City as a place with a great atmosphere, good people, good times, and a great food and
beverage menu. The awareness campaign will have a Sand City Squad who go around Saskatoon
to events, lounges, schools, and anywhere with a social following and promote Sand City and its
offerings. There will be features on news stations, radio, social media, and a strong focus on
word of mouth to create the buzz that will help gain attention.
There is an expected gross profit of over $800,000 in Year 1, growing to $1,200,000 by Year 5.
The sales generated come from an average expected number of customers per day of 189 in
Year 1, growing to 252 from Year 3-5. There are essentially two revenue streams with this
business: volleyball session revenue and food and beverage sales. The volleyball revenue is
$378,000 in Year 1 with food and beverage sales coming to $653,000. By Year 3 the volleyball
session revenue is $529,000 and food and beverage sales are $900,000. Once all costs are
accounted for, the Net Income in Year 1 is $101,000 and grows to $377,500 by Year 5. These
numbers are very promising for investors.
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Business Plan June 2016
The two main points to consider are if the business can attract the expected number of
customers and if they will spend the expected amount of money. Analysis shows that this is
possible. The expected numbers used were quite conservative, to ensure that we were not
overshooting the projections. In fact, if just 10% more customers come than expected, the sales
projections will grow tremendously.
In conclusion, Sand City Sport and Fitness will see success in the City of Saskatoon. This company
has a first-mover advantage in the province, and has a very different offering than anything else
in the area. With a fun and energetic team running the business, the atmosphere and happy
customers will continue for years to come. People will be thinking let’s head to the beach, “Sand
City: Love at First Spike” in no time.
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Business Plan June 2016
Table of ContentsExecutive Summary........................................................................................................................2
1.0 Introduction..............................................................................................................................9
1.1 What Does Beach Volleyball Look Like?...............................................................................9
1.2 Program Offerings................................................................................................................9
2.0 Operations Plan......................................................................................................................10
2.1 Organizational Structure....................................................................................................10
2.2 Site Plan..............................................................................................................................11
2.3 Floor Plan............................................................................................................................12
2.4 Beach Volleyball Courts......................................................................................................12
2.5 Kitchen & Bar......................................................................................................................13
2.6 Change Rooms and Washrooms.........................................................................................14
2.7 Office & Storage.................................................................................................................14
2.8 Capacity Limits....................................................................................................................14
2.9 Average Business Day.........................................................................................................15
2.10 Service Providers..............................................................................................................16
2.11 Capital Budget..................................................................................................................16
2.12 Net Working Capital.........................................................................................................18
2.13 Operating Budget.............................................................................................................18
3.0 Human Resources Plan...........................................................................................................20
3.1 Organizational Structure....................................................................................................20
3.2 Job Descriptions.................................................................................................................21
CEO......................................................................................................................................21
Assistant Manager...............................................................................................................21
Full-time Bartender..............................................................................................................22
Full-time Kitchen Employee.................................................................................................22
3.3 Wages and Benefits............................................................................................................22
3.4 Human Resources Strategy.................................................................................................23
4.0 Marketing Plan........................................................................................................................23
4.1 Product & Services.............................................................................................................23
4.2 Place...................................................................................................................................23
4.3 Who are the Customers?....................................................................................................23
4.4 What is the Value Proposition?..........................................................................................24
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Business Plan June 2016
4.5 Positioning Statement........................................................................................................24
4.6 Customer Feedback............................................................................................................24
4.7 Competition........................................................................................................................25
4.8 Price....................................................................................................................................25
4.9 Promotion Strategy............................................................................................................26
4.9.1 Awareness Campaign..................................................................................................26
4.9.2 Sand City Squad...........................................................................................................26
4.9.3 Global and CTV Morning Shows..................................................................................28
4.9.4 Social Media: Facebook, Instagram, YouTube.............................................................28
4.9.5 Radio Advertisements.................................................................................................29
4.9.6 Booth in Arts Tunnel...................................................................................................30
4.9.7 Word of Mouth...........................................................................................................30
4.10 Marketing Strategy...........................................................................................................30
4.11 Marketing Expenses.........................................................................................................30
5.0 Accounting and Financial Plan................................................................................................31
5.1 Number of Customers........................................................................................................32
5.2 Gross Profit Projections......................................................................................................33
5.3 Year 1.................................................................................................................................33
5.3.1 Number of Customers – Year 1...................................................................................33
5.3.2 Revenue Streams – Year 1...........................................................................................34
5.3.3 Year 1 Gross Profit.......................................................................................................35
5.4 Year 2.................................................................................................................................36
5.4.1 Number of Customers – Year 2...................................................................................37
5.4.2 Revenue Streams – Year 2...........................................................................................37
5.4.3 Year 2 Gross Profit.......................................................................................................38
5.5 Year 3, 4 & 5.......................................................................................................................39
5.5.1 Number of Customers - Year 3, 4 & 5..........................................................................39
5.5.2 Revenue Streams – Year 3...........................................................................................39
5.5.3 Year 3 Gross Profit.......................................................................................................41
5.5.4 Year 4 & 5 Gross Profit................................................................................................41
5.6 Projected Financial Statements..........................................................................................42
5.7 Financing Budget................................................................................................................42
5.8 Base Case Sales...................................................................................................................43
5.9 Dividend Policy...................................................................................................................43
5.10 Economic Forecast............................................................................................................44
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Business Plan June 2016
5.11 Financial Performance......................................................................................................44
5.12 Net Income, Dividends and Operating Cash Flow.............................................................44
5.13 Net Income Break Even....................................................................................................45
5.14 Goals.................................................................................................................................46
5.15 Sensitivity Analysis – Number of Customers.....................................................................46
5.16 Sensitivity Analysis - $ Spent per Customer......................................................................47
5.17 Sensitivity Analysis Chart..................................................................................................48
6.0 Summary of Business Plan......................................................................................................49
Appendix 1....................................................................................................................................50
Table of FiguresFigure 1 - Indoor Beach Volleyball..................................................................................................9Figure 2 - Organizational Structure...............................................................................................10Figure 3 - Site Plan........................................................................................................................11Figure 4 - Floor Plan......................................................................................................................12Figure 5 - Volleyball Court Dimensions.........................................................................................13Figure 6 - Capacity Limits..............................................................................................................14Figure 7 - Average Business Day & Volleyball Schedule................................................................15Figure 8 - Capital Budget...............................................................................................................17Figure 9 - Operating Expenses - Year 1.........................................................................................19Figure 10 - Annual Operating Expenses........................................................................................20Figure 11 - Menu Pricing...............................................................................................................25Figure 12 - Sand City Squad Example............................................................................................27Figure 13 - Promotional Card........................................................................................................27Figure 14 - Facebook Example......................................................................................................29Figure 15 - Awareness Campaign Costs........................................................................................31Figure 16 - Marketing Expenses....................................................................................................31Figure 17 - Maximum Number of Volleyball Players per Day.......................................................32Figure 18 - Gross Profit Snapshot.................................................................................................33Figure 19 - Year 1 Customer Projections.......................................................................................33Figure 20 - Volleyball Session Revenue Year 1..............................................................................34Figure 21 - Food and Beverage Revenue Year 1...........................................................................35Figure 22 - Customer Spend per Day............................................................................................36Figure 23 - Year 2 Customer Projections.......................................................................................37Figure 24 - Volleyball Session Revenue - Year 2............................................................................37Figure 25 - Food and Beverage Revenue - Year 2.........................................................................38Figure 26 - Number of Customers - Year 3, 4 & 5.........................................................................39Figure 27 - Volleyball Session Revenue - Year 3............................................................................40
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Business Plan June 2016
Figure 28 - Food and Beverage Revenue - Year 3.........................................................................41Figure 29 - Capital Budget Summary............................................................................................42Figure 30 - Base Case Sales...........................................................................................................43Figure 31 - Dividends Paid............................................................................................................44Figure 32 – Income Statement......................................................................................................44Figure 33 – Net Income, OCF & Dividends....................................................................................45Figure 34 –Break Even Analysis....................................................................................................46Figure 35 – Sensitivity Analysis – Number of Customers...............................................................47Figure 36 - Sensitivity Analysis - $ Spent per Customer................................................................47Figure 37 - Sensitivity – Customer Spend $21.50..........................................................................48
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Business Plan June 2016
1.0 IntroductionSand City Sport and Fitness is Saskatchewan’s first ever indoor beach volleyball facility, and it is
open all year around. The business will have a strong focus on sport, fitness and fun, with an
emphasis on creating a social atmosphere for customers. This facility will feature three indoor
beach volleyball courts open 12 months of the year and two outdoor beach volleyball courts
open during the summer months, ideally open from May to September. In order to successfully
promote the social atmosphere and keep up with consumer demands, this facility will also
feature a kitchen and bar.
1.1 What Does Beach Volleyball Look Like?
Figure 1 below shows a very good example of what Sand City will look like. There are beach
volleyball courts lined up side-by-side, bright and happy murals on the walls, and a very beach-
like atmosphere; visually promoting that “fun in the sun” feeling for customers.
Figure 1 - Indoor Beach Volleyball
1.2 Program Offerings
The beach volleyball program will run four sessions per year, one every three months, for each
season. Each session will be Sunday-Friday, about 75 days, equaling 300 days of volleyball
sessions per year. Each week day from Sunday to Friday will have a different league, for a total
of six leagues per session. Leagues will run on different skill levels from recreational to
competitive, each running on different nights of the week.
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Business Plan June 2016
This business plan will first go over the Operations and Human Resources plan, the Marketing
Plan, and the Accounting and Financial Plan.
2.0 Operations PlanThe following section describes the operations plan for Sandy City Sport and Fitness.
2.1 Organizational StructureSand City will be incorporated to allow for greater protection against liability to the owners,
provide ease of transfer of ownership, and to take advantage of the deferral of taxes of the
business income. The Board of Directors will be composed of the management team, a sport
professional from the community and the company lawyer, who is also an entrepreneur. The
management team consists of the CEO, Carly Neil and the Assistant Manager, to be determined.
The following Organizational Chart (Figure 2) shows how the facility will be run. There is
essentially two businesses within this facility to be managed; these are the kitchen/bar and the
sport management. Descriptions of the positions are included in the Humans Resources section
of this business plan.
Carly Neil
Carly NeilCEO
Carly Neil/Assistant Manager
Kitchen/Bar Manager
Carly Neil/Assistant Manager
Sport Manager
TBA
Assistant Manager
Part Time Bartender
Full Time
Bartender/Manager
Full Time
Kitchen Employee/Cook
Figure 2 - Organizational Structure
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Business Plan June 2016
2.2 Site PlanThe facility will be located close to the outskirts of Saskatoon. There should be an easy route to
the location and an open, spacious parking lot for the customers. The optimal location is either
the North End or Stonebridge. Each location has a lot of space for construction of this type of
facility, and are reasonably priced. Because of the court size requirements, the kitchen/bar and
large bathrooms, the building needs to be about 22,496 square feet. According to Colliers
Property Management, buildings need to comprise about 25% of the site area. Therefore, a
building this size needs around 2 acres (88,000 square feet) of land.
According to the City of Saskatoon, parking stall requirements are one for every 258 square feet,
so this site needs at least 85 parking stalls. The following Site Plan (Figure 3) shows what the
facility and parking lot will look like from above, using the corner of Millar Ave and 66 th Street as
an example. This proposed parking lot can provide 92 spacious parking stalls.
Figure 3 - Site Plan
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Business Plan June 2016
2.3 Floor PlanThe floor plan is shown in Figure 4 below.
2.4 Beach Volleyball Courts
The main section of the facility will feature three indoor beach volleyball courts and two
outdoor beach volleyball courts. The floor plan is designed so that the indoor courts are on the
south wall, adjacent to the two outdoor courts. Each court is set to Olympic regulations and
measures 33x66 feet and is surrounded by nets that will be ceiling height to ensure no
volleyballs enter the lounge area. The building must have the outdoor courts running north to
south to ensure that the sun is not in the player’s eyes.
Carly Neil
Figure 4 - Floor Plan
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Business Plan June 2016
An example of standard Olympic volleyball court dimensions is shown in Figure 5.
Figure 5 - Volleyball Court Dimensions
2.5 Kitchen & Bar
The bar is essential for the success of this business, as it is a major source of revenue. It is 20x23
feet, and is situated in the middle of the facility, for easy access for customers during all
sessions. There will also be a portable bar stand for the summer months for outdoor games. The
tables in the surrounding area of the main bar are 6 feet in circumference, and are movable;
there will be 24 tables inside, with 8 chairs each. There is enough space for 5 feet in between
each table, creating easy access into and out of the chairs without crowding. The bar is 20x23
feet and has enough space for a dishwasher, sink, a large bar fridge, an ice bin and keg storage.
There will also be 15 bar stools at the bar. The table set up is circular and will have a beach-like
feel, featuring umbrellas, wooden chairs, and beach décor.
The kitchen is 29x17 feet, large enough to have a 60 inch range, two deep fryers, a commercial
fridge, a large freezer, food prep station, a triple wash sink, dishwasher, and storage shelves.
The kitchen will be selling only appetizers and easy to prepare food, so storage and prep space is
relatively small.
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Business Plan June 2016
2.6 Change Rooms and Washrooms
The customer change rooms/washrooms are 33x48 feet, to accommodate high volumes of
customers at one time. The women’s washroom has 13 toilet stalls, 9 showers, 60 lockers and
lots of space for changing. The men’s washroom has 7 toilet stalls, 6 urinals, 9 showers, 60
lockers and lots of space for changing. The building also has 2 employee washrooms, each with a
shower and change station. Outside of the employees washrooms there is some small storage
space for cleaning supplies and extra kegs.
2.7 Office & Storage
There is an office right inside the main entrance, behind the front desk, where the CEO and
assistant manager will share the duties of running the business. The office will also be file
storage and will be locked at all times of business.
A storage room is also included at the back of the building with access from the inside and
outside. This can hold bleachers, tables, equipment, stock for the kitchen, and miscellaneous
items.
2.8 Capacity Limits
The capacity limits at any one point in time will be about 255 people in the spring, fall and
winter seasons and 351 people in the summer months. These numbers are generated from the
number of seats in the non-playing area, plus the number of players on the courts. With 15 bar
stools, 24 tables (8 seats each) inside, and 8 tables outside, we can seat 207 customers inside
and 64 customers outside. With the potential average of 16 players per court (8 players a team)
at any time, this brings the max capacity at any single point in time to 255 in spring, fall, and
winter, and 351 in the summer. A snap shot of the capacity is demonstrated in Figure 6 below.
Figure 6 - Capacity Limits
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Business Plan June 2016
2.9 Average Business DayThe normal business days for Sand City are Sunday – Friday, 9:00am – 12:00am. Saturday’s will
be the extra days to host tournaments, events, and parties that can run all day from 9:00am to
12:00am. An example of an average busy business day is shown in Figure 7 below, with
descriptions to follow.
An average busy business day
will begin at 9:00am with the CEO or the Assistant Manager doing the daily administrative
duties. These include taking stock of items in the kitchen and bar, entering employee time
sheets, doing payables, ensuring the facility is clean and bathrooms are stocked, and making a
trip to the Liquor store to pick up alcohol needed to replenish the stock every 2-3 days. This
person will also be there to let the cleaners in the building. The cleaners will come three
mornings a week, for about 2 hours each day, doing a thorough cleaning of the floor on these
days.
As shown in Figure 7, the beach volleyball schedule can run 4:30pm – 11:30pm (focusing on
after-work hours), Sunday to Friday each week, with each game being one hour long. There can
be a total of up to seven games per court each night. For the spring, fall and winter sessions
there can potentially be 21 games per night, and 35 games per night in the summer session.
Carly Neil
Figure 7 - Average Business Day & Volleyball Schedule
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Business Plan June 2016
At 4:00pm the other manager (CEO or Assistant Manager) will arrive to help with the managerial
duties before the busy evenings begin. The night managerial duties will include helping in the
kitchen and bar when needed, ensuring games begin on time, watch for conflicts, socialize with
the customers and ensure that everyone is having a good time. Also at 4:00pm the full-time
bartender and full-time kitchen employee will come in and get their stations ready for the
evening. At around 6:00pm a part-time bartender will come in to help with the busiest hours for
alcohol sales. This person can also help in the kitchen if needed.
At 11:00pm there will be a last call for food and alcohol. By 11:15pm the kitchen and bar can
start to shut down and begin cleaning up. At 12:00am the doors will be locked and all customers
and staff can go home.
2.10 Service Providers
There will be cleaners that come in three times a week for two hours each time. Management
will do all of the internal accounting functions, to minimize service costs. For building
maintenance, an on-call company handyman will be retained for when situations arise. The sand
maintenance will be done each morning, either by the manager or with help from the cleaners.
The indoor courts need to be raked each day, to ensure quality playing space for the customers.
There will be plumbing and drainage installed below each outdoor court, to allow for water run
off when it rains.
2.11 Capital BudgetThe total capital budget to purchase the land, prepare the property, build the facility with 5
beach volleyball courts, a kitchen and bar, is $4,604,182.50. Details are shown Figure 8 below.
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Business Plan June 2016
Capital BudgetLand (Quote from Colliers) 500,000.00$ Gravel (Quote from City Gardens @ $35/cubic metre) 50,000.00$ Excavating 15,000.00$ Paving (Outdoor court area) 80 x 120 feet $8sq ft 76,800.00$
85 parking stalls 9 x 25 feet/stall $8sq ft 153,000.00$ Curbing ($48/lineal foot) $48
(115 + 180 + 250) feet 545 26,160.00$ Building (Quote from City Gardens)
Bathrooms, Kitchen, Office Portion 4440 square feet$220 /square foot 976,800.00$
Recreation Portion 18056 square feet$150 /square foot 2,708,400.00$
Fencing 230 feet of fence $4.25 /foot 977.50$ Landscaping (Quote from City Gardens) 15,000.00$ Sand
Leigh Hanson, costs about = $28.44165 tonnes of sand per court 165
Tonnes of Sand for 3 Indoor Courts $14,077.80Tonnes of Sand for 2 Outdoor Courts $9,385.20
23,463.00$ Equipment (Unit Cost) (Quantity)Volleyballs $90.00 15 1,350.00$ Full System $450.00 5 2,250.00$ Score Keeping $300.00 5 1,500.00$ Bleachers (2 row 15ft) $600.00 4 2,400.00$ Tables (35) $200.00 35 7,000.00$ Chairs (8/table) $20.00 280 5,600.00$ Bar Stools $15.00 14 210.00$ Sand Cleaning $525.00 2 1,050.00$ Washing Stations $150.00 3 450.00$
21,810.00$ Kitchen & BarRange - 60", 6 burner 24" griddle 2 oven 3,840.00$ Large Commercial Fridge 2,588.00$ Freezer 3,422.00$ Deep Fat Fryer $1,130.00 2 2,260.00$ Exhaust Hood 2,490.00$ Storage Shelf 136.00$ Dish Washing Sink 600.00$
Food Prep Station (2 x 6 feet) 160.00$
Plastic Trays (24/pack) $38.00 6 228.00$ Dish Washer $500.00 2 1,000.00$
Hand Sink $100.00 2 200.00$
Ice Bin 2,418.00$ Draft Beer Dispenser 1,650.00$ Bar Fridge 1,200.00$ Misc Kitchen & Bar Supplies 2,000.00$
24,192.00$ Net Working Capital 12,580.00$ Total $4,604,182.50
Carly NeilFigure 8 - Capital Budget
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Business Plan June 2016
2.12 Net Working Capital
For this type of business, no more than $10,000 cash on hand is needed. This cash can be used
to pay for services to the building, inventory, miscellaneous supplies, and miscellaneous costs
that come up day to day. There are no accounts receivable for this business, as there will be a
strictly enforced policy that customers must pay up front. We will have four days of inventory of
food and alcohol on hand. We have deliveries of food from our suppliers, and we will be picking
up our own alcohol. The networking capital budget is broken down below:
Net Working Capital
Cash $10,000.00
Account Receivable $-
Inventory (alcohol) $2,580.00 ($130/keg x4 kegs x4 days)+$500 hard alcohol
Inventory (food) $1,344.00 ($1120 sales x 30% COS x 4 days)
Accounts Payable $(1,344.00)
Total Net Working Capital $12,580.00
We will only have accounts payable for our food, as we will be paying for alcohol in-store every
2-4 days, as we pick it up when needed. Our food suppliers will require payment every 14 days.
As shown in the cash conversion cycle below, we will not require any financing.
Cash Conversion Cycle
Inventory 4 days
Receivables None
Accounts Payable 14 days
No Financing -10
2.13 Operating BudgetYear 1 Operating Expenses come to $720,700, shown in detail in Figure 9. This number includes
the Capital Cost Allowance (CCA – which is 50% in year 1), debt interest, and initial marketing
costs. For the next four years, the operating expenses grow because of the increase of CCA at
100%, a snapshot of the first 5 years is shown in Figure 10, with full detail in Appendix 1.
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Business Plan June 2016
Operating Expenses - Year 1 Including Start-UpGPM
COGS: Food 70%Alcohol 70%Recreation 100%
Other Operating Expenses:Natural Gas, Electricity, Water 70,000$ Accounting & Legal 2,000$ Business License (Quote from City) 85$ Business Tax (Based on $3.5M value/tax $64,000 x 1.3) 83,200$ Marketing 43,700$ Tools and Equipment 2,000$ Repair and Maintenance 2,000$ Telephone and Internet (Phone x2 + internet) $220.00 2,640$ Wages
CEO - Carly Neil 65,000$ Assistant Manager 50,000$
Full Time Bartender 40hrs/week*15 29,450$ Full Time Kitchen Employee 40hrs/week*18 35,280$
Part-time Bartender 4,266$ Benefits 19,044$
Insurance $5000 (kitchen + liquor) + $5000 (building) 10,000$ Cleaning $100 x 2/week x 50 weeks 10,000$ General Supplies (papers, utensils, plates, etc) 5,000$ Sand Replacement 2%/year 469$ Capital Cost Allowance 92,720$ Debt Interest 192,847$ Miscellaneous 1,000$ Total 720,652$
Figure 9 - Operating Expenses - Year 1
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Business Plan June 2016
3.0 Human Resources PlanThe following section discusses the Human Resources plan in full detail.
3.1 Organizational StructureAs discussed and shown in Figure 2 above, Sand City will have a management team of two
people, the CEO (Carly Neil) and Assistant Manager. These two positions will have relatively the
same roles, but the CEO will have ownership of the company, the final say in all business
decisions and is in charge of hiring an assistant manager.
The Assistant Manager should have prior experience working with the public, and have an
outgoing personality. Someone who is in their mid-late 20’s to mid-30’s would be ideal for this
position. Sand City is looking for someone who has some previous experience in a
marketing/social role, but is still fresh to the working environment. This person will be energetic
and will personally takes on investing themselves with the long-term success of the business. A
dynamic relationship between the CEO and assistant manager is key to running this successful
business.
Carly Neil
Schedule 4: Operating Expenses 2017 2018 2019 2020 2021
Accounting and Legal 2,000 2,040 2,081 2,122 2,165 Advertizing (Marketing) 43,700 23,113 23,575 25,108 24,528 General Supplies 5,000 5,100 5,202 5,306 5,412 Insurance 10,000 10,200 10,404 10,612 10,824 Property Taxes 83,200 84,864 86,561 88,293 90,058 Telephone 2,640 2,693 2,747 2,802 2,858 Utilities 70,000 71,400 72,828 74,285 75,770 Repair and Maintenance 2,000 2,040 2,081 2,122 2,165 Business License 85 87 88 90 92 Tools and Equipment 2,000 2,040 2,081 2,122 2,165 Cleaning Services 10,000 10,200 10,404 10,612 10,824 Sand Replacement 469 479 488 498 508 Miscellaneous 1,000 1,020 1,040 1,061 1,082 Wages and Salaries 183,946 192,322 202,571 207,441 212,441 Employee Benefits (salaries) 8.19% 9,419 9,607 9,799 9,995 10,195 Employee Benefits (wages) 13.96% 9,625 10,473 11,576 11,922 12,279 Capital Cost Allowance 92,720 180,419 170,770 161,861 153,601 Debt Interest 192,847 185,173 176,962 168,175 158,774 Total Operating Expenses 720,652 793,269 791,259 784,428 775,742
Figure 10 - Annual Operating Expenses
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Business Plan June 2016
Initially, there will also be a full-time bartender, a part-time bartender and a full-time kitchen
employee. More part-time staff will be added to the organization once sales begin to rise. The
full-time bartender and kitchen employee will ideally be persons with previous experience in a
restaurant or lounge setting. They will be happy working full-time and working for $15/hr and
$18/hr, respectively. They will each take responsibility for their department, and essentially
ensure operations are smooth and can take action when problems arise. They will monitor stock
and ensure their departments are clean and meet standards. There will be a part-time bartender
who will come in at the busy times to help out the full-time bartender, and assist in the kitchen
if needed. This employee could be a student who is looking for part-time evening work while
going to University.
3.2 Job Descriptions
CEO Oversee all business decisions
Be in charge of all human resources activities
Assist with accounting/book-keeping and payroll functions
Be in charge of all marketing decisions
Assist in ensuring facility is clean
Assisting with stock level maintenance
Take care of the everyday administrative tasks
Scheduling Beach Volleyball games
Manage all volleyball teams
Ensure that customers are happy
Assist in the kitchen and bar when help is needed
Assistant Manager Carry out accounting/book-keeping and payroll functions
Be in charge of all marketing decisions
Ensure sand is clean and tidy
Ensure facility is in good shape
Monitor and replenish stock levels (food, alcohol)
Take care of the everyday administrative tasks
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Scheduling Beach Volleyball games
Manage all volleyball teams
Ensure that customers are happy
Assist in the kitchen and bar when help is needed
Full-time Bartender Take responsibility for everyday functions of bar
Monitor and communicate stock levels to management
Ensure area is clean
Communicate scheduling of part-time bartender with management
Full-time Kitchen Employee Take responsibility for everyday functions of kitchen
Monitor and communicate stock levels to management
Ensure area is clean
3.3 Wages and BenefitsThe CEO will be on a salary of $65,000 per year. The Assistant Manager will be on a salary of
$50,000/year. These salaries are justified for this start-up as both people will relatively young
and have only a few years of prior work experience. Also, as an owner, the CEO can pay
dividends in good years in addition to salary. These salaries can see an increase upon success of
the company. Both positions will have 8 working hours per day, 5 days a week. Outside work
hours will likely be required for these positions at least in the starting phase of the business. The
full-time bartender will be paid hourly, at $15/hour, and working 8 hours a day, 5 days a week.
The part-time bartender will be paid $12/hour and will be working about 4-5 hours a day, 4-5
days a week. The bartenders will also be receiving tips from the customers, which will be shared
based on hours worked. The full-time kitchen employee will be making $18/hour, and working 8
hours a day, 5 days a week. This employee will also be sharing tips with the bartenders, which
will be a percentage of food sales each day. This number will be determined once operations
have been started.
3.4 Human Resources StrategyIn order to ensure that Sand City is successfully and efficiently run, performance assessments
will be done every three months to communicate with one-another what needs to be changed,
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and what is working well. As number of customers grows each beach volleyball session,
management will consider if additions to the part-time staff are needed.
4.0 Marketing PlanThe next section describes the full marketing plan as well as the aggressive awareness campaign
that will be executed.
4.1 Product & ServicesSand City will have a first-mover advantage for indoor beach volleyball in the entire province of
Saskatchewan. Outdoor beach volleyball in Saskatoon is extremely popular. Currently, one
summer session of games (Sunday-Friday from May-August) for our competition (i.e. Sports on
Tap) is easily selling out in a matter of days once registration opens. There is a large market of
customers who play beach volleyball, and Sand City will be able to provide the opportunity to
play this sport and stay active all year round.
Complimentary to the beach volleyball services, a secondary offering is the social atmosphere
offered by Sand City. There will be a large focus on the food and alcohol offerings, as this social
aspect is what a lot of the beach volleyball players are looking for when joining a league. The
food will be mostly appetizers and small snack foods, and the bar will have a no glass rule and
will feature draft beer and hard alcohol.
4.2 PlaceAll of the Sand City offerings will be held at the facility. The promotion will be throughout
Saskatoon, and awareness will be throughout the province.
4.3 Who are the Customers?The target market of Sand City is very diverse. The primary target will be the current beach
volleyball players in Saskatoon and area, including competitive and recreational groups. These
will be the people who play at Sports on Tap and the Sutherland Bar in the summer sessions and
the people who play in beach volleyball tournaments in the summer all over Saskatchewan.
The secondary target market will be University and high school students. The student
demographic is very large in Saskatoon as there are many high school and post-secondary
education facilities throughout the City; the largest is the University of Saskatchewan. The
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Business Plan June 2016
school boards can also be prospective customers, as this sport could be integrated into the
physical education curriculum. The final target market of Sand City will be the general public;
raising awareness that there is no age limit and essentially anyone can play beach volleyball no
matter how old they are.
4.4 What is the Value Proposition?The value proposition is taken from the customer’s point of view. What is it that they would
want from this business, and what are we promoting that is different from anything else in the
City of Saskatoon?
Sand City: “Bringing the beach to you. All year round”
The first words that come to mind when someone thinks or hears Sand City will be: atmosphere,
team, sport, fun, cheering, food and beverage, and socializing. These will be the focus of the
company; all employees will embrace these qualities of Sand City and ensure that it is always a
fun and positive atmosphere for customers.
4.5 Positioning Statement The positioning statement that we want for Sand City is something that is funny, sporty, and
memorable. The goal is to have a short saying that can be put on t-shirts, signs, promotional
materials, and stick in everyone’s mind as something clever. The Statement chosen is:
Sand City: “Love at First Spike”
Once Sand City’s reputation is built and awareness has grown, we can use this on all
promotional materials. Just imagine hearing, “Sand City Sport and Fitness. Love at First Spike”.
4.6 Customer FeedbackWith such a large focus on fun, Sand City will have a policy of very open and honest
communication with customers. All staff will be very approachable and open to receiving
feedback. Handling complaints will be a positive experience for customers. We want to try to
make all of our customers happy, and will take complaints and feedback seriously. There will be
a comments box at the facility and also on the website for customers who may not feel
comfortable expressing their concerns with the staff.
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4.7 CompetitionThe main competitors for Sand City are Sports on Tap and the Sutherland Bar. They both offer
beach volleyball sessions in the summer months, and if there is bad weather they have to cancel
the games. Sand City has a competitive advantage in the summer session of no cancelled
games; as we will only be running three league games at once in the summer months, so they
can always be moved inside. The main competitive advantage is that people can play beach
volleyball all year round, there are no limiting factors when it comes to weather. People can
enjoy the beach atmosphere every day of the year if they choose.
4.8 PriceThe price for beach volleyball league is $500.00/team per session; this is a standard price in
Saskatoon. If there are 6 people on a team the cost is about $83.33/person, and with 8 people
on a team it is $62.50. This is a very reasonable price to pay for a recreational activity lasting 3
months. The price of food and drinks are shown in Figure 11 below:
Figure 11 - Menu Pricing
The average price of a food menu item used to calculate expected revenues in the financial
projections of Sand City is rounded to $10. The following numbers are what are used to
calculate expected food and beverage sales per team each day:
An average sale of 2 appetizers/team = $20/team
An average of 2 pitchers of beer/team = $40
An average of 2 single hard drinks/team = $10
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FoodWings 12.00$ Nachos 15.00$ Fries 5.00$ Mozza Sticks 8.00$ Chicken Fingers & Fries 12.00$ Grilled Cheese & Fries 8.00$ Burger 7.00$
DrinksBeer Pint 6.00$
Pitcher 20.00$ Titanic 30.00$
Hard Alcohol Single 5.00$ Double 8.00$
Pop 2.00$ Water 1.50$
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Business Plan June 2016
4.9 Promotion StrategyPromotion will happen through a variety of ways. There will first be a large awareness campaign,
followed by a strong marketing plan to follow for the next five years.
4.9.1 Awareness CampaignGaining awareness prior to opening the doors is very important for Sand City. There needs to be
a large awareness campaign to gain interest in the sport of indoor beach volleyball so that the
first session can be as full as expected. We want to focus on building momentum, so before
completion of construction, we will start to get people talking.
The strategy is to begin about two-three months before opening day. We can start by going
around and asking people if they would be interested, we can demonstrate what we have to
offer, begin rolling out a media presence, and promote awareness. In this time we can start to
have wait lists for teams to sign up, and possibly begin early registration. With about three
weeks left, the extremely aggressive awareness campaign will begin. A good length of the final
awareness campaign is three weeks; two weeks does not gain enough time and anything more
than three weeks may lose hype. The entire campaign from the beginning and continuing into
Year 1 will utilize sources such as a Sand City Squad, news stations, social media, radio, the
University and word of mouth, each discussed below.
4.9.2 Sand City SquadThe Sand City Squad will consist of a team of people who go around Saskatoon to events,
functions, malls, the University, lounges, and anything that has a social following of the target
market of the company. The Squad’s members will consist of all of the employees of Sand City,
some of their family and friends who are willing to help out with awareness and promote the
brand and offerings of Sand City. The Squad will be similar to that of the Molson Extreme Team
(see Figure 12) who go to events and promote the brand with potential customers.
The Sand City Squad will engage with customers by playing games, holding contests, and just
promoting that what they are offering is fun and different than anything else. All of the
members of the Squad will wear items that represent the brand and will be having a good time
promoting the products and services.
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Business Plan June 2016
Figure 12 - Sand City Squad Example
The Sand City Squad will also be putting up posters, handing out cards and brochures to gain
awareness all over the City. An example of a card to hand to potential customers is shown in
Figure 13 below.
Figure 13 - Promotional Card
This card has all of the information needed for a potential customer. It also promotes the grand
opening weekend, which will be crucial for getting customers to come and see the facility and
that indoor beach volleyball will be a ton of fun and a great success. The grand opening will be
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Business Plan June 2016
two days of come and go trials of the courts (free for everyone), with games set every few hours
for people who would like to enter a team in for fun. There is potential for about 500 people
throughout the grand opening, and there will be a budget for one free appetizer and two free
drinks per person. This should be enough to cover everyone, as not all customers will be eating
and drinking.
4.9.3 Global and CTV Morning Shows
Being featured on the Global and CTV Morning shows will be great in gaining awareness of all
ages, especially the thirty-plus age category of viewers who may not frequent the social scene in
the City as often. The morning shows are always willing to host new, local companies to help
them gain awareness and promote what their brand is about. We simply just get in contact with
the Stations and pitch our concept. Not only are these featured on TV, but they move on to the
News Station’s website and social media platforms as well. People can share the links of the
news interview and help gain an audience through the sharing of the news segments as well.
4.9.4 Social Media: Facebook, Instagram, YouTube
The use of social media is key for the major demographic of Sand City. Social Media is an
essential part of people’s lives in today’s society, and it is very easy to reach a large number of
people in a small amount of time. The Facebook management tools for businesses give many
options for hosting “sponsored” posts or utilizing the Facebook advertising feature. Both of
these Facebook channels give a company the option to target specific groups of individuals.
Some examples are to target people who follow the competitors’ pages, people who are part of
a certain sports team or gym, live in a certain area, dealerships, business organizations, and
professional firms; basically any people or organizations who are likely to put in a beach
volleyball team. You can also choose the number of people you would like to reach, from one to
100,000 if you choose. Instagram “sponsored” posts work the same way as Facebook, and
targeting the specific demographics should be a fairly easy process. An example of a Facebook
page is shown here in Figure 14 below.
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Business Plan June 2016
Figure 14 - Facebook Example
YouTube promotional videos and advertisements are also a great tool to use. Making a short
two minute video, and then sharing it on Facebook should reach a large audience and showcase
what Sand City has to offer and raise awareness of the exciting new concept. Also, YouTube has
mandatory advertisements that viewers have to watch in order to move on to their search. Sand
City could utilize this tool in Saskatoon at certain times of the day, to reach a larger audience of
people who may not watch the News or be active on Facebook/Instagram, or to just gain more
attention to the brand overall.
4.9.5 Radio Advertisements
The use of local radio stations is another essential tool to gain awareness; especially since there
are a variety of stations, each with a different target market. The Rawlco Radio Company in
Saskatoon has provided a recommendation for an awareness campaign for Sand City. A
breakdown of the cost is shown below.
30 Seconds
C95 $65
Rock 102 $55
Average $60
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Business Plan June 2016
A Total Audience Plan (TAP) is what will work best for awareness of Sand City. TAP allows for
25% of messages in Breakfast (AAA) time from 5:00am-10:00am, 40% Daytime/Drive (AA) time
10:00am – 8:00pm and 30% Evening from 8:00pm – 1:00am. There will be 4 ads a day, 3 days a
week, on alternating days; for example, Monday/Wednesday/Friday one week and
Tuesday/Thursday/Saturday another week.
4.9.6 Booth in Arts Tunnel
Hosting a booth in the Arts tunnel at the University of Saskatchewan will gain the student
attention Sand City desires. Doing something out of the ordinary and differently from other
booths will especially help set Sand City apart. Having two people in shorts tossing back and
forth a volleyball, randomly bumping it to students who are walking by, and having loud music
playing is sure to make people stop and have a look. This is also where they can hand out the
brochures and cards for people to take.
4.9.7 Word of Mouth
Lastly, word of mouth is going to be a very important tool for gaining teams at Sand City. The
primary focus of our promotion is to create a buzz to eventually generate word of mouth. If
people stop by and enjoy themselves, they will want to put in a team, tell their friends to put in
a team, who then pass on the word, and the spread is endless.
4.10 Marketing Strategy
Following the awareness campaign, marketing will still continue to be similar and fairly
aggressive, but because of costs, will be scaled down. Also, there will be an initial investment for
outsourcing the construction of a website. We will hire a company to start up the website for
the company, making sure it is sporty, fun, and very integrative for customers. We will also have
the company monitor the website and continuously update it for us when needed.
4.11 Marketing ExpensesThe awareness campaign discussed above is broken down in Figure 15 below to show the total
cost. It is quite a bit more expensive than regular marketing costs, but it is necessary to gain
awareness and to get potential customers in the door.
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Business Plan June 2016
3 Week Awareness Campaign/Marketing Start-up
Signage $10,000
Radio ($60/30sec x 4/day x 3 days) $2,160
50 Posters ($7/poster) $350
2000 Brochures ($32/50 cards) $1,280
Grand Opening (500 People)
Food (1 appetizer/person) $1,500
Alcohol (2 beer/person) $1,800
Total $17,090
Figure 15 - Awareness Campaign Costs
The continuing marketing expenses each year will be $26,610 in year one (accounting for $4000
website start-up), and is $23,113 in year 2, generally staying the same thereafter for the next 4
years and only increasing with 2.0% inflation per year. The breakdown is shown in Figure 16.
5.0 Accounting and Financial PlanThe following section discusses the accounting and financial projections for Sand City. The full
financial plan is shown in Appendix 1 (Excel Spreadsheet). There are different tabs for different
scenarios. The tab labelled “BASE CASE” is the most important one, as it shows all of the
projections found using the base case numbers, which will be demonstrated below.
5.1 Number of CustomersBefore discussing the financial statements and outcomes, it is important to demonstrate the
how the projected number of customers and sales was used to find revenues for each of the five
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Figure 16 - Marketing Expenses
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Business Plan June 2016
forecasted years.
The revenue projections used for this business plan are fairly conservative. This is to make sure
there is no overshooting the amount of customers we will be attracting, or the amount of
money they will be spending, especially in year one. Revenue projections are based on a
percentage of the projected maximum number of customers that can be accommodated at Sand
City. In the winter/spring/fall sessions, the projected maximum number of volleyball players
visiting per day is about 336 people; in the summer the maximum number of people is 560
(calculations are shown in Figure 17).
Winter/Spring/Fall
7 Games/day
3 courts x 7 hrs of games x 16 players (2 teams (8ppl/team)) =
336 people
Summer
7 Games/day
5 courts x 7 hrs of games x 16 players (2 teams (8ppl/team)) =
560 people
Figure 17 - Maximum Number of Volleyball Players per Day
These winter/spring/fall numbers are calculated based on 7 games per night, on all 3 indoor
courts, with 8 people per team, and 2 teams per game. The max capacity in the summer is
calculated the same way with 7 games per night, including the 3 indoor courts and 2 outdoor
courts, with 8 people per team, and 2 teams per game.
5.2 Gross Profit Projections
A summary of each of the next 5 year’s gross profit is shown in Figure 18 below, with a more
detailed description of each year in the next section.
Year 1 - 2017 Year 2 - 2018 Year 3 - 2019 Year 4 - 2020 Year 5 - 2021
Sales 1,031,373 1,202,286 1,430,721 1,459,335 1,488,522
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Business Plan June 2016
COGS 194,929 227,232 270,406 275,814 281,331
Gross Profit $836,444 $975,054 $1,160,314 $1,183,521 $1,207,191
Figure 18 - Gross Profit Snapshot
5.3 Year 1
Revenue projections are based on about 50% capacity for the winter/spring/fall sessions and
about 40% capacity for the summer. There is expected to be enough interest to run five games a
day, starting at 5:30pm and last game beginning at 9:30pm for winter/spring/fall. The summer
will have six games a day, as beach volleyball is already quite popular in the summer months.
There will only be three courts used in the summer, as two games will be held outside and one
inside. Each week they will rotate who is inside. Another reasoning for only running three courts
in the summer is to accommodate poor weather and have the other two indoor courts as back-
ups and warm-up courts.
5.3.1 Number of Customers – Year 1
A breakdown of the number of customers are shown in Figure 19 below.
To make numbers easy to understand, there was one number of average customers per year
chosen. This was found by taking 75% of the winter/spring/fall and 25% of the summer
projections:
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Figure 19 - Year 1 Customer Projections
(180 x .75) + (216 x .25) = 189 Customers per day in Year 1
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Business Plan June 2016
5.3.2 Revenue Streams – Year 1
There are essentially 2 revenue streams with Sand City. There is the volleyball session revenue,
and the food and beverage revenue. Revenues for a typical day, for example, a Monday, are
broken down in Figures 20 and 21 below.
Volleyball is a fixed cost of $500/team, and is averaged to about $378,000 for Year 1; with 300
days of beach volleyball per year (Sunday-Friday), session revenue per day is $1,260. If we are
using our conservative estimates, and have 6 people per team, this is an average spend of $6.67
per person each day on volleyball.
Volleyball Session Revenue
Monday
1 Session (3 months) of Winter/Spring/Fall 1 Session (3 months) of Summer
5 games per night per court x 3 courts = 6 games per night per court x 3 courts =
15 games/day 18 games/day
30 teams/day 36 teams/day
30 teams/day/session x $500/team = 36 teams/day/session x $500/team =
$90,000 x 3 Sessions = $270,000 $108,000
Total Year 1 Session Revenue
$378,000
Figure 20 - Volleyball Session Revenue Year 1
The food and alcohol revenues are based on the average sale of two appetizers purchased per
team, two pitchers of beer, and two hard alcoholic drinks for a total of $653,373 in Year 1. These
numbers were drawn from market research done on the amount of purchases made at
competitor facilities, and are only a fraction of the sales of the competitors; however, in order to
be conservative and ensure we are not overshooting, these are fair numbers to use for the
revenue projections in this business plan.
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Business Plan June 2016
Food & Alcohol Sales
Winter/Spring/Fall Summer
5 games per night 6 games per night
30 teams 36 teams
On average of 2 appetizers/team = $20/team
$574.29 $689.14
On average of 2 pitchers/team = $40
$1,200 $1,440
On average of 2 single hard drinks/team = $10
$300 $360
Total Daily Sales $2,074 $2,489
75 Days/Session $155,571.43
Total Sessions $466,687.29 $186,685.71
Annual Sales (300 days/year) - 75 days/session
$653,373.00
Figure 21 - Food and Beverage Revenue Year 1
5.3.3 Year 1 Gross Profit
Using the revenue demonstrated above, and a Cost of Sales on Volleyball Session Revenue of 0%
and Food and Drink of 30%, Year 1 Gross Profit is shown below.
Estimated Total Revenue Year 1 $1,031,373
Cost of Sales on Food & Alcohol = 30% $194,929
Gross Profit $836,444
Now the next question to ask is, if these numbers are realistic, are the customers going to spend
what we are projecting? The volleyball session revenue is going to be paid by the customers
upon registration, and is an industry standard cost. Therefore, when calculating the customer
spend on food and alcohol, the cost comes to $11.52 per day, as shown in Figure 22 below. This
is a very reasonable amount of per customer spend, especially since this is going to be a social
facility as well as indoor beach volleyball.
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Business Plan June 2016
Daily Session Revenue
($378,000/300) = $1,260.00
Per Customer Sale:
($1,260/189) = $6.67
Av. Daily Food and Drink Sales
(75% x 2,074 + 25% x 2,489) = $2,178
Per Customer Sale:
($2,178/189) = $11.52
Total $18.19
Figure 22 - Customer Spend per Day
5.4 Year 2
Year 2 projections are quite similar to Year 1, but the winter/spring/fall numbers are expected
to rise to about 65% capacity and the summer months will continue to run on just three courts.
There are two reasons for choosing to run games on three of the five courts. First, as the
business is still growing, we may not have enough interest yet to have all five courts filled, and
customers want to enjoy the summer weather. Second, and most importantly, we are
promoting that weather is not a factor for us and we only want three courts running to
accommodate the chance of bad weather.
5.4.1 Number of Customers – Year 2
The breakdown of the number of customers in Year 2 is shown in Figure 23 below.
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Figure 23 - Year 2 Customer Projections
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Business Plan June 2016
5.4.2 Revenue Streams – Year 2
The revenues in Year 2 were found using Year 1 as a base, increasing the number of teams seen
per day. These projected revenues also account for inflation. The breakdown is shown in Figure
24.
Volleyball Session Revenue
Monday
1 Session (3 months) of Winter/Spring/Fall 1 Session (3 months) of Summer
6 games per night per court x 3 courts = 6 games per night per court x 3 courts =
18 games/day 18 games/day
36 teams/day 36 teams/day
36 teams/day/session x $500/team = 36 teams/day/session x $500/team =
$108,000 $108,000
x3 Sessions $324,000
Estimates Year 2 Session Revenue $432,000
Total Year 1 Revenue Plus Inflation $ 444,846
The food and alcohol revenues for Year 2 were found using the same projected sales as Year 1,
based on the average sale of two appetizers purchased per team, two pitchers of beer, and two
hard alcoholic drinks for a total of $757,440, shown in Figure 25 below.
Food & Alcohol Sales
Winter/Spring/Fall Summer
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Figure 24 - Volleyball Session Revenue - Year 2
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Business Plan June 2016
6 games per night 6 games per night
36 teams 36 teams
On average of 2 appetizers/team = $20/team
$689.14 $689.14
On average of 2 pitchers/team = $40
$1,440 $1,440
On average of 2 single hard drinks/team = $10
$360 $360
Total Daily Sales $2,489 $2,489
75 Days/Session $186,685.71
Total Sessions $560,057.14 $186,685.71
Annual Sales (300 days/year) - 75 days/session
$746,742.86
Total Annual Sales Plus Inflation $ 757,440.00
Figure 25 - Food and Beverage Revenue - Year 2
5.4.3 Year 2 Gross Profit
Using the revenue demonstrated above, and a Cost of Sales on Volleyball Session
Revenue of 0% and Food and Drink of 30%, Year 2 Gross Profit is shown below.
Total Revenue Year 2 $1,202,286
Cost of Sales on Food & Alcohol = 30% $227,232
Gross Profit $975,054
5.5 Year 3, 4 & 5
Year 3, 4 and 5 are a continuation of Years 1 and 2, with the number of games in each session
going to seven games per day, starting each hour from 4:30pm – 10:30pm. The number of
customers will be the same year round, as the number of courts used in the summer will remain
at three; as mentioned above, customers are looking to primarily play outside and enjoy the
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Business Plan June 2016
weather, and there may be no benefit to filling all five courts as we cannot move all games
inside in the case of bad weather.
5.5.1 Number of Customers - Year 3, 4 & 5
A breakdown of the number of customers in Years 3, 4 and 5 is shown in Figure 26 below.
5.5.2 Revenue Streams – Year 3
The revenues in Year 3, 4 and 5 were found using Year 1 and Year 2 as a base, increasing the
number of teams seen per day. These projected revenues also account for inflation, therefore
the revenues grow slightly from Year 3 to 5. The breakdown of Year 3 is shown in Figure 27.
Volleyball Session Revenue
Monday
1 Session (3 months) of Winter/Spring/Fall 1 Session (3 months) of Summer
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Figure 26 - Number of Customers - Year 3, 4 & 5
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Business Plan June 2016
7 games per night per court x 3 courts = 7 games per night per court x 3 courts =
21 games/day 21 games/day
42 teams/day 42 teams/day
42 teams/day/session x $500/team = 42 teams/day/session x $500/team =
$126,000 $126,000
x3 Sessions $378,000
Total Year 3 Session Revenue $504,000
Total Year 3 Plus Inflation $ 529,367.00
The food and alcohol revenues for Year 3, 4 and 5 were found using the same projected sales as
Year 1 and 2, based on the average sale of two appetizers purchased per team, two pitchers of
beer, and two hard alcoholic drinks. The total for Year 3 is $901,354, shown in Figure 28 below.
Food & Alcohol Sales
Winter/Spring/Fall Summer
7 games per night 7 games per night
42 teams 42 teams
On average of 2 appetizers/team = $20/team
$804.00 $804.00
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Figure 27 - Volleyball Session Revenue - Year 3
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Business Plan June 2016
On average of 2 pitchers/team = $40
$1,680 $1,680
On average of 2 single hard drinks/team = $10
$420 $420
Total Daily Sales $2,904 $2,904
75 Days/Session $217,800.00
3 sessions $653,400.00 $217,800.00
Annual Sales (300 days/year) - 75 days/session
$871,200.00
Total Annual Sales Plus Inflation $ 901,354.00
Figure 28 - Food and Beverage Revenue - Year 3
5.5.3 Year 3 Gross Profit
Using the revenue demonstrated above, and a Cost of Sales on Volleyball Session Revenue of 0%
and Food and Drink of 30%, Year 3 Gross Profit is shown below.
Total Revenue Year 3 $1,430,721
Cost of Sales (Food & Alcohol) 270,406
Gross Profit $1,160,314
5.5.4 Year 4 & 5 Gross Profit
As mentioned, the number of customers in Year 4 and 5 will be the same as Year 3, and the
revenues from both volleyball and food and drink will also stay the same, only increasing by
inflation.
Total Revenue Year 4 $1,459,335
Cost of Sales (Food & Alcohol) 275,814
Gross Profit $1,183,521
Total Revenue Year 5 $1,488,522
Cost of Sales (Food & Alcohol) 281,331
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Business Plan June 2016
Gross Profit $1,207,191
5.6 Projected Financial StatementsThe accounting and financial analyses are based on a 5 year plan for Sand City’s growth. The full
financial statements and financial plan are shown in Appendix 1 with the most important “Base
Case” as tab 1. The main driver for Sand City’s growth and success is not only the number of
customers, but how much they spend. The financials show that both the amount of money
spent per customer and the number of customers are very sensitive factors, and the Net Income
can change substantially by customers spending just $1.00 more per day.
5.7 Financing BudgetReferring back to the Capital Budget, Sand City requires $4,603,683 to start up, a quick summary
is shown in Figure 29 below.
Capital BudgetLand $ 500,000 Building
Bathrooms, Kitchen, Office Portion $ 976,800 Recreation Portion $ 2,708,400
Landscaping $ 336,938 Sand $ 23,463 Equipment $ 21,810 Kitchen & Bar $ 24,192 Net Working Capital $ 12,080 Total $ 4,603,683
Figure 29 - Capital Budget Summary
The financial structure will be 60% debt and 40% equity. With 60% debt, we are asking to
borrow $2,754,952, and that is likely the greatest amount that the bank will lend us for this
business. Ideally, we would want a high ratio of debt, as the cost of debt is much less than the
cost of equity. The debt interest rate used in the financial projections is 7.0%, which was found
using prime (3.0%) plus 4.0%. The cost of equity financing is likely to be more than double the
cost of debt, which is why we want to use as much debt as we can. The total amount of equity
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Business Plan June 2016
we will be requesting from investors is $1,836,641; this seems like a lot, but once expected sales
are analyzed, it looks quite positive.
5.8 Base Case Sales
Recall that the average daily customers in year one was 189, and the average daily customer
spend was $18.19, calculations shown below.
Using the number of customers demonstrated in the sections above and their daily spend, with
a growth rate and inflation in mind, the “base case” numbers each year for the financial
projections are shown in Figure 30.
Number of Customers/day 189 216 252 252 252
Number of Days/year 300 300 300 300 300
Average Purchase/customer $18.19 $18.55 $18.92 $19.30 $19.69
Total Sales $1,031,373 $1,202,286 $1,430,721 $1,459,335 $1,488,522
5.9 Dividend Policy
Sand City will pay its investors a dividend when there is an excess of $40,000 cash. As shown in
the Retained Earnings snapshot (Figure 31), there are no dividends paid in the first year, but by
Year 2, there are dividends of $48,750, substantially increasing thereafter. This is a generous
payback for investors.
Retained Earnings Account Year 1 Year 2 Year 3 Year 4 Year 5Beg RE - 100,217 210,529 310,411 290,243 Net Income 100,217 159,062 322,923 349,206 377,518 Dividends - 48,750 223,041 369,374 376,913 End RE 100,217 210,529 310,411 290,243 290,848
Carly Neil
Average Daily Customers= 3 Courts x 5-6 games per day x 12 players
= 189
Daily Customer Spend = Volleyball Revenue + Food & Drink
= $18.19
Figure 30 - Base Case Sales
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Business Plan June 2016
5.10 Economic Forecast
The inflation rate used for all of the financial forecasts is 2.0%, resulting in an inflation factor of
1.02. This number was used for all revenues and expenses throughout this business plan.
5.11 Financial Performance
The following Income Statement (Figure 32) summary shows that net income is positive right
from the beginning, and has more than tripled by Year 3. The full income statement is detailed
in Appendix 1.
Income StatementFor the year ended 2017 2018 2019 2020 2021
Sales 1,031,373 1,202,286 1,430,721 1,459,335 1,488,522 COGS 196,012 227,232 270,406 275,814 281,331 Gross Profit 835,361 975,054 1,160,314 1,183,521 1,207,191
Total Operating Expenses 720,827 793,269 791,259 784,428 775,742
Taxable Income 114,534 181,785 369,055 399,093 431,449 Income Taxes 14,317 22,723 46,132 49,887 53,931 Net Income 100,217$ 159,062$ 322,923$ 349,206$ 377,518$
Figure 32 – Income Statement
5.12 Net Income, Dividends and Operating Cash Flow
A comparison of net income to dividends and operating cash flow over the next 5 years is shown
in Figure 33. Each category has a very positive slope. The operating cash flow is quite high,
keeping in mind that this has the Capital Cost Allowance added back into it. The dividends are
nearly as much as net income by Year 5, this is also a very positive factor for investors. These
estimates look promising upon initial analysis.
Carly Neil
Figure 31 - Dividends Paid
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Business Plan June 2016
Y ear 1 Y ear 2 Y ear 3 Y ear 4 Y ear 5$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$101,318
$377,518
$194,038
$531,119
$49,820
$376,913
Net I ncome, OCF & Dividends
Operating Cash Flow
Net Income
Dividends
Figure 33 – Net Income, OCF & Dividends
5.13 Net Income Break EvenFigure 34 demonstrates the break-even numbers for Sand City based on the number of
customers. Using the “What If” function in Excel, setting Net Income to $0.00, we found that in
Year 1 the break-even number of customers are 162, and are fairly steady for the next four
years. Figure 34 also shows that the break-even numbers are almost the same as the base case
number of customers in Year 1, but over Years 2-5, the spread becomes quite large. By Year 5
the base case customers is nearly 100 customers more, keeping in mind that the base case
numbers are fairly conservative. By looking at this break-even chart, the number of customers
looks promising.
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Business Plan June 2016
1 2 3 4 50
50
100
150
200
250
300
189216
252 252 252
162 174 169 163 158
Net Income Br eak-even B ase d on # of Customer s
Year
Base Case
Break-Even
Figure 34 –Break Even Analysis
5.14 GoalsThe initial main goal is to attract the expected number of customers and have them spend at
least $11.52 each day in Year 1. The next goal is to reach our Return on Investment of 20.0%. As
shown in Appendix 1, using our base case numbers, we have an Internal Rate of Return (IRR) of
17.5%, not quite the expected 20.0%. However, this is not a limiting factor with this business, as
the difference is not that great. Even though the IRR is lower than the ROI, it is still a promising
investment. The following Sensitivity Analysis sections will describe why.
5.15 Sensitivity Analysis – Number of CustomersThe Sensitivity Analysis comparison of number of customers is shown in Figure 35 below. As
shown, if just 10%, or 19 more customers visit a day, the IRR rises to 22.0%, this is now greater
than the expected ROI of 20.0%. The same goes for a lesser number of customers per day, and
we see a drop in IRR. However, as the base case numbers were fairly conservative (recall that
they accounted for only six players/team), the number of expected customers should not fall
below the base case.
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Business Plan June 2016
Figure 35 – Sensitivity Analysis – Number of Customers
5.16 Sensitivity Analysis - $ Spent per CustomerThe Sensitivity Analysis comparison based on number of dollars spent per customer is similar to
the sensitivity analysis done on the number of customers. Figure 36 shows that if each customer
spends $20.01, just $1.89 more (recall that the $6.67 amount spent on volleyball was paid up
front, and that $11.52 is spent per day on food and beverages), for a total spent on food and
beverage per day of $13.41. This is still very reasonable and conservative. Since Sand City will be
a social gathering, with the main hours over supper and into the evening, customers are likely to
spend this amount or even more. If customers spend the $20.01 (or $13.41 on food and
beverage), the IRR rises to 22.0%, greater than the expected ROI of 20.0%. This sensitivity
analysis demonstrates how sensitive these numbers are to a very small increase of dollars spent.
Carly Neil
Sensitivity Analysis - Based on $ Spent per CustomerAverage 5 Year 5
$ Spent year Profit Net Payback IRR Owner Comp$14.55 80% 81381 1965559 6.7 248336$15.46 85% 126,731 3,086,762 9.8% 298,070 $16.37 90% 171,822 4,206,674 12.5% 347,803 $18.19 100% 262,050 6,446,497 17.5% 447,271 $20.01 110% 350,688 8,574,558 22.0% 545,144 $20.92 115% 392,002 9,547,880 24.0% 587,774 $21.83 120% 432,831 10,518,774 26.0% 630,404 $25.00 137% 574,241 13,896,809 32.8% 778,906
Sensitivity Analysis - Based on # CustomersAverage 5 Year 5
Number Cust/day year Profit Net Payback IRR Owner Comp151 80% 81,326 1,967,249 6.7% 248,445 161 85% 126,805 3,088,068 9.8% 298,152 170 90% 171,872 4,207,904 12.5% 347,858 189 100% 262,050 6,446,497 17.5% 447,271 208 110% 350,641 8,573,483 22.0% 545,097 217 115% 391,935 9,456,280 24.0% 587,704 227 120% 432,741 10,516,641 26.0% 630,310
Figure 36 - Sensitivity Analysis - $ Spent per Customer
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Business Plan June 2016
5.17 Sensitivity Analysis ChartReferring to Appendix 1, there is a tab labeled “189 Customers Spend $21.67”, this analysis
demonstrates what happens if a customer spends $21.67, which is $6.67 paid up front for
volleyball, plus $15.00 per day on food and beverages (base case was $11.52 on food and
beverage). This is a reasonable amount to use as $15.00 can buy an assortment of food and
beverage items off of the menu. The price a person pays to go see a movie at the theater is
much more than the $15.00 that customers can spend at Sand City. Shown in Figure 37 below,
you can see that if the customer spends $21.67 ($6.67 on volleyball plus $15.00 food and
beverage), just $3.48 more than the base case, the net income substantially increases and the
IRR rises to 25.5%. This analysis again shows just how sensitive this business is to the amount
spent per customer per day.
Year 1 Year 2 Year 3 Year 4 Year 5$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$101,318
$322,923$377,518
$236,038
$499,222$552,203
N et In com e
Base Case Spend $18.19
Spend $21.67
As shown in the sensitivity analyses, there will need to be a strong promotion on the sales of
food and beverage. Some examples of promotions are themed nights such as “Coors Light
Night” with beer specials, draws made each night for people who purchase pitchers of beer, and
burger and beer specials.
Carly Neil
Average 5 year Net Income = $425,652 IRR = 25.7%
Average 5 year Net Income = $262,050 IRR = 17.5%
Figure 37 - Sensitivity – Customer Spend $21.50
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Business Plan June 2016
6.0 Summary of Business PlanSand City Sport and Fitness is Saskatchewan’s first indoor beach volleyball facility, also featuring
a kitchen and bar. This new concept is open all year round and has a lot to offer the City of
Saskatoon and surrounding area. The target market is very large, allowing for anyone of any age
to play, featuring recreational and competitive leagues.
The number of customers visiting the facility per day and the amount that each customer
spends are very critical to the success of the business. There will be an aggressive awareness
campaign executed from three months before opening day right through Year 1. We want to
create a buzz and have people talking about Sand City and its offerings. We want people to think
of Sand City as a place with a great atmosphere, good people, good times, and a great food and
beverage menu.
The two main points to consider are if the business can attract the expected number of
customers and if they will spend the expected amount of money. As demonstrated in this
business plan, this is very possible. The numbers used were quite conservative, to ensure that
we were not overshooting the projections. In fact, if more customers come than expected, even
seven or eight players per team, or an outside crowd comes in to watch and enjoy the
socializing, the sales projections will also grow, creating even greater profits.
There is some competition faced in the summer months, but the demand in Saskatoon for beach
volleyball in the summer is so high at this time, that filling the leagues should not be an issue.
Competitors are selling out their leagues in a matter of days, and Sand City will be able to grasp
onto this demographic, as well as expand the target market, all year round.
In conclusion, Sand City Sport and Fitness will see success in the City of Saskatoon. This company
has a first-mover advantage in the province, and has a very different offering than anything else
in the area. With a fun and energetic team running the business, the atmosphere and happy
customers will continue for years to come. People will be thinking let’s head to the beach, “Sand
City: Love at First Spike” in no time.
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Business Plan June 2016
Appendix 1See Excel Spreadsheet Labeled Sand City Financial Models
Carly Neil