scott cortus tandra fraser juliana littman celeste nordal feasibility study
TRANSCRIPT
Scott Cortus
Tandra Fraser
Juliana Littman
Celeste Nordal
Feasibility Study
Operations PlanOperations Plan
Guest Ranch Location:Guest Ranch Location:
Site Plan:Site Plan:
Horseshoe PitsHorseshoe Pits
FirepitFirepit
Gar
den
Lodge
ShelterbeltShelterbelt
Quonset
Barn
BinsBins
House
Garage
Lodge Building Plan:Lodge Building Plan:
StorageLounge
4 ft
34 ft
90 ft
Registration Office
Kitchen & Eating Area
Double
Suite
Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday
7:30 Breakfast
8:00
8:30
9:00
9:30
10:00
10:30
11:00
11:30
12:00 Lunch - Picnic at photospot
12:30 Packed lunch in saddlebags Lunch End of stay
1:00
1:30
2:00
2:30
3:00
3:30 Return to farm
4:00
4:30
5:00
5:30 Arrive at farm
6:00 Return to farm
6:30 Supper
7:00
7:30
8:00 Cowboy campfire, cowboy poetry, fellowship
Wilkinson Memorial Observatory
Cowboy Campfire
Visiting in the lodge
P ick up guests at airport
Breakfast
Tour of the farm, safety orientationMatch guests with horses
Lunch
Tour a local operational grain farm
Riding at farm
Supper
Breakfast
Bus tour to Eastend area
Fossil Research Station, T-Rex interpretive centre
Lunch - picnic at Chimney Coulee
Hudson Bay Company Trading P ost, NWMP P ost, Metis winter camp
Supper in Eastend restaurant
Supper
Breakfast
Riding at Cypress
Optional: depart for Swift Current (Elmwood Golf Course)
SupperSupper
Golf (9 holes at Elmwood Golf Course), return to farm
Breakfast
Bus tour of Wood Mountain and Grasslands Notekeu Museum (P onteix)St. Victor's P etroglyphs
Big Muddy Badlands
Grasslands National P ark
Breakfast
Tour Grasslands area
Lunch at farm
Tour Cypress Hills area
Visiting, relaxing in the lodge
Supper
P hotos, etc.
Depart for Calgary
P ick up guests
Breakfast
Riding or free time to enjoy the farm
Free time around the farm
Our Farm
Operating Expenses:Operating Expenses:Operating ExpensesFood Expenses 29400Van Rental 13400Tour Expenses (Admission, etc.) 9186.84Power and Energy bill 9000Fuel and vehicle maintenance expenses 7759.82Feed Expenses 7601.75Telephone, Internet, and Camera Exp. 7096.5Vehicle Insurance Expense 3384Building Maintenance Expense 2340Vet Expense 2190Bathroom Expense 980.51Cleaning Supplies 1500Employee Training Exp. 870Housekeeping Expenses 3485Business license 420Office Expenses 143.59Total Operating Expenses 98758.01
Summary of Financial ResultsSummary of Financial Results
Year 1 Year 2 Year 3 Year 5 Year 10Net Income (after taxes) -36364 -23699 38840 43412 70890Net Cash Flow 80524 14280 40093 22015 12557Dividends Paid 0 0 23304 32205 52589Growth in Revenues 27.0% 22.1% 2.0% 2.0%Growth in Total OperatingExpenses
18.3% -0.1% 0.3% 0.2%
Capital Expenditures:Capital Expenditures:Capital BudgetOffice Supplies 1778Computer 1499Appliances 4459Furniture 22481Tractor 22000Truck 48000Trailer 27655Livestock 43250Tack 13484Outdoor Equipment 2376Land 15000Buildings 60000Lodge 260053Fuel Tank 3478Kitchen 5154Fences 2000
Total = $532,666
Human Resources PlanHuman Resources Plan
Manager
Head CookBarn Manager
Assistant
CookHouse-keeper
Tour Leader
Tour Leader
Human Resource HierarchyHuman Resource Hierarchy
Wage & Salary ExpenseWage & Salary ExpenseFive-year estimate of total wage and salary costs.
Employee Year 1 Year 2 Year 3 Year 4 Year 5 TotalManager $38,000 $38,760 $39,535 $40,326 $41,132 $197,754
Barn Manager $30,000 $30,600 $31,212 $31,836 $32,473 $156,121Head Cook $8,400 $8,700 $9,000 $9,300 $9,600 $45,000
Assistant Cook $5,940 $6,255 $6,570 $6,885 $7,200 $32,850Housekeeper $6,000 $6,300 $6,600 $6,900 $7,200 $33,000Tour Leader $8,000 $8,400 $8,800 $8,000 $8,400 $41,600Tour Leader $8,000 $8,400 $8,800 $8,000 $8,400 $41,600
TotalWages $547,925
Employee Benefits:Employee Benefits:
Five-year estimate of employee benefits.Benefit 5-year EstimateEmployment Insurance 3.15% $17,260Canada Pension Plan 4.30% $23,561Workers Compensation 2.00% $10,959Medical, Dental, Optical (F/T Perm. Staff) 1.30% $4,600Holiday Pay (Temporary Staff) 6.00% $11,643
Total $68,023
Training:Training:
Training Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year10
First Aid andCPR Training
580 400 400 490 580 400 400 490 580 400
Safe FoodHandling Course
290 290 290 290 290 290 290 290 290 290
Total EmployeeTraining
870 690 690 780 870 690 690 780 870 690
Marketing PlanMarketing Plan
ObjectivesObjectives
• Memorable experienceMemorable experience
• Clean, safe holidayClean, safe holiday
• Fulfill the desires of the customerFulfill the desires of the customer
• Profit objectivesProfit objectives
Potential Market:Potential Market:
• Size of potential market hugeSize of potential market huge
• Main markets targeted:Main markets targeted:– United States United States – JapanJapan
Table 2 Expenditures by visitors to Canada, Table 2 Expenditures by visitors to Canada, Top 5 countries of originTop 5 countries of origin
1999 overnight stays
Source: Statistics Canada, Culture, Tourism and the Centre for Education Statistics
Country of Origin Spending in Canada,C$ millions
Trips Nights spent,thousands
United States 7,149 15,180 58,471United Kingdom 883 780 5,725Japan 572 516 3,192Germany 481 392 5,158France 465 414 4,895
Impact on Future Sales:Impact on Future Sales:
• Baby boomersBaby boomers
• Dollar valueDollar value
• Travel depressionTravel depression
• WeatherWeather
CompetitionCompetition
• Source: other planned vacation providers, Source: other planned vacation providers, especially those incorporating riding and especially those incorporating riding and site-seeing in western Canadasite-seeing in western Canada
• Many small businesses who each have a Many small businesses who each have a very small share of the marketvery small share of the market
• Few sources of competition in SW Few sources of competition in SW Saskatchewan, more in AlbertaSaskatchewan, more in Alberta
Sales ObjectivesSales Objectives• Provide tours for 18 weeks during the summerProvide tours for 18 weeks during the summer
• Expected demand per week:Expected demand per week:Year 1 - 8 peopleYear 1 - 8 people
Year 2 - 10 peopleYear 2 - 10 people
Year 3 - 12 peopleYear 3 - 12 people
* Full capacity is 14 people per week* Full capacity is 14 people per week
Pricing PolicyPricing Policy
• Market-based pricing policyMarket-based pricing policy– $1575 for 7 day week ($225/day)$1575 for 7 day week ($225/day)
• Early-bird specialEarly-bird special– $1450 for 7 day week ($207/day)$1450 for 7 day week ($207/day)
• Cash paid before arrivalCash paid before arrival
How will we compete with How will we compete with established competitors?established competitors?
• Great Location Great Location
• Quality Quality
• Reasonable priceReasonable price
Typical CustomersTypical Customers• Age 30-50Age 30-50
• Medium to high incomeMedium to high income
• Professionals, managers, higher paid Professionals, managers, higher paid office workers office workers
• UrbanUrban
Customer BehaviorCustomer Behavior
• One time purchase; possible repurchaseOne time purchase; possible repurchase
• Purchase in advancePurchase in advance
• Purchase trips via travel agents, internet, Purchase trips via travel agents, internet, e-mail, phonee-mail, phone
Customer BehaviorCustomer Behavior
• Factors influencing decision to buy:Factors influencing decision to buy:– Advertising!!! Advertising!!! – Price Price – IncomeIncome– Seasonality of customer’s occupationSeasonality of customer’s occupation– Age of familyAge of family
Distribution and PromotionDistribution and Promotion
• InternetInternet
• Trade ShowsTrade Shows– Denver National WesternDenver National Western– Calgary StampedeCalgary Stampede
• AlliancesAlliances– Saskatchewan Tourism Website linkSaskatchewan Tourism Website link– Cowboy Trails Website linkCowboy Trails Website link
Markets/Product/Service MixMarkets/Product/Service Mix• Market - touristsMarket - tourists
• Product - horseback rides, sight-seeingProduct - horseback rides, sight-seeing
• Service Service – airport pick-upairport pick-up– mealsmeals– knowledgeable guidesknowledgeable guides– Bus tours to neighboring tourist sites Bus tours to neighboring tourist sites
• Eastend Dinosaur digs, Cypress Hills Eastend Dinosaur digs, Cypress Hills
Marketing BudgetMarketing BudgetItem Cost Total Cost
Trade Booth Allowance Calgary Stampede 1,100Denver National Western 1,738 2,838
Travel Allowance Hotel and meals 5,808Flight 1,358 7,166
Pamphlets 6000@$0.18/pamphlet 1,080Business Cards 6000@$0.0774/card 464Brochure [email protected]/sheet 7,620Webpage 500
linked to Sask Tourism 50assoc. w/ Cowboy Trail 180
Laptop*Sales Staff Salary*TOTAL 19,899
Financial PlanFinancial Plan
Financial PlanFinancial Plan
• Taken over 10 yearsTaken over 10 years
• Important costs to consider are:Important costs to consider are:Year 1 Year 2
Total Salaries +Benefits
$75310 $118771
Total OperatingExpenses
$250384 $298167
Total Investments $480675 $460782Total $806369 $877720
Financing:Financing:
FINANCING PLAN
Bank Debt Financing $200,000
Equity Financing $400,000
Total $600,000
Financial Ratios 2002 2006 2011Liquidity RatiosCurrent Ratio 5 9 13Quick Ratio -25.4 -7.1 2Solvency RatiosDebt Ratio 36% 26% 4%Debt to Equity Ratio 55.60% 35.50% 4.30%Profitability RatiosNet Profit Margin -16.40% 12.10% 17.90%Return on Assets -6.40% 8.10% 12.40%Return on Equity -10% 11% 13%Other RatiosKey Operating Exp. as a % of Sales 116% 85% 78%
-
20
40
60
80
100
120
140
1 2 3 4 5 6 7 8 9 10
Year
Qua
ntity
Economic
BaseNet Income
Cash Flow
Break-even AnalysisBreak-even Analysis
Net IncomeNet Income
-40000
-20000
0
20000
40000
60000
80000
1 2 3 4 5 6 7 8 9 10
Year
Net
In
com
e ($
)
-450,000
-350,000
-250,000
-150,000
-50,000
50,000
150,000
250,000
1 2 3 4
$
Base
Worst
Best
# CustomersInvestment Capital
Package Price
Operating Expenses
Sensitivity Analysis (NPV)Sensitivity Analysis (NPV)
Sensitivity Analysis (IRR)Sensitivity Analysis (IRR)
Base Case (%) Worst Case (%) Best Case (%)Amount of Customers 8.4 -3.2 17.6Operating Expenses 8.4 N/a 26.6Package Price 8.4 N/a 27.5Investment Capital 8.4 3.5 14.8
Sensitivity to BuildingSensitivity to Building
The Building NPV IRRBase Case -99803 8.4%Worst Case (+ 20%) -145029 6.0%Best Case (-20%) -54576 11.1%Without Building 126330 27.3%