1.0 Executive Summary

The Spot is a new night club that will focus on attracting the students of State University, with a student population that exceeds 22,000 and growing by 15% each year. The night club will be located one block away from the main campus. The area already has three bars that have been thriving for the past 10 years.  Each establishment has long lines waiting for entry each weekend. Recently, commercial space has become available next to the campus when two adjacent business relocated. The Spot will consolidate this space into a 5,000 square foot night club. The location is on the main street most often used by students. 

Once opened, the Spot will have the exceptional management team to guide its success. The Spot's three owners, Robert Shaw, Jill Morse, and Sheila Thompson, have over 25 years of night club management experience between them.  Robert has been the manager of Tom's Landing, the most popular bar in the university area, for the past five years. Jill and Sheila are co-owners of Olympus, a popular downtown night club that has dominated the city's club scene for the past four years.

Highlights

1.1 Objectives

• Capitalize on excellent location opportunity.
• Launch the venue with a highly publicized grand opening event in the spring of  2002.
• Maintain tight control of costs, operations, and cash flow through diligent management and automated computer control.
• Maintain food costs below 33% of food revenue.
• Maintain total beverage costs below 25% of beverage revenue.
• Exceed $1 million in annual sales by the third year of plan implementation.

1.2 Mission

It's not the lights; it's not the liquor; and it's not the sound. It's the people!

And its the FUN! Successful nightclubs are based on an accurate understanding of the core customers. The mission of the Spot is to create a nightclub environment that satisfies the changing tastes and expectations of our core customers; i.e. college-age women. If the women come, the men will follow. In order to achieve this goal, we must constantly improve our response to the customers' entertainment needs.

1.3 Keys to Success

• Provide exceptional service that leaves an impression with our core customers.
• Consistent entertainment atmosphere and product quality.
• Managing our internal finances and cash flow to enable upward capital growth.
• Strict control of all costs, at all times, without exception.

2.0 Company Summary

The key elements of The Spot are:

1. Focus on attracting college-age women. The company will focus on design and musical themes that have mass appeal to college-age women.
2. Location. One of the major advantages that the Spot will have over its competition will be its location next to the university campus.
3. Exceptional service. In order to reach and maintain a unique image of quality, the Spot will provide attentive and friendly service.

2.1 Company Ownership

The Spot has three owners, Robert Shaw, Jill Morse, and Sheila Thompson.

Robert Shaw has a BS in business administration from State University. He successfully managed three bars over the past 10 years. He is currently in his fifth year as manager of Tom's Landing, the most popular bar in the university area.

Jill Morse holds a BA in marketing. She has held marketing positions with Nike and Sony before starting the Olympus nightclub with Sheila Thompson in 1996. 

Sheila Thompson has a BS in business administration. Before co-owning the Olympus, Sheila managed two successful nightclubs, the Arena and the Power Plant, over a 10-year period.

2.2 Start-up Summary

The Spot has three owners, Robert Shaw, Jill Morse, and Sheila Thompson, who will each invest $70,000. 

Start-up
Requirements
Start-up Expenses
Legal	$2,000
Stationery etc.	$500
Consultants	$0
Insurance	$1,000
Rent	$4,000
Research and Development	$0
Interior Refit	$30,000
Expensed Equipment	$20,000
Air Cond. Upgrade	$5,000
Audio/Lighting	$10,000
Bar Equipment/Supply	$10,000
Fees and Permits	$7,000
Bathroom Upgrades	$5,000
Initial Marketing	$3,000
Opening Salaries Deposits	$15,000
Other	$0
Total Start-up Expenses	$112,500
Start-up Assets
Cash Required	$77,500
Start-up Inventory	$0
Other Current Assets	$0
Long-term Assets	$20,000
Total Assets	$97,500
Total Requirements	$210,000

Start-up Funding
Start-up Expenses to Fund	$112,500
Start-up Assets to Fund	$97,500
Total Funding Required	$210,000
Assets
Non-cash Assets from Start-up	$20,000
Cash Requirements from Start-up	$77,500
Additional Cash Raised	$0
Cash Balance on Starting Date	$77,500
Total Assets	$97,500
Liabilities and Capital
Liabilities
Current Borrowing	$0
Long-term Liabilities	$0
Accounts Payable (Outstanding Bills)	$0
Other Current Liabilities (interest-free)	$0
Total Liabilities	$0
Capital
Planned Investment
Robert Shaw	$70,000
Jill Morse	$70,000
Sheila Thompson	$70,000
Other	$0
Additional Investment Requirement	$0
Total Planned Investment	$210,000
Loss at Start-up (Start-up Expenses)	($112,500)
Total Capital	$97,500
Total Capital and Liabilities	$97,500
Total Funding	$210,000

Start-up

3.0 Products and Services

The Spot represents a unique opportunity create a high energy, dance-theme venue that will cater to college-age women. The development's central location, demographics, and lack of direct competition are major advantages to this project. The new venue will specialize in high-energy themes and will offer beer, wine and an array of liquors and mixed drinks. In addition, the venue will sell nonalcoholic beverages such as soft drinks, juices and bottled water. A "casual" food menu consisting mostly of appetizers and small entrees ranging in cost from six to nine dollars will also be available. The initial hours of operation will be 6:00 P.M. to 2:00 A.M., four nights a week. The establishment will draw primarily from the student population at State University while attracting guests and visitors from outside the area as well.

4.0 Market Analysis Summary

The Spot will focus on college-age women who are looking for a high energy, fun nightclub environment to socialize and dance. Of course, we are also focused on college-age men but it has been our observation that the club scene is driven by where women choose to spend their money when they go out with friends.  At present, none of the local bars create an environment that is responsive to the entertainment demands of this core customer group.  This also extends to the areas surrounding the university that we expect will attract new customers to the Spot.

4.1 Market Segmentation

Our target market segmentation is divided between college-age women and men in and around the State University.

Market Analysis
		2002	2003	2004	2005	2006
Potential Customers	Growth						CAGR
College-age Women	15%	22,000	25,300	29,095	33,459	38,478	15.00%
College-age Men	10%	20,000	22,000	24,200	26,620	29,282	10.00%
Other	0%	0	0	0	0	0	0.00%
Total	12.70%	42,000	47,300	53,295	60,079	67,760	12.70%

Market Analysis

5.0 Strategy and Implementation Summary

Our strategy is simple, we intend to succeed by giving our core customers (college-age women) exactly what they want in a nightclub.

5.1 Competitive Edge

There are three elements to The Spot's competitive edge. 

The first is the location which is in easy walking distance for the entire university community.  The area around The Spot is already a regular place students gather to socialize in the evening.

The second is the exceptional management team that has extensive experience and success managing nightclubs and bars.

The third is our focus on attracting our core customer in every aspect of our planning.  The Spot will have the following to attract and retain our core customers:

• A larger ladies room area. Beyond its traditional uses, it's also a place of social gathering and conversation. As a result, we will add additional square footage to this part of the venue including a couch, TV, music, and plenty of social space.
• Floor design. No doubt, females are more observant of design, and the impression it conveys, than males are. Therefore, careful consideration will be put into everything from colors, to fabrics, and materials.
• Music. This is a critical one. We will hire DJs who have the best satisfaction rate with the female clientele.

5.2 Sales Strategy

There will be a grand opening weekend March of 2002, which the cover charge will be waved for all women customers. We will then establish a traditional Ladies Night, every wednesday.

The cover charge will be $10.  This is cheaper than the downtown clubs.

Our sales strategy is to open earlier and provide entertainment to bring in an early crowd before 10 P.M.  Comedians and Comedy Acts will be booked into the early evening time slot.  We will also have contests sponsored by businesses and products that are marketing to our core customers.

5.2.1 Sales Forecast

As the following table shows, we intend to deliver sales of $550K in the first year, and double that by the third year of the plan.

Sales Forecast
	2002	2003	2004
Unit Sales
Cover	19,500	36,000	42,000
Drinks	56,000	68,000	75,000
Food	14,000	25,000	33,000
Entertainment	13,600	17,000	22,000
Total Unit Sales	103,100	146,000	172,000
Unit Prices	2002	2003	2004
Cover	$10.00	$10.00	$10.00
Drinks	$3.00	$3.00	$3.00
Food	$7.00	$7.00	$7.00
Entertainment	$8.00	$8.00	$8.00
Sales
Cover	$195,000	$360,000	$420,000
Drinks	$168,000	$204,000	$225,000
Food	$98,000	$175,000	$231,000
Entertainment	$108,800	$136,000	$176,000
Total Sales	$569,800	$875,000	$1,052,000
Direct Unit Costs	2002	2003	2004
Cover	$0.00	$0.00	$0.00
Drinks	$0.75	$0.80	$0.86
Food	$2.45	$2.62	$2.81
Entertainment	$4.00	$4.28	$4.58
Direct Cost of Sales
Cover	$0	$0	$0
Drinks	$42,000	$54,570	$64,401
Food	$34,300	$65,538	$92,565
Entertainment	$54,400	$72,760	$100,751
Subtotal Direct Cost of Sales	$130,700	$192,868	$257,717

Sales Monthly

6.0 Management Summary

The management team is a strong one. Together we share a single vision: to provide a unique and entertaining experience through exceptional service.

6.1 Management Team

Robert Shaw will be the manager of The Spot with the responsibility of controlling the day-to-day operation of the night club.

Jill Morse's responsibilities will be administrative management to include inventory management, accounts payable, purchasing, payroll, and public relations.

Sheila Thompson will be responsible for booking entertainment for the nightclub's early evening hours. Sheila preforms the same job for the Olympus nightclub and has agency contacts throughout the country.

6.2 Personnel Plan

The following table shows forecasted personnel needs for the first three years.

Personnel Plan
	2002	2003	2004
Manager	$50,000	$68,000	$72,000
Bartenders	$120,000	$120,000	$120,000
Cooks	$65,000	$70,000	$73,000
Cleaning	$38,000	$40,000	$42,000
DJ	$25,000	$30,000	$35,000
Serving Staff	$50,000	$60,000	$70,000
Other	$0	$0	$0
Total People	0	12	12
Total Payroll	$348,000	$388,000	$412,000

7.0 Financial Plan

The financial projections for this plan are presented in the tables and charts of the following sub topics.

7.1 Break-even Analysis

For our Break-even Analysis, we assume running costs of approximately $43,000 per month which includes our full payroll, rent, and utilities, and an estimation of other running costs.

Break-even Analysis
Monthly Units Break-even	10,220
Monthly Revenue Break-even	$56,482
Assumptions:
Average Per-Unit Revenue	$5.53
Average Per-Unit Variable Cost	$1.27
Estimated Monthly Fixed Cost	$43,527

Break-even Analysis

7.2 Projected Profit and Loss

The following table and chart will show the projected profit and loss for The Spot.

Pro Forma Profit and Loss
	2002	2003	2004
Sales	$569,800	$875,000	$1,052,000
Direct Costs of Goods	$130,700	$192,868	$257,717
Other Production Expenses	$0	$0	$0
	------------	------------	------------
Cost of Goods Sold	$130,700	$192,868	$257,717
Gross Margin	$439,100	$682,133	$794,283
Gross Margin %	77.06%	77.96%	75.50%
Expenses
Payroll	$348,000	$388,000	$412,000
Sales and Marketing and Other Expenses	$22,900	$25,000	$27,300
Depreciation	$2,618	$2,856	$2,856
Leased Equipment	$33,000	$40,000	$40,000
Utilities	$3,600	$3,600	$3,600
Insurance	$12,000	$12,000	$12,000
Rent	$48,000	$40,000	$40,000
Payroll Taxes	$52,200	$58,200	$61,800
Other	$0	$0	$0
	------------	------------	------------
Total Operating Expenses	$522,318	$569,656	$599,556
Profit Before Interest and Taxes	($83,218)	$112,477	$194,727
EBITDA	($80,600)	$115,333	$197,583
Interest Expense	$42	$250	$0
Taxes Incurred	$0	$33,668	$58,418
Net Profit	($83,260)	$78,559	$136,309
Net Profit/Sales	-14.61%	8.98%	12.96%

Profit Monthly

7.3 Projected Cash Flow

The following table and chart are the projected cash flow for three years.

Cash

Pro Forma Cash Flow
	2002	2003	2004
Cash Received
Cash from Operations
Cash Sales	$512,820	$787,500	$946,800
Cash from Receivables	$45,082	$81,127	$101,504
Subtotal Cash from Operations	$557,902	$868,627	$1,048,304
Additional Cash Received
Sales Tax, VAT, HST/GST Received	$0	$0	$0
New Current Borrowing	$5,000	$0	$0
New Other Liabilities (interest-free)	$0	$0	$0
New Long-term Liabilities	$0	$0	$0
Sales of Other Current Assets	$0	$0	$0
Sales of Long-term Assets	$0	$0	$0
New Investment Received	$0	$0	$0
Subtotal Cash Received	$562,902	$868,627	$1,048,304
Expenditures	2002	2003	2004
Expenditures from Operations
Cash Spending	$348,000	$388,000	$412,000
Bill Payments	$289,115	$407,976	$500,717
Subtotal Spent on Operations	$637,115	$795,976	$912,717
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$0	$5,000	$0
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$0	$0	$0
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
dividends	$0	$0	$0
Subtotal Cash Spent	$637,115	$800,976	$912,717
Net Cash Flow	($74,213)	$67,651	$135,587
Cash Balance	$3,287	$70,938	$206,525

7.4 Projected Balance Sheet

The following is the projected balance sheet for the three years.

Pro Forma Balance Sheet
	2002	2003	2004
Assets
Current Assets
Cash	$3,287	$70,938	$206,525
Accounts Receivable	$11,898	$18,271	$21,967
Inventory	$15,593	$23,009	$30,746
Other Current Assets	$0	$0	$0
Total Current Assets	$30,778	$112,218	$259,238
Long-term Assets
Long-term Assets	$20,000	$20,000	$20,000
Accumulated Depreciation	$2,618	$5,474	$8,330
Total Long-term Assets	$17,382	$14,526	$11,670
Total Assets	$48,160	$126,744	$270,908
Liabilities and Capital	2002	2003	2004
Current Liabilities
Accounts Payable	$28,919	$33,945	$41,800
Current Borrowing	$5,000	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$33,919	$33,945	$41,800
Long-term Liabilities	$0	$0	$0
Total Liabilities	$33,919	$33,945	$41,800
Paid-in Capital	$210,000	$210,000	$210,000
Retained Earnings	($112,500)	($195,760)	($117,201)
Earnings	($83,260)	$78,559	$136,309
Total Capital	$14,240	$92,799	$229,108
Total Liabilities and Capital	$48,160	$126,744	$270,908
Net Worth	$14,240	$92,799	$229,108

7.5 Business Ratios

The Ratios table below outlines important ratios for this night club. The last column, Industry Profile, is derived from the Standard Industrial Classification (SIC) Index code 5813, for Drinking Places.

Ratio Analysis
	2002	2003	2004	Industry Profile
Sales Growth	0.00%	53.56%	20.23%	1.90%
Percent of Total Assets
Accounts Receivable	24.71%	14.42%	8.11%	4.60%
Inventory	32.38%	18.15%	11.35%	3.10%
Other Current Assets	0.00%	0.00%	0.00%	44.60%
Total Current Assets	63.91%	88.54%	95.69%	52.30%
Long-term Assets	36.09%	11.46%	4.31%	47.70%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	70.43%	26.78%	15.43%	28.20%
Long-term Liabilities	0.00%	0.00%	0.00%	23.10%
Total Liabilities	70.43%	26.78%	15.43%	51.30%
Net Worth	29.57%	73.22%	84.57%	48.70%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	77.06%	77.96%	75.50%	42.30%
Selling, General & Administrative Expenses	91.67%	68.98%	62.55%	23.40%
Advertising Expenses	3.86%	2.74%	2.47%	2.40%
Profit Before Interest and Taxes	-14.60%	12.85%	18.51%	2.80%
Main Ratios
Current	0.91	3.31	6.20	1.14
Quick	0.45	2.63	5.47	0.74
Total Debt to Total Assets	70.43%	26.78%	15.43%	51.30%
Pre-tax Return on Net Worth	-584.67%	120.94%	84.99%	5.20%
Pre-tax Return on Assets	-172.88%	88.55%	71.88%	10.60%
Additional Ratios	2002	2003	2004
Net Profit Margin	-14.61%	8.98%	12.96%	n.a
Return on Equity	-584.67%	84.65%	59.50%	n.a
Activity Ratios
Accounts Receivable Turnover	4.79	4.79	4.79	n.a
Collection Days	57	63	70	n.a
Inventory Turnover	10.91	9.99	9.59	n.a
Accounts Payable Turnover	11.00	12.17	12.17	n.a
Payment Days	27	28	27	n.a
Total Asset Turnover	11.83	6.90	3.88	n.a
Debt Ratios
Debt to Net Worth	2.38	0.37	0.18	n.a
Current Liab. to Liab.	1.00	1.00	1.00	n.a
Liquidity Ratios
Net Working Capital	($3,142)	$78,273	$217,438	n.a
Interest Coverage	-1997.23	449.91	0.00	n.a
Additional Ratios
Assets to Sales	0.08	0.14	0.26	n.a
Current Debt/Total Assets	70%	27%	15%	n.a
Acid Test	0.10	2.09	4.94	n.a
Sales/Net Worth	40.01	9.43	4.59	n.a
dividend Payout	0.00	0.00	0.00	n.a