THE COMPANY
Introduction:
Hook ‘em, pitch ‘em and close ‘em. In reading this Summary one may have a tendency to think that this business is about boats. That is not the case. Its about business. We have developed a very efficient utilization of an asset and will sell that same product to many customers. Excuse the pun, but the boat is only a vehicle on which the business is designed. That vehicle could be almost any asset which has wide appeal. This company is about business. Sales business. We plan to situate in the center of a vibrant market and sell, sell, sell.
Business Purpose:
The sale of "assured future quality vacation accommodations" involving a shared ownership of property, otherwise known as time share, is a proven market and has a 30 year history of successful marketing and sales strategies. It follows that the sale of "assured future quality recreation" is a logical next step. This project takes the shared ownership concept forward to a level of even higher potential returns with a limitless market availability.
Status:
SEABIRD is a development-stage company founded by Robert Keller, the Company's President and CEO, and Jon Wilhelm, Executive Vice President of Finance (CFO). The Company is a marketing and sales organization in the area of tourist recreation which plans to market and sell lifetime memberships in upscale sailing clubs where tourists can enjoy shared ownership of an elegant sailing yacht with exchange privileges world wide.
Overall Strategy:
The Company’s overall objective is to grow throughout the tropical resort areas around the world to approximately 35 to 50 locations within five to seven years, depending on demand. Each business will be located within a market base and will become a separate profit center.
Business Model:
Location of the business in the heart of the market is the key to success. Customers are vacationing tourists. They are already in the sales location and do not require costly mass hit and miss marketing. Being present at the sales location, they can be easily lured into the net with a valuable, desirable incentive.
Major incentive - FREE yacht cruises. We will offer a complimentary yacht cruise on a beautiful four story 234 foot cruise boat, the "Star of Honolulu", the flagship of Paradise Cruises, as an incentive to learn about the advantages of Club membership. Lifetime membership sales are easily closed by first providing a compelling presentation employing the latest in holographic video presentation, celebrity endorsements and a highly entertaining, yet compelling presentation. Success will be further assured by making the purchase painless by issuance of a new credit card from which fees will be deducted and payments deferred.
THE PRODUCT
The product is a lifetime membership in a vacation sailing club. The Club provides a unique-upscale vacation yachting experience for its members by using the resources of the collective members. Membership in such a Club provides a very broad base of ownership which disperses the costs to make it affordable to even the most humble adventurer. Ownership will allow exchange privileges with other SEABIRD affiliated clubs around the world.
The Club vessel, an elegant sailing yacht, easily has the potential to accommodate 20 Club members on deck for limited day-sail cruises. Charter experience in the local market has shown that a sailing trip lasting longer than three hours becomes an ordeal for most novice sailors. Therefore, the Club will conduct three trips daily, one each in the morning, midday, and at sunset, each lasting for approximately two and one half hours, all under the charge of a professional sailing captain and qualified crew. Each member will be allowed 10 guest trips per year which may by used by any designated person. For example, a couple could take five trips together, a family or group of five could take two. Additionally, each member or designate may ride aboard as often as desired on a space available basis at no charge. The Club vessel will sail only the determined trips and will always be available for club membership use.
The Club will offer its members a daily schedule of club sailing activities. The morning swim and float cruise will including anchoring off the shore of Waikiki. The midday sail will be a robust experience of real hands on sailing, enjoying not only the bliss and peaceful serenity of yachting, but, as the seas allow, the captain and crew will instruct the members on the theory, practical skills and finer points of sailing. The elegant sunset cocktail cruise will be an unforgettable yachting experience.
The Club is a member-owned non-profit corporation. It shall have an irrevocable agreement with SEABIRD to market and sell memberships. The Club vessel will be purchased, operated and maintained by SEABIRD. Upon completion of sales of the Club roster, in accordance with the Club charter, a member Board of Directors will be elected. SEABIRD will deed the vessel to the Member-Club, along with its reserve funds, and the Member-Club will assume all responsibility for the costs of operation, maintenance and replacement of the vessel and the continued operation as a SEABIRD Club affiliate for the benefit of the Club members in accordance with the Club charter. In the meanwhile, SEABIRD will purchase another vessel and commence to sell out the roster in another SEABIRD affiliate club.
Hawaii Visitor Bureau statistics show that over 50% of the mainland visitors are from California and the Pacific and Mountain States. At the implementation of the first Club, arrangements will be made to provide a charter vessel in California to accommodate those members who may not be able or inclined to return to Hawaii each year. In the future, this site may come another Club. A major advantage of Club membership is that members will experience a consistency in quality Club yachting recreation which will become their vacation standard. This will be available to them year after year at various vacation locations throughout their lifetime. The establishment of a replacement fund will assure that the vessel and Club will survive in perpetuity.
Pricing:
The pricing structure of the membership is within the range of virtually anyone who has a desire to buy. The membership is a "lifetime" benefit for $2,500 which may be bequeathed, sold or transferred. Assuming only ten years of use at ten uses per year, the average cost per yacht trip is $25.00. When weighing the cost, if one considers the cost for admission to other recreational activities such as exercise clubs and spas, tennis clubs, shooting clubs, and golf, if one considers the individual costs for boating or ocean recreational activities, then it will be easy to understand why the cost of membership in SEABIRD SAILING CLUB, will be perceived as a real bargain. While much research and thought has been devoted to establishment of the price point, it can be adjusted according to market reaction. A modest decrease would not have a serious effect on the desired profit of the business.
Projects planned:
The business plan presented represents a single project. However, in order to achieve the projected return for the investor, investor’s returns will be reinvested in up to five roll over project developments. All will be modeled after the primary plan. Additional Equity Partners will be sought until an apparent saturation in development occurs.
Regulatory and environmental:
These issues are largely addressed in the manufacture of the vessel. However, there are concerns with regard to docking for passenger pickup. The local State agencies involved require a fee. That cost is reflected in the spread sheet.
THE MARKET AND MARKETING STRATEGIES
The essential key to success for this business is a concentration of tourists in a small and accessible area. We will draw the customers with a very attractive and desirable incentive. While there is considerable competition for the tourist dollar, we are offering a major free gift for attending our sales program. The local time share sales office has been offering an incentive of a much lesser value and has been successful in attracting customers to for over twenty years. We are realistically expecting a market penetration of only 4/10ths of one percent (0.04%) of the visitor count. There are numerous sources for our entry into the customer stream and we will be taking advantage of the most profitable among them. Ready easy access to the market is another major element of this plan...
The business, established in a high traffic location, will give SEABIRD the greatest visibility for a large customer base. High technology will be used to assure further customer interest. The market viability is supported by Hawaii Visitor Bureau statistics of nearly seven million visitors each year, which includes approximately 50% who have vacationed here at least one time previously. Many make arrangements through their local tour agencies. The customer is generally the mainland U.S. and Oriental tourist, mid aged, middle income. They are strolling throughout Waikiki, shopping, enjoying the beach, taking in some of the afternoon distractions and generally looking for ways to be amused. All have the financial ability to come here, stay in nice hotels, and enjoy restaurants and a variety of tourist entertainment. Most have at least two credit cards with potential credit up to $10,000. All have a dream of staying in Paradise.
SOURCE TOUR AGENCIES. Many visitors come to us through agencies on the mainland. This industry is extremely competitive and these companies are very receptive to an offer of added value to their package, with a complimentary day or evening dinner cruise on board a luxury ship in Hawaii for listening to our sales presentation. This will insure a substantial customer attendance. We estimate that this will provide approximately 5000 customers monthly from these sources. If only 30% take advantage of this free offer, we will meet our market objectives from this source alone.
STANDARD WAIKIKI MEDIA. The market is continually replenished on a daily basis with vacationers arriving at a rate of 130,000 per week with over half remaining on O’ahu. There are several established marketing instruments in place which are time-tested and reliable. Several advertising magazines are available to visitors free of charge and are strategically located everywhere in Waikiki. The magazines have strong appeal to the tourist customers with a beautiful cover. They provide dining and entertainment guides, offer special feature articles on various attractions, and, of course, loads of advertisements. They report that less than 1% of the magazines are thrown away with an average coverage of 100,000 copies monthly and an average readership of 3.5 people per copy. The magazines are distributed in newstands at most street corners in Waikiki, in virtually all hotel lobbys, ticket and tour outlets, restaurants, and most retail store locations. We will advertise in the two primary magazines. The advertisement will be a hard page which will result in the magazine automatically opening to our page. That page will be a tear out coupon for a free cruise including meals onboard the "Star of Honolulu", a $45 value. To redeem that coupon the patron must present it at our sales office conveniently located in Waikiki. In addition, we will use hotel in-room advertising on TV which has also proven to be a valuable vehicle.
NUMBER OF CONTACTS. With each sales presentation having an average time frame of an hour, it is anticipated that we will make eight sales presentations per day. It is further assumed that we will meet the target of an average client load of eight customer couples per sales session, including spouses, resulting in a total of 64 client-groups per day. This calculates to 1,920 potential customers per month or 23,040 per year.
THE PITCH. All advertising media will direct the customer to our offices in the building above an easily identifiable landmark, Planet Hollywood, in the heart of Waikiki. Customers will be welcomed as guests by our staff and made comfortable with beverages, pleasant Hawaiian music and lots to see including artwork, nautical decor, holographic representations and boat models. Customers, who are looking for the magic of Paradise, will find themselves in a fantasyland environment. They will be ushered into the sales presentation room and made comfortable at tables and chairs while the Polynesian couple of the sales staff perform Hawaiian hula dance to native drums. They will be given a sales package with a variety of gifts which will tie the customer to the package. We will also serve an elegant dessert from one of the most prestigious restaurants in Honolulu to start their sensory adventure. The guests will be assured that they will be given a FREE voucher for a cruise on the "Star of Honolulu", flagship of the Paradise Cruises, immediately upon completion of the presentation.
THE HOOK. After a welcome to SEABIRD SAILING CLUB by the Sales Captain, the customers will view a hi-tec multimedia and holographic video presentation which will display the features and benefits of the Sailing Club and the member-owned elegant sailing yacht which they will share in ownership. They will also hear testimonies from participants on the different Club cruises and an endorsement by a well-known celebrity encouraging them to purchase their membership immediately. This sales program is designed to develop a sense of "perceived value" and an emotional impulse to buy. The customers will be given a document to fill out for their FREE voucher which will also include a section with the membership agreement and will be as easy to purchase as writing their signature. We will provide a new credit card and take the cost of membership from that card. The membership offering will be too attractive to turn down.
Uniqueness of the business:
To our knowledge, there is no like organization worldwide. Although there are charter services, air plane clubs, sporting clubs and the like, these programs all tie up the asset for considerable time for the use of only a few and the limited number use factor results in very high proportionate ownership costs. An average 65 foot vessel will accommodate approximately 3000 club members. At a vessel cost of $400,000, ownership is still well out of range of the average vacationer. However, at a price point of $2,500, an ownership/cost ratio of 160, club membership is manageable for most vacationers. As projects are added around the world, owners will be able to exchange privileges. To the Company, that 3000 member figure means 2840 member fees accrue toward management costs and profit, mostly profit.
Competition:
As mentioned, there is no like business. However, experience in a tourist location has taught us that every attraction available is serious competition. Each vacationer has only a limited amount of money to spend. Everyone wants it. The competition advertises consistently and effectively. Competition for that money is fierce. While there is considerable competition for the tourist dollar, we are offering a major free gift for attending our sales program.
By comparison, the local time share sales office has offered an incentive of a much lesser value and has been successful in attracting customers for over twenty years. Sales success is reported at 20% closes.
Market Penetration:
We are realistically expecting a market penetration of only 4/10ths of one percent (0.04%) of the visitor count. There are numerous sources for our entry into the customer stream and we will be taking advantage of the most profitable among them. Ready easy access to the market is the other major element of this plan.
Projected advertising costs are in the range of 30% of all operating costs. While this may seem light for a start up company, the fact that the business is situated in the heart of the market offsets much of the need for heavy marketing costs. In addition, we are piggy-backing on the tour companies and utilizing the marketing efforts of the State agencies to support our marketing program. They get the customers to our front door. We hook ‘em, pitch ‘em and close ‘em.
THE MANAGEMENT
The principal players are all highly experienced in their own areas. The CEO is a planner and implementor with years of engineering and construction experience. The CFO has a range of international business and construction development experience which is well suited for the needs of this Company. The CEO is not a business operations person. Therefore, once the plan is instituted, the District General Managers will take over, men who have a breadth of experience including many years of successful day to day operations experience and international and military connections to provide access to our customers. The brief descriptions of the Management Team is shown in the business plan.
The founder and President, Robert Keller and the CFO, Jon Wilhelm are father and son. As I have explained in the business plan, not despotism, Jon is the best money man I know. I have personally worked with Jim Williams for seven years as a vendor to my present position and with Juan Vigil as a colleague and peer at our present place of employment. We all know each other well and work together on a daily basis. The important position of sales closer has not been filled to date as we want to conduct a search for the most qualified individual available at the time of opening.
A very brief description of the Management Team:
CEO
Robert Keller. 59 years old. Education includes Masters in Counseling Psychology, completed coursework for PhD in Administration. Worked 35 years in engineering and construction management. Experienced in project management, product development, project development. Has organized companies and service organizations. Has belonged to many professional and community service organizations.
CFO
Jon Wilhelm. 41 years old. Education includes MBA at SC. Fluent in French. Licensed CPA. Work includes CFO for manufacturing and construction industries. Currently responsible for money management for two major hotels under construction in Colorado. Active in LDS Church.
Pacific District General Manager
Jim Williams. 72 years young. Experienced in owning and running businesses. Has 50 years experience in pool construction, coatings and general structural reconstruction. Presently owns and operates business with over 40 employees. Very active in professional and community organizations.
Latin America District General Manager
Juan Vigil. 51 years old. Fluent in Spanish. Education includes Masters in Administration and another in Criminal Science. Presently completing PhD in International Business. Has distinguished service in military intelligence and is retired military officer. His corporate management experience spans 20 years with appointments at the Department of Energy as a Senior Security Program Specialist, as a Security Manager, Nebraska Public Power in Columbus as their Security Manager and Hawaiian Electric Company as Security Administrator. Active in professional organizations and served as officer at national levels.
FINANCIAL SUMMARY
EARNINGS. The following schedule demonstrates the earnings expected from the sales of club memberships based on the following assumptions:
ASSUMPTIONS.
Sales presentations per day 8
Working 9 am until 9 pm daily
Customers per sales presentation 8
Can accommodate 10 couples
Total customers per day 64
Total annual contacts: 23,000
Percent of sales 13% 64 x .13 = 8.3
Total orders per day 8
Total sales per day $20,000
Days per year 360
Days per month 30
Total orders per year 2,880
Total orders per month 240
Membership cost $2,500
Total sales per year $7,200,000
Total sales per month $600,000
SEABIRD is seeking a Venture Equity Partner with an investment of $1.5 million for a tourist based project. The projected return to the Equity Partner is $13 million or 800% distributed over period of 5 years or less. A very straight forward membership sales business using compounding of initial investment into five roll over projects to achieve return goals.
Initial costs to set up sales office, hire and train staff, initiate advertising, prepare sales holographic video, set up employee tax and hospitalization accounts and other necessary business expenses, purchase the club vessel, arrange for mooring, operation and maintenance, and other expenses associated with the primary asset - $551,000. Set up time estimated a three months. Thereafter:
Operation costs for the first three months - $650,000. (Cumulative)
Projected income for the first three months - $$1.125 million. (Cumulative)
After recovery from the initial start up cost at about the sixth month, the cost verses sales is projected to level out at $260,000 operation costs and $625,000 sales monthly. This is based on conservative estimates of sales closes. We expect much higher close rations and plan to process twice as many customers as indicated.
Five year projections: - Income - Cost - Cumulative Net
year one $4,752,000 $2,880,000 $1,717,000
Year two $7,506,000 $3,114,600 $6,108,000
Year three $7,506,000 $3,114,600 $10,499,400
Year four $7,506,000 $3,114,600 $14,890,800
Year five $7,506,000 $3,114,600 $19,282,200
Financial stage needs:
We expect that the funds will be placed in an escrow account with access based upon approved invoices or as otherwise determined. We will draw only those amounts necessary for the development and funding of the business. This is a very fast track development requiring only three months for set up and another three months to adjust the market and sales procedures. By the sixth month of operation it is projected that the company will be at full production. In as much as there is no market building required for this business, these projections are deemed achievable.
Your spreadsheets indicate a need for $800K. Why are you asking for $1.5 million?
The spreadsheet projections are very thorough and reflect every possible cost and consideration which we have been able to predict. Furthermore, we have undergone many professional reviews of every phase of the economic development of the plan. Even the best advisors can not predict catastrophe. If we were to be impacted by some condition which we could not anticipate, without a capital reserve, we could not react to preserve the Venture Partner’s capital and all would be lost. Hurricanes, airline strikes and just plain poor business environment could devastate the project if not adequately capitalized. With adequate reserves we could recover, even relocate if indicated. We are only interested in working with a Equity Partner capable of taking on an investment of this amount as an easy and doable venture. Additionally, there are costs which may not have been included such as Finder’s Fees, legal set up in foreign countries, payment or compensation to governmental entities to operate, vessel delivery costs, and any number of such costs which may be incurred in each individual start up case. These can not be predicted in advance without detailed research in each separate location. It is, therefore, appropriate to budget an adequate amount in reserves to accommodate such costs as they arise.
Exit strategy:
As with Kendo (the art of Japanese swordsmanship) there is only attack, no exit. We plan to continue to grow - forever. We do have an exit plan for the Equity Partner, but this is a point of negotiation and will depend on that Partner’s investment objectives.