Executive summary | Guest house business plan
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Executive summary (continued)
The Management Team
The ownership and management of Africa Sunrise Experience Guest House is represented by three entrepreneurs, namely; Thato, Paul and David.
The organizational structure of the business will feature the following positions:
- Managing Directors (3)
- General manager (1)
- Finance and administration (1)
- Sales and marketing (2)
- Receptionist (1)
- Room staff (3)
- Kitchen staff – Food and beverages (3)
- Safety and security officer (1)
The market for the business is made up of:
- Domestic tourists
- Foreign tourists
The Target Market
The target market will be composed of domestic and foreign tourists. Accommodation solutions shall also be packaged for small to medium sized corporate clients.
The business will use various forms of marketing (advertising, promotion and branding). The entity will approach Continental Outdoor Media to assist them with setting up billboards in strategic areas within Rustenburg. The internet will play a significant role in attracting foreign tourists. Domestic tourists as well will be attracted by means of a business website. Ensuring customer satisfaction by upholding hallmarks such as customer intimacy will be imperative to the guest house. The guest house will also establish strategic alliances with domestic and foreign travel agents – this will keep an excellent flow of guests and meet the targeted sales levels.
Africa Sunrise Experience Guest House will face both direct and indirect competition. Direct competition will primarily emanate from lodges, guest houses, caravan/ camping sites, bed & breakfasts and other similar accommodation providers in close proximity to where the guest house will be based and appeal to the same customers that the business intends to target. Indirect competition will emanate from hotels, 5* bed and breakfast entities and lodges within Rustenburg.
In terms of financing, the guest house is seeking a total of R1,574,055 to finance its capital expenditure requirements (R1,401,255) and working capital (R172,800). The proposed source of funding for the business is a bank loan of R1,000,000, bank overdraft of R172,800 and owner contribution of R401,255. The proposed security for the bank loan is a notarial bond on the assets of the business. The business will approach local banks such as ABSA, FNB and Standard Bank for assistance with the required funds. This will be in the form of lease finance. The Department of Trade and Industry will also be approached for financial and non financial assistance. The funds will be used to acquire a farm house and render the necessary improvements or renovations to it. In addition, the business will also need to purchase beds, lounges and other assets to render the guest house ready to accommodate guests. The amount also covers the operating capital requirements of the business.
The business is projected to generate R4,104,000 in the 1st year of operations. The entity will strive for a 10% growth compounded annually over the next 5 years. An average gross profit margin of 66% is expected. A net profit after tax of R104,174 is expected in the first year, this is projected to grow with the increasing revenue over the next 5 years.
Total assets in the 1st year of operations will be slightly above R1.5 million. Assets are expected to grow with the increasing cash balances, inventory levels and accounts receivable. Total liabilities in the 1st year of operations are set at R1million. The is attributed to the required bank loan. Liabilities are projected to decline as the repayments of the loan are made. Total owner’s equity will be slightly below half a million Rands in the 1st year of operations. It is projected to increase over the next 5 year – the increase in attributed to retained earnings.