Business Performance Task
Business Performance Task
The Far Horizon
Business Plan
Prepared by the Owner of The Far Horizons
1.EXECUTIVE SUMMARY
The Far Horizon is a multi-faceted entity that includes a restaurant known as Wind Watcher Restaurant, and a bar/lounge known as Idle Hour Bar/Lounge. The third component will be a multi-purpose convention center known as 26 WestMulti-purposeConvention Center and the fourth component will be a 100-unit motel and convenience store. The restaurant and bar/lounge began operations in March of this year. The convention center will become operational pending major building renovations. The motel and convenience store will be added when the convention center has generated enough revenue to substantially fund their construction. The Far Horizon came into existence when the owner purchased the facility, which had previously been a combination supper club and bowling alley.
The owner and managers have in excess of 35 years of combined management experience in restaurant and motel management. The owner has a proven record of successful business management operations in the motel industry and is assisted by a manager with 25+ years of experience in the restaurant industry. She manages the Wind Watcher Restaurant and Idle Hour Bar/Lounge. The present operation is completely paid for with the exception of a small mortgage against the real estate.
The current customer base consists of local residents who seek a quality dining experience in a clean and comfortable atmosphere. Diners may enjoy breakfast, lunch, or dinner at reasonable prices.
The Far Horizon is located adjacent to the airport and is just off of a major highway.
In addition to providing quality dining services the management of The Far Horizon wants to provide facilities and services for individuals or groups who are sponsoring large-group meetings and functions. Management believes The Far Horizon can accommodate up to 850 attendees. The facility is well suited for conventions-training meetings, display shows (gun, fashion, car, etc.), wedding receptions, private parties, banquets, dances, etc. The Far Horizon strives to satisfy the diverse needs associated with these types of events.
1.1MISSION
The mission of The Far Horizon is to provide excellent facilities and services to accommodate the large-group meeting facilities and services needs of individuals and groups. The Far Horizon recognizes the need within the community to host an array of social and business functions and stands ready to assist each client to ensure their event is memorable and accomplishes the purpose for which it is held.
1.2GOALS
Four goals have been established:
1.Within two years, The Far Horizon will be the location of first choice where local businesses can hold large-group meetings and business functions.
2. Within 5 years, The Far Horizon will be seen as a viable location alternative for meetings and conferences by organizations throughout the state.
3.Within 10 years, The Far Horizon will have constructed a 100-unit motel to accommodate out-of-town groups holding conventions and conferences.
2.COMPANY SUMMARY
2.1Background
The Far Horizon is in a community that is centrally located in a sparsely populated state. The central location makes for a convenient location for statewide organizations to hold meetings and conferences. There are a substantial number of organizations in the state that hold annual meetings, conferences, conventions, shows, receptions, training meetings, etc. These functions often require facilities that offer flexibility to allow large-group meetings and small-group breakout sessions. Banquet facilities are often a critical element to a successful activity. The community does not currently have a facility capable of accommodating a group in excess of 300. The owner recognized an opportunity to open a business that could evolve into a full-service convention center offering a facility and services to accommodate large group activities.
The Far Horizon can best be described as a start-up business designed to satisfy a unique need that is not being adequately satisfied by any other business in the community. A key strength is the management expertise of the owner and the vast amount of practical experience of the manager. Another strength is the company’s relatively debt-free condition.
The Wind Watcher Restaurant and the Idle Hour Bar/Lounge have been operating since March of last year. The convention center will be operational upon completion of remodeling of the old bowling alley component of the facility.
Phases 1 and 2 of a 4-phase plan to develop The Far Horizon were realized when The Wind Watcher Restaurant and The Idle Hour Bar/Lounge were opened in March. Phase 3 is to get the convention center fully functional and phase 4 is the construction of a 100-unit motel and convenience store.
2.2Ownership
The Far Horizon is a sole proprietorship. The owner has owned and managed three successful motels. Prior to moving to the community he owned rental properties in Denver, Colorado. He was employed with the Federal Government for 14 years.
2.3Planned Development
The greatest market opportunity for The Far Horizon is in the convention center. There is no direct competition in this region of the state. The community offers scenic and geographic characteristics that are attractive to organizations seeking locations for statewide meetings. This makes a convention center an attractive business for the community.
The prospects for moving forward with the convention center are very positive. Many of the support facilities (restaurant and bar/lounge) are fully functional. The business image is positive, and potential customers make frequent inquiry as to when the convention center will open. The Far Horizon needs capital funding to move into phase 3 and to begin realizing the vast profit potential that exists in this business endeavor.
2.4Capital Requirements
The capital requirement from now through December of next year is $337,861 (see the appendix). Capital is needed for the following:
Complete a major renovation of the kitchen so that a group of 850 people can be adequately served
Complete a major renovation to convert the old bowling alley to a large-group meeting/banquet facility
Acquire tables, chairs, and other miscellaneous items for convention center
Install sprinkler system to satisfy building code requirements
Place settings for occupancy limits
Improve/develop parking facilities
Miscellaneous supplies including carpet
3.SERVICES
At this time, the Far Horizon contains a full-service restaurant and a bar/lounge. The restaurant offers a complete menu for breakfast, lunch, and dinner. Atmosphere is of critical importance and the Far Horizon boasts of a beautiful and panoramic view. The panoramic view, cleanliness, excellent food, a high-quality salad bar, and friendly service combine for a fine dining experience.
Responses from patrons indicate that food quality, atmosphere, and the scenic view are positive influences. The convention center will reflect the same quality image by offering a full compliment of services and support activities associated with large-group events and functions. Inquiries with regard to the availability date of the convention center reinforce the existence of a need for such a facility. We plan to develop strong relationships with business and civic organizations, since their members are the individuals who will be planning functions for their businesses and organizations.
4.MARKET ANALYSIS SUMMARY
The existence of a need for a full-service convention center was determined through some informal discussions and a review of large-group meeting facilities in the community. Several individuals had indicated they were unable to find or schedule a place to hold employee get-togethers, receptions, etc. This prompted a review of the facilities in the community. That review confirmed what people were saying. There is currently no place where an individual or organization could host a large-group activity. The types of activities include annual celebrations, employee recognition festivities, birthday/anniversary parties, receptions, training meetings, etc.
The critical element in this business is quality service. Great flexibility must be maintained in order to accommodate a vast array of individual and group needs. Sufficient supplies and equipment must be on hand or available at a moment's notice to ensure that each function happens virtually glitch-free. This will require an inventory of various items that are typically used in the types of functions to be held at the Far Horizon.
4.1MARKET SEGMENTATION
The market has been defined as any individual, organization, or government agency in the geographic area that is in a position to plan or organize a large-group activity. The market is further segmented based on customer type and events needed by each customer type. The following identifies the segments and types of activities likely to be held by each:
Individuals: wedding receptions, graduation parties, anniversary parties, birthday parties, etc.
Businesses: employee meetings, training, annual parties (Christmas, New Years, etc.), banquets, etc.
Organizations: annual meetings and conferences, banquets, shows, training meetings, etc.
The segments offering the greatest potential are business and organizations. There is a substantial need for a conveniently located convention center where business, corporations, and other organizations can hold meetings, conferences, conventions, etc. that are attended by people throughout the state and region.
5.STRATEGY AND IMPLEMENTATION
5.1COMPETITIVE EDGE
At present any person or entity needing a facility suitable to host large groups may select from the following options: Holiday Inn, the local community college, public library, and local school district. What follows is a description of the limitations of each of these facilities.
Holiday Inn. The maximum seating capacity in the meeting room is 350. This creates an opportunity for The Far Horizon. A strength of the Holiday Inn is the lodging accommodations available on site and in close proximity.
Community College. The community college is host for many civic and organizational activities. Requests for facility usage often cannot be granted because of an excess in potential bookings. Also, the college does not have banquet facilities for a group larger than 250.
Public Library. The public library has a meeting room available. Seating capacity is very limited, there are no support services available, nor are there banquet facilities.
School District. The local school district has several buildings, classrooms, gymnasiums, and auditoriums. District policy restricts the use of these facilities and no banquet facilities are available.
A review of competitors reveals the existence of an opportunity to offer a facility for large-group activities. The Far Horizon can capitalize on this opportunity by offering a full-service convention center that accommodates up to 850 individuals. The Far Horizon’s proximity to the community college makes it a logical choice to handle over-flow requests. A challenge facing The Far Horizon is that its location is somewhat removed from the motels and other lodging facilities in the community. To overcome this challenge management has contacted the local commuter bus line to arrange for shuttle transportation from local motels to The Far Horizon. This is a short-term solution. Long-range plans for The Far Horizon include the construction of a motel facility and convenience store to accommodate housing needs for out-of-town groups and individuals.
5.2Sales Strategy
Our sales strategy includes the following guidelines:
1.Target leaders in the business and organizational segments.
2.Focus sales efforts to these leaders by offering a full complement of meeting and meal facilities to accommodate their unique needs.
3.Network with local members of statewide organization to obtain contact information and receive their endorsement/support.
5.3History
The Far Horizon has shown negative cash flows due largely to two factors. First, it was a new business venture and the individuals originally hired to manage the operations lacked sufficient managerial expertise. They have since been replaced. Second, the inconvenience of the location limits the size of the lunch crowd.
5.4Advertising and Promotion
The goal of the advertising and promotion strategy is to position The Far Horizon as the leading convention center in the region. The strategy will involve a mix of advertising in local and regional media, sales promotional activities, systematic press releases to inform the public about events at The Far Horizon, and participation in civic groups and business organizations in the region.
Promotional expenditures will need to be sufficiently high in order to build a foundation of loyal customers.
5.4Pricing Strategy
Current prices in the restaurant and bar/lounge are competitive. A cost-plus pricing strategy will be used for convention center services. The direct costs for each event will be calculated based on the services requested, staffing needs for the event, and amount of space required. Indirect costs will be added so that each event generates revenue to be applied towards overhead. Indirect costs will be based on the proportion of total facility space used for the event. Finally, the price for the event will be calculated based on the total costs of the event plus a markup based on cost.
6.MANAGEMENT SUMMARY
The Far Horizon management team is comprised of 3 individuals whose backgrounds consist of over 35 years in the motel and restaurant industries. In addition to the owner there is a restaurant and bar/lounge manager who has been involved in all aspects of the restaurant industry for over 25 years. The services of a consultant with a B.S. in Business Administration have been used. She has been providing advice on the management aspects of this business. Additionally, outside management advisors provide support for management decisions.
6.1PERSONNEL PLAN
The operational, marketing, and financial management team is in place. Current employees are capable of handling day-to-day operations. As growth is realized additional management will be added as needed.
7.FINANCIAL PLAN
One of the strengths of The Far Horizon is that the value of the fixed assets totals $240,000 with the only debt being a mortgage balance of $58,000. The only long-term liability is the $526 per month mortgage payment.
Present cash flow is at times negative. At this time sufficient cash is available from other business sources to meet operational requirements. The goal is for The Far Horizon to become totally self-sufficient. This goal will be realized when the full-service convention center becomes operational. The convention center is recognized as having the greatest profit potential among the three components of The Far Horizon.
8.APPENDICES
8.1Convention Center: Estimates to Complete
This section shows the amounts of the bids submitted by businesses to complete the necessary renovations and upgrades to make the convention center operational.
Sprinkler System $22,900
Parking Area, Immediate 24,389
Parking Area, Future Expansion 59,684
Tables, Chairs, Misc. Items 32,460
Place Settings for Occupancy limits 42,802
Misc. Supplies and Carpet 72,325
Kitchen Construction and Wiring 27,850
Plumbing 10,637
Appliances 44,814
TOTAL $337,861
8.2Convention Center: Forecasted Operating Cash Flows
This section shows the forecasted cash receipts and cash expenditures for The Far Horizons Convention Center during its first six months of operations, January 1, 2001 through June 30, 2007.
Cash Revenues
Sales $50,000
Cash Expenses:
Labor costs 20,000
Food and supplies 22,500
General and administrative 15,000
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