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Introduction
For any type of business to be successful, it should be started and also operated with a very clear appreciation of its customers, its inner strengths, the business competitive environment, and more so a vision of how the business will evolve to be competitive in the future. A business venture or project also requires money to be established, to operate, and most importantly grow. Through expanding the efforts to develop a comprehensive business project plan, one will have a got powerful tool. A business plan is a roadmap for a company. It clearly shows where the company or a business venture is, how the business venture got there, and how the business venture plan to proceed. (Pinson and Jinnett, 1993)
Why write a business plan?
A Business plan is prepared as an essential element of raising funds from probable investors such as bankers and some other lenders. a Business plan is a vital document when taking a company needs to take its business public or when selling all or part of a company. Indeed, without a Business plan, soliciting a lender for funds is meaningless. (Pinson and Jinnett, 1993)
To lenders or prospective investors, a Business plan not only gives information and discloses an assessment of the venture’s feasibility, but it also reflects the management abilities. An investigative, objective business plan persuades lenders that a company is capable, structured, and prepared. a Business plan that is badly researched, or makes assumptions not supported indicates that a company is inexperienced and in eyes of lenders or prospective investors eyes reckless. (Pinson and Jinnett, 1993)
Preparing any business plan takes time, however, it is worth the investment in the end. Not only will a Business plan provide important information to external investors and lenders, but it will also lay out the game plan from which to activate a firm. This is, undoubtedly, the most significant use for a business plan. The business plan will become a blueprint and direct one towards attaining his/her overall business aims. A business plan is a comprehensive, well-thought-out document that provides the foundation for an entrepreneur to make proper business decisions. Whatever the proposed use of a business plan, it should be thorough, precise, and backs up each claim with facts. (Pinson and Jinnett, 1993)
This study will outline a business plan which describes a proposed storage facility to be set up in Westbury, New York that involves the conversion of an already existing building. Total project expenditures are estimated at $1,054,487 which includes purchasing price, conversion expenses, and pre-opening costs. Based on present and projected big demand for storage units, rental returns is projected to grow up rapidly as the units are filled up from the initial year’s mark of $320,000 to $684,000 by the third year.
Objectives
After attaining experience and also success in their current storage facility in Plainview, New York the principals of the following proposed project have planned to take the advantage of the current strong demand in the storage industry to accomplish a big presence in Westbury. It is projected that the ownership association with Store Moving will help in gaining complete occupancy fast. Targets have been set to at least rent 50% of the planned 300 unit spaces in the first six months of 2009. An extra 25% will be rented in the second part of 2009, with the remainder to be filled in 2010.
Mission
The mission of the owners is to serve the Westbury community’s local, residential, and business storage and moving requirements.
Keys to Success
The keys to succeeding in the storage facility business are:
- To offer dry, safe, and clean facilities having convenient access.
- To have fine relationships in the moving industry directing customers requiring short-term storage space.
- To be capable to adjust as storage and market requirements change.
Modern-day storage is a start-up venture that is located in Westbury. The owners of the venture have experience in the moving and storage field, and own a well-established moving firm (candid movers) and also own a storage facility in the close by Plainview. The building which is to be purchased for the storage facility is a big brick building that was initially built around 1940. The building has four floors of steel beam and it is ideally suitable for the function of storage. One of the elevator shafts will be appropriate for transporting the storage contents from the ground t the upper units on the second to fourth floor. There is enough space around the building which can be used for building more storage units in the future when the need arises.
Supposing the purchase of this building takes place in March this year, it is estimated that the conversion of the building into storage units possible will be all set for occupancy by December this year. According to market research, there is a strong demand for storage services, and renting the units will not be a problem. Finance from the bank is expected to be 70% while the shareholder’s equity is expected to finance the remaining 30%.
Company ownership
The company will be owned by five individuals who are known as William Kelly, Sammy Brooks, Jimmy Kegan, Juliet green, and Yolanda Melvin. Of them will own an equal amount of stock of the company.
Start-up summary
The business will have to be advertised and promoted mainly through placing adverts on the yellow pages and also in the local newspapers during the period of opening. In total it is estimated the advertisement and promotion will cost around $500 each month for the first year. However, in the following years, the cost will go down.
Property taxes of about $15,000 are estimated at the real rate of tax per year but no major increase is expected.
Normally, maintenance of a building is very important bearing in mind that this building was built in 1940. Though the building was renovated well recently, thus the start-up amount reflects the required sum of capital t make ready the building before it is opened. It is worth noting that since the building will not be used for offices it will not require high maintenance costs. We, therefore, estimate that the maintenance will be equal to only 4 % of the purchasing price which comes to $25,500
Utilities
- Water and sewer projected at a level of $260 annually
- Westbury municipal lights bill amounted to $13,500 for the previous owner of the building, we anticipate the bill to go down as less lighting is needed in the storage facility.
- Removal of trash is set at the normal standards of $530 per year
- The heating of the building is not much required so, it is estimated at $7,000.
- The net total of the above utilities is estimated to amount to $900 per month.
Insurance
The previous amount for property and liability insurance was $16,000 for the previous owner, this estimate will be used.
Telephone
Major telephone bills will be yellow pages ads charges; however, these expenses are already put in advertising and promotion bills. We project that telephone bills will amount to $150 each month.
Bookkeeping
Bookkeeping will be done in the same way as used by the owners’ other business ventures and it will cost $300 each month. The charges of auditors will be around $4,000.
Table 1. Startup.
Company location
Modern day storage will be established and located in Westbury, it will be central located in the town of Westbury.
Services
Modern day storage will offer both short term and long-term storage services for the locals. There will be about 40,000 square maintained storage units for renting and also residing.
Competitive comparison
Other storage facilities that are found within the town were surveyed and the following data were collected for competitive comparisons.
The average price per sq. feet is $1.20 per month
Market analysis
Through the same split as that done by existing storage facilities, the modern-day storage is anticipating to rent 70%of the units available to non-business renters and 30% to the commercial segment of the market. There will be a total of 400 storage units which will be formed and offered for rent. According to market research, this number is still below the market demand.
Market segmentation
Storage units are required by residential customers to keep their personal effects and by commercial customers to keep their stock. It is projected that the residential sector will account for 70% of the total available units while the remaining will be taken up by the commercial sector. Both these segments are expected to grow at an annual average of 5%. Below is a chart and a table to sketch market potential
Table 2 market analysis.
Target market segment
Because the demand for the need of storage facility services outweighs the local supply, modern-day storage will target the two main customer segments which are residential customers and commercial customers. The firm will not target large-scale commercial customers due to the prevailing limitation of the facility.
Market needs
The needs of customers in the storage industry seem to have a particular similarity across various market segments. The main requirements are reliability, safety, and accessibility to a storage facility. Because of the prevailing high demand customers do not price-sensitive, but they put consideration on the convenience of location to make making buying decisions. Residential customer mainly uses the facility when moving to temporarily store they property. While commercial customers need the storage facility to temporarily store their goods or merchandise.
Industry analysis
According to market research done the national income in the industry from a square foot is $6.00 (). The market that modern-day storage facilities will serve is more than double (refer to competitive comparison section) the industry started in the 60s but it has been growing steadily each year doubling its size each decade. At the same time returns on the investments have been extremely good. The reason for the upward trend has been due to the mobility of the society, and the overall increase in property accumulation, it can be argued that there is no indication of a downwards trend for the moment. However, if supply outstrips demand, then modern-day storage facilities will be well-positioned in dealing with competition because of their capability to provide heated units. (Majority of competing storage units are not heated)
Industry participants
Though there are a small number of nationwide players in the industry, this industry is still quite dispersed where several small companies participate.
Strategic positioning and implementation summary
The sales and marketing plan is quite simple because storage facilities have a high demand. The modern-day storage facility will inform the locals of its presence through adverts in the local media and by yellow pages adverts.
Competitive edge
Even though currently there is no competition in the industry owing to the low supply of storage facilities and high demand, Modern day facility has positioned themselves well in case there is competition in the future. The company has good management with experience, offers good services and has extra services such as heated rental units.
Sales strategy
Probably, many sales will come via Yellow pages adverts, appropriate telephone manners and expert handling of inquires on-site are crucial to ensure that more sales are made.
Sales forecast
Because demand is high in the market, Modern day storage may as well be able to rent its units with one year of existence. The ground floor units will be rented at $1.40 per square foot each month while the upper floor will be rented at $1.20/sq.ft monthly. It is projected that 50% of the units will be rented within the first six months. Within one and half years of operation, all the units should be rented. Thus the growth rate will be projected o be a straight line. A lot of storage companies have an extra charge on administration and deposits. More so, there is revenue from rented items such as cardboard boxes, packing materials, plastic mattress covers, storage containers, and tapes. Nonetheless, for the aim of projections, it is thought that revenue from these sources will caution against any credit losses.
Milestones
The table below indicates the milestone that Modern day Storage has established.
Table 3. Milestones.
Management summary
The people who will manage the Modern-day Storage company will be Sammy Brooks, Jimmy Kegan, Juliet green, and Yolanda Melvin all of them have good management skills and lots of experience from past positions.
Personnel plan
Operations hours are slotted to be from 7 in the morning to 7 in the night all week days and from 10 to 5 p.m. on a Saturday. The facility will be closed on Sundays. A manager will be working for the usual 40 hours per week at an annual salary of $ 40,000; a person for maintenance will also be employed at a gross salary of $24,000. Also, there will be a watchman for a salary of $ 24,000
Table 4. Showing amounts on the personnel plan.
Financial plan
There is a need for a commercial loan to finance about 70% of the whole project expenses. Also, a 10-year mortgage plan will have to be applied that has an interest rate of 8% first down payment will be paid upon completion of the seller/buyer agreement. The last down payment will be paid at the end of the year, The mortgage will be completely be fully paid in 2017, after ten years.
Key financial indicators
The chart below indicates the benchmarks for Modern Day storage.
Break-even analysis
The estimated average for the rental of one square foot of the storage space at the Modern-day is placed at $1.40 for the units on the ground floor and $1.20 for units on the upper floor. The net operating costs at placed at $14,476 per month and the interest expense goes at $4,898 this then gives net fixed expenses of $19.374.
The break-even chart indicates that for the company to break even, 15,376 square feet of space should be rented. This is slightly above a third of the overall storage space available for rent.
Table 5. Break-even analysis.
Projected profit and loss
Adverts and promotions will mostly be done through Yellow pages and the local media. It is estimated that the adverts on the Yellow page will cost $165 per month and local media advertisement will cost $300 per month in the initial year. However, in the next two to three years the amount will be reduced.
Property taxes are estimated to be $11,946 per year and no major increases are expected to occur.
Normally, maintenance of a building is very important bearing in mind that this building was built in 1940. Though the building was renovated well recently, thus the start-up amount reflects the required sum of capital t make ready the building before it is opened. It is worth noting that since the building will not be used for offices it will not require high maintenance costs. We, therefore, estimate that the maintenance will be equal to only 4 % of the purchasing price which comes to $25,500
Utilities
- Water and sewer projected at a level of $260 annually
- Westbury municipal lights bill amounted to $13,500 for the previous owner of the building, we anticipate the bill to go down as less lighting is needed in the storage facility.
- Removal of trash is set at the normal standards of $530 per year
- The heating of the building is not much required so, it is estimated at $7,000.
- The net total of the above utilities is estimated to amount to $900 per month.
Conclusion
The business plan of the Modern day Storage facility should be used as guidance and for evaluating the direction and real operating outcome of the facility. For any company to be able operate effectively it needs a business plan to offer the necessary direction and objectives. Poteet (1991) state that, a business plan is a very important management tool, however to get the complete value of a business plan it should be updated. Changes in business and the market or the industry do occur.
Changes in a company, changes within the customer segments, and changes in the market environment all can make a business plan ineffective if not constantly updated. Entrepreneurs and some business owners who prepare a primary business plan are always surprised to find out that the procedure is a corporate self-appraisal and at times even an individual self-appraisal. Making a business plan is not an easy job through any strength of imagination. It is the assessment part of business planning which makes the process so significant for any continuing operation to carry out constantly, even if additional financing is not a consideration.
Reference
Business Services Directory: Office of Business Liaison, U.S. Department of Commerce, Washington, D.C. 2023.
Hailes, W.D., and Hubbard, R.T (1983):.Small Business Management: Planning and Operation, New York: Van Nostrand Reinhold.
Palo Alto software (2006): sample business plan. Web.
Pinson, L and Jinnett, J (1993): Anatomy of a Business Plan, Dearborn Publishing Co.
Poteet, H. G (1991): Starting up Your Own Business–Expert Advice from the U.S. Small Business Administration, compiled, Blue Ridge Summit, PA, The Liberty Hall Press.
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