Travel Information Service Business Plan
TRAVELING U.S. INC.
1500 Pepper Ridge
Haysville, KS 67060
Traveling U.S. Inc.'s business plan is unique, in that it is based upon the production, marketing and distribution of a completely new product, an automated travel information kiosk The business owners plan to capitalize on this need in the market. The owners present investors with a solid plan to fill this market need.
- EXECUTIVE SUMMARY
- MARKET ANALYSIS
- MARKETING STRATEGY
- FINANCIAL PROJECTIONS
This business plan is confidential and is used to introduce prospective investors to Traveling U.S. Inc. (The Company). The Company is in the process of developing David Ford's Travel Guides as a business opportunity and to expand the installation of its products and services throughout the United States.
It is The Company's goal to raise $3,500,000 in equity capital needed to further develop its prototype product, expand its marketing operations and penetrate the marketplace.
The Company owns all rights to its trademarks and the service marks. The Company will be responsible for the overall management of the production and marketing of the products and services, training and advertising coordination.
Statement of Purpose
Traveling U.S. Inc. is interested in developing David Ford's Travel Guides as a business opportunity and to expand the installation of its products and services throughout the United States.
The Company's mission is to open a network of salesmen (corporate and/or independent contractors) for the purpose of installing, and servicing the David Ford's Travel Guides. This will be accomplished in an atmosphere where the sales force will receive the ultimate in quality products and services. It is The Company's goal to revolutionize advertising in the motel, hotel and hospitality industry in the United States. The Company's expansion will eventually be worldwide. Management, services and cost controls will be keystones to The Company's success. The services will be provided by knowledgeable, well-trained management and support personnel.
The Company was founded by its President, David Ford, a consummate entrepreneur who combined his business management ability with his sales and marketing expertise to create David Ford's Travel Guides.
The products consist of a computerized Marquee prototype approximately four (4) feet wide by seven (7) feet tall which will be a free standing unit. The top half will contain ads that will be approximately four (4) inches by five (5) inches, allowing for fifty (50) advertisers. Advertisements will be on transparencies which will be back-lit with fluorescent lighting. Each grouping of advertisers will be color coded. A telephone will be on the base of the unit, hooked up to the advertisers via an automatic dialer allowing the user to be connected to the advertiser. The ads will put the advertiser's customer just a fingertip away from the products and services they need while traveling on business or pleasure. The Marquee advertisers may include: limousine services; pizza delivery; florists; car rentals; quick print shops; movies; theaters; dry cleaners; museums and other attractions.
A manufacturing agreement will be prepared by Traveling U.S. Inc. and Manufact U.S. Inc. (MUI), a Hutchinson, Kansas manufacturing company. Keith Wilson became President of MUI in 1985. MUI was organized in 1967 by Hungarian refugees as an FAA repair station which specialized in meter movements. In 1969, Jim and Kathy Wilson purchased the firm which, at that time, had 800 square feet of manufacturing space and three employees. Today, the plan consists of 15,500 square feet and has over 100 government contracts valued at over $1.5 million.
MUI is currently capable of delivering 42 units per month and has committed to do this beginning eight (8) weeks after approval of the prototype. Costs for the units are currently estimated to be $5000 each. When orders exceed MUI's current capacity it will increase its manufacturing capability accordingly.
The Company's Markets
The U.S. travel and hospitality industry consists predominantly of small businesses. It is a large and growing sector of the U.S. economy. According to the U.S. Travel Data Center's annual National Travel Survey, U.S. residents took 1.3 billion person-trips in 1991 (one person traveling 100 miles or more, one way, away from home in one day, or staying out of town one or more nights). The travel market in the U.S., including hotel and motel accommodations, amounted to over $327 billion in 1991. There are more than 28,000 lodging properties with 97 million hotel and motel rooms in the U.S. Although hotels and motels will be our initial marketing target, there are over 11,000 hospitals in the U.S. which can use David Ford's Travel Guides. Also the over 300 convention bureaus in the U.S. will be targeted. Other markets are being investigated.
With the increasing number of "economy" type motels and hotels (no frills, no restaurants, etc.), The Company envisions a booming market for its David Ford's Travel Guides.
The Company's Objectives
The Company's prime objectives are to establish and maintain its leadership in providing its clients quality products and services through a network of corporate and independent salesmen in order to quickly penetrate major markets in the U.S. Within two years, The Company's objectives are to go public and to provide a consistently high rate of return to its stockholder investors.
Short Term Objectives
- Develop a competitive Marquee prototype
- Study the potential U.S. market for Traveling U.S. Inc.
- Use select and discrete advertising to invite a qualified response
- Pre-qualify independent contractor and sales prospects
- Integrate independent contractors into the system
- Install 500 units in the first full year of operation
- Install 2500 units in second year of operation
- Install 3000 units in third year of operation
- Go public in the second or third year of operation
Long Term Objectives
- Pursue productive and profitable growth objectives
- Obtain prominent market position in the United States
- Place a minimum of 500 new units the first year
- Place 2500 new units the second year
- Place 3000 new units the third year
- Have a total of 6000 units operating by the end of the third year
- Obtain prominent market position worldwide
Strategy for Meeting the Competition
To our knowledge, only one other company currently offers a program similar to The Company's program. Although there is limited competition, it is accepted that once recognized for its profit potential, competition will be severe. It should be remembered that The Company has a leading management and marketing edge on current and future competition and has worked out many of the problems which future competition will have to face.
The strategy The Company employs for meeting the competition includes continuous research and development of product selection, marketing, and service.
Trademarks and Copyrights
The Company will register its Trademark with the U.S. Patent and Trademark Office (PTO).
The Company's Corporate Commitment
To implement market penetration throughout the United States, The Company has and is prepared to continue to invest the dollars and staff time required to develop its corporate expansion program.
The Company plans to issue 15 million shares of stock. Its goal is to sell 7 million shares at fifty cents per share (.50) for the first raise to $3.5 million.
The Company's management strategy is to maintain a highly educated and well-trained management team composed of management, marketing, engineering, financial and legal personnel who are skilled, flexible and focused on The Company's common goal. The Management Team includes:
David Ford is the founder of Traveling U.S. Inc. and is also President of The Company. Mr. Ford graduated from Missouri State University where he received a Bachelor of Arts degree in Business Administration.
Skilled in business administration Mr. Ford has the essential tools necessary to make The Company successful.
Goal oriented and success driven, Mr. Ford has a proven record of significant contributions to the bottom line of those ventures in which he becomes involved. He has served the Venture Company in El Dorado, Kansas for over ten (10) years in varying executive capacities including: Configuration Management; Equipment Management; and Planning and Control Management. David was promoted to Industrial Engineer with the responsibility for developing analyzing, maintaining and applying standards data to all manufacturing plans developed for the Company.
Board of Directors
Mr. Ford has carefully selected his policy-making Board of Directors. They include:
Mr. Holden, a graduate of University of Kansas with a Bachelor's degree in Fine Arts, is an Industrial Engineer with The Venture Airplane Company and responsible for standards development and applications. He is computer literate with both PC's and Mainframe Systems. His comprehensive knowledge of graphics and communications makes Mr. Holden a valued addition to the Board of Directors.
Robert Morris has been involved with entrepreneurial start-ups most of his adult life. He has owned a variety of businesses as well as managed the sales and marketing arm of several firms. His business involvement ranges from publishing to all types of construction. He possesses knowledge in the areas of negotiation, marketing, compensation plans, territory layout, sales, sales training and sales forecasting.
Thomas Carroll, CAE
Mr. Carroll is President of ACL-USA which has been developing successful franchises and business opportunities since March, 1981. Through his franchise development, management and marketing firm, he has worked with over 100 major international, national, and/or regional franchising companies. He was the Executive Vice President of Franchising Worldwide (1975-1980). In 1975 he was a founder, charter member, and first chairman of the Worldwide Franchising Council — an organization which then included National Franchise Associations in over 12 countries. He created FW's franchise trade show and their Outstanding Franchisor Award program. He authored numerous articles on franchising including Organization of Franchising & Advisory Councils. Carroll is also a founder and past chairman of the National Small Business Legislative Council, a past president of the Washington D.C. Jaycees, a past director of the U.S. Jaycees and a past chairman of the 2000 member national professional association executives — The Greater Washington Society of Association Executives (1980-1981).
Robert Mason, CLU
Mr. Mason is President and chairman of Logan Holdings and affiliate subsidiaries of Logan Holdings. Mr. Mason founded the present insurance operation of the company with the purchase and acquisition of the 60 year-old Mayers and Smith insurance brokerage firm in 1985. Robert holds a Bachelor of Arts Degree from Kansas State University. He is a Chartered Life Underwriter and has been a licensed General Agent in the Life Insurance Industry since 1979.
Mr. Smith is an independent consultant operating out of Utah. He has a Master's Degree in Business Administration. He attended the Business Development Institute of Ontario, Canada. Born in Wales, Larry served in the Royal Air Force, United Kingdom Far East. He was director of foreign markets for Casey Herbal of Canada. He developed joint venture partnerships for this company in Malaysia, Brunei, Indonesia, Thailand and the Philippines which spawned 8500 distributors and sales of $2,000,000 per month. Mr. Smith is an expert in multilevel marketing program development. He has worked with Salem Direct Sales Division, Ohio and the Barid Corporation in Massachusetts where he served as Vice President of marketing for the company's Welcome Wagon Division. The above experiences coupled with his experiences with Errol Company and Nova Products will be useful to The Company.
In addition to the above Board of Directors, Mr. Ford has named the following to serve as Advisors to the Board:
Mr. Martin is President of ISI.
Mr. Morton was responsible for increasing the Kansas Mail Services in El Dorado from 30% to 90%. He is a tax expert who designed a successful operation and pricing format for a tax firm. Harold is also an experienced salesperson.
Mr. Summers has worked with The Venture Airplane Company in El Dorado, Kansas since 1980 in capacities ranging from Cost Management Senior Analyst, Corporate Quality Improvement Facilitator to Corporate Quality Improvement Administrator. His banking and financial expertise includes having served as a Branch Manager of the El Dorado Bank & Trust, and the College State Bank. Jerold has a Bachelor of Business Administration from Kansas State University and a Master of Science in Management from Michaels University in El Dorado.
James Sender, Esq., of Washington, D.C. serves as Corporate Counsel.
Certified Public Accountants
The prestigious Regional Certified Public Accounting firm of Kennels and Kohl, headquartered in Wichita, Kansas, will serve The Company on financial and accounting matters and will assist in providing procedures to take The Company public.
The Company has created and enjoys many of the technologies of modern management and procedural methods. The Company's independent contractors are carefully selected and well trained to promote The Company's products and services.
The Company's Job Descriptions
The President, in conjunction with general responsibilities for corporate policy development, is responsible for the overall management of the business and its growth. He establishes corporate policy, performance standards and incentives. Corporate office performance and independent contractor performance is monitored by him and his feedback provides encouragement and increased productivity. He is responsible for approving independent contractors and product design concepts. He addresses the annual meeting of independent contractors designed to facilitate the exchange of ideas and techniques between them and corporate officials.
The Vice President is responsible for the development of the corporate staff and for the overview of product development, sales and promotion.
Director of Operations
The Director of Operations' primary responsibility is to monitor the expansion and development of the independent contractors marketing areas. He is involved in start-up equipment inventory and contractor training. He is also available as a technical resource person for independent contractors who have specific operational problems or questions. As his responsibilities grow, a Director of Training will be added to the operations department who will take on the responsibility of training and development to allow the Director of Operations to assume his increased responsibilities as the system grows.
The Marketing Manager is responsible for advertising programs and cooperative advertising strategies. He works directly with independent contractors in developing cooperative advertising strategies.
Corporate Counsel is responsible for preparation of the independent contractor agreements, filing and maintaining integrity of Trademark and Service Marks registrations. He is also responsible for the corporate legal concerns of The Company.
Financial Advisor (CPA)
The financial advisor will advise The Company regarding its financial and accounting affairs as well as the procedures necessary to take The Company public.
The Economy in 1993
In 1991 and 1992, signs of hesitation in certain economic indicators began to surface, generating concern about the strength and durability of the economy. The year 1993 began with the nation's economy in a moderate recession. However, the 2nd quarter of 1993 is beginning to show signs of economic improvement.
Outlook for 1993
A review of the pre-published U.S. Industrial Outlook - 1993 stated that consumer demand for goods and services is expected to recover from 1992 as the U.S. economy continues to recover. The major sources of growth are likely to stem from a pickup in consumer spending. Personal consumption expenditures account for the largest share of the forecast gain in real GNP in 1992. A relatively stable inflation rate and a slight increase in interest rates are forecast for 1993, implying a continuation of accommodative monetary policy. Expected white collar increased employment should lead to increased purchases of goods and services. The travel industry is expected to rise in 1993.
In summary, though softness is expected in some areas of the economy, moderate growth on balance is in prospect for 1993 and this is a good omen for the future of The Company.
The Company's potential future market is defined as nationwide. The Company's overall market includes the nation's motels, hotels, convention bureaus, hospitals, theme parks, museums, parking garage and other markets currently being explored. However, during its early stages of marketing, it will concentrate in the hospitality area including hotels, motels and convention centers. The Company is in a positive growing situation. Other competitors have entered the market, however, because of The Company's early start, its research and development, and its marketing know how, The Company expects to enjoy a number one position in the national marketing area.
The Company's Markets
The U.S. travel industry consists predominantly of small businesses. It is a large and growing sector of the U.S. economy. According to the U.S. Travel Data Center's annual National Travel Survey, U.S. residents took 1.3 billion person-trips in 1991 (one person traveling 100 miles or more, one way, away from home in one day, or staying out of town one or more nights). The travel market in the U.S., including hotel and motel accommodations, amounted to over $327 billion in 1991. There are more than 28,000 lodging properties with 97 million hotel and motel rooms in the U.S. The Company's early efforts will be to saturate the hotel/motel market. With the increasing number of "economy" type motels and hotels (no frills, no restaurants, etc.), The Company envisions a booming market for its David Ford's Travel Guides. Also targeted are over 300 convention bureaus in the U.S. Once these target markets have been well developed, other markets will be exploited. For example, there are over 11,000 hospitals in the U.S. which can use David Ford's Travel Guides. Other markets are being investigated including 4500 parking garages in America, theme parks and museums.
The Company's distinct advantages over the competition is its experienced and well-seasoned management team which makes The Company a very formidable competitor. The Company plans to meet expected competition by establishing and maintaining a strong market presence based on name recognition quality product and service, and continued marketing and promotion.
One obstacle which needs to be faced by The Company, in forcing a national presence, is the high cost of penetrating this attractive and profitable market. A look at the financial spread sheet indicates that at least $750,000 will be needed for the first three months of operation. However, units should begin to be placed in hotels and motels in the third month, at which time The Company's cash flow will be initiated. The concept is such that a positive cash flow will begin in the third month of operation. It is expected that The Company will reach its break-even point after the 115th unit is installed.
The Company's objective is to raise $3,500,000 in equity capital needed to expand its operations and to penetrate the marketplace. This will be accomplished by selling stock in The Company.
The Market Potential
Traveling U.S. Inc. is an excellent investment. The Company is designed to attract well capitalized veteran business and professional people.
Any company which provides the same or similar products and services available from the Ford' organization will recognize The Company uniqueness as a specialist in marketing and services. The Company's clients will appreciate the speed, the convenience, and the knowledgeable and friendly service of its sales and service organization. This is what will make The Company different and successful.
Actually, there is little direct competition with The Company. Anyone wanting to compete with this concept would have to be prepared to risk anywhere from $500,000 to $1,000,000 on development costs alone. The Company has expended considerable time and money to develop and hone its concept to the profit machine it is expected to become. It would take a lot for competitors to reach The Company's current status.
The objective is for The Company to establish a market presence in a majority of the over one hundred-thirty-five (135) metropolitan statistical areas in the United States. This will be accomplished by:
- The Company opening, owning and operating its own regional sales areas;
- Attracting and integrating qualified regional sales directors into the system through the use of select advertising;
- Developing a vibrant image and commitment to quality and efficient service.
It is recommended that The Company invest sufficient capital in research and development for the purpose of introducing a minimum of two new products each year to stay on the cutting edge of the competition and to enhance bottom line profits.
The Company expects to be perceived as number one in products and services. Customers will recognize The Company's products to be of a higher quality than any competitive product. The Company will continue to maintain and strengthen its marketing position which will create even more confidence and trust among customers and The Company's sales force.
It is premature to consider an international market at this time. Once the U.S. Market is well underway and successful, it will not be difficult to enter the international market through licensing, joint-venturing or master licensing.
Method of Marketing
In order to maintain national control of The Company's marketing potential, it is recommended that The Company develop a national network of commissioned corporate regional sales directors as the primary method of marketing. These individuals will work on a minimum draw plus commission basis in obtaining locations for The Company's products and services. This includes selling the placement of the individual units as well as soliciting the advertisers who will participate in the advertising program. It is estimated that 15 to 25 salespersons will be needed during the first year's operation, 25 to 100 the second year and 100 to 150 the third year — to place the units and to sell 50 ad spaces/units in his/her territory.
Regional target areas will include SMSA marketing areas as defined by the U.S. Department of Commerce. The Company will concentrate on cities with a population of 1,000,000 persons within a 50 mile radius of its geographical center.
Profile of Regional Sales Director
- An individual having liquid assets of at least $50,000
- Business experience in following areas:
- Sales or marketing
- Supervision - minimum of four employees
- Designated regional sales director must play active role in business by devoting 100% of his/her time to the business.
The Company will pre-select a minimum of 25 marketing areas which fit its criteria. The Company will pre-select from these, a few pilot areas for special invitation meetings where prospective regional sales directors can be interviewed and product selling can begin.
Regional Sales Director Services
The Company will emphasize its regional sales director support as one of its major activities. A hotline service will be available to all regional sales directors. The purpose for this service is to assure regional sales director's success, satisfaction and loyalty. Technical and marketing support will be provided by The Company. This will allow the regional sales directors to concentrate on sales and to perform efficiently as The Company's front line.
Regional sales directors will complete a two-day training program in El Dorado. The regional sales director should be ready to recruit customers immediately following their training.
Advertising and Promotion
Once ten or more regional sales directors are on line, The Company will be in a position to utilize the specialized help of an advertising agency in the refining and further development of its marketing direction.
The Company's principals have considerable experience in marketing, advertising and public relations. This expertise will be totally utilized as The Company grows.
Corporate Staffing and Sales Support
During the first three to six months, The Company will use a minimum staff of three executives to sell and to administer the program. This includes the President, the Marketing Vice President and the Director of Operations. A receptionist will be hired to answer calls and take care of routine office matters. Eventually, a highly trained telemarketing team will be hired to support the' regional sales directors in their selling and servicing initiatives.
The Company is already at work developing lists of hotels, motels, and convention bureaus. This program will be extended to include other markets such as hospitals, museums, theme parks, etc. In addition, The Company is researching Marquee advertiser potential and prospects in such services as: limousine services; pizza delivery; florists; car rentals; quick print shops; movie theaters; legitimate theaters; concert halls; zoos; dry cleaners; restaurants; hospitals; medical services; etc.
In addition, The Company is researching all forms of advertising and advertising costs in order to be most competitive.
Pricing and Profitability
Pricing is generally based on what the competition charges, marketing, promotion, overhead costs, etc.
Pricing of products and service is competitive, however, The Company can and does command a competitive price structure because of the high quality of its products and services and the volume of sales controlled by The Company. Clients are willing to pay a fair price for recognized quality product value coupled with equally good service.
Projections indicate that The Company will enjoy an average net income before taxes ranging from 30% to 60% over a three (3) year period. This is attractive by any standards.
Strategy for The Company Growth
- Obtain twenty (20) investors @ $175,000 for a total of $3,500,000
- Install 500 units in year one — Generate sales of $15,500,000
- Install 2500 units in year two — Generate sales of $93,000,000
- Install 3000 units in year three — Generate sales of $186,000,000
The first year's operational cost is estimated to be $10,845,000. This would be offset by a projected $15,500,000 in sales which could net The Company a profit of approximately $2,792,640.
|Income, Expenses and Cash Flow for the First Three Years|
|Item||Month 1||Month 2||Month 3||Month 4||Month 5||Month 6||Month 7|
|Vendor Space Rent||$150,000||$150,000||$150,000||$150,000||$150,000|
|Vendor Phone Lines||$25,000||$25,000||$25,000||$25,000||$25,000||$25,000||$25,000|
|Cash Rev. B/T||($384,382)||($357,382)||$535,118||$540,118||$540,118||$540,118||$540,118|
|Cum. Cash Flow||($384,382)||($741,763)||($206,645)||$333,473||$873,592||$1,413,710||$1,953,828|
Notes for Financial Spreadsheet
- Income represents advertising income as follows:
- 30 ads @ $900 = $27,000
- 20 ads @ $200 = $4,000 (for not-for-profit groups)
- Advertising income @ $31,000 per marquee
- Rent is arrived at as follows:
- First year: 3200 sq. ft. @ $13/sq. ft.
- Second year: 5000 sq. ft. @ $14/sq. ft.
- Third year: 10,000 sq. ft. @ $I5/sq. ft.
- Unit Purchases @ $5,000 (includes R&D and Liability Ins.)
- Vendor's space rentals @ $250/month.
- Salesman's salary/commission @ 22%
|Month 8||Month 9||Month 10||Month 11||Month 12||Year One||Year Two||Year Three|