Sample Business Plan

The Business Plan for

La Vista Azul 490 Woodcreek Dr Suite D Bolingbrook, IL 60440

New Horizons Consulting 921 E Dupont Rd, #885 Fort Wayne, IN 46825

Table of Contents Executive Summary.................................................................................................................................... Company Description................................................................................................................................. Products and Services................................................................................................................................. Marketing Plan............................................................................................................................................ Product................................................................................................................................................... Price....................................................................................................................................................... Place....................................................................................................................................................... Promotion............................................................................................................................................... Competitive Environment...................................................................................................................... Management and Organization................................................................................................................... Financial Plan............................................................................................................................................. Appendices.................................................................................................................................................. Appendix A: Brochure Cover............................................................................................................... Appendix B: Caribbean Location and Characteristics.......................................................................... Appendix C: References.......................................................................................................................

Table of Figures Figure 1. Increases in Local Room Rates................................................................................................... Figure 2. Total Residential Revenues......................................................................................................... Figure 3. Total Commercial Revenues........................................................................................................

Table of Tables Table 1. Accommodation Rate Changes, 2006 – 2007............................................................................... Table 2. Comparison with Other Condominium Property Prices............................................................... Table 3. Pre-Construction Purchaser Deposit Schedule............................................................................. Table 4. Average Unit Size.......................................................................................................................... Table 5. Average Annual Cash Flow........................................................................................................... Table 6. Projected Unit Sales Schedule: Units and Revenues.................................................................... Table 7. Unit Sales Analysis....................................................................................................................... Table 8. Balance Sheet................................................................................................................................

La Vista Azul

Page 3

Executive Summary La Vista Azul is a new resort and condominium complex being constructed on Providenciales (Provo), the most developed island of the Turks and Caicos Islands group of Caribbean islands in the British West Indies. Lying southeast of the Bahamas and northwest of the Dominican Republic, the Turks and Caicos Islands are easily accessible by those in the Eastern United States. About 175,000 tourists take advantage of that accessibility each year. When construction is finished there will be 78 residential and 15 commercial units on 3.5 acres. The entire area is becoming better known and more popular, in part because of the privacy that tourists and guests can find there. Increased demand for available accommodations is evident in the increase in room rates that hotels and other resorts have imposed in the past year. Budget accommodations have increased 20 percent; more luxurious accommodations have increased as much as 34 percent in a single year. Hotel operators typically use yield management pricing quite well; hotel room rate trends can be used as a leading indicator of general tourist trends in the local area. La Vista Azul was granted a loan for land purchase in 2005 and now seeks a construction loan to begin work on the resort. Without any active marketing efforts to date, so far 19 of the 78 total units scheduled to be constructed have been sold in the closing months of 2006 and the first two months of 2007. Current demand is significant and increasing, and it is an attractive time to begin construction on the La Vista Azul Resort and Condominums to make units available not only for pre-construction sale, but also for physical possession.

Company Description New Horizons Consulting in Fort Wayne, Indiana is the company overseeing and conducting the construction, unit sales and operation of the finished La Vista Azul Resort and Condominiums complex in the Turks and Caicos Islands. The complex will be located on 3.5 acres of land on the most developed of the 40 islands and cays of the Turks and Caicos Islands.

Products and Services La Vista Azul is the name of the resort that will be constructed on land that was purchased by the organization in 2005. There will be 78 residential units and 15 commercial units when the project is completed; to date we have sold 19 of those units through pre-construction sales in only four months’ time. We anticipate full sell-out to require 2.5 years, approximately the same length of time that will be required for full completion of the construction project. Floor plans for all unit types can be seen online at www.lvaresort.com, La Vista Azul’s website. Each residential unit is designed to maximize the view from the hillside on which La Vista Azul will be located. Each unit has a direct view of the ocean in the “public areas” of the condominium, with functional and private areas being retained at the back of the unit. All units are the same length, but the larger and more expensive units are wider and provide a more expansive view of the ocean. Prices are $350 per square foot. The basis of the unit price combined with the visible difference being in the width of the unit provides a direct visual point of reference for potential buyers that enables them to directly associate higher price with greater benefit. With its attention to tourism and promoting greater tourism, there are many activities on and around Provo to engage visitors to the Turks and Caicos Islands and La Vista Azul. There are activities in “water sports, hiking, walking, running, golfing, sight seeing, dining and of course, shopping” (Development Profile, 2006), as well as other activities including “Deep sea fishing, para-sailing, sailing, snorkeling, and some of the best diving in the world” (Development Profile, 2006) at Turtle Cove, which is within

La Vista Azul

Page 5

walking distance of the entrance to La Vista Azul. On the grounds of the resort, “Lush roof-top gardens, soothing waterfalls and spacious balconies and terraces provide property enhancements that are luxurious and comfortable, reflecting a beautiful design that pampers residents with its refined tropical ambiance” (Development Profile, 2006). The bottom line for owners and visitors is that there is (with more planned in the future) an array of activities attractive to tourists within easy access of the resort. The active family will be able to take advantage of some of the adventuresome activities while also having the option of simply relaxing on expanses of white powder sand and being cooled by continuous tropical trade winds.

Marketing Plan Other properties in the area will be described in the “Competitive Environment” section below; here only La Vista Azul is of interest. The marketing mix for any product consists of the “four Ps,” which are product, price, place and promotion. Management of each “P” of the marketing mix is required for maximum effectiveness in marketing. The plan for managing those categories of the marketing plan for La Vista Azul are as follows.

Product As stated, the residential units all will have a view of the ocean. The units are long and narrow to ensure that every unit has a view, and the design “stacks” units up the hill on the La Vista Azul property so that each unit gains the most advantageous view possible. Unit interiors will be luxurious and quite comfortable for all guests and residents, regardless of background or expectations. There will be shops and other commercial services in the commercial units of the main building. Three buildings – Delfin, Tortuga and Ensenada – will support rooftop gardens rising above the lower residential buildings and the commercial center that will be situated below them. Residents and guests will have available to them any type of physical environment they desire at any time.

Price As stated, the selling price of a residential unit is $350 per square foot. This represents a high midrange when compared to other properties in the area, many of which sell for more than $500/ft2. A few other developments sell their units for less than $350/ft2, but they also have fewer amenities than do the units and grounds of La Vista Azul. Conversely, there is not a great deal of difference in the amenities of those condominiums selling for much higher asking prices. What those developments are able to gain will be interesting to see; La Vista Azul will provide direct competition.

Place As the most commercially developed island in the Turks and Caicos Islands system, Provo also has the greatest array of activities and attractions to pique the interests of La Vista Azul residents and guests. There are a number of island activities available to tourists, nearly all of which are available on Provo. Those that are not are accessible by airplane, which between islands becomes a rather short “hop” from one island to another.

Promotion The management team of La Vista Azul fully intends that the resort will not be a well-kept “secret” of the Caribbean. Rather, promotion will be aggressive throughout the entire construction period to average 3 percent of sales. Exclusivity will arise with ownership of the sold-out resort, rather than a marketing failure that has created a “secret” the existence of which (by definition) relatively few people are aware. There are two primary reasons for promoting the resort through rather aggressive marketing: (1) to sell the units more quickly and return to profitability sooner; and (2) to avoid any possibility of price reductions in the future. Provo is becoming a more popular tourist destination and several resorts and hotels are being constructed in response. We seek to sell units before many more become available to tourists to take advantage of the most advantageous sales period. Advertising will take place in a variety of media, including using magazine, newspaper and direct mail in the United States, Canada and the Turks and Caicos

La Vista Azul

Page 7

Islands. We will have signage in various places including the Internet and the airport, and brochures will be available at several outlets within the island group.

Competitive Environment There are several choices for accommodations on Provo, ranging in price from $165 a night to more than $10,000. Paris (2006) published a sampling of accommodations in April 2006; Table 1 illustrates the increases in single-night room rates in only one year. The increases indicate that the Turks and Caicos Islands are increasing in popularity and awareness, and that demand for existing accommodations is increasing as well.

Table 1. Accommodation Rate Changes, 2006 – 2007

Category Budget

Property Comfort Suites

Luxury

The Sands at Grace Bay

Superluxury

Parrot Cay

Price Range April, 2006 $135-$170

Price Range March, 2007

$165-$550

$165 – $240 $250 – $1,075*

Start at $390

$450 – $10,000

*7-night minimum Sources: (Paris, 2006; p. 202; Rates, 2007; The Sands at Grace Bay, 2007; Rates 2007; 2007).

The increases in room rates presented in Table 1 equate to substantial price increases for a single year. Figure 1 illustrates:

Figure 1. Increases in Local Room Rates

% One-Year Rate Increase

Parrot Cay The Sands at Grace Bay Comfort Suites 0%

10%

20%

30%

40%

Planned for 2007 are renovations to the 104-room Alexandra Resort; the 40room Amanyara opened in March 2006, and the 54-suite Somerset on Grace Bay opened in June 2006 (Isler, 2006). “Molasses Reef, a Ritz-Carlton Resort, opens late next year in West Caicos Reserve, a previously untouched isle. The resort will have 125 rooms, 75 villas and 2,000 square feet of meeting space” (Isler, 2006; p. S5), and plans for 2009 include a 150-room Fairmont Three Cays “on North Caicos; plans call for a 150-room condo-hotel, a golf course, tennis, a marina and a Willow Stream spa” (Isler, 2006; p. S5). This activity alone indicates the interest that small operators as well as well-known luxury chains have in the Turks and Caicos Islands in general, and specifically the island of Providenciales. Activities abound for visitors with all interests. Visitors can arrange for a catamaran cruise for 2 or 100; they can have a full tour of the islands or cruise for only a few hours. The Provo Golf Club is an 18-hole, par-72 course that maintains relationships with many of the local resorts (Isler, 2006). One of the existing resorts “offers an array of spa makeovers, cooking classes and conch-hunting trips” (Isler,

La Vista Azul

Page 9

2006; p. S5). Cuisine is important and interesting, and tends to focus on conch. Those leaning toward more “natural” or environmental adventures find diving to be breathtaking. “East Caicos, accessible by private boat only, features cave drawings and a long, beautiful beach with a turtle sanctuary” (Isler, 2006; p. S5). In addition to increasing rental rates, La Vista Azul also compares favorably to other condominium purchase opportunities in the Turks and Caicos Islands group. Table 2 offers comparison with other properties in the Turks and Caicos Islands system.

Table 2. Comparison with Other Condominium Property Prices

La Vista Azul

Page 11

Location

# of Units

Br/Ba

Selling Price

Square Feet

Price/ Sq Ft

LA VISTA AZUL RESORT AND CONDOMINIUMS Studio

24

1/1

$230,775

700

Studio Plus

12

1/1

$271,065

833

Junior One Bedroom

18

1/1

$286,365

833

Junior One Bedroom with Bay Window

6

1/1

$342,720

1,055

One Bedroom

12

1/1

$406,470

1,187

Penthouse

6

2/2

$943,883

2,726

Total Number of Units/Average The Pavillions - Ocean Front Grace Bay Provo

78

$384,794

1,074

Condo - New Construction

48

1/1.5

$223,074

459

Condo - New Construction

48

1/1.5

$474,300

1,054

Condo - New Construction

42

2/2.5

$762,552

1,513

Condo - New Construction

20

2/2.5

$962,080

1,920

Condo - New Construction

16

2/2.5

$1,029,325

1,970

Total Number of Units/Average Canterbury - Ocean Front Northwest Point Provo

174

$694,266

1,383

Studio

6

1/1

$312,000

602

One Bedroom

12

1/1

$447,720

1,066

One Bedroom

4

1/2

$479,220

1,141

Two Bedroom

8

2/1

$784,420

1,724

Two Bedroom

10

2/2

$772,350

1,839

Penthouse

2

3/2

$1,254,105

2,883

$611,157

1,403

Total Number of Units/Average 42 Sea Flowers - Canal Front Turtle Cove No Ocean View Two Bedroom Townhouse

18

2/2

$458,000

1,574

Two Bedroom Townhouse

3

2/2

$469,000

1,574

Two Bedroom Townhouse

3

2/2

$479,000

1,574

Total Number of Units/Average

24

$462,000

1,574

$330 $325 $344 $325 $342 $346 $358

$486 $450 $504 $501 $523 $502

$518 $420 $420 $455 $420 $435 $436

$291 $298 $304 $294

Caicos Beach Club - Ocean Front Grace Bay Provo One Bedroom

346

1/1

$329,000

870

One Bedroom

63

1/2

$339,000

955

Two Bedroom

21

2/1

$499,000

1,279

Total Number of Units/Average Lucaya - Ocean Front Grace Bay Provo

430

$389,000

1,035

Studio

6

1/1

$240,000

540

Junior One Bedroom

8

1/1

$330,000

730

Junior One Bedroom

8

1/1

$378,000

900

One Bedroom

6

1/1

$442,000

1,050

Two Bedroom

2

2/2

$715,000

1,590

Penthouse

2

3/3

$1,245,000

2,490

Total Number of Units/Average

32

$427,375

961

$378 $355 $390 $376

$444 $452 $420 $421 $450 $500 $445

Management and Organization New Horizons Consulting based in Fort Wayne, Indiana provides the management during the pre-construction and construction phases of the La Vista Azul project. As the construction phase nears completion the management team will shift in focus toward maintenance of a luxury resort and providing service to owners and their guests.

Financial Plan The overall financial landscape was attractive when New Horizons Consulting purchased the land for La Vista Azul in 2005; appreciation in the time that has passed has made the financial picture even more appealing. If appreciation in hotel room rates increases at the current pace, purchase of a condominium in the Turks and Caicos Islands will be even more attractive to potential owners. Whether purchasers intend to use the condominium as a full- or part-time personal residence or rent the unit to vacationers, in the current climate they can expect the property to appreciate in both

La Vista Azul

Page 13

sales price and rental rates. Approaching the end of the first quarter of 2007, 19 of the 78 residential units already had been sold even though construction has yet to begin. Thus more than 24 percent of the total available residential units already have been sold under contracts that require payments as the project reaches a series of construction milestones. Specifically, these are as provided in Table 2.

Table 3. Pre-Construction Purchaser Deposit Schedule Construction Milestone

Purchase Percent Due

Signing

15

Start Construction

15

Ring Beam Completion

20

Roof Completion

20

Completion and Closing

30

Thus purchasers are obligated to pay for their units as construction progresses, but they are required to pay only 15 percent of the price of the unit prior to beginning construction. Construction must be funded through other sources, though unit sales will carry the resort’s obligations after construction has been completed.

Table 4. Average Unit Size

Residential Units

Number of Units 78

Total Area 83,792 ft2

Commercial Units

15

14,416 ft2

Total

93

98,208 ft2

Ave. Unit Size (ft2) 1,074 961 1,056

Table 5. Average Annual Cash Flow Total

2005/2006

2007

2008

2009

Project

Total Residential Sales

31,243,914

0

4,446,249

7,370,359

Total Commercial Sales

4,267,136

0

259,488

980,288

Other Revenues, Loans and Equity

8,662,396

3,486,532

2,714,644

2,461,220

Total Revenues, Equity and Loans

44,173,446

3,486,532

7,420,381

10,811,867

Total Equity and Loan PayBacks

8,662,396

1,150,000

0

0

Total Interest Costs

1,069,993

92,981

241,701

372,064

Total Costs and Paybacks

31,681,051

3,477,682

6,872,124

10,665,505

Cumulative Cash Income

12,487,732

8,850

557,107

703,469

Cumulative Land Loan FCIB

1,013,000

1,013,000

1,013,000

1,013,000

Cumulative Construction Loan #1 FCIB

1,755,216

0

1,755,216

1,755,216

Cumulative Construction Loan #2 FCIB

2,121,220

0

200,000

2,121,220

1,755,216 1,755,216 2,121,220 2,121,220

Cumulative Equity Proceeds

2,622,960

1,323,532

2,082,960

2,622,960

2,622,960 2,622,960

35,511,050

0

4,705,737

13,056,385

Cumulative Sales Deposits

19,427,306

31,243,914 3,027,360 4,267,136 0 8,662,396

22,454,666 44,173,446 7,512,396 8,662,396 363,248 1,069,993 10,670,402 31,685,714 12,487,732 12,487,732 1,013,000 1,013,000

35,511,050

35,511,050

La Vista Azul

Page 15

Table 6. Projected Unit Sales Schedule: Units and Revenues

Actual To Date

Projecte d Mar-Dec 07

Total Units

Actual 2006

Actual Jan-Feb 07

78

13

6

19

18

24

24

17

78

13

19

19

37

37

61

78

# of Units Sold Cumulative # of Units Sold Total

15

0

0

0

3

3

6

6

15

0

0

0

3

3

15

15

# of Units Sold Cumulative # of Units Sold

93

13

6

19

21

27

30

23

93

13

19

19

40

40

76

93

Total 2007

Project ed 2008

Project ed 2009

Unit Sales Residential # of Units Sold Cumulative # of Units Sold

Total 2007

Project ed 2008

Project ed 2009

Projecte d Total

78 78

Commercial

Sales Dollars Residential Total Unit Sales Cumulative Unit Sales

Total Sales

Actual 2006

Actual Jan-Feb 07

Actual To Date

Projecte d Mar-Dec 07

$31,243, 914

$3,778, 250

$1,922,5 00

$5,700, 750

$7,792,7 60

$9,715,26 0

$9,613,5 12

$7,360,0 56

$31,243, 914

$3,778, 250

$5,700,7 50

$5,700, 750

$13,493, 510

$13,493,5 10

$23,107, 022

$31,243, 914

15 15

93 93

Projecte d Project Total

$31,243,9 14 $31,243,9

14 Commercial Total Unit Sales

$4,324,8 00

$0

$0

$0

$864,960

$864,960

$3,459,8 40

$1,729,9 20

Cumulative Unit Sales

$4,324,8 00

$0

$0

$0

$864,960

$864,960

$4,324,8 00

$4,324,8 00

$4,324,80 0 $4,324,80 0

Totals Project Total Unit Sales

$35,568, 714

$3,778, 250

$1,922,5 00

$5,700, 750

$8,657,7 20

$10,580,2 20

$13,073, 352

$9,089,9 76

$35,568,7 14

Project Cumulative Unit Sales

$35,568, 714

$3,778, 250

$5,700,7 50

$5,700, 750

$14,358, 470

$14,358,4 70

$27,431, 822

$35,568, 714

$35,568,7 14

Table 7. Unit Sales Analysis

Sales Analysis

Actual 2006

Actual Jan-Feb 07

Actual To Date

Projecte d Mar-Dec 07

13

6

19

18

83,792

10,123

4,953

15,076

20,964

31,243,9 14

3,778,2 50

5,700,7 50

7,792,76 0

Total Sales

Project ed 2008

Project ed 2009

24

24

17

25,917

27,952

19,799

10,390,3 47

7,360,05 6

Total 2007

Projecte d Project Total

Residential # of Units Total Square Footage Total

78

1,922,50 0

9,715,260

78 83,792 31,243,91 4

La Vista Azul

Average Price per Unit Average Size Average Price per Square Foot

Page 17

400,563

290,635

320,417

300,039

432,931

404,803

432,931

432,944

1,074

779

826

793

1,165

1,080

1,165

1,165

373

373

388

378

372

375

372

372

400,563 1,074

373

Figure 2. Total Residential Revenues

Total Residential Sales Revenues

35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0

2005/06

2007

2008

2009

Project Total

La Vista Azul

Page 19

Figure 3. Total Commercial Revenues

Commercial Sales

5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0

2005/06

2007

2008

2009

Project Total

Table 8. Balance Sheet

La Vista Azul

Page 21

Actual December 31, 2006

Actual February 28, 2007

Proforma December 31, 2007

Proforma December 31, 2008

ASSETS Current Assets Cash

$703,469

$8,850

$20,217

$557,107

Sales Deposits

$50,000

$133,750

$0

Total Checking/Savings

$58,850

$153,967

$557,107

Total Current Assets

$58,850

$153,967

$557,107

$3,728,250

$5,567,000

$14,358,470

$1,400,000

$1,400,000

$1,400,000

Hard Condo Construction Costs

$135,352

$201,153

$5,547,903

Soft Condo Construction Costs

$792,330

$835,186

$2,251,903

Total Project Costs

$2,327,682

$2,436,339

$9,199,806

TOTAL ASSETS

$6,114,782

$8,157,306

$24,115,384

Accounts Payable

$0

$0

$0

Total Accounts Payable

$0

$0

$0

$1,013,000

$1,013,000

$1,013,000

FCIB Construction Loan #1

$0

$0

$1,755,216

FCIB Construction Loan #2

$0

$0

$200,000

Total Other Current Liabilities

$1,013,000

$1,013,000

$2,968,216

Total Current Liabilities

$1,013,000

$1,013,000

$2,968,216

Sales Deposits Liability

$50,000

$133,750

$4,705,737

$4,889,436 $13,056,385

Deferred Sales Revenues

$3,728,250

$5,567,000

$14,358,470

$23,107,022

Total Liabilities

$4,791,250

$6,713,750

$22,032,424

$41,052,843

Deferred Sales Receivables

$0 $703,469 $703,469 $23,107,022

Project Costs Land

$1,400,000 $14,501,258 $3,964,053 $19,865,311 $43,675,803

LIABILITIES & EQUITY Liabilities Current Liabilities $0 $0

Other Current Liabilities FCIB Land Loan

$1,013,000 $1,755,216 $2,121,220 $4,889,436

Equity Partner's Equity

$1,323,532

$1,443,556

$2,082,960

Net Income

$0

$0

$0

Total Equity

$1,323,532

$1,443,556

$2,082,960

TOTAL LIABILITIES & EQUITY

$6,114,782

$8,157,306

$24,115,384

$2,622,960 $0 $2,622,960 $43,675,803

Appendices Appendix A: Brochure Cover Source: http://www.lvaresort.com/images/LaVistaAzul-brochure.pdf * the picture of the brochure has been removed from the plan to allow easy loading of the plan itself for vieiwng *

La Vista Azul

Page 23

Appendix B: Caribbean Location and Characteristics Source: https://www.cia.gov/cia/publications/factbook/geos/tk.ht ml

The Turks and Caicos Islands were part of the British Jamaican colony until Jamaica gained independence in 1962. The Turks and Caicos Islands also were to be independent entities until 1982, when that plan changed and it was determined that the Islands would remain a British possession and protectorate (Turks and Caicos Islands, 2007). In the current arrangement Britain is responsible for maintaining security and providing defense should it be required. The Turks and Caicos Islands consist of 40 islands and cays, eight of which are inhabited (Islands Overview, 2007). There are almost 22,000 permanent residents within the island system, and the islands’ GDP of $216 million results primarily from tourism and financial services (Turks and Caicos Islands, 2007). As a British possession the official language is English, though the islands’ official currency is the US dollar (Turks and Caicos Islands, 2007). Most of the tourists who visit the island system are from the US; the US and the UK are the Turks and Caicos Islands’ primary trading partners (Turks and Caicos Islands, 2007). Per capita GDP is higher than most other island nations at $11,500. The World Bank designates a country with a per capita income of more than $9,385 as a “high income” country (Private Infrastructure, 2004).

Appendix C: References Development Profile. (2006). La Vista Azul. Retrieved March 23, 2007 from http://www.lvaresort.com/development.php. Islands Overview. (2007). Turks and Caicos Tourist Board. Retrieved March 23, 2007 from http://www.turksandcaicostourism.com/go/en/islands-overview.html. Isler, Tom (2006, September). Their next great adventure: six sensational settings. Meetings & Conventions, 41(10), p. S5. Paris, Wendy (2006, April). An insider’s guide to ... Turks and Caicos: this Caribbean country is a dreamy tropical hideaway, complete with private island retreats. Essence, 36(12), p. 202. Private Infrastructure. (2004). The World Bank. Retrieved March 23, 2007 from from http://rru.worldbank.org/PublicPolicyJournal. Rates. (2007). Comfort Suites TCI. Retrieved March 23, 2007 from http://comfortsuitestci.com/rates.html. Rates 2007. (2007). Parrot Cay. Retrieved March 23, 2007 from http://parrotcay.como.bz/default.asp?section=395. Rates and Reservations. (2007). The Sands at Grace Bay. Retrieved March 23, 2007 from http://thesandstc.com/content/rates_reservations/default.aspx. Turks and Caicos Islands. (2007, March 15). The World Factbook 2007. Retrieved March 23, 2007 from https://www.cia.gov/cia/publications/factbook/geos/tk.html. Turner, Robin (2007, February 5). Zeta and Michael hunt for home No 7. Turks and Caicos Tourist Board. Retrieved March 23, 2007 from http://www.turksandcaicostourism.com/go/en/news--ResourceID--6331.html.