Example Business Proposal As Effort to Obtain Growth Captial – Business Paper
Thank you for your interest and granting me an exploratory meeting. In the meeting I was asked several questions. Below are the questions asked and a clarifying answer. It is our interest to continue forward in speaking with you in what may become a beneficial business agreement for all parties concerned. 1.Why is investing in Antique Properties a solid idea?
We are a proven entity. We are the largest advertiser of historic properties on the inter net; with a national account currently worth $36,000 a year and numerous smaller accounts. We come with solid credentials, references and resumes. Probably most important, is what we are not, an idea on a piece of paper.
2. How is money made on the Internet?
Money is made by impressions; click throughs, paid referrals, and the selling of merchandise, service, and information. Money is also made indirectly by name recognition i.e. Doritos’s creates a great game to play for free at their website. People of all ages play the games and Doritos get great name recognition.
3. How does Antique Properties LLC Make Money?
Our expenses and revenues are proportionally tied together. We generate revenues by selling ad space to agents, agencies, corporations, and homeowners on our website. Pricing is $39.95 per listing per month, $149.95 per office, per month, unlimited listings. We have association discounts and a corporate rate, where we allow corporations to advertise their property listings for free on our website and charge them a $1.00 per referral that we forward to them. Currently we have a corporate account that will pay us up to $3000 per month for referrals.
Summary of where revenues come from.
1. Ads paid per listing, per month
2. Or $1.00 per referral sent to our corporate account
3. Renewals
Our immediate goals
1. Generate 3000 referrals per month
2. Additional monthly listing to create a renewal base
3. New business.
4. Publish Restoring a Treasure Magazine in April of this year. (Please see details below)
We are currently exploring an additional revenue source. By the end of this month we will be testing a referral fee method of payment with a large agency in Massachusetts. We get paid if the referral we send to them buys a property through their agency or an agency they referred the business to. It does not have to be the same property they saw at our website. Example, they sell $1,000,000 in Realestate to buyers we referred to them. A 5% commission is paid=$50,000 commission. If it is all co-brokered the agency receives $25,000; antiquerealestate.com’s commission would be %25 of that figure.
4. How do we obtain our Immediate Goals? Operations?
How do we get to three thousands referrals? We have already hit a milestone of over 250,000 hits per month. Hits are important because it tells us that unique visitors that show up at our website are staying and flipping through our pages, a unique visitor is someone who has not come to our website within 30 days.
A. Increase unique visitors to our website and increase the number of property listings posted at our website. We average around 2000 unique visitors per month and have approximately 500 listings.
We know that we can spend a fixed amount on advertising on the web and get a fixed number of individual click through/unique visitors to our website. A click through is when an individual searches the web finds our URL clicks on it and comes to our website.
B. Spend 500 per month, with an average click through cost of .06 we can increase our unique visitor count to 10,000
Currently we have approximately 500 listings that produce approximately 100 referrals per month with approximately 2000 unique visitors viewing our website every 30 days. C. Increase the unique visitor count to 10,000, which in turn would increase our referral count to 500.
D. Our national account has approximately 3000 listings they are uploading on our website over the next 3 months. That in turn will increase the referral count another six times to 3000.
The scenario stated above creates $3000 in revenues from our national account. It would also generate additional leads to our homeowners, agent and agency accounts thus making renewals a revenue source we can count on. New business and renewals have been averaging approximately 500 per month.
New business. This is just the beginning. Lets go back to the paragraph on how one makes money on the Internet. All of those options are available to us, impressions, click through, selling information…
We are planning to implement a resource page of contractors related to restoration fields such as architects, lenders, lawyers all of which would pay to advertise on our website resource page. Already, Lendingtree.com has contacted us as well as several attorneys who work in the tax credit business.
Restoring a Treasure Magazine is designed to promote the website and to give our company a “Brick and Mortar feel to it” Potentially 1.8 million people will see or read our publication and 1% or 18,000 of our readers will visit our website.
The magazine project is completed and we are selling ad space. It is a quarterly magazine with 600,000 in distribution. We have contacted by mail and phone over 500 possible advertisers across the country. That list has been narrowed to approximately 60 who have shown interest. Our goal is to go to print in April and distributed in early May. Approximate cost is $50,000 for printing and $40,000 for insertion into regional county newspapers. Potential revenues are $120,000 per issue.
Operations
1. We will expand our telemarketing program to reach the real estate agents who have older properties to sell. 40hrs per month at a cost of $25 per hour will be dedicated to this effort, a $1000 expense. At a rate of one listing per hour at $40 per listing, this activity will generate $1,600 per month in revenue. We will increase this activity every month by 10 hours for the next twelve-month. This activity will be generating $6,400 per month by the end of the next twelve months.
2. Conduct targeted online marketing to increase our unique visitors to 10,000 monthly and total hits to 1,000,000+. Cost $500 per month. Revenues produced from this activity will be $3,000 per month. Based upon current proportional numbers. 10,000 unique visitors will generate 3,000 referrals to United Country, whom we are charging $1.00 per referral. It will also drive sales in our phone bank.
3. Phone Bank, for incoming cost is $1,500 per month. Revenues from this activity will be, 40 hrs per week, one sale per hour=160 sales per month at $40 per sale=$6,400 per month
4. In house sales for National Trust and ERA account will be $1,500 per month. 300 agents x 20% market penetration=60 agents listing one property at the association price of $25 per listing=$1,500 per month. We will see 10% market penetration growth every month for three months.
5. Web site development, to include; additional management reports, some misc. programming and additional web site searches. $3,000 will go to web development
6. A Resource button for related business to advertise by state, region, and nationally with the listings in the respected areas, this cost is included in the web site development cost. Revenues generated from this are undetermined at this time and have not been added on the income statement.
(However, if we create 10 different categories such as lending institutions, construction companies, architects…etc and allow three advertisers/resources per category per state, at $10 per listing, that would generate 30 advertisers per state X $10 X 50 states=$15,000 in revenue.)
7. Referral based Commissions from test market study in Mass. The agent in MA would act as a clearinghouse for the referrals sent to him. His responsibility is to input the referral into the relocation network and distribute the referrals to the corresponding area agent involved in relocation referrals. He is also responsible for cutting the commission check to us.
8. Employment contract will include salary plus commission, bonus and health insurance.
9. Restoring a treasure magazine is a consortium of effort put forth by outsourcing to local contractors, (a list of those involved can be provided). Printing and shipping is conducted by Quebecor it is distributed through 600,000 local newspapers. 100,000 in and around the Boston, MA area, 100,000 in the Fairfield and New Haven County area, 100,000 Westchester, NY area, 100,000 in the Princeton, NJ area, 100,000 in the Philadelphia, PA area and 100,000 in the Chesapeake Bay, Maryland area.
5. What milestones need to be reached and what is the exit strategy?
We are seeking a cash infusion of $150,000 at $25,000 increments at quarterly intervals for the next six quarters. The first $25,000 will be invested in January; additional quarterly investments will be contingent upon meeting the following Milestones.
Although, the revenue projections stated above are realistic and based upon sound business projections, I have chosen to make the milestones based upon current business conditions. With increments in revenues also based upon conservative revenue calculations.
1. End of first 90-day period. Antique Properties LLC will have revenues of at least $3500 per month. Unique visitor count of at least 10,000.
2. End of 2nd 90-day period. Revenues of at least $5,500 per month will be reached
3. End of 3rd 90-day period. Revenues of at least $7,500 per month will be reached.
4. End of 4th 90-day period. Revenues of at least $9,500 per month will be reached.
5. End of 5th 90-day period. Revenues of at least $11,500 per month will be reached.
6. End of 6th 90-day period. Revenues of at least $13,500 per month will be reached.
Exit strategy
3-5 years out we would buy out the investment group or we would find a buyer such as HGTV. Buyout conditions will be based upon our business agreement. Example, four years from now, based upon the above stated milestones with similar growth over an additional 12 quarters would put revenues at approximately $34,000 per month. Minus out a supposed expense figured of $10,000 per month. 12 X $24,000= approximately $300,000 in annual profits. Using a basic valuation technique of five times profits = a company value of $1.5 million.