PLAN OUTLINE

1.0

Executive Summary

1.1

Mission

1.2

Keys to Success

1.3

Objectives

2.0
3.0

Company Summary
Products and Services

4.0

4.0 Market Analysis Summary

5.0

5.0 Strategy and Implementation Summary

6.0

6.0 Management Summary

7.0

7.0 Financial Plan

8.0

Appendix

Executive Summary
The Spot is a new night club that will focus on attracting the students of Technical University of
Mombasa, with a student population that exceeds 22,000 and growing by 15% each year. The night
club will be located one block away from the main campus. The area already has three bars that have
been thriving for the past 10 years. Each establishment has long lines waiting for entry each weekend.
Recently, commercial space has become available next to the campus when two adjacent businesses
relocated. The Spot will consolidate this space into a 5,000 square foot night club. The location is on the
main street most often used by students.
Once opened, the Spot will have the exceptional management team to guide its success. The Spot's three
owners, Hope Mwarome, Jill Morse, and Zadock Odhioambo, have over 5 years of night club
management experience between them. Hope has been the manager of Tom's Landing, the most popular
bar in the university area, for the past five years. Jill and Zadock are co-owners of Olympus, a popular
downtown night club that has dominated the city's club scene for the past four years.

1.1 Mission
It's not the lights; it's not the liquor; and it's not the sound. It's the people!
And its the FUN! Successful nightclubs are based on an accurate understanding of the core customers.
The mission of the Spot is to create a nightclub environment that satisfies the changing tastes and
expectations of our core customers; i.e. college-age women. If the women come, the men will follow. In
order to achieve this goal, we must constantly improve our response to the customers' entertainment
needs.

o
o
o
o

o
o
o
o
o
o

1.2 Keys to Success

Provide exceptional service that leaves an impression with our core customers.
Consistent entertainment atmosphere and product quality.
Managing our internal finances and cash flow to enable upward capital growth.
Strict control of all costs, at all times, without exception.
1.3 Objectives
Capitalize on excellent location opportunity.
Launch the venue with a highly publicized grand opening event in the spring of Year 1.
Maintain tight control of costs, operations, and cash flow through diligent management and
automated computer control.
Maintain food costs below 33% of food revenue.
Maintain total beverage costs below 25% of beverage revenue.
Exceed Kshs1 million in annual sales by the third year of plan implementation.

Company Summary
The key elements of The Spot are:
1.

Focus on attracting college-age women. The company will focus on design and musical themes
that have mass appeal to college-age women.
2.
Location. One of the major advantages that the Spot will have over its competition will be its
location next to the university campus.
3.
Exceptional service. In order to reach and maintain a unique image of quality, the Spot will
provide attentive and friendly service.

2.1 Start-up Summary

The Spot has three owners Hope Mwarome, Jill Morse, and Zadock Odhiambo, who will each invest
Kshs70,000.

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

Kshs112,500
Kshs97,500
Kshs210,000

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

Kshs20,000
Kshs77,500
Kshs0
Kshs77,500
Kshs97,500

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

Kshs0
Kshs0
Kshs0
Kshs0
Kshs0

Capital
Planned Investment
Hope Mwarome
Jill Morse
Zadock Odhiambo

Kshs70,000
Kshs70,000
Kshs70,000

Other
Additional Investment Requirement
Total Planned Investment

Kshs0
Kshs0
Kshs210,000

Loss at Start-up (Start-up Expenses)

Total Capital

(Kshs112,500)
Kshs97,500

Total Capital and Liabilities

Kshs97,500

Total Funding

Kshs210,000

Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Consultants
Insurance
Rent
Research and Development
Interior Refit
Expensed Equipment
Air Cond. Upgrade
Audio/Lighting
Bar Equipment/Supply
Fees and Permits
Bathroom Upgrades
Initial Marketing
Opening Salaries Deposits
Other
Total Start-up Expenses

Kshs2,000
Kshs500
Kshs0
Kshs1,000
Kshs4,000
Kshs0
Kshs30,000
Kshs20,000
Kshs5,000
Kshs10,000
Kshs10,000
Kshs7,000
Kshs5,000
Kshs3,000
Kshs15,000
Kshs0
Kshs112,500

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

Kshs77,500
Kshs0
Kshs0
Kshs20,000
Kshs97,500

Total Requirements

Kshs210,000

2.2 Company Ownership

The Spot has three owners, Hope Mwarome, Jill Morse, and Zadock Odhiambo.

Hope Mwarome has a BS in business administration from State University. She successfully
managed three bars over the past 10 years. She is currently in his fifth year as manager of Tom's Landing,
the most popular bar in the university area.
Jill Morse holds a BA in marketing. She has held marketing positions with Nike and Sony before starting
the Olympus nightclub with Zadock Odhiambo in 2009.
Zadock Odhiambo has a BS in business administration. Before co-owning the Olympus, Zadock managed
two successful nightclubs, the Arena and the Power Plant, over a 10 year period.
Products and Services

The Spot represents a unique opportunity; create a high energy, dance-theme venue that will cater to
college-age women. The development's central location, demographics, and lack of direct competition are
major advantages to this project. The new venue will specialize in high-energy themes and will offer beer,
wine and an array of liquors and mixed drinks. In addition, the venue will sell nonalcoholic beverages
such as soft drinks, juices and bottled water. A "casual" food menu consisting mostly of appetizers and
small entrees ranging in cost from 300 to 500kshs will also be available. The initial hours of operation
will be 6:00 P.M. to 5:00 A.M., seven nights a week. The establishment will draw primarily from the
student population at TUM while attracting guests and visitors from outside the area as well.
Market Analysis Summary
The Spot will focus on college-age women who are looking for a high energy, fun nightclub environment
to socialize and dance. Of course, we are also focused on college-age men but it has been our observation
that the club scene is driven by where women choose to spend their money when they go out with
friends. At present, none of the local bars create an environment that is responsive to the entertainment
demands of this core customer group. This also extends to the areas surrounding the university that we
expect will attract new customers to the Spot.
4.1 Market Segmentation
Our target market segmentation is divided between college-age women and men in and around the State
University.

Market Analysis
Potential Customers Growth
College-age Women 15%
College-age Men 10%
Other
0%
Total
12.70%

Year 1

Year 2

Year 3

Year 4

Year 5

22,000
20,000
0
42,000

25,300
22,000
0
47,300

29,095
24,200
0
53,295

33,459
26,620
0
60,079

38,478
29,282
0
67,760

CAGR
15.00%
10.00%
0.00%
12.70%

Strategy and Implementation Summary

Our strategy is simple; we intend to succeed by giving our core customers (college-age women) exactly
what they want in a nightclub.
5.1 Competitive Edge
There are three elements to The Spot's competitive edge.
The first is the location which is in easy walking distance for the entire university community. The area
around The Spot is already a regular place students gather to socialize in the evening.
The second is the exceptional management team that has extensive experience and success managing
nightclubs and bars.

The third is our focus on attracting our core customer in every aspect of our planning. The Spot will have
the following to attract and retain our core customers:
o

A larger ladies room area. Beyond its traditional uses, it's also a place of social gathering and
conversation. As a result, we will add additional square footage to this part of the venue including a
couch, TV, music, and plenty of social space.

Floor design. No doubt, females are more observant of design, and the impression it conveys,
than males are. Therefore, careful consideration will be put into everything from colors, to fabrics, and
materials.

Music. This is a critical one. We will hire DJs who have the best satisfaction rate with the female
clientele.
5.2 Sales Strategy
There will be a grand opening weekend May 2015, which the cover charge will be waved for all women
customers. We will then establish a traditional Ladies Night, every wednesday.
The cover charge will be Kshs150. This is cheaper than the downtown clubs.
Our sales strategy is to open earlier and provide entertainment to bring in an early crowd before 10 P.M.
Comedians and Comedy Acts will be booked into the early evening time slot. We will also have contests
sponsored by businesses and products that are marketing to our core customers.
5.2.1 Sales Forecast
As the following table shows, we intend to deliver sales of Kshs550K in the first year, and double that by
the third year of the plan.

Sales Forecast
Year 1

Year 2

Year 3

Unit Sales
Cover
Drinks
Food
Entertainment
Total Unit Sales

19,500
56,000
14,000
13,600
103,100

36,000
68,000
25,000
17,000
146,000

42,000
75,000
33,000
22,000
172,000

Unit Prices
Cover
Drinks
Food
Entertainment

Year 1
Kshs10.00
Kshs3.00
Kshs7.00
Kshs8.00

Year 2
Kshs10.00
Kshs3.00
Kshs7.00
Kshs8.00

Year 3
Kshs10.00
Kshs3.00
Kshs7.00
Kshs8.00

Sales
Cover
Drinks
Food
Entertainment

Kshs195,000
Kshs168,000
Kshs98,000
Kshs108,800

Kshs360,000
Kshs204,000
Kshs175,000
Kshs136,000

Direct Unit Costs

Cover
Drinks
Food
Entertainment

Year 1
Kshs0.00
Kshs0.75
Kshs2.45
Kshs4.00

Year 2
Kshs0.00
Kshs0.80
Kshs2.62
Kshs4.28

Year 3
Kshs0.00
Kshs0.86
Kshs2.81
Kshs4.58

Direct Cost of Sales

Cover
Drinks
Food
Entertainment
Subtotal Direct Cost of Sales

Kshs0
Kshs42,000
Kshs34,300
Kshs54,400
Kshs130,700

Kshs0
Kshs54,570
Kshs65,538
Kshs72,760
Kshs192,868

Kshs0
Kshs64,401
Kshs92,565
Kshs100,751
Kshs257,717

Total Sales

Kshs420,000
Kshs225,000
Kshs231,000
Kshs176,000
Kshs1,052,00
Kshs569,800 Kshs875,000
0

Management Summary

The management team is a strong one. Together we share a single vision: to provide a unique and
entertaining experience through exceptional service.
6.1 Personnel Plan
The following table shows forecasted personnel needs for the first three years.
Personnel Plan
Year 1

Year 2

Year 3

Manager
Bartenders
Cooks
Cleaning
DJ
Serving Staff
Other
Total People

Kshs50,000
Kshs120,000
Kshs65,000
Kshs38,000
Kshs25,000
Kshs50,000
Kshs0
0

Kshs68,000
Kshs120,000
Kshs70,000
Kshs40,000
Kshs30,000
Kshs60,000
Kshs0
12

Kshs72,000
Kshs120,000
Kshs73,000
Kshs42,000
Kshs35,000
Kshs70,000
Kshs0
12

Total Payroll

Kshs348,000 Kshs388,000 Kshs412,000

7.1 Important Assumptions

The table below presents the assumptions used in the financial calculations of this business plan.

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1
1
10.00%
10.00%
0.00%
0

Year 2
2
10.00%
10.00%
30.00%
0

7.2 Break-even Analysis

Our Break-even Analsysis is shown in the following table and chart.

Year 3
3
10.00%
10.00%
30.00%
0

Break-even Analysis

Monthly Units Break-even

Monthly Revenue Break-even

10,220
Ksh56,482

Assumptions:
Average Per-Unit Revenue
Average Per-Unit Variable Cost
Estimated Monthly Fixed Cost

Ksh5.53
Ksh1.27
Ksh43,527

7.3 Projected Profit and Loss

The following table and chart will show the projected profit and loss for The Spot.

Pro Forma Profit and Loss

Sales
Direct Cost of Sales
Other Production Expenses
Total Cost of Sales

Year 1
Ksh569,800
Ksh130,700
Ksh0
Ksh130,700

Year 2
Ksh875,000
Ksh192,868
Ksh0
Ksh192,868

Year 3
Ksh1,052,000
Ksh257,717
Ksh0
Ksh257,717

Gross Margin
Gross Margin %

Ksh439,100
77.06%

Ksh682,133
77.96%

Ksh794,283
75.50%

Ksh388,000

Ksh412,000

Ksh25,000

Ksh27,300

Ksh2,856
Ksh40,000
Ksh3,600
Ksh12,000
Ksh40,000
Ksh58,200
Ksh0

Ksh2,856
Ksh40,000
Ksh3,600
Ksh12,000
Ksh40,000
Ksh61,800
Ksh0

Expenses
Payroll
Ksh348,000
Sales and Marketing and Other
Ksh22,900
Expenses
Depreciation
Ksh2,618
Leased Equipment
Ksh33,000
Utilities
Ksh3,600
Insurance
Ksh12,000
Rent
Ksh48,000
Payroll Taxes
Ksh52,200
Other
Ksh0
Total Operating Expenses

Ksh522,318

Ksh569,656

Ksh599,556

Profit Before Interest and Taxes

EBITDA
Interest Expense

(Ksh83,218)
(Ksh80,600)
Ksh42

Ksh112,477
Ksh115,333
Ksh250

Ksh194,727
Ksh197,583
Ksh0

Taxes Incurred

Ksh0

Ksh33,668

Ksh58,418

Net Profit
Net Profit/Sales

(Ksh83,260)
-14.61%

Ksh78,559
8.98%

Ksh136,309
12.96%

7.4 Projected Cash Flow

The following table and chart are the projected cash flow for three years.

Pro Forma Cash Flow

Year 1

Year 2

Year 3

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations

Ksh512,820 Ksh787,500
Ksh45,082 Ksh81,127
Ksh557,902 Ksh868,627

Ksh946,800
Ksh101,504
Ksh1,048,304

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received

Ksh0
Ksh5,000
Ksh0
Ksh0
Ksh0
Ksh0
Ksh0

Ksh0
Ksh0
Ksh0
Ksh0
Ksh0
Ksh0
Ksh0

Ksh0
Ksh0
Ksh0
Ksh0
Ksh0
Ksh0
Ksh0

Subtotal Cash Received

Ksh562,902 Ksh868,627

Ksh1,048,304

Expenditures

Year 1

Year 3

Expenditures from Operations

Cash Spending
Bill Payments
Subtotal Spent on Operations

Ksh348,000 Ksh388,000
Ksh289,115 Ksh407,976
Ksh637,115 Ksh795,976

Ksh412,000
Ksh500,717
Ksh912,717

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

Ksh0
Ksh0
Ksh0
Ksh0
Ksh0
Ksh0
Ksh0
Ksh637,115

Ksh0
Ksh0
Ksh0
Ksh0
Ksh0
Ksh0
Ksh0
Ksh912,717

Net Cash Flow

Cash Balance

(Ksh74,213) Ksh67,651
Ksh3,287 Ksh70,938

Year 2

Ksh0
Ksh5,000
Ksh0
Ksh0
Ksh0
Ksh0
Ksh0
Ksh800,976

Ksh135,587
Ksh206,525

7.5 Projected Balance Sheet

The following is the projected balance sheet for the three years.

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

Current Assets
Cash
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets

Ksh3,287
Ksh11,898
Ksh15,593
Ksh0
Ksh30,778

Ksh70,938
Ksh18,271
Ksh23,009
Ksh0
Ksh112,218

Ksh206,525
Ksh21,967
Ksh30,746
Ksh0
Ksh259,238

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

Ksh20,000
Ksh2,618
Ksh17,382
Ksh48,160

Ksh20,000
Ksh5,474
Ksh14,526
Ksh126,744

Ksh20,000
Ksh8,330
Ksh11,670
Ksh270,908

Liabilities and Capital

Year 1

Year 2

Year 3

Current Liabilities
Accounts Payable

Ksh28,919

Ksh33,945

Ksh41,800

Assets

Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

Ksh5,000
Ksh0
Ksh33,919

Ksh0
Ksh0
Ksh33,945

Ksh0
Ksh0
Ksh41,800

Long-term Liabilities
Total Liabilities

Ksh0
Ksh33,919

Ksh0
Ksh33,945

Ksh0
Ksh41,800

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

Ksh210,000
(Ksh112,500)
(Ksh83,260)
Ksh14,240
Ksh48,160

Ksh210,000
(Ksh195,760)
Ksh78,559
Ksh92,799
Ksh126,744

Ksh210,000
(Ksh117,201)
Ksh136,309
Ksh229,108
Ksh270,908

Net Worth

Ksh14,240

Ksh92,799

Ksh229,108

7.6 Business Ratios

The Ratios table below outlines important ratios for this night club. The last column, Industry Profile, is
derived from the Standard Industrial Classification (SIC) Index code 5813, for Drinking Places.

Ratio Analysis
Year 1

Year 2

Year 3

Sales Growth

0.00%

53.56%

20.23%

Industry
Profile
1.90%

Percent of Total Assets

Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

24.71%
32.38%
0.00%
63.91%
36.09%
100.00%

14.42%
18.15%
0.00%
88.54%
11.46%
100.00%

8.11%
11.35%
0.00%
95.69%
4.31%
100.00%

4.60%
3.10%
44.60%
52.30%
47.70%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

70.43%
0.00%
70.43%
29.57%

26.78%
0.00%
26.78%
73.22%

15.43%
0.00%
15.43%
84.57%

28.20%
23.10%
51.30%
48.70%

100.00%
77.96%

100.00%
75.50%

100.00%
42.30%

68.98%

62.55%

23.40%

Percent of Sales
Sales
100.00%
Gross Margin
77.06%
Selling, General & Administrative
91.67%
Expenses

Advertising Expenses
Profit Before Interest and Taxes

3.86%
-14.60%

2.74%
12.85%

2.47%
18.51%

2.40%
2.80%

Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets

0.91
0.45
70.43%
-584.67%
-172.88%

3.31
2.63
26.78%
120.94%
88.55%

6.20
5.47
15.43%
84.99%
71.88%

1.14
0.74
51.30%
5.20%
10.60%

Additional Ratios
Net Profit Margin
Return on Equity

Year 1
Year 2
-14.61% 8.98%
-584.67% 84.65%

Year 3
12.96%
59.50%

n.a
n.a

Activity Ratios
Accounts Receivable Turnover
Collection Days
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover

4.79
57
10.91
11.00
27
11.83

4.79
63
9.99
12.17
28
6.90

4.79
70
9.59
12.17
27
3.88

n.a
n.a
n.a
n.a
n.a
n.a

Debt Ratios
Debt to Net Worth
Current Liab. to Liab.

2.38
1.00

0.37
1.00

0.18
1.00

n.a
n.a

Liquidity Ratios
Net Working Capital

(Ksh3,142) Ksh78,273

Interest Coverage

-1,997.23

449.91

Ksh217,43
n.a
8
0.00
n.a

Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

0.08
70%
0.10
40.01
0.00

0.14
27%
2.09
9.43
0.00

0.26
15%
4.94
4.59
0.00

n.a
n.a
n.a
n.a
n.a