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Shark Tank Assignment Part 1

Hogan Davidson

Business Finance for Entrepreneurs

March 24, 2019

Executive Summary – Hogan’s Hookset: Fishing Guide Service and Rental Cabin
Mission, Vision and Culture
Mission: To provide a wonderful experience for fellow fisherman and to enjoy the outdoors as
mother nature intended.
Vision: To ensure everyone gets the chance to catch a once in a lifetime fish and to teach others
to respect, cherish, and replenish the environment.
Culture: The culture will be very peaceful and laid back. I will be the only employee at the start
and so the culture will reflect my values. Therefore, there will be a big emphasis on eco-friendly
practices and preserving the environment so the experience can be enjoyed for years to come.
Description of Service
Hogan’s Hookset will offer a fishing guide service that ranges from the lakes of Slender, Weld,
and Quill. I will offer target species of walleye, northern pike, muskellunge, smallmouth and
largemouth bass, and lake trout. A full day price will be 550 dollars and will include drinks,
lunch, gas, and fishing equipment. Half day price will be 300 dollars. I will also offer a rental
cabin for a remote place people can stay. They can choose to pair this with the guide service or
rent by itself. The rent price will be $150 a night or $500 for a week per person.
Hogan’s Hookset will be physically operated from my cabin on Quill Lake. Quill Lake is on the
Pipestone Chain of Lakes that have multiple lakes connected throughout the Southwestern part
of Ontario. There are few cabins and little signs of humans once you get passed the initial lake
called Clearwater. It’s the most peaceful place and is my favorite place in the world. Every
morning I wake up listening to the sounds of the loons and go to bed gazing at stars so bright
that on cloudless nights a flashlight is not needed. Nature is all around and it really brings an
appreciation to how special our world we live in is.
The geographic reach is limitless as I will have an online site and visit sport shows in different
parts of North America to draw customers but specifically, I plan on getting most of my
customers from the nearby areas in Minnesota and Ontario.
Description of Operation
Cabin Rental: The upkeep of the cabin will be the main thing involved in this operation. This will include
ensuring solar power is working, there is enough propane, and cleaning before and after guests arrived. I
will also have to provide amenities such as paper towels, kitchen supplies, etc. I will also have to fix any
unseen problems that may arise.

Guide Service: In this operation I will be responsible for driving to locations, teaching others fishing
techniques and the proper way to fish, removal of hooks and putting on bait (if needed), netting fish,
and ensuring that there is enough bait, fishing rods, lifejackets, gas, etc.

Reservations will be made online. I will make a basic website with an overview of the business and
pictures. I will also have a calendar where potential customers can reserve times. I will have a satellite
phone to check online and will also provide a phone number if they want to speak directly to me. The
satellite phone will be expensive, but I will only visit town a couple times a month, so the expense is
necessary.

Overview of the Industry


The business falls under fishing guide service which is under NAICS code 713990 which is All
Other Amusement and Recreation Industries.
The demand for my service is related to the economy. This service isn’t needed for everyday life
and serves as an escape or a mini vacation. If the economy and the average individual isn’t
doing very well then there is going to be less leftover money available to hire a fishing guide
service.
The supply of the service is limited to one customer a day due to me being the only employee
at the start. I could do it every day after the only other thing that affects the amount of the
service that I am able to produce is the fish themselves. There is so much water and fish in the
immediate area that this should never be a problem.
In the U.S. the fishing guide service generates 320 million dollars a year. There are 2600 total
guide services that employ 4500 people. It is only projected to grow and increase roughly 4%
annually from 2011-2021. The industry is just recovering as the economy is recovering.
However, the industries revenue is projected to pass the level of pre- recession.
Right now, in the industry there is no major companies that have a market share that is
dominant in the industry.
The customers are average individuals or families that want to go on a fishing trip. The
government or other businesses aren’t involved in using this service. Still there are a lot of
those who go on fishing trips. In 2015 46 million individuals went on a fishing trip.
Admin. “NAICS Code 713990.” Class Codes, Admin Https://Classcodes.com/Wp-
Content/Uploads/2016/04/Workers-Compensation-Class-Codes.png, 17 Dec. 2016,
classcodes.com/lookup/naics-code-713990/.
The trends in this industry are positive. Fishing guide services are on the climb up. From 2011 to
2016 the industry has grown over two percent. Also, from 2011 to 2021 the value of the
industry to the economy is expected to increase 4% annually while in comparison, the country’s
GDP is only expected to increase 2% annually.
“Starting a Fishing Guide Service Business – A Complete Guide.” ProfitableVenture,
www.profitableventure.com/starting-a-fishing-guide-business/.

Labor Needs
I am planning on running this business by myself without needing the help of anyone else. I am
adequately prepared and knowledgeable enough to run the guide service by myself. I will plan
my business and service offered based on if I will be able to do it with only my labor.
Marketing Plan
I will advertise locally in NW Ontario and Northern Minnesota at bait shops and fishing hotbeds.
I will plan to have a couple billboards at lakes that are frequented by the public. I will also
advertise with brochures at local bait shops and tackle stores. I will also have an online site and
social media outlets that will show pictures of the location and trophy fish. I plan on getting
most of my business from visiting sport shows around the United States. I will set up a booth
and talk one on one with potential customers.
Projected Sales and Profit
I will make revenue from offering ½ day guide trips, full day guide trips, daily cabin rentals and
weekly cabin rentals. The guide trips will be a flat rate no matter how many individuals attend.
For the daily and cabin rentals, they will be charged per person. In my calculations I accounted
for two people a time that would stay at the rental cabin. This number could be lower (1
person) but is likely to be higher. This is tough to predict or interpret as it would vary from
customer to customer, but my safest assumption would be two individuals at a time. As a
result, I think my revenue projections are fair if not a little lower than what they would really
be.
My first-year revenue would be $36,250. A 10% increase in sales yearly would bring projected
year 2 revenue to $39,875 and year 3 to $43,863. There are limited operating expenses and
cost of services sold associated with my business. The main financial burden would be the initial
start up costs. I am also taking a very low salary as I do not need much money to live remotely
from the cabin. I am only in business for 6 months of the year (at least at the beginning) and
will take salaries of $14,400 in year 1, $15,979 in year 2, and $19,343 in year 3. This will account
for the major expense of my business. I am projecting to have a profit of $9,610 in year 1,
$11,191 in year 2, and $11,301 in year 3. This isn’t enough money for the business to have to
pay taxes which is perfect. Also, after year 3 I am projected to have $32,102 in retained
earnings which would put my business in a very stable financial situation.
Short-Term Goals
In the short term I would like to have enough success to live comfortably at my cabin. I already
have the boat and equipment needed to start and the location and rental cabin. I just need to
make enough profit to pay for my living and buy necessities to start. I want to learn and find
more success before I venture into different aspects.
I want to rent out the rental cabin for two months in total (there are inevitably days where it
won’t be rented at the start) and have 25 guided trips total. I believe this is very reasonable.
Long-Term Goals
In the long term I want to make enough money to be able to buy a brand-new Lund boat. I am
hoping to do this by year 5. Also, I am hoping to grow organically and by year 5 have my cabin
rented out for 3.5 months of the year total and guide 50 trips.
I hope to also eventually move into guided hunting trips in the region. I have no timeframe on
this because I have no gauge on the demand or market at this time.
Financial Needs
I am hoping to take on debt to fund the beginning of this business. I am asking for a $10,500
loan to buy necessary fishing supplies, to cover minor cabin renovations, buy necessary
equipment and furniture for rental cabin, and build up an inventory of other needed supplies.
In the beginning I will also put in $10,000 of my personal savings to limit the amount of the loan
and receive $15,000 from family and will negotiate a repayment plan with them (projecting no
interest).

Bargaining Strategy
Details of Initial Request
Like what was mentioned earlier I will be looking for $10,500 to cover the initial start up
expenses. I will not be looking for or even consider giving up equity or having royalty or
perpetuity agreements.
How Much I Am Willing to Bargain
In the excel spreadsheet I calculated my interest rate to be 6%. This would be the maximum
interest rate I would accept. I will start by asking for a rate of 4%. The reasoning for this is
because I found a statement that the average interest rate on a conventional small business
loan is around 4% to 6%.
Average Small Business Loan Interest Rates in 2019: Comparing Top Lenders. (n.d.) Retrieved
from https://www.valuepenguin.com/average-small-business-loan-interest-rates
Further Explanations
The reason I am not offering any equity is because I want to have sole ownership of the
company. I want my decisions to only impact myself and have no worries. Also, while the
business can grow there is only so much, I can do as one person and I believe the business will
plateau. I want it this way and I don’t want to have employees at least at this time. I don’t think
this is very appealing to investors as they would likely not see significant returns on their
money.
I am not open to taking a high interest loan. The money needed at the beginning isn’t
significant as luckily will have other options to cover start up costs. That is why the highest
interest rate I will consider is 6% as mentioned earlier.
Royalties and perpetuities are not appealing for my business as well. It would be very hard to
have a royalty as I am not selling individual products but am providing a service.