Sample Business Plan grandosity

0 0 ! i O. ! ! ! i i ®. i. i i i if i tl i tt i i @ i. t 07 @ CT__7 DOS]TVo CO_ _ E;c,-_u_:,-,"z/g IA,_'t _TaHd uli ,,:,- i, iOi O: O? ,_' Concept D#scussion O O O O O O O • Grandosity.com Concept Discussion We are a web based luxury residential real estate referral network. Our online directory provides a forum where developers and sellers of specialty homes promote their listings to an affluent global audience via the World Wide Web. Buyers seeking homes within the specialty home market: i.e. golf, waterfront, mountain, and city developments, visit our site for a private, comprehensive, and interactive viewing of the opportunities that exist within each niche. Our referral network is based upon the long-standing tradition of broker cooperation throughout the real estate industry. Typically, a broker who procures a buyer may refer him/her to a broker located in the buyers market of interest. This broker agrees to pay the procuring cause broker a referral fee, or percentage of the commission made on the sale of the home. In our case, we are the procuring cause of each potential buyer who enters our site, views property, and submits a request for more information. It is the potential buyers request for more information that becomes our "referral", which is then forwarded to one of our participating affiliated brokerages for traditional foUow-up. What is at stake is roughly $100 Billion in transaction fees distributed annually to residential real estate brokers. Our goal is to capture a small percentage of these transaction fees within 3 years via our real estate licensure and referral network affiliates. Our target market is the maturing baby boomer generation, which numbers roughly 75 million strong. This group is in their peak earning years and primed for purchasing new, second, and retirement homes that offer attractive recreational amenities. Millions of dollars are on the table for those organizations that cater to and service this large population in the coming years. 0 O 0 Our referral based business model revolves around the establishment of an international network of sellers/developers of specialty residential real estate joined with a local affiliate (residential brokers) program to support buyers' personal needs. Since our business model is currently based on transactions, developers have little risk in participating with Grandosity.com and therefore are willing to be included within our system. Local affiliates are also motivated to join our system because of high quality purchase leads, which they receive as referrals. With the creation of our unique referral based business model and the content within, we enjoy "first mover" advantage so crucial to Internet success. Our concept provides an exclusive convergence of online information with personalized, and localized, product delivery. No other company on the Intemet offers this business model concept. Grandosity.com was created to fill a void on the Internet. The majority of _real estate content providers on the Intemet list an overwhelming amount of information encompassing the entire industry and in all price ranges. Homes appealing to the high-end buyer within such sites are tough 0 0 O Q O _Numberof listings- Realtor.com with 1.3M,Cyberhomes.com 900k, Homescout.com 700k,Homeseekers.com 660k, Homeadvisor.com 500k. O O O O O e O to find and short on content. It is our belief that specialty homes deserve a first-class, easily navigable forum in which to be displayed. Our directory provides homebuyers with rich visual information that enables them to efficiently search, view, and cross-reference a multitude of properties at no cost. We save buyers time, expense and the inconvenience of scheduling appointments, traveling to, and visiting properties in person. Sellers/developers are highly motivated to use our unique service as a new and forward thinking multimedia marketing tool. How It Works... ,0 0 O Site visitors view specialty residential properties, and subsequently request additional information through an online response format. Each request takes the following steps: 1. The response form is immediately referred to an appropriate affiliate or seller/developer, who contacts the site visitor to arrange local previewing of the property of interest. 2. Should the visitor choose not to purchase the property atler viewing, the local affiliate has complete latitude to show the visitor other properties that may be of interest to the visitor. 3. Upon completion of a purchase transaction, regardless of whether it is a Grandosity listed property, the local affifiate or seller/developer remits a referral fee, of approximately 1% of the property purchase price, directly back to Grandosity. O Product/Cate_o_ ODoortunities O lid Grandosity has been operational since May 1998 with two property categories under our referral system business model. These include the following: • • Residential Golf Course Properties Residential Water Front Properties O We have had an extremely favorable response to our program, from property developers, affiliates and site visitors. Over a period of one year we have obtained the rights to market approximately 40 premier, new master-planned golf course and waterfront communities from Florida to Hawaii (see attached client list), and have established affifiated brokerages in 10 major markets throughout the United States. Traffic to our golf living section has reached nearly 10,000 home page visits over the same period. This traffic has been driven to the site via minimal search engine placement within O popular search directories such as Yahoo!, Alta-Vista, and AOL Net Find. To date we have not spent a dime on advertising and have generated nearly 250 referrals. We intend to expand our property categories to include all premium, luxury residential real estate property types. Upon successful expansion we will launch a full-fledged marketing campaign (see customer acquisition). O O Q O Q O O O @ O @ 0 O 0 Our preliminary property-offering list is as follows (see attached chart): • Premium real estate offered as Grand Communities • • • • • • • • Golf Course Communities Mountain Communities Waterfront Communities Equestrian Estates Beach Communities Timeshare Communities Wine Country Residences City Living A Highly Scalable Business Model... 0 In addition, we believe that our referral business model may be applied to other luxury product categories. Our intent is to fully develop the real estate concepts and then to add other luxury product channels in the future. For example, we have already established an alliance with a large golf resort oriented travel company, Golf Holidays, which has been integrated within the current tD • golf communities channel. This alliance allows us to offer over 60 exclusive golf travel packages in 8 countries to our site visitors. In addition, we have entered an agreement with "The worlds largest timeshare company", ERA Strornan, by which we have the rights to market over 4,000 timeshare opportunities in 60 countries throughout the world. While we plan to expand upon the travel & timeshare concept, as well as the other concepts listed below, these channels will not be focused upon until later phases of our project. • Exclusive vacation packages as Grand Excursions • GolfTrips • • • • • Water/Beach Trips Adventure Travel Wine Country Excursions Mountain Getaways Spa Resort Vacations 0 O • The Grandosity Grand Transportation, Grand Collectibles, Grand Merchandise... value proposition O O There are four revenue sources (see attached chart) for Grandosity, including: • Referral fees • • • Advertising fees Membership fees Sponsorships O O O O O O O 0 0 0 D 0 0 Q 0 Currently our service is offered at no charge to sellers/developers and broker affiliates. Our only compensation comes from the actual sale of property via our referrals. However, as we build the system and subsequently begin to market and sell properties we believe our revenues will increase substantially from annual membership fees collected from the sellers/developers. Also, as our directory takes form there will be a large number of advertising opportunities, throughout our site, on a local and national level. Our service will always be available to the buyer at no cost. At the current time, the company is receiving referrals from our golf riving channel. Utilizing only our premium real estate model, we have developed the following revenue forecast: Target Communities Participating With Grandosity • • • • • • • • • 1,000 (Currently 40 Communities online) 180 180,000 *3% 5,400 $400,000 $2.16 Billion 1% $21.6 Million 0 0 0 O 0 0 Avg. Number of Referrals / Community / Year Total Annual Grandosity Real Estate Referrals *Conversion Rate (Referrals-to-Sales) Total Annual Property Sales from Grandosity Referrals Avg. Property Sales Price Total Property Sales from Grandosity Referrals Grandosity Referral Fee Grandosity Real Estate Referral Income (Annual) 0 _D * According to a recent survey performed by The NPD Group, Inc., 64 percent of U.S. web users have shopped for real estate online. Of these, 7 percent have reported to have actually purchased property they saw on the web. We have based our projections on what we feel to be a conservative 3% referrals-to-sales conversion rate. Grandosity competitive advantages and unique benefits O O _[_ Quality... Other online residential real estate providers sacrifice quality due to the overwhelming amount of information and the rapid pace at which they are making it available to the viewing public. Our model eliminates the difficulties of locating valuable/quality information by organizing a directory of specialty markets and focusing on only high-end properties. We see a demand here and are taking all steps necessary in finding only the best communities within each market. We also feel that consumers have a demand for better, more knowledgeable professional agents. Our network of broker affiliates is built on this premise. Each affiliate is carefully scrutinized prior to acceptance into our network. They are chosen based upon expertise within their market; this includes property knowledge, customer service, and a good standing within their respected communities. Q A Serious Void... There is an overwhelming amount of information on the Internet pertaining to residential real estate. For example, the Intemet's largest real estate source, Realtor.corn, boasts of listing over 1.3 million homes, of which the majority are existing resale opportunities. Realtor.corn, and other like sites, 0 0 0 cater to the masses, and focus on selling a large number of homes to middle and lower class buyers. While they do list a small number of high-end properties, they are very difficult to find and the O O O D O manner in which they are displayed does not utilize today's technologies in giving the buyer a true, informative and interactive Internet experience. First Mover... With the creation of our unique referral based business model and the content within, we enjoy "first mover" advantage so crucial to Internet success. Our referral network, and the Internet, allows us to capitalize on a long tradition of broker cooperation in the residential real estate industry. Our content is focused solely on the opportunities that exist throughout the high-end residential real estate sector. By developing an intimate directory, such as ours, we relieve consumers of the ever-growing problem of Internet information overload. O Technology... O Our comprehensive directory is essentially a 24-hour, 7 day a week, open house where high-end specialty properties can be displayed while properly using today's Internet technologies. These technologies include 360 degree virtual tours of the homes, lots, and recreational amenities, audio feeds, and customized content (based upon the buyers profile) delivered each time a potential buyer visits. Such customized content delivery will enable us to target market new property offerings, complimentary goods & services, and advertisements that fit each users profile. We create a setting where a buyer fi'om New York can visit our site at midnight and experience a personalized, virtual property viewing of the possibilities that exist in California. O _Jb _1_ We're Not Reinventing The Wheel... Unlike many other Internet companies, we are not attempting to completely change buyer's habits. For example, Amazon.com and other pioneering web based luring consumers away from traditional brick and mortar however a large percentage of consumers are still going to purchase in person. Our model helps the potential purchaser businesses are faced with the task of businesses. This model is working, want to actually examine a potential with the most daunting task they are faced with when beginning the buying process - locating and cross-referencing available products in multiple markets. Once a product of interest is located, the buyer can request additional information via an online form. Once this request is received, we follow-up traditionally via our local affiliated brokerages. We do not change the way people buy specialty homes; we change the .0 way they find them. Our Referral Based Business Model... Currently, the majority of content oriented web based businesses attempt to operate under the traditional advertisement based business model. That is, significant portions of revenues are derived from advertisements placed within their web sites. In contrast, our business is referral based. We are transaction oriented and our revenues are derived from the successful sale of property to buyers that we originated. We simply forward potential buyers information to a local affiliated brokerage that, upon completion of a sale, pays Grandosity a commission of roughly 1% of the purchase price of the property. We capitalize on the sale of any property to a buyer whom we generated, regardless of whether or not we showcased it within our directory. And, more importantly, by using non-employed broker affiliates we enjoy a nationwide, and eventually global, sales force at no cost. We incur minimal expenses as our business is simply controlling the flow of information. We are not faced with the difficulties associated with inventory, shipping, receiving, O O 0 O O O O O O 0 returns, etc. By combining an online presence with a local support network (via af_ates), Grandosity becomes a hybrid product solution, unlike any other available. Target Market... Our target market is the maturing baby boomer generation, which numbers roughly 75 million strong. 2The 50-plus population holds more than 50% of the nation's discretionary income. Further, new homebuyers typically spend more money within the first 6 months of buying a home than they do over the following 6 years. Strategic Alliances... While the driving force behind our business is capitalizing on referrals, we also foresee tremendous revenue potential associated with the offering of complimentary services geared towards the convenience of a new homebuyer. Loan and title companies, moving services, remodeling services, and many other related industries are affected by a real estate transaction. Strategic alliances with such companies will allow us to provide a complete service to the buyer while maximizing our revenue potential. O e Customer acquisition The key to our success rests on our ability to draw customers to the website. Toward this end, we plan to utilize traditional online methods including banner advertising at complementary extensive search engine listings, reciprocal links and strategic promotional alliances. sites, O In addition to the foregoing, Grandosity plans to utiliTe cross-media advertising methods to encourage website draw. These include traditional magazine, newspaper, radio and television advertising. One master-planned developer we have come in contact with has attributed 75 home sales to their web site over a period of one year utilizing such marketing methods. In addition to the foregoing, it is our intent to develop a complete website content program that is category specific. This program will be created and managed through content licensing agreements and strategic alliances with complementary content providers. For example, we may approach a high-end golf course living oriented magazine and propose a co-opetition alliance where we post there content (articles) within our golf riving oriented section. We will push their publication to our site visitors, and in return receive top-notch content and possible advertisements within their publication at little or no cost. This combination of online marketing with advertising and category specific website content development will insure the maximum exposure of Grandosity to the buying public. In addition, we believe word-of-mouth throughout high-end circles will bring invaluable attention to our first-class, personalized service. O O O Q O O O O O 2 According to Builder Magazine -July 1997 "Mature Buyers" O O O D Grandositv's Team Founder & Chief Executive Officer, Colby S. Fitch. • • • Extensive experience with Internet start-ups. Active in the Internet industry having contributed to the development of three (3) internet ventures The channel manager for an Internet "push technology" company (Intermind Corporation) in Seattle, Washington. Responsible for the development of strategic initiatives, corporate alliances and competitive analysis. A licensed real estate agent and created Grandosity's referral system business model O O O O O O O O O O O O _D O O O • Co-Founder & Chief Operating Officer, Michael C. Baker. • • • • Extensive accounting background and web site design experience Developing referral system on behalf of Grandosity Oversees company's operations and administrative needs Licensed real estate agent in the state of Colorado O O O Upon financing the company is seeking personnel to fill the jobs of Chief Technical Officer, VP Real Estate Category, Inside/ Outside Sales Representative (2), Web Designer (2), and a general assistant. Project Phases Grandosity envisions four phases to bring all product categories to the market. • Phase 1 includes the marketing and development of our two main real estate sub-categories, and the offering of limited vacation packages within the associated real estate channels. We are currently in Phase 1. • Phase 2 calls for adding the balance of the real estate categories, and the initiation of a complete advertising and marketing effort. A major business development effort will be undertaken at this point to increase the number of "listed" communities toward our goal of 1000. During this phase, the company anticipates the complete creation of an operational infi'astructure, and finalizing our business plan for use in securing complete "First Round" financing. Phase 2 should see a substantial increase in company revenues. o o The Phase 2 revenue goal is the generation of $1 million in referral revenues during the next 18-month period. Phase 2 and last approximately 12 months. The securing interim working program financing will commence immediately upon company's travel referral capital will be fully developed during this phase as well. O O O O O O O O O O O O O O O O O O O O O O O o Q O O O O O O O O A complete business development initiative will also be undertaken during this phase, including the initiation of strategic industry alliances and sponsorships. Phases 3 will include the addition of our Grand Excursions channel to the Grandosity site, with listings for all types of premium travel packages. At this point, the company envisions extensive, targeted national advertising. We also anticipate securing a "First Round" of financing at this point to allow the company to further develop our infrastructure and prepare the organization for a major national rollout. As we move into Phase 4, we will hire associated industry experts as Channel Managers. The company intends to bring this venture to the public market and will seek public funding at the end of this phase. We anticipate a maximum ofl2 to 18 months to move through Phase 4. Interim Funds Needed Grandosity is seeking interim working capital. • • Grandosity requires approximately $1,200,000 to fund our project for the next 12 months. Funds will be used for: o o o o o o Organizational infi'astructure creation, Affiliate/community solicitation, Preliminary advertising needs, Equipment and technical requirements, Operational personnel salaries and general office facilities, Completion of our business plan to solicit more substantial "First Round" financing. O O O O O O O O O O O O O O O O Interim Financing Investment Structure and Exit In exchange for providing interim financing, Grandosity is offering a negotiable equity position in our company. We will also negotiate an exit option offering with our interim financing partner. We certainly acknowledge the developmental nature of our project, and the risks associated with investing in a start-up entity. However, it is our sincere belief that our concept will be extremely compelling to the marketplace, as our preliminary results have shown, and place us on a fast track to taking the company public or being acquired. For reference purposes only, the typical Intemet venture has been capitalized at between 15 and 25 times 1_t year forecast revenues over the prior year in the public markets (Source: Bane Boston Robertson Stephens Intemet Valuation Model). Consequently, O O point. our venture could enjoy a market valuation, based entirely on our real estate referral revenues, between $261 million and $445 million upon the issuance of stock at an IPO tl O O O O O O O O O O 0 O O I ARIZONA PARTIAL CLIENT LIST .FLORIDA LOUISIANA 0 IMO_.]N Isco'r"_sD"'_'_"'_'zoNA ..................... . , • • @ • [_TKOON O _"_ NEVADA I_,_ NORTH _ SD'IJE'I¢S77770N ." 0 k COUN'I:RY CLUB coun.__Cl__tla e I -.-.. i NORTH CAROLINA COLORADO . ,,,_ ,......... ...... .SOUTH CAROLINA • N +:,_ '.,..'_ -..-:_. CALLAWASS.I[E " ![SLAm> , O ICa_TLE.r'_NeSI .,,..,,. FLORIDA .+ ,+,,,,+ ' " + " Powder Horn O o 0 lip O 0 0 0 • 0 Q _G__DO51TV_CO_ Needs Forecast 0 0 O O I_ Salaries CEO, President COO Inside/Outside Sales Team x 2 Monthly $3,000 $3,000 $6,000 $3,000 $2,000 $3,000 $5,000 $2,000 One-Time CTO Secretary/Assistant VP, Real Estate Category I_ Web designer x 2 Office Facility Rental O O Office Expenses Phone Supplies $1,000 $1,000 $1,000 $1,000 $2,000 O O Printing Miscellaneous $3,000 Equipment Computers (7 stations) Printers Network System Furniture Technical Expenses Website Hosting ISDN Internet Connection Software Programs Advertising/Marketing Creative Design Services Affiliate/Community Solicitation Cross-Media Advertising Outside Services Legal Fees Accounting $15,000 $20,000 $500 $200 $15,000 $6,000 $3,000 $4,000 O $1,000 $10,000 O O O $15,000 $2,000 $10,000 O O O Total Monthly Cost Total Cost For Twelve Months Total Working Capital Costs (12 Months) Financial Needs Buffer Total Funds Needed Including Buffer $68,700 $824,400 $893,400 35.00% $1,206,090 $69,000 O O O O O O O O • 0 0 0 0 Grandosity.com Referral Model NO Purchase 0 I I Product Purchased, _ Referral Paid O O O Local Affiliate (ie: Real Estate Broker) _ Web User Contact & Product Showing O O O _1_ " Web Site Product 1 InfoRequest 0 0 0 O O O Community Developer or Other Product Manufacturer _ Web User Contact & Product Showing _ Product Purchased, Referral Paid O O O • O _ NOPurchase [ O O 0 0 0 0 0 I ._G_ _ _ DQS TYo COiT, l f I I .... ........................................... 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