The concept of E3 Playhouse (E3) is to provide an entertainment, education, and restaurant venue in downtown Santa Cruz. The establishment will provide a live entertainment venue; a restaurant; community-based courses in music and the arts; a retail component offering arts-based retail merchandise; and venue rental services for the Santa Cruz area.
E3 Playhouse is in a start-up position, with a beginning date of July 2004. The purpose of this business plan is to estimate start-up and ongoing costs; identify revenue streams; and forecast net cash flow and profits. The company expects to lease venue space in June 2004, and have a three-month build-out of the space. We anticipate opening our doors to the public in mid-September. The company is on a July through June fiscal year.
The company CEO is Michael Horne. Michael has extensive experience managing live entertainment venues in the Santa Cruz area, having successfully owned and operated a similar venue for six years. The management team is headed by owner Wes Anthony. As a professional musician and teacher, Wes is uniquely qualified to develop an entertainment and education venue.
The nightclub and bar industry is shifting toward a more entertainment-oriented concept. Guests of these venues are not only offered a dynamic place to gather and mingle, but also a place to participate in the entertainment through interactive contests, theme nights, and other events. We intend to heavily utilize entertainment-oriented marketing in an effort to withstand the perpetual shift in trends and cater to as large a client base as possible.
The venue is a 6,600 square foot complex, which will also house the company's corporate business office. The dance club and bar will accommodate 200-400 people. The venue will be equipped with state-of-the-art audio, lighting, and video systems, serving the need for a true entertainment venue in Santa Cruz. The general appearance will be clean, open, and pleasing to the customer. The demographics are favorable, with minimal competition from other dance-themed venues and bars.
E3 will generate sales through seven revenue streams that comprise the company's products and services:
- Membership Fees
- Educational Courses
- Food and Beverage
- Gate/Entertainment
- Retail Merchandise
- Arcade
- Venue Rental
Managing seven separate revenue streams requires ramping up each one individually, ensuring that each area performs well before developing the next revenue stream. In order of importance, Food/Beverage and Gate/Entertainment are expected to provide the most stable revenue streams.
The venue appeals to four major market segments:
- Young Professionals
- College Students
- Tourists and Business Travelers
- Senior Citizens
The E3 Playhouse's central downtown Santa Cruz location, demographics, and minimum competition are major advantages for the success of the venture. The proposed venue will provide a local solution to the lack of social atmosphere and live entertainment venues in the region.
The purpose of this business plan is to estimate start-up and ongoing costs; identify revenue streams; and forecast net cash flow and profits. Initial start-up and operating capital of $190,260 is provided as paid-in capital by owner Wes Anthony.
The owner's total investment is $190,260. We anticipate a start-up date of July 2004, with several months build-out of an appropriate leased space. A grand opening is targeted for September 2004. Our targeted break-even month is July 2005, with an estimated monthly revenue break-even at $66,395, a per-unit variable cost of 60%, and fixed monthly costs of $26,558.
Total net profit for our first year is estimated at approximately negative ($161,000) due to start-up expenses. Our second year forecast shows a positive net profit of approximately $122,400, increasing in our third year to $129,800. Our net cash flow for the first year is projected at $22,000, increasing to $93,000 in our second year and $81,700 in our third year. We project ending our first year with a cash balance of $23,000, increasing to $117,000 in our second year and $198,000 in our third year. We anticipate our accounting net worth at the end of our first year to be approximately negative ($10,000), increasing to a positive $62,000 in our second year and $142,000 in our third year.
The owner is aware of the highly risky nature of launching an entertainment-based restaurant establishment. If the venture fails, the owner's paid-in capital and expenses may not be recovered. If the venture is undercapitalized and requires more working capital, the owner will consider bringing on investment partners. The owner will also review the return-on-investment for personally providing more paid-in capital. In the event that net profitability cannot be attained, the owner will take sequential steps to exit the venture, as outlined in the Exit Strategy section of the Financial Plan.
1.1 Mission
The mission of E3 Playhouse is to create an entertainment, community education, and dining venue for the residents of Santa Cruz. E3 will be an accessible and affordable venue, offering unique and appealing entertainment for all visitors.
The purpose of E3 Playhouse is to provide the residents of Santa Cruz County, and beyond, with quality entertainment in an enjoyable, pleasant atmosphere. It will provide excellent an place and opportunity for social interaction with dancing, games, educational classes, and special events, with an emphasis on "Live" dance music, including Salsa, Swing, R&B, and Americana. The casual dining ambiance, quality of the food, and excellent service will ensure a large, loyal following of customers. The restaurant will feature a beer and wine bar, along with live entertainment and an arcade area.
1.2 Keys to Success
The E3 Playhouse venue has three keys to success.
- Location--The E3 Playhouse will be strategically located to maximize the revenue derived from the live entertainment consumer. The showcase will be in downtown Santa Cruz. This is an excellent location for multi-purpose entertainment, community education, and restaurant with live music.
- Low Operating Cost--E3 Playhouse will be managed specifically to maintain targeted operating ratios that allow for maximum net profits. For initial construction and build out, E3 Playhouse management will keep construction costs at a minimum. The venue will be housed in a leased building. All operating expenses will be kept to a minimum, with cost of sales and margins reviewed on a monthly basis. Cost of sales is targeted at 40%.
- Wide Range of Services--E3 Playhouse will provide entertainment, community education courses, a full-service restaurant/night club, an arcade area, a retail merchandise area, and venue rental services. The objective will be to maximize the revenue per visitor and extend each visitor's time spent at the venue.
1.3 Objectives
The purpose of this business plan is to estimate start-up and ongoing costs; identify revenue streams; and forecast net cash flow and profits. The venture will be funded solely through paid-in capital provided by the owner.
The concept of E3 Playhouse is to provide an entertainment, education, and restaurant venue in downtown Santa Cruz. The establishment will provide a live entertainment venue; a restaurant; community-based courses in music and the arts; a retail component offering arts-based retail merchandise; and venue rental services for the Santa Cruz area. The objectives are to:
- Remodel a leased space and launch the venue within a $40,000 start-up budget, and an infusion of capital of $150,000 in the first month. The venue will open within three months of leasing the appropriate space. Leasing is anticipated to begin in June 2004.
- Reach a first-year sales goal of $427,757 and second-year goal of $1,222,164. Annual growth is targeted at a conservative 7% for the third year.
- Maintain a 40% gross margin.
