The concept of E3 Playhouse (E3) is to provide an entertainment, education, and restaurant venue in downtown Santa Cruz. It will feature a live entertainment stage, a restaurant and community-based arts and music courses. A retail component will sell arts-based merchandise. The Santa Cruz area can also rent the venue.
E3 Playhouse is in an initial position. The company’s start date is 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 will lease the venue space in June 2004. It will then have to build out the space for three months. We anticipate opening our doors to the public in mid-September. The company has a fiscal year that runs from July to June.
Michael Horne is the company’s CEO. Michael Horne is an experienced manager of live entertainment venues in Santa Cruz. In fact, he has owned and operated a similar venue for six consecutive years. Wes Anthony leads the management team. Wes Anthony is an experienced musician and educator who is uniquely qualified in developing entertainment and education venues.
The nightclub and bar industry is shifting toward a more entertainment-oriented concept. These bars and nightclubs offer guests an exciting place to mingle and mix, as well as a chance to be part of the entertainment via interactive contests and theme nights. 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.
It covers 6,600 square feet and will house the company’s corporate office. 200 to 400 people will be able to use the dance club and bar. 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 overall appearance of the venue will be welcoming and clean. With minimal competition from other bars and venues that are dance-themed, the demographics are favorable.
E3 will generate sales through seven revenue streams that comprise the company’s products and services:
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Membership Charges
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Educational Courses
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Food and Beverage
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Gate/Entertainment
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Retail Merchandise
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Arcade
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Venue Booking
Each revenue stream must be managed individually. This ensures that each revenue stream performs well and can be developed. Food/Beverage and Gate/Entertainment will provide the best stable revenue streams.
Four major market segments are attracted to the venue:
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Young Professionals
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College Students
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Tourists & Business Travelers
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Senior Citizens
The E3 Playhouse’s Santa Cruz location in the heart of downtown and its low competition are all major factors that will ensure the success of this venture. The proposed venue will offer a local solution for the lack of entertainment venues and social atmosphere in the area.
This business plan is used to forecast and forecast cash flow and profits, as well as estimate ongoing and start-up costs. Wes Anthony pays $190,260 as capital to start up and operate the business.
The total investment of the owner is $190,260. The owner anticipates a July 2004 start-up, with several months of construction of a suitable leased space. A grand opening is planned for September 2004. The July 2005 target month for break-even is July 2005. This would mean that the monthly revenue breakeven will be $66,395, which has a variable cost per unit of 60%, and fixed monthly expenses of $26,558.
Our first year’s net profit is expected to be negative ($161,000), due to start up expenses. Our second year forecast predicts a positive net income of around $122,400. It will rise to $129,000. Our projected net cash flow for year one is $22,000. It will rise to $93,000 the second year and $81,700 the third year. We anticipate ending the first year with a cash surplus of $23,000. The amount will increase to $117,000 for our second year and $198,000 for our third year. We anticipate that our accounting net value at the end if our first year will be approximately negative ($10,000), growing to a positive $62,000 second year, and to $142,000 third year.
The owner is fully aware of the high risk nature of opening an entertainment-based restaurant. The owner’s invested capital and expenses could be lost if the venture is unsuccessful. The owner may consider investing in partners if the venture is not adequately capitalized. Owners may also be asked to review their return-on-investment in order to determine if they can provide additional 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
E3 Playhouse’s mission is to provide entertainment, education and dining opportunities for Santa Cruz residents. E3 will provide unique entertainment that is affordable and accessible to everyone.
E3 Playhouse’s purpose is to provide Santa Cruz County residents and others with entertainment in a fun, friendly 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. You will enjoy a casual dining experience, good food, and great service. There will be a beer and wine bar as well as live entertainment and an arcade.
Success Keys 1.2
Three keys to success are the E3 Playhouse venues
- Location The E3 Playhouse will strategically be located in order to maximize the income derived from live entertainment consumers. Santa Cruz will host this showcase. This is a perfect location for entertainment, community education, or a restaurant that features live music.
- Low Operating costE3 playhouse will be managed to ensure maximum net profits and maintain targeted operating ratios. E3 Playhouse management plans to keep construction costs as low as possible for initial construction, and build out. The venue will be based in a leased space. 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%.
- E3 Playhouse will offer entertainment, community education classes, a full service restaurant/nightclub, a arcade area, retail merchandise area and venue rental services. The objective is to maximize visitor revenue and prolong visitor time at the venue.
1.3 Objectives
This business plan is used to forecast and project net cash flow, profits and costs. The owner will fund the venture with his or her paid-in capital.
The concept of E3 Playhouse is to provide an entertainment, education, and restaurant venue in downtown Santa Cruz. It will offer live entertainment, a restaurant, community-based classes in music and the arts, a retail component with arts-based merchandise and rental services for Santa Cruz. The objectives are to:
- Remodel a leased area and launch the venue within a $40,000 starting budget and an infusion capital of $150,000 for the first 30 days. The space will be ready for use within three months. Leasing is scheduled to begin in June 2004.
- To achieve a first year sales goal of $427.757, and a second year goal of $1.222.164. A conservative 7% growth rate is expected for the third and fourth years.
- Maintain a 40% gross margin.