Board and Bike

PROPOSED BUSINESS PLAN

RETAIL SPORTING GOODS AND APPEARAL STORE
CHASKA DECA CHAPTER
TYLER BORRELL & SAMMY SARKIS
Table of Contents

Introduction… 3
Analysis of the Business Situation… 4
Planned Operation of the Proposed Business… 8
Planned Financing… 18
Conclusion… 20
Bibliography… 21
Appendix… 22

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Introduction
The name of the business we are proposing to open is “The Arsenal” board and

bike. This will be a two-story retail shop that sells snowboard, bicycle, and skateboard

equipment and clothing. Our vision is to create a complete, professional buying-

experience for the customer when they are looking to purchase snowboard, bicycle and

skateboard equipment- all of this in a modern, cool atmosphere. There are also future

intentions of developing a skate-park on-site for "freestyle" cyclists and skateboarders.

Although, the skate-park is not the main focus of the business, we would like to begin

construction on a first phase within 3 years of the store opening.

The business will be located in Stratton Resort on Stratton Mountain in Vermont.

The location is excellent because of the high guest traffic-flow year-round at Stratton

Mountain Resort from major cities like New York City, Jersey City, Boston and others.

Stratton Mountain offers reputable terrain facilities for freestyle skiers and snowboarders

alike. Every year, major competitions such as the US Open snowboard competition, Cold

Wars and the Vermont Open ski competition.

The business will appeal to both males and females between the ages of 10-25 and

enjoy snowboarding, biking or skateboarding. These individuals also have a disposable

income and are mostly from lower-middle to upper-class families that either live in the

New England area or are attending boarding schools in the southern Vermont area.

I came up with the name the Arsenal by thinking of original words that describe a

place of storage for goods. I liked the name the Arsenal because it is clean and

professional-sounding.

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 Analysis of the Business Situation

General Data

In general, The Arsenal will draw customers from all around the New England

area including; families and individuals from major cities such as NYC, New York,

Boston, MA, Jersey City, NJ as well as students from boarding schools and universities

in the New England region.

Geographic

Geographically speaking, the Arsenal is located at the base of Stratton Mountain

in Vermont. Stratton Resort is located about 4 miles from the town of Bondville, VT.

The resort and shop is about a four-hour drive from Brooklyn in New York City, NY.

From Boston is about a three-hour drive (141 miles). Mountainous, forested areas with

gentle streams and majestic, large trees could describe the landscape. The snowfall in the

winter is significant and if there isn't enough natural snowfall early in the year, Stratton’s

state-of-the-art snowmaking machines “let it snow.” The population of Stratton, VT is

roughly over 135 people- a small, rural town. This means that the majority of our

customers will be coming from other areas. People coming from New York City and

regions southwest of Vermont will be coming up highway 7, through the town of

Manchester (the town offers shopping malls, restaurants and lodging but is still about 30-

40 minutes from the Stratton Mountain resort. As you enter Manchester, highway 30

comes to a fork and you head east onto highway 11. From highway 11, you turn right

onto Stratton Mountain Access Rd into the resort after driving about 19 miles. From

Boston and the south/east you would come up Highway 7 to Highway 30 in Vermont

onto the Stratton Mountain Access Rd. The towns surrounding Stratton Resort are laid-

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out in a colonial fashion with a town square, bank, post office, gas station, church and

other small shops/business. Houses are more densely packed in the towns; otherwise

they are spread onto several-acre subdivisions. The resort itself has a village laid-out for

commercial/retail space as well as hotels, condos, town-homes and houses for guests to

buy or rent. The resort is still expanding by adding new condo projects that are going to

increase customer traffic to the resort.

Demographic & Economic

In the Arsenal’s local trading area, Stratton's total population is 136. The majority

of the families in Stratton are supported by single income, blue-collar jobs. These

individuals enjoy skiing/snowboarding, snowmobiling, hunting, fishing and watching

television. There are 70 males and 66 females living in Stratton, Vermont. Over 98% of

the population is white and 2% of the population is more than one race. The average

family size is 2.89 people. The average household income in 1999 was $39,688- the

average family income was $43,750. There are a total of 1,091housing units in Stratton.

Of the 1,091 units, 60 of those units are occupied. The reason for so many vacant

housing units is because Stratton Resort attracts so many individuals that come and go

depending on the season, these homes are vacation getaways to individuals who either

own a home or both own the property and rent it out to other individuals as a time-share.

Market Segment Analysis of Target Market

At the Arsenal we will have a wide variety of customers. Our primary market are

boarding school attendees ranging in ages from 10-25 years old, that live near, are riding

for the day or staying and/or vacationing at Stratton Resort. This segment attends

boarding schools in the southern Vermont and New Hampshire region and has a

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disposable income. They are involved in winter activities at school such as

snowboarding or skiing and also enjoy spring, summer and fall activities such as biking

and skateboarding. Most of the students reside at the school but some have family

condos or town-homes at a ski resort in the area (such as Stratton), that they attend on the

weekend or vacation days. Most of these people have chosen to live at the relaxing

Stratton Resort on Stratton Mountain. They enjoy staying at their parents' condo because

it's pure leisure time in a relatively secure environment. As I mentioned before, most of

these kids have disposable incomes and have parents with dual incomes.

Analysis of Potential Location

Before choosing a location, we looked at different factors that would be necessary

in choosing a profitable location. First, we wanted a location with a high, steady traffic

flow. We also wanted to be more centrally located to reach our market. Then we needed

to look at the cost of the land and the overall estimate of the potential land development

in the next ten years. Next, we need proper utilities such as electricity, sewer and water

and, of course, ample parking space. Another motivation we looked at was the potential

space to add a skate-park facility as well as expanding the store. We would also consider

the nearby schools, towns and communities to find the site that offered the most potential.

There are only two sites that we deeply considered before choosing one. Both of

them are within 20 miles of each other off of Highway 7 in Vermont- northeast of New

York City and west-northwest of Boston, MA. The first location was in Manchester, VT;

and the second was located in Stratton Mountain Resort in Stratton, VT. In the following

paragraphs we will explain why we chose the location that we did based on the

information above.

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 Our first option, Manchester, VT is located off of highway 7 on the way to some

of the most popular ski areas in New England. It had one of the higher populations and

average income for the area as well. The cost of the land was less expensive than

Stratton, but finding land that could be developed commercial use was scarce and lacked

potential for the high traffic flow we were looking for.

The second site, Stratton Mountain Resort, was very attractive because for years it

has held the reputation of having some of the best terrain facilities in the nation for skiing

and snowboarding. It is also within driving distance from one of the most populace areas

in the world, New York City. Stratton hosts major snowboard competitions such as the

US Open half pipe competition which is held here every year and draws roughly 25,000

fans in one weekend. There is also a multi-event competition for freestyle snowboarders

called the ColdWars. This tournament has now been going on for three consecutive years

and would be another opportunity for unusually high traffic flow of customers that match

our target market. Stratton Resort's village layout is also appealing because it keeps

residents in a high density area. This allows for more potential customers to visit our

store. Although Stratton offers all of these great benefits, it is still about $400,000 for a

1/4 acre of land close to the village.

In the end, we chose the Stratton location because it had a higher potential for

greater profitability than the Manchester location.

Competitors

There are several local competitors located in Stratton Resort’s Shopping Village.

The first competitor, “Bogner,” is a European outerwear and casual wear store. They

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don’t pose a large threat on account that the main product they carry is exclusively

European fashion. Another competitor, “Stratton Mountain Sports,” carries mostly

Stratton Resort logo-wear but also rents high performance skies and snowboards to

customers. But Stratton Mountain Sports is not open during the summer months, an

advantage to the Arsenal because of less competition during the summer season. The

third source of local competition is “First Run Ski Shop,” they have summer and winter

gear. Although the Arsenal carries similar types of equipment, it will have different

brands that appeal to a different market. “Pipe Dreams” is a larger source of competition

because they carry exclusively snowboard equipment and outerwear/fashion. The

Arsenal will compete with Pipe Dreams by having a larger selection of brands and more

convenient hours of operation. Our biggest rival in the local area will be Syd & Dusty's-

a local board shop in the village, which offers premium Burton snowboard products, a

major competitor to our brands. We will beat Syd and Dusty's by offering a more

professional atmosphere in the store, as well as a broader brand selection for customers to

choose from. That is manly how the Arsenal will shut-down the competition.

Planned Operation of the Proposed Business

Proposed Organization

The Arsenal will be owned through a Subchapter S Corporation- because of the

size of the business we will need a substantial amount of capital to open to a smooth

start-up. With 5 people in the corporation, we can generate enough cash flow to get the

business started. Most new business lacking in capital often fail because they don’t have

a substantial amount of money to get off to a smooth start. We are making sure this will

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not happen to the Arsenal. The Arsenal will have investors and silent partners to help

increase capital. Another big advantage of a Subchapter S is that we get limited liability,

which would protect us from losses if disaster were to strike.

There are many advantages that come with having a Subchapter S Corporation.

Generally speaking, a business of this type starts with more capital and has greater

potential to expand easier. Another advantage is that each partner has a limited liability-

meaning they are protected from losses of more than they initially invested. In addition,

we will not get double taxed like a typical corporation: a BIG plus in saving money.

With the proper mix, there is a wider selection of management skills to operate with.

That is a vital ingredient of a successful business.

Although there are some great advantages with a Subchapter S, there are some

disadvantages as well. For instance, the owners would not have as much individual

control over making decisions for the business as a person would with a sole

proprietorship or partnership. Also, the earnings are split among owners and partners,

which can limit individual profit. The Subchapter S is also very complex and requires

and vast amount of legal work to get started.

We didn't choose a partnership because of the unlimited liability, plus we didn't

like the fact that there would only be a couple of partners sharing a great amount of

financial responsibility. Furthermore, we want enough capital to ensure a smooth start-up

(an easy way to increase capital is to partner with multiple investors); a partnership didn't

offer this. That is why we chose a Subchapter S Corporation as our form of ownership.

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Start-Up Steps to Form Business
1. Find General Partners

2. Find Limited Partners

3. Find a good attorney

4. Consult with a small business association for help and/or advice

5. Write up a partnership agreement

6. File for the business name and tax I.D. number

7. Set up a bank account for the business

8. Purchase adequate insurance

9. purchase a property for store and future skate park

10. Get necessary building permits

11. Design and construct the store

12. Locate vendors and suppliers for business

13. Establish a line of credit

14. Take care of all licenses and ordinances

15. Establish an accounting system

16. Purchase equipment for store

17. Buy merchandise for store

18. Buy cleaning/maintenance equipment for store

19. Buy computers and office equipment

20. Establish a phone network in the store

21. Prepare a one-year advertising plan

22. Hire necessary employees

23. Plan work schedule for opening month of business

24. Train employees

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Planned Personnel Needs

In the following charts we will present all the necessary employees needed at the

Arsenal Board, Bike and Skate. We will also give an estimate of their wages and

salaries, total number of hours worked each week, what department they work in and a

list of jobs they will each be expected to perform. On the page after that, there is also a

list of all the positions, salaries, numbers of employees, weekly hours, weeks worked per

year, and an estimated total amount for salary expenses for the first year. In the last

chart, third page will be a proposed organization chart for the business. This shows the

two main department heads and all the employees under them.

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The Arsenal Organization Chart

Co-Manager Co- Manager

Administrative
Tune Shop Technician
Secretary

Tune Shop Technician

Salesperson Supervisor

Salesperson

Salesperson

Salesperson

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Proposed Business

The Arsenal will sell every equipment necessity for snowboarding, biking and

skateboarding. We will also sell stylish clothing from brands that target customers in this

market. Some potential suppliers include: Rome SDS, Never Summer, Capita, Lib Tech,

Academy, Marin, Felt, Free Agent, Haro, Kona, Union bindings, Technine, 32, D.C.,

Northwave, Mission Six, Holden, WE SC, Volcom, Dragon, Oakley, Electric, Spy,

Celtek, Grenade, Dakine, Bakoda, Giro, Protec, Emerica, Nike, Lakai, Es, and Nixon-

just to name a few. These different brands offer different ranges of price and style in

their products. We feel that focusing on one specific, large brand wouldn't be beneficial

to the customer- we want to have a selection of the best products out there to match the

customer's needs. We also want to carry original, one-of-a-kind brands like WE SC and

Celtek.

Our business will not only sell products but we will service them too. We will

service snowboards, bikes and skateboards from performing routine maintenance like

tune-ups and repairs, to installing new parts and fine tuning them to the customer's

preference.

Our inventory policy is that we keep a limited number of the product on the sales

floor. For security purposes, high risk items will be locked up along with changing

rooms. If we don't have a product in-stock or don't usually stock a product by a brand we

carry; we can do special orders.

We have a 100% satisfaction guarantee policy for 30 days from the date of

purchase. For returns, all original packaging and package contents need to be with the

item in order for to receive store credit.

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Proposed Strategies
“The Arsenal” will be the first of its kind in Stratton Mountain Resort; therefore

promotional activities will be mainly focused in the resort area, other nearby resorts and

boarding schools and skate parks. Our promotional program is targeting, once again, men

and women ranging in ages from 10-25 years old that live in the local area of Stratton,

Vermont or are staying and/or vacationing at Stratton Resort. The types of local

advertisements we will be using will efficiently target our market. We will be using two

types of promotions to do so: personal and non-personal.

Non-personal promotion includes ways of attempting to attract customers to the

store without personal contact. In order to advertise effectively, “The Arsenal” will use a

variety of mediums to reach its market. Local advertisements will include the Internet,

newspapers, direct mailings, event sponsorships, radio advertisements, billboards,

posters, travel magazines, specialty magazines, and mass e-mailings.

The popularity and convenience of the internet makes it a logical choice to

advertise. Before the grand opening of “the Arsenal”, a store website will be created to

educate customers about our products, services, hours and other important information.

After the store is opened we will make available the option of online shopping to our

website. Online advertising will run on the Stratton Resort website, and local skate park

websites (if any). Also mass e-mailings will be sent to a large chunk of our target market:

boarding school attendees.

“The Arsenal” will advertise in Stratton’s local newspapers also, to help attract a

large number of customers.

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 Postcards will be sent weekly to hotel guests when they receive their newspapers

in the morning. These postcards will be informing them directly of the grand opening

date, exclusive brands, services and products that will be available. Non-hotel residents

will be mailed directly instead—this including boarding residents, nearby resorts, and

members of near by skate parks.

Event sponsorships will be one of our major mediums of advertising. Stratton

holds three major competitions a year: Cold War series, Vermont Free Skiing Open and

the US Open Snowboarding Championships. Huge publicity and advertising will be

achieved at these competitions where our target market will see our logo on sponsorship

signs, posters and event T-shirts. However, establishment on “The Arsenal” will be

needed if it we want to sponsor all Stratton Winter Events.

Another form of media advertisements we will be using to reach out, will be radio

commercials. In general, most of our market listens to the same kind of music: alternative

and rock music. Valuable promotions can be aired on their favorite music stations such in

major cities and the surrounding Stratton area.

Billboards will also be used to attract trafficking residents in and out form the

Stratton Resort. We will place four billboards along the major highways coming into the

Stratton resort to ensure maximum exposure. The first one will be placed on Route 30

leading into Stratton; another will be placed on 101 West from New Hampshire; the last

two will be advertised on 1-91 North from Connecticut and 1-91 West from Boston. The

billboard on Route 30 will be the most noticeable for drivers. Every direction on the

Stratton website ends up on Route 30 going into Stratton. Stratton’s remoteness makes

billboard advertising an advantageous medium. Billboards will become more noticeable

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after miles of indifferent scenic views. “The Arsenal” billboard’s message will be:

The Arsenal Board and Bike- Nothing like it

In addition, posters will be used to promote buzz on “The Arsenal” locally.

Within the Stratton Resort we will put posters up around the Hotel, condos, timeshares,

the sports center and slope areas. Outside the resort, posters will be put up in nearby

boarding schools, skate parks, and hotels for promotion.

Our last medium of promotion is magazines. We will publish ads in traveler’s

magazines for newcomers and Stratton residents to advertise its’ opening and distinction

from the competition. Ads will also be run in specialty magazines. Potential magazines

include Transworld, Snowboarder magazine, Skateboarder magazine, and BMX

magazine.

We plan to run these ads monthly for the first year in order to establish our brand

meaning our promotional program will be oriented around local types of advertisement.

Our promotional program will include Stratton.com Since “The Arsenal” is located

within the resort. We will advertise in weekly papers that will have more targeted

shoppers.

Planned Financing

Projected Income and Expenses

On the next few pages we will be explaining the projected income and expenses for the

Arsenal Board and Bike. On the first chart is a list of all the equipment and fixtures that

we will need to run the Arsenal to its maximum potential. That chart has an estimated

$250,000 for purchasing all the necessary fixtures and equipment. Following that chart is

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a list of start-up costs, operating expenses and personal expenses. The total of these three

categories is roughly $870,000, which is the amount of capital needed to start the

business. The next chart is a projected income statement for the first year of business at

the Arsenal. This chart gives you a month to month figure on cash flow and gives you an

estimated balance at the end of each month. We projected $242,000 in cash balance at

the end of the first year.

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Proposed Plan to Meet Capital Needs

In order to cover the financial burden of a new store, there needs to be a

substantial amount of capital. Our personal and internal sources consist of two owners,

Tyler Borrell, and Sammy Sarkis, contributing $250,000 out of each of our own savings

accounts. We will also have seven silent partners contributing either: $75,000, $65,000,

$50,000, $40,000, or $20,000. This brings the total capital to $880,000.

However, we do need to borrow some money to help cover mortgages on the new

building and land. We are going to purchase 2 acres of land in Southwest Vermont in

Stratton Mountain Resort. This land is priced around $10,000/ acre for a total of

$200,000. The arsenal will place a down payment of 50% for the land equaling

$100,000. The size of the building will total 7,000 sq. ft. The building totals $350,000

and other construction totals nearly $100,000 for landscaping and paving a small parking

lot. We will place a down payment of 50% for the parking lot equaling $50,000. The

rest of the loan will be paid back over a 15 year period with a 10.9% interest rate. The

building will be financed through a 30 year loan with an 8.9 % interest rate. All of the

loans are shown more clearly on the second chart.

The Arsenal has a considerable amount of long-term equity. Once the building is

constructed it will be worth a considerable amount of money. The 2 acres in the heart of

Stratton Resort will also be worth a good amount of money. As the business grows and

expands the profits will be higher and our overall equity will also increase.

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 Conclusion

To summarize, we will recap the three loans we are requesting. We are

requesting $100,000 for the building, $50,000 for the construction and $100,000 for the

land all at a 10.9% interest rate for 15 years.

We believe that the Arsenal will grow and prosper in the years to come if it's

given the chance to get off the ground. Snowboarding, skateboarding and biking are

becoming a few of the fastest growing sports among kids. Thousands of people visit

Stratton every year and a little over a thousand upper-class families own homes or condos

within Stratton Resort. The reason for the primary target market is all of the kids that

stay in the resort and all of the boarding school students that visit for snowboard and ski

competitions or daily practice. Skateboarding has been growing at rates of over 100%

over the last few years between kids ages 8-18. There is a great need for a quality board

shop on Stratton that offers more diverse selection of brands and carries bikes. Many

stores don't offer a good selection of brands, especially within Stratton.

In conclusion, we would like to thank you and your bank for the serious

consideration of this request for a loan. We have put a lot of thought and hard work into

this business plan there is no doubt in my mind that it will be a success. Southwest

Vermont has been anxiously anticipating the arrival of a shop like the Arsenal to

represent their sport. Although it is an abundance of money to ask for, I believe that the

previous information is evidence that the Arsenal will be a major success. We would like

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to thank you and your bank once again for taking time out of your busy schedule to meet

with us and hear our plan.

Bibliography

 Author Unknown. American Fact Finder, Stratton, VT.

Website: http://factfinder.census.gov

 Author Unknown. Stratton Mountain Resort.

Website: http://www.stratton.com/

 Earl C. Meyer, PH.D. & Kathleen R. Allen, PH.D. Entrepreneurship. Copyright

2000 by Glencoe/McGraw-Hill; New York, NY.

Appendix

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