E3 Playhouse (E3) was created to offer entertainment, education, as well as a restaurant 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 currently in a start up position with a July 2004 beginning date. This business plan is used to forecast cash flow and profit, estimate ongoing and start-up costs, and identify revenue streams. The company will lease the venue space in June 2004. It will then have to build out the space for three months. Our doors will open to the public in midSeptember. The company is currently on a July-June fiscal year.
Michael Horne is the CEO of the company. 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. 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. These venues offer guests not only a place to mix and mingle but also an opportunity to engage in interactive contests, theme night, and other entertainment. 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 6,600-square-foot complex will also house the corporate business office. The dance club and bar will accommodate 200-400 people. Santa Cruz will have a venue that is equipped with the most modern audio, lighting, video, and audio systems. The venue’s appearance will be pleasing to the customers and will be open and clean. The demographics are favorable and there is little competition from other venues or bars that offer dance-themed entertainment.
E3 will generate revenue through seven revenue streams, which include the company’s products and services.
-
Membership Fees
-
Courses
-
Food and Beverage
-
Gate/Entertainment
-
Retail Merchandise
-
Arcade
-
Venue Rental
Each of seven revenue streams is complex and requires individual management. 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.
This business plan is used to forecast and forecast cash flow and profits, as well as estimate ongoing and start-up costs. Wes Anthony provided $190,260 of paid-in capital for the initial start-up and operation capital.
The total investment made by the owner amounts to $190,260. We expect a July 2004 launch date. Then, it will take several months to build out the appropriate leased space. A grand opening is scheduled 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.
Due to start-up costs, our total net profit for the first year is approximately negative ($161,000). The second-year forecast projects a positive net profit of $122,400. This will increase to $129,800 in the third year. Our net cashflow for the first 12 months is $22,000. This figure will rise to $93,000 by year two and $81,700 by year three. The cash balance in our first year will be $23,000. It will rise to $117,000 the second year and $198,000 the 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 risk of opening a restaurant that is entertainment-based is well known to the owner. If the venture fails, the owner’s paid-in capital and expenses may not be recovered. The owner will look into bringing in investment partners if the venture has low capital and needs more work capital. 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.
E3 Playhouse’s purpose is to provide Santa Cruz County residents and others with entertainment in a fun, friendly atmosphere. You will have the opportunity to interact with other people through games, dancing, educational classes, and social events. It will feature live dance music, such as Swing, R&B, Salsa, and Americana. A casual dining atmosphere, high quality food, and outstanding service will guarantee a loyal customer base. The restaurant will offer a beer and wine shop, as well live entertainment and an arcade.
Success Keys 1.2
Three keys are key to success at the E3 Playhouse venue
- Location The E3 Playhouse will strategically be located in order to maximize the income derived from live entertainment consumers. The showcase will be in downtown Santa Cruz. This is a great location for entertainment, community education and a restaurant with live band.
- Low Operational CostE3 Playhouse is managed with the goal of maximizing net profits. For initial construction and build out, E3 Playhouse management will keep construction costs at a minimum. The venue will have its own space in a leased facility. All operating expenses will be kept to a minimum, with cost of sales and margins reviewed on a monthly basis. A 40% reduction in sales costs is expected.
- Wide Variety of ServicesE3Playhouse offers entertainment, community education, a full restaurant/nightclub and a venue rental service. The aim is to increase revenue per visitor as well as extend the time that each visitor spends at the venue.
1.3 Objectives
This business plan is designed to help you estimate your startup and ongoing expenses, identify revenue streams, forecast cash flow and profit. The owner will fund the venture with his or her paid-in capital.
E3 Playhouse was created to be a downtown entertainment, education and restaurant venue. 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. These are the objectives:
- The venue will be remodeled and launched in a month. It costs $40,000 to start up and $150,000 to infuse capital the first month. After three months of leasing the space, the venue will be open. Leasing is expected to begin June 2004.
- Reach the sales goals of $427,757 for the first year and $1,222,164 for second. Targeted annual growth for the third consecutive year is conservatively 7%
- You should maintain a 40% gross margin.
