Villa Secrets Cape Town Rentals – 3 Year Business Plan

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By Nick Ray Ball 11th October 2016

Introduction video (8 Minutes)
Year 1 video (10 Minutes)
Year 2 video (7.5 Minutes)
Year 3 video (6 Minutes)
Mandates Video (14 Minutes)

The following three-year business plan is created from 3 spreadsheets which present a forecast. This forecast is a version of the business plan that can be reassessed month on month, and will in time be created as part of the TFBMS business and marketing software.

Month by Month Strengths & Weaknesses can be identified and addressed, spending decisions can be adapted according to income generated and the procurement of villa rental mandates.

Index

• Villa Secrets Cape Town Rentals – Introduction
• Year 1. ‘2017’ Business Plan and Financial Forecast
• Year 2. ‘2018’ Business Plan and Financial Forecast
• Year 3. ‘2019’ Business Plan and Financial Forecast
• Magic Mandates Introduction and due diligence

Download Spreadsheets: 2017 | 2018 | 2019 + Magic Mandates

Villa Secrets Cape Town Rentals – Introduction

This is the 3rd version of this plan, version 2 is presented in the following link CTLV 2017 to 2020. In Version 2 we use ‘Very Safe Forecasting,’ in which every profit centre is set at a low figure or percentage. For example, in March 2014 we launched the second Cape Town Luxury Villas.com website prototype (the first being wwww.Capevillas.com in 2002). Cape Town Luxury Villas.com (CTLV) team made ZAR1,400,000 in gross profit, but for the sake of caution we have lowered this figure to ZAR1,000,000.

The latest update (V3) is still safe, however there is a considerable variable that has uncertainty, in that we hope to recruit 19 property mandates by the end of year 3. Please note that alternate spreadsheets (See ‘no mandates’ tabs) are created without any mandates and still generate at far better than average return.

In general, we suggest that while the forecasts made are certainly achievable and become the businesses target, due to the uncertain nature of business, for a worst case scenario one should half the gross and shareholder profit. To this figure we are willing to put our money where our mouth is… ZAR 3,000,000 out of the ZAR 5,000,000 investment for this venture is only paid on reaching the following gross profit targets: Year 1 (ZAR 2,750,000), Year 2 (ZAR 9,300,000) & Year 3 (ZAR 18,750,000).

Year 1. ‘2017’ Business Plan and Financial Forecast

Year 1 Video (10 Minutes)

Year one is a year of building for the future, websites, software, stock and mandates. In 2015, on a shoe string budget www.Cape-Town-Luxury-Villas.com made ZAR 1,400,000 in gross profit, which created ZAR 1,00,000 in shareholder profit. In 2017 we are manning 2 more websites, and so, if the trio of websites were also run of a shoe string budget, the 3 websites should create ZAR 3,000,000 in shareholder profit. However, as we are reinvesting most profit into building for the future we expect to make the following…

In Year 1 we forecast a gross profit of ZAR 5,500,000, with costs of ZAR 3,800,000 and Shareholder profit of ZAR 1,300,000.
Which is in turn shared 75/25 between the investor who nets ZAR1,000,000 and two key staff/directors who share R300,000

Note that for an inventor who was not actively involved in the business on a day to day basis, the share on profit to key staff increases to 100% in year 1 and 50% thereafter.

Note; All our workings are created in gross profit. We create turnover by a simple calculation where turnover is 85% and gross profit (commissions) are 15%.

In year 1, income is divided into two categories…

• Web Agency Income in 3 parts
  • Cape-Town-Luxury-Villas.com ZAR 1,375,000
  • CapeTown.VillaSecrets.com ZAR 1,400,000
  • VillasInCampsBay.com ZAR 1,100,000
• Income derived from Rental Mandates
  • Exclusive Mandate Direct ZAR 900,000
  • Exclusive Mandate Residual ZAR 860,000
    
    (This is bookings made from enquiries for a mandated villa, that end up making bookings for other villas. Note in years 2 & 3 this income stream is larger than the income made from direct bookings for the mandated villa)
  • HomeAway Subscriptions ZAR 90,000
  • Other Subscriptions ZAR 100,000

Expenses are broken into 7 categories

• General Expenses ZAR 200,000
• Staff & Office ZAR 1,400,000
• Cape-Town-Luxury-Villas.com marketing ZAR 340,000
• CapeTown.VillaSecrets.com marketing ZAR 340,000
• VillasInCampsBay.com marketing ZAR 340,000
• Mandate Google Ads and Remarketing ZAR 200,000
• Mandate Web Development and Marketing ZAR 1,375,000
  
  Note that this expense is the licence/service fee of 25% of gross profit.

  An alternate version of these results that adapts the forecast to zero mandates is found on the tab ‘1st Year 2017 – No Mandates’ in this scenario shareholder profit is reduced from ZAR 1,300,000 to ZAR 650,000.

  The forecast we apply to mandates is

• 2017 – 5 Mandates at average day rate of ZAR12,000 per night
• 2018 – 11 Mandates at average day rate of ZAR14,000 per night
• 2019 – 19 Mandates at average day rate of ZAR18,000 per night

Further note the other additional tabs…

• ‘VS-CTR 1st Year 2017 Complex’ – Offers a more in depth forecast, with every effect of the TFBMS (Total Financial, Business & Marketing Systems) itemized month by month.
• ‘1st Year 2017 – No Mandates’ – Offers a forecast that has no mandates
• ‘Villa Mandate’ – The calculations for how much income mandates will generate.
• ‘Mandate Costs + #Villas 4 Rent’ – The number of villas mandated and how much of the licence fee is spent on development and marketing.
• ‘Villas Sold Referral Com’ – Referral income from property sales (not applicable in first year)

Year 2. ‘2018’ Business Plan and Financial Forecast

Year 2 video (7.5 Minutes)

In Year 2 we forecast a gross profit of ZAR 18,600,000, with costs of ZAR 13,700,000 and Shareholder profit of ZAR 4,900,000
Which is in turn shared 75/25 between the investor who nets ZAR 3,700,000 and two key staff/directors who share ZAR 1,200,000

Note that the large increase in all profit centres, is in part due to the reinvestment in year 1.

However also note that in year two 32% of income is generated from 11 mandated villas. The actual number of villas may be more or less.

Due to this uncertainty and in general the law of ‘S*** happens’ we half the GP in this forecast to ZAR 9,300,000. This becomes the ‘worst case’ forecast. We are so confident that we will achieve a result higher than the worst case scenario, that we will lose our 2nd year investment payment if we make less than the ZAR 9,300,000.

In year 2, income is divided into three categories…

• Web Agency Income in 3 parts
  • Cape-Town-Luxury-Villas.com ZAR 1,870,000
  • CapeTown.VillaSecrets.com ZAR 3,050,000
  • VillasInCampsBay.com ZAR 1,870,000
• Income derived from Rental Mandates
  • Exclusive Mandate Direct ZAR 3,600,000
  • Exclusive Mandate Residual ZAR 3,700,000
  • HomeAway Subscriptions ZAR 320,000
  • Other Subscriptions ZAR 370,000
• Other Income
  • Local Franchises ZAR 600,000
  • Income from 25% of GP ZAR 2,400,000
  • Sales Referrals ZAR 800,000

Expenses are broken into 7 categories

• General Expenses ZAR 800,000
• Staff & Office ZAR 4,850,000
• Cape-Town-Luxury-Villas.com marketing ZAR 540,000
• CapeTown.VillaSecrets.com marketing ZAR 640,000
• VillasInCampsBay.com marketing ZAR 540,000
• Mandate Google Ads and Remarketing ZAR 1,760,000
• 25% of Gross Profit spent on
  • Mandate Expenses ZAR 2,270,000
  • Total of other costs ZAR 2,800,000
    
    (Guest Gifts, Print Media, Video & TV, Web Development, Villa Secrets Operations, Content Marketing & SEO, Software Development)

An alternate version of these results that adapts the forecast to Zero mandates is found on the tab ‘2nd Year 2018 – No Mandates.’ In this scenario shareholder profit is reduced from ZAR 4,900,000 to ZAR 3,000,000.

Year 3. ‘2019’ Business Plan and Financial Forecast

Year 3 video (6 Minutes)

In Year 3 we forecast a gross profit of ZAR 37,500,000, with costs of ZAR 24,700,000 and Shareholder profit of ZAR 12,800,000
Which is in turn shared 75/25 between the investor who nets ZAR 9,600,000 and two key staff/directors who share ZAR 3,200,000

As before, the projected figures are far greater than any travel company could expect. However, we are not a travel company we are a technology company, that works with travel companies, the increases shown are in line with successful technology companies. Given we recruit the mandates, and create the software & systems on time, every Rand is justified, largely due to the TFBMS (Total Financial, Business & Marketing System)

This said, to account for unknown factors and mandate targets not being achieved, and to create a ‘QSF’ (Quantum Safe Forecast) we need to half the estimate for a ‘worst case’ scenario, which generates ZAR6,400,000 in shareholder profit, &/or ZAR 18,750,000 in gross profit, which is still an impressive result for any investor.

We are confident that we will reach this gross profit target and we put our money where our mouth is. If we don’t make ZAR 18,750,000 we forfeit the Year 3 instalment of the initial investment.

Note on mandate marketing… In 2019 we intend to spend a great deal more money on adverting each of the 19 villa rental mandates than we spent on all CapeTownLuxuryVillas.com advertising in 2015. The front page of Google for most searches will mostly be a collection of our individual villas and agency websites.

In year 3, income is divided into three categories…

• Web Agency Income in 3 parts
  • Cape-Town-Luxury-Villas.com ZAR 2,270,000
  • CapeTown.VillaSecrets.com ZAR 3,500,000
  • VillasInCampsBay.com ZAR 2,270,000
• Income derived from Rental Mandates
  • Exclusive Mandate Direct ZAR 8,680,000
  • Exclusive Mandate Residual ZAR 12,600,000
  • HomeAway Subscriptions ZAR 590,000
  • Other Subscriptions ZAR 690,000
• Other Income
  • Local Franchises ZAR 1,200,000
  • Income from 25% of GP ZAR 3,900,000
  • Sales Referrals ZAR 1,850,000

Expenses are broken into 7 categories

• 1. General Expenses ZAR 1,600,000
• 2. Staff & Office ZAR 8,000,000
• 3. Cape-Town-Luxury-Villas.com marketing ZAR 675,000
• 4. CapeTown.VillaSecrets.com marketing ZAR 675,000
• 5. VillasInCampsBay.com marketing ZAR 675,000
• 6. Mandate Google Ads and Remarketing ZAR 3,750,000
• 7. 25% of Gross Profit spent on
  • Mandate Expenses ZAR 3,100,000
  • Total of other costs ZAR 5,250,000
    
    (Guest Gifts, Print Media, Video & TV, Web Development, Villa Secrets Operations, Content Marketing & SEO, Software Development)

Magic Mandates Introduction and due diligence

Mandates Video (14 Minutes)

Magic Mandates, and our ZAR 1,000,000 marketing budget commitment are presented in great detail. Follow this link for the Magic Mandates Index Page.

To see the previous edition (V1.03) of this business plan please follow the links
> Executive Summary
> 4 Year Bunnies Plan & Financial Road Map
> The Basis if the Agreement