Cashew Guest House: Business Plan: Executive Summary

Introduction

The long-term goal of Cashew Guest House is to become the best choice in Ashanti Region of Ghana, for temporary lodging by creating a differentiated experience capitalising on personal service, the historical nature of the Ashanti Region, and its unique location in one of the most attractive parts of Ghana in terms of tourism. We plan to create an environment of friendliness that will encourage our customers to always service and other forms of advertisement and through the Internet will allow us to maintain a higher than average occupancy rate and above average profits.

The Company

Cashew Guest House is a business idea and will be established as a Limited Liability Company under the Companies of Ghana. After inception Cashew Guest House will diverse into other ventures to ensure a steady flow of patrons (tourists and locals) through its doors.

The Guest House will be wholly owned by Mr. Baffour Arhin Sarpong. Mr. Sarpong will reside on the property, managing and maintaining the business and making sure that customers are satisfied.

Our Services

The Guest House has been an idea carefully thought out and planned for years now. The Ashanti Region is believed to be the cultural hub of Ghana and therefore attracts a lot of tourist in the course of the year. The Guest House shall be strategically located at the heart of Ashanti. When construction is completed, it will have the potential of 22 bedrooms in the short term.

Creating a “home away from home” which is often more beautiful by creating a customer led services will ensure many returned customers. The riches of Ashanti have always drawn a significant number of tourists into the Region. In addition to providing information about such locations, we plan to collaborate with tour agencies and businesses throughout the area by offering packages and special rates.

As the Guest House become established, we plan to expand our services by providing space for formal or informal gatherings (i.e. wedding receptions, office parties, Christmas parties, etc.)

The Market

Cashew Guest House (CGH) aims to start with the following: 10 normal size rooms, 8 double size rooms and 4 smaller size rooms with students size beds all on short term basis. Hotels/motels constitute the largest percentage of rental properties in the region.

A modest projection for increased unit rental is 30% per year to increase 50% after three years when the facility hits full capacity. This projection is without any significant increase in advertising or exposure, but is based on the general average increase in tourism.

Our two major customer segments are tourists from Europe and USA who traditionally prefer the cosy forest environment with traditional and cultural touch, and local patrons who need the facilities for various events. Subscriptions to various web services will provide international exposure to potential customers for nominal annual fees.

Financial Consideration

Cashew Guest House will be acquired at $200,000 - 650,000 USD via 20% equity and 80% grant and debt. We are assuming an initial capital start-up of $12,000 for operating expenses.

We estimate average monthly fixed costs to be at $6,770 ($3,486 for expenses and $3,283 for interest payments). Peak and off-season will have significant impact on the monthly earnings. For the first year, on-season revenues will offset off-season losses. As Cashew Guest House builds its market position among the local patrons, we anticipate that off-season revenues will be enough to break during that season.

Cashew Guest House

Business Plan

USD 200,000.00 Financing Required (Grant and Debt)

May 11, 2014

Baffour Arhin Sarpong

Managing Director

P.O.BOX SN 332

Santasi-Kumasi

Ghana

Email:bsapong14@yahoo.com

Phone No. 00233 (0) 24 3360432

00233 (0)249208776

Table of Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

1.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.0 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

4.2Market Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4.3 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

4.3.1 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

4.4 Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

4.5 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

5.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

5.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

6.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

7.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

7.2 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

7.3 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

7.4 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

1.0 Executive Summary

Introduction

The long-term goal of Cashew Guest House is to become the best choice in Ashanti Region of Ghana, for temporary lodging by creating a differentiated experience capitalizing on personal service, the historical nature of the Ashanti Region, and its unique location in one of the most attractive parts of Ghana in terms of tourism. We plan to create an environment of friendliness that will encourage our customers to always return, a home away from home. . Expanding our exposure through quality customer service and other forms of advertisement and through the Internet will allow us to maintain a higher than average occupancy rate and above average profits.

The Company

Cashew Guest House is a business idea and will be established as a limited liability Company under the Companies of Ghana. After inception Cashew Guest House will diverse into other ventures to ensure a steady flow of patrons (tourists and locals) through its doors.

The Guest House will be wholly owned by Mr. Baffour Arhin Sarpong. Mr. Sarpong will reside on the property, managing and maintaining the business and making sure that customers are satisfied.

Our Services

Creating a "home away from home" which is often more beautiful by creating a customer led services will ensure many returned customers. The riches of Ashanti have always drawn a significant number of tourists into the Region. In addition to providing information about such locations, we plan to collaborate with tour agencies and businesses throughout the area by offering packages and special rates.

As the Guest House become established, we plan to expand our services by providing space for formal or informal gatherings (i.e. wedding receptions, office parties, Christmas parties, etc.).

The Market

Cashew Guest House (CGH) aims to start with the following: 10 normal Size rooms, 8 double Size rooms and 4 smaller Size rooms with students size beds all on short term basis. Hotels/motels constitute the largest percentage of rental properties in the region.

Our two major customer segments are tourists from Europe and USA who traditionally prefer the cozy forest environment with traditional and cultural touch, and local patrons who need the facilities for various events. Subscriptions to various Web services will provide international exposure to potential customers for nominal annual fees.

Financial Consideration

Cashew Guest House will be acquired at $ 200,000 -650,000 USD via 20% equity and 80% grant and debt. We are assuming an initial capital startup of $12,000 for operating expenses.

1.1 Objectives

1. Open the Cashew Guest House as a "turn key operation" by May 2016.

2. Demonstrate a minimum of 65% occupancy averaged throughout year 2017.

3. Increase exposure and market using Internet technology and direct advertising to the whole country.

4. Through incentives and increased exposure on the Internet, we hope to increase offseason occupancy by 30% the first year.

5. Increase off-season use by divesting into other uses for property (cater parties, receptions, weddings, etc.).

1.2 Mission

The mission of Cashew Guest House is to become the best choice in temporary lodging by providing quality dedicated services to customers. We plan to be more than a great bed and breakfast. We plan to create an environment of friendliness that surpasses the standard.

Tourists will want to explore the riches of Ashanti Region such as the Manhyia Palace, Bonwire Kente, Obuasi Gold Mines etc, natural lake of Bosomtwi, the weekly funerals, and the 40 days “Akwasi day festivals”. Again the green forest with its species, the Garden City of Kumasi with is rich history of the Ashanti Kingdom, Queen Mother Yaa Asantwaa and her exploits, etc. In addition to providing information about such locations, we plan to collaborate with tour agencies and businesses throughout the region so that our guest shall have easy access to such places.

Amenities to be included in the Guest House are the following:

· A complimentary music CD for each room that the guest may keep (copy included in packet).

· An extensive video and audio library for guest use.

· CD stereo systems and VCRs in each room.

· A variety of local and continental dishes.

· Daily fresh-baked bread and other pastries with tea.

· Links to other businesses and services in the region.

· Information and direction to other tourism sites in the Region and Country at large

1.3 Keys to Success

In order to succeed, the management will strive to achieve the following goals:

· Position Cashew Guest House as the best and most attractive Guest House to Tourist in the Region.

· Build strong market position among the local patrons.

· Maintain sound financial management of the venture.

· Locate within a local community to encourage interaction with local community and active local patronage

2.0 Company Summary

Cashew Guest House is a business concept to be established as a Limited liability Company under the Companies code of Ghana. After constructions and a brief period of becoming established, the Guest House will diverse into other ventures to ensure a steady flow of patrons (tourists and locals) through its doors.

2.1 Company Ownership

The Cashew Guest House shall be wholly owned by Mr. Baffour Arhin Sarpong. As of this writing, the decision to incorporate has been made, awaiting the response on this business plan. Mr. Sarpong will reside on the property, managing and maintaining the business and satisfying customers’needs.

3.0Services

The Cashew Guest House shall be a Bed and Breakfast lodging facility located in one of the communities in the Ashanti Region, close to Kumasi the Regional Capital. The services shall be spiced with comfort, friendly environment interlinked with some luxury.

4.0 Market Analysis Summary

The Cashew Guest House will focus on, a friendly, yet affordable, lodging for vacationers interested in exploring the Ashanti Region with its tourism potential which is seen as a sleeping giant on the verge of awakening.

Our most important group of potential customers are those who traditionally choose the bed and breakfast climate to the more traditional and sterile surroundings of hotels / motels. By this Cashew Guest House hopes to create a "home away from home" which is often more beautiful and friendly than where they are traveling from. This is to ensure many return customers.

4.1 Market Segmentation

A modest projection for increased unit rental is 30% per year. This projection is without any significant increase in advertising or exposure, but is based on the general average increase in tourism.

Table: Market Analysis

Market Analysis
Potential Customers	Growth	2015	2016	2017	2018	2019	CAGR
Tourists	20%	5000	6000	7000	8000	9000	20.00%
Local Patrons	5%	1000	1050	1100	1150	1200	5.00%
Total		6000	7050	8100	9150	10200

Market Analysis (Pie)

Tourists

Local Patrons

4.2 Market Analysis

Our two major customer segments are tourists from the Europe and the USA who traditionally prefer the cozy environment of the Ashanti Region, and local patrons who need the facilities for various events. The chart above outlines the total market potential for our business.

4.3 Target Market Segment Strategy

The History of the Ashanti Region as a commercial centre of Ghana demonstrate that money can be made in this area simply by existence of such a facility as the proposed guest house. We continue to see that the Region, in general, as under-exposed as a vacation destination. We plan to aggressively pursue guests from both within and outside in order to utilize this under-tapped market population. We also plan to use Cashew Guest House for local patrons by opening it for catered parties, receptions, etc.

Subscriptions to various Web services will provide international exposure for nominal annual fees. Committing to staying in the building to book reservations and openings, the Cashew Guest House will encourage diverse groups to patronize.

4.3.1 Market Needs

Similar to tourists who choose to stay in traditional hotels, customers who come to Cashew Guest House will seek relaxation, fun and stress management while on vacation. However, this type of customer also prefers comfortable accommodations in a cozy, family environment. These patrons are more social, they love meeting new people while at the same time require enough privacy to enjoy their vacation. Cashew Guest House will have all the necessary facilities to attract such customers.

4.4 Service Business Analysis

Cashew Guest House along with other short-term lodging on in the region hopes to become a key player in tourism development in the region.

Hotels generally constitute the largest percentage of rental properties in the region in terms of units. However, the average Cashew Guest House customer is not typically interested in the hotel/motel climate. That, and the comparison of rates, which are substantially higher in the hotel/motel industry, shall give Cashew Guest House the competitive edge.

4.5 Competition and Buying Patterns

The bed and breakfast industry offers a unique lodging environment, which caters to an ever-increasing group of travelers, tourist and people seeking comfort from home. We shall create a climate of home, where guests become temporary members of a larger family. The Cashew Guest House shall open itself to guests, allowing them to participate and share in the richness of a community, while still allowing whatever degree of privacy is preferred.

A variety of settings available in Cashew Guest House shall be situated to enable individuals or small groups to locate the perfect setting for whatever mood or activity one is pursuing (reading, watching television, playing board games, etc.). In the Cashew Guest House a guest is a guest in one's home, not a customer. It becomes a place to return to: at the end of a day, or during the next vacation (like going home).

At the Cashew Guest House, guests will have the right mix of membership and privacy. Being

dutiful without being intrusive is a delicate balance and one that owners will seek to maintain at the facility at all times.

5.0 Strategy and Implementation Summary

We are committed to creating the best on services for our patrons. As a furnished (turn key) operation, we will be able to invest more time and money into the finer things that goes into the running of a Guest House (the extra amenities that go above and beyond those associated with the other guest houses). In most facilities, parking is a problem. Cashew Guest House shall provide enough parking space for its patrons at all times.

With the right exposure, we believe that an un-tapped market of vacationers can be enticed to the Ashanti Region and the Cashew Guest House. A web site shall be created for the Guest House, as well it shall be registered on international links to attract tourist into the region and the facility. Again facilities and properties owned by both the Company and patrons shall be insured to boost customer confidence in the Cashew Guest House.

5.1 Competitive Edge

We start with a critical competitive edge: there is no competitor we know of that can offer the convenience and friendly environment combined with luxury that one will expect to find at the Cashew Guest House. Our managers have travel experience both locally and internationally, and will seek to make a difference based on good experiences from elsewhere.

5.2 Sales Strategy

Cashew Guest House will sell its rooms directly to repeated customers, as well as via traditional travel agents and through the Internet. All reservations will be handled by Mr. Baffour Arhin Sarpong. Repeat customers will have the privilege of priority reservations during the high season. As mentioned above, the owners will list Cashew Guest House on international links such as www.worldres.com, which will make it available to potential international tourists.

5.2.1 Sales Forecast

Our sales forecast is based on the historical industry trend of temporal accommodation facilities in the Ashanti Region of Ghana, and the following rates and occupancy assumptions:

	Off-season (May-Aug)	On season (Sept.- April)
Occupancy Rate	45%	85%
Normal Size Rooms erooms	$1500	$1200
Large Size Units	$1200	$1500
Smaller Size Unit	$900	$1200

Sales Monthly (Planned)

$18,000

$16,000

$14,000

$12,000

$10,000

$8,000

$6,000

$4,000

$2,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Normal Size Large Size Smaller Unit

Table: Sales Forecast (Planned)

Sales Forecast
Sales	2015	2016	2017
Normal Size	$40,320	$42,336	$44,453
Large Size	$34,324	$36,040	$37,842
Smaller Unit	$27,140	$28,496	$29,921
Others Unit	$22,934	$24,081	$25,285
Total Sales	$124,718	$130,953	$137,501
Direct Cost of Sales	2013	2014	2015
Apartment	$0	$0	$0
Normal Size	$0	$0	$0
Large Size	$0	$0	$0
Smaller Unit	$0	$0	$0
Subtotal Direct Cost of Sales	$0	$0	$0

6.0 Management Summary

The Cashew Guest House will operate as an owner-occupied business. Salary for the first year of operation will be $12,000, as indicated on the expense table. This salary, though low, is reasonable considering that major living expenses (rent, utilities, etc.) will be covered by the business.

6.1 Personnel Plan

As mentioned above, Mr. Baffour Arhin Sarpong will reside on the property while performing necessary day-to-day management tasks. Mr. Sarpong shall reside there with his wife as well as two other employees. The table below outlines projected personnel plan for Cashew Guest House.

Table: Personnel (Planned)

Personnel Plan
	2015	2016	2017
Mr. Arhin Sarpong	$12,000	$15,000	$18,000
1^st & 2^nd Assistants	$8,000	$10,000	$12,000
Total Payroll	$20,000	$25,000	$30,000
Total People	3	3	3

7.0 Financial Plan

Cashew Guest House will be acquired at $200,000 - 650,000 USD via equity debt and grant. Equity share is estimated at 20%. We are assuming an initial capital start-up of $12,000 for operating expenses.

7.1 Break-even Analysis

Break-even Analysis

$6,000
$4,000
$2,000
$0
($2,000)
($4,000)
($6,000)

($8,000)

$0 $2,000 $4,000 $6,000 $8,000 $10,000

Monthly break-even point

Break-even point = where line intersects with 0

Table: Break-even Analysis

Break-even Analysis:

Monthly Units Break-even 6,838

Monthly Sales Break-even $6,838

Assumptions:

Average Per-Unit Revenue $1.00

Average Per-Unit Variable Cost $0.01

Estimated Monthly Fixed Cost $6,770

7.2 Projected Profit and Loss

Below is the Cashew Guest House’s projected income statement for the next three years. As mentioned above, earnings are subject to seasonal fluctuations. The management will, however, strengthen Cashew Guest House’s market position among the local community who will patronize the establishment during the low season, and thus offset the negative impact of the season.

Table: Profit and Loss (Planned)

Pro Forma Profit and Loss
	2015	2016	2017
Sale		$124,718 $130,953	$137,501
Direct Cost of Sales	$0	$0	$0
Other	$0	$0	$0
Total Cost of Sales	$0	$0	$0
Gross Margin	$124,718	$130,953	$137,501
Gross Margin %	100.00%	100.00%	100.00%
Operating Expenses:
Advertising/Promotion	$2,000	$3,000	$3,150
Travel	$0	$0	$0
Miscellaneous	$600	$700	$735
Payroll Expense	$15,000	$35,000	$40,000
Payroll Burden	$2,250	$5,250	$6,000
Depreciation	$4,440	$4,500	$473
Depreciation	$2,580	$2,600	$210
Depreciation	$2,400	$2,500	$10,500
Depreciation	$420	$450	$368
Duties & Subscriptions	$175	$200	$2,100
Depreciation	$9,996	$10,000	$10,000
Room/Housecleaning	$300	$350	$2,730
Groceries	$1,500	$2,000	$2,625
License	$175	$200	$210
Total Operating Expenses	$41,836	$66,750	$79,100
Profit Before Interest and Taxes	$82,882	$64,203	$58,401
Interest Expense Short-term	$0	$0	$0
Interest Expense Long-term	$52,500	$51,750	$50,150
Taxes Incurred	$7,595	$3,113	$2,063
Extraordinary Items	$0	$0	$0
Net Profit	$22,786	$9,340	$6,188
Net Profit/Sales	18.27%	7.13%	4.50%

7.3 Projected Cash Flow

The table below outlines the projected cash flow and shows that the company will have enough cash reserves to cover the off-season's low sales. These projections are realistic in terms of the historical market of temporal residence facilities in the Ashanti Region of Ghana as a whole based on current pricing.

Cash (Planned)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Net Cash Flow Cash Balance

$600,000
$400,000
$200,000
$0
($200,000)
($400,000)
($600,000)

Cashew Guest House
Table: Cash Flow (Planned)
Pro Forma Cash Flow	2015	2016	2017
Cash Received
Cash from Operations:
Cash Sales	$31,179	$32,738	$34,375
From Receivables	$91,109	$97,894	$102,788
Subtotal Cash from Operations	$122,288	$130,632	$137,164
Additional Cash Received
Extraordinary Items	$0	$0	$0
Sales Tax, VAT, HST/GST Received	$0	$0	$0
New Current Borrowing	$0	$0	$0
New Other Liabilities (interest-free)	$0	$0	$0
New Long-term Liabilities	$525,000	$0	$0
Sales of other Short-term Assets	$0	$0	$0
Sales of Long-term Assets	$0	$0	$0
New Investment Received	$0	$0	$0
Subtotal Cash Received	$647,288	$130,632	$137,164
Expenditures	2013	2014	2015
Expenditures from Operations:
Cash Spent on Costs and Expenses	$8,024	$7,686	$8,484
Wages, Salaries, Payroll Taxes, etc.	$17,250	$40,250	$46,000
Payment of Accounts Payable	$87,653	$69,369	$75,903
Subtotal Spent on Operations	$112,927	$117,305	$130,387
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$0	$0	$0
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$0	$15,000	$17,000
Purchase Other Short-term Assets	$0	$0	$0
Purchase Long-term Assets	$500,000	$0	$0
Dividends	$0	$0	$0
Adjustment for Assets Purchased on Credit	$0	$0	$0
Subtotal Cash Spent	$612,927	$132,305	$147,387
Net Cash Flow	$34,361	($1,674)	($10,223)
Cash Balance	$46,361	$44,687	$34,464

7.4 Balance Sheet

The table below outlines the projected balance sheet of Cashew Guest House for Fiscal Year 2015-2017.

Table: Balance Sheet (Planned)

Pro Forma Balance Sheet Assets
Short-term Assets	2015	2016	2017
Cash	$46,361	$44,687	$34,464
Accounts Receivable	$6,429	$6,751	$7,088
Other Short-term Assets	$1,000	$1,000	$1,000
Total Short-term Assets	$53,790	$52,438	$42,553
Long-term Assets
Long-term Assets	$700,000	$700,000	$700,000
Accumulated Depreciation	$34,440	$38,940	$39,413
Total Long-term Assets	$665,560	$661,060	$660,588
Total Assets	$719,350	$713,498	$703,140
Liabilities and Capital
	2015	2016	2017
Accounts Payable	$4,564	$4,372	$4,826
Current Borrowing	$0	$0	$0
Other Short-term Liabilities	$0	$0	$0
Subtotal Short-term Liabilities	$4,564	$4,372	$4,826
Long-term Liabilities	$525,000	$510,000	$493,000
Total Liabilities	$529,564	$514,372	$497,826
Paid-in Capital	$50,000	$50,000	$50,000
Retained Earnings	$117,000	$139,786	$149,126
Earnings	$22,786	$9,340	$6,188
Total Capital	$189,786	$199,126	$205,314
Total Liabilities and Capital	$719,350	$713,498	$703,140
Net Worth	$189,786	$199,126	$205,314