ECONOMICS PROJECT

BUSINESS PLAN
SILVER BEAR LODGE

BY VAIBHAVA AGARWAL

THIS IS A BUSINESS PLAN ON THE TOPIC SILVER BEAR LOUGE

1.0 Executive Summary
The Silver Bear Lodge is located three blocks from Crest Lake
Village, mid-mountain at Bear Valley Resort and on the free shuttle
system. Located in the recently expanded Crest Canyon area, Silver
Bear Lodge will offer customers 12 two-bedroom units with
underground parking, fully-equipped kitchens, laundry facilities and
stone fireplaces. Silver Bear Lodge also will offer a common-area
outdoor hot tub as well as a on-site store and on-site front desk
service.
Each year, over 150,000 skiers and nature lovers visit the Bear
Valley Resort area. On average, visitors spend over $250 million,
annually, for lodging, food, and recreational activities at Bear Valley
Resort.  
Marty Snyderman and Luke Roth, co-owners of the Silver Bear
Lodge, will operate the lodge as a ski resort during the months of
November to April.  During the Spring and Summer months (May to
August), the Silver Bear Lodge will operate as a summer resort.
 Highlights

$1,100,000

$1,000,000

$900,000

$800,000

$700,000 Sales

$600,000 Gross Margin

$500,000
Net Profit
$400,000

$300,000

$200,000

$100,000

$0
Year 1 Year 2 Year 3

Chart: Highlights

1.1 Objectives
The objectives of the Silver Bear Lodge for the first three years of
operation include:
 Exceeding customer's expectations for luxury apres ski
accommodations.
 Maintaining an 90% occupancy rate during the peak periods.
 Assembling an experienced and effective staff.

The mission of Silver Bear Lodge is to become the number one lodge
of choice with visitors to Bear Valley Resort.
2.0 Company Summary
The Silver Bear Lodge, located in the recently opened Crest Canyon
area, has 12 two-bedroom units with underground parking, fully-
equipped kitchens, laundry facilities and stone fireplaces. Silver Bear
Lodge also has a common-area outdoor hot tub as well as an on-
site store and on-site front desk service.
2.1 Company Ownership
Marty Snyderman and Luke Roth are co-owners of the Silver Bear
Lodge.
2.2 Start-up Summary
Marty Snyderman and Luke Roth will each invest $100,000.  They
will also secure a mortgage to purchase the property for $250,000
and an SBA loan for $100,000
 Start-up

$400,000

$360,000

$320,000

$280,000

$240,000

$200,000

$160,000

$120,000

$80,000

$40,000

$0
Expenses Assets Investment Loans
Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $185,400
Start-up Assets to Fund $364,600
Total Funding Required $550,000

Assets
Non-cash Assets from Start-up $350,000
Cash Requirements from Start-up $14,600
Additional Cash Raised $0
Cash Balance on Starting Date $14,600
Total Assets $364,600

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $350,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $350,000

Capital

Planned Investment
Marty Snyderman $100,000
Luke Roth $100,000

Additional Investment Requirement $0

Total Planned Investment $200,000
 Loss at Start-up (Start-up Expenses) ($185,400)
Total Capital $14,600

Total Capital and Liabilities $364,600

Total Funding $550,000

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $5,000
Stationery etc. $400
Brochures $6,000
Rental Shop Setup $50,000
Property Down payment $50,000
Lodge Setup $20,000
Store Setup $50,000
Insurance $4,000
Total Start-up Expenses $185,400
 Start-up Assets
Cash Required $14,600
Other Current Assets $0
Long-term Assets $350,000
Total Assets $364,600
Total Requirements $550,000

2.3 Company Locations and Facilities

The charm and solitude of Bear Valley's secluded mountain setting is found just 36 miles
from the Richmond International Airport.

3.0 Products

Silver Bear Lodge will offer customers 12 two-bedroom units, fully-equipped

kitchens, laundry facilities and stone fireplaces. Silver Bear Lodge will offer a common-
area outdoor hot tub as well as the following services on-site:

 Food store
 Ski rental/clothing shop
 Front desk service

4.0 Market Analysis Summary

Resort hotel development and operation in the Bear Valley Resort area has been very
profitable and successful due to the economic upturn experienced in the early and mid
 90's. Time-share / resort hotel development and investments into ski resorts nationwide
are currently going strong. In the past two years, sales of time-shares in the Bear Valley
Resort area have increased by over 35 percent. There are forty condominiums, lodges,
inns and hotels within two miles of the resort. Each year, room occupancy is close to
100% during the peak skiing season. New construction is planned in the spring for two
condo complexes and a hotel.

4.1 Market Segmentation

Our customers can be broadly divided into two groups:

 Skiers. The Bear Valley Resort area is quickly becoming one of the best ski resorts in
the U.S. The resort is located 36 miles from Richmond International Airport and is
easily accessible.

 Summer Visitors. During the summer months, the Bear Valley Resort area is a
beautiful wilderness retreat with over 50 hiking trails and other outdoor recreational
activities.
Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Growth CAGR
Customers
Skiers 15% 90,000 103,500 119,025 136,879 157,411 15.00%
Summer visitors 15% 60,000 69,000 79,350 91,253 104,941 15.00%
total 15.00% 150,000 172,500 198,375 228,132 262,352 15.00%
 Chart: Market Analysis (Pie)

Market Analysis (Pie)

Skiers

Summer Visitors

5.0 Strategy and Implementation Summary

Silver Bear Lodge will aggressively market to both winter and summer visitors of the
Bear Valley Resort area.  The Bear Valley Resort has activities occuringyear round. 
During the winter there is skiing but in the summer months, the resort has hot-air
balloon trips, white water adventures, day hikes into Bear Valley, and other recreational
activities that take advantage of valley's spectacular beauty.

There are only thirteen lodges and inns in the Bear Valley Resort.  These facilities
represent only 580 room units of the total of 4,000 room units in the resort area. The
majority of room units in the area are condos.

Our customers are looking for a different lodging experience that cannot be found in any
of the area's condo complexes or hotels.  We will offer our customers a comfortable,
congenial environment that will assure return visits to the Silver Bear Lodge.
 The lodge will cost a little more but we will offer our customers all the services they
need to make their stay memorable. We will offer a food shop that will be able to take
special orders daily.  There will be a ski rental shop where customers can outfit
themselves and purchase ski passes.  Each evening, guests can gather in the lodge's
main room where there is a large fireplace, drinks and light music.

5.1 Competitive Edge

The competitive edge of Silver Bear Lodge is the service, first and foremost.  Marty
Snyderman and Luke Roth, co-owners of the Silver Bear Lodge, have over twenty years
experience in managing ski lodging facilities.

Marty is the manager-owner of the Crest Lake Inn.  He has owned the inn for ten years.

Luke recently was the manager of the Village Resort Hotel. He held that position for the
last five years.  Before this position, Luke was the manager of The Ridge, a 60 unit
condo complex in Silver Lake Village.

Another significant advantage for the Silver Bear Lodge is its location.  Being located in
the recently opened Crest Canyon area, Silver Bear Lodge is uniquely positioned to be
centrally located to both Crest Lake Village (.5 miles) and the Bear Valley Resort ski area
(.5 miles).

5.2 Sales Strategy

The Silver Bear Lodge's sales strategy is to harness the existing Bear Valley Resort booking
system that has been critical to the success of all of the area's lodges and inns.   Room
rates for the lodge will range from $150  - $250 per night in peak season.  In the off
season prices will range from $100 to $175 per night
5.2.1 Sales Forecast

The following is the sales forecast for three years.

Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
Rooms $430,000 $560,000 $600,000
Food $121,000 $140,000 $180,000
Ski Rentals $132,000 $145,000 $160,000
Clothing $58,000 $70,000 $82,000
Total Sales $741,000 $915,000 $1,022,000

Direct Cost of Sales Year 1 Year 2 Year 3

Rooms $0 $0 $0
Food $59,500 $71,000 $90,000
Ski Rentals $0 $0 $0
Clothing $23,700 $30,000 $38,000
Subtotal Direct Cost of Sales $83,200 $101,000 $128,000
Chart: Sales Monthly

Sales Monthly

$120,000

$100,000

Rooms
$80,000
Food
$60,000 Ski Rentals

Clothing
$40,000

$20,000

$0
Month 1 Month 3 Month 5 Month 7 Month 9 Month 11
Month 2 Month 4 Month 6 Month 8 Month 10 Month 12
5.3 Marketing Strategy
The Bear Valley Resort area has its own website and
advertising/promotion program that promotes the area's
lodging. Currently, 70% of the area's visitors use the website to
identify lodging and service options.
The Silver Bear Lodge is positioned as a new upscale facility that is
focused on the high-income visitors to Bear Valley Resort.  The
area's lodges and inns receive approximately 80% of their guests
from the Bear Valley Resort booking system. Since the total number
of room units are few with the area's lodges and inns, these lodging
units fill up quickly.
In addition, the Silver Bear Lodge will be highlighted in a
promotional piece for Bear Valley Resort in the December issue of
Ski Magazine.

6.0 Management Summary

Luke Roth will be the manager of the daily operations of the Silver
Bear Lodge.
6.1 Personnel Plan
 The personnel needed for the Silver Bear Lodge are the following:
 Manager.
 Assistant manager.
 Lodge staff (7).
 Food store staff (3).
 Ski rental/clothing store (3).
 Maintenance staff (3).
 Cleaning staff (4).

Table: Personnel

Personnel Plan
Year 1 Year 2 Year 3
Manager $36,000 $39,000 $42,000
Assistant Manager $42,000 $45,000 $48,000
Lodge Staff $110,000 $120,000 $126,000
Food Store Staff $39,000 $43,000 $46,000
Ski Rental/Clothing Store Staff $35,000 $39,000 $42,000
Maintenance Staff $48,000 $52,000 $55,000
Cleaning Staff $72,000 $76,000 $79,000
Total People 9 22 22

Total Payroll $382,000 $414,000 $438,000

7.0 Financial Plan
7.1Projected Profit and Loss
Chart: Profit Monthly

Profit Monthly

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

$0

($5,000)

($10,000)

($15,000)

($20,000)
Month 1 Month 3 Month 5 Month 7 Month 9 Month 11
Month 2 Month 4 Month 6 Month 8 Month 10 Month 12
Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3

Sales $741,000 $915,000 $1,022,000
Direct Cost of Sales $83,200 $101,000 $128,000
Other Production $0 $0 $0
Expenses
Total Cost of Sales $83,200 $101,000 $128,000

Gross Margin $657,800 $814,000 $894,000

Gross Margin % 88.77% 88.96% 87.48%

Expenses
Payroll $382,000 $414,000 $438,000
Sales and Marketing and $60,000 $80,000 $100,000
Other Expenses
Depreciation $14,280 $14,280 $14,280
Leased Equipment $0 $0 $0
Utilities $26,000 $26,000 $26,000
Insurance $24,000 $24,000 $24,000
Lease $0 $0 $0
Payroll Taxes $57,300 $62,100 $65,700
Other $0 $0 $0

Total Operating Expenses $563,580 $620,380 $667,980

Profit Before Interest and $94,220 $193,620 $226,020

 Taxes
EBITDA $108,500 $207,900 $240,300
Interest Expense $33,375 $30,500 $27,500
Taxes Incurred $18,254 $48,936 $59,556

Net Profit $42,592 $114,184 $138,964

Net Profit/Sales 5.75% 12.48% 13.60%

7.2 Break-even Analysis

The monthly break-even point is approximately $52,900.

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break- $52,905
even

Assumptions:
Average Percent 11%
Variable Cost
Estimated Monthly Fixed Cost $46,965
 Chart: Break-even Analysis

Break-even Analysis
$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0

($10,000)

($20,000)

($30,000)

($40,000)

$0 $20,000 $40,000 $60,000 $80,000 $100,000

$10,000 $30,000 $50,000 $70,000 $90,000 $110,000
7.3 Projected Balance Sheet
The following is the projected balance sheet for three years.

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets

Current Assets
Cash $31,437 $118,555 $165,584
Other Current Assets $14,000 $32,000 $53,000
Total Current Assets $45,437 $150,555 $218,584

Long-term Assets
Long-term Assets $350,000 $370,000 $430,000
Accumulated $14,280 $28,560 $42,840
Depreciation
Total Long-term Assets $335,720 $341,440 $387,160
Total Assets $381,157 $491,995 $605,744

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $3,965 $30,619 $35,405
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current $3,965 $30,619 $35,405
Liabilities

Long-term Liabilities $320,000 $290,000 $260,000

Total Liabilities $323,965 $320,619 $295,405

Paid-in Capital $200,000 $200,000 $200,000

Retained Earnings ($185,400) ($142,809) ($28,625)
Earnings $42,592 $114,184 $138,964
Total Capital $57,192 $171,376 $310,340
Total Liabilities and $381,157 $491,995 $605,744
Capital

Net Worth $57,192 $171,376 $310,340

7.4 Projected Cash Flow
Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $741,000 $915,000 $1,022,000
Subtotal Cash from Operations $741,000 $915,000 $1,022,000

Additional Cash Received

Sales Tax, VAT, HST/GST $0 $0 $0
Received
New Current Borrowing $0 $0 $0
New Other Liabilities (interest- $0 $0 $0
free)
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $741,000 $915,000 $1,022,000

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $382,000 $414,000 $438,000
Bill Payments $298,163 $345,882 $425,971
Subtotal Spent on Operations $680,163 $759,882 $863,971

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid $0 $0 $0
Out
Principal Repayment of Current $0 $0 $0
Borrowing
Other Liabilities Principal $0 $0 $0
Repayment
Long-term Liabilities Principal $30,000 $30,000 $30,000
Repayment
Purchase Other Current Assets $14,000 $18,000 $21,000
Purchase Long-term Assets $0 $20,000 $60,000
Dividends $0 $0 $0
Subtotal Cash Spent $724,163 $827,882 $974,971

Net Cash Flow $16,837 $87,118 $47,029

Cash Balance $31,437 $118,555 $165,584
 1
MonthM
Chart: Cash

Cash

$140,000

$120,000

$100,000

$80,000 Net Cash Flow

$60,000
Cash Balance
$40,000

$20,000

$0

($20,000)
7.5 Business Ratios
Business ratios for the years of this plan are shown
below. Industry profile ratios based on the Standard
Industrial Classification (SIC) code 7011, Hotels and Motels,
are shown for comparison.
Table: Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry
Profile
Sales Growth n.a. 23.48% 11.69% 5.90%

Percent of Total Assets

Other Current Assets 3.67% 6.50% 8.75% 26.00%
Total Current Assets 11.92% 30.60% 36.09% 32.00%
Long-term Assets 88.08% 69.40% 63.91% 68.00%
Total Assets 100.00 100.00% 100.00% 100.00%
%

Current Liabilities 1.04% 6.22% 5.84% 19.40%

Long-term Liabilities 83.95% 58.94% 42.92% 34.60%
Total Liabilities 85.00% 65.17% 48.77% 54.00%
Net Worth 15.00% 34.83% 51.23% 46.00%
Percent of Sales
Sales 100.00 100.00% 100.00% 100.00%
%
Gross Margin 88.77% 88.96% 87.48% 0.00%
Selling, General & 83.02% 76.48% 73.88% 75.10%
Administrative Expenses
Advertising Expenses 8.10% 8.74% 9.78% 1.90%
Profit Before Interest and 12.72% 21.16% 22.12% 2.50%
Taxes

Main Ratios
Current 11.46 4.92 6.17 1.45
Quick 11.46 4.92 6.17 1.05
Total Debt to Total Assets 85.00% 65.17% 48.77% 54.00%
Pre-tax Return on Net 106.39 95.18% 63.97% 1.70%
Worth %
Pre-tax Return on Assets 15.96% 33.15% 32.77% 3.70%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 5.75% 12.48% 13.60% n.a
Return on Equity 74.47% 66.63% 44.78% n.a
Activity Ratios
Accounts Payable Turnover 76.19 12.17 12.17 n.a
Payment Days 27 17 28 n.a
Total Asset Turnover 1.94 1.86 1.69 n.a

Debt Ratios
Debt to Net Worth 5.66 1.87 0.95 n.a
Current Liab. to Liab. 0.01 0.10 0.12 n.a

Liquidity Ratios
Net Working Capital $41,472 $119,936 $183,18 n.a
0
Interest Coverage 2.82 6.35 8.22 n.a

Additional Ratios
Assets to Sales 0.51 0.54 0.59 n.a
Current Debt/Total Assets 1% 6% 6% n.a
Acid Test 11.46 4.92 6.17 n.a
Sales/Net Worth 12.96 5.34 3.29 n.a
Dividend Payout 0.00 0.00 0.00 n.a