The company's management is confident that The Company can achieve its aggressive sales forecasts, generating total sales of approximately $XXX,XXX, $XXX,XXX and $X,XXX,XXX in years, 2014, 2015, and 2016 respectively.  In addition, The Companys' management has carefully considered its market, potential customer base, and its ability to grow its sales average to capture market share in the (insert industry here) industry.

The Company has the potential to become a highly regarded resource in local, regional, national, and international markets.  Due to the company's aggressive marketing strategy, establishment of the company as a "unique" entity in its industry, careful development of its products coupled with strategic partnerships with some of the industry's leaders, and the company's profitable revenue model, The Company has the potential to provide lucrative returns to potential investors.

For The Company to achieve status as an industry leader, it must secure initial capital.  This capital will be used for start-up costs, to establish a reputable storefront, and to further develop the business, business infrastructure, internal systems, product development, and extensive marketing and geographic positioning.

Providing that the company is able to acquire its funding requirements,The Company will be able to achieve operational success for many years to come.

Executive SummaryBatten-Hatchez Security is a startup security company founded by Chindit Batten, an experienced former police sergeant and security company manager. Located in Coastalburg at its launch, the business will provide security guards, security audits, and referrals to equipment providers to commercial buildings, retail businesses, and, eventually special event venues and other clients. The business seeks to acquire capital from an angel investor and will expand to additional cities in Ourstate and beyond if successful.

In the current political climate, with increasing fears of terrorist activity, and the current economic climate, which promises an upswing in general and in outsourced services especially, this business is launching at the right time. The business will target large retail stores and building management companies first in order to establish a strong base of clients in Coastalburg.

Batten-Hatchez will grow its employee base of security guards carefully, based on client contracts, and use both full-time and part-time guards. The business expects respectable sales of in the first year, almost doubling by the end of the third year. Gross margins will be similar to the industry average, based on guard labor costs vs. billings. After the initial investment and launch, a lean first year, and the establishment of an office and training space in the second year, the business will be poised to expand through its own financing after three years. After the business is proved replicable in additional cities, the business may be sold to provide an exit for the initial investor and founders.

ObjectivesBatten-Hatchez Security will base its success on meeting the following objectives:

1. Employ 25 full-time equivalent security guards by the end of the third year of operation

2. Supply security guards to 15 buildings on a full-time basis by the end of the third year of operation

3. Earn $2 million in revenue with net profit over $300,000 in its third year of operation 

MissionBatten-Hatchez Security will remove worries for clients who require security guards for their buildings, facilities, and events by providing excellent customer service for clients and in-depth training for their employees.

Keys to SuccessBatten-Hatchez Security believes the keys to success in its industry include:

1. Listening carefully to client concerns and objectives to create customized security guard packages

2. Knowing what the client does not know (bringing deep security expertise as well as knowledge of legal regulations and liability to the table)

3. Training security guards carefully and maintaining their training and certifications (e.g. to carry firearms)

4. Monitoring the quality of security guard service to offer quality assurance

Company SummaryBatten-Hatchez Security is a startup security company founded by Chindit Batten, a former police sergeant and security company manager with fifteen years in law enforcement and ten years in security work. The business will provide security guards to commercial buildings, retail businesses, and special events. The business will launch in Coastalburg but will expand to additional cities if successful.

Company OwnershipChindit Batten is CEO and founder of Batten-Hatchez Security. He currently owns 60% of the business and the remaining 40% of shares are owned by his partner and co-founder, Viipuri Hatchez, COO. The business is incorporated as an S Corporation to enable additional investment for its launch. The founders shares will be diluted as up to 40% of shares will be given to investors.

Start-up SummaryBatten-Hatchez Security will launch as a home-based business out of the home office of Chindit Batten. Initially, this will reduce the cost of rent and equipment. Training for security guards will be provided in temporarily rented office space as needed. Other start-up costs include the costs of incorporation and permits, such as concealed weapons permits, business license, and police clearances (legal fees), the initial website and brochure design and printing, and the first insurance premium for the business, including liability insurance for the guard's work and carrying of firearms.

Long-term assets include mobile phones and headsets for all guards and employees, as well as two-way radios for guards working as teams.

ServicesBatten-Hatchez Security will provide well trained guards for one or more of the following purposes:

To guard entrances and screen guests/employees To monitor clients' premises with video surveillance equipment To protect clients' assets, employees and guests To deter crime with visual presence To organize response in the case of fire, evacuation, or other emergency To respond to customer and employee health emergencies and accidents To eject unwanted customers or trespassers To liaison with police and city emergency responders

In addition, the principals of the firm will offer the following:

Security audits and recommendations for security plans Referrals to providers of security technology (camera systems, etc.)

Batten-Hatchez will be a licensed, insured, and bonded business and will offer both armed and unarmed guards, based on client needs and budgets. All guards will be certified for security work and to carry firearms.

Whenever possible, the same guards will be sent consistently to the same clients. However, substitutes will be necessary from time to time and the business will ensure that detailed data about the job is transmitted to substitute guards on those occasions. Batten-Hatchez Security will build trust with clients as a partner, rather than simply in the specific guard or guards they grow comfortable with.

Guards will keep in constant communication with their team via portable two-way radios and with the Batten-Hatchez office, as necessary through mobile phones. The Batten-Hatchez office will be not be staffed full-time at launch, but the CEO and COO will be within reach by phone wherever they work. Guards who encounter criminal activity will alert the authorities immediately rather than going through a communications center. Once the Batten-Hatchez office is established outside of the home of Chindit Batten, it will be staffed full-time with a rotation of three call center personnel who will cover the dispatches.

Guards will either be stationed at desks or patrol on foot at all facilities. Clients must provide vehicles if their jobs require vehicle patrol (i.e., a facility with several buildings), but this will not be a focus of Batten-Hatchez Security.

Market Analysis Summary

The market for security guard services includes building management companies, retail businesses, event venues, and other businesses. IBISworld.com reports that the security services industry as a whole was $29.7 billion in 2008. While this number includes investigative services and armored car services, it is estimated that security guards accounted for $22.3 billion. This represents approximately 540,000 employees in the security guard industry.

While market revenue has dropped 2% in 2008 due to the recession, it is expected that the market will rise again due to increasing outsourcing of security services by companies who will delay hiring their own full-time employees as the recession ends. The continuing and growing concerns about security brought on by international terrorism are also expected to contribute to growth in the industry.

Of the potential targets available in Coastalburg Batten-Hatchez Security will focus on building management companies and retail businesses at the outset. These businesses require steady security needs and serving them is simpler than serving special events.

Market SegmentationThe market analysis table shows the market segmentation for Coastalburg among the major market segments for security guard services. Growth is slow among these markets as new development is not prevalent in Coastalburg currently.

Building management companies generally install surveillance equipment and employ security guards to monitor that equipment, to staff front desks/security checks, and sometimes for general patrol. These companies often work with a number of commercial or residential buildings and look to establish a relationship with one reliable vendor for all of their security guard needs. While some buildings require night-shift guards, others require only day coverage.

Large retail businesses use security guards to deter theft and to provide safety. These include department stores and other retail stores over 4,000 square feet, although some smaller stores may use security guards if they sell high-priced items (designer fashion, jewelry, technology, etc.). Retailers require more guards during the day. Some simply lock the store at night while some larger department stores use night patrols as well.

Event venues use security guards to monitor guest lists and fire capacities and to organize emergency response. Nightclubs and bars may be included in this category. However, most nightclubs and bars employ their own security personnel (or "bouncers") directly and do not use vendors. Event security has the same risks as other security, but there is limited time for security audits and situations change fast, making this a higher stress business that requires better trained guards. Events tend to happen in the evenings with weekday nights for corporate events and weekend nights for private events.

Educational institutions, such as primary and secondary schools and colleges, generally employ security officers to guard and patrol their buildings and campuses. Often these institutions employ their own in-house security staff, but they will sometimes use outsources security vendors. These institutions require night and day patrols.

Target Market Segment StrategyBatten-Hatchez Security will target the first two of these target markets initially, building management companies and retail businesses. Both segments require ongoing security vendors and are eager to establish long-term relationships. Once relationships are established, good customer service, quality assurance, and competitive pricing can ensure that the relationships are retained and that the security provider is considered a true partner in the protection of the building or businesses' assets and people.

Furthermore, the other two target markets listed will be taken on at a later date, if at all. Event venues require more specialized services and may be a slower market to tackle. Educational institutions are often eager to establish their own security staffs, making this a difficult market to establish a strong foothold in as well.

Service Business AnalysisAccording to IBISWorld, there were 41,000 security services firms in the U.S. in 2008 running 56,000 establishments. The average size of a firm was $700,000 revenue per year based on these numbers, meaning that the industry includes both small and larger companies. There are few barriers to entry, as long as basic legal requirements are met, as the capital investment in the business is very low. The industry depends on a supply of labor, often using retired police officers as security guards.

As security guard services are sold business-to-business, marketing and advertisement is generally targeted on the markets and industries the security companies seek to serve. Businesses generally search for security guard providers on the Internet or through referrals from other companies they trust.

Competition and Buying Patterns

Top players in the industry include Securitas AB, Allied Security LLC, The Brink's Company, and G4S plc. Huge players provide services for a huge range of markets, including governments, chemical and petrochemical, colleges and universities, commercial real estate, financial institutions, health care facilities, manufacturing and industrial, residential communities, shopping centers, and temporary security services.

Smaller security companies achieve success based on the expertise and reputation of their founding managers and the growth of a team with a similar track record. The continued success of a company depends on client satisfaction, leading to referrals.

Larger institutions and governments may receive several bids for security contracts, while smaller businesses (such as many that Batten-Hatchez Security will target) often prefer to try out security companies and move on if they do not meet expectations.

The smaller the amount of assets being protected, the more willing a company will be to risk their security on educated hunches about a security company without feeling the need to do due diligence on a number of options.

IBISworld reports the following about the security industry:

While the public's perception of the rising crime rate assists revenue, the most significant factor which increases the demand for this industry's services is a breach of an existing security system, a break-in or a near break in. The economic crisis has hurt demand over the past two years but things will soon begin to improve.In Coastalburg, security guard service competitors include securityguard.com, Top Guard Security, US Security Guard Services, and Trend Security Corporation.

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Strategy and Implementation SummaryThe key strategy for Batten-Hatchez Security is to build their operations and marketing around buildings and retail stores that are large enough to have permanent, on-site security needs, but not so large that they can save significant money by developing security staff in-house. To achieve this strategy, Batten-Hatchez will:

Train guards well for permanent check-in, patrol, and surveillance positions Use advertising and targeted lists to locate and market to these customer

markets Focus specifically on guard services and high-level consulting audits, while

outsourcing or referring to vendors for security equipment and system needs

Competitive EdgeBatten-Hatchez Security will built a competitive edge through high levels of customer service and assurance. The company will strive to not be a broker between clients and contracted security guards, as some security guard providers become,

but instead be a partner in the security and protection of client's assets, with security guards as a major tool in that protection. This strategy will require Chindit Batten to carefully audit a client's security situation and to work with them on plans to upgrade and maintain that security. He will continually check in with clients and with the guards sent to client sites to learn about the challenges they are facing.

Marketing StrategyTo reach its target markets of building management companies and large retail businesses, Batten-Hatchez Security will use the following tactics:

Development of a basic "brochure" website with services and contact information

Advertising in trade publications read by managers in these two industries Advertising online with Google AdWords around keywords for security services

and security guards, especially associated with these two types of customers Business cards and brochures for Chindit Batten to distribute on appointments

and while networking with Coastalburg-area business networking groups Direct selling work based on purchasing or developing target lists Direct mail of brochures and letters to these target lists of potential clients in

Coastalburg

Sales StrategyChindit Batten will be the primary salesperson for Batten-Hatchez Security. He will meet with clients at their buildings to perform an initial consultation and will create proposals for security services based on the client's needs. Batten will track sales prospects and clients with ACT!, a client management database system. 

Batten's sales strategy will be to listen carefully to the needs of the client and to provide assurance through stories of his experience and a canny understanding of their needs and concerns. While his proposals may not be the lowest cost bids a potential client receives, he will follow up with care and the same personal attention that clients will receive if they move forward with using Batten-Hatchez Security.

Sales ForecastSecurity guard sales will be recurring. Assuming a client retention rate of 90% annually, based on Chindit Batten's track record in the business, total sales will escalate quickly. Sales will be a combination of clients requiring 24/7 coverage and those with only daytime coverage. 40% of sales in dollars are expected from 24/7 clients. Sales are expected to meet the objective of $1.75 million in the third year.

Direct costs of sales consist of supplies specific to each job, such as uniforms which must be purchased. Uniform may be a branded Batten-Hatchez uniform, or contain the customer's branding to provide the visible presence of security at the job site. Additional sets of uniforms must be purchased by the guards (at a discount) from the designated uniform provider and laundry and cleaning of uniforms is the responsibility of the guards as well. Job supplies will include materials related to security audits and specific equipment purchases for a job as well.

$814,010

Management SummaryChindit Batten, CEO, creates the vision and strategy of Batten-Hatchez Security. He brings with him knowledge of the industry and sales skill. Batten will be personally responsible for marketing, sales, and ongoing client service. Batten will also run training for guards.

Viipuri Hatchez, COO, will run the operations of the company. He will manage finances/accounting, hiring and human resources. Hatchez has ten years of experience as assistant director of operations for a security systems company and therefore has familiarity with operations management and the security industry as well.

Batten and Hatchez will be the only full-time employees at the launch of the company. Security guards will be employed as client engagements are set and will be accounted for as a cost of sales. In the second year, three administrative/call center assistants will be hired to work under the COO and to staff the office at all times for the purposes of dispatches and maintaining communications with guards on-site.

Personnel PlanThe personnel table reflects the full-time office personnel of the business. Security guards will be a combination of full-time and part-time guards and will be hired as sales increase. Guards will be hired either as daytime guards, night-shift guards, and part-time guards who take a part-time load of either evening or daytime work. A business office must be rented starting in year 2 when the administrative/call center assistants are brought on to provide 24 hour dispatch support. These 3 assistants are paid $15 per hour.

Guards are hired after an independent background check is completed and interviews with both managers of the business as well as checks with three references. Guards are eligible for health insurance and disability pay through the business to protect them in the case of injury on the job or other problems.

Financial PlanBatten-Hatchez Security expects to produce excess cash after a lean first year of operation which can finance its expansion to an office space along with a 5 year home equity loan to support significant growth of its employee base in its second and third years to 25 FTE security guards (which can be estimated as 10 full-time guards and 30 part-time guards). Future growth will be financed by the business and will include launching operations in other cities in Ourstate and launching a line of security products.

Important AssumptionsThe long-term interest rate is 6% for a home equity loan taken out in year 2 to cover the cash needs for a move to an office space.

In addition to the assumptions shown in this table, the business makes the following assumptions:

That the security guard industry will experience an overall upswing in the next three years

That the sales record of Chindit Batten at his previous firm can be replicated at Batten-Hatchez

Projected Profit and LossSecurity guard labor is estimated at 55% of sales in the first year, dropping slightly to 53% by the third year as prices increase and cheaper labor becomes available due to the range of employees.

Marketing includes ongoing Web hosting and maintenance fees, continued revisions and reprinting of the brochure and stationery, additional direct mail campaigns, ongoing advertising in trade publications, and online advertising for the website.

Rent, utilities, and depreciation will be expenses beginning in the second year when an office space is required. Training requires the use of larger meeting rooms for groups of guards which will have to be rented separately in the first year of operations. Training cost will be reduced once an office is rented, as the business will choose a space with a conference room or table to hold employee training at the office. Training will be an ongoing expense both due to turnover and due to continued training and check-ins with employees. The surety bond must be renewed each year for the business.

Licenses and permits will include licenses for new guards to carry firearms and to operate, and continued renewals of licensing and permits for the business each year.

Net profit will swing to a net loss in the second year due to the opening of an office space. Net profit will occur in year 3 again as the business scales up to cover these additional costs.

Projected Cash FlowExcess cash from the first year of operation and a $150,000 five year home equity loan from the business' owners will be used to finance the expansion to a rented office space in the second year, which will require the purchase of furniture, additional computer and phone equipment, and some improvements to the space. This loan will be taken out by one or both of the owners at 6% interest halfway through year 2 when cash is needed.

Cash flow is expected to become positive in the fifth month of operation due to the low fixed costs and launching without a full-time call center/office. Continued investments in communications equipment will be needed throughout the first year as additional guards join the business. In the second year, assets must be purchased for the office, including computers and equipment, furniture, and a phone system. Communications equipment purchases will continue to grow in the second year.  

It is estimated that 70% of sales will be made on credit for payment within one month and 30% will be paid at or before the time of service.

Business RatiosThe ratio table compares the business over its three years of projections to the average for Security Guard and Patrol Services, SIC code 7381, NAIC code 561612, of $1 - $5 million in annual revenues.

Ratio Analysis

Sales Growth

Percent of Total Assets

Accounts Receivable 63.49%

Other Current Assets 0.00%

Total Current Assets 98.80%

Long-term Assets 1.20%

Total Assets 100.00%

Current Liabilities 53.75%

Long-term Liabilities 0.00%

Total Liabilities 53.75%

Net Worth 46.25%

Percent of Sales

Sales 100.00%

Gross Margin 40.64%

Selling, General & Administrative Expenses 33.31%

Advertising Expenses 0.08%

Profit Before Interest and Taxes 10.53%

Main Ratios

Current 1.84

Quick 1.84

Total Debt to Total Assets 53.75%

Pre-tax Return on Net Worth 93.59%

Pre-tax Return on Assets 43.29%

Additional Ratios

Net Profit Margin 7.33%

Return on Equity 65.51%

Activity Ratios

Accounts Receivable Turnover 4.56

Collection Days 42

Accounts Payable Turnover 6.67

Payment Days 27

Total Asset Turnover 4.13

Debt Ratios

Debt to Net Worth 1.16

Current Liab. to Liab. 1.00

Liquidity Ratios

Net Working Capital $101,695

Interest Coverage 177.04

Additional Ratios

Assets to Sales 0.24

Current Debt/Total Assets 54%

Acid Test 0.66

Sales/Net Worth 8.94

Dividend Payout 0.00

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