Business Plan

Date: 6.24.2015

Presented by:

Dan Dreeman

Renaldo Garcia

Executive Summary

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The sport of surfing has transitioned over the years from an adrenaline fueled hobby to a way of life. Despite its global popularity, it has been secluded from the world as a competitive sport for many years but has gradually gained popularity over the last three decades through increased broadcasting and social media accessibility. As of January 2015, the long standing Association of Surfing Professionals have remodelled the organization and rebranded their image the World Surf league, introducing with it innovative, social platforms that has significantly raised the awareness of surfing across the globe. The ability to utilize these channels to market surfing to the 16.5 million tourists and surfers of the Florida region has provided a profitable market opportunity for Oasis’s innovative facility.

Oaisis is poised to become a revolutionary presence in the United States offering the country’s first artificial wave garden which will provide ideal surf conditions year round. Located just off of Florida’s notorious southeast coast, the facility which spans approximately 5200 sqft. will have a lagoon of ample size equipped with a state of the art wave generator that can facilitate surfing conditions of all skill levels. From experienced surfers to thrill seeking tourists, Oasis offers the combined experience of radical surf with the leisure of an amusement park.

Requiring less than 1% of the tourism and surf market in order to satisfy demand forecasts, Oasis is assured revenues of $177,669.10, three months after conception. Moderate first year demand estimations have allowed us to expect a minimum, yearly growth of 3% (Appendix M). Management stands confidently behind these numbers given the size of our distinct niches. Florida surfers possess a market size of roughly 583000 (Figure 3)while tourism beach spending in florida upward of $9 billion (Figure 4)

Following combined owner’s injections of $50,000, Oasis will secure startup funding from an Angel Investor for $1,650,122 (Appendix E).

Table of Contents

1.0 Industry Overview (05)2.0 Business Overview (06)

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2.1Description (06) 2.2 Service Offerings (06)3.0 Market Research and Analysis (07) 3.1 Florida Surfers (07) 3.2 Florida Tourism (08) 3.3 Revenue (10)4.0 Competition (10)

4.1 Environment (10)4.2 Tourist’s Attractions (10)

5.0 Marketing Plan (11) 5.1 Marketing Strategy (11) b. Market Potential (12) 6.0 Design and Development Plans (13) 6.1 Start-Up Requirements (13) b. Payroll (13)7.0 Operational Plan (14) 7.1 Geographical Location (14) 7.2 Facility and Improvements (14) 7.3 Operating Strategy (15)8.0 Management Team (16) 8.1. Management Personnel and Roles (16)

8.2 Management Compensation (17)

9.0 Potential Risks and Problems (17)10.0 Financial Plan (18) 11.0 Appendices (19)(A) Beach Tourism Impact (19)(B) Utility Data (20)(C) Property Images (21)(D) Design Sketch (23)(E) Required Startup Funds (24)(F) Fixed Operating Expenses (25)(G) 3-year Projected Income Statements (3 years) (26)(H) 3 year projected statement of Cash Flow (29)(I) 3 year Balance Sheets (32)(J) Year end Summary (Year 1) (35)(K) Financial Ratios (36)(L) Financial Diagnostics (37)(M) Projected Sales (3 years) (38)

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1.0 Industry overview

The number of people in America who surf at least once a year has exponentially increased to roughly 2.6 million (more than a million surf at least eight times annually) in the last decade (Fortune). The average surfer, earns approximately $75,000 a year, and in 2010 some $6.3 billion was spent on surfboards and surf equipment (wetsuits, sunglasses, and surf-related clothing and accessories). With an increased participation from women and with the sport’s swelling reputation Globally, analysts predict that the global surf industry will generate more than $13 billion by 2017 (psresearch). It should be noted that this number does not include

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revenue generated by the growing international surf travel business. Companies like Santa Monica-based Waterways Travel specialize in sending well-heeled surfers on two-week safaris to hard-to-reach surf breaks in places like Peru, Indonesia, and Fiji for up to $12,000 while organizations such as the World Surf League has created a global community for the world’s surf fans to watch, participate and follow their favorite surfers on social applications and media. The director of the Center for the Blue Economy at the Monterey Institute and author of the book What Environmentalists Need to Know About Economics, Paul Kvitna worked with a handful of other surf-minded economists in pioneering “surfonomics,” a field that attempts to show that the waves themselves have economic value. Surfonomics was born on the northwest coast of Puerto Rico in 2002 at the legendary surf spot Rincon. Surfers used an economical approach to quantify the value of daily surf trip expenditure, the increase in tourism and the increased popularity of the beach globally in order to prevent the destruction of the beaches structure to facilitate construction projects (52 million dollars was generated annually). In 2007 a similar study concluded that the surf break at Mundaka on the coast of southern Spain generated $4.5 million annually for the local economy.

The founders of Oasis applied the concept of surfonomics when determining an ideal geographic location to construct our artificial wave facility. Florida’s southeast coast, a hub for the 3rd largest surf population in the US, lead the search criteria due to its substantial population of surfers coupled with the economic potential of its booming tourism industry. It was unanimously decided by management as the most profitable location to construct the establishment.

In conjunction with economic research obtained from Forbes and US statica, we quantified Florida’s surf economy based on “travel cost studies” that measure things like the distance surfers and spectators travel to a surf break, the number of times they visit, the amount of time they take off work, and the amount they spend on gas. Figures 4 indicated the size of the tourism market in Florida and while figures from Figure 3 illustrates the amount of money that tourism contributes to Florida’s GDP.

2.0 Business Overview

Oasis, Florida’s first artificial Wave Generator, will provide consistent, quality surf in a convenient and well-manicured facility that panders to the customer’s desire to escape the mundane and satisfy their adrenaline craving instincts. Our mission at Oasis is centered on quality as we strive to facilitate perfect surf conditions year round within a state of the art establishments that combines the allure of luxury beaches with the excitement of traditional water parks. Regardless of ability, Oasis provides patrons the ability to experience high quality surfing conditions without the worry of inconsistent surf conditions, dangerous ocean elements

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and demanding physical conditioning of surfing. Oasis will revolutionize surfing in the Florida region providing accessible, high quality waves on a regular basis.

2.1 DescriptionOasis’s wave generating mechanism runs a “snow-plough” like structure under the

surface of the lagoon in order to create waves that hold form and power that can cover the distance of the pool. The shape of the lagoon creates distinct channels that filters currents around the incoming waves to ensure that the surface or “face” of the wave is clean, smooth and sizeable, offering a wide range for maneuverability. The machine can be calibrated to produce waves that range from 1 to 9 feet in height which offers potential for tubes and the occasional lip ramp which is ideal for a wide range of skill sets. The flexible shapes, sizes and speeds will provide a comprehensive surf experience for all levels of surfing ability.

2.2 Service Offerings

Rentals

Although our policy allows patrons to bring their own equipment, they can visit our surf shack to rent boards, leashes, beach chairs and umbrellas for a small, hourly fee.

Surf School

Never surfed? No problem, Customers can sign up for daily coaching sessions that will have you in the water up and riding in no time.

Kids Pool

Families can rest assured that infants and toddlers have a safe location to enjoy in our kid friendly splash zone custom fit with fun rides, shallow water and constant lifeguard supervision. 3.0 Market Research Analysis

Total market SizeGlobally, there are more than 35 million surfers with roughly 2.9 million of those found

in the US (Statista 2015). These statistics indicate that the surf industry has experienced a 10 % increase in the surf population since 2010 and with the adoption of new broadcasting technologies by the World Surf League, it is poised to see exponential increases in the upcoming decade.

Marketing efforts by Oasis focussed on two distinctive niches in order to maximize reach and ensure consistent demand. Primarily, we targeted Florida’s vibrant surf community and

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secondly capitalized on Florida’s booming tourism industry. The data obtained was used to forecast demand.

3.1 Florida Surfers

Figure 1 illustrates regional data collected in 2011 that ranks the states within the US by the number of documented surfers. Florida is highly ranked as the the third most popular state for surfing which is why we have decided to establish our facility here. Although Hawaii and California have greater population of surfers our ability to capture significant market share will be hampered by more consistent surfing conditions found year-round in these regions.

In a demographic survey done in 2011 and illustrated in figure 1, Florida’s 583,000 documented surfers will provide an ample market size in order for our marketing efforts to achieve maximum reach and effectiveness. In an article on the World Surf League’s website, WSL CEO Paul speaker commented on the significance of obtaining sponsorship from Samsung, stating that the adoption of the notorious electric company will only serve to exponentially increase the sport’s reputation. We expect that the number of surfers in Florida has already seen significant increases in 2015 and will continue to grow over the next few years. Based on our projections, we calculated an average, growth rate of 2.3%/year which estimates our current market size at approximately 625,658 surfers.

Figure 1

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3.2 Florida Tourism

GDPIn Florida, tourism represents a significant portion of the state’s GDP, possessing 3 of the

top twenty ports of entry in the US (Figure 2) . Oasis has fixated marketing efforts on this segment. Figure 2 illustrates a breakdown of Florida’s GDP by industry.

Figure 2 : Port arrival Data

According to Figure 3, $48.1 billion in revenue is generated in recreation and entertainment while the highest contribution of $166.97 billion is derived from financing, car

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rentals, and leasing. These figures are all indicative of indirect and direct tourist involved activities. As a result, these statistics, coupled with our tourism data, validate the economic potential of the tourism industry in Florida.

Figure 3: Florida GDP data

3.3 Revenue

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Statistics from the a demographic study conducted by the Catanese Centre at Florida Atlantic University show that beach tourism contributes an estimate of $39 billion toward Florida’s tourism revenue, with international and out-of-state tourists recorded over 27 million trips per year (Appendix A). In fact, out-of-state beach tourists alone (excluding international), spent approximately 19.1 billion dollars annually which contributes to 3.8 percent of FLorida’s GDP. These figures adds further credibility to our decision to locate the facility in a region with a market potential beneficial to our operation.

4.0 Competition

Presently, there are no other facilities in the US like Oasis. It is a revolutionary concept that is certain to capture and dominate the intended market. However, Oasis does face competition from two main sources, environmental conditions and tourist’s attractions.

4.1 Environmental Conditions

Environment, refers to the quality of surfing conditions during certain periods in the year. Cyclical seasons affect the quality of surf that hits Florida’s coastal areas. During the end of summer, namely the hurricane season, and the winter season, meteorological conditions usually favor bigger, more consistent swells which will likely lure surfers and away from our facility. However, these conditions can also be a deterrent for some because conditions during these times of year can be dangerous due to rough seas, riptides and significantly large swell sizes. In addition groms (amateur surfers) will face stiff competition on crowded beaches for limited rides. Therefore, although we are considering possibility of reduced in attendance, we do not believe that it will be significant enough to impact our forecasted market share.

4.2 Tourist’s Attractions

Our decision to strategically locate ourselves in between the main tourists ports of Florida (Miami, Orlando and Ft. Lauderdale) brings competitive forces in the form of existing tourist’s attractions. Our biggest concern is the proximity of our facilities to the Disney theme parks and Florida’s southeast beaches. This is a double-edged sword because we are in a prime location to reach our intended market, however, there are several other options available to tourists in the form of water sports, leisure activities and Disney’s facilities.

5.0 Market Plan

5.1 Market strategy:

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TouristsIn order to effectively reach our target market, Oasis’s management team has decided to

invest in three separate advertising channels. The first channel involves purchasing billboard space at popular beach destinations along the southeast coast of Florida in the Miami and Ft. Lauderdale areas. Two Billboards will be set up in Orlando in close proximity to the Disney theme parks. Additionally, we will purchase advertising space in hotels to display infographics while making pamphlets available for distribution. The combination of these efforts will aid in securing the tourist niche of our market.

SurfersThe timely conversion of the Association of Surfing Professionals to the World Surf

League, provides us with a huge opportunity to reach surfers throughout Florida and throughout the country. The Samsung powered World Surf League website has revolutionized the manner in which surfing is followed globally through mobile applications and a high performance website that streams competitions and provides daily surf content. Oasis has arranged to purchase banner space on the WSL website in order to effectively reach the surf community. A breakdown of the costs of our advertising efforts are illustrated below.

Table 1: Advertising Expense

Advertisement Price

Billboard's $60,000

Info-graphs and pamphlets $1,000

WSL website $9,500

Total $70,500

5.2 Market potential

Between Florida tourists and surfers, our management team has identified a market size of over 29.3 million people. In order to meet our minimum financial requirements, Oasis needs to attract 890 patrons per week. This indicates a need to capture approximately 0.003% of the

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entire market in order to realize profits. Management believes that our revolutionary facility coupled with our strategic location and our marketing promotions can allow us to successfully achieve this figure.

Figures 4 shows that the region in which Oasis’s wave facility will be constructed (Southeast Florida) generates the largest amount of revenue by region in Florida. This data, combined with the projected growth of the surf community in Florida, management has decided to apply a generous 3% market growth figure to our anticipated demand at the start of each year (Appendix M: Anticipated Demand).

Figure 4: Beach Tourism spending by region in Florida

6. Design and Development Plans

6.1 Start-Up RequirementsOasis has scheduled its opening day of the year for June 1st. 2016. Prior to opening,

construction, remodelling and installation of all required equipment and assets will begin three

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months prior to this date on March 1st. Within the three months management has calculated required start-up costs at $1,650,122. (Appendix E). The mortgage taken will cover all fixed assets namely buildings, lagoon expansion, pool, fixtures and other fixed assets, excluding the cost of the wave machine. Pre-opening operating costs will be covered by our funding sourced from our Angel Investor. These costs appear as part of the total fixed business expenses on our income statements and are reflected under loan payments (cumulatively) on the cash flow statement. Oasis will possess cash on hand at the end of year three prior to the opening in June where we will begin to earn revenue.

6.2 PayrollAll employees are hired on a part-time basis with the exception of our CPA. He will be brought in on a quarterly basis at a cost of $225/hr.

Employee's Position Number of Employees

Pay per hour Hours per week Total pay for week

Front Desk 1 $15.00 62 $930

Concession Stand 3 $12.00 62 $2,232

Life Guard 2 $12.00 62 $1,488

Trainers 2 $8.00 28 $448

Equipment managers 2 $15.00 62 $1,860

Custodians 2 $10.00 14 140

Total Monthly Pay

$28,392

Total Yearly Pay

$369,096

7. Operational Plan

Operating Business Hours

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Days Hours Total Hours per day

Monday- Thursday 10:00 a.m. - 6:00p.m 8

Friday - Sunday 9:00 a.m. - 700p.m 10

Weekly Total 72 hours

7.1 Geographical Location

Oasis will be established off the east coast shore of Fort Lauderdale, Florida in the town of Davie (Appendix C). Selecting a location in the southern region of the county grants us the ability to run the wave park year round and disregard climate change. When considering other locations with vibrant surfing communities such as California, New Jersey and South Carolina, the benefit of Florida is the ability to remain open and sustain customer attendance during the colder months of the year.

Strategically situated between three of the most visited ports in the US according statistics from the US Department of Commerce, Miami, Orlando and Ft. lauderdale, Oasis provides both surf enthusiast and tourists the ability to travel short distances to experience the region's only surf park (Figure 2).

7.2 Facility and Improvements

The existing structure which consists of 3 building, a lagoon and an abandoned stable will undergo cosmetic modifications before the park will be operational. One of the structures will undergo demolition to allow for lagoon expansion. The lagoon will also undergo modification to meet the dimensions requirements. Outsourced engineers from the company Wavegarden will be hired to oversee the installation of our wave generating machine and ensure the lagoon’s transformation to simulate a beach. Simultaneously, contractors will construct and modify the remaining facilities including the child friendly “Splash Zone” and administer the finishing touches to the landscape. An original sketch is illustrated in Appendix D based on a diagram from Wavegarden Spain.

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7.3 Operating Strategy

Supplier Business Role

1. WaveGarden 1. Will modify the lagoon.2. Install the wave to make the lagoon operational.

2. Sullivan Constructionhttp://buildwithsullivan.com/

1.Will be in charge of all construction including the building, pool and landscaping.

3. Wal-Martwww.walmart.com

Chosen provider of food, supplies and sundry items whose costs are minimal to the company.

4. Verizon www.verizon.com

1. Chosen provider for communication and internet needs.

5. CustomInk www.customink.com

1. Chosen to producing advertising materials and billboard designs.

6. World Surf League website www.wsl.com

1. Advertising banners purchased on this site.

7. Channel Island Surfboards www.CI.com

1. Chosen provider of various surfboards and equipment.

8. MANAGEMENT TEAM 8.1 Management Personnel and Roles

Engineers- To build the wave garden we will hire engineers from Wavegarden’s staff. They understand the design in “the wave” and are the best in the industry in installation. They will

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oversee the entire process to make sure the wave is running at optimal capacity. In order to maintain the long term success of Oasis they will be available for maintenance when needed along with the once a year draining and cleaning.

Trainers- Skilled surfers who understand the fundamentals of surfing will be hired. Desired candidates will have a high school education, personable disposition and have the ability to demonstrate patience while teaching others. Oasis will be offering surf lessons to all ages, however the focus group will be younger kids that desire to learn how to surf in a safe and practical location. Lifeguards- Due to the location of Oasis it should be easy to hire certified lifeguards. Candidates will ideally be young adults searching for a life guard job offered at part time. We will hire approximately six lifeguards and have three working on a daily basis. Front Desk Manager- This is a part time occupation where they will be in charge of admission. They will also handle the phone for anyone calling about visiting or if they have any questions about the facility.

Concessions- This will be a part time job most likely for young adults to work between the times of 11-8. We will have three workers at all time but hire a total of six members in order to have someone available everyday.

Equipment managers- This will include two part time jobs. One manage will be in charge of renting boards and make sure they are returned in the previous condition. The other manager will rent chairs and umbrellas and make sure they are also returned in their previous condition.

Custodians - There will be two custodians that are hired part time to help keep Oasis a clean and beautiful destination.

CPA - There will be a certified public accountant that looks over the financial books in a quarterly manner. This will give us their perspective on how Oasis is currently operating and possible changes that are necessary.

8.2 Management Compensation

Oasis co-owners have confirmed that the company will operate as a limited partnership. Owner compensation will be recorded as payroll expenses where both have agreed on a salary of $1000 per week. Following the first year of operation, management will review the company’s profitability and determine the prudence of salary increases. In the future gradual increases in

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salary will be consistent between both owners with the monetary increases contingent upon company performance.

9. Potential Risks and Problems

Oasis believes we mitigated many potential risks due to the location we have chosen. However the chart below shows possible risks that could occur.

Potential Risks Preventative Action

1.Underestimating Start up Cost We have an accurate assumption of how much it will cost to buy “The Wave Machine” and install it. However we don't fully understand the cost to modify the lagoon into the proper size and proportions. The lagoon must be a certain depth consistently throughout so the machine can properly operate. This may become more expensive than we anticipated.

2.Overestimating the demand of surfers for artificial surfing

This location has a high demand for surfing. However there is the possibility that the demand for artificial surfing may not be what we expected. In this case we would increase marketing and premium rates to attract customers.

4.Underestimating the amount of employees needed

If Oasis has a greater demand than anticipated we may need to hire more employees. Responsibilities such as lifeguards and concession workers we will hire twice the amount on the books. The first day we plan to have two lifeguards working. However there will be another three available for the part time job. If we need to have more than three lifeguards on duty then we already have extra hired.

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10. Financial Plan

Appendix (E): Required Start up funds- At inception, management has decided to include building costs, fixture costs, vehicle costs and all other asset costs into our mortgage payment. A total of $1,650,122 will be required for start up. Management has injected $50,000 in start up funds and have secured the investment from an Angel Investor in order to cover the other costs. Appendix (F) Fixed Operating ExpensesAppendix (G) Projected Income StatementAppendix (H) Projected Cash Flow StatementsAppendix (I) Balance SheetAppendix (J) Year End Summary Appendix (K) Financial RatiosAppendix (L) Financial DiagnosticsAppendix (M) Sales Projections - Anticipated demand was forecasted based on analysis of tourism and surf market data listed in the paper. The percentages shown are management’s prediction of the composition and mix of patrons expected to visit Oasis. The percentages dictate what portion of the anticipated demand will comprise of that group.

11.0 Appendices

Appendix (A)

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Appendix (B)Utility Data

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Appendix (C)Google map image of property

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Lagoon Image

Appendix (D)

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Sketch of original design

Appendix (E)

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Appendix (F)

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Appendix (G)

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Appendix (H)

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Appendix (I)

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Appendix (J)

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Appendix (K)

Appendix (L)

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