Scott Cortus

Tandra Fraser

Juliana Littman

Celeste Nordal

Feasibility Study

Operations PlanOperations Plan

Guest Ranch Location:Guest Ranch Location:

Site Plan:Site Plan:

Horseshoe PitsHorseshoe Pits

FirepitFirepit

Gar

den

Lodge

ShelterbeltShelterbelt

Quonset

Barn

BinsBins

House

Garage

Lodge Building Plan:Lodge Building Plan:

StorageLounge

4 ft

34 ft

90 ft

Registration Office

Kitchen & Eating Area

Double

Suite

Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday

7:30 Breakfast

8:00

8:30

9:00

9:30

10:00

10:30

11:00

11:30

12:00 Lunch - Picnic at photospot

12:30 Packed lunch in saddlebags Lunch End of stay

1:00

1:30

2:00

2:30

3:00

3:30 Return to farm

4:00

4:30

5:00

5:30 Arrive at farm

6:00 Return to farm

6:30 Supper

7:00

7:30

8:00 Cowboy campfire, cowboy poetry, fellowship

Wilkinson Memorial Observatory

Cowboy Campfire

Visiting in the lodge

P ick up guests at airport

Breakfast

Tour of the farm, safety orientationMatch guests with horses

Lunch

Tour a local operational grain farm

Riding at farm

Supper

Breakfast

Bus tour to Eastend area

Fossil Research Station, T-Rex interpretive centre

Lunch - picnic at Chimney Coulee

Hudson Bay Company Trading P ost, NWMP P ost, Metis winter camp

Supper in Eastend restaurant

Supper

Breakfast

Riding at Cypress

Optional: depart for Swift Current (Elmwood Golf Course)

SupperSupper

Golf (9 holes at Elmwood Golf Course), return to farm

Breakfast

Bus tour of Wood Mountain and Grasslands Notekeu Museum (P onteix)St. Victor's P etroglyphs

Big Muddy Badlands

Grasslands National P ark

Breakfast

Tour Grasslands area

Lunch at farm

Tour Cypress Hills area

Visiting, relaxing in the lodge

Supper

P hotos, etc.

Depart for Calgary

P ick up guests

Breakfast

Riding or free time to enjoy the farm

Free time around the farm

Our Farm

Operating Expenses:Operating Expenses:Operating ExpensesFood Expenses 29400Van Rental 13400Tour Expenses (Admission, etc.) 9186.84Power and Energy bill 9000Fuel and vehicle maintenance expenses 7759.82Feed Expenses 7601.75Telephone, Internet, and Camera Exp. 7096.5Vehicle Insurance Expense 3384Building Maintenance Expense 2340Vet Expense 2190Bathroom Expense 980.51Cleaning Supplies 1500Employee Training Exp. 870Housekeeping Expenses 3485Business license 420Office Expenses 143.59Total Operating Expenses 98758.01

Summary of Financial ResultsSummary of Financial Results

Year 1 Year 2 Year 3 Year 5 Year 10Net Income (after taxes) -36364 -23699 38840 43412 70890Net Cash Flow 80524 14280 40093 22015 12557Dividends Paid 0 0 23304 32205 52589Growth in Revenues 27.0% 22.1% 2.0% 2.0%Growth in Total OperatingExpenses

18.3% -0.1% 0.3% 0.2%

Capital Expenditures:Capital Expenditures:Capital BudgetOffice Supplies 1778Computer 1499Appliances 4459Furniture 22481Tractor 22000Truck 48000Trailer 27655Livestock 43250Tack 13484Outdoor Equipment 2376Land 15000Buildings 60000Lodge 260053Fuel Tank 3478Kitchen 5154Fences 2000

Total = $532,666

Human Resources PlanHuman Resources Plan

Manager

Head CookBarn Manager

Assistant

CookHouse-keeper

Tour Leader

Tour Leader

Human Resource HierarchyHuman Resource Hierarchy

Wage & Salary ExpenseWage & Salary ExpenseFive-year estimate of total wage and salary costs.

Employee Year 1 Year 2 Year 3 Year 4 Year 5 TotalManager $38,000 $38,760 $39,535 $40,326 $41,132 $197,754

Barn Manager $30,000 $30,600 $31,212 $31,836 $32,473 $156,121Head Cook $8,400 $8,700 $9,000 $9,300 $9,600 $45,000

Assistant Cook $5,940 $6,255 $6,570 $6,885 $7,200 $32,850Housekeeper $6,000 $6,300 $6,600 $6,900 $7,200 $33,000Tour Leader $8,000 $8,400 $8,800 $8,000 $8,400 $41,600Tour Leader $8,000 $8,400 $8,800 $8,000 $8,400 $41,600

TotalWages $547,925

Employee Benefits:Employee Benefits:

Five-year estimate of employee benefits.Benefit 5-year EstimateEmployment Insurance 3.15% $17,260Canada Pension Plan 4.30% $23,561Workers Compensation 2.00% $10,959Medical, Dental, Optical (F/T Perm. Staff) 1.30% $4,600Holiday Pay (Temporary Staff) 6.00% $11,643

Total $68,023

Training:Training:

Training Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year10

First Aid andCPR Training

580 400 400 490 580 400 400 490 580 400

Safe FoodHandling Course

290 290 290 290 290 290 290 290 290 290

Total EmployeeTraining

870 690 690 780 870 690 690 780 870 690

Marketing PlanMarketing Plan

ObjectivesObjectives

• Memorable experienceMemorable experience

• Clean, safe holidayClean, safe holiday

• Fulfill the desires of the customerFulfill the desires of the customer

• Profit objectivesProfit objectives

Potential Market:Potential Market:

• Size of potential market hugeSize of potential market huge

• Main markets targeted:Main markets targeted:– United States United States – JapanJapan

Table 2 Expenditures by visitors to Canada, Table 2 Expenditures by visitors to Canada, Top 5 countries of originTop 5 countries of origin

1999 overnight stays

Source: Statistics Canada, Culture, Tourism and the Centre for Education Statistics

Country of Origin Spending in Canada,C$ millions

Trips Nights spent,thousands

United States 7,149 15,180 58,471United Kingdom 883 780 5,725Japan 572 516 3,192Germany 481 392 5,158France 465 414 4,895

Impact on Future Sales:Impact on Future Sales:

• Baby boomersBaby boomers

• Dollar valueDollar value

• Travel depressionTravel depression

• WeatherWeather

CompetitionCompetition

• Source: other planned vacation providers, Source: other planned vacation providers, especially those incorporating riding and especially those incorporating riding and site-seeing in western Canadasite-seeing in western Canada

• Many small businesses who each have a Many small businesses who each have a very small share of the marketvery small share of the market

• Few sources of competition in SW Few sources of competition in SW Saskatchewan, more in AlbertaSaskatchewan, more in Alberta

Sales ObjectivesSales Objectives• Provide tours for 18 weeks during the summerProvide tours for 18 weeks during the summer

• Expected demand per week:Expected demand per week:Year 1 - 8 peopleYear 1 - 8 people

Year 2 - 10 peopleYear 2 - 10 people

Year 3 - 12 peopleYear 3 - 12 people

* Full capacity is 14 people per week* Full capacity is 14 people per week

Pricing PolicyPricing Policy

• Market-based pricing policyMarket-based pricing policy– $1575 for 7 day week ($225/day)$1575 for 7 day week ($225/day)

• Early-bird specialEarly-bird special– $1450 for 7 day week ($207/day)$1450 for 7 day week ($207/day)

• Cash paid before arrivalCash paid before arrival

How will we compete with How will we compete with established competitors?established competitors?

• Great Location Great Location

• Quality Quality

• Reasonable priceReasonable price

Typical CustomersTypical Customers• Age 30-50Age 30-50

• Medium to high incomeMedium to high income

• Professionals, managers, higher paid Professionals, managers, higher paid office workers office workers

• UrbanUrban

Customer BehaviorCustomer Behavior

• One time purchase; possible repurchaseOne time purchase; possible repurchase

• Purchase in advancePurchase in advance

• Purchase trips via travel agents, internet, Purchase trips via travel agents, internet, e-mail, phonee-mail, phone

Customer BehaviorCustomer Behavior

• Factors influencing decision to buy:Factors influencing decision to buy:– Advertising!!! Advertising!!! – Price Price – IncomeIncome– Seasonality of customer’s occupationSeasonality of customer’s occupation– Age of familyAge of family

Distribution and PromotionDistribution and Promotion

• InternetInternet

• Trade ShowsTrade Shows– Denver National WesternDenver National Western– Calgary StampedeCalgary Stampede

• AlliancesAlliances– Saskatchewan Tourism Website linkSaskatchewan Tourism Website link– Cowboy Trails Website linkCowboy Trails Website link

Markets/Product/Service MixMarkets/Product/Service Mix• Market - touristsMarket - tourists

• Product - horseback rides, sight-seeingProduct - horseback rides, sight-seeing

• Service Service – airport pick-upairport pick-up– mealsmeals– knowledgeable guidesknowledgeable guides– Bus tours to neighboring tourist sites Bus tours to neighboring tourist sites

• Eastend Dinosaur digs, Cypress Hills Eastend Dinosaur digs, Cypress Hills

Marketing BudgetMarketing BudgetItem Cost Total Cost

Trade Booth Allowance Calgary Stampede 1,100Denver National Western 1,738 2,838

Travel Allowance Hotel and meals 5,808Flight 1,358 7,166

Pamphlets 6000@$0.18/pamphlet 1,080Business Cards 6000@$0.0774/card 464Brochure 1000@1.27/sheet 7,620Webpage 500

linked to Sask Tourism 50assoc. w/ Cowboy Trail 180

Laptop*Sales Staff Salary*TOTAL 19,899

Financial PlanFinancial Plan

Financial PlanFinancial Plan

• Taken over 10 yearsTaken over 10 years

• Important costs to consider are:Important costs to consider are:Year 1 Year 2

Total Salaries +Benefits

$75310 $118771

Total OperatingExpenses

$250384 $298167

Total Investments $480675 $460782Total $806369 $877720

Financing:Financing:

FINANCING PLAN

Bank Debt Financing $200,000

Equity Financing $400,000

Total $600,000

Financial Ratios 2002 2006 2011Liquidity RatiosCurrent Ratio 5 9 13Quick Ratio -25.4 -7.1 2Solvency RatiosDebt Ratio 36% 26% 4%Debt to Equity Ratio 55.60% 35.50% 4.30%Profitability RatiosNet Profit Margin -16.40% 12.10% 17.90%Return on Assets -6.40% 8.10% 12.40%Return on Equity -10% 11% 13%Other RatiosKey Operating Exp. as a % of Sales 116% 85% 78%

-

20

40

60

80

100

120

140

1 2 3 4 5 6 7 8 9 10

Year

Qua

ntity

Economic

BaseNet Income

Cash Flow

Break-even AnalysisBreak-even Analysis

Net IncomeNet Income

-40000

-20000

0

20000

40000

60000

80000

1 2 3 4 5 6 7 8 9 10

Year

Net

In

com

e ($

)

-450,000

-350,000

-250,000

-150,000

-50,000

50,000

150,000

250,000

1 2 3 4

$

Base

Worst

Best

# CustomersInvestment Capital

Package Price

Operating Expenses

Sensitivity Analysis (NPV)Sensitivity Analysis (NPV)

Sensitivity Analysis (IRR)Sensitivity Analysis (IRR)

Base Case (%) Worst Case (%) Best Case (%)Amount of Customers 8.4 -3.2 17.6Operating Expenses 8.4 N/a 26.6Package Price 8.4 N/a 27.5Investment Capital 8.4 3.5 14.8

Sensitivity to BuildingSensitivity to Building

The Building NPV IRRBase Case -99803 8.4%Worst Case (+ 20%) -145029 6.0%Best Case (-20%) -54576 11.1%Without Building 126330 27.3%