Really am letting myself in here for a slaughtering
so be easy with me, but here's the first draft of my business plan for bitB Properties, a letting company targeted at mainly expats in Budapest. I wrote this after 3 hours sleep on a 2 hour flight using my phone so expect the odd spelling mistake!
Business Plan for bitB Properties, market leader property expert company based in Budapest and beyond.
"Our aim is to be the definitive choice in Budapest for property rentals and exciting construction & property development in and around the city."
Index
1- Front Page
2- Business Plan, notes & assumptions
3- Index
4- Executive Summary
5- Funding and capitalization plan
6- Proposed site and the concept
7- Management overview
8- Initial Staffing
9- Operations
10- Premises and equipment
12- Competition analysis (a) - Rentals
13- Competition analysis (b) - Construction
14- Competition analysis (c) - Purchasing
15- Costing and pricing
16- A look at potential projections
17- Marketing strategy (a) Networking: Wooze and Smooze
18- Marketing strategy (b) Focused FB ad space: get in their faces
19- Marketing strategy (c) Word of Mouth
20- Swot Analysis & Risk Analysis with explanations & solutions
21- Summary and thoughts
4- Executive Summary
Introducing bitB Properties to Budapest
bitB Properties was born from a personal and community frustration towards the property management companies based in one of the most rapidly expanding cities in the world. With the lack of professionalism, and heavy cannibalization and monopolization from "airBNB" most rental companies, especially those facing English speaking tenants seem to have simply give up trying to offer a premium service.
bitB Properties business and growth into areas such as construction, development and commercial expansion will depend solely on its reputation throughout the city. bitB Properties will be initially focused on giving the best customer experience for both the tenant and the landlord.
The user experience for the tenant will start on a state of the art interactive website, progress through exemplary face to face customer service and continue through regular face to face and virtual communication.
The user experience for the landlord will start at functions, dinners and public meetings, progress through a follow up meeting and develop and flourish over hopefully many separate rentals of their properties.
There are numerous potential spin offs that can be built into bitB Properties at a later date that will allow the company to grow to the next level as further increase turnover.
5- Funding requirement & capitalization plan
The business will not require a large amount of initial capital to fund the launch of the business. €10,000 will be injected initially for a small central office space to allow interaction with new and current clientele.
€3000 will be injected initially for interior design including but not limited to computers and office equipment.
€7500 will be injected initially for website expansion.
Up to €1,000,000+ will be injected long term on purchasing properties.
The company will consult with local experts and authorities about potential start up company grants that they will be entitled to.
6- Proposed site and the concept
Working alongside Laszlo Nagy, management will consult, see, find and purchase an office space somewhere in either the 5th, 6th or 7th district that allows staff to work efficiently and optimally, maximizing the amount of potential viewings in each day.
bitB Properties has been found and created because property companies are shying away from the prospect of battling against AirBNB for market space. Reasons why companies are currently failing is 1) Incompetency, 2) Inferior Websites to leading external competitors such as AirBNB and 3) Innovative mindsets. bitB (best in the business) prides itself on competency, punctuality, hard work and innovation. There is currently thousands and thousands (find exact number at later date) of English only speaking people living in Budapest and renting apartments off rental agencies.
The goal for bitB is to simply capture 100% of the market share of English speaking tenants and acquiring them through word of mouth marketing that will in turn make the rival agencies die a slow death as their customers decide to come to us for their next long term rental contract.
Whilst the reputation and focus of the company will be built from doing as many successful rental contracts as possible, it's aim will be on bigger and better things, maximizing revenues by securing construction deals on all levels and minimizing costs with efficient and affordable outgoings.
The company will hopefully be the rental company that all landlords want to use. bitB will use this to its advantage and find, negotiate, renovate and rent properties that they can assess are of high value compared to others on the market at a higher price. The portfolio of bitB properties should be forever growing and leading to a huge revenue driver.
The goals of the company will be to grow in 2 years to the extent that
1) It isn't a question in people's minds where to go to when wanting to rent an apartment in Budapest.
2) Exciting construction contracts are regularly being offered to us and we expand to hiring multiple project mangers reporting back to management regarding progress
3) The company looks to move internationally and secure contracts to push revenues to a different standard all together.
4) The company owns a large portfolio of properties that they are able to either sell at a later date or continue renting out for regular income.
7) Management overview
Management:
Patrick Leonard, owner & CSO (Chief Strategy Officer)
Leonard will initially be the sole investor in the company, providing the entire cash flow and thus being the majority equity holder. Working on the business development and strategy of the company, Leonard will be focused on the initial growth and expansion of the company, including the initial set up, projections and elimination potential problems whilst thinking innovatively to ensure the company is the best property company in the city.
xxxxxxxx xxxxxxx, CCO (Chief Construction officer)
A young yet relatively experienced member of the construction industry, xxxxxxxx will be pivotal to the short and long term success of the company as she will be trusted with the responsibility of sourcing and securing jobs and projects that will allow the company to work with very high revenues and eventually grow internationally. xxxxxxxxx will also work alongside Leonard with the strategic side of the company and offer assistance and consultation to paid staff members. xxxxxxxxxx bilingual ability & her overall competency and charm are exactly the level of standard that the company will demand from its future employees. xxxxxxxxxxxx will receive both an initial basic salary & equity in the company, both to be decided at a later date.
Additional/Initial Staffing
bitB will employ
- 2 full time salesman/woman who will work on helping persuade potential tenants to sign contracts whilst assisting in the management of the properties in certain cases.
- An initial web developer to create the base website
9) Operations
bitB will look to launch in August 2016, ensuring set up is ready and prepared for the huge influx of international students coming to the city in September.
Office space will be acquired at the end of June and all strategic business decisions and set up will be done between now to August to ensure the final product is that of an exemplary standard.
Recruitment will be done between July 20 - August 20 and full staff training will be done between August 20 - September 1st allowing for no excuses of incompetancy.
xxxxxxxx and Leonard will look to do intensive market research between April - June and between April and September (and beyond) both will look to network as much as possible including functions, dinners and other opportunities to speak with prominent business and property owners.
10) Premises & Equipment
As previously stated, bitB will source and purchase an office space in either district 5, 6 or 7 that allows staff to work efficiently and productively whilst "putting our face in the windows of all our potential customers"
New computers, chairs, tables and simple decor will be purchased to continue the feel of a company of the highest quality rather than some rogue traders or "another rental company".
10-12 Competition Analysis (Rentals)
There are currently X amount of rental companies working in Budapest
There are currently Y amount of properties listed on Albertlet
There are currently Z amount of properties listed on airbnb
There are currently A amount of properties listed on Albertlet under 300€ a month
There are currently B amount of properties listed on Albertlet between 300€ - 500€ a month
There are currently C amount of properties listed on Albertlet between 500€ - 750€ a month
Currently there are
There are currently D amount of properties listed on Albertlet between 750€ - 1200€ a month
There are currently E amount of properties listed on Albertlet between 1200€ - 1600€ a month
There are currently F amount of properties listed on Albertlet between 1600€ - 2000€ a month
There are currently G amount of properties listed on Albertlet between 2000€+
There are currently A amount of properties listed on Airbnb under 300€ a month
There are currently B amount of properties listed on Airbnb between 300€ - 500€ a month
There are currently C amount of properties listed on Airbnb between 500€ - 750€ a month
Currently there are
There are currently D amount of properties listed on Airbnb between 750€ - 1200€ a month
There are currently E amount of properties listed on Airbnb between 1200€ - 1600€ a month
There are currently F amount of properties listed on Airbnb between 1600€ - 2000€ a month
There are currently G amount of properties listed on Airbnb between 2000€+
Based on this analysis we can make an accurate assumption that X, y, z
Because of these assumptions the companies focus regarding rentals should be a, b, c because e, f, g
13) Competition Analysis (construction)
(Unsure exactly what to do here, xxxxxxxx to brainstorm and complete)
Based on this analysis we can make an accurate assumption that X, y, z
Because of these assumptions the companies focus regarding construction should be a, b, c because e, f, g
14) Competition Analysis (purchasing)
(Patrick to ask Lazslo to create a full written overview of the property purchasing market over the last 5 years focusing on prices, politics and the current state and concluding the report with suggestions, ideas and potential roadblocks.
15-16 Costing & Pricing + A look at potential Projections.
A) Rentals costing & pricing + potential projections
In our market research we will understand better exactly how much rental companies and AirBNB are charging to landlords for their services to give us a clearer indications of margins.
Management will be focused on the long term development side of the company and looking for overall growth rather than their initial salary.
Initial costing for setting up an office and fully functional and modern website were €21000 (€10,000 rent, €3500 interior design, €7500 website)
Marketing (see 17-19) will be given an aggressive €2000/month cap
Salesmen/women for thewill be given an attractive 25% royalty fee for each rental.
Working on 2 different projections (pessimistic) (optimistic) we are left with these (largely estimated numbers
Important: All fixed costs are put into rental side of the company thus putting negative stance on initial figures, especially for year 1.
1- Pessimistic
Year 1
Costs €45,000 (office + interior design + website + marketing)
Rentals = 52 apartments at €400/apartment = €20800
Salesteam bonus = €5200
Year 1 = - €29400
Year 2
Cost €20,000 (office €10,000 + marketing €10,000)
Rentals = 150 apartments at €400/apartment = €60000
Sales team bonus = €15,000
Year 2 = +€35000
Year 3
Cost €15,000 (office €10,000 + marketing €5000
Rentals = 200 apartments at €400/apartment = €80,000
Sales team bonus = €20,000
Year 3 = +€45000
Optimistic
Year 1
Cost €45,000 (office+ interior design + website + marketing)
Rentals = 150 apartments at €400/apartment = €60,000
Sales team bonus = €15,000
Year 1 = Breakeven
Year 2
Cost €20,000 (office + marketing)
Rentals = 350 apartments at €400/apartment = €140,000
Sales team bonus = €25,000
Year 2 = +£95,000
Year 3
Cost €20,000 (big office)
Rentals = 700 (15/week isn't too unreasonable) = €280,000
Sales team bonus €50,000
Year 3 = + €210,000
Year 4 =
Cost €20,000 (office)
Rentals = 1500 (30/week) = €600,000
Sales team bonus = €120,000
Year 4 = + €460,000
B) Construction costing & pricing + potential projections
xxxxxxx to complete potential projections based on accurate information for both pessimistic and optimistic outcomes.
Important: All fixed costs have been put into the rentals side of the company, the construction side of the company instantly works at a profit.
C) Property purchasing, costing & pricing + potential projections
Leonard to complete potential projections based on accurate information for both pessimistic and optimistic outcomes.
Important: All fixed costs have been put into the rentals side of the company, the property purchasing side of the company instantly works at a profit.
Overview of projections, costing and pricing
The long term potential of the company is outstandingly huge. Building a reputation on competency whilst turning over modest amounts to allow the growth of the company through acquisitions of construction and property purchasing will allow the company to grow on a year to year basis. All numbers are subject to change after the rental report and feedback from Lazslo and other local experts.
17) Marketing Strategy (a) - Wooze and Smooze
Between April - September, Xxxxxxxx and Leonard will try and befriend as many property & construction investors, tycoons and enthusiasts in Budapest. The system will be relatively clear:
1- Meet potential client
2- Wooze and Smooze
3- Give business card and receive business card
4- Always send a follow up email in the morning and try and arrange a time/date/place to take them for dinner/whatever else
5- Plan each meeting strategically, what we want to get out of it, what the goal is
6- Reach some kind of potential agreement in dinner, impress them a lot with our expertise, competency, enthusiasm and all round like ability.
18) Marketing strategy (b) Get in their face
Between June - September we will advertise a marketing campaign all over Facebook and other popular areas for Expats / Students with a "we're coming" signal that starts to push the brand into our target audience.
Once launched we will have dedicated as space set up regularly to keep our company in the view of everybody. Local advertising can be used popular local bars such as House Bar, Godzsdu etc
19) Marketing strategy (c)
We will deliver the best product. People love to talk about their apartments. They love to show off their apartments and people always ask others for help about apartments. Our service will be of the highest quality that people will always recommend us, there will be no other choice. Fuck Airbnb and their inflated prices, fuck Albertlet with their awful customer services and fuck all the other sites with their awful unworkable websites
20- Swot Analysis & Risk Analysis with explanations & solutions
Strengths-
We have multi dimensional yet inter-linkable revenue streams that blend in perfectly
We have good experience in all of these areas
Budapest is a growing market, every year more English speaking people move here
We are competent
We will have the best website in the industry
We are very well connected in Budapest and know a lot of good people whilst also having the correct personalities for networking with new people
Weaknesses-
AirBNB has shifted a lot of focus away from rental companies and cut out the middle man (even though Airbnb still take a fee)
We're not currently functional, no space, no business, no website
Opportunities
AirBNB bubble could likely pop once the prices vs average wage get unsustainably high
Huge potential chances of contracts for construction side of the company
Huge advantage in terms of acquiring the best houses in the for sale market with opportunity of high margins for re-selling
Could also lead into property management, 100 properties c €100/month = €120,000/year (huge revenue stream especially if can get to more properties) once reputation gets to acceptable level we would be the trusted, reputable company people would want to look after their house.
Threats
Real estate is always popular company for people to do and other new competent competitors could swing in and take some of our market share
21) Summary and thoughts
Despite writing this on a 2 hour flight I think the business model is extremely solid and we have a lot of foundations for initial stability whilst also a huge opportunity for exponential growth. The idea of the company being the leading property company in Budapest renting out 500 properties a year, having a portfolio of 50 purchased houses and working on national and international construction contracts may on the surface seem ambitious but in hindsight seems manageable.
As in any business there will always be set backs, unexpected costs and lots of lows, but with our two personalities I think there is extremely good chances for other doors to open.
I'm looking forward to hearing your feedback and thoughts.