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Table of Contents 1.0 Executive Summary...........................................................................1 1.1 Introduction......................................................................................................................................................1 1.2 Business Strategy Overview.........................................................................................................................5 1.3 Opportunity......................................................................................................................................................6 1.4 Expectations.....................................................................................................................................................8
2.0 Development Impact......................................................................10 Socio Economic Impact ....................................................................................................................................10
3.0 Opportunity ......................................................................................12 3.1 Problem & Solution.......................................................................................................................................12 3.2 Target Market.................................................................................................................................................16 3.3 Competition ...................................................................................................................................................18
4.0 Execution ..........................................................................................22 4.1 Marketing & Sales .........................................................................................................................................22 4.2 Operations .....................................................................................................................................................26 4.3 Milestones & Metrics ...................................................................................................................................29
5.0 Company ...........................................................................................32 5.1 Overview .........................................................................................................................................................32 5.2 Team ................................................................................................................................................................32 5.3 Skills Development ......................................................................................................................................34 5.4 Legal and Regulatory Overview ...............................................................................................................35
6.0 Strategic Analysis ............................................................................37 6.1 Analysis Overview ........................................................................................................................................37 6.2 Porters' 5 forces.............................................................................................................................................37 6.3 Swot Analysis ...............................................................................................................................................40 6.4 Risk Analysis..................................................................................................................................................41
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7.0 Financial Plan...................................................................................44 7.1 Forecast ...........................................................................................................................................................44 7.2 Financing .......................................................................................................................................................48 7.3 Statements ......................................................................................................................................................51
Appendix ..................................................................................................57 Profit and Loss Statement.................................................................................................................................57 Balance Sheet.......................................................................................................................................................64 Cash Flow Statement..........................................................................................................................................71
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1.0 Executive Summary 1.1 Introduction Introduction Effective management of residential, commercial or industrial schemes, is an integral, crucial, and a time-consuming element for the well-being of any property, which, when done correctly, can add substantial value to a property investment. Spes Legacies (Pty) Ltd is an existing property management company based in Cape Town, Western Cape which currently manages 40 bedroom units that are primarily used for international student accommodation. The company's business model has been to lease buildings that are owned by landlords which are then subleased to students. The company, therefore, manages the property on behalf of the principal owner but with a slightly different model from what is commonly known in residential or commercial property leasing in South Africa as shown in the business model overview. Purpose of Business Plan The primary goal of this business plan is financial: Spes Legacies (Pty) Ltd needs funding of R 11, 7 million and this document is the first step in the process. The capital will be used to secure the sale of two adjacent properties in which we will conduct the business in, the finance to effect the transfer of the property as well as the capital to renovate and refurbish some of the areas in the house. Property Information The property that is being proposed to be bought is located at 16 Wolmunster and 11 Cecil Roads, Mowbay, Cape Town. The property is currently owned by Ravenscoe Properties 109 CC whose registration number is 2000/019439/23. An agreement of sale has been entered between the founder of Ravenscoe, Mr. PH Munnik the current owner and Nokulunga Zondi the owner of Spes Legacies. The two properties adjacent to each other sit on a total of 1 443 square meters. The first property sits on 998 sqm whilst the second one sits on 445 sqm. The stands have been consolidated by the City of Cape Town and are zoned as general residential 2 (GR2).
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The Sale is to be completed through a firm called MAURICE PHILLIPS | WISENBERG who specialize in Property Law. MAURICE PHILLIPS | WISENBERG was formed in 1995 by the 2 founding partners and has since developed to its current niche providing a range of wellrespected legal services tailored to the needs of its clientele. MP|W now has 4 conveyancers, all well-versed in the various laws that impact on Real Estate in SA. They are part of the well respected MSI Global Alliance providing a local and international presence for all its clients.
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The business plan is also a roadmap for the company. The document gives all present and future employees, as well as the owner a sense of purpose that may exist without the business plan, but becomes more relevant after the business plan is written, reviewed, shared, and edited by all. It is a living document that will last far beyond the purpose of raising a loan, or if that doesn't occur, to bring an investor on board. This business plan is instrumental in helping the business understand the external environment, industry, market and internal environment that it shall operate in. It articulates the operational, marketing, human resource and financial requirements of the business. The business plan will be invaluable in the following areas: •
Determining the commercial viability of the property management business
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Examining the business idea from different angles
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Outlining a clear vision and mission
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Outlining strategic goals and objectives and later devising comprehensive strategies
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Establishing comprehensive measures to evaluate the success of the business
Company Overview The current business position of Spes Legacies (Pty) Ltd is an SME. The company was formed and registered in 2016 but started operating in 2012 albeit as an informal entity. Spes Legacies is 100% black and female owned by an ambitious lady called Nokulunga Zondi. Nokulunga holds two degrees from the University of Cape Town. The first degree is a bachelor of Social Sciences, with a triple major in Politics, Sociology, and Social Anthropology. She then went on to do the LLB and did her electives in the law of Cession, Corporate law, European Union law and Refugee and Immigration law. However, with a sharp business insight and based on her university experience she identified a gap in the student accommodation market and even more precisely the international student accommodation segment. Nokulunga Zondi has been providing accommodation to students for the past four years. These students are mostly South African or African students from other African countries and in 2016 it was students from the United States of America and students from the European continent. Nokulunga Zondi (now the company – Spes Legacies) has renovated houses, advertised and placed the students in the accommodation and drafted lease contracts for the students.
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1.2 Business Strategy Overview 1.2.1 Objectives The company's objective is to build quality, full-service residential property rental services to its clients. Our goals include: 1.
Raising funding of R11, 7 million to purchase the buildings.
2. Offer a clean, healthy and conducive environment for students to stay in. 3. To provide accommodation for at least 5% of the international students that come to the University of Cape Town, with the possibility of expanding to accommodate 10% of the students in the year 2018. 4. To be the best international student accommodation company in the Southern suburbs of Cape Town, providing comfortable, luxurious accommodation to students at a fair price to the international student market. 5. To expand the company to not only deal with accommodation for international students but to expand to include the middle class South African students. 6. Constantly monitor the intra and inter behaviour of students (in our premises) to create and maintain the professional environment we want to build for others. (No student will be allowed to be unbecoming towards others e.g. making noise, have parties as this would affect others) Our fundamental objective is to ensure that a living and learning environment is the foundation of our accommodation culture. Every effort is made to ensure that students' residence life experience will foster their holistic development as well as being fully supportive of their academic program. Our residence should be a community in which one meets a range of diverse students and forges life-long friendships. 1.2.2 Mission We serve to please - Spes Legacies provides high-quality, comfortable units for international students at UCT. The company’s house units offer state-of-the-art living conditions reflective of the growing need for quality student housing. Our company is dedicated to a hassle free living environment in which our tenants can enjoy all of the benefits of safe, attractive, and
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inviting units. Unlike many other property companies that are solely concerned with turning profits, our primary objective at Spes Legacies is to maintain the highest level of customer satisfaction that is achievable. Tenant safety, happiness, and comfort are our main goals. Spes Legacies will maintain competitive market prices while working toward expanding the number of units owned, and increasing total profits earned. Within the company, we will strive to work as a cohesive, harmonious unit focused on exemplifying our mission. 1.2.3 Keys to Success 1.
Safe, quality housing that provides state-of-the-art accommodation facilities at competitive prices.
2. Maintaining open communication between Spes Legacies and its customers in order to ensure the highest level of customer satisfaction and long lasting reputation within the community. 3. To continue to expand the number of units owned and maintained, while also increasing the level of profits for Spes Legacies. Business Model Overview This business model is slightly different from other property letting agencies who just manage tenants on behalf of the principal owner(s). We completely become the primary tenants of the landlords to whom we pay a fixed fee per month as stipulated in our agreement for the whole building(s). We then renovate the building according to the specifications outlined by the University of Cape Town and get certified to use the buildings for student accommodation. The difference between the revenue generated through student accommodation and the monthly fee we pay to the landlord is the revenue we accumulate. Our focus in not on every type of student accommodation but particularly based on international student accommodation. This business plan will outline why we chose this segment and what motivates us to keep sharply focused on it.
1.3 Opportunity Market There is a huge market in Cape Town for international student accommodation services, with plenty of profitable business to have. Nearly 4 000 people have been identified as an attractive immediate market to which Spes Legacies (Pty) Ltd has to direct its attention whilst the overall
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market of student accommodation has more than 20 000 active educational students (both national and international). Capturing market share at a profit is definitely achievable. The key to winning over this market segment is to create a conducive atmosphere suited for student activities. The total size of the market was 4682 in 2014 and was predicted to grow in 2015. However, due to the protest actions that have ensued at the Universities country wide, this number will stay the same or will increase slightly due to the introduction of international academic exchange contracts being established with Universities in China and Asia at large. This leads us to estimate that the size of the market is currently at 5000 students coming from abroad and who are looking for accommodation at the University of Cape Town or close to the University. How fast is the market growing? The market is growing extremely fast due to the fact that Cape Town has become one of the top ten destinations to visit for holidays and tourist reasons. This is aided by the fact that Cape Town has one of the Seven Wonders of the World, Table Mountain, which our properties have a beautiful view of. The University of Cape Town is a leading institution in South Africa and indeed Africa as an academic institution and many students are coming to study at the University of Cape Town. This is indicated in the number of international students who come to study at UCT (4682) but who cannot all be accommodated at UCT residences, as only 120 can be accommodated. “The likelihood of a first-year student passing is increased from 60% to 80% if they stay in residence,” said John Schooling‚ MD of STAG African. “The negative pass rate is, even more, staggering at previously disadvantaged universities‚ where it is common for six or more students to share a room‚ simply because there is no alternative. “Accommodation for students is more than providing a place to sleep; it’s about creating communities; a listening‚ learning and living environment. This is crucial to the success of the housing facilities provided by the university‚” says Schooling. Stag African is a large student accommodation company based in South Africa. STAG, together with our valued partners, has been responsible for over R1.3 billion in development in South Africa and our projects have been met with consistent acclaim. Why Us? - Our Value Proposition To the Students If you’re looking for a luxury home, delicious home cooked meals, independence and fun house evenings geared towards introducing our students to the South African cultures and
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ways of life, welcome to Spes Legacies. The value for our customers is that they are not isolated from really experiencing University life abroad, because of distance, as our homes are located at the doorstep of the University. The students will have access to sports fields, the University gym and the University computer labs which are all five minutes’ walk from the houses. To the landlords For landlords and property investors, Spes Legacies’ multi-channel marketing, industry experience, brand visibility and pre-screened tenant waiting lists, ensures that your property investments are quickly and effectively leased to approved tenants at competitive rentals. Spes Legacies ensures that all the correct tenant application screening and legal processes are followed with signing a new lease, thereby safeguarding and maximising rental income on rental properties.
1.4 Expectations Forecast Spes Legacies (Pty) Ltd’s financials are realistic, and based on very conservative sales figures relative to the property industry as a whole. That is because one of the goals of Spes Legacies (Pty) Ltd is to build the business one client at a time, and to serve each client as if it were the last. This is how loyalty is generated, and cultivated. Customer service is what Spes Legacies (Pty) Ltd will do best, and is a large part of the company's overall mission.
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