Ten Not So Easy Steps In Securing The Financial Success of Your FEC

Transcription

1 IAAPA Attractions Expo 2010 Ten Not So Easy Steps In Securing The Financial Success of Your FEC Presented By: Rich Sanfilippo, President Jerry Merola, Managing Partner

2 Top 10 Success Factors Concept Development Location Capital/Operating Budgets Competition Weather/Environment Occupancy (Lease v. Own) Economic Conditions Business & Financing Structures Management & Sales Strategy Maximize ROI

3 1. Concept Development Clear Analysis of Market Opportunity Feasibility Study Business Plan Establishment of Design Direction Site Plan Schematic Drawings Uniqueness of Entertainment Offerings Games & Attractions Food & Beverage Concessions Establishment of The Entertainment Value Proposition

4 Focus On Becoming A Market Leader

5 2. Location, Location, Location Suitable market demographics Sufficiency of site or structure Pro-business nature of municipality Accessible road networks Visibility by consumers Financing implications Competitive Threats

6 Site Selection And Style Is Key!

7 3. Capital & Operational Budgeting Match development budgets to long-term market capability Balance operational budgets against likely short-term revenue attainment Focus on creating a sustainable investment Consider re-investment requirements

8 Budgeting Provides A Basis For Sound Management Decision Making

9 4. Competition Assess the market s current competitive climate Identify competitors capabilities and offerings Compare pricing and guest service programming Consider competitive advantages of specific real estate locations

10 Excel Above The Competition From Ordinary To Extraordinary

11 5. Weather / Environment Identify localized risks associated with temperature, precipitation, and hours of daylight Consider length of operating year and requirements necessary to service guests Examine prior tenant or land use histories for environmental risk assessment

12 Environmental Impacts Are the #1 Cause of Missed Objectives Superfund Clean-Up Sites

13 6. Occupancy Right-size your business Every square foot counts! Research fixed and variable expenses Taxes Utilities Association/Complex Dues Understand Common Area Maintenance (CAM) charges Consider financing implications Compare ownership vs. leasing options

14 Is My Budget Sufficient To Renovate This Space? How Much Can I Afford To Spend On Rent? Am I Land Locked? Should I Lease Or Buy?

15 7. Economic Conditions Track consumer spending habits Study impacts on commercial real estate Pricing availability Assess availability of financing Government soures Private funding Understand the industry s historical performance

16 widespread unemployment

17 8. Business & Financing Structures Select Appropriate Ownership Format Sole Proprietorship Partnership Corporation Subchapter S designation C Corporation LLC - Limited Liability Company Position Yourself For Financing Small Business Administration Economic Development Authority United States Department of Agriculture Private Investors

18 Typical Financing Structures Option #1 Option #2 50% Traditional Bank Debt 30% Government Direct Loan 20% Developer Equity 75% Traditional Bank Debt Government Sponsored Bank Guarantee 25% Developer Equity

19 9. Management & Sales Strategy Management Protocols Establish hierarchy within organization Hire Expertise Finance Sales & Marketing Human Resources Operations Become Skilled At Every Job Description Empower staff through training and disclosure of operational performance data Lead by example

20 An Organized Entertainment Business Provides A Solid Foundation For Its Staff and Guests Executive Management General Manager Food Service Manager Entertainment Director Front End Hostess Lead Bartender Chef Currency Control Manager Maintenance Tech Control Desk Manager Party Hostess Marketing Manager Server Bar Support Asst. Cook 1 Asst. Cook 2 Currency Clerk Junior Tech Redemption Staff Assistant Hostess Special Events Coordinator Server Server Server Server Server Server Server Server Bar Support Bar Support Bar Support Bar Support Food Prep Class 1 Food Prep Class 1 Food Prep Class 1 Food Prep Class 1 Food Prep Class 2 Food Prep Class 2 Food Prep Class 2 Food Preparer Class 1 Food Preparer Class 1 Food Preparer Class 1 Food Preparer Class1 Food Preparer Class2 Food Preparer Class 2 Food Preparer Class 2 Attraction Attendant 1 Attraction Attendant 2 Attraction Attendant 3 Attraction Attendant 4 Attraction Attendant 5 Attraction Attendant 6 Attraction Attendant 7 Assistant Hostess Assistant Hostess Assistant Hostess Assistant Hostess Server Food Prep Class 2 Food Preparer Class 2 Server Server

21 Management & Sales Strategy Sales & Marketing Protocols The Big 8 Hire top salespeople the best outsell 4:1 Be different stand out from your competitors Build relationships with guests Collect every stitch of contact information from your guests Offer on-line reservations, tools, and sales options Create guest service standards - The 10 Commandments Utilize pay-per-click and social media advertising methods Allocate time marketing is the lifeblood of the business

22 10. Maximize ROI Incorporate financial controls that permit operation to meet or exceed stated objectives Structure lending transactions with appropriate repayment amortization schedules Control two largest cash consumers: Occupancy cost Labor Utilize key financial indicators to guide investment decisions Define your exit strategy now Protect management through employment contracts Lock in investor upside returns

23 Key Financial Indicators Current Ratio Net Working Capital Ratio Debt-to-Worth Ratio Return on Assets Return on Equity Net Profit Margin Debt Coverage Ratio

24 Questions? Jerry Merola, Managing Partner AEM, LLC 12 Elkins Road East Brunswick, NJ Rich Sanfilippo, President Sam s Fun City 6709 Pensacola Blvd. Pensacola, FL Richard@samsfuncity.com