Real Estate Website Business Plan

We want to finance growth mainly through cash flow. We recognize that this means we will have to grow more slowly than we might like. The most important factor in our case is collection days. Our agents are committed to a year lease with a 30-day cancellation agreement. These 30 days are not prorated and payment comes at the first of every month through direct withdrawal from either a major credit card or electronic transfer. If a credit card transaction fails because the agent has exceeded his/her limit or has received an NSF from his/her bank, he/she will be locked out of the members area automatically. This will prohibit him/her from performing any duties as a real estate agent until the problem has been remedied.

6.1 Funding Options

The owner plans to invest $125,000 of his own money (the proceeds of the liquidation of properties and assets of Hall Properties Realty, Inc.). The cash flow projections show that the business will require $65,000 of working capital during the early months of the first year of operations. If a new corporate site is needed for unforeseen growth, additional financing may be necessary. We have identified three options for raising further funds

1. The sale of equity, perhaps to unknown investors, with a goal to raise between $200,000 and $300,000. This would provide some capital to allow for growth. Any shortfall could be funded either by a line of credit or a bank loan. This option is not needed due to current capital and should only be considered as a term loan with no equity stake.

2. Approach our bank with a view to raising a medium-term loan of $200,000 and a line of credit of $60,000. David Hall could provide any lender with security for part, if not all, of this facility.

3. Option: This third option has been added due to the overwhelming response of real estate agents and other professionals in the real estate field. Our national presence should be guaranteed and only capital will set the pace for accomplishing this goal. Our figures to date have been with no financing, and it could take as long as five years to complete. Our belief is that this period of time could leave an area open for competition and should possibly be addressed now. Our figures, though not set in stone, should be placed at $1 million, but that should be considered low end. If you take into account the other untouched markets that have not been addressed in Phase 1 of our plan, we should be ready to seek an additional $1 million for future growth as the need arises .

6.2 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. From the beginning, we recognize that collection days are critical, but not a factor we can easily influence. At least we are planning on the problem, and dealing with it. Interest rates, tax rates, and personnel burden are based on conservative assumptions.

Some of the more important underlying assumptions are: 

• We assume a strong economy, without major recession. 
• We assume, of course, that there are no unforseen changes in technology to make our products and services immediately obsolete. 
• We assume that no laws will change to interfere with the real estate market as we see it now.

6.3 Break-even Analysis

The following chart and table summarize our Break-even Analysis. With fixed costs of $37,000 per month at the outset (a bare minimum), we need to bill $45,000 to cover our costs.

6.4 Projected Profit and Loss

Our projected profit and loss is shown in the following chart and table, with sales increasing from $7.78 million the first year to more than $77 million in the third, and substantial profits even in the start-up phase of the business.

6.5 Projected Cash Flow

The company’s projected cash flow analysis for FY2001-2003 is provided below.

6.6 Projected Balance Sheet

The following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position.

6.7 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 6531, Real Estate Agents and Managers, are shown for comparison.