«Business Plan Updated 5/4/11 THIS BUSINESS PLAN IS FOR INFORMATIONAL PURPOSES ONLY. THIS BUSINESS PLAN DOES NOT CONSTITUTE AN OFFER TO SELL OR A ...»
If we achieve these results our three-year cumulative average profit margin is 24%. However, to examine our actual results from operations for profit margin purposes it is important to take into account the contributions we make to socially conscious businesses and other organizations and the amount we pay to our Founding Members. Contributions total 9.5% of our gross revenues. Payments to Founding Members total 1.25% of gross revenues over the three year period. Therefore, profits from operations are actually nearly 35%.
Following is a review of each of our five major profit centers from the perspective of gross revenues, cost of revenues and operating margin.
As the data reflects, each of our major profit centers has a healthy operating margin. Since we are a memberdriven organization, our most important business unit is Join The SCENE. The operating margin of this most important business unit is 50% giving us a wide latitude in developing additional membership benefits, adjusting commissions and bonuses, altering service packages and changing prices of individual product or service driven benefits. The Greenfoot Global revenue is purely passive in nature, due to the high position we hold as a Company in the GFG organization and to the nearly 30 Compassion Happens re-sellers who help build our passive income stream as they grow their own GFG businesses.
Founding Members may currently purchase stock in the Company at five cents per share. This price is only available until all available Founding Member positions have been sold. Founding Members enjoy many benefits including a share in our gross revenues during the first three years of operations. This is reflected in our financial projections and, as described above, is projected to be valued at approximately $725,000. This amount is split equally among the 20 Founding Members. The average Founding Member position would thus be worth about $36,000 over three years. This amounts to just under a 100% return on investment. Founding Members also enjoy all the benefits of other common stock holders in the Company, including a pro rata share of declared dividends as more fully described in our Founding Member Program documents.
Shortly, the Company will release its Private Placement Memorandum, with a goal of selling additional common shares at twenty cents per share. We plan to offer 20,000,000 shares under the PPM.
Exit Strategy Our priority at this time is to build our networks, particularly The SCENE. We project a total membership in The SCENE of about 65,500 after three years, with 50% of that being paid membership. We project that on average each paid member is worth approximately $2,000 per year in revenues to the company at an average profit margin of 40%, yielding a gross profit per paid member of about $800 annually. On a three year rolling basis, taking into account both new entrants and our standard attrition rate, we expect that each paid member is worth $1,800 in long-term income value to the Company. With a paid membership of 32,750 at the end of Year Three that equates to an annualized long-term (three years forward) income value of nearly 60,000,000. During Years 4 and 5 we expect paid membership to grow to 100,000 globally. At this membership level the annualized long-term income value of the membership to the Company is $180,000,000.
Our other business units are smaller, but together comprise the added value services, products, events and business opportunities that will continue to drive membership higher and increase the overall value of The SCENE in the marketplace. We believe that during Years 4 and 5 we will be an ideal candidate for acquisition by a large market player seeking to purchase a network of socially conscious entrepreneurs. We believe this is a
strong possibility for five reasons:
In five years the socially conscious business movement will have become the standard bearer for how nearly all companies try to operate. Its principles and practices will be widely adopted and nearly 100% of established companies and new businesses will want to form and grow using these principles. As an established education, training and ―how-to‖ services provider, we will be seen as a thought and content leader in the marketplace.
Consumer preferences, as demonstrated by the dramatically growing purchasing power of LOHAS (Lifestyles of Health and Sustainability) consumers, will continue to move toward socially conscious and socially responsible businesses, products and services. This will increase the value of our network and our education and training products in the eyes of a large market player seeking to be firmly aligned with consumer preferences.
Business will continue to move online and depend on social networking and social media to generate attention, drive value and focus branding on valuable niche markets. Our network of socially conscious entrepreneurs and home-based business owners will be an ever-more cohesive and attractive group for a large market player seeking to bring its products and services to a well-defined demographic.
Speed will continue to be one of the most important market forces for larger companies. New products, new ideas, new services and new branding and value creation must now be done incredibly fast.
Companies that see value in our network of socially conscious entrepreneurs and home-based business owners will seek an acquisition because the time to create a similar group would be far too long.
We’re a conscious business serving other conscious businesses. As an acquisition target our Company will benefit greatly from the combination of the four factors listed above, combined with our form, structure and outreach that is already grounded in conscious business practices. Any acquirer seeking a foothold or an expansion in conscious business products, services and practices will be attracted to our Company because it has been authentically built within these practices.
Therefore, we plan to grow the Company networks now, in order to be an excellent acquisition candidate within 4 to 5 years. If we achieve our primary benchmarks for The SCENE membership and long-term income value per member, we can expect a valuation of at least $100,000,000 and perhaps as high as $200,000,000. With 100 million current shares, an investor who purchases stock at five cents per share would have potential ROI of 20 x to 40 x after 5 years. An investor who purchases our PPM stock at twenty cents per share would have potential ROI of 5 x to 10x.
Addendum I: Financial Summaries Financial Projections Assumptions for Financial Projections Projected Balance Sheet Projected ROI