Money Trees
Show me the money….or at least, how to get the money.
More Money really does mean more problems
While we had a solution in place - build a location with 2 skatemills, 3 shooting lanes, a goalie corner (because my kids are goalies!), full gym, proshop, and restaurant. This was not cheap to do.
Have you ever done a financial forecast before? Unless if you are into finance, a CPA, or just really enjoy doing numbers, it is miserable to put together. I know my limits and enlisted the help of a trusted colleague from the past to help with the first swing of building that all important financial outlook. This document is the most important document you can have. It determines if our company can be profitable, how long it will take to do that, how much we need to make on a monthly basis to cover bills, how long it will take the company to breakeven, and so on. It required access to resources that I did not have, in order to compare to other ‘similar’ industries. EVHC was a little different because it combined three separate industries into one location. PLUS, we did not consider the restaurant as a profitable piece - we just want to breakeven there and call it a day. Thank goodness for my friend Marilyn.
Marilyn helped me gather all the costs, helped estimate budgets appropriately, and organize what our startup costing was going to look like. There were a lot of costs….so how were we going to pay for everything.
This is the biggest question every business comes to - how to price services or products that a costomer will be willing to pay. For EVHC, our service is our product. Our technology is our consumable good.
We were thankful for HDTS again, as they had model pricing to share with us. However, we understood the market and considered what cost the market was willing to bear. Prices in San Diego would not work here.
Hockey is the most expensive sport in the country. A survey listed that nationally, hockey cost $2,700 annually. Living in Hampton Roads, I wish hockey actually cost me that much! We have goalies. We paid the same amount for the season as everyone else (no goalie discount, which was a usual courtesy every where else we played), our equipment is 3-4 times more than the average player (a new helmet is as much as $1,200!!), and some programs don’t have dedicated goalie coaches, so you are finding and paying for private lessons. We paid up to $10,000 annually for my goalies to play travel hockey - not including extra tournaments, weekend travel costs, or summer camps or clinics.
Affordability was the number one key.
The way for us to do that and to know our expected revenue, was for EVHC to be a membership based service. Recurring revenue, like your Netflix subscription, on a monthly basis allowed us to have predictable revenue targets that were manageable. Then it was driving the cost for the memberships around the most ‘important’ service, which is our skatemills. We wanted to make sure people had the ability to work out when they wanted, to increase their services with ‘Add-on’ services, like private coaching or more skatemill time, if they so desired. It took time, it took a lot of research, but we think we have our formula down - where we could keep things affordable for our customers and maintain sustainability for the company.
So let’s add everything up….and the cost to get started and renting a space large enough for us, we were looking at being a $2.5+ Million Dollar start-up. UGH!
How do we go about getting money and finding a space? How do we present everything to a bank?
It was time to get serious and get everything down. I had a lot of paperwork to create for shopping banks:
Business Plan
Financial Forecast
Marketing Plan
Did I need a HR doc already?
There was LOTS to write and organize. And as always, things were about to be a work in progress. But once I have all of this together, who can help me to make sure I am not missing anything?Sure there are ‘checklists’ out there but they never seem like enough. And I struggled with the process of what is next, what is the order things get done in.
One of the best things we did was partner with the local Small Business Development Council (SBDC). The Hampton Roads SBDC is a free resource funded by the Federal Government to help small business get off the ground and running. They are brimming with resources and relationships and ready to hold your hand through the entire process. Our team at HRSBDC is the only reason we got to where we are today. They believe in us - and thank God they do!
With a lot of work, we were able to get our business plan developed, a financial forecast built, an identity and culture created, and a pitch deck ready to dazzle the banks and investors. While we built a solid package (what we thought was), we moved cash around and scraped together $190,000 to start. We thought we were ready and that people would line up to support us. Nope! We still had a lot to learn, a lot to flush out, a lot to adjust.