1.0 Executive Summary
Deutsch Facilities Group LLC (“the Company”) has been founded with the intention of providing a wide range of facilities management services for commercial and industrial enterprises throughout the greater Houston metropolitan area. The Company was founded this year by Matthew Deutsch. Full scale revenue generating operations are expected to commence in the third quarter. At this time, the Company is seeking a $250,000 revolving credit facility in order to establish operations.
Operations
The business will produce highly recurring streams of revenue from the ongoing range of facilities management and maintenance services that will be rendered within the greater Houston market. For many of these businesses, it is far more economically advantageous to outsource specific functions like facilities management to companies like Deutsch Facilities Group. A major component of the Company’s operations will focus on providing specialized services for the needs of data centers.
The services offered by the company will include general facility maintenance, electrical system maintenance, HVAC system maintenance, and coordinating major repairs with third-party contractors.
The third section of this facilities management business plan will further document operations.
The Financing
As noted above, the Company is currently seeking a $250,000 revolving credit facility in order to establish its operations in Houston and expand over the next five years. The Company has specifically chosen a working capital line of credit rather than a business loan so that the business will only incur interest costs when capital is needed. At the onset of operations, $100,000 will be drawn down in order to acquire vehicles and related operating assets for providing facilities management.
Matthew Deutsch will contribute $50,000 towards the venture. Moving forward, the Company could easily expand its credit facilities in order to acquire additional operating assets as new engagements are secured.
The Future
The Company will continue to expand the scope of its operations, not only within Houston, but also within other markets of Texas. Given the number of data centers being developed in this market, Management sees a substantial opportunity to operate within the unique niche of providing services specific for these types of entities. The Company will also continually hire additional facilities management staff so that additional engagements can be acquired.
Market Overview
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The $250,000 of revolving credit funds and Mr. Deutsch’s $50,000 equity injection will be allocated as follows:
2.2 Management and Investor Equity
Matthew Deutsch is the 100% owner of Deutsch Facilities Group LLC.
2.3 Exit Strategies
Facilities management and maintenance businesses generate highly recurring streams of revenue from their operations. As such, this makes them highly valuable businesses and can easily be sold to larger entities. There is also the possibility that the business could be sold to a private equity firm that is looking to establish operations within the facilities management industry.
3.0 Operations
As discussed in the executive summary, Deutsch Facilities Group will be involved with providing a wide range of services specific for the needs of data centers, commercial enterprises, and industrial Enterprises. The business may also provide services specific for the needs of medical facilities from time to time.
The Company’s service architecture has been designed as an end-to-end solution, which will include maintenance of electrical, roofing, HVAC, and data systems. The business will operate on a contractual basis and fees of $5,000 to $20,000 per month will be charged for rendering services. Although this may sound like a substantial expense for a client, these fees are far less expensive than maintaining an in-house facilities maintenance department or custodial staff.
The Company will be able to provide general maintenance services for the systems listed above. However, in instances where there have been major system failures – Deutsch Facilities Group will be able to coordinate with third-party HVAC and electrical contractors in order to have substantial repairs made. This will be a significant value-added benefit for clients.
4.0 Overview of the Organization
4.1 Registered Name
Deutsch Facilities Group LLC. The busniess is registered as a limited liability company in the State of Texas.
4.2 Commencement of Operations
Deutsch Facilities Group will commence full scale operations in the third quarter of this year.
4.3 Mission Statement
To provide cost-effective facilities management solutions including for enterprises that operating in a technologically driven capacity.
4.4 Vision Statement
To become highly recognized in Texas for providing comprehensive facility management services.
4.5 Organizational Objectives
• Establish ongoing relationship relationships with entities that maintain large scale structures that require ongoing maintenance.
• Develop a unique niche within the facilities management industry with a focus on data centers.
• Develop an internal sales network that will directly approach C-suite executives as well as property management staff in order to on for them as clients.
• Adhere to all regulations as it relates to rendering facilities management services.
• Continue to expand the scope of the Company’s operations to include services specific for the needs of medical facilities and hospitals as this will also produce highly recurring streams of revenue.
• Potentially enter other markets within the state of Texas as well as the Midwestern United States as the Company expands.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of the facilities management business plan will focus on the current economic climate, the industry, the demographic profile, and the ongoing competition that the business will face.
At this time, the economic climate in the United States is moderate with some degree of volatility given the ever-changing trade policies that have been implemented by the federal government. This has caused inflation to increase at a rate that is slightly higher than anticipated. However, the federal government has made substantial in roads to addressing these issues, especially as it relates to affordability.
It should be noted that issues with the economy will only have a negligible impact on Deutsch Facilities Group’s ability to generate revenue remain profitable. The facilities maintenance services offered by the Company provide a cost-effective solution that is far less expensive than maintaining an inhouse department.
5.2 Industry Analysis
As of this year, facilities, maintenance services, generate $375 billion revenue while providing employment opportunities for 900,000 people. There are 60,000 companies that rendered these services to commercial and industrial enterprises.
One of the major trends within this industry is to operate as a fully end to end solutions provider so it all matters related to the care of building can be rendered through one entity. This not only saves substantial amount amounts of money, but also streamlines the operations of the client. Deutsch Facilities Group will capitalize on this trend as it establishes its operations within Houston.
5.3 Customer Profile
Any enterprise that operates a large scale industrial or commercial facility is a potential client for the company. Generally, these businesses will have revenue and excess of $10 million a year and are seeking a fully outsourced solution for the maintenance/management of their buildings. As has been one of the themes throughout this document, the Company will focus heavily on providing services to the rapidly increasing number of data centers within Texas.
5.4 Competitive Analysis
The ongoing competition that the business will face a significant. One of the primary ways that Deutsch Facilities Group will maintain a differentiating factor is by providing an entire suite of services that are specific for the needs of technology enterprises, especially data centers. This unique approach will provide a significant competitive advantage as well as a differentiating factor for the business.
6.0 Key Strategic Issues
6.1 Sustainable Operations
Deutsch Facilities Group will have sustainable operations as a result of the following:
• Limited competition among companies that can specifically render facilities management services to data centers.
• The business will produce highly recurring revenue which will lead to substantial economic stability.
• Experienced Owner, Matthew Deutsch, that has worked in the field of custodial services and facilities maintenance for the past twenty years.
• The Company can easily expand its operations to include other types of services specific for the needs of clients.
6.2 Basis of Growth
The Company will expand via the following methods:
• Expansion of operations to include services that are appropriate for medical facilities.
• Continued acquisition of additional operating assets that will allow the business to render a greater degree of services within Texas.
• Expansion of operations to include other services that are complementary to facilities management.
7.0 Marketing Plan
7.1 Marketing Objectives
• Maintain an expansive internal sales network they will directly approach procurement officers among enterprises that maintain large scale facilities.
• Establish a significant online presence that showcases the facilities management capabilities of the business.
• Market the Company’s services in trade journals that are specific for operators of data centers.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• The Company will launch is facilities management services in Houston.
• Revenue will reach $718,000.
Year 2
• The business will secure an additional facilities management contract in Year 2.
• Revenue will reach $1 million.
Years 3-5
• At this time, the Company will expand the scope of its operations to include other markets in Texas with a focus on areas that have a number of data centers.
• Revenue will reach $1.8 million.
7.4 Marketing Strategies
Most importantly, the Company will develop an internal sales network that will directly approach procurement officer and property management specialists among entities that maintain large scale facilities. The business will have a number of brochures at other visually stunning brand assets that will showcase the entire suite of services of Deutsch Facilities Group and its capabilities. Throughout the life of the business, this will be the primary method in which the Company markets its services.
In regards to the Company’s website, this platform will undergo significant search engine optimization specific for the Houston market. The website will showcase every aspect of operation as well as providing preliminary pricing regarding the suite of facilities management services offered. New information will be added to the website on an ongoing basis in order to maintain it standings.
Although the business will maintain a presence on all social media pages, the Company will use targeted advertisements on LinkedIn among managerial level individuals that have the authority to hire a facilities management company.
The Company will also use a number of advertisements that are specifically geared towards technology enterprises that operate data centers. As artificial intelligence and machine learning become more integrated with businesses, there is an immense demand to render facility management services specific for the needs of data centers. As it has been noted through throughout this document, this will be a major component of the Company’s growth.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• Deutsch Facilities Group will acquire a $250,000 revolving credit facility to establish operations.
• Matthew Deutsch will invest $50,000 as an equity injection.
• Deutsch Facilities Group will achieve a compounded annual growth rate of 26%, which is supported by the ongoing addition of operating assets and expansion into other market in Texas.
9.2 Financial Highlights
• On facilities, maintenance services, the company will achieve contribution margins of 95%.
• Part sales will achieve contribution margins of 50% when needed for repairing HVAC or electrical systems.
9.3 Sensitivity Analysis
In the event of a severe economic reception, the Company will be able to remain profitable and cash flow positive. Most importantly, the Company is targeting economically stable industries, including data centers that are relatively stable, even during challenging economic climates. In turn, this will lead to an economically viable facilities management business that will be able to remain profitable.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• The unique facilities management services niche within the field of data centers will provide an advantage for the Company.
• A Founder and CEO, Matthew Deutsch, that already has extensive relationships with businesses that will use the Company’s services.
• The Company will be able to properly scale its operations to include a greater number of facilities management services contracts with technology businesses, as well as healthcare enterprises.
Weaknesses
• This is a highly complex business given the number of services rendered and the number of employees required.
• This is a highly competitive industry.
Opportunities
• Expansion of operations include services that are specific for the needs of other types of economically stable enterprises.
• Expansion to include several satellite offices throughout the State of Texas as well as selected markets in the Midwestern United States.
• The Company can easily acquire existing facilities management and maintenance businesses that can be integrated into its service architecture.
Threats
• The ongoing issues with inflation can cause the operating costs of the business to increase especially as it relates to both marketing and labor.
Appendix B – Risk Analysis
Development Risk – Low
The facilities maintenance service architecture specifically for needs of commercial, technology, and industrial enterprises has been developed. The primary matter that needs to be addressed is securing the revolving credit facility discussed in this document.
Financing Risk – Low/Moderate
The $250,000 credit line will be principal use for the acquisition of operating assets as well as for early working capital purposes. These risks are reduced by the highly recurring reams of revenue that the Company will produce from facilities management engagements.
Marketing Risk – Low
Direct outreach will be this primary component for establishing ongoing relationships with data center operators, commercial building operators, and industrial building owners. This will be complemented through the use of numerous secondary forms of marketing to increase brand-name visibility.
Management Risk – Low
Matthew Deutsch is a highly experienced facilities maintenance entrepreneur that has more than 20 years and industry.
Valuation Risk – Low
The valuation risk is offset by:
• Highly recurring income from ongoing management and maintenance contracts.
• The Company’s specialized niche for providing services to data centers will provide a strong competitive advantage.
• The Company can scale its operations as new contracts are acquired.
Exit Risk – Low
There would be an immense to demand among numerous businesses to acquire the operations of Deutsch Facilities Group. While there are no long-term plans to sell this business, the Company could easily find a buyer once a formal valuation is completed. This event is not expected to occur for a minimum of 15 years.
The Facilities Management Business Planning Process
Once established, facilities management businesses can be highly scalable enterprises that produce significant revenue from the ongoing management of large scale commercial and industrial properties. One of the best aspects about these businesses is that many operators of commercial properties will often work with a facilities maintenance and management firms in order to reduce their overhead costs. In many instances, it is advantageous to maintain a relationship with a facilities management company rather than conducting these operations in house. As such, an extremely large industry has been developed in order to provide the services on an outsourced basis. One of the common trends within the industry is to not only provide general facilities management but also repairs of systems related to HVAC, electrical, as well as other specialized repair repairs. This can easily provide a facilities management company with a significant competitive advantage and differentiating factor.
The approach we take when developing a facilities management business plan is to first conducted the market research. Specific for this type of enterprise, we focus on the number of commercial properties and industrial properties within the target market radius. We also take a look to see how many owners there are of these properties given that some companies will have several properties within the target market area. This allows us to form the total addressable market while also conducting the necessary analysis to see how many of these properties are under third-party management. From here, we then calculate the service obtainable market in order to determine what percentage of the regional industry can be acquired by the facilities management enterprise.
Using this information, within develop the facilities management revenue profile. This allows us to then seamlessly create a profit and loss statement which leads into the cash flow analysis and balance sheet. Additional tables that we include within our business plans are a common size income statement, breakeven analysis, facilities management business ratios profile, DSCR analysis, as well examining unit economics. These tables are very important as they showcase the potential viability of the business within its target market area.
Once the financial model is finalized, we then move into developing the facilities management marketing plan. As these companies are not consumer facing, a heavy focus is placed on conducting direct outreach with owners of commercial/industrial properties. This includes the development of extensive sales brochures that showcase the wide range of capabilities that are offered by the company. Beyond direct outreach, which is the most effective way of onboarding clients through contractual relationships, we also discuss the extensive use of online marketing strategies. As many people initially find a potential service provider through the internet, it is extremely important to have a wide-ranging online presence. This includes a proprietary website that undergoes regional search engine authorization while also listing the business among numerous online directories which contributes to the efficacy of this type of marketing. We also include a discussion regarding the use of PPC in order to immediately drive traffic to the website. Beyond these online marketing strategies, we also integrate the use of print advertisements in publications that are geared towards the owners of commercial and industrial properties as well as enterprises that operate within these types of facilities.
We then move into the facilities management operations plan. In this section, we discuss the scope of services that are offered by the company including general facilities management, repairs, maintenance, and supervising third-party contractors were needed. This chapter further extends discussing human resource resources matters, including employee scheduling, compensation of employees, and contingency plans in the event that there is an incident at a client’s location.
Once these primary chapters are finalized, but then move into the secondary work of the facilities management business plan. This includes a SWOT analysis which outlines the facilities management enterprises’ strengths, weaknesses, opportunities, and threats. As relates to strengths, facilities management companies are able to produce recurring income, which allows them to have stability of profit while also providing opportunities for significant growth. For weaknesses, these businesses do have high barriers to entry given the scope of services that they render at large scale properties. A significant amount of capital is typically spent on marketing in order to onboard an initial client base. For opportunities, this can be done quite simply by hiring additional personnel that can provide facilities management services at a client’s location. There is also the opportunity to enter other geographic markets. For threats, this is primarily due to competitive issues given that this is a large-scale industry. Economic recessions can impact the revenue of a facilities management company in the event that a client no longer can remain in business due to economic circumstances.
We also develop a risk analysis section which addresses matters related to the pre-launch of the business as well as things that may occur during the course of normal business operation. This is broken down into development risk, marketing risk, management risk, exit risk, and valuation risk.
Finally, we turn our attention to the facilities management executive summary. Here, we outline the entire capabilities of the business, while also discussing how the enterprise will launch operations. The name of the owner, location information, use of funds information, and related content is included in this chapter.