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1.0 Executive Summary
The purpose of this business plan is to raise $100,000 for the development of a property appraisal business while showcasing the expected financials and operations over the next three years. Property Appraiser, Inc. (“the Company”) is a New York based corporation that will provide value appraisals of homes on behalf of homeowners, real estate investors, and banks in its targeted market. The Company was founded by John Doe.
1.1 Operations
The primary revenue stream for the business is property appraisal and real estate analysis for the general public. Mr. Doe will become licensed by the state’s appraisal licensing authority to perform certified appraisals to the general public and banks that have taken homes into foreclosure. One of the most interesting aspects of the business is that it is needed in all economic climates, including the deleterious real estate market currently occurring within the United States. The third section of the business plan will further describe the services offered by the Property Appraiser.
1.2 The Financing
Mr. Doe is seeking to raise $100,000 from as a bank loan. The interest rate and loan agreement are to be further discussed during negotiation. This business plan assumes that the business will receive a 10 year loan with a 9% fixed interest rate.
1.3 Mission Statement
The Property Appraiser’s mission is to become the recognized leader in its targeted market for property appraisal services.
1.4 Management Team
The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the construction and real estate industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations.
1.5 Sales Forecasts
Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years.
1.6 Expansion Plan
The Founder expects that the business will aggressively expand during the first three years of operation. Mr. Doe intends to implement marketing campaigns that will effectively target individuals, banks, contractors, and real estate investors within the target market.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Property Appraiser, Inc. The Company is registered as a corporation in the State of New York.
2.2 Required Funds
At this time, the Property Appraiser requires $100,000 of debt funds. Below is a breakdown of how these funds will be used:
2.3 Investor Equity
Mr. Doe is not seeking an investment from a third party at this time.
2.4 Management Equity
John Doe owns 100% of Property Appraiser, Inc.
2.5 Exit Strategy
If the business is very successful, Mr. Doe may seek to sell the business to a third party for a significant earnings multiple. Most likely, the Company will hire a qualified business broker to sell the business on behalf of Property Appraiser, Inc. Based on historical numbers, the business could fetch a sales premium of up to 4 times earnings.
3.0 Operations
Below is a description of the property appraisal services offered by Property Appraiser, Inc.
3.1 Property Appraisal Services
As stated in the executive summary, the primary revenue stream for the business will be to determine the approximate free market value of a property. For each appraisal rendered, Mr. Doe anticipates a fee of $500 to $750 depending on the size and complexity of the appraisal. Appraisals will be completed in line with regulations set forth by the State. These certified appraisals will often be used in direct conjunction with the acquisition of properties and loans, and as such, they must adhere to standards in determining free market value. Mr. Doe (and his staff) will often use comparables, recent home sales, and pending home sales in making determinations of free market value.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the analysis will detail the economic climate, the property appraisal industry, the customer profile, and the competition that the business will face as it progresses through its business operations.
Current, the economic climate is moderate. The economy is undergoing a transition period due to changes in global trade policy. At this time, interest rates have remained steady due to appropriate and measured policies by central banks. While there has been volatility, this is expected to subside as the economy adapts to these changes.
However, property appraisal businesses operate with relatively strong economic stability as home sellers/buyers and real estate investors are required to have certified property appraisals in order to obtain home loans. During strong real estate markets, property appraisal companies are demanded among real estate developers to certify the value of new properties. As such, the business will be able to remain profitable in any economic climate.
4.2 Industry Analysis
Within the United States, there are 4,500 companies that provide certified property appraisal services. Each year, these businesses aggregately generate $1.7 billion a year of revenue while providing jobs to more than 17,000 people. Total payrolls in each of the last five years have exceeded $500,000,000. This is a mature industry, and the future expected growth rate will mirror that of the general economy.
4.3 Customer Profile
In this section of the analysis, you should describe the type of customer you are seeking to acquire. These traits include income size, type of business/occupation; how far away from your business is to your customer, and what the customer is looking for. In this section, you can also put demographic information about your target market including population size, income demographics, level of education, etc.
4.4 Competitive Analysis
This is one of the sections of the business plan that you must write completely on your own. The key to writing a strong competitive analysis is that you do your research on the local competition. Find out who your competitors are by searching online directories and searching in your local Yellow Pages. If there are a number of competitors in the same industry (meaning that it is not feasible to describe each one) then showcase the number of businesses that compete with you, and why your business will provide customers with service/products that are of better quality or less expensive than your competition.
5.0 Marketing Plan
Property Appraiser, Inc. intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Company.
5.1 Marketing Objectives
- Establish relationships with contractors, real estate investors, and banks within the targeted market.
- Implement a local campaign with the Company’s targeted market via the use of flyers, local newspaper advertisements, and word of mouth advertising.
- Develop an online presence by developing a website and placing the Company’s name and contact information with online directories.
5.2 Marketing Strategies
Mr. Doe intends on using a number of marketing strategies that will allow Property Appraiser, Inc. to easily target homeowners, real estate investors, and developers within the target market. These strategies include traditional print advertisements and ads placed on search engines on the Internet. Below is a description of how the business intends to market its services to the general public. Property Appraiser, Inc. will also use an internet based strategy.
This is very important as many people seeking local services, such as property appraisers, now the Internet to conduct their preliminary searches. Mr. Doe will register the Property Appraiser with online portals so that potential customers can easily reach the business.
The Company will also develop its own online website showcasing the Company’s services, preliminary pricing, and contact information. Finally, Mr. Doe will develop ongoing relationships with real estate investors, contractors, and home builders that continually need the services of a licensed property appraiser.
5.3 Pricing
In this section, describe the pricing of your services and products. You should provide as much information as possible about your pricing as possible in this section. However, if you have hundreds of items, condense your product list categorically. This section of the business plan should not span more than 1 page.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
7.0 Financial Plan
7.1 Underlying Assumptions
- Property Appraiser, Inc. will have an annual revenue growth rate of 10% per year.
- The Owner will acquire $100,000 of debt funds to develop the business.
- The loan will have a 10 year term with a 9% interest rate.
7.2 Sensitivity Analysis
In the event of an economic downturn, the business may have a decline in its revenues. However, property appraisal services are demanded regardless of the general economy as people selling homes (like in today’s market) will continue to require certified appraisals for their properties. Finally, the high margin revenues generated by the business will ensure the continued profitability of the business despite declines in top line income.
7.3 Source of Funds
7.4 General Assumptions
7.5 Profit and Loss Statement
7.6 Cash Flow Analysis
7.7 Balance Sheet
7.8 Breakeven Analysis
7.9 Business Ratios
