1.0 Executive Summary
The purpose of this business plan is to raise $5,000,000 for the development of a structured settlement buying and trading while showcasing the expected financials and operations over the next three years. Structured Settlement Buyer, Inc. (“the Company”) is a New York based corporation that will actively trade and acquire income producing structured settlements within the United States. The Company was founded by John Doe.
1.1 Operations
The Structured Settlement Buyer’s primary income center will be from the ongoing acquisition of profitable and performing structured settlements other income producing assets with the intent to hold them for interest income. The Company’s secondary stream of income will be derived from selling appreciated structured settlements to institutional investors and other investors at a profit within the United States. The third section of the business plan will further describe the investment management services offered by the Structured Settlement Buyer, Inc.
1.2 The Financing
At this time, the Company is seeking to raise $5,000,000 for the development of the Structured Settlement Buyer’s operations. Mr. Doe is seeking to sell a 75% ownership interest in the business in exchange for this capital. 90% of the invested capital will be used for direct investments into the firm’s commodity trading operations. Briefly, the capital will be used as follows: • Structured Settlement operations. • Development of the Company’s office. • General working capital.
1.3 Mission Statement
Management’s mission is to develop the Structured Settlement Buyer into a middle market investment company that specializes in trading and buying structured settlements.
1.4 Management Team
The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the lending 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 Company will to undergo an aggressive expansion after the successful completion of the initial capital raising period. As the laws that govern investment pools for structured settlements are different than those for general securities dealers/traders, the business may be able to solicit capital from the general public in a similar capacity to that of a registered investment advisory.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Structured Settlement Buyer, Inc. The Company is registered as a corporation in the State of New York.
2.2 Required Funds
At this time, the Structured Settlement Buyer requires $5,000,000 of equity funds. Below is a breakdown of how these funds will be used:
2.3 Investor Equity
At this time, Mr. Doe is seeking to sell a 75% interest in the Structured Settlement Buyer in exchange for the capital sought in this business plan. Please reference the Company’s private placement memorandum regarding more information regarding the Company’s fee and ownership structure.
2.4 Management Equity
John Doe currently owns 100% of the Structured Settlement Buyer, Inc.
2.5 Exit Strategy
Management has planned for two possible exit strategies that would yield significant capital appreciation for the Company’s Management Team and Investors. First, the business could be sold in its entirety to a third party entity. At this point, Management would most likely leave the Company to pursue other ventures. The second exit strategy would be to engage a secondary capital raising that would allow Management and Investors to cash out a portion of the equity built into the business while concurrently providing the firm with more capital for structured settlements. This exit strategy would still require that Management operate the firm on a day to day basis, so in actuality it is only a partial exit strategy. However, by raising a secondary or tertiary round of capital, the business could easily expand to become a much larger trading firm after the third year of operations.
3.0 Operations
As stated in the executive summary, the business will be primarily engaged in the business of acquiring a number of different types of receivables including Structured Settlements and other income producing cash flow notes. The business is currently developing a number of review procedures to ensure that the business only purchases seasoned structured settlements that have high quality borrowers. The Company’s secondary income will come from the ongoing sale of seasoned structured settlements that have appreciated during the time that the business holds its note portfolios. Management anticipates that a substantial amount of these sales will occur once the business has held a cash flow note more than one year so that capital appreciation tax rates can apply.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the analysis will detail the economic climate, the structured settlement and credit trading industry, the customer profile, and the competition that the business will face as it progresses through its business operations.
Currently, 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.
Inflation is somewhat of a concern for the Company. As the inflation rate decreases, the purchasing power parity of the American dollar decreases in relation to other currencies. This may pose a risk to the Company should rampant inflation, much like the inflation experienced in the late 1970s, occur again. This event would significant weaken the Company’s ability to borrow funds (should the need arise), but it could also severely impact the gross margins of the business. After the business begins to own and sale in excess of $10,000,000 per year in revenues, the business may solicit a currency based investment bank to hedge against inflationary risks. This risk has been faced by many companies over the last five years as the value of the Euro/Yuan/Yen has appreciated significantly in its relation to the American dollar.
4.2 Industry Analysis
The financial services sector has become one of the fastest growing business segments in the U.S. economy. Computerized technologies allow financial firms to operate advisory and brokerage services anywhere in the country. In previous decades, most financial firms needed to be within a close proximity to Wall Street in order to provide their clients the highest level of service. This is no longer the case as a firm can access almost every facet of the financial markets through Internet connections and specialized trading and investment management software. With these advances, several new firms have been created to address the needs of people in rural and suburban areas. Within the United States, there are approximately 2,000 companies that independently buy and sell structured settlements with the intent to generate a profit. Each year, these firms aggregately generate more than $12 billion of revenue while concurrently providing $5 billion of payrolls (including bonuses). More than 6,000 people are employed by the industry.
4.3 Customer Profile
As the business intends to operate in an investment capacity (with a specific focus on structured settlements), the business will note directly have customers. However, in regards to potentially raising capital from the public, Management has outlined demographics (based on the demographics of “accredited investors”) so that the business can source additional capital if need be.
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
As the Structured Settlement Buyer intends to primarily trade for its own account, the marketing required by the business will be absolutely minimal. Mr. Doe’s marketing campaigns will primarily consist of familiarizing the Company’s brand name with institutional investors so that future joint ventures and investments can be made in the future. As discussed earlier, there is the possibility that the business may be able to solicit capital from the general public. In that instance, the Company will engage marketing strategies discussed below.
5.1 Marketing Objectives
- Develop ongoing relationships with structured settlement buyers within the United States and abroad.
- Develop an informative website if the Company decides to solicit capital from the general public.
5.2 Marketing Strategies
Foremost, the Company will develop ongoing relationships with several structured settlement brokerages throughout the United States. Mr. Doe will distribute information, via an information packet, to these firms informing them that the Structured Settlement Buyer is in business, its capitalization, and what types of cash flow notes the company most frequently engages. In regards to raising capital from the general public, the Company will develop an informative website showcasing the operations of the firm, Mr. Doe’s experience as a structured settlement buyer/investors, proper investment disclosures, and relevant contact information. The website may also feature functionality so that investors can log in and track the performance of their account. If this website is built, the Company will hire an internet marketing firm to properly rank the site via search engine optimization and pay per click strategies.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
7.0 Financial Plan
7.1 Underlying Assumptions
- The Structured Settlement Buyer will have an annual revenue growth rate of 19% per year.
- The Founder will acquire $5,000,000 of equity funds to develop the business.
- The Company will earn a compounded annual return of 17% on its commodities portfolio.
7.2 Sensitivity Analysis
The revenues of the business are moderately sensitive to changes in the general economy. If there is a more severe economic pullback then the business may have issues collecting interest payments from its structured settlements that are held in the business’ portfolio. However, the business intends to only acquire quality structured settlements and related notes and as such the business should be able to remain profitable and cash flow positive in any economic climate.
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
