Business Plan For Pepshi Management Group Commerce Essay

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The business idea involves the opening up of Pepshi management group, a property management company in Bronx. The company's ownership is of the sole proprietorship nature and will have up to five employees. All the staff are family members hence they will provide family labor. The human capital for the company has experience in the field of property management. In addition, all the staff are conversant with the real estate development of the Bronx area because for over the last 15 years they have been working or residing in Bronx. The company's operations would involve the management of 20 properties that roughly accumulate to 1,000 units. Besides, the company will handle various activities so long as they relate to buildings. The company being a startup is expected to face challenges such as competition, marketing, market segmentation and operational experience among others.

However, several strategies will be put in place to counteract such challenges that are indeed eminent in any business environment. The real estate industry provides a potential opportunity for investment businesses in the area of property management. The crisis experienced in the real estate industry recently provides a substantial number of benefits for businesses involved in property management. This property management company then will be established with the main aim of accruing benefits from its services and operations in the real estate industry. The company considers this as the best time possible to startup a property management company considering the numerous opportunities and benefits at stake. This industry of property management business presents a prosperous future and consequently for the business company as well. The application of best management practices by the staff will be pivotal in the attainment of long-term goals and objectives. The development of effective strategies and policies will enable the company to grow faster and a command a substantial market share. The real estate industry is experiencing an increasing rental demand hence a well managed company in the field of property management will be capable of realizing huge financial margins and revenues.

2.0 General company description

The company's mission, vision and commitments are dependent on the current market situation of the real estate industry. The property management industry is currently benefiting from the economic recession and as such, the market conditions are favorable for the establishment of a business investment in this industry. This situation provides the ideal time to start up the company as evidenced by the following conditions:

The sale of houses and properties is on the decline making it necessary for owners of houses and investments to move towards renting out their units. This consequently increases the number of rental property in the supply chain.

Owners of real estate properties are continuously selling their properties to investors who later rent them out. This has consequently led to a supply increase with regard to the rental property amount in the market.

The financial inability by homeowners to afford mortgage payments will lead to make such homeowners to start renting apartments. As such, the demand of rental units will subsequently increase.

The above-mentioned factors create suitable market conditions for a business startup in the industry of property management. Such business opportunities influence the company's commitments in the property management business. The company would like to cater for the increased demand for rental units through the provision of the real estate property management services. The company's mission is to provide such services in an efficient and effective way hence accruing the benefits from the numerous potential opportunities. The business operations will largely target all aspects of buildings in addition to managing more than 1,000 units from roughly 20 estate properties. In the provision of the property management services, the company will charge 5 % of each property owner's total monthly income. In addition to the provision of such services, there will be a construction company, a part of Pepshi management group which will do any needed renovations on buildings owned b y the respective landlords.

The company has a licensed broker who helps in the activity of renting the property apartments. Such additional factors in the business activity will enable the company to achieve success in the industry because of the creation of a competitive advantage. This is so because other companied in the industry of property management do not offer such additional services. This consequently will enable our company to have a cutting edge over the others hence a considerable market performance. The Pepshi management group based in Bronx New York will be a property management firm that will offer benchmark-housing units in Bronx for rental purposes. The company has been in operation in another estate from 2005 where it has owned and managed own estate properties comprising of 252 housing units in the form of apartments. Security provision for the apartments has been one of our major concerns with surveillance security cameras installed for all of our estate units. These cameras offer security for the apartments 24 hours a day, 7 days a week. In addition to offering repairs, renovations and constructions for buildings, the firm also offers open communication services through telephone lines between the apartment renters and the management.

Such experience in estate property management is advantageous to the firm relative to the intended startup business of the same kind in Bronx a New York based real estate. This will be employed as a competitive factor in attainment of the market share as well as market target. This is because such business investment in Bronx area requires the application of strategies that will provide a competitive advantage over the others. The establishment of a property management firm in Bronx entails many varied duties with regard to property treatment. Such a requirement involves managing the estate property as if it was yours or as if you were to live in that property.

One crucial role involves the liaison between the landlord and tenants or the management firm and the renters in the case where the firm operates on behalf of the landlord. The responsibilities in property management include among others, addressing or responding to maintenance issues, the acceptance of rent and the provision of the relationship between landlords and tenant population. Some of the landlords may desire to keep a distance from tenant population and want to manage their properties only as investments. In such a situation, the property management firm establishes the necessary link between the tenant population and property owners. Through the application of experience and additional services for property management, the company's growth in Bronx would be tremendous. With such a high growth rate, Pepshi management group would be able to unlock the potential in Bronx real estate therefore accruing the numerous benefits available from the business opportunities.

3.0 Description of services

The operations of the Pepshi management group will involve duties such as the staff monitoring in each of the properties under its management. Such staff will constitute among others handymen, porters and superintendents. The firm will monitor, address and respond to complaints from the renters concerning the status of the buildings for instance, complaints of leaks, broken ceilings and toilets amongst others. The service provision will involve the assignment of the right workers for each specific job, which needs attention. In such assignments, the management will involve any outside assistance such as for a plumber or an electrician if their services are required. The firm will monitor all aspects of the building such as innovations and repairs and involve its own workers to carry out such activities. In cases where the property owner wants the installation of a security system, the property manager has to enlist two or three different companies involved in such service provision. The manager should analyze the company's prices or proposals and select the best bid or quotation as per the property management company's decision. In addition, the property management firm has a duty to attain the insurance for the property under their management. The building industry is comprised of varied building insurance companies that have different rates, different insurance types and different prices. In such a situation, the property manager has to consult the property owner for the analysis of suitable rates and estimates. In monitoring the estate property, the property manager is required to visit that particular property at least 3 to 4 times on a weekly basis. This will enable the property manager to monitor any work in progress on the property and receive the tenants' problems that may be present. Such frequent visits to the property by the property manager are very important in that, he/she will know everything that is happening in the building. With such knowledge, the manager is able to report to the lord as well the ability to respond to any questions from the landlord.

The conditions brought by the economy being at all time low, increases the demand for property management leading to a constant need for rental apartments. Besides, these conditions have led to the default of mortgages by homeowners consequently resulting to renting. Many people find it easier to rent houses because the government programs provide such people with rental month every month. As a property management firm, we will have to address the violations that may arise on a given property. In the event of such an occasion, the property manager has to correct the violation and initiate a court proceeding showing that the violations have been corrected and the violation dismissal by the court. The failure by tenants to pay their monthly rental dues requires the property manager to put such tenants in a landlord/tenant court. The firm's clients would mainly be landlords in ownership of rental properties in Bronx estate. This property management company will offer the following services:

Tenant placement

Advertising properties through print media and internet.

Viewing apartments that are presently vacant and scheduled-to- be vacant.

Doing checks on credit, verification of employment and previous property owner preferences on prospective tenants.

Distribution upon start of tenancy of relevant information and keys.

3.2 Book keeping services

Collection and deposit of rent and other payments from tenants.

Billing and collection of maintenance services' fees, utility payments and other miscellaneous fees from tenants.

Bill payments of clients and clients' expense account management to include among others mortgages, taxes and utility payments.

The analysis of clients' monthly financial statements such as rental income statement, delinquent rent reports, reconciliation reports, transaction reports, maintenance expense register, monthly income/expense reports.

3.3 Complete maintenance services

Preparation of units designed for move-ins.

Maintenance staff on full time basis with on-call emergency service of 24 hours.

Services for removal of snow and lawn mowing.

Property inspections on regular basis

3.4 Office Staff and Equipment

The office staff consists of owner, Armend Pepshi, 2 full time tenant relations/ rental agent personnel, 1 full time bookkeeper, 1 tenant collections agent and 1 full time office assistant who answers telephone calls and welcomes clients. The office is fully networked using the computer system, which incorporates the Yardi property management software package, Microsoft and quicken applications software. The internet setting contains the company's own home page and provides both e-mail and full faxing.

3.5 Maintenance Staff

The maintenance staff consists of ten employees on a full time and yearly basis. However, additional employees may be hired in relation to the needs of the respective project. This full time staff is able to handle many maintenance issues that may arise such as electrical and plumbing. In circumstances whereby the city codes require only the licensed personnel to carry out the work, we normally have to use systems 2000 plumbing and heating, Chilelli electrical contractors for the provision of such services. All the maintenance staff own cellular phones hence the improvement of communication with the property managers and clients. In addition, in attempts to achieve fast responses in case of urgent maintenance issues, the staff drives vehicles that are owned and outfitted by the Pepshi management.

3.6 Management Fee Structure

The rental commission fee dependent of the gross value of the signed lease at 3%. The property's gross value determines the management services fee at 5%. This fee is inclusive of all services of bookkeeping, office and tenant placements as outlined above. However, advertising fee specifically done for the property is not included in the fee because it is charged to the client. Any additional service is charged a fee of $ 100.00 per property. The unit's floor plans and pictures if available may be included in the web site listing. For units with four or more pictures, the additional cost per-unit listed is $ 25.00. The normal business courses such as ordinary copying services, ordinary postage and phone calls do not have additional charges. The billing of charges for overnight and certified mailings is at the company's cost. Some of the tenant related matters such as occupancy agreement breach of contract or evictions may require the provision of legal services. In such a case, the legal representatives for the company take care of such services and the client pays the resultant fees.

3.7 Maintenance Fee Structure

For every routine maintenance service, the charge is $ 37.00 on hourly basis with one hour as the minimum maintenance service that can be charged. Maintenance services offered as overtime are charged at $55.50/hour. The regular business hours are Monday to Friday from 8:00 am to 5:00 pm. Any calls for maintenance made after such times may be on holidays and weekends attract a charge of 1½ times the hourly rate based on a two-hour minimum charge. The C.S.P management enables the purchase of maintenance materials and supplies. The billing of management accounts is at our cost but with an additional 10% markup. This mark-up can be eliminated if clients set up or have already set up accounts at local suppliers thereby the C.S.P management charges supplies to such accounts and pays directly for them from accounts of the clients. The charge of using other contractors and not the C.S.P management staff would be at that contractors' rate and the payment made out of the respective clients' account. Services that require trucking attract a charge of $ 8.00 per job.

4.0. Marketing plan

4.1. Competitive edge

There are very few property management firms in Bronx estate. However, those available few do not offer the same range of technological and quality property management services as Pephsi. Issues of customer service are highly regarded in this industry something our firm takes very serious. We believe that by treating clients with utmost urgency and care is essential for successful business investment. All the staff and personnel must be able to maintain an effective relationship with clients and an efficient customer service. In the provision of property management services, all activities are influenced by the strategy to attain a competitive edge over the others hence the extensive service offering from the company.

4.2 Marketing strategy

The recognition of excellence is very important in developing marketing plans in a housing industry that is highly competitive. The company intends to create a point of difference in displaying our services for property management clients. The company will build its name relative to such components. There will be efforts by the company to develop and offer a living estate environment of reputable proportion. Such a strategy will start with the commitment to demand fulfillment and satisfaction of customers. Our unmatched commitment to clients' comfort and quality involves 24-hour safety and customer service. The company will aim at the provision of living developments that distinguish property management services of Pepshi from all other property management firms in Bronx real estate. We focus on the application of highly advanced technologies with regard to building innovations, repairs in tenants' market. The company incorporates many marketing ideas in the formulation of comprehensive marketing strategies.

In offering the company to prospective property owners, we utilize various marketing ideas considered as finest and effective. Our company organizes events to promote the firm's services in the real estate industry. Such events bring a one on one interaction between the firms' staff and personnel and the property owners in the real estate. The potential clients for our property management services come face to face with the company's staff. Such events are both informative and interactive enabling clients to get the necessary information relating to our services. In the preparation for such events, the company prepares marketing information, erects neighborhood signs and runs certain ads regarding the promotion event. These events enable our staff to attend, address, respond to and cater a broad variety of clients' needs at one point of time. The use of media exposure is another method of our marketing strategy that helps the company to stay in the limelight. In the sale of our property management services to clients, we utilize the media as a marketing strategy to present the company's innovations. The property owners are able to get lucrative information and deals while at their home's comfort. In the context of free publicity, the company advertises through the print media in the form of newspaper features. In addition, we also run TV programs in the form of interviews and ads hence our services acquiring the element of free publicity. The company may use the media to make known to the public the events meant for our property management services promotion.

The other vital marketing strategy employed by the company is the intensive use of internet in the marketing plan. Using online marketing services, our activities, information and ideas are spread across many clients. The company has a website of its own, which is optimized and designed in a manner to attain a very strong web presence. In the creation of our presence awareness in the local market, the company makes strong use of social networking websites and the creation of clients' yellow pages on the websites. Such an intensive internet use or online community will possibly be informative and interactive hence a tremendous response with regard to our services. The relationship between the client and the service provider is allowed by such successful marketing strategies hence the response to advertisements with enthusiasm.

5.0. Operational plan

Our company is involved in the provision of property management services in Bronx a New York based real estate. The office staff and other additional personnel such handymen, electricians and plumbers on the ground provide these services. In addition to the provision of property management services in real estate, our company handles many issues to deal with buildings such as innovations, repairs and security installation. The firms' property management team monitors the other staff in ensuring that the clients' needs are addressed with the necessary urgency and care. In its operations, our company offers varied services with regard to tenant placement, bookkeeping and complete maintenance. In addition, the operations may include the installation of security cameras, the sourcing of the best insurance covers for the properties and the correction of violations by clients through the tenant/landlord courts. The surrounding business environment comprises of other firms involved in the provision of services in the property management sector of the real estate industry. This creates a competitive environment whereby several strategies have to be employed for our company to stay in operation. In the event of such a situation, the company applies varied processes, policies and programs geared towards the achievement of a competitive advantage over the others in the same line of operations.

5.1. Distribution strategy

The company will employ more focus in the provision of living environments of high quality in convenient locations of Bronx real estate. The marketing plan will enable the attainment of a broad customer base hence the capability to command a huge market share in property management in Bronx area. It is important for us to remain at the top echelon with regard to provision of quality services in comparison to our competitors. The company will achieve this by implementing and organizing a sound management and operations plan. Such a plan will assume the duties and responsibilities towards the appearance and functionality of properties under the management of Pepshi management group. With the experience from earlier operations and the additional services, our company will provide intensive and exclusive operations in the field of real estate property management. In the distribution strategy, our website will be always updated for all interested clients to get information about our services, activities and properties.

5.2. Positioning Statement

For clients who want to live in high-quality environments with the availability of numerous customer services then our company is the ideal place. Pepshi management group will be able through their wide range of services fulfill clients' desires and needs at affordable and customer friendly prices. Unlike the majority of other companies in the business of property management, our firm shows commitments in the achievement of customers' full satisfaction. This is done through the provision of maintenance services, book-keeping services, surveillance security cameras installation, 24 hour on staff service, frequent weekly visits by property managers, live answering line and a website for instant handling of all complaints as well as for information passage.

5.3 Pricing Strategy

Our pricing strategy will be dependent on the values that the market for such services bears. Because of the competition from other firms, the company's prices will be also competitive with the maintenance of top-level quality and expert management. Routine maintenance fee ranges from $ 37.00/ hour to $ 55.50/hour with per job trucking charges being at least $ 8.00. The rental commission is dependent on gross value of the leased property at 3% while management service fee is dependent on property's gross revenue at 5%. Such prices may vary subject to pricing marketing trends and the strategy to maintain a competitive edge.

6.0 Budget and Financials

6.1 start-up expenses

The company's start-up expenses are outline in the following table. They include, main computer station, office equipment, stationary, legal costs, furnishings, office advertising and services, website design and other expenses involved in opening a new office. The owner's investment directly finances the start-up expenses.

Pepshi Management Group

Start-up

Requirements

Start-up Expenses

Legal/Incorporating

$ 930

Stationery

$ 2,000

Mailings/Postal

$ 1,000

Advertising

$ 2,500

Company Yard Signs

$ 1,300

Insurance

$ 500

Answering service

$ 200

Website Design

$ 440

Rent

$ 3,000

Expensed equipment/computer/copier

$ 3,000

Office furnishings/Lease or Used

$ 4,000

Other/Miscellaneous

$ 1,000

Business software

$ 1,000

Utilities Start-up

$ 250

Total Start-up Expense

$ 21,120

6.2 Pro Forma Profit and Loss

The following table shows the company's projected profit and loss. As with the break even analysis the projecting is very conservative with regard to gross margin and cost of sales.

Year 1

Year 2

Year 3

Sales

$135,394

$259,510

$459,510

Direct Cost of Sales

$19,970

$108,990

$228,840

Other

$0

$0

$0

Total Cost of Sales

$19,970

$108,990

$228,840

Gross Margin

$115,425

$150,520

$230,670

Gross Margin %

85.25%

58.00%

50.20%

Expenses

Payroll

$36,000

$60,000

$100,000

Marketing/Promotion

$8,100

$1,000

$1,000

Depreciation

$1,270

$970

$970

Utilities

$1,800

$1,950

$1,950

Rent

$15,600

$15,600

$15,600

Insurance

$1,800

$1,800

$1,800

Office Supplies

$3,000

$3,200

$3,200

Business Software

$1,000

$1,000

$1,000

Leased Equipment

$3,000

$3,000

$3,000

Total Operating Expenses

$71,570

$88,520

$128,520

Profit Before Interest and Taxes

$43,855

$62,000

$102,150

EBITDA

$45,125

$62,970

$103,120

Interest Expense

$325

$831

$1,220

Taxes Incurred

$10,779

$15,292

$25,653

Net Profit

$32,750

$45,877

$75,277

Net Profit/Sales

24.19%

17.68%

16.38%

6.3 Break-even Analysis

The following table summarizes the firm's break-even analysis. Most of our fulfillment cost is the advertising, maintenance, brokerage, insurance and depreciation.

Break-even Analysis

Monthly Revenue Break-even

$6,996

Assumptions:

Average Percent Variable Cost

15%

Estimated Monthly Fixed Cost

$5,964

6.4 Projected Cash Flow

The projections of cash flow are pivotal for our success. The monthly cash flow figures are compounded to get the cash flow per annum.

Pro Forma Cash Flow

Year 1

Year 2

Year 3

Cash Received

Cash from Operations

Cash Sales

$121,855

$233,559

$413,559

Cash from Receivables

$8,983

$21,774

$39,221

Subtotal Cash from Operations

$130,838

$255,333

$452,780

Additional Cash Received

New Current Borrowing

$6,000

$4,620

$3,150

Subtotal Cash Received

$136,838

$259,953

$455,930

Expenditures

Year 1

Year 2

Year 3

Expenditures from Operations

Cash Spending

$36,000

$60,000

$100,000

Bill Payments

$66,091

$149,398

$272,528

Subtotal Spent on Operations

$102,091

$209,398

$372,528

Subtotal Cash Spent

$102,091

$209,398

$372,528

Net Cash Flow

$34,747

$50,555

$83,401

Cash Balance

$44,503

$95,058

$178,459

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