HOLE 19
GOLF RETAIL
& SIMULATION
COURTNEY SANDIFORD
CHRIS HOFFOS
Table of Contents
Table of Contents .................................................................................................................................................................... 2
1.0
Executive Summary ..................................................................................................................................................... 4
2.0 Introduction ...................................................................................................................................................................... 5
2.1 Strategy and Goals ........................................................................................................................................................ 5
2.2 Mission Statement ........................................................................................................................................................ 5
3.0 Operations Plan................................................................................................................................................................. 5
3.1 Location ......................................................................................................................................................................... 5
3.2 Floor Plan & Layout ....................................................................................................................................................... 6
3.3 Business Hours of Operation ........................................................................................................................................ 6
3.4 Suppliers........................................................................................................................................................................ 6
3.5 Capital Budget ............................................................................................................................................................... 6
3.6 Inventory Management ................................................................................................. Error! Bookmark not defined.
3.7 Operating Expenses ...................................................................................................................................................... 7
3.7 Cost of Sales .................................................................................................................................................................. 8
4.0 Human Resources Plan ..................................................................................................................................................... 8
4.1 Organizational Chart ..................................................................................................................................................... 8
4.2 Weekly Schedule ........................................................................................................................................................... 9
4.3 Job Descriptions ............................................................................................................................................................ 9
4.4 Shareholders Agreement ............................................................................................................................................ 10
4.5 Human Resources Strategy ......................................................................................................................................... 10
4.6 Human Resources Costs .............................................................................................................................................. 10
5.0 Marketing Plan ................................................................................................................................................................ 11
5.1 Target Market ............................................................................................................................................................. 11
5.2 Products/Simulators ................................................................................................................................................... 11
5.3 Price Strategy .............................................................................................................................................................. 11
5.4 Distribution Strategy ................................................................................................................................................... 13
5.5 Promotional Activities ................................................................................................................................................. 13
5.6 Competitors ................................................................................................................................................................ 13
5.7 Purchasing Patterns of Consumers ............................................................................................................................. 13
5.8 Marketing Expenses .................................................................................................................................................... 14
6.0 Financial Plan .................................................................................................................................................................. 14
6.1 Capital Requirements.................................................................................................................................................. 14
6.2 Projected Income Statement ...................................................................................................................................... 15
6.3 Projected Balance Sheet ............................................................................................................................................. 17
6.4 Critical Variables and Sensitivity Analysis ................................................................................................................... 17
6.5 Break Even Analysis..................................................................................................................................................... 18
6.6 Net Present Value and Internal Rate of Return .......................................................................................................... 19
6.8 Risk Analysis ................................................................................................................................................................ 19
7.0 Summary/Feasibility ....................................................................................................................................................... 19
1.0 Executive Summary
Hole 19 Golf Retail and Simulation is a business located in Weyburn, SK. Co-founders include Courtney Sandiford and
Chris Hoffos, who have both grown up in South-East Saskatchewan. With the founders having experience in the golf
industry, as well as retail and sales management, we believe we can offer a store unlike any other currently available.
We carry the biggest brands in golf today including:





Titleist
Ping
Taylormade
NikeGolf
Calloway
Along with golf equipment and accessories, we offer a brand new social experience in the way of simulated golf.
Within our location there are two TruGolf high-definition simulators, with 82 available courses to play and a variety of
settings to make it the perfect round for any level of golfer.
When it comes to working at Hole 19, we are not looking for just any set of employees. We want our staff to not
only have knowledge of golf, but for them to bring value to our business with their approachable personalities and savvy
sale skills. Our marketing approach is quite traditional at Hole 19. Using Facebook, Instagram, Twitter etc., we can keep
our customers in the loop with any sales; discount offers and just general happenings within the store. We will be
advertising on the following radio stations in Weyburn, whose signal reaches the smaller communities that also have
golf courses:



Magic 103.5
AM 1190
K106
Along with these traditional marketing techniques, we hope to use Graham Delaet as a celebrity endorsement,
considering he was born and raised in Weyburn, Saskatchewan and is currently playing on the World Tour.
Our financials conclude an internal rate of return of 31.4%. This makes us believe starting this business and
investing our time and money will be worthwhile, and lead to a recognized and active member of the Weyburn and
South-east Saskatchewan business community.
2.0 Introduction
2.1 Strategy and Goals
Hole 19 seeks to be very successful in within the first five years of being in business with goals that include meeting
customer expectation and needs, play a contributing role in the community by being involved in local events, gain high
community awareness and become a place where people want to come and enjoy their favourite game.
2.2 Mission Statement
Hole 19’s missions statement reads, “Hole 19 strives to provide golfers with quality golf clothing and equipment in order
to keep up with industry trends as well as provide a unique social environment through the golf simulation experience.
3.0 Operations Plan
3.1 Location
Hole 19 is located in Weyburn, Saskatchewan on 1st Avenue in the newer area of the city that is currently developing
rapidly. This is a great area to be in because it is where new businesses are being built as Weyburn is currently
expanding in that direction. The consumers that live in the area have higher incomes and are constantly building new
houses on this side of the city. Below is a snapshot of the location of Hole 19 as well as a picture of the empty lot it will
be built in.
Figure 1: Location of Hole 19
3.2 Floor Plan & Layout
Figure 2: Floor Plan and Layout of Hole 19
To the left is the floor plan to scale for Hole 19.
When the customer walks in the store the first thing
they see is women’s clothing with shelves where
shirts and sweaters will be hung and tables and
racks where pants and shorts will be. If they turn to
the right, it is where the golf shoes will be displayed
with the men’s on the left and women’s on the right.
If they continue into the store the men’s clothing is
on the other side of the women’s with a similar set
up. If they are looking for clubs and equipment it will
be in the back right of the store with shelving along
the wall where the clubs will be and shelving in rows
where the equipment will be. If they want to test
out the putters there is a putter testing area to the
direct right of the clubs. Once they have decided
what they want to buy, they make their way to the
checkout counter along the left side wall where impulse buy items such as tees and balls will be. Hats are available
behind the counter and can be requested if they want to purchase one. If a customer comes in and wants to use the
simulators, they will come straight to the front counter and check in, making sure they have the right time, purchase any
drinks or food they desire and then head into the simulator rooms in the back left of the store. Customers can pre-book
times either on the phone or on the website to secure a tee time. It takes an average of one hour per person to do 18
holes with a maximum of four people per session. This breaks the sessions into 3 time slots that can be booked during
the day; 9:00am to 1:00pm, 1:00pm to 5:00pm and 5:00pm to 9:00pm for weekdays and 8:00am to 12:00pm, 12:00pm
to 4:00pm and 4:00pm to 8:00pm.
3.3 Business Hours of Operation
The hours of operation for Hole 19 are Monday to Friday from 9:00am to 9:00pm and weekends from 8:00am to
8:00pm.
3.4 Suppliers
Our suppliers for stocking Hole 19 with golf equipment, supplies and accessories will come from the brand sites such as
Taylormade.com and Ping.com, meanwhile we will be using Triangle Surplus and Golf Clearance Warehouse who
purchase surplus golf equipment from the major manufacturers. The simulators will be bought and installed directly
from the people at Trugolf.com
3.5 Capital Budget
Hole 19’s Capital Budget is $1,527,144 as seen below in the breakdown of capital costs. The majority of costs will be
coming from the construction building a new facility in the lot that we purchased.
Description
Cost
Source
Land
150,000
City of Weyburn
Building
1,000,000
Terra Developments Inc.
Land Development
100,000
Equipment
20,000
Adcogroup World
Initial Inventory
207,144
Suppliers
Simulators (2)
50,000
Trugolf
Total Capital Required
1,527,144
Figure 3: Capital Budget
3.6 Operating Expenses
Hole 19’s operating costs are expressed in Figure 4 below. A detailed breakdown of the marketing and human resources
expenses can be found later on in the report in the corresponding sections.
2015
Accounting and Legal
2016
2017
2018
2019
2,000
2,050
2,101
2,154
2,208
25,927
26,575
27,240
27,921
28,619
Other Expenses (POS,
Security)
4,000
4,100
4,203
4,308
4,415
Insurance
1,500
1,538
1,576
1,615
1,656
Property Taxes
5,000
5,125
5,253
5,384
5,519
Telephone
1,200
1,230
1,261
1,292
1,325
12,000
12,300
12,608
12,923
13,246
2,000
2,050
2,101
2,154
2,208
249,583
283,723
314,104
333,959
355,548
34,842
39,608
43,849
46,621
49,635
5,836
7,477
8,814
9,486
10,209
Advertising (Marketing)
Utilities
Repair and
Maintenance
Wages
Employee Benefits
13.96%
Misc. Variable Costs %
Sales
0.5%
Capital Cost Allowance
37,000
69,800
62,112
55,711
50,349
Debt Interest
52,500
50,411
48,175
45,783
43,224
433,387
505,986
533,396
549,310
568,159
Total operating
Expenses
Figure 4: Operating Expenses
3.7 Cost of Sales
The profit margins of Hole 19 consist of 30% on equipment and 50% on clothing. Further detail is assessed in the
financials section later on in the report.
4.0 Human Resources Plan
4.1 Organizational Chart
Figure 5: Organizational Chart
4.2 Weekly Schedule
The figure below describes the weekly schedule for the managers, full time staff and part time staff members.
MON
TUES
WED
THURS
FRI
SAT
SUN
Total Hours:
Manager (x2)
9-5
1-9
9-5
1-9
9-5
1-9
9-5
1-9
9-5
1-9
12-3
3-6
12-3
3-6
68
Supervisor
1-9
1-9
1-9
1-9
1-9
Full Time 1
9-5
9-5
9-5
8-4
8-4
37
Full Time 2
1-9
1-9
1-9
1-8
1-8
38
9-5
9-5
Full Time 3
1-9
1-9
9-5
Part Time
5-9
5-9
5-9
40
37
8-12
8-12
20
Figure 6:Weekly Schedule for Hole 19
4.3 Job Descriptions
Description: Supervisor
Job Duties
Demonstrate managerial/supervisorial skill, along with a solid knowledge base when it comes to golf and golfrelated products. Taking inventory, making purchase orders, scheduling staff, setting up displays and process
payments by totaling purchases, processing cash and credit card payments. Assigning and monitoring of
clerical functions and training of new employees, as well as disciplining and monitoring employee’s job results.
Skills/Qualifications
Delegation, Staffing, Developing Standards, Inventory control, Supervision, Selling to customer’s needs,
Motivation for sales and Internal communications.
Description-Full Time Sales Associate
Job Duties
Create and maintain relationships with customers and offer guidance and recommendation when it comes to
finding the right product for the consumer. Provide information on products and document sales by creating
customer profiles. Process payments by totaling purchases, processing cash and credit card payments. Keep
clientele informed of upcoming sales, promotions or events within the store.
Skills/Qualifications
Customer service, Product knowledge, General math skills, Dependability, People skills and Internal
communications.
Description-Part time Sales Associate
Job Duties
Assist in general upkeep, appearance and cleanness within the store. Provide information on products and
document sales by creating customer profiles. Process payments by totaling purchases, processing cash and
credit card payments. Keep clientele informed of upcoming sales, promotions or events within the store.
Skills Qualifications
Customer service, Product knowledge, General math skills, Dependability, People skills and Internal
communications.
4.4 Shareholders Agreement
Courtney Sandiford and Chris Hoffos will hold 50% each of the total shares for the corporation and each hold the
necessary requirements to make strategic decisions for the company.
4.5 Human Resources Strategy
At Hole 19 we would prefer our employees to not only work at the establishment, but also bring value to the store and
the experience. The hiring process will include looking for individuals with golf backgrounds, knowledge and love of the
game is what we are looking for, skill is not our priority. Sales experience will also be advantageous for potential
employees. The chain of command will be full-time and part-time staff report to the supervisor (our most senior
employee after a few months of operation) and that supervisor reports to one of the two managers (Courtney and
Chris). The full-time and part-time employees are not discouraged to communicate with the managers, but we’d prefer
to delegate smaller matters directly to the supervisor such as scheduling and training practices.
4.6 Human Resources Costs
Hole 19 consists of two managers who work full-time hours, along with four full-time staff, with a varying amount of part
time staff over the 5 years, displayed in figure 6 below. Managers will receive a salary of $48,960, going up the by
inflation factor of 1.025 over the 5 years. Full-time staff will receive a rate of $18/hour, again going up by the inflation
factor over the years. Meanwhile the part-time staff will be paid a competitive $11/hour, going up by the inflation factor
each year. Turning the total manager, full-time and part-time wage costs into percentages we see that 40% of it goes to
the managers, 56% of it the full-time staff and approximately 4% to the part time staff.
2015
Manager Salary
2016
48,960
2017
50,184
2018
51,439
2019
52,725
54,043
Full time staff (wage rate/hr)
$
18.00
$
18.45
$
18.91
$
19.38
$
19.87
Part time staff (wage rate/hr)
$
11.00
$
11.28
$
11.56
$
11.85
$
12.14
Salary and Wage Costs
Manager
97,920
100,368
102,877
105,449
108,085
Full time staff
141,120
144,648
148,264
151,971
155,770
Part time staff
10,543
38,707
62,963
76,539
91,693
249,583
283,723
314,104
333,959
355,548
Total Salaries and Wages
Figure 7: Human Resources Costs
5.0 Marketing Plan
5.1 Target Market
At Hole 19, we want to be the place where people feel comfortable and go to when they have golf-related questions or
needs, as well as looking for a social activity they may not have tried before such as simulated golf. Our target market
would begin with avid golfers, those who golf regularly and purchase golf equipment and accessories fairly often as well
The avid golfer always follows to new trends and wants to try the new products, so they should be good some repeat
business. Next we have those who do not golf at all, our something like once a year at the company tournament, family
reunion etc.
We want these people to come in and feel free to use the simulators on an easier setting and just have a good
time playing golf and spending time with their friends, family or significant others. Next in our target market, we would
like the retired community, those who are free during the days to use the simulators and possibly have regular golf
rounds on a certain day of the week, every week. A social experience similar to going to the coffee shop every morning
but a lot more fun. Last but certainly not least in our target market we have women. Just like you see on a regular golf
course, there are always a few groups of ladies who play together regularly, and just like the retired folks we would like
to book them into the simulators consistently.
5.2 Products/Simulators
The inclusion of simulators within our golf retail store gives our customers not only the obvious chance to try out
products they are interested in, but also a chance to experience a unique social experience with friends and family.
Perfect for date nights, staff parties, and family outings or just keeping your game in check over the winter, the Trugolf
high-definition simulators will exceed the expectations of any level of golfer. With over 8o courses to choose from
including incredible fantasy or artificial courses to the top PGA Tour courses such as Pebble Beach and St. Andrews,
finding a new setting could not be easier. The ball-tracking and swing trace technology can drastically increase the
amount of time it takes to fix imperfections in your game, and if you’re playing just for fun the Trugolf Simulator is a
great new way to experience the competitive, exhilarating and challenging game of golf.
5.3 Price Strategy
Products:
Hole 19’s pricing strategy consists of competitive pricing on all products and slightly higher pricing for the simulator
rounds in order to cover to the cost of them more efficiently. The average prices for products can be seen below.
Product Item
Average Price
Jackets
$175
Shirts
$50
Shorts
$75
Pants
$100
Hats
$28
Product Item
Average Price
Drivers
$277
Woods
$183
Irons (Set)
$713
Wedges
$130
Putters
$123
Product Item
Average Price
Bags
$150
Tees
$10
Balls
$40
Figure 8: Average Prices for Products
Simulators:
Hole 19 will be purchasing 2 of the 2014 models of Trugolf’s simulators. They are $25,000 each for a total of $50,000,
installations included. Our customers will pay approximately $28.50/each to use the simulator and group rates
(consisting of 4 people) will be available for $85/group on weekdays and $100/group on weekends. Within each
simulator room, a see-through glass enclosure, seating will be available as well as food and drink. The drinks available
are beers, coolers and spirits and the food will consist of dry snacks and pre made sandwiches, made at the beginning
each of day.
5.4 Distribution Strategy
All of Hole 19’s sales will be done in the retail store located in Weyburn, Saskatchewan
5.5 Promotional Activities
Hole 19’s promotions will be a variety of communications tools. Radio ads, social media, a very user-friendly website,
flashy billboards possible celebrity endorsement should be enough to get word out in a smaller city that a new place has
opened. The radio stations are Magic 103.5, AM 1190 radio and K106. Using Instagram we would like to portray the
interesting social experience we offer through the simulated rounds of golf, as well as post pictures of our latest clubs
and equipment. Our Facebook and Twitter pages will let customers be able to communicate with us, as well as allowing
us to have a platform for getting word out about sales or promotions. The website itself will allow users to browse our
selection, compare prices and view our hours of operation. Booking sessions for simulator use will also be available
online through the website. Protouch Signs is responsible for our billboard, the image being split between an individual
using the simulator as their friends watch and the other image being the layout of the store, allowing people to view the
wide selection of products and equipment we offer. We would also like to include a celebrity endorsements from
Graham Delaet. He was born and raised in Weyburn and is heavily praised throughout the community and currently is in
the World Golf Tour. We would like to bring him into the store for a day in order to sign autographs and participate in a
contest to see if someone can beat him on the simulators for a free round of golf.
5.6 Competitors
Our competitors in Weyburn are very minimal, with Canadian Tire and Wal-Mart having golf equipment available, but at
a lower price and much lower quality. In Regina, approximately an hour away from our location, Golf-Town and Nevada
Bob’s offer the same products at a slightly lower price, we assume consumers will either not notice the slightly higher
price, or consider it a trade-off for not having to drive to satisfy their golf needs. Also in Regina is an organization called
First Tee, which offers the simulated golf play on 10 available simulators. Their simulators are slightly outdated so Hole
19 offers a higher quality, but also at a slightly higher price than that of First Tee. Seen below is a matrix of the
competitors based on price and quality to indicate where Hole 19 fits in against them.
Figure 9: Competitors Matrix
5.7 Purchasing Patterns of Consumers
The trend for higher sales in the golf industry, particularly in equipment and accessories tends to be in the beginning of
spring and quite consistent through the summer months. December also sees higher sales with people purchasing for
the holidays and Christmas. As for the simulators, what we have witnessed from our competitors is that typically indoor
golf is used much often during the winter months. Hole 19 looks forward to consistent and steady business all year
round. When it comes to finding our average purchase price, it is a difficult number to agree on because we have high
cost items such as a complete set of golf clubs (driver, irons, wedges and putter) as well as low cost items such as $3 for
a bag of wooden tees.
5.8 Marketing Expenses
As seen below, the expenses we plan to incur with our marketing plan total up to just under $26,000. The breakdown
consists of $6000 for our online ads on discoverweyburn.com, a website consisting of anything from classifieds to
updates on happenings within the community. The cost to put an ad up for a month is $500, and we want our ad to be
up all year round. The cost for our radio ads are $31 per 30 seconds of airtime, we want our 30-second ad to play 312
days out of the year, or 6 days a week. Our billboard ad will be designed by Protouch signs, a reputable business who
does the majority of Weyburn’s advertising needs. We thought it would be good to give people a reason to come into
the store and check it out, even without spending money so over the summer we will be donating $500 in simulation
rounds to various local golf tournaments, as well as events occurring in the surrounding courses around Weyburn. We
will hire a website designer at the cost of $1000 to design an attractive and user-friendly website for Hole 19. Our liquor
license through SLGA costs $1055, as we thought adding the option of adult beverages would enhance the social
experience we are trying to offer. We want our storefront sign to be nice and visible in any conditions, so we went
through Stellar Signs to order our light enhanced, 3-feet-high lettered sign depicting “Hole 19, Golf Retail and
Simulation.” This brings our total marketing costs to $25,927.
Marketing Costs
Year 1
Source
Online Ads
6000
DiscoverWeyburn.com
Radio Ads
9672
Golden West Radio
Billboard Ads
700
Protouch Signs
Door Prize Donations
500
Golf Courses
Website Design
1000
Stealth Interactive
Licensing
1055
SLGA
Store Sign
7000
Stellar Signs
Total
Figure 10: Marketing Costs
6.0 Financial Plan
6.1 Capital Requirements
25,927
Hole 19 requires a total investment of $1,320,000 to begin. The capital budget breakdown is $150,000 to buy the plot of
land in Weyburn, SK., $1,000,000 for construction of the building and finally $170,000 for land development, furnishings,
equipment etc. To finance these costs, Hole 19 has borrowed $750,000 from Affinity Credit Union and the founders as
well as their families have put up in terms of equity financing another $700,000. Total financing costs are $1,450,000
leaving us with $130,000 in case our average purchase price of $80 is too optimistic we have a slight cushion to keep us
afloat.
2015
Land
150,000
Building
1,000,000
Land Development/Equipment
170,000
Total
1,320,000
Figure 11: Capital Budget
Debt/Equity
Ratio
Bank debt
2015
52%
750,000
Equity
700,000
Total
1,450,000
Figure 12: Financing Budget
6.2 Projected Income Statement
Hole 19 consists of 3 revenue streams, including golf equipment sales, simulation sales and food and drink sales. 88% of
our revenues come from golf equipment sales, 7% from golf simulators and 5% from food and drink sales. Total
revenues are $1,167,14. Our cost of goods sold consists of golf equipment, food and drink. The total cost of goods sold is
$639,187. Only $17,107 of that is food and drink, the other $622,080 coming from golf equipment. This leaves us with a
gross profit of $527,953. Our average profit margin would then be 55%. Hole 19’s net income in the first year totals
$82,272 and grows to $309,222 by year five.
For the year
ended
2015
2016
2017
2018
2019
Revenues
Golf Equipment
Sales
1,036,800
1,328,400
1,565,852
1,685,248
1,813,748
Golf Simulators
81,463
104,374
123,031
132,412
142,509
Food and Drink
48,878
62,625
73,819
79,447
85,505
Total revenues
1,167,141
1,495,399
1,762,701
1,897,107
2,041,762
Golf Equipment
622,080
797,040
939,511
1,011,149
1,088,249
COGS Food and
Drink
17,107
21,919
25,837
27,807
29,927
Total Cost of
Goods Sold
639,187
818,959
965,347
1,038,955
1,118,176
Gross Profit
527,953
676,440
797,354
858,152
923,586
COGS
Figure 13: Revenue Model
Net Income
82,272
Revenues
148,295
229,644
268,693
309,222
2015
2016
2017
2018
2019
Number of Customers/day
Equipment
36
45
52
54
57
Number of Customers/day
Simulators
8
10
11
12
13
Total Customers/day
44
55
63
66
70
Number of Days/year
360
360
360
360
360
Average Equipment
Purchase/customer
$
80.00
$
82.00
$
84.05
$
86.15
$
88.31
Average Simulator
Purchase/customer
$
28.57
$
29.29
$
30.02
$
30.77
$
31.54
Average Food and Drink
Purchase/customer
$
17.14
$
17.57
$
18.01
$
18.46
$
18.92
$
70.73
$
72.49
$
74.31
$
76.16
$
78.07
Weighted Average Purchase
Growth Rate Number of
Customers
Figure 14: Customers per Day and Average Purchase Prices
25%
15%
5%
5%
6.3 Projected Balance Sheet
For the Year:
Current Assets
Cash
Inventories
Total Current
Assets
2015
2016
2017
2018
2019
60,730
213,062
201,974
272,986
422,990
321,782
692,458
346,318
993,132
372,725
273,792
474,960
744,773
1,038,777
1,365,857
150,000
150,000
150,000
150,000
150,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
170,000
170,000
170,000
170,000
170,000
(37,000)
(106,800)
(168,912)
(224,623)
(274,972)
Total NonCurrent Assets
1,283,000
1,213,200
1,151,088
1,095,377
1,045,028
Total Assets
1,556,792
1,688,160
1,895,861
2,134,154
2,410,885
54,366
69,374
81,601
87,764
94,395
Long Term Debt
720,154
688,219
654,048
617,486
578,364
Total Liabilities
774,520
757,593
735,650
705,250
672,759
Common Shares
Retained
Earnings
Total Equity
700,000
700,000
700,000
700,000
700,000
82,272
782,272
230,567
930,567
460,211
1,160,211
728,904
1,428,904
1,038,126
1,738,126
1,556,792
1,688,160
1,895,861
2,134,154
2,410,885
Non-Current
Assets
Land
Buildings
Furniture and
Fixtures
Accumulated
CCA
Liabilities
Accounts
Payable
Total Liab &
Equity
Figure 15: Projected Balance Sheet
6.4 Critical Variables and Sensitivity Analysis
Below is the Sensitivity Analysis for Hole 19 based on the number of customers per day and the average purchase price
per customer of equipment and clothing. The factors include the average five year profit, net payback and the internal
rate of return. (Keeping in mind that our Required Rate of Return is 20%)
Customers/day
Average 5 year Profit
Net Payback
IRR
26
63,953
200,066
5.6%
31
136,835
853,173
20.2%
36
207,625
1,495,826
31.4%
41
277,841
2,135,605
40.8%
46
346,857
2,745,393
49.0%
Figure16: Sensitivity Analysis Based on Customers Per Day
Avg Equipment
Purchase
Price/Customer
Average 5 year Profit
Net Payback
IRR
60
78,529
330,688
8.9%
70
144,123
918,483
21.4%
80
207,625
1,495,826
31.4%
90
270,820
2,071,627
39.9%
100
333,281
2,629,111
47.40%
Figure 17: Sensitivity Analysis Based on Average Purchase Price
6.5 Break Even Analysis
The breakeven was calculated based on the number of customers paying $80 it took to make the net income equal to
zero. Hole 19’s breakeven analysis can be seen in the figure below based on the amount of customers per day for the
products and simulators combined. As noted, it is positive to see that we have some room to work with above the
breakeven point.
Base Case
Cust/day
44
55
63
66
70
Breakeven
Cust/day
35
37
36
35
35
Number of Customers per
day
80
70
63
66
70
60
50
40
35
44
55
37
30
36
35
35
3
Year
4
5
20
10
0
1
2
Figure 18: Breakeven
6.6 Net Present Value and Internal Rate of Return
The net present value (NPV) for Hole 19 is $310,719 and the internal rate of return (IRR) is equal to 31.4%
6.8 Risk Analysis
Although the IRR and NPV do not indicate it, this venture is relatively risky because it is hard to predict the average
purchase price for Hole 19 which it makes it difficult to make assumptions of the revenue projections. If indeed we have
been aggressive in the average price, this venture is risky.
7.0 Summary/Feasibility
Based on a Return on Investment (ROI) of 20% and an Internal Rate of Return of 31.4% we have concluded that we are a
feasible venture to invest within.