II - MSU Billings | MSU Billings



Small Business Plan

BIG HORN RIVER AMERICAN INDIAN CAMPGROUND

Montana State University- Billings

2007

I. Executive Summary

In order to promote American Indians as well as the AIBL organization, our team is proposing a campground resort in Fort Smith, Montana along the Bighorn River. Currently there are four other campgrounds in Fort Smith. Bighorn River American Indian Campgrounds will offer an authentic Native American experience with an RV and Teepee campground adjacent to the river.

1. Business Concept

The Bighorn River is one of the best fishing sites in the United States. We will be able to attract the customers who love RV’ing and fishing. The campgrounds will be on 40 acres of pre-owned land by two of the AIBL members. The activities will be spread through culture recognition and awareness. The campground’s will offer our guests a memorable experience by offering an authentic once in a life time opportunity.

2. Financial Features

Funding for this type of start-Up business will consist of a balanced debt/equity structure, in which angel capitalists will provide 27% of the initial cost, 13 % by the AIBL members, and the remaining 60% a mixture of a SBA and Wells Fargo Loan. Potential success of this business can be measured by the six financial criteria that are calculated from the financial projections.

The payback calculation is the length of time it would take to recover the initial investment of the business. The net present value is a calculation that discounts all future cash flows back to the present and then subtracting out the initial investment. Likewise, the internal and modified internal rates of return are indications of when the cash flows will make the net present value zero. However, the modified rate assumes the money will be reinvested in another security. The following table outlines all of the financial criteria when applied to Big Horn River American Indian Campgrounds base case financial projections:

|Scenario |Undiscounted Payback |Discounted Payback|Net Present Value(WACC)|Net Present Value |Internal Rate of Return |Modified Internal Rate of|

| | | | |(RRR) | |Return |

|Base Case |1 Year, 3.5 Months |1 Year, 5.48 Mths |$ 2,973,155 |$1,742,255 | 89% | 31% |

The base case assumptions for Big Horn River American Indian Campgrounds are based on figures higher than the alternative case. They include the purchase of land, and the construction of the main lodge.

Upon analysis of the figures above, it appears that Big Horn River American Indian Campgrounds has a high likelihood of success. The favorable numbers are attributed to the low initial cost to start the venture and the high favorable sales.

The six financial criteria are applied to an alternative case to make the investment more attractive. The alternative case also produces positive results that produce a positive investment at this time.

3. Current Business Position

Bighorn River American Indian Campgrounds business will be a limited-liability corporation with two principals whom are AIBL members. Our timeline built for the startup of our campgrounds will have a ground breaking in October 2007 and a grand opening of March 2008. Kim and Ada were both born and raised in the Fort Smith area and are very knowledgeable of the land along the river and have studied the demand for campgrounds in the area. We will have two owners, three full-time employees, 10 interns, and 12 guides for our operation.

4. Major achievements

The land is currently owned and according to this business plan the potential for profit and net present value is extremely promising. Market conditions and trends also bode well for a successful venture.

II. Description of the Business

A. Business Concept

Seventy five million U.S. Baby Boomers are set to retire and enjoy their retirement years, making the RVing and the camping industry very promising.

RV owners––traveling in motor homes, travel trailers, truck campers and folding camping trailers––plan to use their RVs an average of 40 days––including nine weekends––this spring/summer, according to the survey

Approximately 179 million total camper nights were generated in the United States Last year. About 101 million of those nights were spent in private campgrounds. One in 10 mentions Florida, Montana, Wyoming, Oregon, California, and Washington.

Fishing is the most popular physical activity on a camping trip. The Bighorn River American Indian Campground’s will be a new type of business brought to the Fort Smith area.

Our business will be a limited-liability corporation with two principals whom are AIBL members. Kim Iron will have a Bachelor’s Degree Business Administration with an option in Accounting. She has had three years experience in developing a business plan with the financial statements. Ada Iron will have a Bachelor’s Degree in Liberal Studies with a concentration in public relations and communication. She brings to the company her expertise in promotion and marketing. Both have a long term heritage with the Crow nation and ranching. Both were born and raised in the Fort Smith area and are very knowledgeable of land along with the campgrounds in the area. They both will bring a total of 13% equity to the startup of the business.

Our customer base will be baby boomer, families with children under the age of 18, and Caucasian families with an average of 37 with an income greater but not limited to $50,000. Our product will be distributed through telephone, internet, and word of mouth.

Our campground will be on 40 acres of land. It will have 10 teepees that will house a family of four and 40 RV spaces. We will also have activities that will spread culture recognition and awareness. We will have a lodge with a restaurant that will sell authentic Native American food and a gift. Our lodge will also have restrooms and showers for our guests. We will offer back country horseback riding with fishing opportunities. Our guides for both back trail fishing and river fishing will be knowledgeable and local guides from the area.

Unlike other campgrounds in the area we will offer an authentic Indian experience. Most of our profits will come from horseback riding and fishing opportunities for our guests. Because the Bighorn River is known for one of the best fishing sites in the United States, we will be able to attract the consumers who love to RV and fish in our area. The RV market is growing and Fort Smith is an area that needs supply in order for this area to thrive in the demanding business development that it greatly needs.

B. Vision and Mission Statement

Vision Statement

The vision of the Bighorn River American Indian Campgrounds is to ensure an authentic Apsalooke experience in the utmost heartwarming customer oriented environment. We will increase the diversity among Americans by sharing our culture and our knowledge of Crow Country. We will share our history through guided tours in our back country during our guest’s fishing, sightseeing and leisure activities.

We will teach our own people how to strive in a successful business using

a Native American business method. We will provide income and wealth for future generations by contributing to the system provided on our reservation and generate income through our own future banking system. We will contribute in the ever decreasing unemployment for our reservation by offering employment first with a Crow preference.

With the knowledge we endure during the growth of our business we will start a foundation to help other Native Americans to have the knowledge and financial securities to start up their own businesses. Our business along with our foundation will help future generations by offering internships to contribute their knowledge as well as being on location to learn first hand how to run a Native American owned business.

Mission Statement

The Bighorn River American Indian Campgrounds will offer our guests of all ages the opportunity to experience an authentic Native American experience. Our guests will have the opportunities to go back trail fishing, hiking, and horseback riding with local natives who have the knowledge and expertise of the beautiful land our resort is located on. We promote family-friendly, safe camping environment where families and RV and camping enthusiasts can experience outdoor recreation on the land of our ancestors. The purpose of our resort is to please and respect our customers because we value your business and enjoy the pleasure of sharing our culture. We will meet the needs of our customers by listening and reacting to the needs and wants of our customers. We value our guests, as you will value us as Native Americans while you share your experience with our culture.

C. Product Service Description

We will not only provide an authentic experience campground with RV and Teepee camping. We will offer an authentic American Indian experience. We will develop a working plan to integrate the Native American Culture with all our camper’s who come to the establishment.

o We will provide local Native American fishing guides who know the land and the history.

o Our hunting opportunities will be unique because we as Native Americans have access to the land adjacent to the Bighorn River known for outstanding hunting reserves.

o Our resort will allow our guests the opportunity to go back country fishing on horseback or ATV through parts of the Bozeman Trail with local guides whom are able to tell the history of the land.

o Guides will also be available to hike anywhere in the Fort Smith area with the knowledge and expertise of the area.

o An amphitheater will be available for our guests for viewing of our native ancestry and history, dancing, and cultural activities.

o There will also be public viewing of beading instruction, native hand games, arrow throwing, and as well as other cultural activities.

o There will be ten spaces for our guests to experience the opportunity to spend the night, weekend, or even weeks in a fully furnished teepee with opportunities to sit around the campfire and enjoy the company of your family or newly found friends and locals.

o Our restaurant will offer authentic meals for our guest’s enjoyment along with the choice of “American food” at their own pleasure.

o People wanting to bring camp trips to our resort to be informed about the Crow culture will also be allowed to come and enjoy days or weeks experiencing the outdoors at the Bighorn River American Indian campgrounds.

o The possibilities will be endless for the opportunities one will be able to experience for a value of self accomplishment while taking home a souvenir gift offered at our gift shop authentically made from local Native Americans.

D. Location and Physical Facilities.

Location

We will focus our customer’s attention on the Bighorn River in Fort Smith, MT located 44 miles off of I-90. Fort Smith is located in the south eastern part of Montana. This spectacular fishery was created in 1967 with the completion of the Yellowtail Dam. The Bighorn River enters Montana more than 150 miles downstream where it flows into Bighorn Lake, formed by the Yellowtail Dam. The Bighorn River is nationally recognized as one of the premiere trout streams in the United States.

As such, it is a very popular destination spot for anglers on a Montana fly fishing trip. The Bighorn River is considered to be one of the finest trout streams not just in Montana but the lower forty-eight states. Unlike many rivers in Montana, the Bighorn is a high quality fly fishing river for the entire year, offering anglers who don’t mind the elements the opportunity to catch large fish in the middle of the winter.

Also in Fort Smith we have the Bighorn Canyon National Recreation Area that we can offer our customers. It has breath-taking scenery, countless varieties of wildlife, and abundant recreational activities, such as boating, fishing, ice fishing, camping, and hiking. Bighorn offers visitors what few other National Park areas can, that of solitude, serenity, and beauty. One of the best assets to this river is the Crow Indian Reservation also known as The Teepee Capitol of the world which offers visitors a chance to view the biggest encampment of American Indians that replicates the most authentic experience anyone could imagine.

Physical Facilities

➢ Bighorn Canyon National Recreation Area

➢ Fishing supplies

➢ Fishing trips

➢ Lodging

➢ Dining lunches for the river trip

➢ Groceries

➢ Souvenirs

➢ Showers

➢ Restrooms

➢ Full-RV Hookup

➢ TeePees

➢ Horses

➢ ATVs

➢ Amphitheatre

➢ Fireplaces

E. Tribal and Other Local Benefits

Employment opportunities

o Our resort will give our tribal members first preference for job opportunities because of the knowledge and the cultural background to reduce unemployment. We will be able to staff summer youth programs such as conservation corps or JTPA.

Internship Opportunities

o Our resort will give college students the opportunity to work at our resort in every aspect of the business to become knowledgeable in their fields. We will have just about every opportunity such as information technology, management, accounting, marketing, public relations, culinary art cooking, with the opportunity to become confident entrepreneurs and knowledgeable about the Crow culture through the experience our resort will offer.

Increase diversity

o We will allow our guests the opportunity to experience and share our culture in an authentic manner.

Benefiting local ranchers

o We will contract saddle horses from local ranchers as well as buying hay to feed the horses needed for our backcountry fishing expenditures.

Promoting other Native American businesses

o We will allow other businesses to sell souvenirs in our gift shop.

o We will promote AIBL in our gift shop.

Cultural awareness

o Our culture will be shared with our guests using a cultural education tract.

Foundation

o We will create a foundation in the profitable years and help other businesses with startup money and knowledge of how to become a successful entrepreneur on the reservation.

F. Relationships to Tribal Economic/Sustainable Development

Our campgrounds will contribute to the economic sustainable development by using our resources such as land, water, and buildings to create a business that will help each member in the economic realm. With 40 acres on the Crow reservation being profitable, this business will be good for both tribal development and economic enhancement.

G. Development Strategy

Product Development Goals

o Campground opens March of 2008.

o Land is currently owned by Iron family.

o Design of buildings and layout summer of 2007

o Break ground October 2007

o Construction complete January 2008

Market Development Goals

o Creative concepts complete October 2007

o Media and printing secured November 2007

o Mass Advertising begins December 2007

o Grand Opening March 2008

Organizational Development Goals

o Hiring begins January 2008

o Training February 2008

o Grand Opening 2008

III. Market Analysis

A. Market Description

We will focus our Target Market at people who want to experience an authentic American Indian culture camping experience. We will also target those with RV’s who will travel to Montana and Northern Wyoming as well as residents in the surrounding Billings area.

According to KOA, at least 63% of campers utilize campgrounds on the way to the destination, and 17% are used for the destination for their vacations. This makes our location essential to our product description.

KOA also describes the largest targets as baby boomers, families with children under the age of 18, Caucasian families with an average age of 37 with an income greater than but not limited to $50,000.

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With our campgrounds entering a mature market with an elastic demand curve , we need to ensure we have a product advantage to successfully compete with the surrounding area campgrounds. We can capitalize on a better product with our authentic American Indian experience.

Opportunities/ Threats= Objectives

100 million nights spent in private campgrounds (Source: KOA)

10 (10% of nights spent in Montana)

= 10 Million Nights spent in Montana

10 Million Nights spent in Montana

4 Equal parts of the State

= 2.5 Million Nights

2.5 Million Nights

50 Area Competitors

=234 Nights spent at the Bighorn River area

234 Nights spent along the Bighorn River

4 campgrounds in the Bighorn River area

= 58 Customers per Night

Opportunity given land layout of facility

• RV: $50 per night x 40 RV spaces per night

= $2000 per night

• Teepees: $120 per night including breakfast x 10 teepees

=$1200 per night

$2000 + 1200 = $3200 per night (not including extra fees such as restaurant, gift sop, and activities)

Yearly Sales: $3200 x 213 nights/season = $681,600 at full capacity

B. General Market Trends

Seventy five million U.S. Baby Boomers are set to retire and enjoy their retirement years, making the RVing and the camping industry very promising. According to the latest "Campfire Canvass" survey by Recreation Vehicle Industry Association (RVIA), three-fourths of RV owners expect to travel more this spring/summer than they did last year. Almost a quarter (23%) say they will travel the same amount as last year, while only two percent plan to travel less. The survey was conducted by Robert Hitlin Research Associates of Reston, VA.

Among RVrs planning more travel this spring/summer, over two-thirds (68%) of respondents say they'll take more RV mini-vacations and "spur-of-the-moment" trips. Ninety-six percent of RV owners feel they have greater flexibility and control with RVs, making it easier to take shorter, less structured getaways. This is why we also want to target the Billings area.

In addition, survey respondents cited desires to enjoy nature (66%), travel anytime and anywhere at their own pace (57%), escape stress (54%), and spend quality time with family (51%) as other top reasons for using their RVs more this spring/summer. Over a third (34%) cited a desire to save money on travel as a reason for RVing more this spring/summer. "RVing costs less than staying in hotels/motels.

RV owners––traveling in motor homes, travel trailers, truck campers and folding camping trailers––plan to use their RVs an average of 40 days––including nine weekends––this spring/summer, according to the survey. In addition, those surveyed plan to log approximately 2,900 miles and visit an average of five states and nine campgrounds this season.

Camping is the overwhelming favorite activity of RV'rs, according to 88 percent of respondents under the age of 55, the largest and fastest-growing segment of the market.

|RV'rs under age 55. |RV'rs over 54 |

|sightseeing (81%) |sightseeing (87%) |

|swimming (68%) |campfires (72%) |

|fishing (61%) |visiting friends (65%) |

|hiking (56%) |shopping (51%) |

|biking/ATVs (54%) |antiquing (46%) |

|festivals/fairs (51%) | |

Approximately 179 million total camper nights were generated in the United States Last year. About 101 million of those nights were spent in private campgrounds. One-third of all trips camped by RV owners were spent in public campgrounds and resorts. Less than one in 20 trips were spent in a public parking area. Campers are most interested in a visiting the West and South in the next two years, 52% and 32% respectively. One in seven RV owners mentions Arizona or Colorado as a state they would like to visit. One in 10 mentions Florida, Montana, Wyoming, Oregon, California, and Washington.

Approximately 8% of vehicle-owning households also owns an RV. The highest RV ownership rates were among Baby Boomers (ages 55-64). KOA’s same-campground camper nights grew by 2% in 2005. Intent to purchase an RV was higher in 2005 than in 2001 or 1997. Factory deliveries of RVs in 2005 was higher than at any time in the past 25 years.

Fishing is the most popular physical activity on a camping trip, followed closely by swimming and hiking. 28% of campers camp as part of a group outing. 39% of camper’s camp with pets, and 93% of these pets are dogs. More than half of all campers have taken a trip for the primary purpose of participating in an activity such as fishing, snow skiing, or rock climbing.

Two-thirds of RV owners plan to go camping more often as they get older. Three in 10 RV owners agree that rising gas prices won’t affect their travel. The average gas price at which RV owners and active campers would reevaluate their travel plan is $4.31 per gallon.

Strong RV Market Growth Forecasted

Demand for RVs will continue to grow during the next decade, due to favorable population trends and purchase intentions. The following statistics are reported by .

By 2010, RVs will be owned by 8.5 million households—an 8 percent increase, outpacing overall U.S. household growth of 6 percent, Curtin estimates. The enormous baby boomer generation is reaching retirement age and is expected to continue dominating the RV market, the study forecasts.

Baby boomers have begun entering the prime age range—55 to 64—with the highest ownership rates, according to the study. Today one-in-10 vehicle-owning households in that age group own at least one RV.

In addition, purchase intentions are higher now compared to what the study found in 2001 and 1997. Two-thirds of current owners plan to purchase another RV. Among households that have never owned an RV, more than one in six expressed interest in buying one in the future. Among all U.S. households, nearly one quarter (23 percent) intend to purchase an RV in the future.

"Overall, there is a strong and enduring appeal to the RV lifestyle that is as valid today as it was 20 years ago. The latest survey data only adds support to an optimistic forecast of RV sales and future ownership growth."

U.S. ownership of recreation vehicles has reached record levels, reveals a newly released study by the University of Michigan's Survey Research Center.

Today nearly 8 million U.S. households own at least one RV—a 15 percent increase over the past four years and a stunning 58 percent rise since 1980, according to the study. One in 12 U.S. vehicle-owning households now own at least one RV.

A leading force behind RV ownership's upswing is the baby boomer generation, supported by strong ownership gains among both younger and older buyers. In fact, high RV ownership rates now extend across a 40-year span from age 35 to 75, the study found.

Those under age 35 posted the largest gains in RV ownership rates over the past four years—testimony to industry promotion efforts bringing in more young families, the study suggests.

C. Customer/Consumer Profile

Demographics

Among other key demographic findings from KOA are as follows:

• More RVs are owned by 35-to-54 year olds than any other age group.

• The typical RV owner is age 49, married, owns a home and has an annual household income of $68,000.

• The average age of a RV camper is 57, and a tent camper is 42.

Shorter getaways were also found to be more economical by RV.

According to , going by RV reduces family vacation costs vs. other vacation types, according to a comprehensive study comparing travel expenses to popular U.S. destinations:

|Vacation Type |Itinerary |Amount Saved By RV |

|Folding Camping Trailer vs. Car / Hotel |Denver to |54 percent |

| |Grand Canyon | |

|Type C Motor home vs. Airline / Rental Car / Hotel |Atlanta to |53 percent |

| |Orlando | |

|Travel Trailer vs. Airline / Rental Car / Rental Home |Washington, D.C. |43 percent |

| |to Cape Cod | |

RV vacations were found to offer big savings over travel by car or plane with hotel accommodations or rental properties. The most expensive RV trip is one-third the cost of a cruise excursion and one-fifth the cost of an all-inclusive package getaway.

Psychographics

Ninety-seven percent of respondents feel that RVs enable their family to spend more quality time together. Three-quarters of those surveyed said they will travel with either their children or grandchildren this spring and summer. And, 87 percent of pet owners surveyed agree that RVing is the best way to vacation with family pets.

Nine out of 10 RV owners surveyed say that RVing helps their family maintain a healthier lifestyle. Among the top reasons why are the ability to escape stress and rejuvenate (75%), control one's own schedule (70%) and get more exercise (68%), according to respondents.

D. Competition

Within Southern Montana and Northern Wyoming, about 50 campgrounds with similar RV hookups already exist, and see the competitive grid that follows.

• 8 campgrounds within the Big Horn County

• 9 campgrounds in Sheridan Wyoming area

• 27 campgrounds along Interstate 90 in the Montana area

• 32 campgrounds along Interstate 90 in the Wyoming area

• Other campgrounds exist around the area of Mount Rushmore

Other Threats

• Activities such as horse rides

• Guided fishing opportunities

• Full hookups pull ups with hot showers and clean bathrooms

• Laundry facilities

• Lake access offered by other campgrounds

• Biggest threat would be the 7th Ranch RV camp

|Competitor |Product |Price |Promotion |Place |

|7th Ranch |Some Authentic |Camping Low |Rack Cards |Telephone |

| |Horses |Horses High |Billboards |Reservations |

| | | |Website | |

|Bighorn Mountain |Camping |Low |Rack Cards |Telephone |

| | | |Billboards |Reservations |

| | | |Website | |

|Hardin |Camping |Low |Rack Cards |Telephone |

| | | |Billboards |Reservations |

| | | |Website | |

|Grandview |Camping |Low |Rack Cards |Telephone |

| | | |Billboards |Reservations |

| | | |Website | |

E. Risks

The greatest risk is to not sell packages as they are the greatest source of profit. Our prices are competitive but research shows that our area has many benefits for our guests and we will be focusing on activities in order to reap the most benefits for our guests. The costs and benefits Bighorn River American Indian Campgrounds guests can expect are as follows:

Costs/Price

1 night teepee stay = $120.00

1 night RV hookup = $40.00

Packages:

Backcountry fishing: Average Package $135

River float: Average Package $135

Horses: Average Package $85

Hunting: Average Price $200

Benefits

• Sharing an experience with the Crow Culture

• Walking distance to Bighorn River

• Self-accomplishment

• Close accommodations to historical sites

• Native American fishing guides that are familiar with the area

• Private accommodations for comfort

• Activities in the evening for families

• Increased diversity

• Authenticity not stereotyping

Strengths-

Location –

• Fort Smith is located around other popular attractions such as Bighorn Canyon National Recreation Area, Pompey’s Pillar, The Little Bighorn Battlefield, Yellowstone and Grand Teton National Park, and Mount Rushmore.

• The resort will be located on the Crow Reservation also known as the Teepee Capital of the World for an authentic experience.

Activities –

• Fishing, horseback riding, annual hunting, Indian games, and other cultural activities

• Fishing is one of the most popular physical activities on a camping trip according to KOA Camping Trends.

• 79% of campers consider themselves family oriented

• 47% of campers preferred an activity oriented campground.

• A RV capacity of 40

• A Teepee capacity of 10

• A lodge w/ a restaurant, activities desk, showers, restrooms, and room to grow

• A section for cultural activities and events

Weaknesses-

• New Business

• Unbranded Name

• 44 mile distance off the main highway

Create a self -ccomplished experience with an authentic Native American Experience.

In order for Bighorn River American Indian Campgrounds to be successful, a significant value added experience will be created for our guests. An authentic experience will be directly related to memorable experiences our guests will have using our facilities. Our genuine authentic and knowledgeable staff coupled with the rising trend in camping will assist us in growing trends of RV’rs and camping at our resort.

Bighorn River American Indian Campground will be the only authentic Native American resort with full RV hookups and Teepee camping in the Bighorn River Area on the Crow Reservation. The only direct camping resort competition is the 7th Ranch RV camp in close vicinity to the Crow Reservation. We also have competition with the other 27 campgrounds along interstate 90 in the Montana area and the 32 campgrounds along interstate 90 in the Wyoming area which allows campers to use their facilities for camping.

Marketing Mix

Product Positioning-Means End Chain

|Attributes |Physical Consequences |Psychological Consequences |Values |

|Teepees, river access, |Authenticity, tours |Cultured, experience unmatched |A once in a lifetime experience |

|activities, Bighorn River being |semi-convenience, backcountry, |by other campgrounds, and a |and self- satisfaction of |

|nationally recognized as one of |and health. |relaxing atmosphere |experiencing the real thing. |

|the premiere trout streams in | | | |

|the United States for anglers | | | |

From a perceptual map versus our competition we will focus on high cost vs. low cost and a traditional campground vs. cultural experience campground. In the high cost vs. traditional sector of the map we will consider the Black Hills campground in Rapid City, South Dakota that has high cost in a traditional campground. In the low cost vs. a traditional campground sector we will consider the Hardin KOA campground in Hardin, Montana and the Sheridan KOA in Sheridan, Wyoming. In the low cost vs. cultural experienced campground we will consider the Bighorn Mountain campgrounds and the Grand View campgrounds. In our sector high cost vs. a cultural experienced campground our only competition is the 7th Ranch RV campgrounds in Garryowen, Montana.

[pic]

Bighorn River American Indian Campground must differentiate itself from other campgrounds in the area by striving to attain the potential customers from other community campgrounds. Our methods will be modern hookups, camping in a teepee, an authentic American Indian experience, cultural activities, back country fishing on horseback, experienced and knowledgeable fishing guides and hunting opportunities.

Price

In order for Bighorn River American Indian Campground to be successful we will obtain maximum profit by offering competitive prices in a mature market therefore obtaining a greater market share resulting in greater sales and profits.

We will offer a one-price policy offering the same price to all of our customers. Our price strategy will be a penetration pricing policy due to our strong competition in the mature market.

Our discount policies will be quantity discounts offered to encourage a larger quantity of customers involved in fishing, float trips and back country horseback riding with fishing opportunities and anyone interested in experiencing an authentic Native American experience.

Promotion

Our objectives are to both persuade and inform our target audience and will plan to get their attention in order to gain interest and the obtain their desire and then call them to action.

We will generate attention and interest by promoting product through such things as the travel channel, internet sites and information brochures in card rack in high way gas stations.

We will convince potential customers to take action by reminding them of what is offered at the American Indian Campground as opposed to other campgrounds through advertising and coupon offers for returning customers.

Promotion Blends

➢ Mass Selling

Advertising

▪ Billboards

▪ Phonebooks

▪ Websites

▪ Travel Channel

▪ Rack Cards

Publicity

▪ Pow-wows

▪ Referrals

➢ Sales Promotion

▪ Coupons for returning customers .

Place

Our objective is to serve RV’rs and Campers at reasonable costs and to quickly adjust to their needs. Our strategy will be with a direct distribution channel that will allow us to be more in tuned to our customer needs and wants.

A primary finding indicates that nature-related tourism and recreation are growing trends nationally, regionally, and within the State of Montana. Comparatively, a higher percent of Montana residents participate in nature related recreation an in particular, hunting, fishing, and wildlife viewing. Non-resident travel is also closely linked to wildlife and fishing. We may accept instate checks but only cash and credit for worldwide and out of state folks.

IV. Organization and Management

A. Legal Form of Organization

The Bighorn River American Indian Campgrounds will be a limited-liability corporation.

B. Management Team Profile

Kim Iron, Ada Iron will found The Bighorn River American Indian Campgrounds. As the new management, they have history in the Bighorn River area and have a passion for the outdoors and knowledge of the historical culture. Ada will be the general manager and Kim will be the assistant manager. Both individuals will focus on creating free cash flow for The Bighorn River American Indian campgrounds.

Ada will operate the Bighorn River American Indian Campgrounds as the general manager. Ada’s sister, Kim, will function as the assistant manager. Ada and Kim will hire three full-time employees, 10 interns, and 8 guides for their operation.

Kim and Ada both have experience with working and managing ranches the area. Ada has her Bachelor’s degree in Liberal Studies with a concentration in Public Relations and Communications. Kim has her degree in Bachelor of Arts in Business Administration with an accounting option.

The Bighorn River American Indian Campgrounds will be a respected corporation with strong community involvement. The communication of the organization is expected to be open, to allow for new ideas or expressing concerns. The Bighorn River American Indian Campgrounds wants to make lasting impression, not only through the physical locations attributes, but also with its staff. While doing their jobs all employees will maintain cleanliness, positive attitudes, and a professional appearance with great customer service at all times.

C. Management and Training Plans

Management and customer service training will be done from a hierarchy structure from top to bottom. The two full-time employees on staff will do most of the training for the interns, guides as well as maintenance men.

Hierarchy Structure[pic]

V. Financial Analysis

Big Horn River American Indian Campgrounds has a great advantage because the costs of goods sold are minimal compared to its projected sales. The business generates a positive free cash flow in year 1. This creates a financial strength for the business. To compare the different financial scenarios, two sets of financial statements are presented in the financial plan: the base case, based on higher estimates for sales and cost figures; and an alternative case, based on lower estimates for sales and cost figures. For both cases, the financial plan has a mixture of debt and equity financing from AIBL members and other investors. For both cases, the initial investment for all equipment and the building needed comprise most of the startup costs.

Financial Assumptions

Numerous sales and expenses assumptions are necessary to compile both pro forma financial statements. Many of these assumptions are based on benchmarking from area campgrounds, available land, and sales estimates derived from the AIBL team.

The sales estimates for both cases start at 60% in year 1 and increase by 5 % in the base case and 10% in the alternative case.

The Bureau of Indian Affairs provided an estimated cost of the land, and the cost of the building are from an internet site. As mentioned previously, estimates are the same for both the base and alternative case.

Included in the plan is an base case owners’ draw of $350,000 in year 1 with an increase of 12% in year 2 and 10% thereafter. The business will be run as a Limited Liability Company (LLC), and we choose to elect being taxed as a sole proprietorship. Therefore, the taxes will flow through to the owners’ and the owners’ draw must pay the taxes and include enough to provide for reasonable living expenses.

A. Capital Requirements

As mentioned earlier, the plan includes two sets of pro forma financials. Both cases include construction of a building, ten teepees, and 40 RV hookups, along with estimated sales figures. The initial startup cost totals $670,195. The alternative case initial startup cost totals $667,360. The main differences in each scenario are the in the estimated capacity per day and prices.

B. Structure Financing

In both cases the loan consists of an SBA loan. Inclusion of an SBA loan covers the purchase of land and building and guarantees a fixed rate of 10.75% on the total loan amount. Amortization of the loan is over a 25-year period. In both cases, the loan structure of the business is equal to 13% provided by AIBL members, 27% provided by investors, and 60% provided by an SBA loan.

C. Financial Analysis

Explanation of Six Financial Criteria

The following criteria influence the decision of an individual to undertake a new business venture:

|Undiscounted Payback |Net Present Value (using RRR) |

|Discounted Payback |Internal Rate of Return (IRR) |

|Net Present Value (using WACC) |Modified Internal Rate of Return(MIRR) |

Undiscounted payback is a method that simply calculates the length of time it would take to recover the initial investment of all the parties involved. However, the undiscounted payback does not consider the cost of capital. This problem is somewhat solved by the discounted payback; it is the same as undiscounted payback, but the expected cash flows are discounted by the cost of capital.

The net present value (NPV) is a process that discounts the free cash flows back the present and subtracts the initial investment. It is a good indicator of the current value of the business, and if it is positive, it is a signal that the business is generating more cash than is needed to service the debt. An NPV using the weighted average cost of capital shows the present value of the business required to recover the cost of money. On the other hand, an NPV using the required rate of return is more ambitious as it is usually larger than weighted average cost of capital (WACC) because it is a required return the business needs to continue. Calculate NPV as follows:

The internal and modified internal rates of return are discount rates that result in the NPV having a value of zero. They both produce the same conclusions; however, the modified internal rate of return takes into consideration the idea that the funds will be reinvested into another security that would generate money. If these returns are positive, the business is worth undertaking.

Calculation of WACC and RRR

The weighted average cost of capital (WACC) is the weight in the capital structure (we) times the cost of equity (ke) plus the weight of the capital structure (wd) times the cost of the debt structure (kd) times 1 minus the tax rate (t). The following calculations yielded a WACC of 17.92%.

WACC = we ke + wd kd (1-t)

To calculate the required rate of return, use the risk-free rate (e.g., rate on a treasury bill) plus a risk premium (e.g., the market rate minus the risk-free rate). The risk-free rate of 5% added to the risk premium of 20% gives the required rate of return of 25%.

Analysis of Six Financial Criteria

To provide a better understanding of the financial analysis, the cash flows are extrapolated out to 10 years. The following table shows the results of the six financial criteria for the base case scenario.

|Scenario |Undiscounted Payback |Discounted Payback|Net Present Value(WACC)|Net Present Value |Internal Rate of Return |Modified Internal Rate of|

| | | | |(RRR) | |Return |

|Base Case |1 Year, 3.5 Months |1 Year, 5.48 Mths |$ 2,973,155 |$1,742,252 | 89% | 31% |

The figures provided for the base case show the payback for the campground will take less than 2 years, meaning it will recover the initial cost of the venture within the first 2 years. Discounted payback provides the same payback projections. This is a good indication that Big Horn River American Indian Campground is a positive venture. Even when discounting the cash flows at a WACC rate of 14.39% and an RRR of 25%, the positive numbers are an indication of adequate future cash flows.

The positive IRR and MIRR are also strong evidence that the venture would be able to generate ample cash flows to recover the initial cost of the investment in a timely manner. Therefore, Big Horn River American Indian Campground is positioned for success in the campground business because the base case figures all indicate a adequate amount of future cash flows.

In response to the analysis of the base case scenario, an alternative case is presented to reevaluate the revenue and to make the business more attractive to investors.

|Scenario |Undiscounted Payback |Discounted |Net Present Value (WACC)|Net Present Value |Internal Rate of |Modified Internal Rate of |

| | |Payback | |(RRR) |Return |Return |

|Alternative Case |2 years, 8.56 months |4 Years, 1.78 |$1,156,877 |$497,202 |42% |22% |

| | |Mths | | | | |

The alternative case results indicate that Big Horn River American Indian Campground is capable of producing cash flows and recovering the initial cost of the venture. The payback period observed at face value recovers the cost after 2 years and 8.56 months. Also, the IRR is greater than the WACC of 14.39%, which is an indication the venture will not impose costs onto the investors of Big Horn River American Indian Campground. All of the criteria are good indicators the venture is able to provide sufficient cash flows to recover the initial cost of the project and should be considered a better investment than the base case.

VI. Supporting Documents

Attachment 1. Financial Statements

Attachment 2. Map of Area

[pic]

Sources:

“Kamping Trends,” KOA.2006.12 Feb.2007

“Montana Campgrounds.” Road Camping. 12 Feb. 2007

Perrault, Jr., William D., and E J. McCarthy. Essentials in Marketing. 10th ed. New Yok: McGraw-Hill Irwin, 2006.225

“Recreational Vehicle Facts.” University of Minnesota. 15 Feb. 2007, University of Minnesota. 12 Feb. 2007

“New U-Mich Study: RV Ownership Reaches All-Time High.” 16 Feb. 2007, News Release,

“Montana Tourism and the Role of Fish and Wildlife.” 17 Feb. 2007,

“Flyfishing near the Bighorn River.” 18 Feb.2007,

Wells Fargo Bank. Zach Winkelmann. October 20, 2006

First Interstate Bank. Trish Zowada. October 20, 2006

Billings Gazette. Janna Huhtala. October 31,2006

Ray & Company Realtors. Jerry T. Ray. October 31, 2006

. 16 Feb. 2007

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Product Life Cycle

High Cost

Low Cost

Authentic American Indian Experience

Typical Campground

Black Hills Campground

Sheridan KOA

Hardin KOA

Grand View Campground

Bighorn Mountain Campground

7th Ranch RV Camp

Bighorn River American Indian Campground

Product: Perceptional Map

Ada Iron

General Manager

Full – Time

Employee

Kim Iron

Assistant Manager

Full – Time

Employee

Employees

Employees

cash flow1

(1+rate)1

cash flow2 (1+rate)2

cash flow3

(1+rate)3

cash flown

(1+rate)n

NPV = [

] – Initial Investment

+

+

+ . . . +

½ mile to Boat ramping access to the River

¼ Mile Distance to River

40 Acres for our campgrounds site

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