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Rookies and Newcomers: The Road to Success Investment Insurance Group Sales People Feasibility Attractions Mix Facility Design.

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Presentation on theme: "Rookies and Newcomers: The Road to Success Investment Insurance Group Sales People Feasibility Attractions Mix Facility Design."— Presentation transcript:

1 Rookies and Newcomers: The Road to Success Investment Insurance Group Sales People Feasibility Attractions Mix Facility Design

2 Business Plan & Investment David Cohen President & CEO Spencer Norton Sales Executive

3 Business Plan & Investment Agenda Current Banking and Lending Environment –How does that impact your business plan today? Credit –What is important in order to obtain financing? –The 4 C’s of Credit Financial Planning –What should be included in your plan and why it is important. Q & A

4 Current Banking Environment and Consumer Spending Trends Business Plan & Investment

5 Bank Trends Source: FDIC Statistics

6 Business Plan & Investment Bank Trends Why have the number of banks declined? –Failures –Closures –Mergers Additionally, there are 651 institutions that are considered “problem institutions" by the FDIC

7 Business Plan & Investment Current Banking Environment “The aggregate value of small business loans outstanding from depository lending institutions was $587.8 billion in June 2012, $19 billion less than in June The decline in small business loans slowed from 6.9 percent in June 2011 to 3.1 percent in June This smaller drop in the value of small business loans suggests that although small business lending terms and standards are easing, standards remain fairly high.” Small Business Lending in the United States in 2012 Report by the U.S. Small Business Administration – Released July 2013

8 Business Plan & Investment Current Investment Environment Impact of the Affordable Care Act “To raise capital, if you’re in a growth mode, you want a CFO who exudes creditability,” say Christian Oberbeck, CEO of Saratoga Investment Corp., which provides loans to and invests in small businesses. We’ve walked away from financing a number of companies because they were unable to prove their compliance efforts would work or provide a sober view of the financial impact,” he says. Health Law Stirs Lending Worries for Small Business Wall Street Journal, 10/15/13

9 Business Plan & Investment Some Good News – US Consumer Spending is up!

10 The Number of Part-Time Employees has Increased Source: Bloomberg, SVB Asset Management

11 Rates are Expected to Stay Steady Through 2016 Source: Bloomberg, Washington Budget Chaos Keeps Fed Rates Low for Longer By Craig Torres & Caroline Salas Gage - Oct 10, 2013 Most Fed officials last month (September 2013) predicted drag from fiscal restraint, a slow recovery in housing markets, and tight credit would cause them to hold the benchmark lending rate at 2 percent or lower until the end of 2016 to support growth and job creation.

12 Business Plan & Investment What does this mean for you? Many Banks are challenged to extend credit for new loans (especially for new businesses or new projects). Dodd/Frank has created huge degree of regulation and scrutiny for all banks, thus making it difficult to obtain financing from banks. Compliance with and calculating the effects of the Affordable Care Act has added additional complexity Most lenders are looking for lower debt to equity ratios for new projects, which means you need to have invested capital in your project. Most new equipment purchases require a down payment. Small business owners must personally guarantee any debt and have significant equity in the business.

13 Business Plan & Investment What does this mean for you? Lenders will require periodic financial statements reporting so they an monitor your business and progress. Credit requests with lenders/banks are taking much longer to get approved and funded. Underwriting requests and requirements are greater today. Business and Financial plans will be scrutinized; there will be great emphasis on “where you got the numbers” –Assumptions in your projections need to be reasonable and justifiable Personal credit is extremely important to your lenders –Know you Score !!! Over-leveraging your business will be avoided by lenders

14 Business Plan & Investment Different Types of Financing for your Business Commercial Real Estate –Typically banks look at R/E favorable, but in today’s market, extremely difficult and time consuming Leasehold Financing –Probably more challenging in current environment, look to have the landlord perform the work Working Capital –All based on your performance, cash flows and proejctions Equipment –Seek independent sources and manufacturer assisted programs.

15 Credit Business Plan & Investment

16 What do you need to get financing? The Four’s C’s Of Credit Credit Capacity = Cash Flow & Capital Collateral Character

17 Business Plan & Investment Credit Good Personal Credit –Credit card debt, installment loans, student loans, mortgage –Know your credit history and score –Look up your credit scores at Good Business Credit –Dun and Bradstreet –Trade References –Existing loans and leases Your performance is measured as an indicator of how you will perform in the future.

18 Business Plan & Investment Capacity = Cash Flow & Capital Existing businesses are judged on the available cash flow to service current and proposed loans. (to be able to make timely payments) –This criteria is not based on profits but cash flow –Examples are included in the appendix New businesses will be judged on the projected cash flow and the assumptions that are inherent in that financial model. Make sure to have cash reserves to account for the unforeseen “stuff” that will happen. This should be part of your assumptions. Take advantage of low rate financing. –The current rate environment is projected to last for a short time, we may never see these type of rates again The right amount of debt is essential to grow a business. Don’t get overleveraged, that is when problems occur.

19 Business Plan & Investment Capacity = Cash Flow & Capital Net Worth (you and your partners) –Personal and/or business net worth is required –The days of OPM (Other People’s Money) are long over Make sure you have updated business and personal financial statements. If you have other profitable businesses, they will had strength to your ability to secure financing.

20 Business Plan & Investment Collateral/Capital Real Estate –Take advantage of the commercial R/E market today. This is a great time to be looking for space. –Trends show some signs of improving so it may be moving from a buyers/lessee market to the owners/lessor market. Drive the Owners to invest in the property. You need to invest in the business. Rides, Games, and Other equipment types –Measure the strength and value– earnings potential over time –Evaluate the right mix – use the experts to help. Knowledge is very powerful. –Don’t be afraid to remarket, replace and change mix of equipment over time. Ride and Game Revenue will decrease over time if you do not refresh and update the experience for the customer Don’t forget about the “Soft Costs” –Tax, Freight, Installation, training –Someone is going to have to pay for this….. Additional collateral –Use it to strengthen your buying power, helps reduce down payment requirement

21 Business Plan & Investment Character This is the subjective area. Relationships are important –Yes, we lend to businesses, but we really lend to people. –How you handle yourself, how you communicate, how you conduct business is critical to the success of the business and your ability to borrow money. –Be open and honest. Surround yourself with good people, i.e. - employees, vendors, bankers, accountants, lawyers.

22 Financial Planning Business Plan & Investment

23 Financial Plan The Business Plan will have key components –A Financial Plan is criteria to your Business Plan. Key Areas that a Financial Plan should cover are; Investment Considerations – are you looking for investors ? Critical Assumptions inherent the the Plan Key Performance Indicators ( KPI’s) that help you measure the business Budgets including –Projected Balance Sheet & Profit and Loss Statement –Projected Cash Flow –Break even Analysis –Departmental Revenue Source and Use Statement Debt service schedule and other Financial Ratios that lenders are focused on Longer term plan, more that one year out

24 Business Plan & Investment Financial Plan Checklist Projections should be: –Reasonable & Conservative –It is OK to have a high/medium/low set of assumptions to help build the model –Budgets are a measurement tool, not just a set of numbers to give a banker. If you don’t measure your business performance against a budget, how do you if you are performing ? Every month you need to measure your actual performance against your budget. –Assume that some “stuff” will happen, i.e – bad weather will impact your business. You will need Cash reserves should be available for the “stuff” Include plans for replacement and upgrading equipment Cash flow analysis –This is key to getting the lender to say “YES”!

25 Business Plan & Investment Source and Use Statement Really important, helps the financial people understand the project. Lenders need to know: Source of funds for the project –How much debt, where is coming from and the terms ? –How much equity, who is putting money into the business? Use of funds for the project –Where will the money be spent? How much on Equipment, Leaseholds, Marketing, Training, Construction, Start up payroll ? Working Capital to run the business until you reach breakeven Debt / Equity ratio –Computes the amount of debt divided by the amount of invested capital. Measures the leverage of the business.

26 Business Plan & Investment Cash Flow/Debt Service Calculations Cash Flow –Net Income –Add back: Depreciation & other non-cash expenses –Add back: Interest Expense Debt Service –What are the annual monthly payments, P&I, that the business is contractually obligated to make. Cash Flow Coverage is then a KPI.

27 Business Plan & Investment When the lenders says “YES” Keep an Eye out for… Loans vs. Leases Acceleration Clauses Bank Fees Prepayment premiums Floating vs. Fixed Rate loans Add on % vs. APR Rates Try to leave your personal assets out of the collateral discussion.

28 Business Plan & Investment Key Takeaways We are still in the midst of an uncertain economy, and it is not likely to end next year. Way too much uncertainly in the US as well as the Global economy. Credit is still tight for small businesses as banks under Regulatory pressure but also have the need to make loans to make budget. They will be interested in a sound business opportunity. As a small business owner you must make sure to take care of your personal credit and your business financials. Open communication w/ your lender is extremely important; full disclosure.

29 Business Plan & Investment Questions?

30 Business Plan & Investment About Firestone Financial Founded in 1965 Focused on the out of home amusement industry –Expertise in the business. Over 2,000 customers in U.S. and Canada Currently have over $70 Million in credit lines extended to our existing customers! Relationships and loan promotions with the major manufacturers Simple and streamlined approval process You work with the decision makers Visit us at Booth #1603 we are here all week!

31 Business Plan & Investment David S. Cohen President and CEO Firestone Financial Mr. Cohen has been affiliated with Firestone Financial Corp. since He directs the management of all aspects of the business. He participates in the generation of new business, maintenance of key customers relationships, serves as a member of the Credit Committee and leads the planning and policy- making functions of the Company. He was Chairman of the Board of the AAMA (American Amusement Machine Association), and currently serves on the board. On a local level, he previously has served on various non-profit community boards and presently is on the Board of the New Center for Arts and Culture. He is serving a second term as a member of the Board of Directors and Audit Committee of Holbrook Cooperative Bank. From September 1998 until September of 2000, Mr. Cohen was President and member of the Board of UST Leasing Corporation, which provided equipment leasing services to bank and non-bank customers. Mr. Cohen was a Divisional Controller for XTRA, Inc., a transportation leasing company and he started his career in 1978 at Coopers & Lybrand as a Certified Public Accountant. Mr. Cohen received a BA in Business Administration from Rutgers University.

32 Business Plan & Investment Spencer Norton Sales Executive Firestone Financial Spencer Norton joined Firestone Financial in 2005 as an inside sales representative and has worked his way up within the sales organization. He plays a critical role for the organization in developing and growing relationships with our manufacturers, distributors, operators, and family fun centers in the amusement and vending industries. Prior to joining Firestone, Spencer was an executive recruiter with Commonwealth Resources, responsible for recruitment and placement of commercial general contractors in New England. A native of Peaks Island, Maine, Spencer earned his BS degree in Finance from Babson College in 2004 and graduated from the AMOA-Notre Dame Management Development Program in 2012.

33 Business Plan & Investment ext

34 Expectations R.O.I. Satisfied Guests Revenues Profits Engagement Success Business Plan & Investment


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