Swanton Motel

Business Plan

 
 

 
Swanton Motel

112 Grand Ave

Swanton, VT 05488

Phone: +1-802-868-4284

service@swantonmotel.com

Revision 15 June 2015

 
 Table of Contents

1.0 Executive Summary........................................................................................................1

Chart: Highlights...........................................................................................................................2
1.1 Objectives....................................................................................................................................2
1.2 Mission...........................................................................................................................................2
1.3 Keys to Success.........................................................................................................................3
2.0 Company Summary......................................................................................................................3
2.1 Company Ownership................................................................................................................3
2.2 Company History and Improvements...............................................................................3
Table: Past Performance............................................................................................................4
3.0 Services.............................................................................................................................................5
4.0 Market Analysis Summary.........................................................................................................6
4.1 Market Segmentation..............................................................................................................6
4.2 Future Market Segment Strategy.......................................................................................7
5.0 Strategy and Implementation Summary.............................................................................8
5.1 SWOT Analysis...........................................................................................................................8
5.1.1 Strengths..............................................................................................................................9
5.1.2 Weaknesses.........................................................................................................................9
5.1.3 Opportunities......................................................................................................................9
5.1.4 Threats..................................................................................................................................9
5.2 Competitive Edge....................................................................................................................10
5.3 Sales and Marketing Strategy............................................................................................10
5.4 Sales Forecast..........................................................................................................................10
Chart: Sales Monthly.............................................................................................................11
5.5 Milestones..................................................................................................................................12
Table: Milestones........................................................................................................................12
6.0 Management Summary.............................................................................................................13
7.0 Financial Plan................................................................................................................................14
7.1 Assumptions..............................................................................................................................14
7.2 Break-even Analysis...............................................................................................................14
7.3 Projected Profit and Loss and Cash Flow.......................................................................15
Table: Profit and Loss and Cash Flow.................................................................................16

Swanton Motel
1.0 Executive Summary

Swanton Motel
112 Grand Ave
Swanton, VT 05488
Phone: +1-802-868-4284
service@swantonmotel.com

Introduction

Swanton Motel is a family motel operating for over 60 years, and since June 2009 by Shelly
Cunningham (Cunningham12, Inc.). The motel has a great reputation for being impeccably clean. It
is a two diamond rating by AAA and the last AAA approved motel before the Canadian border in
northwestern Vermont. In addition to the outdoor access strip motel, there is a 3-bedroom
owner/managers home with office located on the property.

Location

Swanton Motel is located at 112 Grand Ave, Swanton, VT 05488. It is one-quarter mile south on
Route 7 from the Swanton Village Park with the Royal Swans. It is 5 miles north of the new Walmart.

The Motel

The Swanton Motel offers superior quality lodging in the form of 6 single rooms with queen beds, 5
double rooms with double beds, a two-bedroom suite with two double beds in one room and two twin
beds in another room, and a two bedroom suite/apartment with a kitchen. All 15 bedrooms have flat
screen TVs with extra large screens in the suites. Each unit is equipped with half-height
refrigerators, microwaves and Keurig coffee makers. The suite full kitchen is equipped with full size
kitchen appliances including a dishwasher and all dishes, pots, pans and utensils.

Our Services

Swanton Motel will offer superior cleanliness and boutique rooms with a unique decorative style
matching all the AAA requirements that assure travelers expectations are met. Prices are published
on our web site for all seasons and for peak demand times with all discount options to assure guests
they are treated fairly and not gouged like many summer travelers in Vermont.

The Market 

Swanton Motel is located in Swanton, Vermont in the northwest corner of the state. It is just a mile
from Interstate 89 exit on busy route 7 just inside the village limits. It experiences approximately 70
sellouts per year with most being summer and fall. It is located close enough to the lake and has
sufficient boat parking to attract several fishermen. It is 45 minutes from the closest ski mountains
and thus attracts only a few ski enthusiasts each year. We also have many contractors and some
commercial accounts who choose our motel when working in the area as our rates are much below
the chain hotels. We attract many travelers passing through from western Canada to Maine, New
Hampshire and the Canadian Atlantic provinces. We also attract many vacationers and travelers
from Massachusetts, Connecticut and New York with northern Vermont destination and/or passing
through to Canada.

There is only one other motel in Swanton that is also an independent family operated motel but does
not have AAA approval. The closest chain motels are in St. Albans, 10 miles south of us. The
Vermont market is very high priced in summer and fall which allows us to charge a very profitable
rate while still being far below the chain rates.
 Financial Considerations

The current financial plan for the Swanton Motel is to obtain a better financing package to allow the
cash flow to grow additional business opportunity. The motel has had major improvements and stock
additions during the first 6 years of Cunningham12, Inc. ownership and is poised to be a cash cow for
several years. New financing will reduce the cash outflow and allow the profits to be reinvested to
grow the dining option. The motel has a consistent history of providing a healthy gross income to the
owners. It was the only area motel to weather the financial crash of 2009 without ANY loss of
revenue. Revenue actually increased in 2010 under the current ownership.

1.1 Objectives

The objective of the Swanton Motel is to maintain the high occupancy and to provide travelers with a
low cost superior quality establishment that provides comfortable lodging to all.

1.2 Mission

Swanton Motel aspires to maintain a loyal customer base by providing impeccably clean lodging with
top quality amenities and comforts. The care of our guests is our primary concern. We aim to provide
an environment that encourages and promotes an excellent rest and comforting experience for our
guests.

1.3 Keys to Success

 Clean, clean, clean – this is most important key.

 Provide amenities above expectation – Keurig coffee maker, half-height refrigerator, large flat
screen TV.
 Maintain pricing below chain hotels.
 Provide high quality bedding, furniture and decor.
 Provide good water pressure and hot water for showers.
 Full kitchen suite.
 Outdoor pool.
 Ample parking with outlets for boats.
 Free high speed and reliable Wi-Fi.
 Care more about people – do little things to make them feel special.
 Develop business relationships/accounts (add to Pike Industries, etc.)

2.0 Company Summary

The Swanton Motel is located at 112 Grand Avenue, Swanton, Vermont 05488. It is currently owned
by Cunningham12, Inc., an S Corporation fully owned by Shelly Cunningham. It is now operated by
Erin Moser, General Manager. The business was established in 1950 as an 11 unit motel with 5
single rooms, 5 double rooms, and 1 two-bedroom suite. It incorporated an owners quarters with an
office on the north end. Later, a 3-bedroom home was built on the same property but detached from
the motel. The motel strip owner’s quarters was converted into another single unit and a two-
bedroom apartment to provide fully 13 units and a separate office located in the house.

2.1 Company Ownership

It is currently owned by Cunningham12, Inc., an S Corporation fully owned by Shelly Cunningham.

Shelly acquired the business with the support of her husband, Karl, in June 2009 from Steve &
Corinne Benham, who had operated it for 11 years.

2.2 Company History and Improvements

The Swanton Motel has had consistent ownership in its 60+ year history with only 5 owners.
The Swanton Motel did not suffer any downturn during the worldwide recession in 2008 - 2010. The
volume of business actually increased by 10% in 2009/10 when most Northern New England motels
suffered a significant downturn in business volume. AAA reported many closings while most motels
reported 20% to 30% decrease by volume.

The Cunningham12, Inc. ownership increased the total volume of business with several improvements
including upgrading the web site with installation of on-line reservation software. Publication of the
cleaning checklist and the emphasis on cleaning on the web site is also reported by first time guests as
being influential in their decision to stay at the Swanton Motel.

Expenses and capital improvements under Cunningham12, Inc. were based on the family income and
preparing the business for the future. Karl Cunningham’s job income enabled investment into the
business beyond the business income which provided for improvements and personal (joint) income tax
savings associated with the expenses. As well there was a significant impact on the volume of business
due to family use of several rooms that eliminated them from potential income generation (Karl and Shelly
are parents of 12 children and 14 grandchildren), in particular was the use of the most expensive suite
101 for 2013 and 2014.

The motel sells out over 70 times a year. The occupancy rate from June 15 to October 15 is 85%
compared to 10% from November through March and 30% the other 3 months. The impact of not having
all rooms available for sale due to renovation and family occupancy, as well as under-reporting of sales,
puts the projected gross income over $200k.

Additionally, Shelly Cunningham, the share owner and operator, enjoyed performing significant
decorating and community support activities that created significant expense without a significantly off-
setting business improvement benefit. These expenses will be reduced significantly by a business
owner/manager operating under a proper fiscal model.

The most notable physical improvements under Cunningham12, Inc. include:

 Replacement of all credenza top CRT televisions with wall mounted flat screens.
 Additional flat screen TV’s in the additional suite rooms with a large flat screen in each main suite
room.
 Additional wiring of the suite kitchen and appliance upgrades – new stove, refrigerator, dish washer,
coffee maker, toaster, microwave, dishes and silverware.
 Installation of free high speed wireless internet access points covering all rooms.
 Installation of new Keurig coffee makers in every room.
 Installation of microwaves in every room.
 Replaced all mini refrigerators with half-height refrigerators (3X bigger).
 Replacement of all south side hot and cold water pipes with new larger diameter pipes.
 Increase of water pressure to all rooms.
 Installed new pressure bladder tank to eliminate water pressure fluctuations.
 Replaced boiler with new, high efficiency gas boiler unit.
 Replaced old washers and dryers with three each new units.
 Replaced drain plumbing of washers with properly vented design for proper water flow.
 Replaced water heater in motel and house with new units.
 Replaced main water plumbing with new larger copper pipes and valve manifold.
 Painted the exterior of the motel.
 Replaced several older heater valves and thermostats to modern more readable style.
 Performed major bathroom upgrades to 6 rooms with new floor tile, fixtures, vents, wall board, ceilings
and painting.
 Performed carpet and furniture replacements and/or upgrades in most rooms.
 Replaced all bed spreads and blankets and increased spare linen inventory.
  Replaced pool lining and pump with upgrades to current code (dual drain).
 Added a large ice making machine that fills fishermen’s coolers without depleting machine.
 Added soda and snack vending machines.
 Upgraded the plants and shrubs on grounds for better road side appeal.
 Procured additional tools and machines for maintenance and grounds keeping.
 Replaced all sump pump units and installed operating spare units with new drain piping.
 Procured a 2010 Jeep Wrangler with Boss plow for winter snow removal.
 Replaced outdoor aluminum frame and plastic strap chairs with Adirondack wooden pairs.
 Installed CCTV security system.
 Replacement of all entry rugs and painting of concrete porch.

Table: Past
Performance
2006 2007 2008 X 2011 2012 2013 2014
SALES $152,793 $155,225 $168,154 $174,651 $178,986 $158,570 $199,492

EXPENSES:
Repairs & Maintenance 8,825 6,030 2,931 24,170 9,471 30,154 42,427
Taxes & Licenses 11,019 11,616 10,211 10,560 11,461 1,038 38,749
Interest 31,523 29,702 27,132 25,252
Depreciation & Amortization 5,107 1,667 1,667 84,803 35,775 42,145 20,272
Advertising & Marketing 1,455 1,359 2,309 8,146 2,574 1,508 1,413
Accounting & Legal & Pay 2,090 2,098 2,598 2,289 2,395 1,128 3,413
Processing
Vehicle Expenses 4,763 6,478 8,984 21,519 16,959 21,003 22,075
Bank and Credit Card Charges 3,567 3,924 4,260 4,984 3 4,698 7,485
Dues, Subs, Licenses, Travel, 1,411 1,200 1,234 3,374 13,384 1,672 8,219
Misc.
Insurance 3,008 3,323 3,033 5,603 4,105 4,172 3,863
Office Supplies 907 2,103 1,079 3,921 5,518 4,900 8,723
Contract Labor and Direct 10,778 19,183 16,051 626
Salaries
Owners Salary & Rent 61,875 21,191 23,690
Supplies 6,466 7,210 7,171 23,942 14,700 48,401 36,686
Utilities 13,701 16,176 17,145 25,306 24,737 19,448 21,625
Telephone & Internet & TV 6,245 6,879 6,380 8,175 12,772 15,111 15,238
Small Furniture & Appliances 1,332 1,559 2,105 1,704
Décor & Grounds 9,767 1,610 2,148 2,590
TOTAL EXPENSES $141,217 $110,437 $108,743 $269,414 $186,725 $227,389 $259,734

Net Profit (Loss) 11,576 44,788 59,411 (94,763) (7,739) (68,819) (60,242)

Occupancy
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 21% 38% 16% 32% 33% 61% 70% 82% 82% 77% 41% 45%
Paid
2013 23% 42% 25% 45% 41% 63% 84% 95% 83% 84% 61% 70%
Total
2014 21% 43% 20% 33% 39% 52% 76% 79% 61% 57% 42% 35%
Paid
2014 78% 74% 43% 54% 59% 63% 84% 89% 67% 66% 48% 47%
Total
3.0 Services

Swanton Motel offers the cleanest, superior quality, affordable lodging in northwestern Vermont.

Cunningham12, Inc. (Shelly Cunningham) has been re-fashioning the motel starting with updated
bathrooms by replacing with “right height” oblong toilets in all units, and several bathrooms with
new floor tile, sink, mirrors, tubs, walls and ceilings. Several rooms have been re-decorated and re-
furnished. All rooms have been updated with new appliances and electronics. All linens have been
replaced with new, higher quality to provide guests with the cleanest, cozy, comfortable and
affordable environment in which to rest.

The motel previously experienced low water pressure and fluctuating temperatures when
Cunningham12, Inc. purchased in 2009. Since then, Shelly replaced all of the main plumbing and
half of the room plumbing in an upgraded larger diameter piping and new valves. A large bladder
tank was added to maintain steady pressure through all demand situations. As well, a new electrical
panel was added to serve the kitchen apartment/suite and northern rooms where old breakers
previously experienced frequent trips. Two new AC units were added to better serve the suite and
last room.

Swanton Motel plans to continue improvements to keep the motel on the cutting edge of comfort and
technology. Future improvements can now be made by a careful re-investment of a portion of the
profits since the more extensive infrastructure upgrades have been made. Erin is authorized to
continue to improve décor and furnishings. Erin also has several options for improving the
telecommunications/TV amenity while reducing the cost for the same as currently imposed by the
cable company.

Swanton Motel is considering several options for increasing revenue that include: 1) providing winter
plowing services with the Jeep and plow, 2) addition of a diner through minor modifications and
addition to the house, 3) increasing the number of commercial accounts through more aggressive
sales effort, 4) providing cleaning services to homes and camps, 5) providing rental services for
equipment or vehicles, 6) providing local answering service, 7) providing local office services, 8)
providing catering services, 9) providing party services on the motel premises, 10) installing summer
quarters, 11) providing laundry services, 12) establishing winter recreation packages to attract winter
travelers, 13) utilizing GDS to enable travel agent and online travel site bookings, and/or 14)
acquiring additional property to manage within the same overhead.

4.0 Market Analysis Summary

The population of Swanton Village is approximately 2,387 (2012) and Swanton Town is
approximately 6,427 (2010). Swanton is home of the Royal Swans, a gift of male and female swans
in 1963 from Queen Elizabeth II in honor of the Swanton Bicentennial. It is located in the northwest
corner of Vermont with Interstate 89 passing through to the border of Canada and bordering Lake
Champlain on the west side. The Swanton Motel is the last AAA approved motel before the Canadian
border and the New York State border.

Guests are divided among much segmentation such that the motel business is not dependent on any
single market segment but enjoys a healthy preference among several. Opportunity exists to put
more rooms in service at a healthy profit with only limitations being space and financing. Temporary
summer quarters are being considered including container rooms, yurts, and cabin structures.
4.1 Market Segmentation

Swanton Motel attracts from the following market segments:

 
1. Summer and Fall vacationers from CT, MA, and NY. Vermont is a big vacation destination in the
summer and fall. Tourists flock to Vermont to enjoy the lakes, rivers, and Green Mountains. Lake
Champlain is most famous that attracts many fishermen to our motel but Lake Carmi is also a big
attraction in the area. Missisquoi River is a popular fishing and canoe destination as well. The
Appalachian Hiking Trail and the Long Trail through the Green Mountains are also popular
summer attractions. This attracts many people to our motel from Connecticut, New York and
Massachusetts.
2. Passing tourists travelling from western Ontario and points further west in Canada. Many western
Canadians travelling to Maine, New Hampshire or the Canadian Atlantic Provinces like to cross the
border into the US in northern NY and pass through Swanton on their drive east and then back
again. Many have made it a habit to stop at the Swanton Motel.
3. Tourists into and out of Canada. Many tourists travelling into Canada will stop at the Swanton
Motel as the last AAA motel listed in the AAA Tour Guide before crossing into Canada where hotels
become much more expensive. Some Canadians require an additional night in the US to qualify
their purchases for duty free. Some Canadians will stay at our motel prior to flying from the
Burlington International Airport to southern destinations due to the lower cost of airfare from
Burlington as compare to Montreal.
4. Commercial clients. Swanton Motel enjoys being the preference for several local businesses
including Pike Industries, Schwann Foods, and more. Most local construction projects prefer
Swanton Motel for the lower prices and higher quality. Many individuals on assignment in the
area request their company to select the Swanton Motel over the lower priced independents due
to the quality and peaceful atmosphere.
5. Local events attendance. Although there are not many local events, Swanton Motel is still a
preference that fills up fast. Events include Fournier’s Farm Machinery Auction, Franklin County
Maple Festival, Franklin (Swanton) Field Days, Swanton Classic Car Show, Episcopal Church
Christmas Musical and the Winter and Summer Fishing Derby. We are also conveniently located
down the street from Kidder Funeral Home and several Swanton churches from which we attract
several funeral and wedding guests. Swanton Motel participates in the Swanton and Franklin
County Chamber of Commerce to develop more events to attract overnight guests.

4.2 Future Market Segment Strategy

Swanton Motel must maintain its market share through continued focus on cleanliness and quality to
keep the existing customer base extremely satisfied while impressing all new guests for their positive
reviews and repeat business. The challenge of the Swanton Motel is to attract more winter and early
spring guests.

The focus for this will be through increasing the number of commercial accounts that are year round
business as opposed to seasonal construction type and to establish winter recreation packages with
Vermont ski, snowmobile and ice fishing businesses. There has not yet been a concerted sales effort
to contact local businesses with regard to the Swanton Motel with the cost and quality advantage.

To take advantage of the high demand in the summer and fall Swanton Motel is developing concepts
for providing summer rooms that can be shut down efficiently for winter to avoid the heating costs.
Several various concepts of pre-manufactured type rooms are under consideration to fit within the
land and use restrictions. The space limitation of the motel prevents significant development in this
direction of more than two or three rooms.

Acquisition of additional nearby property is also under consideration. This is limited by the high cost
of improved property in the village of Swanton. Viable investment is $50k per unit at the high end.
Parking considerations are a major limiting factor for most properties.
 Development of new complimentary markets is another approach that has good promise. These
possibilities include (implementation strategy and forecast for 1 and 2 are included in this business
plan):

1) Winter plowing services with the Jeep and plow. The Jeep Wrangler Sport was specifically
targeted for plowing around the Swanton Motel because of its small size and turning radius. As
such it is possible to plow snow onto the lawn areas without damaging them and to get in and
around some of the tight places around the facility. This same versatility is desired by many
home and small business owners in Swanton. This is a niche market that will allow us to utilize
our asset with a minor increase in maintenance and depreciation costs.
2) Addition of a diner through minor modifications and addition to the house with a wrap-around
porch for outside tables. Kitchen modifications in the house including a commercial sink have
already been implemented in anticipation of such an option. Swanton does not possess many
restaurant options and a local meal service is a strong attraction for the motel business. The
required on-site management is nearly the same so some of overhead is already in place. The
concept of shared overhead is an important aspect of this option. The required services for the
motel come in spurts – check out time, cleaning, check-in and reservations. Taken together it
does not add up to full time but the time is very spread out during the day. The diner will help fill
in that time. It will also help provide some economy of scale with our cleaners. The cleaners and
grounds personnel only work a few hours each day but can now be combined with the
waiting/cooking positions to provide more hours to make these positions more attractive to more
and better workers. The breakfast rush ends at the same time cleaning needs to start.
3) Cleaning and Laundry services to homes and camps. Swanton Motel sells CLEAN as much as it
does a bed. The same 47 point cleaning checklist is a major attraction for the many summer
residents along nearby Lake Champlain. Part time cleaners are already required during the
summer so making them full time or adding a few could actually provide more economy of scale
with regard to the motel staff.
4) Rental services for equipment or vehicles. Swanton Motel has 24x7 staff on site and utilizes
several specialized cleaning machines, maintenance tools, and groundskeeping and landscaping
tools. As such, making these available to rent is another possible source of income which could
be increased per demand.
5) Local answering and office services. Swanton Motel is staffed 24x7 but this staff is not necessarily
busy 24x7 just for the small motel. As such, it is prime to provide local call answering or office
services for other local businesses.
6) Catering and party services. Swanton Motel has a nice pool and patio with lawn that has been
utilized for parties. This can be developed into another business branch.

5.0 Strategy and Implementation Summary

The primary sales and marketing strategy for Erin Moser dba Swanton Motel consists of the following:

1. To provide unmatched cleanliness for our guests

2. To maintain quality bedding and amenities to maintain guest satisfaction

3. To develop new commercial motel accounts

4. To develop complimentary businesses without adding excessive overhead 

Swanton Motel has clearly defined the target market and has differentiated itself by offering the
cleanest rooms with high quality amenities that exceed guests expectations. Reasonable sales targets
have been established with an implementation plan designed to ensure the goals set forth are
achieved.
5.1 SWOT Analysis

Swanton Motel’s strengths to build on are:

5.1.1 Strengths

Swanton Motel’s strengths to build on are:

 Reputation for clean, clean, clean rooms.

 60+ years established business.
 Improved high quality accommodations and amenities.
 Outstanding hospitality attitude that makes guests feel valued.
 A loyal and broad customer base of returning guests. 
 One of only two motels in Swanton. The only AAA approved motel and last before border to
Canada and New York.
 Vermont State does not have sufficient lodging to handle the summer and fall tourist crowds
which enables Swanton Motel to set a handsome price for guest rooms and sell out
frequently.
 Owners strong and large family support to draw from.

5.1.2 Weaknesses

Swanton Motel’s major weaknesses:

 Lack of space on the lot to expand by building on.

 Lack of cash coupled with the high price of Vermont real estate to expand through acquisition.
 Winter travel though Vermont is nearly non-existant.
 Location too far from ski facilities is further negative impact to winter lodging.

5.1.3 Opportunities

Swanton Motel opportunities are:

 Increase the spring and winter market share by cultivating commercial relationships with more
local business based on the success of the existing commercial accounts.
 Maintain or improve quality bedding and technology at the same competitive pricing.
 Making the suite apartment 100% available for sale (no longer occupied by family).
 Develop one or more of the complementary business opportunities identified. 

5.1.4 Threats

If a major hotel chain were to locate in Swanton it could have an impact on the business. If the
business was too impacted to maintain the level of profitability one back-up plan is to modify the
motel into 7 long term apartments in addition to the house. The 7 apartments will provide $6,800
per month rental income plus utilities – rental of the house would put it at $8,000. The net cash flow
will still be positive and cover the mortgage. The value of the real estate is still at the $650k figure
with comparables nearby based on the 3BR house at $200k and the 7-unit apartment at $450k.

A new hotel is being constructed in downtown St. Albans that will not be open in time for the busy
2015 season. For future years only minor impact is expected as we do not generally compete with
the St. Albans hotels. Swanton Motel is already the low cost option for northwestern Vermont where
people don’t have to sacrifice quality and cleanliness for their night’s sleep and morning shower. The
impact will be on the overfill traffic as the state hotels fill up from the south, which happens about 15
to 20 times a year now, and on the Maple Festival in downtown St. Albans. We suspect the
maximum possible impact to result in a total number of 40 to 50 rooms drop in sales for ~$5000 -
 8000 gross. This will be more than off-set by the increase in desirable room improvements and
higher number of rooms available and corporate accounts, as is already being witnessed with
reservations being taken for improved rooms that were not available to rent in 2013 and 2014.

5.2 Competitive Edge

Erin Moser dba Swanton Motel will utilize the following strengths to provide it with a leading edge:

 Continuity with and support from previous owner, Shelly Cunningham, and family.
 Continuing the personal attention provided to each guest and a genuine concern for their
enhanced experience.
 A consistent and loyal following earned by a knowledgeable and caring staff.
 The affordability and combined luxury of an unexpected motel experience.
 Clean, clean, clean is where we begin and end.

5.3 Sales and Marketing Strategy

Swanton Motel’s marketing strategy is to make direct sales contact with local business
establishments to further develop the commercial accounts.

The complimentary business development will be based on internet, flyer distribution, local
advertising media, and direct sales contact as well as through an extensive network of contacts.

5.4 Sales Forecast

With the increase in available rooms for sale the Swanton Motel anticipates an increase annually to
$220,000 in room rentals.

Winter plowing business forecast is based on the plowing requirements of the motel and historical
snowfall data. On average there are 37 days per year with a half-inch or more of snow which is a
typical plowing requirement. Additionally, there are several days with heavy snow-fall that require
multiple plowings. This puts the annual average at 50 plow sessions per year for the average
customer. The limitation on the number of customers is based on time requirements for the heavy
snowfall days, which is approximately 10 average customers. Average customers are charged $25
for a snowplow session. The annual total revenue is calculated at $10,000.

The diner concept is based on providing a boutique café concept with a very simple menu for
breakfast and lunch and a limited buffet dinner at night during the busy travel seasons. Meals will be
served on an outdoor wrap-around porch with removable wind and rain covers. The main focus is to
provide our motel guests an option for meals due to the limitations in the area, but will also be open
to the general public to allow the business to utilize full capacity. Sales projections are based on
research into the purchase of existing restaurants and knowledge of the local establishments. It is
based on selling an $8 breakfast to and average of 16 people during the peak season, a $10 lunch to
8 people for the same period, and a $20 dinner to 15 people for the same period. This projection
keeps the overhead limited to some part-time staff and direct food and material costs. We think
there is much more up-side opportunity. Our current total revenue projection is $60,000.

Table: Sales Forecast by Month

Sales Forecast
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Room $6,000 $9,000 $8,000 $14,000 $15,000 $27,000 $37,000 $37,000 $29,000 $23,000 $10,000 $5,000
Sales
Plow $3,500 $3,500 $500 $2,500
Sales
Diner $2,000 $4,000 $8,000 $14,000 $14,000 $11,000 $7,000
Sales

5.5 Milestones

In order to achieve the growth it is necessary to make all rooms and apartment suite 101 available
100% for rental. Family members have been moved to new permanent home in October 2014. An
upgrade to the 101 suite and bathroom was completed in March 2015 to restore the suite to the high
price rental condition. Guests have started calling to reserve this spacious suite.

The development of the complimentary dining business depends on achieving mortgage financing
that will allow sufficient cash flow to support. Assuming May 2015 approval of financing the business
milestones follow.   

Milestones

Milestone Description Start Date End Date Budget

Execute Commercial Account Sales Agreements 1/1/2015 continue $0
Wrap-Around Porch with seating and tables 08/1/2015 08/31/2015 $12,500
Commercial Kitchen Upgrades 11/1/2016 01/31/2017 $17,500
New Sign 09/1/2015 09/15/2015 $2,500

6.0 Management & Personnel Summary

Swanton Motel has the following organizational structure:

Erin Moser – General Manager - Annual Salary $15,600 plus household expenses (rent, heating,
electric, water & sewer, garbage removal, internet).  Salary position.  Job Description - Monitor and
supervise the daily operations, housekeeping and independent contractor staff, financial management
and overall productivity. Ensure a high level of customer satisfaction, monitor and track all company
assets and reorder supplies as needed.

Housekeeping Staff- Annual Salary $14,000 – Part-time hourly positions as needed. Job
Description – Manage the daily operations of cleaning and maintaining suites in superior condition,
reassess supplies and refill as required, perform daily laundry and monthly cleaning functions as
required. 

7.0 Financial Plan

The current financial plan is for Swanton Motel to obtain mortgage funding in the amount of
$487,500 to pay off the existing mortgage and reduce the monthly payment based on a 20 year
amortization.

7.1 Assumptions

Inflation is not factored into the sales and expense as rates have historically been increased based on
the cost inflation and are planned to continue in this manner.

The mortgage payment is based on 5% interest over 20 year amortization schedule.

Swanton Motel uses a cost base of $40 per room-night to cover all variable costs – immediate
expense for cleaning and short term capital. This is atypical of many motel financing models but
replacement and incremental improvement is considered a necessary part of the variable costs to be
a quality motel. Thus, they are included in the $40 cost model rather than being factored in with the
fixed (capital) costs of longer terms such as real estate. Heat and electric is treated as a fixed cost
 because they do not vary much in Vermont given the harsh winter and need to keep up room
temperatures as well as lights and appliances energized to welcome guests.

7.2 Break-even Analysis

The Company's annual break-even revenue is expected to be $150,000 without consideration of the

interruptible terms of the second mortgage, and includes the owner’s salary. Break-even is $130,000
without the owner’s salary and $106,000 with interruption of second mortgage.

7.3 Projected Profit and Loss and Cash Flow

The motel profits will be directed to the development expenses and capital required by the
complementary businesses. This is the main growth opportunity due to the limitations of the
property for expansion.

Table: Pro Forma

Profit and Loss
2015 2016 2017 2018
Motel Sales 220,000 225,000 230,000 236,000
Plowing Sales 2,500 10,000 10,000 10,000
Diner Sales 20,000 40,000 60,000
SALES $222,500 $255,000 $280,000 $306,000

EXPENSES:
Repairs & Maintenance 12,000 12,500 13,000 14,000
Taxes & Licenses 12,000 14,000 15,000 16,000
Interest 32,000 31,000 30,000 28,900
Depreciation 36,000 36,000 36,000 36,000
Advertising & Marketing 2,000 2,500 2,500 2,500
Accounting & Legal & Pay 3,000 4,000 4,000 4,000
Processing
Vehicle Expenses 4,000 5,000 5,500 6,000
Bank and Credit Card 6,000 7,000 8,000 8,200
Charges
Dues, Subs, Licenses, 1,600 3,000 3,000 3,000
Travel, Misc.
Insurance 4,200 6,000 6,000 6,000
Office Supplies 3,000 3,500 3,500 3,500
Contract Labor and Direct 18,000 23,000 25,000 27,000
Salaries
Salary 18,000 18,000 18,000 18,000
Supplies 15,000 29,000 40,000 50,000
Utilities 20,000 22,000 24,000 26,000
Telephone & Internet & TV 8,000 8,000 8,500 8,500
Small Furniture & 1,000 1,100 1,200 1,300
Appliances
Décor & Grounds 1,000 1,100 1,200 1,300
TOTAL EXPENSES $196,800 $226,700 $245,400 $260,200

Net Profit (Loss) $25,700 $28,300 $34,600 $45,800

CASH FLOW (before

tax):
Depreciation & Interest 68,000 67,000 66,000 64,900
Mortgage Payments (51,500) (51,500) (51,500) (51,500)
Net Positive Cash $42,200 $43,800 $49,100 $59,200
Flow