Alberto Castellanos Project

Applied Project Alberto Castellanos
Athabasca University
“Business Plan: Property Management in

Southern Mexico”
Coordinator: Jim Dunn
Supervisor: Ike Hall
Submitted by: Alberto Castellanos
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Executive Summary:
The subject of this business plan is to develop a property management company

and relate services in the south of Mexico. The company vision and mission was
developed to take advantage of the growing trend of Baby Boomers that are
purchasing second homes in winter destinations, the strong financial forecasts
over the next 10 years for vacation homes in Mexico, and the willingness of the
community to participate. Estimate costs required are in the amount of $350,000
and included one time expenditures and operating expenses. Proposed gains
and benefits will be to create a stable business with a stable income stream as
well as personal career development. Major obstacles are the sources of funds
required to start-up the venture, perception of civil unrest, concern of recent
tourist deaths in Mexico, long breakeven point due to nature of the business, and
variety of laws and restriction that apply to different country.
The applied project analyzed the short-term strategies to forecast future demand
and new potential customers. The City of Oaxaca in the south of Mexico has
been selected as a starting point. The project includes company value
proposition, values, business goals, and objectives to be achieved. Products and
services to be provided are described as well.
Environmental scanning was developed in order to identify trends and events that
can influence the project. The Marketing strategy includes:
• Typical buyers
• Market segmentation
• Psychological and sociological factors
• Target market
• Size of the market
The Marketing plan focuses in the target niche market and product offerings to
attract buyers. The Marketing plan includes:
• Price strategy
• Price structure
• Advertising
The Production and operation plan was developed to take advantage of the
critical success factors – order winner and qualifiers.
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A theoretical framework is proposed for human resources strategy to accelerate

the development of high performance teams.
Organizational form is explained and organizational strategy includes:
• Limited partnership
• Financing
• Taxation
• Insurance program
Time frame and expected costs are described under the implementation
schedule. The Implementation schedule spans over two years.
Financial strategy is developed under financial plans. The plan includes:
• Sources of capital
• Expected profit in the first year of operations
• Financial projections and ratios
• Break-even analysis
• Divestiture/ harvest strategy
Risk types are identified under a specific risk analysis framework. Description,
scope, and management of the risk are described under four different categories.
Major findings includes the identification of a growing market for vacation homes
in sunny Mexico, but mostly in coastal development and established expatriate
communities. This type of business is capital intensive and financial forecasts do
not demonstrate high return on investment in the first year of operation, making it
difficult to obtain sources of capital for the short-term. Other findings include
risks associated with political and security concerns for potential buyers and tax
implications for investors. Coastal developments offer a better outlook and
growth opportunities than inland communities. A Strategic decision concerning
where to invest is now required to be made if the project should go forward.
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TABLE OF CONTENTS
1.0 INTRODUCTION ...............................................................................................5
2.0 FACT SHEET ....................................................................................................7
3.0 THE INDUSTRY ................................................................................................8
4.0 THE COMPANY ..............................................................................................10
5.0 PRODUCTS/SERVICE OFFERING.................................................................12
6.0 MARKET ANALYSIS.......................................................................................14
7.0 MARKETING PLAN.........................................................................................21
8.0 PRODUCTION OPERATION PLAN ................................................................27
9.0 MANAGEMENT TEAM....................................................................................32
10.0 IMPLEMENTATION SCHEDULE ..................................................................36
11.0 FINANCIAL PLAN .........................................................................................37
12.0 RISK FACTORS ............................................................................................44
13.0 CONCLUSION...............................................................................................46
14.0 END NOTES AND REFERENCES ................................................................47
15.0 BIBLIOGRAPHY............................................................................................51
16.0 APPENDICES................................................................................................52
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1.0 INTRODUCTION
Southern winter destinations continue to attract many Americans and Canadians.

One such destination of choice for traveling, studying, and even working is
Mexico. It is not uncommon for Canadian baby boomers to purchase a second
home in sunny Mexico. Within Mexico, the colonial city of Oaxaca in the south
offers the unique combination of colonial architecture and pre-Hispanic ruins, as
well as affordable prices and sunny weather.
The company vision and mission is based on offering property investment

opportunities through specialist services responsible for selling and managing of
high quality private vacation homes in the southern and coastal parts of Mexico,
to Canadian and international buyers. Company values include integrity,
responsibility, profitability, value, security and career growth opportunities for
employees. Business goals include achieving steady sales growth and creating
one the most recognized businesses of this type within the area.
Property management and related services are the focus of this business plan.
Related services complement the value proposition. The starting point of the
business is the City of Oaxaca and the concept of strong community ties is at the
centre of the business model. The growing community of expatriates and high
demand for residential real estate gave rise to the idea.
Environmental scanning was developed in order to identify trends and events.

Economic forces identified that the sales of vacation homes will remain high with
$5 billion in investments by developers and homebuyers over the next 15 years
within the country.1 Districts with the largest expatriate populations were
identified as well; they are Baja California, the Federal District (Mexico City), and
Jalisco. The expatriate population is expected to continue growing at a rate of
0.01% of the total population. Typical buyers are baby boomers who are
approaching retirement and looking for second or vacation homes. Market
segmentation includes boomers that enjoy colonial cities and are interested in
exploring local culture and traditions. Psychographic or sociological factors
include lifestyle status. The target market is reduced to 50 potential property
buyers per year and approximately $15 million US in investment within the City of
Oaxaca.
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The marketing plan identifies the unique features, the target niche market, and
the reasons for the attractiveness of the services provided. Price structure and
strategy are described. Advertising through the Internet would be used with
potential links to various sites. The proposed promotional slogan is included and
significant advertising efforts would be required to build awareness. Public
relations and communication strategies are described, as well as distribution
channels.
Production and operation plans identify critical success factors and operational
priorities for this type of business: safe investment, communication, location,
dependability, and flexibility. Also included are growth opportunity, delivery
speed, and price.
The human resources strategy is laid out using a comprehensive theoretical

framework geared for effective high performance teams.
Factors affecting organizational form are evaluated in order to select the best
alternative. Advantages and disadvantages of limited partnerships are explained
for both Canada and Mexico. Taxation affects the way foreign operations are
financed. Debt financing was selected in order to avoid double taxation. An
insurance program is presented for basic protection of the new venture.
The implementation schedule for the venture has been broken down into four
distinct phases: conceptual, preliminary, development, and growth. Each of
these phases includes the time frame and expected costs.
The financial plan includes arranging financing from several sources to raise the
required capital. Business is expected to generate $9,300 after taxes in the first
year of operation. Ramp-up is planned for the second year of operation. Start-up
financial requirements are also laid out. Financial projections include cash flow,
income statement, balance sheet, and financial ratios. Break-even analysis is
included as well as divestiture/harvest strategy with four options.
Risk type is identified using Hartman’s basic steps for risk analysis. Description,
scope, and management of risk are covered. Categories of risk include business
related, environment related, and project related.
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2.0 FACT SHEET
Company Name: Southwest Property Management

Product: Property management and related services
Description: Provide property management and investment opportunities
to international buyers through specialist services
responsible for selling and management of high quality
private properties in the south of Mexico.
Capital Required: $350, 000
Management: Alberto Castellanos
Mission: Company business is based on offering Canadian and
international buyers a potential investment in emerging and
established locations, through a specialist services
company responsible for selling and managing high quality
private properties in the southern and coastal regions of
Mexico. Growth opportunities and synergistic benefits are
achieved through the long standing partnerships with
communities, employees and environmental protection
obligations. The Company objective is to recruit, develop,
motivate, reward, and retain employees of exceptional
ability and dedication by providing compensation on the
basis of performance, career growth opportunity, and
business development.
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3.0 THE INDUSTRY
Traditionally, Canadians have invested in real estate properties in the southern

United States (eg., Florida) as a winter destination, but more and more
Canadians are choosing more exotics locales, such as the Caribbean, Costa
Rica, and Mexico (Owens, 2006).2 Nowadays many retirees choose Mexico for
traveling, learning, playing, and even working. Up to date information about the
local cost of living, real estate market, medical care, safety recreation, and
community events is readily available (“Health and Safety,” 2006).3
Owning a picturesque southern Mexican vacation property is becoming an

affordable reality for many Canadians (Mang, 2006).4 Baby boomers are leading
the charge to invest in vacation real estate. Canadian boomers are proving to be
especially receptive. For example, they make up the third largest property
vacation buyers group tied with Great Britain at 14 percent and behind only the
Americans at 42 percent, as demonstrated by investor statistics in the Bahamas
(Owens, 2006).5
A growing number of Canadians are purchasing second homes in sunny Mexico.

Usually it involves cashing out some of the equity in their private residences and
investing it in properties in Mexico. This trend has accelerated since 1993 when
the Mexican Government allowed foreigners to own properties within restricted
zones (such as along the coast) through a trust (called a fideicomiso in Spanish)
managed by Fonatur, Mexico’s National Tourism Development Trust (Huang,
2005).6
Destinations include not only coastal locations, but inland communities, such as
San Miguel de Allende and Lake Chapala (Cooper, 2006).7 These two
communities have attracted Canadians looking for pockets of foreigners where
English is widely spoken. San Miguel, an artist’s haven, alone has an expatriate
community of 10,000 Americans and Canadians. An estimated 20,000 North
Americans now live in the lakeside community of Ajijic, an hour southeast of
Guadalajara (Huang, 2005).8
Another tourist destination is the City of Oaxaca de Juárez (Oaxaca); the capital
of the State of Oaxaca in the south of Mexico. ("Oaxaca", pronounced wa-HA-
ka, comes from the Nahuatl word "Huaxacac”, meaning "in the nose of the
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squash.") The city, with its 256,848 inhabitants, is located in the centre of the
state just four hours drive from Mexico City. The state is bounded to the north by
the states of Veracruz and Puebla, to the east by Chiapas, to the west by
Guerrero, and to the south by the Pacific Ocean.
Tourism is one of the principal sources of income for the residents of Oaxaca
(“Municipio de Oaxaca,” 2004).9 One of the first cities established by the Spanish
conquistadores, Oaxaca is also steeped in the Mixtec and Zapotec indigenous
cultures, and offers a unique combination of colonial architecture and pre-
Hispanic ruins. Oaxaca also has a growing community of expatriates located in
the north of the city that has been well-received by the city’s local population.
They enjoy the city’s year round spring-like climate, the scenery, architecture,
cuisine, and a multitude of cultural and artistic centres and events.
A perfect combination of affordable prices, sunny weather, rich history and

culture, and convenient traveling time from Canada through Mexico City make
Oaxaca City an ideal real estate market.
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4.0 THE COMPANY
4.1 Company Vision
The company’s vision is to create a property management entity that sells, rents,
or manages private vacation or second home real estate in unique locations that
offer a variety of activities and cultural experiences.
4.2 Company Mission
The company business is based on offering Canadian and international buyers a

potential investment in emerging and established locations, through a specialist
services company responsible for selling and managing of high quality private
properties in the southern and coastal regions of Mexico. Growth opportunities
and synergistic benefits are achieved through the long standing partnership with
communities, employees and environmental protection obligations. The
company objective is to recruit, develop, motivate, reward, and retain employees
of exceptional ability and dedication by providing compensation on the basis of
performance, career growth opportunity, and business development.
4.3 Company Value Proposition
The company value proposition is based on the following considerations:
• Secure Investment
• Responsibility towards the community
• Unique experiences
• Accessible destinations
• Ease of airlift potential
• Competent partners
• Safe surroundings
• Environmental sustainability
• Superior quality.
The strengths of the proposed business plan include architectural and

construction services experience combined with project management and market
knowledge. Opportunities include the willingness of communities to participate,
tourism services available in the city and possible future market expansion to
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other countries. Weaknesses include the language barrier, lack of employee

training, availability of medical service providers and size of the actual expatriate
community (Ponder, 2005). 10 Threats include land ownership restrictions, local
regulations, and political and security concerns.
4.4 Company Values
Fundamental values to be adopted by the company when conducting business:
• Integrity – dealing honestly with customers, suppliers and the community

• Responsibility – respecting the environment, community and common good
• Profitability – maintaining the level of profitability required to achieve long
and short term goals
• Value – being committed to quality as the only sustainable advantage in the
long term
• Security – providing secure investment opportunities to customers
• Employees – providing career growth opportunities and potential partnership
to responsible employees.
4.5 Business Goals to Be Achieved
Listed below are major business goals:
• Create a family business type of company that is diverse enough to survive

recessions, but small enough to be able to maintain control of the company.
• Create one of the most widely recognized businesses of its type
• Create a stable business that will provide a sufficient income stream.
4.6 Specific Objectives to Be Achieved
The following criteria will be used to measure the ability to achieve the company
mission:
• US$ 325,000 in property sales in the first year of operation

• US$ 500,00 in property sales per year after the first three years of operation
• A steady growth that will enable the company to look for opportunities in
different locations that complement the value proposition.
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5.0 PRODUCTS/SERVICE OFFERING
The purpose of the project is to develop a business plan for a property

management company. The proposed location is the City of Oaxaca with
possible future expansion to coastal regions. This project provides an evaluation
of the feasibility of establishing a services company that will assist with the
buying and management of residential real estate in southern Mexico. The
categories of potential property buyers are identified and the opportunity for
investors to receive a good return on their investment is demonstrated. Canadian
baby boomers with a median age of 50 that have sufficient earnings and net
worth to acquire a second home, and have an interest in diversifying their
investments, are being targeted as the principal customer group.
Services provided by the company include:
• Assistance with acquisition of existing residential properties;

• Consulting regarding site selection for the construction of new residential
properties and negotiation of land purchase agreements;
• Outsourcing of architectural and construction services;
• Project management of construction;
• Maintenance, protection and management of residential properties, including
marketing and rent collection; and
• Assistance with the sale of residential properties.
These services would be provided primarily in the north of the city where the
American and Canadian expatriate community is currently located, but other
locations within the city would also be investigated. Existing as well as potential
members of the expatriate community would be targeted.
Demand would be driven primarily by the opportunity to own a private residential

property at much lower prices than at other popular destinations (Vieira, 2005).11
Property prices could range between $150,000 to $500,000 USD. At the same
time, real estate can offer a good return on investment because of cheaper
prices, strong forecasted demand, and the strength of the Canadian dollar versus
the Mexican peso.
The concept of strong community ties is at the centre of the business model.
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Services such as housekeeping, security, and maintenance would be provided by

the members of the local community. Community members and expatriates
would create a synergy through opportunity and demand for services.
Community employees will be given a chance to start their own businesses as
independent service providers. The combination of dependable service providers
reinforces the idea of investment opportunities within the community. The idea
was born after coming to know the growing community of expatriates in Mexico
and their willingness to purchase residential properties (Sansom, 2006).12
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6.0 MARKET ANALYSIS
Fred R. David (2001) argues that no organization can plan in detail every aspect
of its current or future actions, but all organizations can benefit from knowing the
general direction in which they are headed and the ways to get there.13 It is a
fact that changes in external forces translate into changes in consumer demand
for both products and services. External forces affect the type of products
developed, the nature of positioning and market segmentation strategies, the
type of services offered and businesses’ decisions to acquire or sell. Identifying
and evaluating external opportunities and threats enable organizations to
develop clear strategies and to achieve long term objectives. A framework to
develop an external audit is a vital part of the strategic management process.
Information to be reviewed includes:
• Economic;
• Social, cultural, demographic, and environmental;
• Political, governmental and legal;
• Technological; and
• Competitive forces.
Environmental scanning helps to identify and evaluate the trends and events
beyond the control of the organization.
6.1 Economic Forces
As affluence increases, individuals place a premium on time, improved customer

service, immediate availability, trouble free operation of products and dependable
maintenance and repair services.
Real estate for second home and property vacation homes demand in Mexico is
being fueled by U.S. residents flush with cash from rising stocks and five-year
surge in home value, according to Mitch Creekmore, director of International
Development for Steward Title Guaranty, which insures $3 billion of property in
Mexico. (Black, 2006)14
Jeff Hornberger, manager of international market development for the National

Association of Realtors, estimates that anywhere between 500,000 to 1.5 million
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Americans have homes in Mexico. (Harris, 2006)15
The INEGI, “Censo de Poblacion y Vivienda” reported in 2000 that approximately

493,000 expatriate residents have been registered as living in Mexico. (Sistemas
Nacionales Estadisticos y de Informacion Geografica. 2006). Migracion.16
Mexico is quickly becoming the country of choice for retiring Americans and
Canadians, allowing them to save on housing and living expenses.
Lenders know there is a huge niche south of the border and have begun to
jockey for position in some of the more attractive markets. Lenders now offer
fixed rate and adjustable rate mortgage programs for primary and secondary
home buyers under its “Mexico: my dream” campaign, which debuted last year.
(Kelly, 2006)17
As a reference, baby boomers are now nearing retirement age and are
increasing the demand for second homes. It is likely that second-home sales will
remain historically high over the next decade. The National Association of
Realtors (NAR) reported 43.8 million second homes, out of which 37.2 million
were found to be investment homes and 6.6 million vacation homes. 23 percent
of all homes purchased in 2004 were for investment purposes, and another 13
percent were vacation homes. In 2003, second home sales went up by 16
percent, investment homes up by 14 percent and vacation homes up by 20
percent. (Reeves, 2005)18 Last year, vacation homes and investment properties
made up about 36 percent of all real estate sales, or about $560 billion. (Neville,
2005)19 Property management has been beneficed because homeowners pay
about 25% commission on all rental income to property management companies.
In exchange property management companies are on duty 24/7, to book guests
and check them in and out, to see that the small details such as windows are
washed or snow removed, and to call in a repairman when the roof leaks or the
dishwasher breaks. (Bennett, 2005)20
A little more than a decade ago, Mexico underwent a currency crisis that saw the
Peso collapse, followed by an economic downturn. Since that time, however, the
Mexican economy has seen a steady economic growth of 5 percent in 2005 with
inflation rarely reaching more than 5 percent. Much of this success can be
attributed to the North American Free Trade Agreement, as Mexico is one of the
largest trading partners of the United States and Canada. Still, should another
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devaluation of the peso occur, an investor in Mexico will likely emerge from it
unscathed. (Smith, 2006)21
According to Mexico’s National Trust Fund for Tourism Development, the five
largest projects geared for U.S. customers should yield $5 billion in investment by
developers and homebuyers over the next 15 years. A Mexican real estate
investment can provide a hedge against rising prices. (Young, 2006)22
The state of Oaxaca offers great retirement opportunities with a reasonable cost
of living, low property taxes and minimal need for climate control.
6.2 Social, Cultural, Demographic and Environmental Forces
Baby boomers, the 76 million Americans born from 1946 to 1964 who make up
29 percent of the U.S. population, stand to inherit more than $70 billion from their
parents, and much of that will be spent on real estate. Baby boomers are using
their savings or equity from rising U.S. home prices to buy across the border.
Mexico has relaxed its foreign investment laws and U.S. companies have begun
offering escrow services and title insurance reducing risk. This change in
Mexico’s real estate climate is drawing U.S. developers including Donald Trump,
David Butterfield, and John Fair to build communities on the Baja peninsula.
(Black, 2006) 23
According to Mark Raven, a Tucson attorney specializing in real estate in Mexico,

the buying boom took off after the September 11, 2001 terrorist attack and
thousands of new units have been built. (Harris, 2006)24
Most Mexicans welcome U.S. investment, recognizing that new developments

have produced jobs and economic benefits. Buying an overseas vacation home
immerses the buyer into local culture and a different lifestyle. When buying an
overseas vacation home part of the fun is having access to a different culture.
Environmental problems in southern Mexico include a limited fresh water supply.
6.3 Political, Government and Legal Forces
During the last five years, the Mexican government under President Vicente Fox
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has cracked down on corruption and real estate bribes. This has created a safer
environment for real estate business. Recently, for the second time since 1910, a
conservative President was elected and he is probably going to continue the
same policies.
Buying a home in Mexico has gradually become similar to a U.S. transaction. In

1994 a law was passed to allow full foreign ownership of land near the coast or
border through trusts or “fideicomisos.” (Trusts are not required for foreigners to
acquire property located in the interior of Mexico. (Expat Focus).25) The trusts
are created and owned by Mexican banks. The foreign buyer benefits by having
his property rights protected. The trusts last up to 50 years and are renewable.
Interest in the properties can be protected through title insurance that will cover
legal fees in case of an ownership dispute.
In 2003, the Mexican Legislature provided some clarity to the foreclosure

provisions under Mexican law. Foreclosure procedures have been abbreviated
and a non-judicial foreclosure is available when the property is held in a Mexican
trust. Recent reforms to the Mexican constitution and judicial system have
significantly strengthened the rights of foreign owners of Mexican real estate.
U.S. companies now offer escrow services and title insurance and financing from
US banks is now more readily available. All these factors are attracting U.S.
developers. Florida-style retirement communities complete with golf courses,
marinas, and shopping centers are being planned. Elsewhere in Mexico, the
government wants to develop beach land by creating coastal corridors in
Fonatur. (Retire Better, 2006)26
In terms of disadvantages, poor record keeping of land granted to farmers can

lead to title disputes. Foreign buyers still do not have the same legal standing as
Mexican Citizens, who can buy any property without using a trust.
Overall, however, lending in Mexico has become much more attractive to lenders
and safer for consumers.
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6.4 Conclusion of Environmental Scanning and Identification of Trends
A critical factor in successfully launching a new venture is understanding who

your customers are and what needs your products or services might satisfy.
Baja California has the largest population of expatriates at 62,829. The Federal
District (Mexico City) is the second largest with 56,187 expatriates followed by
Jalisco with 48,989 and Chihuahua with 44,436. Oaxaca only registered 4,591
expatriates or 1% of all the expatriate residents in Mexico. The expatriate
population has seen a steady growth of 0.04% since 1990. In 2000, the
expatriate population grew by 0.1% and is expected to continue growing,
especially in established locations such as Baja California, Jalisco, Mexico City
and Chihuahua. Typical real estate buyers are baby boomers that are near
retirement and looking for second homes or vacations homes, or for investment
opportunities.
Expatriates buy properties in Mexico located within:
• International developments
• Communities
• New developments
• Florida-styles retirement communities
• Fonatur
The principal requirements in selecting a product or service of this type include:
• Fixed interest rate

• Adjustable rate mortgage program
• Escrow services and title insurance to reduce risk
• Full foreign ownership, including through trusts
• Title insurance and third-party management of escrow
• US bank-financing
Geographic segmentation would include location since Oaxaca City or coastal

developments are located in specific locations in southern Mexico. The target
client group would include people who like colonial cities and the surroundings.
Geographic location reduces the target market to 1% of all potential expatriates.
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The demographic description includes baby boomers with a median age of 50

that have sufficient earnings and net worth to acquire a second home, and have
an interest in diversifying their investments. Psychographic or sociological
factors include lifestyle and status. Market segmentation includes boomers that
enjoy colonial cities and desire to explore different cultures, traditions and values.
6.5 Estimated Total Market Size and Trends
The principal market is located in the City of Oaxaca in the first phase of the
project. Actual total market size is about 4,591 based on the number of
expatriates living in Oaxaca in 2000. The market is scattered throughout the city
and surroundings without a typical pattern of specific location. Market size has
grown at 1% per year from 1990 to 2000. Therefore there are 50 potential
customers for properties in the city in the coming year. Total market size in US
dollars is $15,000,000 using an average price of $325,000 per residence.
According to Fred R. David (2001) competition in virtually all industries can be

described as intense, and sometimes cut-throat.27 Collecting and evaluating
information on competitors is not always easy because privately held firms do not
publish any financial or marketing information. However, many firms use the
Internet to obtain most of their information on competitors.
6.6 Analysing Competition
The key direct competitor in the area is URBIC Constructions – Joaquin Solis
Altamirano.28 The estimated market share is unknown. Products or services
offered include:
• Investment management
• Property acquisition
• Sales and promotion
• Property management
• Surveying
• Property appraisal
URBIC is an integrated service provider that offers mainly real estate,

architectural, design, construction, structural engineering, and business
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consulting services. It aims to become the first strategic consultant on investment

projects and its principal advertising strategy is the Internet. URBIC emphasizes
quality through quality management. Average selling price (in USD) is as follows:
• Land for sale in the area surrounding the city - $6.50 per m2
• Land for sale in coastal areas - $300 per m2
• Land and property within the city - $286 per m2
Its profit margin is approximately between 30 to 50% and it does not emphasize a
low selling price. Expected retaliation could include price lowering and increased
promotion and advertising.
Other indirect competitors include:
• Independent real estate companies - “Oaxaca Real Estate”. Oaxaca Real

Estate & Oaxaca Real Estate Investment Guide.29
• MEXonline. Buying Property in Mexico. MEXonline.com.30
• Others - Retirement & Investment Real Estate. 1st Wave Realty.com.31
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7.0 MARKETING PLAN
Kotler (2003) states that the traditional view of the business process will not work
in more competitive economies where people face abundant choices. The mass-
market is actually splintering into numerous micro markets, each with its own
wants, perceptions, preferences and buying criteria.32 The marketing strategy
could be defined as follows:
• Choosing the value – representing the research that marketing must do

before any product exists. It must segment the market, select the appropriate
market target, and develop the offering’s value proposition.
• Providing the value – representing the features, price and distribution.
• Communicating the value – representing the tactical marketing, sales
forces, promotion, and advertising.
Product and service offered is providing property management and investment

opportunities to international buyers through specialist services responsible for
selling and management of high quality private properties in southern Mexico.
The concept is unique because it strives to tailor the second home buying
experience to the individual's taste and preference. Its focus is on international
buyers that are looking for a potential investment in either an emerging or
established location. The concept is strengthened by forming long standing
partnerships with communities and employees with the obligation to protect the
environment. It is distinctive from other concepts because it caters to a market
niche with individual clients and individual experience. The primary customers
are baby boomers who enjoy new cultural experiences and at the same time
want a good return on their investment. The concept combines two ideas into
one opportunity. On the one hand, it provides a winter destination, and on the
other captures the growing market of expatriates willing to purchase second
homes in sunny Mexico. If the idea is technically feasible, a property residence
would be built as a first step to demonstrate quality standards and unique design.
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7.1 Services Provided
Services provided by the company would include:
• Assistance with acquisition of existing residential properties;

• Consulting regarding site selection for the construction of new residential
properties and negotiation of land purchase agreements;
• Outsourcing of architectural and construction services;
• Project management of construction;
• Maintenance, protection and management of residential properties, including
marketing and rent collection; and
• Assistance with the sale of residential properties.
Warranties would be subject to local laws, but additional services free of charge
would include free translation and consulting regarding references and
networking.
The products and services are unique because of the following features:
• Focus on customers with attention to detail – niche market

• Customer protection and loyalty
• Investment opportunities within the community
• Experience in project management and market knowledge
• Competitive advantage through high-quality workforce
• Being adaptive.
Kotler (2003) identifies market niches by dividing a segment into sub-segments.

An effective segmentation must be measurable, substantial, accessible,
differentiable, and attainable.33 An attractive niche is characterized as follows:
• The customers in the niche have a distinctive set of needs

• They will pay a premium to the organization that best satisfies their needs
• The niche is not likely to attract other competitors
• The niche gains certain economies through specialization
• The niche has size, profit, and growth potential
Kotler (2003) outlines different ways to identify customers including needs,

attitudes, preferences, income, social classes, and stages in family life cycle.34
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The target customers are baby boomers near retirement age with a median age
of 50 that have sufficient income and net worth to acquire a second home and
have an interest in diversifying their investments.
The following is a list of reasons why customers will buy company products and
services:
• Limited offerings in the city

• Sales would be available in Canada directly
• Residence prototype is available in advance
• Complete package of services
• Warranties are available for customers
• Knowledge of the product
• Quality control
• Price structure is easy to understand
• Specific target market and product offering
• Strategic location – water is an issue due to scarcity
• Reliability of the company
• Use of performance objectives
• Property protected with title insurance
• Easy due diligence
• Strong community ties.
In a study of hundreds of business units, the Strategic Planning Institute found

that the ROI averages 27 percent in smaller markets, but only 11 percent in
larger markets” (Kotler, 2003, p.271).35 There are several reasons, but the
principal reason is that the specialized business ends up knowing the target
customers so well that it meets their needs better than bigger firms that
occasionally sell to this niche. As a result, the specialized firm can overstate its
price versus cost. Where the nicher achieves high margin, the mass-marketer
achieves high volume (Kotler, 2003).36
Anthony A. Atkinson et al (2000) identifies how an organization determines its

long-term benchmark price to guide its pricing strategy. Managers must consider
both the short-term and the long-term consequences of their decisions. Price-
Taker or Price-Setter decisions will be identified using short-term and long-term
decision-making considerations. (David, 2001)37
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7.2 Pricing Program
New properties based on design specification and needs are unique services that
should be priced as value-based instead of competition-based.
Value-based pricing is the perceived value the customer places on services. The
price is determined by analysing customer needs and value perceptions that
involve availability, image, and warranty considerations. Differentiating factors
include availability, location, image, quality and reliability.
Pricing strategy will include the cost of the land and the cost of construction. The
average cost of land is US$150 per m2 and US$300 per m2 for construction.
The price includes 5 percent for project management services and 10 percent for
architectural design and engineering.
7.3 Advertising
Advertising would be done through the Internet and complemented by sending

out press releases and developing effective outdoor window displays. Cost
estimates for Internet site development varies from $500 to $100,000 and
information on the website should be updated regularly. Advantages include high
selectivity, interactive possibilities, and relatively low cost. A disadvantage of the
proposed advertising strategy is that the Internet is a relatively new medium with
low numbers of users in some countries. Other aspects to consider include:
• Domain name
• File registration request
• Reliable web server to house the site
• Links leading to the site by listing with directories and hotlines
There are different sites that promote living in Mexico and offer financial, legal, or
cooperative advertising programs. A direct link to the company's website would
be preferred. Cooperative advertising websites include:
• Mexretire.com – “Mexico feels like home”

• Expat Focus – For anyone moving or living abroad
• Oaxaca Real Estate – Oaxaca vacation information
• Oaxaca Real Estate Investment Guide
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• Mexliving.com – Live in Mexico twice the lifestyle half the cost

• Choose Mexico – Retirement in Mexico, health and safety travel guide.
7.4 Promotion
The primary promotional message to potential customers is: “Investment

opportunities in sunny Oaxaca. Buy, rent, or invest in a colonial town; perfect
combination of affordable prices, sunny weather, rich history and culture, and
convenient traveling time from Canada through Mexico City make Oaxaca City
an ideal real estate market.”
In setting the promotional budget, five specific factors require consideration:
• Product life cycle stage – new products require a significant advertising

budget to build awareness and gain consumer interest, but established
brands usually are supported with lower advertising budget when compared
to sales (informative advertising).
• Market share and consumer base – increasing market share by increasing
market size requires larger expenditures (informative advertising).
• Competition and clutter – In a market with a large number of competitors
and high advertising spending, a brand must advertise more heavily to be
noticed (persuasive advertising).
• Advertising frequency – number of repetitions needed has an important
impact on the advertising budget (remainder advertising).
• Product substitutability – advertising is important when a brand can offer
unique physical benefits or features (persuasive advertising).
Due to specific factors listed above we have:
• Large advertising efforts are needed to build awareness

• Larger advertising efforts are needed to increase market size
• Less advertising is needed if the number of competitors is decreased
• Large advertising efforts needed to put across the brand’s message
• Large advertising efforts needed to offer unique physical benefits or features.
Overall a large advertising budget is required for the new venture.
A trade promotion program will include complementary services with cooperative
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firms. Also, promotion will include maintenance services, extended guaranties,

consulting services, and cost saving strategies.
7.5 Public Relations
Public relations, general communication and relationships would be personal and

would include employees, government, community and customers. Support of
the community and environment would be of utmost importance everywhere we
do business.
Distribution of the products will be directly to the consumers. The company will
use its own sales force in the beginning and start using agents and brokers once
more products are available.
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8.0 PRODUCTION OPERATION PLAN
Critical success factors include those activities that must be performed if the
organization wishes to achieve its long term objectives. Critical success factors
or performance objectives are designed to satisfy the market they attempt to
serve. Nigel Slack, Stuart Chambers and Robert Johnston (2001) classify critical
success factors into two categories:38
• Order-winning factors are those objectives that directly and significantly

contribute to a winning business. They are a key reason for purchasing.
Raising performance in an order-winning factor will either result in more
business or improve the chances of gaining more business.
• Qualifying factors are those aspects of the operation’s performance that must
be above a particular level just to be considered by customers. Any further
improvement above the qualifying level is unlikely to gain the organization
additional competitive benefits.
Identifying and classifying the critical success factors would enable the
organization to gain a competitive advantage.
Nigel Slack et al (2001) identify operational strategy as the set of general

principles that will guide the decision making process.39 Those decisions include
translating market requirements into operation decisions. A Top-Down approach
should be used to identify operational strategy and to address the following
questions:
• What types of business does the organization want to be in?

• What part of the world, region, or city does the organization want to operate
in?
• How should cash be allocated amongst the various businesses, departments,
or units?
8.1 Identification of Operational Priorities
Critical success factors or performance objectives within the operation seek to

satisfy customers through developing their five performance objectives.
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For a property management company the quality advantage means providing

error-free goods and services that are suitable for their purpose. Internally,
quality operations reduce costs and increase dependability. Quality advantage
includes the following services offering:
• Safe Investment – long standing partnership with communities and

employees.
• Growth Opportunity – a sound investment with growth projections.
Company’s organization is stable and efficient. Operations are performed as
specified.
• The quality of the technical solutions – the appropriateness and
constructability as perceived by customers. Consulting services are carried
out in a consistent manner. Properties to be sold or bought are inspected to
ensure their good condition.
• The quality of communications with customers – the frequency and
usefulness of information. Customers are consulted and kept informed. All
documentation is presented and information is accurate and useful.
• The quality of company documentation – the usefulness of documentation
throughout the project life and customer relationship.
The Speed Advantage means providing the services promptly and without delay
– minimizing the time between a customer asking for services and receiving them
in full. Internally, speed reduces risk by delaying resources commitment.
• Delivery speed – the time between customers requesting a services and

receiving it is kept to a minimum.
• Location – direct air access between three to five hours.
Dependability Advantage means delivering the services when and as they were
promised. In other words, it means keeping the delivery promises you have
made to your customers. Internally, dependability increases operational
reliability, thus saving the time and money that would otherwise be taken up in
solving reliability problems, and also provides stability to the operation.
• Dependability – our ability to deliver on the promised date and on a revised

date. Have a plan ahead of services schedule and a plan for dependability of
supply.
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The Flexibility Advantage means the ability to vary or adapt the operational
activities to cope with unexpected circumstances or to give customers individual
attention. Hence, the range of goods and services that you produce has to be
wide enough to deal with all possible customer preferences. Change far enough
and fast enough to meet customer requirements. Internally, flexibility can help
speed up the response time by saving time that would otherwise be wasted in
changeovers and maintaining dependability.
• Flexibility – the ability to adapt to different solutions. This means changing

what operations does, how it is doing it, or when it is doing it. Keeping track
and retrieving new customer information (e.g. medical records). Keeping up
with new customer demands, and providing a range of options from which
customers are able to choose when acquiring services.
• Highly skilled personnel that are able to resolve problems. The ability to train
highly skilled personnel.
Cost Advantage – means minimizing costs, that is to produce goods and services
at a cost that enables them to be priced appropriately for the market while still
asking for a return to the organization. Internally, cost advantage is helped by
good performance in the other performance objectives.
• Price – the total charge to the customer. The lower the cost of producing the
goods and services, the lower they can be priced to the customers.
Graph No.1 - Plotting on the nine-point scale:
Importance/Performance Scale to Customers

More Important Less Important
1 2 3 4 5 6 7 8 9 10
Safe Investment X
Growth Opportunity X
Communications X
Documentation X
Speed X
Location X
Dependability X
Flexibility X
High Skilled Personnel X
Price X
1 2 3 4 5 6 7 8 9 9
X Rating of importance to customers
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Graph No. 1.2 Order Winner/Qualifiers/Less Important:
Order Less
Qualifiers
Competitive factors winners important
Safe Investment
Growth Opportunity
Communications
Documentation
Delivery Speed
Location
Dependability
Flexibility
High Skilled Personnel
Price
Safe Investment, communications, location, dependability, and flexibility are

classified as order winners. Growth opportunity, delivery speed, and price are
classified as qualifiers. Although the qualifiers provide a crucial advantage,
clients would be more interested in the order winners. Performance objectives
are important considerations for focusing resources where they are important to
achieve competitive advantage.
To address the owner order winner qualifiers, it is important to separate them into
two categories. The first category can be achieved through planning and
searching for the best options on the market (safe investment and location). The
second category can be achieved through training and project team
development. A review of the internal process is required in order to increase
communication, flexibility, and dependability.
8.2 Human Resources
Charles R. Greer (2000) states that human resources strategies are essentially
plans and programs that address and resolve fundamental strategic issues
related to human resources management. Human resource strategy focuses on
the alignment of the organization’s human resources practices, policies, and
programs with corporate and strategic business plans. Increasingly, it is being
recognized that competitive advantage can be obtained with a high-quality
workforce, which enables organizations to compete on the basis of market
responsiveness, products and service quality, differentiated products, and
technological innovation, instead of reliance on low costs.40 A comprehensive
theoretical framework can be used in order for human resource strategy to help
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align personnel practices, policies, and programs with the human resource
strategy so that the desired employee roles and characteristics will support
company strategy (Hartman, 2006).41
Open communication – a culture of openness is best cultivated through

leadership and example. Open communication should be nurtured from the
beginning.
Ownership of your work – having control of your work and balancing the needs
of an individual against those of the team.
Propensity to take risk – competitive advantage lies in continuing improvement

and improvement comes from trying something different. If a risk is taken, the
results should be treated as a learning experience in order to replicate the results
or to avoid making the same mistake in the future.
Creativity – it attracts the best people to the organization and keeps them
motivated. Creativity needs encouragement, focus, and natural leaders as well
as general awareness within the company.
Fun – it starts with open communication and creativity. Team members having
fun are much more productive and motivated.
Tribalism – people feel good when they belong to a tribe. Each tribe has its own
language, culture, dress code, hierarchy, taboos, and traditions. It is part of our
heritage and it is a powerful tool in bringing people together.
Trust – it is the glue that binds us into more effective teams. It is a necessary
condition for meeting targets, collaboration, improvements, and competence.
This framework offers powerful ways to accelerate effective high performance

teams.
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9.0 MANAGEMENT TEAM
Anthony A. Atkinson, Robert S. Kaplan, and S. Mark Young (2000) contend that
in response to today’s increasing competitive pressures, organizations are
changing the way they are organized and the way they do business.42 This is
necessary because they must be able to change quickly in a world where
technology, customer tastes, and competitors’ strategies are constantly
changing. Being adaptive generally requires that the organization’s senior
management delegate or decentralize decision-making responsibility to people in
the organization. Decentralization allows motivated and well-trained organization
members to identify changing customer needs quickly and gives frontline
employees the authority and responsibility to develop plans to react to these
changes.
The degree of decentralization reflects the organization’s trust in its employees,

the employees’ level of skill and training, the increased risk from delegating
decision-making, and the employees’ ability to make the right choices. It also
reflects the organization’s need to employ highly qualified personnel.
9.1 Legal Forms of Business Organization within Canada
The legal form of organization involves several factors to be considered, such as:
• Complexity – it could be complex if the business adopts different types of

operations even though they can be complementary. Line of operations
involves:
o Buying and selling properties is complementary to the core

business proposition. It should be considered as a way to attract
more business, so there should not be a separate organization to
perform this business operation in the short term.
o Property management – it is the core of the business and
operations should be concerned to develop its performance
objectives.
o Consulting services – it is complementary as stated in point No.1
o Project management - it is complementary and it should be
outsourced if possible. It should be performed to control quality of
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the processes and it should be performed in the early stages of the

business.
• Expenses associated with organizing and operating the business – principal

expenses are start up costs, such as land acquisition, engineering and
architectural services and construction. Start-up expenses are high and the
breakeven point could be achieved later than in one year.
• The extent of the owner’s personal liability is a key factor to be considered in

initiating and organizing the legal form of the business.
• The need for capital and operating funds from different sources – funds to be
considered after start up costs.
• Distribution of profits and losses
• Extent of government regulation in both countries
• Tax consideration and implication – to be discussed separately
• Need to involve different partners
After considering all these factors, the most appropriate form of partnership in
Canada is a limited partnership. The liability of a partner in a limited partnership
is limited to the partner’s own contribution to the capital of the business. Also,
limited partners are limited in their participation in the day-to-day management of
the business or they will lose their limited-liability status, but they have the ability
to remove the general partners.
Ease of recruiting investors is one of the principal advantages of this form of

organization. The disadvantages for the partners are that only the general
partners have decision-making authority and can participate in the management
of the business. Other advantages include:
• Initial requirements and costs – it should be registered provincially.

• Taxes – apply individually to the partner’s contribution
• Transfer of ownership – partners can sell their interest in the company
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In Mexico the best form of organizing the business is as a foreign subsidiary. A

foreign subsidiary is a legal entity that is completely separate from the Canadian
parent. Corporations are easy to organize under Mexican laws. The advantages
are similar to those of a corporation in Canada. A company qualifies as
multinational company when it has operations and assets in a foreign market and
draws part of its total revenue and profits from such market. As a multinational
company, it can be exposed to international factors such as:
• Foreign ownership – portions of equity of foreign investment owned by

foreign partners, thus affecting foreign decision making and profits.
• Multinational accounting – different currencies and specific rules influence
the consolidation of financial statements into one currency.
• Foreign exchange risk – fluctuations in foreign exchange markets can affect
foreign revenues and profits, as well as the overall value of the company.
9.2 Legal Forms of Business Organization Outside of Canada
The existence of bilateral tax treaties and the subsequent application of tax rules
can significantly enhance the overall net funds available to multinational
companies from the invested country. International taxation is one of the
variables that multinational corporations should take into consideration when
financing overseas projects. In determining the total taxes to be paid by a
multinational company, the level of taxable income must be calculated.
In order to reduce double taxation, a company should have a permanent

establishment in the foreign country and take advantage of tax treaties that
override domestic laws. In addition to taxing business income, most countries
impose withholding taxes on certain types of payments out of the country.
Payments subject to withholding taxes include dividends, interest, royalties, and
management fees. The tax rate that applies tends to be 15%. Since tax treaties
normally do not eliminate withholding taxes altogether, double taxation can still
occur.
The decision on whether to finance a foreign operation using debt or equity

financing is based on the tax rates in the country where the foreign operation is
based and the home country. In countries with high tax rates, debt is preferred
as a financing method. If a multinational company is financed with debt and pays
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foreign income as interest in the year it is generated. The home country tax rate
will likely apply because interest payments may make it possible to reduce the
foreign operation’s taxable income to zero.
9.3 Insurance
An insurance program will provide some financial protection against

unpredictable occurrences in several areas that could threaten the survival of the
company. The following represent the basic insurance protection of the new
venture:
• General liability insurance – covers the liability to customers injured by a

product that the company has sold to them.
• Business premises insurance – covers business premises and equipment
from loss due to fire, theft, and other causes.
• Use vehicle insurance – it must be obtained for cars and other vehicles used
in the company’s business.
• Business interruption or loss-of-income insurance – it will enable the
company to continue to pay the bills if the business should be closed down by
fire, flood, or other catastrophes.
• Credit insurance – it protects the company from extraordinary bad debt or
losses due to a customer going out of business.
• Surety and fidelity bonds – it protects the business from the failure of
another firm or individual to fulfill its contractual obligations.
• Worker’s compensation - it provides compensation for the company
employees in case of illness or injury related to their employment.
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10.0 IMPLEMENTATION SCHEDULE
A general implementation schedule has been developed to ensure that all

phases of the venture have been adequately planned. The development of the
concept has been broken down into four distinct components: concept phase,
preliminary phase, development phase, and growth phase.
• Concept phase. This phase would take approximately six months to be

developed. Activities include assembling the advisory team, such as
accounting, law, and marketing. The principal objective is to identify land
options to be purchased, to evaluate the most attractive alternatives, and to
purchase the most suitable alternative. Expected cost, $110,000.
• Preliminary phase. This phase would take approximately four months to be
completed. The principal activity is to secure financing. Other activities under
this phase include name registration, business incorporation and registration
for tax purposes. Architectural, engineering, and web page design services
will be contracted. Expected cost, $20,000.
• Development phase. This phase is expected to take ten to twelve months to
be completed with the majority of the time consumed by construction and
sales activities. Principal activities include sales, advertising and promotion
campaign, employee hiring, and comprehensive training program. Expected
cost, $120,000.
• Growth phase. This includes the long-term growth of the business. This
phase involves the development of new coastal property locations and
property management services.
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11.0 FINANCIAL PLAN
According to Lawrence J. Gitman & Sean M. Hennessey (2005), the financial

strategy sets out the company’s planned financial actions and the anticipated
financial impact of those actions over the period ranging from 2 to 10 years.
Long-term (strategic) financial plans are part of the integral strategy that, along
with production and marketing plans, guide the firm toward achievement of its
strategic goals. Those long-term plans consider proposed fixed asset outlays,
marketing, capital structure, and major sources of financing. 43
11.1 Arranging Financing
There are relatively few sources of seed capital for ventures that are just starting
and do not have a track record. Combining financing from several sources to
raise capital is required.
11.2 Investigating Debt Financing
Banks can provide debt financing in the form of self-liquidating, short-term loans
to cover small business working capital requirements in the form of a line of
credit. With an operating loan, credit is extended up to a prearranged limit on an
ongoing basis to cover day-to-day expenses due to cyclical incomes.
Furthermore, a line of credit can give you the advantage of a discount for prompt
payment.
Restrictions investing with debt financing are:
• Retained earnings leave the company

• Vetoes purchase of fixed assets above certain limit
• It is subject to annual review and renewal by mutual agreement determined
by the lender
• Interest on operating loan is usually tied to the prime rate
• Bank may ask for a personal guarantee of business loans as well as a pledge
of collateral security for the full value of the loan or more.
• In order to qualify for a loan, one must have sufficient equity in the business
and a strong personal credit rating.
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11.3 Arranging Personal Funds
Personal funds will be used in the business. The first land acquisition will be
financed through a combination of personal and family funds. All of the terms
and conditions of the investment will have to be set out in a formal legal
agreement. The legal agreement will include the nature of the business, detailed
implementation plans, and risks associated with the venture.
Family business orientation has the advantage of obtaining funds from family
sources with the understanding of limited liability, limited participation in the day-
to day management of the business, and mutual agreement of all partners.
Moreover, family members located in different countries can take advantage of
tax laws.
11.4 Venture Capital
Venture capital involving equity participation would be necessary in the

development stage of the business. The development stage of the business will
require funds of US$1 million. To grow the business into the development stage,
venture capital would be required. Equity participation would be needed to raise
funds for new property development. The main issues under capital investment
include:
• Price – value of the business, value prepared to accept, and value prepared
to consider.
• Control – managing the risk by putting some controls in place to protect their
investment, such as ability to make financial decisions, representation on the
board of directors, equity to give up based on predetermined performance
based targets, first opportunity to participate in the sale of equity, and ban on
the sale of future shares without limited partnership agreement
• Establishment of performance expectations – specific milestones and
objectives and performance measures
• Exit strategy – available option to cash in their investment such as:
acquisition by a third party, sale of the investor interest to third party investors,
buy-back agreement, and management of employee buyout.
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11.5 Down Payment from Customers
In construction it is customary to receive a partial payment at certain defined

stages during the course of the project. Any work that involves special orders or
custom design would require a significant deposit or part of the total payment in
advance.
Money Required to Launch the Property Management Business
Calculating funds available to launch the start up phase of the business includes:
Source Amount in US$

Personal Sources
Cash 2,000
Stock 5,000
Mutual Funds 51,000
RRSP’s 5,000
Other Investments 5,000
Credit Cards 10,000
Line of Credit 22,000
Sub-Total 100,000
Personal Contacts
Family Members 50,000
Limited Partners 100,000
Sub-Total 150,000
Other Sources
Down Payments from Customers 100,000
Total Funds from All Sources 350,000
11.6 Determining Start-Up Financial Requirements
The property management business is a capital-intensive business to start. The

bulk of the money is required for land acquisition and professional services. The
estimate of the funds required to set up the business can be broken down into
two components:
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One time expenditures – expenditures must be made before the business can
open its doors. These include capital expenditures and soft costs as disclosed in
Table 12.1
Operating expenses – these include employee payments, wages, utilities,

promotions, and other ongoing expenses that must be incurred until the business
begin to generate profit. It is estimated that three to six months of funds would
be required to cover operations. A cash flow reserve is required to cover
emergency situations. Operating funds to cover these initial operation expenses
are also illustrated in Table 12.1
Table 12.1 Estimated Start-Up Requirements for Property Management

Company
Estimate Monthly Expenses

MONTH
1 2 3
Estim ate m onthly No. of m onths of Estim ate cas h
bas ed on sales of cash req. to required to start
$322,000 per year cover expenses business
ITEM
1. Owner's Salary -1,667 3 -5,000
2. Employees' Wages and Salaries -3,750 3 -11,250
3. Rent -376 3 -1,127
4. Advertising and Promotion -524 3 -1,572
5. Delivery Expense -215 3 -644
6. Supplies and Postage -270 3 -810
7. Telephone -939 3 -2,818
8. Utilities (Heat, Light, Power) -671 3 -2,013
9. Insurance -537 3 -1,610
10. Taxes including employment insurance -2,147 4 -8,587
11. Interest -1,342 3 -4,025
12. Professional, Legal and Accounting Fees -1,878 3 -5,635
13. Maintenance Expense -617 3 -1,852
14. Other Fixed Expenses -1,020 3 -3,059
A. TOTAL CASH REQUIRED FOR MONTHLY -15,951 -50,000
RECURRING EXPENSES
*Expenses and other payments should be entered as negative (-) numbers.
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Estimate One Time Expenditures

Expenditures
Cash require d to s tart
B. CAPITAL COSTS business
ITEM
1. Land Purchased ( 1 lots) -100,000
2. Licenses and Fees -10,000
3. Geotechnical Work -1,000
4. Surveying and Permitting -1,000
5. Architectural Services -10,000
6. Engineering Services -10,000
7. Interior Design Services -3,000
8. Furniture -10,000
9. Construction Fees -110,000
10. Supervision and Appraisals -5,000
11. Web Page Design and Set Up -5,000
11. Others -7,500
-272,500
Estimate One Time Expenditures

Expenditures
Cas h re quire d to start
business
C. SOFT COSTS
ITEM
1. Utilities -1,500
2. Professional, Legal and Accounting Fees -5,000
3. Licenses and Permits -1,000
4. Advertising and Promotion -2,000
5. Accounts Payable (Interest) -8,000
6. Cash -5,000
7. Others -5,000
-27,500
D. TOTAL ONE-TIME CASH REQUIREMENTS -300,000
E. TOTAL ESTIMATE CASH REQUIRED TO START BUSINESS: -350,000
11.7 Financial Projections
Detailed financial projections are provided under Exhibit No.1 and No.2. As
indicated, Property Management Services are expected to require $350,000 in
the first year of operations, primarily due to land acquisition, construction fees,
and professional services, such as architectural and engineering. The business
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is expected to generate $9,300 in its first year of operations, as well as providing

for the purchase and development of a second property. Profits will be used to
repay limited partners and family members. The $322,000 sales generated in the
first year is enough for the breakeven point of $302,518. Financial projections for
the second year will include the construction of one additional property and the
ramp-up of the property management services.
Break-Even Analysis
Projected Sales 322,000

Total Operating Expenses 245,642
Gross Margin
Contribution Margin 81.10%
Net Sales
Total Operating Expenses

Break-Even Point ($Sales) 302,888
Contribution Margin
As indicated in the Cash Flow projection under Exhibit No.2, the initial bank loan
and the $27,000 investment give operations more than adequate cash flow. This
gives the business the advantage of paying debt more aggressively and the
possibility of launching additional properties. Equity will not be paid to the owner
initially in order to maximize funds available for growth. The current and debt
ratio provide evidence that there should not be problems meeting financial
obligations going forward. If cash is drawn down due to equity distribution, it will
be done under the condition that the current ratio be maintained at a minimum of
2:1.
11.8 Divestiture/Harvest Strategy
Real options are opportunities that are embedded in capital projects that enable
managers to alter their cash flow and risk in a way that affects project
acceptability (NPV). These options are described below and they will be used to
assess the feasibility of the business plan:
• Abandonment option – The option to abandon or terminate a project prior to
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the end of its planned life will be considered prior to initiating the construction
phase where the bulk of resources would be committed. Land could be sold
and proceeds of the sale will be used to pay off the debt obligations of the
business and any remaining funds will be used to pay the owners
• Flexibility option – Flexibility is incorporated into the organization’s
operations by virtue of the different services provided by the company.
Flexibility would allow the company to focus on the more profitable niches.
• Growth option – The option to develop follow-on projects, expand markets,
and so on includes property developments in the coastal areas after year two
of the implementation schedule. Project feasibility indicates that the growth
option should be pursued.
• Timing option – The timing option recognizes the organization’s opportunity
to delay acceptance of a project for one or more periods, to accelerate or slow
the process of implementing a project in response to new information or to
shut down a project temporarily in response to changing product market
conditions or competition. Funding is the principal obstacle to delaying the
project and to use the timing option.
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12.0 RISK FACTORS
Francis T. Hartman (1999) defines risk as the event or factor that leads to a
different than planned outcome. Risk analysis helps to identify the elements that
can increase the uncertainty of the outcome of a project. The goal is to avoid or
reduce the chance of failure, and risk analysis involves finding the most volatile
parts of the project and stabilizing them by mitigating the risk. (Hartman, 2006)44
Using Hartman’s basic steps for risk analysis will help to layout a plan to
moderate the things than can go wrong. The three steps to review are as
follows:
• Identifying risks
• Assessing risks
• Managing risks
Types of Risk and Consideration in the Project:
Category Name Risk Type

Description and Scope
Market Market assessment – estimate size of the
market.
- Further assessment of the market would
be required to suit market development
and new market opportunities such as
national market.
Risk related to the
business Financing Source of funds – investors prefer to
invest in coastal places or close to home.
- National stockholder have shown
interest in the concept if additional capital
is required.
Limited Partnership Perceived value and delay on ROI.

- Location of the properties is the key for
faster product turnover. Trade promotion
and advertising are required.
Risk related to the Political Civil unrest in the city and concern of
external environment recent tourist deaths in Mexico.
- Exit strategy would be offered to
stockholders.
Page 44 of 56
Economic Tax breaks problems.

- Use of debt instead of equity to avoid
double taxation.
Social Local competition.
- Different product offering and value
proposition.
Nature Possibility of natural disasters, e.g.
earthquakes.
- Comprehensive insurance protection.
Sub-contractors Delay in construction and leasehold
improvements.
- Penalty clauses will be written in the

contrasts to ensure Property
management is compensated for the
damages. Project management services
will be in effect.
Duration Long breakeven point.
- Offering different lines of services.
Value Huge size of cash flow is required.
- Allocation of personal fund and continue
looking for external sources of financing.
Risk related to the project
Complexity Variety of laws and restrictions.
- Incorporate an experienced advisory
team.
Definition and volatility Scope of what clients want.
- Clear definition of success and further
assessment of the market conditions.
Page 45 of 56
13.0 CONCLUSION
Major findings includes the identification of a growing market for vacation homes
in sunny Mexico, but mostly in coastal development and established expatriated
communities. This type of business is capital intensive and financial forecasts do
not demonstrate high return on investment in the first year of operation, making it
difficult to obtain sources of capital for the short-term. Other findings include
risks associated with political and security concerns for potential buyers, and tax
implications for partners. Coastal developments offer better outlook and growth
opportunities than inland communities. The strategic decision about “where” to
invest must be made if the project should go forward after the first phase.
Page 46 of 56
14.0 END NOTES AND REFERENCES
1
Young, Linda. (2006, October 13). U.S. Retirees Buying Homes in Baja
California, Mexico. AII Headline News. Retrieved October 30, 2006 from the
World Wide Web: http://www.allheadlinenews.com/articles/7005171350
2
Owens, Wesley. “They Are Boomers. And They Are Doing It.” The Globe
and Mail 25 February 2006: LUX1.
3
Choose Mexico: Retirement in Mexico, Health and Safety Travel Guide.
Retrieved on October 14, 2006 from MedToGo Web Site on the World Wide
Web: http://medtogo.com/t/health-travel-store/retirement-in-mexico.html
4
Mang, Anthony Randall. “Join the Club.” The Globe and Mail 25
February 2006: LUX2.
5
Supra No.2.
6
Huang Renee. “Destination Mexico.” The Globe and Mail 8 July 2005:
G12
7
Cooper, Douglas Anthony. “Barbarians at the Gate.” En Route Monthly
March 2006: 51-58.
8
Supra No.6.
9
Municipio de Oaxaca, Oaxaca Fiesta de Arte y Color, retrieved on
October 14th, 2004 on the World Wide Web:
http://www.oaxacainfo.gob.mx/?mod=topic&topic=poblacion.
10
Ponder, Stephanie E. “Staying Healthy in Mexico.” The Costco
Connection Bi-monthly May/June 2005: 51.
11
Vieira, Donna S. “Pure Escapism.” Dream Escapes Bi-monthly
January/February. 2005: 24-28.
12
Sansom, Maggie. “Dream Big” The Globe and Mail 25 February 2006:
LUX2.
13
Fred R. David (2001). Strategic Management Concepts and Cases. (8th
ed). Upper Saddle River, NY.: Prentice Hall.
14
Black, Thomas. (2006, October). News. Mexico’s Baja Tempts U.S.
Page 47 of 56
Buyers With Beaches, Title Insurance. Blooberg.com. Retrieved October 12,

2006 from the World Wide Web: http://cansim2.statcan.ca/cgi-
win/cnsmcgi.pgm?Lang=E&ResultTemplate=Srch3&CORCmd=GetTCount&COR
Id=1212
15
Harris, Craig. (2006, May 15). Mexico Beachfront Homes Lure U.S.
Investors. Azcentral.com. Retrieved October 12, 2006 from the World Wide
Web: http://www.azcentral.com/home/hb101/articles/0515mexico0515.html.
16
Mexico. Systemas Nacionales Estadisticos y de Informacion Geografica.
(2006). Migracion. Instituto Nacional de Estadistica e Informatica. Mexico.
17
Kelly, Tom. (2006, May 8). Buying in Mexico is Getting Easier. Herald
Net. Retrieved October 12, 2006 from the World Wide Web:
http://www.heraldnet.com/stories/05/05/08/100bus_mexico001.cfm/.
18
Reeves, Scott. (2005, April 21). Buying The Perfect vacation Home.
Forbes.com, Real Estate. Retrieved October 12, 2006 from the World Wide
Web:
http://www.forbes.com/personalfinance/2005/03/22/cx_sr_0322vacationhomes.ht
ml
19
Neville, Tim. (2005, August 5). Buying a Second Home Without a First
Look. The New York Times. Retrieved October 12, 2006 from the World Wide
Web: http://www.nytimes.com/
20
Bennett, Julie. ( 2005, January 27). Real Estate Journal. Buying Vacation
Rentals In Southwest Hot spots. Wall Street Journal.
http://www.realestatejournal.com/secondhomes/20050127-bennett.html
21
Smith Geri. (2006, March 13). Piggybank Full of Pesos. Businessweek
Online. Retrieved October 12, 2006 from the World Wide Web:
http://www.businessweek.com/@@bR4qQoYQBgaIVR0A/magazine/content/06_
11/b3975071.htm
22
Young, Linda. (2006, October 13). U.S. Retirees Buying Homes in Baja
California, Mexico. AII Headline News. Retrieved October 30, 2006 from the
World Wide Web: http://www.allheadlinenews.com/articles/7005171350
23
Black, Thomas. (2006, October). News. Mexico’s Baja Tempts U.S.
Buyers With Beaches, Title Insurance. Blooberg.com. Retrieved October 12,
Page 48 of 56
2006 from the World Wide Web: http://cansim2.statcan.ca/cgi-

win/cnsmcgi.pgm?Lang=E&ResultTemplate=Srch3&CORCmd=GetTCount&COR
Id=1212
24
Harris, Craig. (2006, May 15). Mexico Beachfront Homes Lure U.S.
Investors. Azcentral.com. Retrieved October 12, 2006 from the World Wide
Web: http://www.azcentral.com/home/hb101/articles/0515mexico0515.html.
25
“Mexico – Buying Property.” For Anyone Moving or Living Abroad. Expat
Focus. 2006. 14 October.
http://www.focusonmexico.com/categories.php?pagid=33&gclid=CLnf5v-
3nYgCFSTsPgod3GthXQ.
26
“Retire Better.” Thousand of North American Expats Retire Each Year in
Mexico. “MexRetire.com.” October 2006. http://www.mexretire.com/why.
27
Supra No.13.
28
Real Estate, Project Design, & Development. MexOnline.com. Retrieved
November 14, 2006 from the World Wide Web:
http://www.mexonline.com/urbic.htm
29
“Oaxaca Real Estate”. Oaxaca Vacation Information. Oaxaca Real Estate
& Oaxaca Real Estate Investment Guide.
http://www.oaxacavacationinfo.com/realestate.asp.
30
“Can Foreigners”. Buying Property in Mexico. MEXonline.com.
http://www.mexonline.com/index.htm.
31
“1st Wave Realty” (October 12, 2006). Retirement & Investment Real
estate. 1st Wave Realty.com. .
http://www.1stwaverealty.com/?gclid=CICAis_xn4gCFQHqPgodlxlkWw.
32
Kotler, Philip R. (2003) Marketing Management. Upper Saddle River, NY.:
Prentice Hall.
33
Supra No.32
34
Supra No.32
35
Supra No.32
36
Supra No.32
Page 49 of 56
37
Supra No.13
38
Nigel Slack, Stuart Chambers and Robert Johnston (2001). Operation
Management. (3rd ed.) Essex England, Pearson Education.
39
Supra No.38
40
Charles R. Greer (2000). Strategic Human Resource Management. (2nd
ed.) Upper Saddle River, NY.: Prentice Hall.
41
Francis T. Hartman (1999). Don’t Park Your Brain: A Practical Guide To
Improving Shareholder Value with SMART Management. Newton Square,
Pennsylvania. Project Management Institute, Inc.
42
Anthony A. Atkinson, Robert S. Kaplan, and S. Mark Young (2000).
Management Accounting. (4th ed.) Upper Saddle River, NY.: Prentice Hall.
43
Lawrence J. Gitman and Sean M. Hennessey (2005). (Canadian ed).
Principles of Corporate Finance. Toronto, Ontario. Pearson Education Canada
Inc.
44
Supra No.41
Page 50 of 56
15.0 BIBLIOGRAPHY
Kerzner, Philip R. (2001) Project Management a System Approach to Planning,

Scheduling, and Controlling (7th ed.). New York: John Wiley & Sons.
Kezsbom, D., & Edward, K. (2001). The New Dynamic Project Management:
Winning Through Competitive Advantage.,p.94, New York: John Wiley & Sons.
Walter S. Good, (2005). Building a Dream: A Canadian Guide to Starting Your

Own Business (6th ed.) McGraw-Hill Ryerson.
Page 51 of 56
16.0 APPENDICES
Page 52 of 56
Exhibit No.1
P R O F O R M A IN C O M E S T A T E M E N T
F O R T H E P E R IO D E N D IN G : Y e a r - M o nt h - D a y
M ONTH
1 2 3 4 5 6 7 8 9 10 11 12 T OT A L
1. Gro ss Sales 1,200 1,500 1,500 301,600 2,700 2,700 2,700 2,700 2,700 2,700 322,000
2. Less: Cash Disco unts 0
A . N E T S A LE S 0 0 1,2 0 0 1,5 0 0 1,5 0 0 3 0 1,6 0 0 2 ,7 0 0 2 ,7 0 0 2 ,7 0 0 2 ,7 0 0 2 ,7 0 0 2 ,7 0 0 322,000
Co st o f Go o ds So ld:
3. B eginning Invento ry 21,981 21,981 21,981 21,981 21,981 21,981 21,981 21,981 21,981 21,981 21,981 21,981 263,770
4. P lus Net P urchases 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 150,000
5. To tal A vailable fo r Sale 3 1,9 0 5 3 1,9 0 5 3 1,9 0 5 3 1,9 0 5 3 1,9 0 5 3 1,9 0 5 3 1,9 0 5 3 1,9 0 5 3 1,9 0 5 3 1,9 0 5 3 1,9 0 5 3 1,9 0 5 3 8 2 ,8 5 8
6. Less Ending Invento ry 26,833 26,833 26,833 26,833 26,833 26,833 26,833 26,833 26,833 26,833 26,833 26,833 3 2 2 ,0 0 0
B . C O S T O F G O O D S S O LD 5 ,0 7 2 5 ,0 7 2 5 ,0 7 2 5 ,0 7 2 5 ,0 7 2 5 ,0 7 2 5 ,0 7 2 5 ,0 7 2 5 ,0 7 2 5 ,0 7 2 5 ,0 7 2 5 ,0 7 2 6 0 ,8 5 8
C . G R O S S M A R G IN ( C =A -B ) - 5 ,0 7 2 - 5 ,0 7 2 - 3 ,8 7 2 - 3 ,5 7 2 -3 ,5 7 2 2 9 6 ,5 2 9 - 2 ,3 7 2 - 2 ,3 7 2 -2 ,3 7 2 -2 ,3 7 2 - 2 ,3 7 2 - 2 ,3 7 2 2 6 1,14 2
Less Variable Expenses*
7. Owner Salary -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -20,000
8. Emplo yees' Wages and Salaries -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -45,000
9. Supplies and P o stage -268 -268 -268 -268 -268 -268 -268 -268 -268 -268 -268 -268 -3,220
10. A dvertising and P ro mo tio n -429 -429 -429 -429 -429 -429 -429 -429 -429 -429 -429 -429 -5,152
11. Delivery Expense -215 -215 -215 -215 -215 -215 -215 -215 -215 -215 -215 -215 -2,576
12. B ad Debt Expense 0 0 0 0 0 0 0 0 0 0 0 0
13. Travel -805 -805 -805 -805 -805 -805 -805 -805 -805 -805 -805 -805 -9,660
14. Co nstructio n, P ro fessio nal, and Legal Fees -1,878 -1,878 -1,878 -1,878 -1,878 -1,878 -1,878 -1,878 -1,878 -1,878 -1,878 -1,878 -22,540
15. Vehicle Expense -537 -537 -537 -537 -537 -537 -537 -537 -537 -537 -537 -537 -6,440
16. M aintenance Expense -617 -617 -617 -617 -617 -617 -617 -617 -617 -617 -617 -617 -7,406
17. Other Co nstructio n Expenses -1,073 -1,073 -1,073 -1,073 -1,073 -1,073 -1,073 -1,073 -1,073 -1,073 -1,073 -1,073 -12,880
D . T O T A L V A R IA B LE E X P E N S E S - 11,2 4 0 - 11,2 4 0 -11,2 4 0 - 11,2 4 0 - 11,2 4 0 - 11,2 4 0 -11,2 4 0 -11,2 4 0 - 11,2 4 0 - 11,2 4 0 - 11,2 4 0 - 11,2 4 0 - 13 4 ,8 7 4
Less Fixed Expenses*
18. Rent -376 -376 -376 -376 -376 -376 -376 -376 -376 -376 -376 -376 -4,508
19. Utilities (Heat, Light, P o wer) -671 -671 -671 -671 -671 -671 -671 -671 -671 -671 -671 -671 -8,050
20. Telepho ne -939 -939 -939 -939 -939 -939 -939 -939 -939 -939 -939 -939 -11,270
21. Taxes and Licences -2,147 -2,147 -2,147 -2,147 -2,147 -2,147 -2,147 -2,147 -2,147 -2,147 -2,147 -2,147 -25,760
22. Depreciatio n -2,200 -2,200 -2,200 -2,200 -2,200 -2,200 -2,200 -2,200 -2,200 -2,200 -2,200 -2,200 -26,404
23. Interest -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -16,100
24. Insurance -537 -537 -537 -537 -537 -537 -537 -537 -537 -537 -537 -537 -6,440
25. Other Fixed Expenses -1,020 -1,020 -1,020 -1,020 -1,020 -1,020 -1,020 -1,020 -1,020 -1,020 -1,020 -1,020 -12,236
E . T O T A L F IX E D E X P E N S E S -9 ,2 3 1 -9 ,2 3 1 - 9 ,2 3 1 - 9 ,2 3 1 - 9 ,2 3 1 - 9 ,2 3 1 - 9 ,2 3 1 - 9 ,2 3 1 - 9 ,2 3 1 - 9 ,2 3 1 -9 ,2 3 1 -9 ,2 3 1 -110 ,7 6 8
F . T O T A L O P E R A T IN G E X P E N S E S ( F =D +E ) - 2 0 ,4 7 0 - 2 0 ,4 7 0 - 2 0 ,4 7 0 -2 0 ,4 7 0 -2 0 ,4 7 0 -2 0 ,4 7 0 - 2 0 ,4 7 0 - 2 0 ,4 7 0 -2 0 ,4 7 0 -2 0 ,4 7 0 - 2 0 ,4 7 0 - 2 0 ,4 7 0 - 2 4 5 ,6 4 2
G . N E T O P E R A T IN G P R O F IT ( LO S S ) ( G =C - F ) - 2 5 ,5 4 2 - 2 5 ,5 4 2 - 2 4 ,3 4 2 -2 4 ,0 4 2 -2 4 ,0 4 2 2 7 6 ,0 5 8 - 2 2 ,8 4 2 - 2 2 ,8 4 2 -2 2 ,8 4 2 -2 2 ,8 4 2 - 2 2 ,8 4 2 - 2 2 ,8 4 2 15,500
H . IN C O M E T A X E S (e s t ima t e d) -10,217 -10,217 -9,737 -9,617 -9,617 110,423 -9,137 -9,137 -9,137 -9,137 -9,137 -9,137 6,200
I. N E T P R O F IT ( LO S S ) A F T E R IN C O M E T A X (I=G -15,325 -15,325 -14,605 -14,425 -14,425 165,635 -13,705 -13,705 -13,705 -13,705 -13,705 -13,705 9 ,3 0 0
*Expenses and o ther payments sho uld be entered as negative (-) numbers.
Page 53 of 56
Exhibit No.2
T W ELV E- M O N T H C A SH F LOW PR O JEC T I ON S
M o nt h 1 M o nt h 2 M o nt h 3 M o nt h 4 M o nt h 5 M o nt h 6 M o nt h 7 M o nt h 8 M o nt h 9 M o nt h 10 M o nt h 11 M o nt h 12 TOTAL
Cash Flow f rom Operat ions (during month) 0
1. Cash Sales 300 300 300,400 1,500 1,500 1,500 1,500 1,500 1,500 310,000
2. Payments f or Credit Sales 0
3. Investment Income 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 12,000
4. Other Cash Income 0
A . T O T A L C A SH ON HA N D 0 0 1,2 0 0 1,50 0 1,50 0 3 0 1,6 0 0 2 ,70 0 2 , 70 0 2 , 70 0 2 , 70 0 2 ,70 0 2 , 70 0 3 2 2 ,0 0 0
Less Expenses Paid

5. Inventory of New M aterial 0
6. Owner Salary -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -1,667 -20,000
7. Employees' Wages and Salaries -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -3,750 -45,000
8. Supplies and Postage -268 -268 -268 -268 -268 -268 -268 -268 -268 -268 -268 -268 -3,220
9. Advertising and Promotion -2,576 -2,576 -5,152
10. Delivery Expense -215 -215 -215 -215 -215 -215 -215 -215 -215 -215 -215 -215 -2,576
11. Travel -805 -805 -805 -805 -805 -805 -805 -805 -805 -805 -805 -805 -9,660
12. Construct ion, Professional, and Legal Fees -15,000 -5,000 -2,540 -22,540
13. Vehicle Expense -537 -537 -537 -537 -537 -537 -537 -537 -537 -537 -537 -537 -6,440
14. M aint enance Expense -617 -617 -617 -617 -617 -617 -617 -617 -617 -617 -617 -617 -7,406
15. Rent -376 -376 -376 -376 -376 -376 -376 -376 -376 -376 -376 -376 -4,508
16. Ut ilities -671 -671 -671 -671 -671 -671 -671 -671 -671 -671 -671 -671 -8,050
17. Telephone -939 -939 -939 -939 -939 -939 -939 -939 -939 -939 -939 -939 -11,270
18. Taxes and Licenses -5,190 -5,190 -5,000 -5,190 -5,190 -25,760
19. Int erest Payment s -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -1,342 -16,100
20. Insurance -6,440 -6,440
21. Ot her Construct ion Expenses -448 -448 -448 -448 -448 -448 -7,948 -448 -448 -448 -448 -448 -12,878
B . T O T A L EX PEN D I T U R ES - 2 3 ,2 6 4 - 11, 6 3 4 - 11,6 3 4 - 19 , 4 0 0 - 3 1, 6 3 4 - 11,6 3 4 - 2 9 ,3 2 4 - 11, 6 3 4 - 11, 6 3 4 - 19 , 4 0 0 - 11,6 3 4 - 14 ,174 - 2 0 7,0 0 0
Capit al
Purchase of Fixed Asset s 100,000 100,000
Sale of Fixed assets 0
C . C HA N GE I N C A SH F R OM PU R C HA S E OR
SA LE OF A SSET S 0 0 0 0 0 - 10 0 ,0 0 0 0 0 0 0 0 0 - 10 0 ,0 0 0
Financing 0
Payment of Principal of Loan -77,500 -77,500
Inf low of Cash from Bank Loan 5,500 12,500 11,000 18,000 30,500 0 0 0 0 0 0 0 77,500
Issuance of Equit y Positions 0
Repurchase of Out standing Equity 0
D . C HA N GE I N C A SH F R OM F I N A N C IN G 5,50 0 12 , 50 0 11,0 0 0 18 , 0 0 0 3 0 ,50 0 - 77, 50 0 0 0 0 0 0 0 0

E. I N C R EA SE ( D EC R EA SE) IN C A SH - 17, 76 4 866 56 6 10 0 366 112 , 4 6 6 - 2 6 ,6 2 4 - 8 ,9 3 4 - 8 ,9 3 4 - 16 ,70 0 - 8 ,9 3 4 - 11,4 74 15,0 0 0
F . C A SH A T B EG IN N IN G O F PER IOD 2 6 ,6 6 7 8 ,9 0 3 9 ,76 9 10 ,3 3 5 10 ,4 3 5 10 , 8 0 1 12 3 ,2 6 7 9 6 ,6 4 3 8 7, 70 9 78 ,775 6 2 ,0 75 53 ,14 1 4 1,6 6 7
G. C A SH A T EN D O F PE R IO D 8 ,9 0 3 9 , 76 9 10 ,3 3 5 10 ,4 3 5 10 ,8 0 1 12 3 , 2 6 7 9 6 ,6 4 3 8 7, 70 9 78 ,775 6 2 ,0 75 53 , 14 1 4 1, 6 6 7 56 ,6 6 7
M EET M I N I M U M C A S H B A L A N C E A c c e p t a bl e A c c e p t a b l e A c c e p t a b l e A c c e p t a b l e A c c e p t a bl e A c c e p t a bl e A c c e p t a b l e Ac ce pt a ble Ac c e pt a bl e Ac c e pt a bl e Ac c e pt a bl e A cc e pt a ble 0
*Expenses and other payment s should be ent ered as negative (-) numbers.
Page 54 of 56
Exhibit No.3
PRO FORMA BALANCE SHEET
End of year 1
ASSETS
Current Assets:
1. Cash 56,670
2. Account Receivable 0
3. Inventory 0
4. Other Current Assets 100,000
A. Total Current Assets 156,670
Fixed Assets
5. Land and Buildings 0
less depreciation 0
6. Furniture and Fixtures 10,000
less depreciation -2,000
7. Equipment 7,500
8. Truck and Automobiles 5,000
9. Other Fixed Assests 5,000
B. Total Fixed Assests 22,000
C. Total Assets (C=A + B) 178,670
LIABILITIES
Current Liabilities (due w ithin 12 months) 27,500
10. Account Payable 35,670
11. Bank Loans/Other Loans 0
12. Taxes Ow ed 0
D. Total Current Liabilities 63,170
Long-Term Liabilities
13. Notes Payable (due after one year) 0
14. Other Long-Term Liabilities 100,000
E. Total Long Term Liabilities 100,000
F. Total Liabilities (F=D + E) 163,170

NET WORTH (CAPITAL)
Share Capital
Common Shares 0
Preferred Shares 0
Retained Earnings 15,500
G. Total Net Worth (G= C - F) 15,500
H. Total Liabilities and Net Woth (H = F + G) 178,670
Page 55 of 56
Exhibit No.4
FINANCIAL RATIOS
Gross Profit 261,142

1. Gross Margin/Sales 0.81
Net Sales 322,000
Current Asset 156,670

2. Current Ratio 1.99
Current Liabilities 78,670
Current Assets - Inventories 156,670

3. Quick Ratio 1.99
Current Liabilities 78,670
Net Income (After Tax) 9,300

4. Net Profit/Sales 0.03
Net Sales 322,000
Net Income (After Tax) 9,300

5. Return On Assets 0.05
Total Assets 178,670
Net Sales 322,000

6. Sales/Net Worth 20.77
Net Worth 15,500
Net Profit 15,500

7. Net Profit/Net Worth 1.00
Net Worth 15,500
Page 56 of 56

Alberto Castellanos Project

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Applied Project Alberto Castellanos

“Business Plan: Property Management in

Coordinator: Jim Dunn

Supervisor: Ike Hall

Submitted by: Alberto Castellanos

The subject of this business plan is to develop a property management company

A theoretical framework is proposed for human resources strategy to accelerate

Organizational form is explained and organizational strategy includes:

Financial strategy is developed under financial plans. The plan includes:

1.0 INTRODUCTION ...............................................................................................5

2.0 FACT SHEET ....................................................................................................7

3.0 THE INDUSTRY ................................................................................................8

4.0 THE COMPANY ..............................................................................................10

5.0 PRODUCTS/SERVICE OFFERING.................................................................12

6.0 MARKET ANALYSIS.......................................................................................14

7.0 MARKETING PLAN.........................................................................................21

8.0 PRODUCTION OPERATION PLAN ................................................................27

9.0 MANAGEMENT TEAM....................................................................................32

10.0 IMPLEMENTATION SCHEDULE ..................................................................36

11.0 FINANCIAL PLAN .........................................................................................37

12.0 RISK FACTORS ............................................................................................44

14.0 END NOTES AND REFERENCES ................................................................47

Southern winter destinations continue to attract many Americans and Canadians.

The company vision and mission is based on offering property investment

Environmental scanning was developed in order to identify trends and events.

The human resources strategy is laid out using a comprehensive theoretical

2.0 FACT SHEET

Company Name: Southwest Property Management

3.0 THE INDUSTRY

Traditionally, Canadians have invested in real estate properties in the southern

Owning a picturesque southern Mexican vacation property is becoming an

A growing number of Canadians are purchasing second homes in sunny Mexico.

A perfect combination of affordable prices, sunny weather, rich history and

4.0 THE COMPANY

4.1 Company Vision

4.2 Company Mission

The company business is based on offering Canadian and international buyers a

4.3 Company Value Proposition

The company value proposition is based on the following considerations:

The strengths of the proposed business plan include architectural and

other countries. Weaknesses include the language barrier, lack of employee

4.4 Company Values

Fundamental values to be adopted by the company when conducting business:

• Integrity – dealing honestly with customers, suppliers and the community

4.5 Business Goals to Be Achieved

Listed below are major business goals:

• Create a family business type of company that is diverse enough to survive

4.6 Specific Objectives to Be Achieved

• US$ 325,000 in property sales in the first year of operation

5.0 PRODUCTS/SERVICE OFFERING

The purpose of the project is to develop a business plan for a property

Services provided by the company include:

• Assistance with acquisition of existing residential properties;

Demand would be driven primarily by the opportunity to own a private residential

Services such as housekeeping, security, and maintenance would be provided by

6.0 MARKET ANALYSIS

6.1 Economic Forces

As affluence increases, individuals place a premium on time, improved customer

Jeff Hornberger, manager of international market development for the National

Americans have homes in Mexico. (Harris, 2006)15

The INEGI, “Censo de Poblacion y Vivienda” reported in 2000 that approximately

6.2 Social, Cultural, Demographic and Environmental Forces

According to Mark Raven, a Tucson attorney specializing in real estate in Mexico,

Most Mexicans welcome U.S. investment, recognizing that new developments