Business plan

Zoltany Inc.
200 Cashflow Ave
Suite 100
Irvine, Ca
92614

949-555-4545
949-444-5454
949-345-8588
Excecutives@ZoltanyInc.com
www.ZoltanyInc.com

Contact: Laszlo Zoltany, Founder, CEO
(Writing Partner: Derek Basset)

Contents Page
1. Executive Summary.........................................................................................................................3
2. General Company Description.....................................................................................................4
3. Products and Services......................................................................................................................6
4. Marketing Plan..................................................................................................................................8
5. Operational Plan..............................................................................................................................12
6. Management and Organization..................................................................................................15
7. Startup Expenses and Capitalization.........................................................................................20
8. Financial Plan.....................................................................................................................................27
9. Appendices...........................................................................................................................................31
10. Refining the Plan-Alternative Strategies..................................................................................35
11. References..........................................................................................................................................36

1. Executive Summary

Zoltany, Inc. is a startup Real Estate Investment Trust company that focuses on the developments, acquisitions and mergers of multifamily apartments and office buildings in the Southern California market place. Zoltany, Inc. is committed to provide the highest possible return on investment while producing above industry average standards in social and environmental responsibility. At Zoltany Inc., the break-even sales point for its first 12 unit apartment complex development is $8,200 a month and its cash flow pro-forma is forecasted to realize at $140,000 at the end of the 1st fiscal year.
After several years of fruitful work in corporate America, the founders of Zoltany Inc. are poised to break into the REITS scene as owners. In pursuit of this master plan, the founders have extended a 70 percent of equity stake in the total startup cost. In addition to equity funding, management is issuing $500,000 20 year preferred bond at 7 percent premium to meet the debt funding portion of its start-up costs.
Zoltany Inc.’s management and employee team includes people with expertise in property management operations, investment banking, and finance.
Zoltany Inc. will be incorporated as a Real-Estate Investment Trust, which allows the business to not pay taxes as long as the bulk of its assets and income connected to real estate investment and distributes at least 90 percent of its taxable income to shareholders annually in the form of dividends ("SEC.gov | Real Estate Investment Trusts (REITS)", n.d.) The partners-Bill Clark and Agnes Zoltany-will not be involved in the day-to-day management of Zoltany Inc.

2. General Company Description

Zoltany, Inc.
Zoltany, Inc. is a Real Estate Investment Trust company that focuses on the developments, acquisitions and mergers of multifamily apartments and office buildings in the Southern California market place.
Mission Statement
We buy products for many reasons, running from physiological needs to aspirations and beliefs (Russo, 2010, p.55). At Zoltany, Inc., we believe that connecting with all of our stakeholders, from the renters and/or buyers of our real estate to our investors; we can create and sustain an emotional relationship in a competitive way. The mission of Zoltany, Inc. is to provide our residents, customers, and investors with all the benefits of our mission driven philanthropy. Zoltany, Inc. is committed to provide the highest possible return on investment while producing above industry average standards in social and environmental responsibility. The concept of social and environmental differentiation at Zoltany, Inc. is key to the success and sustainability. As Russo (2010) puts it, “Company authenticity is pivotal for mission-driven companies because it breathes personality and equity into brands” (p.35). Zoltany, Inc. is ready to open many doors to the future for all of our stakeholders.
Quantifiable Research
While the number of Californians 25- to 34-years-old will increase in absolute terms (by nearly three-quarters of a million people between 1990 and 2020), their overall share of the State's population is projected to decline from 19 percent in 1990 to just over 14 percent in 2020. The number of 35 to 45-year olds will also grow in absolute terms but decline in share ("Department of Housing and Community Development - State of California", n.d.). This is a clear indication of a great need and demand for at least three-quarters of a million new apartment homes and Zoltany Inc. is positioned to take a significant slice out of this projected new market. While we plan to deliver a total of 12 units in 2015, the competition from AIMCO to EQUITY are sure paired up to deliver an estimated 3500 units together in FY 2015. Although these numbers are strictly projections and they can change and get updated, based on statistical projections of the California Department of Housing and Community Development, Zoltany Inc.’s entering into the apartment dwellers market is well timed and positioned.

3. Products and Services

Real Estate Investment Trusts
Zoltany, Inc.’s ultimate goal is to deliver long-term value to shareholders, the best standard of service to residents and the highest quality experience for its employees. This plan will be executed through the formation of real-estate investment trust (REITS) and the foundation of our mission-driven philanthropy.
REITs are real estate companies that benefit from a 1960 federal tax law which allows the companies to not pay taxes on otherwise taxable income. In exchange, the companies must pass through 90 percent of their taxable income to their shareholders, thus avoiding "double taxation." This benefit means that only the ultimate owners of the REIT pay taxes on dividends, not the corporation itself. However, the company may not retain its income (as non-REIT companies do) for the purposes of reinvestment in the business. Income must be paid out to investors as dividends.
The Important "P"
In the marketing mix, describing the products and/or services is one of the key component of the 4 P's because if we don't have a product or service to sell, we don't have a business. For Zoltany, Inc., it’s the real estates it builds and the customer service it provides to all of its stakeholders in the supply chain. Zoltany Inc.'s sustained competitive advantage is in the quality of the building it owns and its mission-driven philanthropy as it relates to its assets it operates, acquires, renovates, develops, redevelops Zoltany, Inc. manages multifamily and single apartment communities, office buildings and shopping centers generally located in high barrier-to-entry markets located throughout the Southern and Northern California market place.
The Competition
Competition for new buyers or residents is always the most important piece in the "REIT" puzzle. Some of our completion offers features that we can't compete against. For example, these developments can use rental discounts or lower monthly rents to obtain temporary competitive advantages. This can at times be beneficial for them and some other times it cannot, as we know it from the basic concept of the game theory. As Marcus (2010) asserts, "Game theory's lesson is that one company's success is critically dependent on what other companies do"(p.88). Zoltany, Inc. has to face a huge competition: These competitors include insurance companies, pension and investment funds, public and private real estate companies, investment companies and other public and private apartment REITs.

4. Marketing
Marketing Strategy
Zoltany, Inc. has three strategies to back up its marketing plan. First, our focus is placed on high barrier to entry markets where land and home ownership levels are low, so renting is more of the preferred community choice and larger developers are not present for lack of significant market share. Second, we are emphasizing a great deal of energy on segmenting our market through psychographic and demographics characteristics. Third, we continue to build fruitful relationship with the federal government to leverage the external forces. Most importantly, our marketing plan continuously evolves around our mission statement. That is, Zoltany Inc., is to provide our residents, customers, and investors with all the benefits of our mission driven philanthropy of providing the highest possible return on investment while producing above industry average standards in social and environmental responsibility.
SWOT- Internal Strengths
Experienced Management-Zoltany Inc. has a combined experience among its senior and mid-level management of 35 years in the property management and the investment banking industry. Our team has a broad knowledge and experience in the disciplines of leadership, management, and finance. Our executive team is passionate about corporate social responsibility (CSR) and the triple bottom line (TBL).
Broad Investment Options-In the California market place, there are many choices from distressed multifamily communities, fixer upper shopping centers, or foreclosed homes in which we can find value from an ROI stand point.
SWOT-Internal Weaknesses Lack of Resources-Resources consist of financial capital (money from entrepreneurs, equity holders, bonds, banks, and retained earnings) and physical capital (plant, equipment, land, natural resources, raw materials, computer hardware and software, manufacturing robots, automated warehouse, semi-finished goods, by-products, waste, unsold stock of finished good, and other tangible property) (Marcus, 2011, p.65). For a startup as Zoltany Inc., these things can be essential. No Brand Equity-Being in the infant life-cycle of our REIT venture, we have not had sufficient enough time to build a strong name recognition.
SWOT-External Opportunities
Lack of Homeownership Demand-Although current government regulations on obtaining consumer credit has loosened up since the great recession in 2008, people are still not moving into the housing market at the rate they rent apartment homes.
SWOT-External Threats Industry Environment-As Marcus (2011) asserts, “Forces such as politics and law, technology demographics, society, the economic climate, and the state of the physical environment…affect the immediate industry environment” (p.25-26). These outside forces can sweep through an entire economy and no business or organization has the absolute know-how on how to leverage these troubled waters.
Marketing Mix
The marketing mix is often associated with the 4 P'S or as it is most commonly know: price, product, promotion, and place. As The Marketing Mix and 4 P'S puts it, "It's simple! You just need to create a product that a particular group of people want, put it on sale some place that those same people visit regularly, and price it at a level which matches the value they feel they get out of it; and do all that at a time they want to buy". Zoltany, Inc. takes a strong position in succeeding with its marketing plan by creating an authenticity. As Russo asserts, "Company authenticity is pivotal for mission-driven companies because it breathers personality and equity into brands" (p.35). Staying on our mission through continually crafting the perfect marketing mix commands us sustained competitive advantage (SCA) today and tomorrow.
Price
Zoltany, Inc. sets its prices based on analyzing different sources with like business models. First, we shop the current competition from other REITS, private or public investment trusts in and around the locations where we are interested to buy or build. Second, we base our pricing model on strong and comprehensive financial analysis using sources like Bloomberg or SEC. Third, we conduct local and national surveys on current real estate trends and movements of the competition like the Irvine Company, Equity Inc., UDR, Inc. or AIMCO Inc.
Promotion
Zoltany, Inc. is committed to allocate 20 percent of its revenue to promote brand awareness and build brand equity through social media like Facebook, Tweeter, Pinterest, and LinkedIn. We are targeting the Generation Y and the Baby Boomers market segment for two distinct reasons. One, studies show that Generation Y spends 60 percent of their time on one of these social media networks. Two, the Baby Boomers, although not as computer savvy as the Millennial, spends 5 times as much time on these social sites than they did 5 years ago. In addition to the internet, we reach out to our customers through local TV channels like KCTV, Channel 9, Travel Channel, and local and regional magazines like Lifestyle in OC or Rental Living Magazine.
Place
The locations of Zoltany, Inc.'s ventures are in the highly populated metropolitan cities like Los Angeles and San Francisco, where the Millennial prefers to look for housing and the less condensed suburban areas of Orange County, Inland Empire and Upland that the Baby boomer favors. In addition, we target most of the coastal areas of California where the younger and older generations to for fun. As targeting the cities and beaches of California is definitely on top of our agenda, making a well-positioned move toward physiographic profiles is another. This theory breaks the market segment into seven groups like be longer, achiever, emulator, socially conscious type A/B, balanced, and need driven.
The two largest group of these seven according to Physiographic (n.d.) are the Belongers with 25 percent of market share, the socially conscious type A/B with 32%, and the Emulator with 15 percent of the total population. These groups love to live in communities with family and friends, they always look for approval from their peers, and always connected with the world lf achievement. With these pivotal research analysis in the center piece of our marketing plan, we are well positioned to get to our target customers.

5. Operational Plan
REIT
Forming a REIT has many requirements. One of them is that it has to be formed in one of the 50 states or District Columbia for federal tax purposes. In addition, it has to be governed by board of directors or trustees; and most importantly, its shares have to be transferable to shareholders. Starting the second year after the REIT was formed, it has to pass the ownership test or also known as the (the "5/50 Test"). This means that the vast majority of the organization has to be owned by shareholders and 5 or fewer individuals can’t own more than 50 parent of the REIT (Forming a Real Estate Investment Trust | REIT.com. (n.d.).
Location
Zoltany Inc. Corporate Headquarters is located at 568 Future Dr., Suite 150, Irvine , CA 92606, Phone: 949-283-6120, Fax: 949-283-2451. The property of our corporate office is leased from The Irvine Company, LLC for 5 years at $60,000 annually. This is a 5000 sf office building in the center of Fashion Island, located conveniently to major roads, freeways, and John Wayne Airport.
Supply and Inventory Management
Setting aside delusions or intentional misrepresentations, larger companies generally don’t appreciate how powerful a moral element is to their reason for being (Russo, 2010, p.118). Zoltany Inc.’s commitment to social and environmental responsibility is authentic and is built in the company’s moral DNA. This means that we only do business with suppliers and vendors at our developments who are mission-driven organizations themselves and their organizational mission is strictly governed by the concept of the triple bottom line (TBL). For this, an approved supply chain management system is in place and only those who are on this list are to do business with Zoltany Inc.
Our Management
Laszlo Zoltany serves as the CEO of Zoltany, Inc. with over 15 years of property management experience, having had responsibility for over 1 MM square feet of commercial space and over 10,000 multifamily units. Laszlo’s experience includes apartment acquisitions, mergers, lease ups and redevelopments Additionally, Laszlo has held senior management positions from privately owned and nationally known real estate companies, including The Irvine Company and UDR, Inc. Laszlo has received his BA in Organizational Leadership and his MBA in Finance from Chapman University in 2012 and 2014 respectively.
Mihaela Zoltany, COO, has been a pivotal asset since she has joyed us from the investment banking industry in 2012. She has experience in all of Zoltany Inc.’s operations. Mihaela has earned her BA in Marketing at Chapman University and is concurrently working on her MBA. Mihaela’s excellent client relationships, in-depth knowledge of the property management industry, and detailed understanding of accounting and marketing for real estate management has benefited Zoltany Inc., in all of its operations.
John Kink, Regional Operations Manager, has over 20 years of real estate investment experience and has held positions District Manager, Executive Manager, Regional Manager, and has done consulting as an Asset Manager. John has held management positions within locally and nationally known real estate companies: Arnel Management, Western National Group, The Irvine Company, and UDR.

6. Management and Organization
Leadership
In contrary to management, leadership is more concerned with doing the right things as oppose to doing things the right way. As Williams (2011) asserts, “(leadership is the process of influencing others to achieve group or organizational goals” (p.533). The key for the leader is to create an environment where leaders and followers are full participants in the activities of leadership. This means that anyone can be a leader and a follower as long as synergy is created for the benefit of the organization and its people. At Zoltany, Inc., we believe in visionary leadership that as Williams (2011) puts it, “creates a positive image of the future that motivates organizational members and provides direction for future planning and goals setting” (p.559).
Organizational Chart
A typical corporation's structure consists of three main groups: directors, officers, and shareholders. The roles and responsibilities of these groups are described in more detail below ("Corporate Structure: Directors to Shareholders - Find Law", n.d.). Zoltany Inc. has the following organizational chart along with fifty to one hundred word job descriptions for every employee.

Board of Directors
Acting on behalf of Zoltany Inc. and its best benefits with an right "duty of care" at all times; Acting with devotion to the corporation and its shareholders; Partaking in regular meetings of the board of directors; Approving certain corporate actions and dealings -- including agreements; voting of new corporate officers; approval of new corporate strategies; and more.
Corporate Officers
The corporate team will be added to Zoltany Inc.’s payroll in the first 0 to 6 months. Following the addition of the corporate officer team, in the 6 to 12 month timeframe, our management team will be added to our organization’s payroll.
Laszlo Zoltany, Chief Executive Officer (CEO) or President: Mr. Zoltany has decisive responsibility for the corporation's activities, and signs off on contracts and other legally-binding action on behalf of the corporation. Mr. Zoltany reports to the corporation's board of directors.
Mihaela Zoltany, Chief Operating Officer (COO): Mihaela is charged with managing the corporation's day-to-day affairs, Mihaela usually reports directly to the CEO.
Michelle Zoltany, Chief Financial Officer (CFO) or Treasurer: Michelle is responsible for almost all of the corporation's financial and investor relations matters.
Giselle Zoltany, Secretary: Giselle Zoltany is in charge of maintaining and keeping corporation's records and documents.
Meet our Management Mike Bundy, VP of Operations: Mike Bundy has over 20 years of property operations experience including positions held as Executive Manager, Regional Manager, and has been a Director of Asset Management. Mike also has experience in training, marketing, finance, mergers and acquisitions. Mike has held management positions within locally and nationally known real estate companies: KBG Management, Eastern National Group, The Irvine Company, and AIMCO. He has experience in managing real estate in California, Los Angeles, and Chicago markets. Mike Bundy has had market success through clear strategies in increasing revenue, reducing cost, and developing customer service strategies in metropolitan markets.
Kim Turban, VP of Asset Management: Kim has held several positions in asset management and the financial services industry. Kim has 10 years of asset management experience, including positions held as Asset Manager, Financial Analyst, Administration Manager, Director of Accounting, as well as onsite manager. Kim has held management positions within locally and nationally known investment trusts: REITS, AIMCO, The Irvine Company, and BRE Trust.
Gigi Ton, Director of Human Resources: Gigi Ton has over 10 years of experience in the Human Resources field. She developed, implemented and maintained the Human Resources Department for a textile company in Alabama, a Computer manufacturing company in New York and a plane parts rebuilder in San Francisco. Prior to beginning her career, Gigi studied abroad in London, England at the London University, earned her Bachelor of Arts Degree at UCLA and Certification in Human Resources with USC.
Organizational Culture
Making a difference in our employee’s life and positively impacting all of our shareholders financially and socially is the culture that drives Zoltany Inc. mission from a triple bottom line approach.
Ethics
Ethical behavior is a critical element in organizational settings because, as Williams (2011) describes, “Ethical behavior conforms to a society’s accepted principles of right and wrong” (p.120). With this proven phenomenon in mind, Zoltany Inc. has a management in place who models ethical behaviors by using resources for the company business and not for their own personal benefits, by handling information with confidentiality, and don’t use their positions to influence others to conduct unethical activities. The question that managers and scholars often ask: “Does it pay to be socially responsible?” Zoltany Inc.’s management believes that being socially responsible to shareholders and all of its stakeholders, and following the highest ethical standards is key to sustained comparative advantage for now and the future.

7. Startup Expenses and Capitalization

Introduction
Financial data is always at the back of the business plan, but that doesn’t mean it’s any less important than up-front material such as the description of the business concept and the management team (Bangs, 2005, p.157). Despite that ventures, big and small, can fail due to lack of financial planning, this part of the business plan is still the most undervalued area among new start-ups. In addition to not contributing equal and efficient resources to the financial planning, the most important reason that start-ups fail is the lack of cash-flow. For every founder that manages to bootstrap a startup, there are dozens, maybe hundreds that run out of cash for any number of reasons: they don’t want to give up a piece of the pie, they don’t budget properly, they don’t plan for how long it takes to raise rounds of funding, their burn rate is too high, or some combination thereof (Entrepreneur.com, n.d.). Clearly, having a sound financial plan as the backbone of any business plan is critical and can make the difference between success and failure.
Start-up Expenses
Before any business can be up and running, there are going to be countless expenses that have to be paid with no cash flow from operations. Simply put, the entrepreneur has to have enough capital for start-up expenses and even surprises that may arise. It is important to estimate these expenses accurately, and then to plan where you will get sufficient capital ("Startup Expenses & Capitalization", n.d.). Even with some of the best plans in place, there can always be more surprises than a business owner can think. There are two ways to deal with these not foreseen events: (1) we can add a little “padding”, or (2) we can use a separate line item, also called contingency. According to industry standards, REITs usually add about 20 percent of the total startup expense as a cushion in their contingency line. For Zoltany Inc., the 20 percent industry accepted rate is used in their “contingency” line and is estimated at $459,000.
Buildings/Real Estate
The land purchase in prime real estate locations, such as California, is one of the largest expenditures among all of our startup expenses. After carful due diligence, the land purchase is estimated to take out a $1 million dollar portion of the start-up budget. According to Industry Norms and Key Business Indicators, this is a competitive and realistic valuation of the 20 acre land on the Irvine Ranch in Orange County California. The second large expense out of our start-up budget is the building of the 12 units’ apartment complex at $86,100 per unit valuation. The final expense item under the Building/Real Estate category is a $50,000 construction tailor purchase. This onetime expense will be used in future development sites after the successful completion of our first 12 unit multi-family apartment community.
Lease Hold Improvements
Alterations made to rental units during tenancy to improve the quality of living is called lease hold improvements. Leasehold improvements include painting, installing partitions, changing the flooring, putting in customized light fixtures and so on (Investopedia, n.d.). For this expense category, Zoltany, Inc. has a total fund allocation of $41,000. The breakdown of tenant improvements consists of $12,000 patio furniture for residents, $4,000 for granite countertops, $10,000 for optional stainless steel appliances, and $15,000 for smart home connect ability. All of these expenses are optional and will be itemized as ROI (Return on Investment) on the Income Statement of Zoltany, Inc.
Capital Equipment List
Capital equipment list is an important piece of the business plan because it shows the critical tools that the business cannot live without. Capital equipment can be moved from one location to another-they are not part of the building structure. Our leasing office building needs furniture, computers, property management software, and other miscellaneous items. We allocate $26,500 as startup costs for our capital equipment expenditure with a keen eye on future expansion as needed. As a general rule, capital equipment list does not include expandable items such as office supplies. These items are expensive and can affect our bottom line, if not managed responsibly.
Location and Admin Expenses
The expenses that an organization incurs not directly tied to a specific function such as manufacturing/production or sales are also referred to as administrative expenses. Salaries of senior executives and costs of general services such as accounting are examples of administrative expenses. (Investopedia, n.d.). In out start-up expense, we budget our executives’ salaries, utility deposits, legal and accounting fees, pre-paid insurance and pre-open salaries. These pro-forma expenditures are forecasted to total $77,500. These operating expenses, although, not directly related to our revenue, they make a significant contribution to Zoltany, Inc.’s total start-up expense list.
Advertising and Promotional Expenses
As Winer (2011) wrote, “The marketing concept involves being customer and competitor focused and making a profit as a result” (pg. 32). Setting off a start-up business in any industry takes a significant amount of marketing money and the business cannot succeed without it. With careful consideration of this marketing principle 101, Zoltany Inc. allocates the following expenses in its startup budget. First, a total of $36,000 of advertising cost is calculated for social media, such as Facebook, Tweeter, Pinterest, and YouTube. In addition to our online campaign to reach our market segment, Zoltany Inc. uses a B2B and B2C campaign through various magazines like Apartment Magazine, Lux List, Orange County Register, and Media Nations Magazine. Furthermore, $10,000 of signage expense is projected to create additional foot traffic through banners on the side of our building and human directional on the corner of the main cross street of our apartment complex. Finally, we anticipate to have a $3500 cost incurred for travel expenses and other team building activities in the first fiscal year.
Sources of Capital
Owners' Investment
One of the most common reasons a start-up fails before it even had a chance to take off is the lack of capital and cash flow. Finding money for any new venture can be scary and scarce at the same time. Direct funding sources are as crucial as having a solid marketing plan in place and it invests directly in the business. These include funds from individuals, banks, government agencies, and various levels of professional investors (Bangs, 2005, p. 20). The beginning of our financing efforts starts with the owners’, including Laszlo Zoltany, personal savings of $1 million as private equity and will account for 70% stake in the business. The additional 30 % equity investment comes from Bill Clark, angle investor with $75,000 and 5% share, Agnes Kovacs, family member, $75,000 and 5% share, and Becon Venture Capital LLC, Venture Capital Investor, with $300,000 and 20% equity ownership.
Bank and Other Loans
Most successful business are financed by banks (Bangs, 2005, p.22). Although Zoltany Inc. is still in its infant stage of the business cycle, 18 percent of its total capital comes from debt financing through Bank of America, Merrill Lynch and Chase Investments. As Bangs (2005) continues, “One of the nice things about debt financing is that the entrepreneur doesn’t have to give up ownership of his or her company to get it” (p. 22). Zoltany Inc. decision on debt financing was made based on its position of being an up-and-running enterprise that will have adequate cash flow to pay its loan obligations from the start of operations. Finally, Zoltany Inc. takes on $297,700 in loans from private “loan sharks” for a percent above of market interest rate to finance its other loan obligations in the event of slower cash flow.
Break Even Analysis
One of the most important calculations a startup or any business needs to do is to figure out the break-even point. The process to figuring out is to run a break-even analysis. As Bangs (2005) asserts, “This is the point at which revenue equals cost” (p.168). Zoltany Inc. break-even sales point is calculated at $5631. This means that we have $5445 fixed cost each month with 1.5% variable expenses. The formula used to arrive at the $5631 break even sales level is as follows: Breakeven Sales Level = Total Fixed Expenses/ ((100-Total Variable Expenses %) /100). Clearly, Zoltany Inc. has a manageable break-even point and will perform the analysis regularly and often to counter changing circumstances.

12 Month Profit and Loss Projection
A profit and loss, or P&L, forecast is a projection of how much money you will bring in by selling products or services and how much profit you will make from these sales (Nolo.com, n.d.). A carefully written P&L pro-forma can serve two vital roles for a business. One, it is used as an odometer that shows the business whether there will be enough money coming in to exceed the costs of providing services. Two, it can serve the entrepreneur as a road map on what kind of revenue needs to be generated or costs to be cut to return to break-even point. Zoltany Inc. has researched Industry Norms and Key Business Rations and Statement Studies for key performance indicators of like business in the REIT industry when creating its P&L forecast.
Having enough cash in any business can mean the difference between making it and being successful or failing all together. Even if your operation is profitable and you have plenty of capital assets, you can go broke if you run out of cash and can’t pay your taxes, wages, rent, utilities, and other essentials (Bangs, 2005, p. 176). The projected cash flow for Zoltany Inc. in fiscal year 2015 shows a positive trend throughout the 12 months of its operation with no negative periods in any of the operating months. Our average cash flow for the 12 unit start up apartment complex is projected to be at an average of $15,000 or 62 percent of total revenue, each month. According to Industry Norms, a 60 to 70 percent NOI (Net Operating Income) has been proven to be an industry standard for REITS. Clearly, Zoltany Inc. is in a healthy financial condition to start its venture for it having sufficient sources of capital structure and well planned financial pro-forma that serve as solid grounds to succeed.

8. Financial Plan

Cash flow Projection
Projecting cash flow is the main vehicle for any business to run smoothly and stay afloat. Many of the small businesses that fail do so because they simply cannot pay their bills ("Money, Personal Finance, Business, Careers, Life Skills: Lessons, Education", n.d.) The importance of cash flow does not mean that all the other financial statements are worthless, it simply means that a positive cash flow is essential to survive. For this reason, astute business owners and experienced investors look at this projection as the document of all documents. This projection allows the business owner to plan out the cash need for starting the business, pre and operating expenses, and how much contingency fund they need to put aside for rainy days. As there is no automation for a precise cash flow projection, the most popular way of looking at it as a checking account in future timeframes. At Zoltany Inc., the below cash flow projection shows a gradual growth month over month with no negative or minimal positive cash flows in any months.
As the below template indicated, Zoltany Inc. has a pre-startup cash position of $11,500. This is a direct result of some capital items (computer, desks, furniture) purchase, setting some contingency funds aside, and some miscellaneous startup costs. Zoltany Inc. reflects a total cash sales of $246,000. This includes rental income and total other income. Total cash paid out amounts for $118,000 for the fiscal year of 2015, and it derives from the gross wages of our full time on-site manager, its payroll taxes, outside services and the maintenance services that are necessary during the tenancy of our renters. In addition, our advertising, legal and accounting costs are estimated to account for almost 20% of our total cash payout for FY 2015. Finally, utilities, insurance, taxes and interest, we project to take 32% of our total estimated cash out. The net result of our cash in and cash out for fiscal year 2015 comes to $141,678, and that is Zoltany Inc.’s net cash flow for the year.

Plans for Funding
Equity Funding
Business plan is almost essential for entrepreneurs seeking to raise money to help fund their companies (Bangs, 2005, p.19). Zoltany Inc. has a master plan for funding its start-up and operational continuity for success. The funding comes from the following direct sources. First, Laszlo Zoltany, Owner and CEO, invests $1 million of his own assets and assumes a 70% ownership in Zoltany Inc. Bill Clark and Agnes Zoltany, angel investors contribute $75,000 respectively into the company’s equity fund. Finally, Becon Venture Capital LLC invests $300,000 as a 20% shareholder of Zoltany Inc.
Debt Funding
Most successful businesses are financed by banks (Bangs, 2005, p.22). 21 % of the total funds for Zoltany Inc. come from debt financing. Debt financing is when, as Bangs (2005) goes on to say, “you take out a loan and pay it back, perhaps in installments consisting of principal and interest, perhaps in payments of interest only, followed by a balloon payment of the principal”(p.22). The total loan of $500,000 are financed through the following four banking institutions: Merry Linch, Bank of America, Globspan Capital Partners, and Golden Gate Ventures. The loan’s principal payment and interest equals to $2000 a month and is paid in 20 years. This is a 20 year loan with a fixed interest rate of 5 percent.
Driving Assumption
Making sense of the estimated revenue and costs takes deep research and critical thinking. Zoltany Inc. derives its assumptions from Industry Norms and Key Business Ratios and Statement Studies. The equity and debt financing needed to start and operate the business is compared to industry giants like the Irvine Company, Equity Residential, AIMCO, and UDR Inc.
Customer Acquisition Rates
In property management, the customer acquisition rate is referred to as projected occupancy or lease up rate. We budget to lease up our 12 units apartment development in 3 months. This means that from January to March, we will fill up 4 apartments each month. If the projected lease up rate falls behind the plan, we will offer move in specials and discounts for up to 2 weeks of free rent. This strategy will allow to increase leasing velocity and achieve the projected stabilization by March 31st, 2015.
Risk
There are three questions that may have a significant effect on the success of Zoltany Inc. First, what will the level of demand be for new apartment dwellings in 2015? Second, will future prospect be paying for the premium quality apartments? Finally, will the homeownership rate in the U.S. increase, so there will be less market for new REITS such as Zoltany Inc.
Conclusion
Having all the necessary financial plans and data in place can mean whether the business will successfully acquire investors and customers. Astute investors look carefully at the charts, tables, formulas, and spreadsheets in the financial section because they know that this information is like the pulse, respiration rate, and blood pressure in a human-it shows whether the patient is alive and what the odds are for continued survival (Bangs, 2005, p. 157). In this paper, Zoltany Inc. has presented its break-even analysis and cash flow projection for 12 months. Clearly, with an $8176 break-even sales level and a $144,178 end of year net cash standing, Zoltany Inc. is in a winning position to succeed its startup and following years to come.

9. Appendices

Floor Plans

Ammeneties * Community Amenities * Resort Style Pool * Pet Friendly * Soothing Resort Style Spa * Outdoor Fireside Lounging Spaces * 2 Acre Park * Electric Vehicle Charging Stations * Concierge Services * On-Site Laundry * Fitness Center * Internet Café * Multi-Level Private Parking Garage * Outdoor Kitchen With Barbeque Grills * On-Site Storage * Controlled Access * High-Speed Internet * On-Site Maintenance * Near Dining & Shops * Public Area Wi-Fi * The Reserve - Dining Room With Catering Kitchen and Wine Lockers * Package Acceptance Services * The Vue - Media Room With Surround Sound * Home Delivery From Participating Bella Terra Restaurants * On-Site Management

Apartment Amenities * Granite Countertops With Glass-Tile Backsplash * Spacious Master Suites With Custom Closets * Hardwood-Style Flooring and Plush Carpeting * Dual Vanity Sinks
Pictures
Living Room

Kitchen

Bedroom

12 Month Profit and Loss Projection

10. Refining the Plan-Alternative Strategies
Mistakes in implementation result in an organization losing precious time, money, and momentum versus its rivals (Marcus, 2011, p.198). Although Zoltany Inc.’s business plan is built on strong fundamentals of real estate management science and decades of professional expertise, an alternative strategy has also been crafted to get the company through unforeseen challenges or failures. Despite that, as Marcus (2011) continues, “The root causes of failure are universal, such as poorly formulated plans, misapplied resources, breakdowns in communication, and limited accountability for results, Zoltany Inc. has its exit strategy.
Zoltany Inc. plan B is supported by its solid financial resources and ready to help angel investors. Should the operation request more capital than the original plan outlines, the contingency found from the owners and angel investors are readily available to prevent any cash flow disruptions. In addition, the current management team does not only depend on Zoltany Inc. for making a living. Should plan A and plan B not work out as planned, management and staff are ready to re-join corporate America as primary source of income. Finally, should our business plan prove to be not holding a sustained competitive advantage as planned, the organization will be ready to seek other opportunities through mergers and/or acquisitions. As the old saying goes, “if you can’t beat them, join them”.

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