Leah-Cherri Kain

Final Business Plan BA 499

Prepared for Donna Lane PhD.

Southern Oregon University 2015

THE SEATTLE WHISKEY ROOM

COMPANY DESCRIPTION• The Seattle Whiskey Room is a Seattle, WA based company providing premium whiskeys

available for sale per ounce in growlers of all regional varieties and flavors. The Seattle Whiskey Room strives to offer a unique Whiskey experience that is locally focused by offering whiskey for sale per ounce in a variety of flavors and tastings for a purely customizable experience.

• The Seattle Whiskey Room will attract a high-end, trendy clientele and will be situated in the upper-middle class neighborhood of Roosevelt/University District.

• The Seattle Whiskey Room will focus solely on whiskey sales from local and regional distilleries vs. craft beers and provides a place to customize and taste these options and also strives to become a staple in the community for local charities with funding raised from monthly local artist shows.

THE SEATTLE WHISKEY ROOM INCOME STATEMENT

Year 1 Year 2 Year 3Sales $662,117 $717,702 $774,783

Less Cost of Sales $244,555 $248,227 $251,947

Gross Profit $417,562 $469,475 $522,836

Total Operating Expenses

$215,134 $206,700 $222,151

Earnings Before Interest and Taxes

$202,428 $262,775 $300,685

Interest Expense $5,851 $6,110 $6,580

Earnings Before Tax $196,557 $256,665 $294,105

Income Tax $72,460 $99,499 $116,347

Net Income $124,117 $157,166 $177,758

THE SEATTLE WHISKEY ROOM BALANCE SHEETYear 1 Year 2 Year 3

Current Assets $217,688 $378,118 $559,477

Property/Equipment $10,000 $10,000 $10,000

Less Accumulated Depreciation

($3197) ($6,530) ($9,863)

Total Fixed Assets $6,803 $3,470 $137

Total Assets $224,491 $381,588 $559,614

Total Liabilities $100,374 $100,305 $100,573

Stock and Paid-in Capital

$25,000 $25,000 $25,000

Retained Earnings ($25,000) $99,117 $256,283

Current Yr. Earnings $124,117 $157,166 $177,758

Total Equity $124,117 $281,283 $459,041

Total OE + Liabilities $224,491 $381,588 $559,614

THE SEATTLE WHISKEY ROOM CASH FLOWYear 1 Year 2 Year 3

Net Income $124,117 $157,166 $177,758Depreciation $3,197 $3,333 $3,333Operating Activities $98,064 $157,440 $178,288Land $0 $0 $0Buildings $0 $0 $0Machinery/Equip. $0 $0 $0Office Equip/other $10,000 $10,000 $10,000Investing Activities $10,000 $10,000 $10,000Long-Term Borrow $100,000 $0 $0Repayment of LTB $6,000Sale of Stock $25,000 $0 $0Net Cash/Financing $94,000 $0 $0Net (I/D) in Cash $182,064 $157,440 $178,288Plus Beg. Cash $0 $182,064 $339,504Ending Cash $182,064 $339,504 $517,792

• NAICS Code 722410

• Annual growth +1.4% yearly through 2020 (IBIS World, 2015).

• IBIS World notes an emerging trend in the industry and that it the growing popularity of purchasing alcoholic beverages to drink at home which directly reflects the growing popularity of growlers in breweries and their respective retail locations.

INDUSTRY SUMMARY

TARGET MARKET• Innovators: Highly influenced by image as an indication of their taste, usually career-

professionals, and their recreational activities usually symbolize a desire for higher-quality.

• In Seattle there were 111,355 Whiskey purchases (retail) in the past 6 months (ESRI, 2015).

• Median Disposable Household Income within Seattle is $53,716

• Consumers aged 25-34 spend 66% above the national average expenditure in liquors and bars.

• 48% of Seattle residents earn $50-$150k per year, of that 48%, 44% fall into the age range of 25-54.

TARGET MARKET POTENTIAL AND SALES FORECASTTMP: 111,355 purchases in the last 6 months x 2= 222,710 units

6 Whiskey Distilleries in Seattle + 4 specialty whiskey bars= 10 direct competitors= 10% Market Share of the Industry = 22,271 units sold per year

Sales Forecast: Units divided equally between the three size offerings available = 7545 16oz. Growlers, 7357 32 oz. growlers, and 7369 64 oz. growlers in Year 1. Tastings are measured by capacity due to limited hours and table space: 5 tastings per week x 4 weeks/month= 215 in Year 1.

Sales Price of Growlers: 16 oz. = $1332 oz. = $2664 oz. = $50Tasting Room = $20

Total Sales Forecast in Year 1: 16 oz. growlers = $98,085 32 oz. growlers = $191,28264 oz. growlers = $368,450Tasting Room Sessions = $4,300Total Sales Year 1: $662,117

COMPETITION• Primary Competition: Whiskey distilleries and local whiskey bars in Seattle

• Secondary Competition: Liquor stores in the area for consumers looking for name brand whiskey’s not featured at The Seattle Whiskey Room

• Competitive Position: The Seattle Whiskey Room would have a competitive advantage because it would be the only location in Seattle offering a variety of premium whiskeys from local and regional distilleries only in a variety of flavors available to purchase per ounce with a growler. This allows customers to customize their purchase and only purchase quantities more suited to their needs.

• In addition, the presence of local artist shows solely for the purpose of community service funding and donation to local charities, will make The Seattle Whiskey Room a beacon in the area for high-end local spirits and community support and awareness.

COMPETITIVE MATRIXSuccess Factors Industry

BenchmarksThe Seattle Whiskey Room

Competition Ranking

Customer Service Scale of 1-6 4/6 2/6

Product Innovation Scale of 1-6 5/6 4/6

Distribution (access) Scale of 1-6 1/6 3/6

Available Offerings Scale of 1-6 6/6 5/6

Location Scale of 1-6 5/6 5/6

STRATEGIC POSITION• Broad Differentiation Strategy: Through the company’s pay-per-ounce strategy and locally

focused product offerings, maintain a large base of specialty whiskey drinkers interested in high-end, locally and regionally distilled products and tastings. This would allow for pricing based on quality and overall product differentiation instead of attempting a low-cost strategy, putting the company in a position of market advantage.

• Competitively valuable alliances and cooperative ventures: Forming a strategic alliance with Machine House Brewery located in Downtown Seattle will create an Omni-Channel experience for The Seattle Whiskey Room as they also participate largely in community art-shows and events, and have a large following of consumers looking for English specialties such as Cask Ale but have not fulfilled the Whiskey needs of their consumers.

• The Seattle Whiskey Room will be the only retail location in Seattle that allows for purchases per ounce and will carry all local and regional Whiskey offerings for the largest local selection in Seattle.

MARKETING PLAN AND SALES STRATEGY• Marketing Plan:

• Social media outlets include Facebook, Twitter, Instagram, Google+ that will be maintained by all members of the board of The Seattle Whiskey Room.

• Website and Blog will be maintained by founder Leah-Cherri Kain

• Local marketing outlets will include participation in local trade shows and events, as well as advertising locally on Yelp and paying for Google Ad Words as well as a local mobile marketing package for smart phone platforms. There will also be joint marketing ventures with the local distilleries that the company partners with.

• Sales Strategy: With the strategy of the Seattle Whiskey Room we will be fulfilling the following needs for our customers:

• Extensive Whiskey Selection

• Customization of flavor enhancement

• Pay-per-Ounce

• Lounge atmosphere for tasting room

• It is this specially designed offering and selection of Whiskey instead of craft beer and the strong retail options we would have available for everyday purchase that will ensure the Seattle Whiskey Room is meeting its customer’s needs. By differentiating ourselves from the usual collection of craft beer breweries and bars in Seattle we will be able to fulfill a need for a niche customer and create excitement around the new innovations in the Whiskey world and make them available to our customer. Our customers’ option to “customize your poison” will surely give us a competitive advantage above other whiskey bars and retail shops in the Seattle area.

OPERATIONS • Supplies and Facility: The facilities and supplies needed would include: the building (approximately

1000 square feet located in the Roosevelt neighborhood of Seattle), a store iPhone, a Square payment processing system, empty whiskey growlers (The Seattle Whiskey Room would encourage customers to bring in their own and offer a discount), 100 varieties of whiskey, four long tasting room tables, sipping glasses, a small food/beverage scale, and various cleaning supplies.

• Labor Plan: As stated previously, the labor plan for The Seattle Whiskey Room would consist of three operational heads (President/CEO, CFO, and Head of Operations/Distilling) who would handle all of the financials, marketing and planning, and daily operations of the business. The Seattle Whiskey Room would also employ a crew of 3-7 Part-Time employees whose job title will be Customer Service Specialists and will have the primary role of assisting customers with any and all of their whiskey shopping needs.

• Supply: The Seattle Whiskey Room will feature mainly local varieties of Whiskey and flavorings and will retain the majority of its inventory through the various Seattle distiller’s distribution systems. Local supply will encompass 75% of available inventory, and the other 25% will be large “name brand” Whiskey’s such as Wild Turkey, Jack Daniels, Jamison, etc… just to give a sense of familiarity with the newly budding Whiskey-lover.

OPERATIONS CONTINUED: CUSTOMER SERVICE AND QUALITY CONTROL.• It is the goal of The Seattle Whiskey Room to ensure the highest standards of quality for its customers. By providing a level of

customer service that goes above and beyond the expectations of the customer, and by offering the highest level of customization and choices for our customer we will differentiate ourselves from the competition and become a premier destination for high quality Whiskey selections. In order to ensure the highest level of quality all employees will be highly trained in sanitation standards for the location as well as storage guidelines specifically for aged whiskey including temperature and moisture control of the area. Employees will also have the responsibility of educating customers after purchase on how to maintain the quality of their whiskey selection from home as well as timeframes for the freshest consumption. The Seattle Whiskey Room’s Customer Service Model will be as follows:

• Always sincerely and warmly welcome every customer entering The Seattle Whiskey Room within 10 seconds of them entering the establishment.

• Make a connection with every customer – create a relationship so as to ensure repeat business through genuine conversation.

• Always offer a sample of Whiskey before purchase, as well as a sample of the Whiskey of the Day and offer tips and suggestions of flavor enhancements to supplement.

• During a tasting session, always ask the customer for feedback and make recommendations based on their taste and likes/dislikes.

• Always inform customers of upcoming community actions and benefit concerts to support local charities in the community.

• Always educate the customer, Whiskey is a broad world, make them aware of all the wonderful advances and events

• Outreach – Suggest Facebook, Yelp, Instagram #theseattlewhiskeyroom, and email capture to stay updated on the most current events and happenings in the establishment and for special offers.

• The idea is that it is more than just Whiskey, it is a lifestyle. Creating an environment where people feel at home and part of a community is the main focus of The Seattle Whiskey Room, and coupling that environment with the most customization available in the market, that is where The Seattle Whiskey Room can really differentiate itself from its competition.

MANAGEMENTLeah-Cherri Kain: President/Founder

Alex Brenner: CFO Head Distiller/Ops MGMT: TBD

HR/Training and Development

Maintains all ledgers and financial workbooks/accounts

Supply Ordering

Sales/Board Director Investor Relations Quality/Inventory Control

Events Coordinator Forecasting Sales Projections

Customer Service Management

Marketing and Development Payroll Coordinator/Administration

Regulatory Compliance Head

GOALS AND STRATEGY• Long-Term Goals:

• The Seattle Whiskey Rooms long-term goals include expansion and becoming a well-known Seattle staple in the market. We plan to grow steadily during the first five years and hopefully by year 6 begin to pursue opening new locations in other neighborhoods. Eventually we would love to bring the Seattle Whiskey Room’s custom flavor options to other local bars in the neighborhood on a wholesale basis and maybe eventually even lead into the manufacturing piece which would require additional machinery being built and a much bigger space. Due to the excess amount of capital needed to start the manufacturing and distilling process for the Seattle Whiskey Room the long-term expansion goals will not be economically feasible until year 10.

• Strategy for Achieving Goals:

• The main strategy for achieving our goals is going to consist mainly of ensuring that capital expenditures are done at adequate times and that we have enough capital (either on hand or through investment ventures) to execute our expansion plans and fulfill machinery and equipment needs for manufacturing. The itemized plan would be as follows:

• Start-up location opens its doors in Roosevelt neighborhood

• Maintain staffing levels of 5-7

• Solidify year marketing strategy including strong participation in local events relevant to the market

• Pay off start-up debt

• Year 6 start pursuing locations in Capitol Hill and West Seattle neighborhoods

• Year 10 begin purchase/renovation of new building for distillery/manufacturing

• Year 11 bring Seattle Whiskey Room to local bars in the area through the wholesale/manufacturing process.

QUESTIONS?

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