Table of Contents

Executive Summary.......................................................................................................................... 2
I.

The Industry ........................................................................................................................... 4

II.

The Company and the Concept .............................................................................................. 8

III.

Definition of the Relevant Market and Customer Overview ............................................... 14

IV.

CrashPads Economics ........................................................................................................... 20

V.

Marketing Plan ..................................................................................................................... 24

VI.

Design and Development ..................................................................................................... 28

VII.

Operations Plan .................................................................................................................... 32

VIII. Management Team .............................................................................................................. 35

IX.

Overall Schedule .................................................................................................................. 39

X.

Critical Risks, Problems, and Assumptions........................................................................... 40

XI.

Financial Plan ....................................................................................................................... 43

XII.

Proposed Company Offering ................................................................................................ 45

XIII. Appendices ........................................................................................................................... 46

References ..................................................................................................................................... 67

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Executive Summary
The Opportunity
Summit County, Colorado, attracts millions of visitors each year with scenic vistas and popular
ski resorts. While many of these visitors treasure the picturesque towns, luxurious hotels and
comforting amenities, about 25% are hardcore skiers and riders that care little about luxurious
amenities. These hardcore-types are looking for an inexpensive place to crash until they return
to the slopes. CrashPads, LLC, provides this demographic a comfortable yet inexpensive bed in
prime locations.
The transient population of Summit County exceeds 124,000 people during peak periods.
CrashPads estimates target market potential during these periods to be $5.5 million in Summit
County alone. Few low-cost lodging alternatives exist for adventurers making multiple overnight
trips per year, and Summit County is rapidly approaching the build-out of developable land,
forcing lodging prices to go up drastically during periods of peak demand. With projected
increases in international and domestic travel, along with projected growth in the hostel
industry, CrashPads must enter the market now and gain market share to establish brand
recognition, industry relationships, and operating standards.
The CrashPads Concept
CrashPads is a mobile lodging service that provides clean, safe, and convenient accommodations
at affordable prices in locations with high temporary demand. CrashPads provides the
opportunity to pay less and play more in a prime location with low cost and transportable
containers as lodging space. CrashPads utilizes unused spaces near popular destinations (such as
parking lots) and provides space for overnight belongings, security, Wi-Fi, and an easy to use
reservation system. CrashPads reduces the variability of demand by moving beds to nearly any
location with the greatest temporary demand.
Competitive Advantage
CrashPads provides cheap lodging in prime locations, with minimal overhead in an industry
burdened with huge real estate costs. A head start will entrench CrashPads in the market and
provide pristine opportunities to coordinate working agreements with resorts, concert
producers, and race organizers, while also cementing future working relationships. Rapidly
approaching build-out of developable land, there is little risk CrashPads will be outcompeted by
a traditional hostel facility in Summit County.
Target Market and Marketing Approach
The CrashPads target market earns $50,000 or less, travels by themselves or in small groups of
two or three, and takes overnight trips near resort communities in Summit County. The target
market has active lifestyles, are mostly between the ages of 16 and 45, and view lodging as a
necessity only to enjoy their primary activity. The target market within Summit County during
the peak winter period represents a $5.5 million opportunity and is estimated to grow at 6% per
year. Initial consumer awareness will come from an aggressive mobile advertising campaign
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utilizing the side of CrashPads trucks (future revenue from outside advertisers), a search-engine
friendly website, and a comprehensive media relations strategy.
Technology and Operational Issues
CrashPads will employ expandable lodging units manufactured by Berg Corporation to provide
mobile lodging solutions. CrashPads will also utilize the design expertise of Roberto Gil to design
and produce foldable bunk beds that meet CrashPads specifications and the needs of CrashPads
customers.
The CrashPads Team
The CrashPads team will include CEO John Doe, CFO Jane Doe, COO Roger Doe, and CMO Peter
Doe. John has 14 years of product development experience, Jane has 25 years of accounting and
finance experience, Roger has 10 years of operations experience, and Peter has 21 years of
communications and marketing experience.
Economics
The CrashPads economic model consists of medium margins (30% to 103%), high volume (80%
occupancy), medium operating leverage, and two revenue drivers (lodging and advertising) with
flexible pricing. Fixed costs are less than half of the total costs under conservative estimates.
Once proven in Summit County, CrashPads will aggressively market the business model
throughout the country in areas with temporary periods of high lodging demand.
Financials
Using the startup cost for six 60-bed standard setups, at 15% vacancy and $45 per bed,
CrashPads will breakeven with approximately 643 nights of operation. This includes land costs,
the purchase of all units and trucks, and no advertising revenue. With the addition of
advertising revenue, mitigation of land costs and secured leases, breakeven quickly drops to 156
nights of operation. Breakeven continues to decrease with additional setups. Under
conservative assumptions, positive cash flow is achieved in Month 8 with a projected cash
balance of over $24 million in Year 10.
Financial Needs
Each founder will appoint an angel investor to the board. In exchange for a $750,000
investment (each), investors receive a 12.5% share of the company. Under conservative
estimates, the investors should see a ROI of 30% after five years, which will continue to grow
with the company. As growth continues, CrashPads will either seek a second round of financing,
secure loans with manufacturing companies for additional equipment, or sell the CrashPads to a
hotel chain such as Choice Hotels International, Inc.

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I.

The Industry

As a form of accommodation, CrashPads falls under the subset of the Accommodations and
Food Services sector and it belongs to the Other Traveler Accommodations industry under
NAICS code 72119. This industry comprises establishments that are primarily engaged in
providing short-term lodging with the exception of hotels, motels, and casino hotels. Industry
examples include bed and breakfast inns, housekeeping cabins, housekeeping cottages,
guesthouses, hostels, tourist homes, and youth hostels (IBIS World, 2013, p. 2).

Size and Growth Rate

As a relatively large industry, travel accommodation saw a total value of sales of US$140 billion
in 2012. Yet, the subset of Other Traveler Accommodations saw a total value of sales of US$1.7
billion in 2012 with only 4,426 participating businesses. These sales generated profits of $288
million and companies paid wages of $441 million. Bed and Breakfasts comprised 69% of sales
while all other accommodations contributed the remaining 31%. The annual growth rate for the
industry between 2008 and 2013 was only 1% due to the recession and a decrease in domestic
travel. However, the forecasted annual growth rate for the industry between 2013 and 2018 is
expected to increase to 1.3% (IBIS World, 2013, p. 3).

Structure
With no major players, the Other Traveler Accommodations industry is highly fragmented. Most
operators are small business owner-operators who either generate additional income by
offering bed and breakfast (B&B) services in their home or operate full time and generate their
primary income from these services. Industry concentration is low, with most B&B
establishments being owner-occupied and having only eight rooms. In 2013, the top four
industry players earn well under 5.0% of total industry revenue. Due to the nature of the
industry and the maintenance of high levels of personal hospitality, few operators run more
than one establishment. 87% of establishments are small-business operators with nine or fewer
employees. There are no operators that employ more than 250 people (IBIS World, 2013, p. 18).
Hostelling International USA is the largest player with an estimated market share of 1.4%. The
nonprofit organization is an affiliate of the International Youth Hostel Federation, which has a
network of more than 4,000 hostels across 90 countries. The association hosts about one million
nights annually in the United States. Internationally, there are more than four million members.
Guests have to be members of the association to use the hostel and its facilities. In the United
States, HI-USA directly operates more than 125 hostels that meet the international
requirements. Since the 1980s, major hostels have opened in central city locations. HI-USA
generated $21.7 million in industry-relevant revenue in 2012. In 2013, revenue is expected to
reach $24.9 million. Hostelling International does not currently have any hostels in the state of
Colorado, or any other states in the central US. Additionally, prospective hostel organizations
such as CrashPads should consider matching the standards set by Hostelling International
members, and even incorporation into the Hostelling International network and reservation
system (IBIS World, 2013, p. 22).
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Given the owner operator nature of this business, and its generally small scale, there are few
barriers to entry. Start-up costs are generally relatively low. There are also no qualifications
required for operators to enter this industry. However, operators do have to meet all local
building and health regulations (IBIS World, 2013, p. 21).

Value-added Chain
The Value-added chain diagram for the accommodations industry (See Appendix A, Exhibit #1)
depicts the processes of research, service production, service providing, and marketing to
achieve product value. Most businesses in the Other Traveler Accommodations Industry are
small business owner-operators, and they perform nearly all of the processes in the value-added
chain without outside assistance.

Key Trends
Increase in Domestic and International Travel
The economic recession and an increase in unemployment caused consumers to spend less
money on nonessential travel in 2009. Travel plummeted as households worried about finances.
The industry was hurt by falling international arrivals into the United States, which declined
5.2% in 2009. As the economy improved from 2010, consumers began spending on trips and
overnight stays in bed and breakfast and hostel accommodations. For the next five years, there
is a forecasted increase in domestic travel, GDP, and international travelers. Thus, over the fiveyear period to 2018, industry revenue is forecast to increase at an average annual rate of 1.3%
to $1.8 billion. Industry profit margins are anticipated to grow over the next few years due to
the increase in demand for travel accommodations.
Expansion of the Hostel Segment
The hostel component is expected to expand, particularly in large cities. This will lead to growth
in the number of quality facilities at reasonable cost and increase overall demand for hostels.
Establishments with offerings such as a prime location or a willingness to arrange excursions will
be poised for success.
The Internet
The industry has experienced high levels of technological change in recent years. The main use
of technology recently has been in the use of websites as a source of information and
reservations for guests. The reservation system typically incorporates additional operator
functions such as room management, accounting, and credit/debit card payments. Technology
in relation to client services includes wired and wireless internet access, often available at no
additional charge.
The internet has become the main advertising platform for small providers, and those with a
superior online presence are more likely to succeed over the next five years. The industry is
likely to benefit from increased internet penetration rates over the next five years, and
establishments that can best take advantage of this trend will witness the strongest growth (IBIS
World, 2013, p. 6).
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Increase in Professional Operators

Over the next five years, the industry is expected to continue to be segmented based on
facilities and price. Firms will be comprised of more full-time professional operators and fewer
hobby or casual owners. While the average number of rooms per establishment will increase as
more operators that are full-time enter the industry, the B&Bs and hostels will remain a smallbusiness environment.
Catering to International Travelers
International visitors and U.S. residents who want to affordably travel and tour the U.S. make up
most of the hostel market. Many international backpackers originate from Europe, Canada,
Australia and New Zealand, and therefore hostels are acutely sensitive to factors that influence
these guests propensity to travel. Many of these travelers seek the experience of meeting and
interacting with people from different countries, as well as local residents. They prefer to save
their money to spend on special tours and experiences. Backpackers tend to stay longer than
other international visitors and spend more over the whole duration of their trip, even though
their daily expenditure is lower (IBIS World, 2013, p. 13).

Key sources of differentiation

Quality and Hospitality
While the B&B and Hostel industries are both part of the accommodation industry, they feature
more hospitable owners and operators with higher quality and smaller, more restful
surroundings. The competitive landscape is based less on price and more on quality, genuine
hospitality and ambience. Hostels, however, do compete on a basis of price with the rest of the
accommodations sector (IBIS World, 2013, p. 20).
Location and Secondary Services
According to BedandBreakfast.coms Summer 2012 Travel Trends Survey, most travelers feel
that B&Bs provide more value than hotels (71.0%) and would choose a B&B over a hotel at the
same nightly rate. There may be some opportunity for chains of B&Bs to evolve more strongly.
Besides free onsite parking, breakfast, flexible check-in and other inn amenities, travelers chose
B&Bs based on scenic views (68.0%), gardens and landscaping (67.0%), architecture (61.0%),
historical significance (58.0%) and their reputation for good food (53.0%). According to
HostelBooker.coms 2011 Travel Survey, sightseeing and culture were the most popular reason
for traveling among hostel travelers (IBIS World, 2013, p. 8).

Key success factors

Market Understanding and Tourism Relationships
Operators must continually monitor clients needs and satisfaction levels to stay attuned to any
key market or customer changes or requirements. It is important to develop cross-promotional
relationships with other local tourism operators and attractions particularly with local
restaurants and wineries (IBIS World, 2013, p. 18).

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License, Reputation, Presentation, and Technology

Some states require a lodging license and compliance with industry regulations on an on-going
basis. However, the state of Colorado does not require this license. Good word-of-mouth
recommendations and online reviews of establishments are essential because they are
necessary for repeat and new guest visits. The property must provide the appropriate facilities
and ambiance to cater to their target market and also offer facilities that provide a clean, safe
and secure environment (particularly in hostels). A successful establishment nowadays must
have adequate property information, as well as reservation and confirmation capabilities
available on the internet or by e-mail (IBIS World, 2013, p. 12).

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II.

The Company and the Concept

Company Form and Base of Operations

CrashPads will form a Limited Liability Company (LLC) in order to enjoy the tax benefits and
flexibility provided by this form of corporation. CrashPads will initially operate out of Summit
County, CO, with headquarters located within 20 minutes driving distance of the Breckenridge
Ski Resort. The company will lease the headquarters location, which must have adequate space
to park all CrashPads assets and have access to public utilities for the maintenance of the
lodging units.

Timeline for Beginning Operations

Based on an initial $300,000 investment by the founding owners, CrashPads will form an LLC in
January 2014. CrashPads will immediately seek its first round of outside financing with initial
assets delivered in late Q2. Set up and dry runs will occur in Q3 with full-scale operations
starting in Q4. For further details, refer to section 9 (Timetable).

Crash Pad History

Team member Roger Doe grew up in the mountains west of Denver, Colorado. The son of a real
estate developer, he witnessed how much the area has developed and experienced the
gridlocked Interstate 70 on ski weekends. Friends of the family that manage hotels have told
numerous stories of one hotel room packed with singles trying to save a buck, of skiers ruining
rooms trying to use the rooms iron to tune skis, and of ski fanatics sleeping in their cars at night
just so they can get to the slopes quickly in the morning. In addition, the three other team
members have friends and co-workers who live in the Denver area and have shared stories of
skiing for the weekend at Breckenridge, Copper Mountain, Keystone, and Arapahoe Basin. Team
One discussed various ways to exploit these market opportunities with regard to resources
currently not controlled. Initially, the largest hurdle to starting a hostel-like operation in the
county was the high overhead due to low supply driving real estate prices sky-high in the
mountains. After several lengthy and heated brainstorming sessions, the team identified ski
resort parking lots as underutilized resources after the ski lifts close for the day, and as cheap
real estate to alleviate high overhead. With the addition of some mobile lodging units in these
ski parking lots, the CrashPads concept was officially born.

Mission and Main Objectives

CrashPads allows customers to Pay Less and Play More by gaining significant market share in
the Other Traveler Accommodations industry in Colorado and by accomplishing the following
objectives:

Prove the concept and profitability of modular lodging operations.

Gain a foothold in the ski resort accommodations market.
Expand operations to bike races, concerts, festivals, and industrial efforts in order to
maintain profitability and utilization rates year round.

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Core Value Proposition

CrashPads provides the opportunity to play more. The business delivers nightly lodging,
providing customers with a clean, safe, comfortable, convenient, and affordable bed in a prime
location by:
Utilizing low cost, modular, and transportable containers as lodging space.
Renting unused spaces in or near popular destinations (such as parking lots).
Providing guests with the tools and space they need to maintain recreational
equipment.
Offering personal security and nightly storage.
Providing the space needed for guests to interact socially.
Utilizing an easily accessible online and in-person CrashPads reservation system.

The Product and Service Mix

CrashPads primarily provides lodging services. Customers receive a comfortable bed for the
night, the opportunity to take a hot shower and use the bathroom, and a secure place to store
their overnight items, all at an unbeatable price and location. Nightly CrashPads rates are
standardized and fluctuate with demand. The full inventory of all CrashPads rooms can be
accessed and booked at any time on the CrashPads.com website.
Expandable modules on the back of mobile trailers house the CrashPads, allowing the flexibility
to travel to nearly any event (See Appendix A). Customers will find CrashPads in any open space
directly next to the action, such as in the Breckenridge Resorts skier parking lots. CrashPads are
not luxury hotel rooms; there are no late checkouts, room service, cable TV, or private
bathrooms and there are no premiums charged for these unwanted and unused luxuries.
A solid revenue stream will come from leasing advertising space on the side of the expandable
CrashPads units and trucks. CrashPads will attract firms targeting the same segments since this
billboard-style advertising will be seen in high-demand areas where people are focused on a
particular event or activity. For example, an energy drink company or ski equipment company
will find it appealing to advertise to the crowds coming in and out of the ski resorts on each
weekend.
CrashPads will also provide secondary products and services at additional charge, such as
wireless internet connections, food, drinks, toiletries, towels, locks, equipment tuning services,
equipment tuning tools, CrashPads novelty items, and other commonly forgotten items.

Revenue Drivers and Product/Service Mix

Lodging
Beds at nightly rate

Advertising
Lodging Container
Bathroom Container
Truck
Website
Partnerships

Small Retail Items

Wireless Internet
Towels
Hourly
Shower shoes
Daily
Toiletries
Locks for storage
CrashPads novelties

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Primary Uses
Low Cost Lodging Provider
Customers will primarily use CrashPads as a low-cost lodging alternative to traditional hotels,
motels, and condominiums in high-priced and high-demand areas. These customers will use
CrashPads to stay as close to the action (skiing, concerts, conventions, festivals, bike races, etc.)
as possible without paying the location premium. CrashPads users will spend most of their
waking moments away from their lodging enjoying the activities of their choice with little need
for luxurious in-room amenities.
Walking Distance
Just walking distance from the ski lift, the stage, the competition, the start line, and the
downtown bars and shops, CrashPads eliminates the customers dependency on transportation
during their stay. With CrashPads primarily located in large parking lots, customers can usually
park next to the CrashPads truck and remain there for the duration of their stay.
Comfortable and Secure Bed
While customers are in the climate-controlled CrashPads facility, they will have a comfortable
bed with a privacy curtain, a locker for overnight items (locks not included, but provided) and
access to a bathroom with a shower. Each bunk will have a reading light and an outlet to charge
personal electronic devices. With a single keycard entry door and an active surveillance system,
CrashPads will also provide a secure environment for its users. For an additional fee, users can
also access CrashPads wireless internet at hourly or daily rates. While CrashPads expects mutual
respect and courtesy from customers in a hostel-like environment, CrashPads management will
reiterate the expectation of silence and privacy while within the CrashPads unit during customer
check-in. Management will also convey an eviction policy for those customers who do not
respect the CrashPads rules.
Social Interaction
Outside of their CrashPads unit, customers will have the opportunity to interact with likeminded
skiers, snowboarders, music lovers, hikers, and bike racers. CrashPads will initially invite popular
mobile food trucks to the premises so customers can purchase breakfast or dinner, along with
the beverages of their choice (CrashPads will reassess future opportunities to supply their own
mobile food truck, the CrashBar). Customers can then enjoy their food and spirits in CrashPads
outdoor lounge area. In the company of other CrashPadders, customers can meet new fellow
adventurers, recount their feats from the day, and plot tomorrows exploits with some
newfound friends.
No Coordination Required
Condominiums provide ultra-cheap lodging if the cost is split between many friends (usually
four). But how many weekends a year can four friends match schedules? With CrashPads,
people can adventure on their own, or assemble small groups of two or three friends.

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Secondary Uses

Temporary post-disaster lodging (tornadoes, hurricanes)

Industrial lodging (oilfield engineers, road workers, utility crews)
Guided group excursions (provide basecamp for backcountry skiing, hiking, rafting trips)

Estimated Value to the Consumer

Considering the cheapest motels in Summit County as the current low-cost lodging for the target
market, CrashPads provides extreme value to the customer. Currently, low-cost motels run for
an average of $85 per night. Additionally, the low-cost motels are outside the city limits of
Breckenridge, or in neighboring cities such as Frisco, Silverthorne, and Dillon, requiring
customers to drive 15-20 minutes to arrive at the ski resort parking lot. With CrashPads in or
near the ski resort parking lots, the location adds an estimated $50 of value to the lodging
experience, even after considering a significant loss in consumer value with respect to in-room
amenities. With a base price of $45 dollars, CrashPads saves the customer a minimum of $40,
but more realistically offers $95 of value to the consumer (See Appendix B, Exhibit #1). Even
comparing CrashPads with other hostel offerings (though current options have few beds),
CrashPads provides greater value due to the location premium of $50.
This example, while specific to ski resort areas, will hold true on average because some places
will have slightly higher or lower alternatives to the $85 per night.
More Trips per Year
For a two-day trip to Summit County, spending $85 a day on lodging and $40 a day on
food/drinks, a customer will spend about $250 per weekend using the motel option. Thus, a
season pass holder who takes four weekend trips per year will spend around $1,000. Using the
same $1,000, that customer will be able to take six weekend trips a year by using CrashPads
that is 50% more (See Appendix B, Exhibit #2).
In addition to lower lodging costs, CrashPads offers the following advantages over current
options:

It does not require coordination among several friends to achieve affordability;

Is within walking distance to target activities;
Customer does not pay for unnecessary services and amenities;
Allows frequent overnight trippers the opportunity to travel more times per year.

Drawbacks
Sleeping in a Cargo Container
The CrashPads concept is not for everyone, even within the target market segment. The greatest
challenge to CrashPads will be to convince consumers to sleep in the back of a crowded tractortrailer in the middle of a parking lot.

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CrashPads must maintain a high density of beds within the modules in order to stay profitable.
However, CrashPads will mitigate the risks of consumer claustrophobia by utilizing industry
standard privacy bunk beds. These bunk beds will incorporate comfortable, full thickness
mattresses, a privacy curtain, and a reading light with an outlet for the charging of personal
devices. Thus, even when the CrashPads module is at full capacity, customers can rest in a quiet,
private, and comfortable space.
Highly Variable and Seasonal Demand
Success of the CrashPads concept depends almost entirely upon acceptance of the concept by
the hard-core skier market segment. Demand from this segment is primarily on weekends
during the ski season. This demand also depends on weather conditions, specifically on the
amount of recent snowfall.
CrashPads will send pow-pow email alerts when significant snowfall is expected and flex its
operations to accommodate unexpected demand (especially in the middle of the week when
people ditch work to go ski, and when people coordinate early arrivals at the lifts to attain
critical first tracks). CrashPads will only launch such nights when predicting an 80% occupancy
rate. In order to exploit high-demand periods and events that appeal to the target market, the
CrashPads event location planner will coordinate future CrashPads locations 6-18 months in
advance. Finally, the CrashPads website will invite customers to add future locations and events
to the CrashPads calendar and allow them to reserve beds at that event. If enough reservations
accumulate for that event (80%), then CrashPads will collect reservation payments and arrive at
the event.
Parking Lot Coordination
The CrashPads concept relies on the attainment of adequate real estate within a parking lot that
is walking distance to the action. A large majority of operations will require the CrashPads truck
to relocate from the parking lot, to the staging area, and back to the parking lot, all while cars
continually enter and exit the parking lot in use. CrashPads will reduce these location risks by
assigning a parking lot coordinator (initially the COO) to maintain a daily relationship with
parking lot managers and parking attendants. It is through these relationships that CrashPads
will attain the prime parking lot real estate necessary for ideal operations.
Ease of Imitability and Competition
The CrashPads concept can be imitated, but getting started requires months of thorough
planning, coordination, capital, and a staging area. A head start will achieve an entrenched
position, as CrashPads will be the first to coordinate working agreements with ski resorts,
concert producers, and race organizers, cementing solid working relationships for the future.
Additionally, Summit County is rapidly approaching 100% build out of developable land, so there
is little risk CrashPads will be outcompeted by a large, traditional hostel facility.

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Entry and Growth Strategy

CrashPads will initially enter the Other Traveler Accommodations market in and around the ski
resort areas of Colorado. As the CrashPads concept gains a foothold in the Colorado market, the
company plans to expand operations into surrounding states taking advantage of concerts, fairs,
conventions, races, industrial projects, natural disasters, and any other profitable opportunities.
Additionally, as working capital accumulates, secondary products and services may be offered
such as:

Food, drinks, alcohol (the CrashBar mobile food trailer)

Ski/snowboard/bike tuning (self-serve tool bench or professional technician)
Daily equipment storage (lockable ski/snowboard/bike racks)

CrashPads envisions the creation of two additional CrashPads hubs within five years: one on the
West Coast and one in the Midwest or the East Coast. Scheduling centers in these hubs will
allow CrashPads to access nearly every geographical market in the United States with the
mobility-lodging concept.

Barriers to Entry
The CrashPads concept requires a minimal amount of capital to start up compared with
traditional lodging concepts that require the purchase and development of real estate. Thus,
capital requirements provide a very low barrier to entry for new entrants. In order to mitigate
this risk, CrashPads plans to expand market share as rapidly as possible. This will create
CrashPads brand name recognition among consumers and set the standard for mobile lodging.
Additionally, elevated consumer switching costs through heavily promoted discounted 10-night
vouchers will discourage Crashers from using other lodging sources with remaining stays on
their voucher. Finally, additional discounts for customers who complete satisfaction surveys
following their stay will promote retention and the surveys will help to maintain and improve
customer satisfaction.

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III.

Definition of the Relevant Market and Customer Overview

Relevant Market
The CrashPads target B2C market earns $50,000 or less, travels by themselves or in small groups
of two or three, takes overnight trips, and stays in hotels, hostels, campers, campsites, or
personal vehicles near the mountain resort communities in Summit County, Colorado. The
market does not include consumers that travel with four or more friends or family members.
The users of the CrashPads facilities affectionately known as Crashers have active
lifestyles, are mostly between the ages of 16 and 45, and view lodging as a necessity only to
enjoy their primary activity.
The target B2B market includes events of 10,000 people or more occurring in areas with ample
space and either little on-site lodging capacity or high-priced on-site lodging capacity. These
events draw a large number of people who need lodging for at least one night, but the area
does not ordinarily have enough traffic to demand permanent lodging facilities.
Other potential markets include lodging for natural disaster relief workers, large and remote
construction projects such as oil wells and factories.
Crashers and firms that want to contract CrashPads services for their customers or employees
desire convenience, safety, affordability, cleanliness, and security.

Market Size and Trends:

2012 Estimates (all $ in M)
COLORADO OVERALL (Dean Runyan
Associates, 2013, p. 11)
MOUNTAIN RESORT REGION (Dean
Runyan Associates, 2013, p. 17)
SUMMIT COUNTY (Dean Runyan
Associates, 2013, p. 47)

Total
Destination Spent on
Spending
Accommodations

Ratio

$ 14,791.0

$ 2,838.0

19.2%

$ 3,216.0

$ 1,039.0

32.3%

$ 642.6

$ 165.5

25.7%

The total amount spent on lodging in Summit County was estimated by using statewide and
regional ratios of lodging expenses to total destination spending. This results in a conservative
average ratio of 25.7%, or $165.5M in annual lodging revenues for Summit County.
CrashPads is focused on those who earn less than $50,000 per year, travel in groups of three or
less and who are 18 to 45 years old. Applying these limitations (International, 2012), the
estimated market potential is as follows:
$165.5M * 57% under age 45 * 44% earn less than $50,000 * 20% travel in groups of 3 or fewer
= $8.3M (Relevant market revenue)

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In Summit County, the high-demand season for lodging is the winter ski season, which accounts
for roughly two-thirds of the annual demand. That means about $5.5M exists in prime season
relevant market revenue for CrashPads to focus on, assuming the rates are competitive with
current inventory and that average weather provides normal ski season attendance. CrashPads
also hopes to grow the market by attracting people who currently sleep in their cars or drive
home.
Tourism growth is expected as the country recovers from the 2009 economic downturn
(International, 2012). With little new lodging inventory being added in Summit County due to
the build out of developable land, CrashPads can help meet demand during busy seasons,
particularly around winter weekends and holidays. The large resorts have added attractions to
increase demand during the offseason, but there is not enough permanent demand during this
period to warrant CrashPads units at ski resorts. Instead, CrashPads will focus on bike races,
music festivals, special events, rodeos, industrial clients, and other sporting events throughout
Colorado to fill demand during the warmer months (See Appendix C, Exhibits #1 and #2).

Buyer Behavior
Like most hotel customers, Crashers will fall into two basic categories those who reserve in
advance and those who walk-in.

Reservations these customers will search online for a room months in advance right
up until arrival; online demand will be based on finding the CrashPads website using
online search functions, requiring promotional dollars to influence.
Walk-ins these customers are overflow from other properties, or someone who saw or
heard about CrashPads and decided it sounded better than sleeping in their car.
CrashPads will increase this demand through direct low-cost marketing at the event or
destinations (signage will be key).

Crashers will be influenced by personal experience. For someone upgrading from the backseat
of their two-door coupe, CrashPads will have a physiological advantage compared to those who
are downgrading from a standard hotel. Initially, CrashPads will place great emphasis on
guerrilla marketing tactics that push word of mouth referrals. In targeting groups of two or
three who are travelling together and possibly sharing expenses, CrashPads must convince all
members of the group that CrashPads are a viable option.
Although CrashPads will likely experience lower customer ratings than full-service hotels, the
goal is still to provide a product, price, and experience that solicits positive feedback, future
purchases, and promotion to others. The CrashPads customer buying process follows:
1. Realize the need Crashers decide they need to pay for a place to sleep/shower.
2. Search for information Customers ask friends/family where to stay, search online,
recall advertising/promotions, walk-in.
3. Consider options Users consider quality, price, convenience, safety, availability.

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4. Make purchase Customers assess overall value and decide where to stay.
5. Evaluate decision Crashers assess cleanliness, safety, price/value, customer service.
To ensure CrashPads is meeting its customer expectations, Crashers will be asked the ultimate
question, Would you recommend CrashPads to your friends/family? with a simple 1-10 scale
as they check out and various incentives for completing the survey. This data will be available
daily to the COO. Crashers that rate CrashPads at less than a 9 will be contacted within 48 hours
to find out how the experience could be improved.
CrashPads sells a value proposition in two directions: consumers can get a bed and a shower for
$45 where the action is happening; and there is no reason to pay up to five times as much for a
bed and a shower when consumers are not utilizing the high cost amenities. Of course,
CrashPads also put Crashers close to the action, so they can pay less and play more.
Choosing a hotel is a medium-involvement purchase: there is a little research and some price
shopping. The CrashPads price point will attract the primary target segment. It will be important
that the website accurately reflect CrashPads spaces. While there is no need to portray
CrashPads as luxury suites, the website must convey convenient lodging services, just absent
many unnecessary amenities.

Market Segmentation and Targeting

See Appendix C, Exhibit #3.

Competition and Competitive Edges

Our main competitors will be non-resort lodging options within Summit County including
traditional mom-and-pop motels, economy hotels, campgrounds and bed-and-breakfasts. When
two or more people share a room, the cost-per-person will be competitive if not cheaper than
our price. See Appendix C, Exhibit #4. Substitute products include all lodging options from highend resorts to sleeping in ones own vehicle.
A ski weekend getaway to Summit County can easily cost $500 with lift tickets and lodging as the
biggest expenses. While annual passes and other discount ticket promotions can help with lift
tickets, most resorts and motels do not offer multi-night discounts certainly not during peak
season or on weekends. A price point of under $50 will attract an immediate market
especially for single travelers.
CrashPads does not attempt to compete with the high-end resorts and amenities that families
expect during an annual ski vacation. However, there are also those just looking for a place to
crash. One of the biggest challenges CrashPads will face is a hesitance to accept hostel-like
accommodations. Hostel-like accommodations have not completely taken root in the United
States, but acceptance is growing in Europe and Asia. Additionally, no other competitors
provide limited overnight accommodations with mobile units to provide a low-cost option that
can be set up for short stays of only one night.

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Estimated Market Share and Sales

Key purchasers will be individuals and small groups of 2 to 3 people. CrashPads plans to launch
in August 2014, beginning a marketing campaign in early summer and becoming more
aggressive heading into the fall and winter, generating interest in the product before the peak
winter season. In general, CrashPads will only operate units with an anticipated occupancy rate
greater than 80%, but will be flexible during the start-up phase when occupancy rates may be
lower. Through a combination of advertising and a physical presence at key locations, CrashPads
expects to achieve 75% overall occupancy by the end of the first ski season.
The table below illustrates the potential demand and growth within the Summit County ski
season:
ESTIMATED MARKET SHARE SUMMIT COUNTY
2014
Average price per night
$45
Capacity (beds)
360
Average Usage Rate (per night)
80.00%
Number of nights operating (per year)
40
Total beds occupied
11,520
Estimated ski season revenue $520,000
CrashPads' % of Selective Demand Revenue
9.32%

2015
$45
720
80.00%
40
23,040
$1,040,000
17.59%

2016
$45
1440
80.00%
40
46,080
$2,070,000
33.19%

Initially, Crashers will be interested in both the why not pricing and the convenience of
location. Because this market segment tends to be price sensitive, CrashPads will use
promotional pricing to drive toward the goal of 80% occupancy. Over time, mainstream
customers will appreciate the overall value of affordability, safety, and convenience.
Appendix C, Exhibit #5 shows anticipated Colorado market share over the first three years. This
data reflects year-round growth potential. The Selective Demand represents the portion of the
existing overnight-trips market from which CrashPads expects to convert customers. The
CrashPads percentage of overall Colorado market is relatively small with 2% of the market in
three years. The industry as a whole will barely recognize CrashPads existence, however, in
years two and three, CrashPads begins to take a noticeable chunk of the low-end customer
market in Summit County. Also worth noting, because CrashPads is charging less per night than
industry standard, the percent of lodging revenue is lower than the percent of nights captured.

Assumptions

Year 1
Year 2
Year 3

Market
Growth
6%
6%
6%

Total Beds (# Setups)

360 (6)
720 (12)
1440 (24)

Events
Weekend only, 80% target occupancy
Begin 3-4 day events, 80% target occupancy
Begin weekly events (5-7 nights), 80% target
occupancy

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Explanation of Assumptions
The overall trip industry in Colorado has had a stable growth rate of 2% over the past 10 years.
However, Summit County, which is CrashPads initial market area, has had a higher growth rate
due to the rising popularity and accessibility to ski resorts during wintertime. CrashPads has
chosen to keep this rate steady at 6%, which is slightly conservative given higher rates (7.1% and
6.3%) in the past few years and an anticipated increase in domestic travel over the next few
years. In effect, CrashPads will benefit if the market as a whole does better than our prediction.
In terms of average utilization rate, the success of CrashPads will be predicated upon the ability
to predict demand. Initially there are two problems with CrashPads target of 80%:
1. Because this is a new offering, the market awareness will be low. However, while
Summit County certainly has the ideal environment to reach 80% demand, the market
will need to become aware of the offering. This means CrashPads will sometimes
operate at a lower than expected occupancy rate. At the very least, this sub-optimal
deployment will act as self-promotion (i.e. a marketing promotion expense).
2. CrashPads has little ability to predict demand accurately on any given night. A large pool
of potential customers in Summit County is favorable, but other important factors
include which days of the week have more people, what events make areas of the
county more popular on a given night, and what spots in those areas provide the best
location for customers to access CrashPads offerings.
Over time, CrashPads will improve its ability to predict demand, meaning higher usage rates and
more profit. Additionally, better predictability will lead to more profit opportunities, allowing
CrashPads to expand its footprint, growing at a 100% rate for year 2 and year 3. These growth
numbers reflect the rapid expansion of a new product creating a new market space. CrashPads
expects a steeper growth curve compared to the existing mature lodging solutions.
Furthermore, CrashPads intends to increase the number of operating nights per year by working
with events that need lodging for 3 to 7 nights. This will require more units because some will be
less mobile at a given time, which is another reason to grow at a faster rate. Year 2 assumes
changes in operations to handle 3 to 4 night events, while Year 3 assumes the ability to
implement a 7-night event.

Ongoing Market Evaluation

Experience from Years 1 and 2 will provide many insights that will lead to a better product and
service offering that can offer weekly events in year 3. During operations in Years 1 and 2,
CrashPads hosts will solicit feedback from Crashers regarding all aspects of the business,
including overall recommendation (i.e. the ultimate question). Key aspects include:

Booking experience: Was it easy to book a bed in advance and/or on-site at the last
minute? Was it easy to pay? Was it easy to check in/out?

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Appearance: Did CrashPads look like it should? How does appearance affect future
visits?
Safety and security: Does the premise need different safety measures (more cameras,
more people, etc.)? Did you feel your articles of possession were stored securely while
sleeping?
Comfort: Should the mattress be thicker? Was it too hot or cold? Did you have enough
space?
Convenience: Was the lodging close enough to the action? Were the right amenities
there to support your activities during the day and at night?
Locations & Events: What events does the customer want CrashPads to attend?

CrashPads will collect this type of information both formally through surveys and informally via
employee interactions. This feedback will help shape the evolution of the overall product and
service experience. Some feedback may invoke immediate attention (such as creature
comforts), while other changes may take time and long range planning (such as new locations).
Reception and feedback may cause a shift in strategic direction, as secondary events and
markets may surprisingly become the core focus. These types of changes could affect product
layout (e.g. three rooms with 10 beds versus one room with 30 beds) or cause logistical changes
(short truck movements versus long truck movements).

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IV.

CrashPads Economics

Revenue Drivers and Profit Margins (contribution margins)

CrashPads specializes in one revenue driver: a convenient, safe, and affordable place to sleep for
those hard at play or work. These beds may be rented in bulk to a construction company or a
municipality putting on a festival. They may be supplemented by a resort that wants to provide
better service to their potential customers. Or they may be rented directly by the person using
them to recharge his or her batteries before returning to the action.
However, this activity lends itself to another revenue driver billboards on the sides of the
expandable units and bathroom trailers.
Contribution margin per bed varies with the number of beds occupied. CrashPads projects a
required occupancy of at least 80% and a minimum price of $40 per bed in order to position the
standard setup. This will provide a minimum contribution margin of 30%. These price points
give the customer a good perceived value, especially compared to higher hotel room rates. See
Appendix D, Exhibit #1.

Fixed and Variable Costs

The standard setup for operations will include four 20 expandable containers (two per trailer)
and one bathroom unit. This will provide 60 beds and require a footprint of 60 by 70. Fixed
costs include the expandable units, the bathroom units, trailers to carry the units, insurance,
and land to store the units. Expandable units include all modifications necessary to contain 30
beds and two bathrooms. CrashPads plans to lease semi-tractors and one-ton trucks on a
monthly basis, but will treat them as fixed costs for the purpose of this analysis. Numerous
parcels of acreage are available in nearby counties for a fraction of the cost that Summit County
demands. CrashPads anticipates the land will finance itself, by purchasing a larger tract of land
than needed, making minor access improvements, and selling the remaining portion to cover
the original cost. For example, a 40-acre plot is listed for $89,900. CrashPads would require no
more than ten acres, so CrashPads could immediately sell the remaining 30 acres in accessible
parcels that would not only cover the purchase price, but any required improvements such as
fencing. However, $500,000 is included in start-up costs to cover land expenses. This provides a
measure of cushion in the breakeven analysis.
Variable costs include drivers, hosts/hostesses, laundry services, fuel, maintenance, parking
fees, dumping fees, and supplies. CrashPads will hire and train drivers and hosts/hostesses to
the unique requirements of the portable units. Because of special CDL requirements for drivers,
they will be paid on a higher scale than hosts/hostesses will. Contracts for laundry and
maintenance services will be arranged. Bulk fuel contracts will also be secured with local
vendors. See Appendix D, Exhibit #2 for annual costs per standard setup. The marketing budget
will absorb and fixed costs associated with advertising on the side of the units.

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CrashPads earn a profit if units achieve at least three nights with less than 10% vacancy and $40
per bed. $50 per bed allows up to 25% vacancy for the same three-night period.

Operating Leverage and its Implications

CrashPads requires substantial upfront investments in fixed assets, but most assets will last at
least five years before substantial upgrades or replacements are required. The ratio of fixed
costs to variable costs is .91, meaning the operating leverage is low to medium. Fixed costs are
approximately 48% of total costs under the conservative estimates above. In reality, CrashPads
expects the costs for the semi-tractors and one-ton trucks to be lower due to rental or lease
agreements. This low-to-medium operating leverage presents a lower investment risk because
the breakeven point will be reached sooner than if the operating leverage is high.

Start Up Costs
Design and Engineering costs involve the funding required to create the expandable units and
bathroom units to CrashPads specifications. Marketing costs will focus on areas prone to
overfilling of hotels, such as the Summit County ski resorts, as well as those in charge of
organizing large festivals and sporting events, such as the USA Pro Cycling Challenge. Training
costs will ensure all initial hires understand how to operate and maintain the units. See
Appendix D, Exhibit #3.

Overall Economic Model

CrashPads overall economic model (see Appendix D, Exhibit #4) consists of medium margins,
high volume, medium operating leverage, and two revenue drivers with flexible pricing. This
model is attractive because no additional expenses are incurred if vacancy is expected to exceed
25%. In fact, as management grows comfortable with different venues, predictability of vacancy
levels will increase. Therefore, each subsequent year will see decreases in vacancy percentage
as CrashPads matches the correct number of beds to the level of demand. Additionally,
CrashPads will vary prices to match the demand of the venue and location. Each situation will
be analyzed to determine profit potential.

Breakeven Chart and Calculations

See Appendix D, Exhibits #5 and #6. Using the startup costs for six 60-bed standard setups, at
15% vacancy and $45 per bed, CrashPads will breakeven with approximately 643 nights of
operation. This includes NO advertising revenue. Even with highly conservative ad revenue
estimates of $1,000 per month per unit, the breakeven point moves to 441 nights. This analysis
is conservative in a number of ways:
VACANCY ESTIMATES
In general, CrashPads expects vacancy numbers to be closer to 10%, not 20% - 25% as used
in our conservative estimates. For example, hotel occupancy rates in the Summit County
area averaged 60% in 2012, but this includes seasonal lows. CrashPads will only set-up
when occupancy rates are near peaks.

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STARTUP COSTS
Land costs, unit costs, and truck costs are expected to be lower, significantly decreasing
fixed costs.
AD REVENUE ESTIMATES
CrashPads will sell advertising on the side of its units and offer discount pricing to
advertisers making longer commitments. The cost per thousand impressions, known in the
advertising industry as CPM, is typically very low in outdoor advertising especially in semitruck advertising. Between the vehicle traffic where the CrashPads vehicles travel and
where the units are parked, potential advertisers are looking at a CPM between $4 and $10.
Our benefit to advertisers is that we can get them visibility near the events where a specific
demographic is already gathered. The Denver media market (which Summit County is a part
of) is the 18th largest in the United States, but most of our events are in lower traffic areas
within the county. CrashPads is delivering advertisements to very targeted crowds of
people, whereas a traditional truck advertisement in a city is hitting the entire market with
random variations of market segments. In essence, CrashPads can connect advertisers with
the right set of eyeballs albeit a smaller total.
CrashPads initially assumes that the difference here is negligible, although optimistically,
CrashPads believes that it can offer much more targeted advertising to vendors that sponsor
events or activities that CrashPads is servicing. Furthermore, CrashPads believes it will have
seasonal advertising contracts during winter and summer with multiple monthly contracts
for fairs, festivals, and events. CrashPads estimated $1,000 per month per truck, which is
conservative given that many of the contract rates should fall closer to the $3,000 range.
Given this, CrashPads believes a $2,000 per month rate is a realistic price.
AVAILABLE UNITS
This analysis includes six standard set-ups (e.g. two expandable units and a bathroom unit).
As the concept proves successful, additional units will accelerate the breakeven point.
CrashPads does not expect to breakeven in the first year, or even in the first two years. As
the market initially becomes aware of this new option for lodging, CrashPads expects to
book more than just the weekend nights with events such as the Colorado State Fair and the
USA Pro Cycling Challenge. CrashPads will purchase additional standard set-ups to meet
increasing demand before the first set-ups have completely covered start-up costs.
Relationship management with existing hotel and resort owners as well as event organizers
will overcome the challenges to reach breakeven as quickly as possible.
If further discussion with these leaders highlights additional interest, a larger initial purchase
of units will lower the breakeven point. Additional markets such as construction companies
or other work groups in austere locations may prove to be more lucrative than initially
thought. CrashPads may also discover that the intended market is not as price sensitive as
feared and raise prices.
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Profit Durability
CrashPads expects a solid profit stream from this venture. Once it has overcome the American
aversion to hostel-like sleep arrangements, the market potential will grow appreciably. The
current economic situation favors cheaper accommodations that allow the active traveler the
opportunity to venture out without crushing budgets. The familiarity and business relationships
formed will add a layer of protection, as will superior customer service and loyalty programs.
Additionally, many potential competitors will wait to see how the market responds before
entering. This will give CrashPads a substantial market lead-time to build brand awareness and
create Crasher loyalty.

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V.

Marketing Plan

Overall Marketing Strategy

CrashPads will create a new category of lodging known as mobile overnight accommodations. It
will position itself as a convenient, affordable place to sleep close to the action. CrashPads will
communicate a Why pay more? theme to attract people who currently stay in a competing
hotel or motel, as well as a Pay a little theme to those who hop in their car to sleep or daytrip
and drive home.
CrashPads is a unique service currently unavailable in our selected first market of Summit
County, Colorado. In fact, capsule accommodations are just entering the U.S. market and at this
point are permanent structures not a mobile product. Accordingly, the marketing strategy
focuses on the mobility CrashPads can be brought in to a high-demand location for as little as
one night or for weeks at a time, but can then move to the next needed spot. Due to seasonal
variability across different geographies and destinations, the marketing strategy needs to
respond with a multi-tiered approach.
CrashPads plans to launch in August in time to meet the demands of the Colorado State Fair in
Pueblo and the USA Pro Cycling Challenge. The next focus will be the Summit County ski season
where CrashPads will find space to place the units and charge users for staying at a nightly price
based on market conditions. CrashPads is also open to landing a contract with one or more of
the main destination resorts to use the units as overflow for their lodging.
Following the winter ski season, the CrashPads will focus on locations throughout the greater
Colorado area where there is temporary overnight demand such as the Colorado State Fair,
music festivals and rodeos. Again, CrashPads will seek to rent space for the units with direct
contracts to event planners as the secondary focus.
Once established, CrashPads will look to expand to other regions in the United States using a
hub-and-spoke approach based on identified needs. Potential segments to explore include
industrial clients to provide employee housing as well as any heavy tourist or festival market
across the country.
Marketing communications will play off the Need a place to crash theme with both creative
and tactical focus on the primary demographic audience. A heavy emphasis will be placed on
public relations and social media tactics early with a push toward more traditional online sales
conversions closer to opening and beyond.
CrashPads will have a direct to consumer strategy that is focused on online sales, as well as a
business-to-business strategy focused on sales relationships with hotel and event planners.

Pricing
CrashPads aims to provide low cost lodging. The price will be substantially lower than those
available through hotels and condominiums will for a single person, or even for parties of two or
24 | P a g e

three. CrashPads is also trying to set the price attractive enough to expand the market to
include those who may have, in the past, chosen to sleep in their cars or to make a long drive
home at the end of the day.
By keeping the units mobile, CrashPads avoids the high cost of land ownership in prime
locations. Therefore, the low price still provides profits to the owner and investors while
providing superior value to Crashers.
A hotel room on a peak weekend in Summit County snow season will easily run upwards of $100
per night if it is even remotely close to the slopes. Such a room might provide a private
bathroom, a mini fridge, a closet, a TV, and room service. CrashPads offer just the basics: a bed
and a shower. By keeping the facilities clean, comfortable, and secure and the staff friendly and
courteous, CrashPads provides everything the avid skier needs without demanding extra money
for undesired or unneeded amenities.
CrashPads will strive to price in accordance with demand. Discounts will be provided for those
who purchase in bulk, whether it is a single Crasher buying a block of 10 nights or an event
organizer paying to house staff for the duration of a week-long event.

The Selling Cycle

Aware

Know

Like

Prefer

Purchase

In launching a new brand, CrashPads will need to create a connection between potential
customers and the product by taking them through the stages identified above. The first step
will be creating the marketing materials and sales tools needed. This will require content
including photos, videos, and text to use in promotional flyers, trade show displays, the website,
social media, and advertising concepts.
Initial awareness will come from an aggressive mobile advertising campaign utilizing the side of
the trucks (which later become revenue streams from other advertisers) and a comprehensive
media relations strategy focused on Colorado television, radio, and newspaper editors as well as
some key trade publications. This effort will coincide with a strategic public relations campaign
targeted at festivals and events where large numbers of potential customers typically attend.
This will include a full-sized replica of one of the CrashPads trucks so people can see and touch
the product, which will push on the know/like/prefer portion of the cycle. In addition to the buzz
this will create, the sales consultants who staff these events will have two main goals: book
rooms for the following season and develop an e-mail database. CrashPads will also provide
incentive pricing to anyone who purchases a 10-night stay voucher on location.

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Sales Tactics
More than 57 percent of all lodging reservations are made online (statisticbrain, 2013) (and
likely higher in the CrashPads demographic), so CrashPads will need to partner with an
experienced hotel industry software developer to build the reservation system, website, and
online booking engine with an ongoing digital marketing platform to serve as the primary sales
tool. This subscription-based service will include content, development, photography and video,
ongoing maintenance, and fully integrated digital, social, and mobile platforms. CrashPads will
also utilize this contractor to provide around-the-clock telephone support for booking issues.
Some of the key components of this strategy include:

Hotel website design CrashPads will use responsive design to allow for easy viewing in
desktop, mobile, and tablet formats
Online travel agency build and management to make the rooms visible and
competitive through OTAs including Expedia, Travelocity, and Priceline
Search engine optimization this is more complicated than it used to be so CrashPads
needs to have engaging content, acceptable download speeds, and relevant local links
to have CrashPads appear on the first two pages of Google, Yahoo, and Bing search
results
Search engine marketing with a solid SEO strategy in place, CrashPads can have a
greater return on the dollars devoted to SEM
Social media marketing primary customers will want to find CrashPads on social, local,
and mobile applications such as FourSquare, Facebook Nearby, and Google+
Online reputation management CrashPads needs to respond to negative online
customer reviews
Customer relationship management its the perfect time to develop an electronic CRM
that can be used to communicate directly to Crashers

After the initial blitz, the sales force will be charged with identifying locations where CrashPads
could expect sufficient demand to book at least 80 percent of delivered rooms. See Appendix E,
Exhibit #1.
Once the sales force has identified and booked a location, the details will become available on
the website and the room nights released for promotion and booking. CrashPads will also allow
customers to suggest locations where a CrashPads unit is needed and start a waiting list while
the location is secured. In addition to this primary role, the sales team will also be responsible
for selling the advertising space on the side of the trailers and establishing partnerships with key
destinations.

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Advertising and Sales Promotions

TACTIC
Develop marketing materials

COST
$10,000 for design and printing

TIMELINE
July 2014

MEASUREMENTS
*Deadline met

Website launch

$1,000 development
$600 monthly

July 2014

*Deadline met
*Web analytics

Truck panel marketing

$1,000 per truck development for

brackets and initial ads

July 2014

*Deadline met
*CPM estimates

Sales and info kiosk

$5,000 creation plus $15,000 in

event costs for highly visible events
throughout state

Summer
2014

*Event sales
*Mailing list
signups

Digital marketing

$2,500 per month

Summer
2014

*Conversion
analysis
*Organic and
local rankings
*Pay-per-click
reporting

Media relations

$500 in content development

Ongoing

*Successful
placements in
traditional and
industry
publications
*Ad value
comparison

27 | P a g e

VI.

Design and Development

Berg Expandable Shelter Systems

Berg Company, based out of Spokane, Washington, currently manufactures Expandable Shelter
Systems (ESS) with frames built from 20 ISO shipping containers. They build these shelters for
military, medical, law enforcement, and various other purposes. The shelters have hard floors,
walls, and ceilings that fold from within a standard sized 20 ISO container to triple the capacity
of a regular container. The hard floors and wall are completely self-supporting and do not
require external supports. These shelters also come in various forms and functions. The Hardsided ESS can be tailored to meet the various needs of the customer to include power
generation, climate control, hot water, showers, sinks, and toilets.

The Energy Efficient ESS is essentially a basic version of the Hard-sided ESS, as it does not have
any of the utility capabilities, but its junction box can easily hook-up with an adjacent powerproducing unit.

These ESS units can be manufactured to meet the specific needs for CrashPads. CrashPads
intends to place one Hard-sided ESS, equipped with two full bathrooms, adjacent to one Energy
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Efficient ESS on one 40 cargo truck chassis. This chassis, of course, will be transported to nearly
any site of CrashPads choice by a semi-truck. The resulting mobile lodging unit will contain up to
30 bunks, two full bathrooms, a generator, climate control, a water heater, a water tank, a grey
water tank, a black water tank, and lockers, as depicted below.

Private Bunk Beds

As previously identified, CrashPads greatest challenge will be to provide the customer with
enough comfort and privacy to overcome an aversion against hostel-like accommodations and
associated dormitory conditions. To overcome this challenge, CrashPads will invest in folding
bunk beds that will feature full thickness twin mattresses, three sides of privacy walls, raised
protective barriers for security, a privacy curtain, and built-in lamps with electrical sockets for
the charging of electrical devices. While this specific bunk bed is not currently commercially
available, CrashPads will contract the services of Roberto Gil to design and to mass-produce the
180 bunk beds needed to support our 12 initial lodging units. CrashPads will utilize the concepts
depicted below in the development of our bunks.

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Mobile Showers and Bathrooms

With only two full bathrooms within a single mobile lodging unit, CrashPads will also augment
CrashPads locations with a 28 mobile bathroom trailer housing eight showers, six toilets, and
four sinks to potentially accommodate up to 60 people from two CrashPads lodging units. This
unit will be transported by an F-350 as depicted below. This truck will also act as a checkin/check-out station for customers.

Costs
Hard-sided ESS:
Energy Efficient ESS:
Berg Engineering Costs:
Bunk bed:
Roberto Gil Bed Design Services:
Mobile Bathroom trailer:
40 chassis:
1-ton truck:
Semi-truck:

$25,000 per unit with order of 12

$15,000 per unit with order of 12
$20,000
$1,000 per unit with large custom order of 180
$5,000
$20,000
$3,000
$50,000
$70,000
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Proprietary Issues
While the CrashPads concept provides temporary lodging in a unique and innovative fashion,
there is nothing groundbreaking or difficult to imitate about CrashPads technology. With the
exception of registering a trademark on the CrashPads name and purchasing the CrashPads.com
domain name, there is little incentive for CrashPads to patent the mobile lodging technology.

31 | P a g e

VII.

Operations Plan

CrashPads allows customers and staff of other activities, such as ski resorts, festivals, and
sporting events, to stay closer to the action in a clean and safe environment at an affordable
price. These mutual customers can enjoy the activities they want more because they have less
travel time from their more-affordable sleeping quarters. Therefore, Crashers have more time
and money to enjoy their primary activity over permanent lodging options.
CrashPads is negotiating with the Colorado State Fair and with locations along the route of the
USA Pro Cycling Challenge for August engagements. CrashPads is also negotiating with several
landowners and municipalities in Summit County to rent parking lot space for the winter season.

Operations Strategy
CrashPads will schedule and deliver standard setups (60 beds) to locations as needed.
Drivers will be trained in house to use the equipment, drive the trucks, and set up the units
safely and efficiently. Hosts/hostesses will be trained to use the equipment, set up the units
safely and efficiently, and clean the units, including gathering the used linens and placing clean
sheets and towels. Both drivers and hosts/hostesses will be trained in customer service,
ensuring that our front stage operations with Crashers are always pleasant.
For operations in Summit County, CrashPads will outsource laundry functions with Belick
Laundry in Breckenridge. These services will be contracted in bulk at a per item rate (for
example, $1 per sheet set, $.50 per towel set, etc.). Maintenance for the trucks, units, and
generators will be contracted with Summit Mobile Service out of Silverthorne. Fuel supply will
be contracted through A-B Petroleum, based out of Denver. Each of these companies is small
and will benefit from a contract with CrashPads. As CrashPads expands into other locations,
similar contracts will be created.
Both sets of employees can be trained by CrashPads to accomplish their necessary tasks;
however, drivers with a commercial drivers license (CDL) will be preferred. Initially, these jobs
will not be full time. Therefore, the positions will most likely be filled by labor desiring extra
work on weekends or full-time college students looking for extra funds.
CrashPads will focus on low cost and friendly service. Crashers should always get a safe, clean,
convenient, and hassle-free place to refresh themselves for another day hard at play.

Operating Model and Cycle (front stage and back stage)

CrashPads schedules units either by customer request or through direct CrashPads negotiation
in a location with anticipated demand. Once units are scheduled, drivers and hosts/hostesses
will be notified and scheduled.
CrashPads will continuously strive to maintain satisfying relationships with customers of every
type including Crashers, parking lot owners, and event organizers.

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Geographic Location
CrashPads will be based out of Eagle County, Colorado, just west of Summit County. Currently,
several plots of acreage are listed that are suitable for CrashPads storage, including 40 acres for
$89,900.
Office space will be rented, initially in the Summit County area. Currently, several listings are
appealing, including one 1,100 square foot space available for a 12-month lease at $19 per
square foot, or $21,109.
An office in Breckenridge will give CrashPads a central location to build rapport with business
partners. Non-unionized labor is available with minimum wage increasing to $8 per hour on
January 1, 2014. CrashPads intends to pay workers at a rate above minimum wage.
Taxes vary greatly with location. Colorado has a state sales tax of 2.9% (Sales Tax). Summit
County requires a 2% sales tax and a Mass Transit District tax of 0.75%. Breckenridge requires a
3.4% accommodation tax on top of a 2.5% sales tax as well as an Accommodation Unit License
($175 for units with 4 or more bedrooms). Therefore, sales in Breckenridge will require
collection of 11.55% for taxes. In the town of Silverthorne (Keystone Resort), the town sales tax
is 2% as is the accommodation tax, so the amount of taxes to be collected is 9.65%. CrashPads

33 | P a g e

will need to work closely with local governments to ensure tax laws are properly followed
(Taxes).

Facilities and Improvements

CrashPads will purchase land for unit storage. This land will require fencing to protect the units
from intruders or vandals.
CrashPads will rent office space in Summit County; the space will require phone lines, fax line,
and Internet connectivity.

Equipment Requirements
CrashPads will require expandable bed units, bathroom units, semi-tractors, one-ton trucks,
trailers, foldable bunk beds, and linens (bedding and towels).

Employee (non-managerial) Requirements

CrashPads will hire and train drivers and hosts/hostesses. Drivers will be required to have a CDL,
which includes physical requirements for a DOT medical certificate. Hosts/hostesses will
welcome and check in Crashers, ensuring that they have a pleasant experience, as well as
assisting drivers with set-up and cleaning units after all Crashers have checked out.

Capacity Levels and Inventory Management

CrashPads will initially have six standard set-ups available for deployment. As demand grows,
additional units will be added. The initial estimated life of the units and trucks is five years. This
will be adjusted as wear is observed on the units. At the end of the useful life, units and trucks
will be sold or scrapped.

Legal Issues Affecting Operations

Colorado does not require licenses or permits for hotel operators, but many of the counties do.
Summit County requires the annual purchase of an Accommodation Permit (Accomodation Unit
Licenses).
CrashPads will purchase liability insurance to deal with any potential accidents or hazards
associated with driving large trucks on snowy, steep roads.
Drivers will be trained to be courteous drivers, to obey all laws, to be risk averse. Drivers will be
dismissed if they break laws or create hazards.

34 | P a g e

VIII. Management Team

The team members have complimentary backgrounds that will fill the gaps of the others
weaknesses. The team of owners has spent two years working together as a team at the
University of Florida while pursuing their MBA degrees. This team has progressed through the
stages of team development to become a high-performing team. The team is comfortable
having intense discussions to reach the best outcome without feelings getting hurt or grudges
being held.
Crash Pads will be run by its owners for the first three to six months before hiring a General
Manager whose first responsibility will be to hire, train, and manage a pool of 20
drivers/attendants.
See Appendix F, Exhibit #1 for organizational chart. The following describes the key roles for
Crash Pads success:
CEO
John Doe will fill the Chief Executive Officer role. He has the overall responsibility and
accountability for leading the product launch and drive towards operational milestones
(e.g. 80% occupancy, 90% advertising space filled) which will ensure a stable foundation
for future growth. By ensuring the successful generation of revenue, the CEO will prove
the concepts work and drive negotiations for future expansions.
His 14 years of product development experience (i.e. building, launching, and
supporting new products) in the Software, Aerospace, and Medical industries will allow
him to be a jack of all trades, which is necessary as a CEO to bring together all the
pieces of the puzzle. John is a big picture visionary who has been called unflappable by
former teams. In his current role, he has led eight on-time software releases using a
cross-functional team of people from Marketing, R&D, and Operations. He has routinely
managed annual project budgets of $3 to $4 million using many internal and external
resources.
CFO
Jane Doe will fill the Chief Financial Officer role. She has the responsibility for funding
the venture through different financing methods. She will build models to predict future
revenues and track the on-going progress key financial indicators.
Janes experience with finances began at the age of 13, assisting with the bookkeeping
for her fathers auto repair business. By the time she graduated high school, she was
primary bookkeeper for the business. Although she completed her undergraduate
degree in Mechanical Engineering and subsequently trained as an Air Force pilot, her
additional duties in the military included managing a $2.1 million annual budget for
three years. She managed a $2.5 million labor budget in addition to a multi-million
35 | P a g e

dollar parts budget as the operations manager for General Electrics locomotive repair
facility. She currently oversees the local execution of a $1.1 billion government contract
for Lockheed Martins Aircrew Training and Rehearsal System.
COO
Roger Doe will fill the Chief Operations Officer role. He has the responsibility of running
the front and backend operations. This person ensures that the day-to-day work goes
off without a hitch. Furthermore, this person oversees product improvements that will
meet its target market demands when CrashPads moves toward geographic expansion.
The COO will work with both B2C (e.g. people staying in the units) and B2B (e.g. event
planners needing units, firms needing advertisements) to understand ways to better
serve the target markets. This includes developing future improvements to the product
and service. Prior to launch, this person will be highly involved with turning the product
concept into reality by working with vendors to source all the hardware necessary.
His knowledge of the surrounding area, and ability to bring in expert advisors based on
family contacts, will be critical in surmounting the regulatory and competitive pressures.
Roger understands the lodging industry and the product/service expectations based on
his family history. Roger has acted as Operational Test Director (Program Manager) on
many high-tech Navy acquisition programs. As both a Naval Aviator and a Naval Officer,
his previous positions as Department Head, Division Officer, and Operations Officer over
ten years have prepared him well to take on this demanding management and
operations position.
CMO
Peter Doe will fill the Chief Marketing Officer role. He has the responsibility of building
the companys business through the successful development and execution of a
strategic marketing plan, including oversight of the website, reservation system, public
relations and advertising. The CMO is also responsible for the business development
strategy of the company, providing recommendations for expansion markets and
growth tactics. In the early stages of the company, the CMO will serve as the primary
sales force.
His 14 years of consumer marketing experience will help CrashPads focus its efforts in
the right advertising space and meet the needs of customers. He has successfully built
demand for products and services in saturated markets by connecting customers with
the information they need to make an informed decision. He works closely with
operations to ensure that the customer experience mirrors what is being sold, leading to
high customer satisfaction and loyalty.

36 | P a g e

As a regional vice president with a large healthcare system, he oversaw a $3 million

annual budget, a team of 10 marketers and handled all government affairs, public
relations and social responsibility efforts in a nine-county region of northeastern
Wisconsin. He also has led business development and growth strategies for health
systems in Florida and Oregon. A former award-winning print journalist, his writing and
communications skills will provide in-house resources for content development, media
relations and special event management.

Management Compensation and Ownership

John, Peter, Jane, and Roger will contribute $75,000 each to obtain 25% ownership each. Each
owner will receive no salary for the first year of operation and support themselves on savings
and other family income. The owners will be eligible for a bonus for reaching operational
milestones.
In year two, each owner employee will receive a salary of $40,000 plus bonus eligibility.

Other Current Investors

Initial ownership of the founders will be diluted by future investors. The expectation is that 20%
of the shares will be set aside in a pool for future employees. Furthermore, the initial round of
financing will bring in a new investor at 35% to 50% equity. This effectively means the founders
will control between 30% and 45% of the company (split evenly amongst the four founders).

Employment and Other Agreements, Stock Options and Bonus Plans

Each owner employee is expected to spend the first 3 years working for CrashPads. If an owner
employee shall leave before the completion of year 3, that owner will forfeit their equity share
of the company and the share will be distributed to the remaining founders.
The profit-sharing model will distribute a certain percentage of the profits to each owner
employee. This will provide the incentive to become profitable as early as possible.
The remaining profits will be reinvested in year 2. In year 3, the first distribution to investors will
be based on the Board of Directors motivations to continue or divest the business.

Board of Directors
CrashPads CEO will lead the Board of Directors. Each owner will have a seat with the remaining
seats distributed proportionally to other equity investors. Any member may call a board
meeting with a two-week notice.
The initial Board of Directors will include:

William Cerny is a long time entrepreneur with 30 years of experience building

businesses from the ground up. Bill has successfully started and sold four food
establishments that are still profitably operating today. Bill is the uncle of CrashPads
CEO. Bill now serves as a Vice President for a major bank. John Doe will appoint Bill to
this board.
37 | P a g e

Fred Fritz Lindner Jr. is a retired successful culvert and equipment business owner
and CEO with extensive financial, project management and international business
negotiation experience. His son-in-law Peter Doe will appoint Fritz to this board.
Tom Doe is an established real estate developer in Colorado. He has dealt with
regulatory and compliance for many years, especially in Summit County where
CrashPads will launch its operation. Toms son Roger will appoint him to this board.
Larry Good owns a highly successful bar in Tallahassee. He has succeeded in the
hospitality industry when conditions were less than hospitable. Jane Doe will appoint
Larry to this board.

Other Shareholders, Rights, and Restrictions

No other rights or restrictions.

Supporting Professional Advisors and Services

Legal: Prepaid Legal will serve as the first avenue of legal consultation. Further council will be
sought based on initial consultation.
Accounting: In-house using QuickBooks. Board of Advisors and Board of Directors are capable of
reviewing financial statements.
Advertising: In-house content and strategy development with creative outsourcing through
independent graphic designers
Website and reservation system: established developers such as Boulder, Colorado-based
Insight Designs or template products such as the Hotel Digital Marketing firm: buuteeq.
Banking: Bank of America

38 | P a g e

IX. Overall Schedule

See Appendix H, Exhibit #1

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X. Critical Risks, Problems, and Assumptions

Key Assumptions
Development and Budget
Regarding the development of expandable containers to the required specifications, CrashPads
assumes Berg Corporation will have the infrastructure and expertise to keep engineering costs
low and deliver the units on schedule. With a large order for 12 standard setups, which is
actually 24 total expandable containers, this is a crucial assumption. In terms of the
development of bunk beds, CrashPads assumes the renowned Roberto Gil can design beds with
the correct features at design and production costs within budget. CrashPads also assumes both
entities will be available to work on the custom orders during the timeframe specified.
CrashPads conservatively assumes $80,000 to cover the costs of one complete CrashPads truck.
This budget allows for a $20,000 cost overrun in the development of the unit, as original
estimates for the entire unit are approximately $60,000.
Finally, CrashPads assumes we can fit all folded bunk beds in stowed expandable containers and
other available trailer space for transportation from site to site.
Finance
CrashPads assumes eventual receipt of an initial $3 million needed to purchase assets and
commence operations.
Revenue Forecasts and Sales
CrashPads assumes rapid acceptance of the CrashPads mobile lodging concept followed by rapid
expansion of market share within the accommodations industry. This assumption is required,
because if CrashPads does not rapidly obtain market share, competition from new entrants may
stifle profit opportunities. After proof of the CrashPads concept, CrashPads assumes attainment
of 80% occupancy on all nights of operation and that customers will pay $45 per night for
CrashPads accommodations.
Operations
With various local laws and codes potentially conflicting with CrashPads operations, CrashPads
assumes the ability to receive licenses and permits to allow overnight stays in city parking lots
and to allow advertisements on trucks, through negotiations with local government and resorts.
CrashPads also assumes the attainment of an affordable piece of real estate within acceptable
driving distances to operating areas, with acceptable access and utilities.
CrashPads also assumes key employees, such as truck drivers, are willing to work irregular part
time shifts to satisfy operating requirements.

40 | P a g e

Major Problems and Risks

Market Acceptance
There is a high risk customers will not feel they can rest comfortably with 29 other people in a
cargo container. This is a high-risk issue because there is a medium probability of occurrence,
but the potential consequences for CrashPads if the market does not accept the product are
catastrophic.
Competition
There is a low risk for either pre-emptive entry into the market by a competitor or price-cutting
by competitors. This risk is low because there is no affordable developable land remaining in
Summit County, and existing establishments have expensive mortgages with higher overheads
restricting the amount they can lower prices.
Manufacturing
There is a low risk that CrashPads will face delays in the delivery of the units needed to
commence operations. CrashPads is confident in the delivery of the minimum number of units
required (even if not the delivery of all 12 setups) to begin minimal marketing efforts, dry runs,
and initial operations in August. Additionally there is a low risk that design and manufacturing
costs will exceed estimates, as CrashPads has padded these cost estimates by 33%.
There is a medium risk that CrashPads will not achieve the requested features in the design of
CrashPads bunk beds. CrashPads is confident the large order of beds, along with the coverage of
design costs, will provide enough incentive to engineer an innovative solution that meets the
needs of customers.
Capital Requirements
CrashPads clearly cannot commence operations or place orders without outside sources of
funding. If CrashPads cannot obtain this funding, then CrashPads simply never gets off the
ground and ceases to exist. While this is a high-risk issue, it does not threaten operations after
they begin, because the beginning of operations implies successfully meeting capital
requirements. Once operations do commence, there is a low risk to the timely delivery of
adequate funding. This is risk is greatly reduced by the staggered manufacturing and delivery of
units from Berg Corporation.

Critical Risks
The most critical risk to CrashPads success is market acceptance. Americans have an aversion to
hostel-like accommodations, but the hostel industry is predicted to grow with increases in both
international and domestic travel. Additionally, CrashPads is mitigating this risk by providing
extreme value to the customer (see Section II, The Company and the Concept), designing
innovative privacy bunk beds (see Section VIII, Design and Development ), implementing a
creative marketing plan with price promotions (see Section V, Marketing Plan), and providing
41 | P a g e

lodging services in the most appealing locations to our target market (see Appendix E,
Marketing).
Another critical risk to CrashPads operations is the approval of local governments and resorts to
allow CrashPads to operate within city and resort parking lots. CrashPads is mitigating this risk
by assigning the COO (and future event planning coordinators) the primary task of managing
these relationships and planning alternative CrashPads locations that still provide value to the
customer.

42 | P a g e

XI. Financial Plan

Highlights of the Financial Statements
CrashPads will seek out financing through either venture capitalists or angel investors. Once a
deal has been reached, the founders of CrashPads will each invest $75,000 of their personal
funds. This will be used in the first month to place an order for the first six standard setups with
a 10% down payment, launch the marketing campaign, and fund design and engineering costs.
Three million dollars from investors will be used, beginning in Month 4, to complete payments
on the initial order, rent office space, purchase trucks, and hire and train drivers. CrashPads will
also use these funds to finance the land purchase and improvement as required.
Subsequent influxes of funds at 18 months and 24 months will be required to expand
operations. At this point, CrashPads will become self-sustaining and generate substantial
returns. Following the expansion plan through Year 10, CrashPads will have a cash balance of
$24.8 million and retained earnings of $46.4 million. Annual Total Income Before Taxes will
remain negative until Year 5.
Comparing to the financial ratios depicted in Section I, CrashPads will make progress towards
the industry ratios depicted. The Industry Value Added/Revenue for 2014 is 50.1 for the
industry and 3603.6 for CrashPads, but moves to 50.6 and 132.1 by 2018. Revenue/Employee
hovers in the mid-80s for the industry and improves from 6.13 to 23.50 over the first five year
for CrashPads. However, differences are expected because our business profile is different from
the majority of existing non-hotel lodging.

Months to Breakeven and to Positive Cash Flow

If only weekends are booked, it will take about 49 months to breakeven. Cash flow, however,
will be positive beginning in Month 8, with negative cash flows only appearing after Month 8
when more units are purchased.

Key Financial Assumptions

1. No inflation. Prices, salaries, expenses and all numbers are not adjusted for inflation. It
is assumed that any inflation will affect all of these the same.
2. All equipment is purchased. This may vary if favorable lease contracts can be
negotiated to decrease costs.
3. All equipment is purchased in full at time of delivery with a ten percent down payment
at time of order. If funding is not available to do this, payment plans will be worked
with the manufacturer of the units and for the semi-tractors and one-ton trucks.
4. Equipment lasts five years with zero salvage value.
5. Linens last one year.

43 | P a g e

6) Equipment costs are estimated higher than detailed in Section VI to allow for possible
financing, shipping costs, and any unexpected expenses. Projections will be adjusted as initial
purchases are completed.

Key Cost Controls

The CFO will be primarily responsible for monitoring the control of various cost elements;
however, she will work closely with the other officers to address any concerns with these costs.
Especially in the first year and in all new venues, the CFO will reconcile actual expenditures
versus projected costs and revenues, and subsequently adjust budgets. Each quarter, the
officers will discuss expansion plans based on updated projections.

Pro Forma Income Statements

See Appendix G, Exhibit #1

Pro Forma Balance Sheets

See Appendix G, Exhibit #2

Pro Forma Cash Flow Analysis

See Appendix G, Exhibit #3

44 | P a g e

XII. Proposed Company Offering

Desired Financing
CrashPads will obtain its required financing in strategically timed stages. During the start-up
stage, the four owners will contribute $75,000 each. CrashPads will use these collective funds
for working capital to start production on the units and for initial marketing expenses.
The next phase will involve obtaining $3 million in equity capital. This funding will be secured by
having each founder appoint an advisory board member. These individuals will bring business
experience and $750,000 to the organization in exchange for 12.5% ownership in CrashPads
resulting in a projected ROI of 30% at 5 years.
As CrashPads continues to grow, it will seek additional financing from:

Its founders or advisory board members

By finding new angel investors
Through a small business loan
Partnering with some of its suppliers to exchange product for shares in CrashPads

As the mobile accommodations segment becomes more accepted in the U.S. and demand
grows, CrashPads anticipates seeking an initial public offering, or being bought out by a large
hotelier such as Choice Hotels International, Inc., to add to its portfolio of properties. CrashPads
estimates this occurring somewhere around Year 5 to Year 7.
If the business fails, assets will be sold off to pay off debt with the owners splitting the
remaining proceeds or splitting the loss (if less than $300,000 original investment).

Offering
Each owner will receive 25 percent ownership for the initial investment and will be eligible for
profit sharing for meeting established goals. The company will set aside 20 percent in a stock
option pool for future employees.
As investors join, the ownership percentage will decrease but the value will increase. Likewise,
the angel investors will receive higher returns as the business grows. See Appendix I, Exhibit #1.
All original owners will have the first right of refusal to buy out any of the other owners looking
to leave the company. If more than one owner is interested, the buyout and shares will be split
equally.

45 | P a g e

XIII. Appendices
APPENDIX A.

Industry

Exhibit #1. Value-Added Chain

Exhibit #2. Standard Financial Ratios for the Other Traveler Accommodations Industry

46 | P a g e

(IBIS World, 2013, p. 26)

47 | P a g e

Exhibit #3. Business Locations for the Other Traveler Accommodations Industry

(IBIS World, 2013, p. 16)

48 | P a g e

APPENDIX B.

Company

Exhibit #1. Estimated Value to Consumer (EVC) Chart

Exhibit #2. Play More Chart.

49 | P a g e

APPENDIX C.

Market Analysis

Exhibit #1. Total Destination Spending

Total Destination Spending

(Summit County only) in $M
% growth

2010

Actual
2011

585.9
N/A

615.2
5.0%

2012

Projected
2013
2014

2015

642.6
4.5%

673.1
4.8%

738.6
4.8%

705.1
4.8%

Exhibit #2. Accommodation Spending

Actual

Projected

2012
Accommodation
spending $M
(Summit County
only)

2013

2014

2015

$165.47

$175.40

$185.92

$197.08

% growth
RevPAR
(Colorado
Resorts overall)
(DestiMetrics,
2013)

6.3%

6.0%

6.0%

6.0%

$ 140

$ 151

$ 163

$ 176

% growth

11.1%

8.0%

8.0%

8.0%

Exhibit #3. Market Segmentation

Segment

Description

Slumberwheels

This group is spending their cash on lift

tickets, food, and beverages but not
willing to shell out a couple hundred
bucks for a hotel room. Theyll sleep in
their car so they save enough money to
afford another trip or at least have
enough gas to get home. They are
willing to share quarters if the price is
right. They dont care if they have to
share a bathroom and shower. They
require space for their recreational
gear.

% of Sales Potential
sales
80
High they wish the
rest of the world
hadnt discovered
what they know:
Summit County has
some of the most
beautiful country in
the world; sick of
driving back and forth
to avoid high lodging
costs; they currently
take day trips to
avoid spending the
50 | P a g e

Action Jacks (and Jills)

Worker bees

Planet Plan-It (B2B)

This group wants to get close and

personal with the reason they have
traveled here. While many could afford
a room elsewhere, the idea of falling
asleep and waking up in the action is
appealing. Being able to stumble from
the barstool to their bed is a good thing
luxurious accommodations not so
much. Some will require private space,
but for most just having a place to rest
their eyes is enough.
They are temporary laborers hired by
big events to serve its customers. Could
also be part-time workers serving the
ski industry. They are willing to work
but cannot have their entire wages go
to housing costs. They are willing to
share as long as it is cheap and safe.
They also are more likely to reserve in
advance since they know their
schedule.
Falling under the B2B realm of
events/festivals/fairs, they make the
call about which vendors to hire and
how much it will cost. They are focused
on net profits and are open to any
ideas that bring in revenue. In addition,
they hold a direct link to our potential
customers through their databases and
on-site marketing options.

Exhibit #4. Competition

CATEGORY
EXAMPLES
Mom-and-Pop motels Luxury Inn, Alpine Slopes

COST
$90+

Economy hotels

Super 8, Days Inn

$100+

Bed-and-breakfasts

Fireside Inn

$90+

RV, Campground

Tiger Run RV Camping,

Dillon Ranger District

Free$65+

1012

8-10

<1

cash to stay
overnight
Medium-high every
minute not spent
commuting back and
forth to the lodge
means more minutes
for skiing; just the
thought of being the
first in line is worth
the slight
inconvenience of
sharing a bathroom
Low-medium in ski
season this is most
likely to be a parttime worker who
bartends Friday and
Saturday nights and
doesnt want to
spend entire jar of
tips on a room
Low while there are
theme weeks at the
resorts, its pretty
unlikely that
CrashPads will be
invited to the parties;
more likely in the
non-ski months

STRENGTHS
Service, loyalty,
cost, ownership,
local knowledge
Marketing, cost,
economies of scale
Service, amenities,
loyalty, ownership
Cost, simplicity

WEAKNESSES
Marketing,
location,
amenities
Location,
amenities, staff
turnover
Capacity,
marketing
Amenities,
service, location

51 | P a g e

Exhibit #5. Overall Potential Market

2013
Capacity (beds)
N/A
Average Usage Rate (per night)
N/A
Number of nights operating (per year)
N/A
Total beds occupied (Trips)
Overall Market (Trips)
Relevant Market (Trips)
Selective Demand (Trips)
CrashPads' % of Overall Market
CrashPads' % of Relevant Market
CrashPads' % of Selective Demand

2014
360
80.0%
80

2015
720
80.0%
120

N/A
7,253,280
1,819,123
176,455

23,040
7,688,477
1,928,270
187,042

69,120
8,149,785
2,043,966
198,265

N/A
N/A
N/A

0.3%
1.2%
12.3%

0.8%
3.4%
34.9%

2016
1440
80.0%
160
184,320
8,638,773
2,166,604
210,161
2.1%
8.5%
87.7%

Selective Demand Revenue $8,649,813 $9,168,802 $9,718,930 $10,302,066

CrashPads' Potential Revenue ($45/night)
N/A
$1,036,800 $3,110,400 $8,294,400
CrashPads' % of Selective Demand Revenue
N/A
11.3%
32.0%
80.5%
Overall Colorado Potential Market (First 3 years) - Trips are equivalent to one bed for one night.

52 | P a g e

APPENDIX D.

CrashPads Economics

Exhibit # 1. Contribution margins 60 bed setup

60
57
54
51
48
45
42
39

$30
22%
16%
10%
4%
-2%
-8%
-15%
-21%

$35
42%
35%
28%
21%
14%
7%
0%
-7%

Price/bed
$40
63%
55%
46%
38%
30%
22%
14%
6%

$45
83%
74%
65%
56%
46%
37%
28%
19%

$50
103%
93%
83%
73%
63%
53%
42%
32%

100%
95%
90%
85%
80%
75%
70%
65%

Exhibit #2. Annual costs

Annual Costs (for 1 standard setup)

FIXED
Cost/Yr.
2x20' expandable units
$32,000.00
Trailer (carries 2 units)
$1,200.00
Semi-truck
$28,000.00
Bathroom units
$4,000.00
One-ton trucks
$10,000.00
Linens
$3,600.00
Insurance (semi tractors)
$13,000.00
Insurance (one ton trucks)
$4,000.00
Office Space
$25,000.00
Land
$20,000.00
Total Fixed $140,800.00
TOTAL COSTS
*Assumed Night Used/Year

%
Total
10.9%
0.4%
9.5%
1.4%
3.4%
1.2%
4.4%
1.4%
8.5%
6.8%
47.9%

VARIABLE*
Cost/Yr.
Driver
$37,440.00
Cleaning/Hosting
$44,928.00
Laundry
$28,080.00
Dumping/Fill Water
$3,120.00
Fuel
Generators
$14,976.00
Movement
$14,976.00
Maintenance
$4,680.00
Supplies/Miscellaneous
$2,080.00
Parking Fees
$3,120.00
Total Variable $153,400.00
$294,200.00
104

53 | P a g e

%
Total
12.7%
15.3%
9.5%
1.1%
5.1%
5.1%
1.6%
0.7%
1.1%
52.1%

Exhibit #3. Start-up costs

Start Up Costs

12
12
12
6
6

12
12
6

Design & Engineering

2x20' Expandable Units
Trailers
Semi-tractors
Bathroom Units
1 ton trucks
Marketing
Training
Land
Linen Sets
Office Space
Insurance - semi
Insurance - 1 ton
Salaries
TOTAL

$25,000.00
$960,000.00
$36,000.00
$840,000.00
$120,000.00
$300,000.00
$50,000.00
$20,000.00
$500,000.00
$21,600.00
$25,000.00
$78,000.00
$24,000.00
$162,000.00
$3,161,600.00

Exhibit #4. Economic model

54 | P a g e

Exhibit #5. Breakeven analysis no ad revenue

CrashPads Breakeven Analysis

$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$50 100 150 200 250 300 350 400 450 500 550 600 650
Fixed Costs

Total Costs

Revenue (beds)

Exhibit #6. Breakeven analysis with ad revenue

CrashPads Breakeven Analysis

(with Ad Revenue)
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$50 100 150 200 250 300 350 400 450 500 550 600 650
Fixed Costs

Total Costs

Total Revenue

55 | P a g e

APPENDIX E.

Marketing

Exhibit #1. Ski season events

Ullr Fest weeklong festival in Breckenridge in early January

Dew Tour 4 day ski/snowboard competition and concert at Breck
Burton Mountain Festival at Copper Mountain
Sprint US Grand Prix at Copper Mountain
Armed Forces Week at Keystone
International Snow Sculpture Championships (actually a big deal)
Spring Break in Breck
Mardi Gras Breckenridge Style
Winterskol - -4-day festival in Aspen in mid-January
Winter Games 4-day sporting event in Aspen in late January
Sheridan Arts Comedy Festival 4-day festival in Telluride in mid-February
Aspen Laff Festival 4-day festival in Aspen in late February
Apres Ski Cocktail Classic 4-day festival in Aspen in mid-March
Bud Light Spring Jam 10-day winter festival in Aspen in late March
Breckenridge Spring Beer Festival weekend festival in Breckenridge in April

Exhibit #2. Spring/Summer festivals and events

4th of July Weekend Fireworks over Lake Dillon, Copper Mountain, and Keystone
USA Pro Cycling Challenge weeklong event with stops in seven Colorado cities
Greeley Blues Jam weekend music festival in Greeley in mid-April
Golden Music Festival weekend music festival in Golden in early June
Country Jam USA 4-day music festival in Grand Junction in late June
NSRA Street Rod Nationals 4-day sporting event in Pueblo in late June
Cowboys Roundup Days weeklong festival and rodeo in Steamboat Springs in early
July
Ride Festival weekend festival in Telluride in early July
Bobstock weekend music festival in Fort Morgan in mid-July
Colorado State Fair 10-day fair in Pueblo in early August
Ride the Rockies June 8-15 bike race from Telluride to Colorado Springs (stopping in a
different town each night)
Oktoberfest weekend in September
Run the Rockies Frisco
Warrior Dash Copper Mountain

56 | P a g e

APPENDIX F.

Management

Exhibit #1. Structure

CEO / Owner
John Doe

CMO / Owner
Peter Doe

CFO / Owner
Jane Doe

COO / Owner
Roger Doe

General Manager
TBD

Pool of 20 hosts

TBD
Driver / Attendant

57 | P a g e

0.0

0.0

(867.4)

2.8
358.0

1.4
358.0

(374.8)

362.8

2.0

2.0

(183.0)

(12.0)

(6.0)

Total Income (Loss) Before Taxes

0.0

0.0
12.0
(12.0)

0.0
6.0
(6.0)

861.4

0.0

May
1

183.0

0.0
0.0

April

Total Expenses

0.0
0.0

March

500.0

108.0
25.0

50.0

0.0
0.0

February

(749.6)

725.6

5.6
716.0

4.0

(24.0)

0.0
24.0
(24.0)

(724.0)

803.6

15.0
13.5
25.0
4.0
21.6
8.5
716.0

194.4
132.8
61.7
18.0
79.7

August
6

(2.5)

41.0

8.5

4.0

15.0
13.5

64.8
44.3
20.6
18.0
38.6

September
6

(2.5)

41.0

8.5

4.0

15.0
13.5

64.8
44.3
20.6
18.0
38.6

October
6

13.9

37.0

8.5

15.0
13.5

103.7
70.8
32.9
18.0
50.9

42.7

37.0

8.5

15.0
13.5

194.4
132.8
61.7
18.0
79.7

November December
6
6

APPENDIX G.

Expenses
Salaries
Rent - Office
Marketing
Training
Linens
Insurance
Equipment (units & trucks)
Design & Engineering
Land

Total Standard Setups

Revenue
Bed Sales
COGS (Variable Costs)
Net Bed Sales:
Ad Revenue:
Gross Profit:

CrashPads, LLC
2014
(all numbers $000)
June
July
2
4

Exhibit #1. Income Statements

Financials

58 | P a g e

59 | P a g e

3.1

Total Expenses
(2.8)

0.1
0.1
0.1
0.0
0.0
0.1
2.3
0.0
0.5

Expenses
Salaries
Rent - Office
Marketing
Training
Linens
Insurance
Equipment (units & trucks)
Design & Engineering
Land

Total Income (Loss) Before Taxes

0.6
0.5
0.2
0.1
0.2

2014
6

Total Standard Setups

Revenue
Bed Sales
COGS (Variable Costs)
Net Bed Sales:
Ad Revenue:
Gross Profit:

16.7

63.0

15.0
13.5
25.0
1.0
0.0
8.5
0.0

194.4
132.8
61.7
18.0
79.7

January
6

(78.7)

146.0

15.0
13.5
0.0
1.0
0.0
8.5
108.0

155.5
106.2
49.3
18.0
67.3

February
6

29.3

38.0

15.0
13.5
0.0
1.0
0.0
8.5
0.0

155.5
106.2
49.3
18.0
67.3

March
6

29.3

38.0

15.0
13.5
0.0
1.0
0.0
8.5
0.0

155.5
106.2
49.3
18.0
67.3

April
6

0.5

38.0

15.0
13.5
0.0
1.0
0.0
8.5
0.0

64.8
44.3
20.6
18.0
38.6

May
6

(3.6)

38.0

15.0
13.5
0.0
1.0
0.0
8.5
0.0

51.8
35.4
16.4
18.0
34.4

(3.6)

38.0

15.0
13.5
0.0
1.0
0.0
8.5
0.0

51.8
35.4
16.4
18.0
34.4

CrashPads, LLC
2015
(all numbers $000)
June
July
6
6

(2078.4)

2237.7

15.0
13.5
0.0
1.0
43.2
17.0
2148.0

388.8
265.5
123.3
36.0
159.3

August
12

47.0

46.5

15.0
13.5
0.0
1.0
0.0
17.0
0.0

181.4
123.9
57.5
36.0
93.5

September
12

47.0

46.5

15.0
13.5
0.0
1.0
0.0
17.0
0.0

181.4
123.9
57.5
36.0
93.5

October
12

72.7

45.5

15.0
13.5
0.0
0.0
0.0
17.0
0.0

259.2
177.0
82.2
36.0
118.2

138.5

45.5

15.0
13.5
0.0
0.0
0.0
17.0
0.0

466.6
318.6
148.0
36.0
184.0

November December
12
12

60 | P a g e

Total Income (Loss) Before Taxes

Total Expenses

Expenses
Salaries
Rent - Office
Marketing
Training
Linens
Insurance
Equipment (units & trucks)
Design & Engineering
Land

Total Standard Setups

Revenue
Bed Sales
COGS (Variable Costs)
Net Bed Sales:
Ad Revenue:
Gross Profit:

5246.4

180.0
25.0
25.0
10.0
86.4
408.0
4512.0

7776.0
5310.0
2466.0
72.0
2538.0

2016

(2708.4)

24

2017

(946.8)

5493.6

180.0
25.0
25.0
10.0
129.6
612.0
4512.0

13996.8
9558.0
4438.8
108.0
4546.8

36

1308.0

5740.8

180.0
25.0
25.0
10.0
172.8
816.0
4512.0

21772.8
14868.0
6904.8
144.0
7048.8

3175.2

5864.4

180.0
25.0
25.0
10.0
194.4
918.0
4512.0

27993.6
19116.0
8877.6
162.0
9039.6

CrashPads, LLC
2016-2023
(all numbers in $000)
2018
2019
48
54
2020

4467.0

5988.0

180.0
25.0
25.0
10.0
216.0
1020.0
4512.0

32400.0
22125.0
10275.0
180.0
10455.0

60

2021

3585.0

8367.6

180.0
25.0
25.0
10.0
237.6
1122.0
6768.0

37065.6
25311.0
11754.6
198.0
11952.6

66

2022

5041.2

8491.2

180.0
25.0
25.0
10.0
259.2
1224.0
6768.0

41990.4
28674.0
13316.4
216.0
13532.4

72

2023

6579.6

8614.8

180.0
25.0
25.0
10.0
280.8
1326.0
6768.0

47174.4
32214.0
14960.4
234.0
15194.4

78

$3,296

TOTAL LIABILITIES & EQUITY

$5,924

$624
$924

($4)
$296

$5,000
$5,000

$300

$3,000
$3,000

LIABILITIES
Current Liabilities
Long-term Liabilities
Total Liabilities

$5,924

$300

$3,296

TOTAL ASSETS

$500
$4,512

$912

2015

SHAREHOLDERS' EQUITY
Owner's Equity
Capital Stock
Retained Earnings
Total Shareholders' Equity

$500
$2,256

$540

2014

Long Term Assets

Land
Plant & Equipment (net of depreciation)

ASSETS
Current Assets
Cash

$10,746

$2,446
$2,746

$300

$8,000
$8,000

$10,746

$500
$9,024

$1,222

2016

$14,371

$6,071
$6,371

$300

$8,000
$8,000

$14,371

$500
$13,536

$335

$20,251

$11,951
$12,251

$300

$8,000
$8,000

$20,251

$500
$18,048

$1,703

CrashPads, LLC
2014-2023
(all numbers in $000)
2017
2018

$25,742

$17,442
$17,742

$300

$8,000
$8,000

$25,742

$500
$20,304

$4,938

2019

$32,525

$24,225
$24,525

$300

$8,000
$8,000

$32,525

$500
$22,560

$9,465

2020

$38,426

$30,126
$30,426

$300

$8,000
$8,000

$38,426

$500
$24,816

$13,110

2021

$45,783

$37,483
$37,783

$300

$8,000
$8,000

$45,783

$500
$27,072

$18,211

2022

$54,679

$46,379
$46,679

$300

$8,000
$8,000

$54,679

$500
$29,328

$24,851

2023

Exhibit #2. Balance Sheet

61 | P a g e

$25,000

$183,000
$0
$0
$867,400 $374,800 $749,600
$117,000
$0
$0
$2,132,600 ($374,800) ($749,600)
$0 $117,000 $117,000 $117,000 $2,249,600 $1,874,800
$117,000 $117,000 $117,000 $2,249,600 $1,874,800 $1,125,200

Total Payments
Cashflow Surplus/Deficit
Opening Cash Balance
Closing Cash Balance

$288,000
$12,000
$280,000
$36,000
$100,000

$5,600

$4,000

$24,000

$0

Design & Engineering

Land

$12,000

$500,000

$144,000
$6,000
$140,000
$18,000
$50,000

2x20' Expandable Units

Trailers
Semi-tractors
Bathroom Units
1 ton trucks

$144,000
$6,000
$140,000
$18,000
$50,000

$2,800

$1,400
$96,000

$2,000

$12,000

$2,000

$50,000

$6,000

$0

Expenses
COGS (Variable Costs)
Salaries (Mgmt)
Rent - Office
Marketing
Training
Linens
Insurance

$0

May

$3,000,000

$300,000

$0

April

Bed Sales:
Net Bed Sales:
Ad Revenue:
Total Receipts:

March
$3,000,000
1

February
$300,000

Founder's Investment
Loan Received
Total Standard Setups

$908,850
($696,450)
$1,125,200
$428,750

$288,000
$12,000
$280,000
$36,000
$100,000

$4,000
$21,600
$8,500

$132,750
$13,500
$12,500

$194,400
$61,650
$18,000
$212,400

$8,500

$4,000

$44,250
$13,500

$8,500

$70,800
$13,500

$8,500

$132,750
$13,500

$64,800 $103,680 $194,400

$20,550 $32,880 $61,650
$18,000 $18,000 $18,000
$82,800 $121,680 $212,400

$70,250 $70,250 $92,800 $154,750

$12,550 $12,550 $28,880 $57,650
$428,750 $441,300 $453,850 $482,730
$441,300 $453,850 $482,730 $540,380

$8,500

$4,000

$44,250
$13,500

$64,800
$20,550
$18,000
$82,800

CrashPads, LLC
2014
June
July
August September October November December

Exhibit #3. Statements of Cash Flows

62 | P a g e

63 | P a g e

Total Payments
Cashflow Surplus/Deficit
Opening Cash Balance
Closing Cash Balance

Design & Engineering

Land

2x20' Expandable Units

Trailers
Semi-tractors
Bathroom Units
1 ton trucks

Expenses
COGS (Variable Costs)
Salaries (Mgmt)
Rent - Office
Marketing
Training
Linens
Insurance

Bed Sales:
Net Bed Sales:
Ad Revenue:
Total Receipts:

Founder's Investment
Loan Received
Total Standard Setups

$205,750
$6,650
$540,380
$547,030

$8,500

$8,500

$237,200
($63,680)
$547,030
$483,350

$12,000

$96,000

$1,000

$1,000

$129,200
$44,320
$483,350
$527,670

$8,500

$106,200
$13,500

$155,520
$49,320
$18,000
$173,520

March

$106,200
$13,500

$155,520
$49,320
$18,000
$173,520

February

$132,750
$13,500
$25,000
$25,000
$1,000

$194,400
$61,650
$18,000
$212,400

January

$129,200
$44,320
$527,670
$571,990

$8,500

$1,000

$106,200
$13,500

$155,520
$49,320
$18,000
$173,520

April

$67,250
$15,550
$571,990
$587,540

$8,500

$1,000

$44,250
$13,500

$64,800
$20,550
$18,000
$82,800

May

$58,400
$11,440
$587,540
$598,980

$8,500

$1,000

$35,400
$13,500

$51,840
$16,440
$18,000
$69,840

$58,400
$11,440
$598,980
$610,420

$8,500

$1,000

$35,400
$13,500

$51,840
$16,440
$18,000
$69,840

CrashPads, LLC
2015
June
July

$2,488,200
($63,400)
$610,420
$547,020

$864,000
$36,000
$840,000
$108,000
$300,000

$1,000
$43,200
$17,000

$265,500
$13,500

$388,800
$123,300
$36,000
$2,424,800

$2,000,000
12

August

$155,400
$62,040
$547,020
$609,060

$17,000

$1,000

$123,900
$13,500

$181,440
$57,540
$36,000
$217,440

12

$155,400
$62,040
$609,060
$671,100

$17,000

$1,000

$123,900
$13,500

$181,440
$57,540
$36,000
$217,440

12

September October

$207,500
$87,700
$671,100
$758,800

$17,000

$177,000
$13,500

$259,200
$82,200
$36,000
$295,200

12

$349,100
$153,460
$758,800
$912,260

$17,000

$318,600
$13,500

$466,560
$147,960
$36,000
$502,560

12

November December

64 | P a g e

$1,920,000
$72,000
$1,680,000
$240,000
$600,000

2x20' Expandable Units

Trailers
Semi-tractors
Bathroom Units
1 ton trucks

Total Payments
Cashflow Surplus/Deficit
Opening Cash Balance
Closing Cash Balance
$10,538,400
$309,600
$912,260
$1,221,860

$5,310,000
$162,000
$25,000
$25,000
$10,000
$86,400
$408,000

Expenses
COGS (Variable Costs)
Salaries (Mgmt)
Rent - Office
Marketing
Training
Linens
Insurance

Design & Engineering

Land

$7,776,000
$2,466,000
$72,000
$10,848,000

$3,000,000
24

2016

Bed Sales:
Net Bed Sales:
Ad Revenue:
Total Receipts:

Founder's Investment
Loan Received
Total Standard Setups

$14,991,600
($886,800)
$1,221,860
$335,060

$20,548,800
$1,368,000
$335,060
$1,703,060

$1,920,000
$72,000
$1,680,000
$240,000
$600,000

$172,800
$816,000

$129,600
$612,000
$1,920,000
$72,000
$1,680,000
$240,000
$600,000

$14,868,000
$180,000

$21,772,800
$6,904,800
$144,000
$21,916,800

48

2018

$9,558,000
$180,000

$13,996,800
$4,438,800
$108,000
$14,104,800

36

2017

$24,920,400
$3,235,200
$1,703,060
$4,938,260

$1,920,000
$72,000
$1,680,000
$240,000
$600,000

$194,400
$918,000

$19,116,000
$180,000

$27,993,600
$8,877,600
$162,000
$28,155,600

54

$28,053,000
$4,527,000
$4,938,260
$9,465,260

$1,920,000
$72,000
$1,680,000
$240,000
$600,000

$216,000
$1,020,000

$22,125,000
$180,000

$32,400,000
$10,275,000
$180,000
$32,580,000

60

CrashPads, Inc.
2016-2023
2019
2020

$33,618,600
$3,645,000
$9,465,260
$13,110,260

$2,880,000
$108,000
$2,520,000
$360,000
$900,000

$237,600
$1,122,000

$25,311,000
$180,000

$37,065,600
$11,754,600
$198,000
$37,263,600

66

2021

$37,105,200
$5,101,200
$13,110,260
$18,211,460

$2,880,000
$108,000
$2,520,000
$360,000
$900,000

$259,200
$1,224,000

$28,674,000
$180,000

$41,990,400
$13,316,400
$216,000
$42,206,400

72

2022

$40,768,800
$6,639,600
$18,211,460
$24,851,060

$2,880,000
$108,000
$2,520,000
$360,000
$900,000

$280,800
$1,326,000

$32,214,000
$180,000

$47,174,400
$14,960,400
$234,000
$47,408,400

78

2023

Appendix H.

Overall Schedule

Exhibit #1. Timeline

Event

Start Date

End Date

Responsible

Form LLC

1/6/2014

1/6/2014

CEO

Contacting prospective investors

1/6/2014

5/2/2014

CEO/CFO

Collect initial owner/employee investment

1/6/2014

1/31/2014

CFO

Move into office space

1/13/2014

1/13/2014

CEO/CFO/COO/CMO

Order for units and trucks (with deposit)

2/1/2014

2/1/2014

COO

Present business case to investors

2/3/2014

5/2/2014

CEO/CFO

Owner/employee quit current jobs

4/1/2014

4/1/2014

CEO/CFO/COO/CMO

Plan marketing campaign

4/1/2014

5/2/2014

CMO

Receive 1st round financing

5/5/2014

5/13/2014

CFO

Purchase property in Summit County

5/5/2014

5/19/2014

COO

Receive/set up 2 units

5/19/2014

5/26/2014

COO

Hire General Manager

6/1/2014

6/30/2014

COO

Develop marketing materials

6/1/2014

6/30/2014

CMO

Receive/set up 2 units

6/19/2014

6/26/2014

COO

Hire and train drivers/attendants

7/1/2014

10/31/2014

COO

Kickoff marketing campaign/website

7/1/2014

7/1/2014

CMO

Sales & info kiosk at events

7/1/2014

9/30/2014

CMO

Digital Marketing

7/1/2014

10/31/2014

CMO

Media Relations

7/1/2014

12/31/2014

CEO/CMO

Receive 6 units

7/19/2014

7/26/2014

COO

Prep and demo the units

8/1/2014

8/31/2014

COO

Book winter events, locations, and beds

8/1/2014

8/1/2014

COO/CMO

Dry-runs - USA Pro Challenge Bike Race

8/18/2014

8/24/2014

ALL

Official Launch

11/26/2014

11/26/2014

CEO/CFO/COO/CMO

Ski area operations

11/26/2014

4/30/2014

General Manager

Evaluate new potential markets

12/1/2014

2/1/2015

CEO/CMO

Evaluate expansion ideas (e.g. franchising)

12/1/2014

2/1/2015

CEO/CMO

Book summer events, locations, and beds

1/1/2015

3/1/2015

COO/CMO

Market segment study

1/15/2015

2/28/2015

CMO

Begin search for 2nd round of financing

2/1/2015

5/30/2015

CEO/CFO

Put a deposit onto new units

2/1/2015

2/1/2015

COO

Iterate on expandable unit product design

3/1/2015

5/31/2015

COO

Begin summer operations

5/1/2015

9/30/2015

COO/General Manager

Receive 2nd round financing

6/1/2015

6/15/2015

CFO

Purchase new & updated units

6/15/2015

6/15/2015

COO

Begin winter operations

10/1/2015

4/30/2016

COO/General Manager

Evaluate new markets and expansion ideas

11/1/2015

2/1/2016

CEO/CMO/CFO

Iterate/improve revenue drivers

1/1/2016

5/31/2016

CMO/COO

Begin search for 3rd round of financing

2/1/2016

5/30/2016

CEO/CFO

Begin summer operations

5/1/2016

9/30/2016

COO/General Manager

Begin winter operations

10/1/2016

4/30/2017

COO/General Manager

65 | P a g e

Appendix I. Proposed Company Offering

Exhibit #1. Pre-Money/Post-Money valuation

Exhibit #2. DCF valuation

Exhibit #3. Risk assumptions

Tax
Rate
30%

Assumed
Discount
Prob. Of
Rate
Failure
30.0%
40%

Growth
3.0%

Exhibit #4. Discount rate

Discount Rate
Risk Free =
Risk Premium =
Beta =
Discount Rate:

1.50%
1.54
10.7%

6%
2.28
15.2%

2.5
16.5%

1.54
13.8%

8%
2.28
19.7%

2.5
21.5%

66 | P a g e

References
Accomodation Unit Licenses. (n.d.). Retrieved January 2, 2014, from Town of Breckenridge:
http://www.townofbreckenridge.com/index.aspx?page=479
Dean Runyan Associates. (2013). Colorado Travel Impacts 1996-2012. Denver, CO: Colorado
Tourism Office.
DestiMetrics. (2013, May). Destination Lodging Reservations Activity. Retrieved November 27,
2013, from Town of Breckenridge:
http://www.townofbreckenridge.com/Modules/ShowDocument.aspx?documentid=369
5
IBIS World. (2013). Bed & Breakfast & Hostel Accommodations in the US. IBISWorld Inc.
International, L. (2012). Colorado Travel Year 2012. Longwoods International.
Sales Tax. (n.d.). Retrieved January 2, 2014, from Silverthorne, CO:
http://www.silverthorne.org/index.aspx?page=114
statisticbrain. (2013, June 18). Internet Travel Hotel Booking Statistics. Retrieved December 6,
2013, from statisticbrain.com: http://www.statisticbrain.com/internet-travel-hotelbooking-statistics/
Taxes. (n.d.). Retrieved January 2, 2014, from Town of Breckenridge:
http://www.townofbreckenridge.com/index.aspx?page=146

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