1

Capsule Co.
Business Plan

Prepared for
Professor Alicia Forbrich
School of Global Innovation and Leadership
College of Business
San Jose State University

Prepared by
Jona Sandico, Sean Carbrey, Yusaku Takizawa, Masashi Sugai
San Jose State University

May 3, 2017
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Table of Contents
1. Executive Summary .................................................................................................................................. 4
1.1 Overview ............................................................................................................................................. 4
1.2 Mission Statement ............................................................................................................................... 4
1.3 Goals and Objectives .......................................................................................................................... 4
1.4 Keys to Success................................................................................................................................... 5
2. Service Description ................................................................................................................................... 6
2.1 Overview ............................................................................................................................................. 6
2.2 Service Description ............................................................................................................................. 6
2.3 Competitive Comparison .................................................................................................................... 6
2.4 Location .............................................................................................................................................. 7
2.5 Technology ......................................................................................................................................... 7
2.6 Future Products ................................................................................................................................... 7
3. Market Summary ...................................................................................................................................... 8
3.1 Overview ............................................................................................................................................. 8
3.2 Market Segmentation .......................................................................................................................... 8
3.3 Target Market Segment Strategy ........................................................................................................ 9
3.4 Industry Analysis ................................................................................................................................ 9
3.5 Competition....................................................................................................................................... 10
4. Strategy & Implementation Summary .................................................................................................... 13
4.1 Overview ........................................................................................................................................... 13
4.2 Competitive Analysis ........................................................................................................................ 13
4.3 Market Strategy & Programs ............................................................................................................ 14
4.4 Marketing Budget ............................................................................................................................. 16
4.5 Sales Strategy .................................................................................................................................... 17
4.6 Sales Forecast.................................................................................................................................... 19
5. Management Summary ........................................................................................................................... 22
5.1 Overview ........................................................................................................................................... 22
5.2 Organizational Structure ................................................................................................................... 22
5.3 Management Team............................................................................................................................ 22
5.4 Management Team Gaps .................................................................................................................. 23
5.5 Other Personnel ................................................................................................................................. 23
5.6 Personnel Growth Plan ..................................................................................................................... 24
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6. Financial Plan.......................................................................................................................................... 25
6.1 Financial Assumptions ...................................................................................................................... 25
6.2 Start-up Expenditures........................................................................................................................ 25
6.3 Projected Cash Flows ........................................................................................................................ 27
6.4 Projected Income Statement.............................................................................................................. 28
6.5 Projected Balance Sheet .................................................................................................................... 29
7. Appendix ................................................................................................................................................. 31
7.1 Capsule Concept Photos ................................................................................................................... 31
7.2 Jona Sandico Resume (CEO) ............................................................................................................ 32
7.3 Masashi Sugai Resume (CMO)......................................................................................................... 33
7.4 Yusaku Takizawa Resume (CFO)..................................................................................................... 34
7.5 Sean Carbrey Resume (COO) ........................................................................................................... 35
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1. Executive Summary
1.1 Overview
Capsule Co. is a hotel alternative operating in the San Francisco International Airport for the
convenience of travelers who are waiting in the airport for an extended period of time. We aim to
give travelers a safe place to rest and store their belongings, rather than resting on airport seats
with their personal belongings unprotected. Our hotel is designed after Japanese capsule hotels,
which feature small, yet comfortable rooms with all the basic accommodations that are normally
found in traditional hotel rooms. This model is ideal for short stays, which will account for most
of our business. We will also be providing our customers a safe place to leave their personal
belongings as they stay with us, giving them peace of mind as they rest. Pictures of our capsules
will be included in the appendix.
We intend to position ourselves as a new business in the hospitality industry. This industry is
already large and growing rapidly. As our industry is closely related to travel, our customer base
will experience seasonality and will increase and decrease based on the amount of layovers,
flight delays, and cancelled flights at SFO. Because of these persistent problems, we believe that
our service will be able to complement the the demands of travelers very well. Our location in
SFO will give us an advantage to fill these needs in a way that no other business can.
Capsule Co. LLC will be founded by: Jona Sandico (CEO), Sean Carbrey (COO), Masashi Sugai
(CMO), and Yusaku Takizawa (CFO). The four founders possess experience in the fields of
operations, customer satisfaction, and management. A board of advisors will be assembled
promptly to fill in for the knowledge gaps in the management team.
We estimate $228,139 in startup expenditures. In order to fund this business, we are seeking
$105,139 in outside investment. Each founder will contribute $30,750 of their personal funds to
the business. We plan to have an income of $190,865 in year 1, $182,649 in year 2, and
$224,304 in year 3.
1.2 Mission Statement
We provide low cost, high quality sleep solutions for tired travelers.
1.3 Goals and Objectives
1. Successfully introduce our hotel concept to market by July of first year.
a. Focus early marketing efforts on millennials, to capitalize on their interest of new
experiences.
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b. Gain positive media attention by having people review our service on social
media and travel publications.
c. Establish advertising campaign by March 2018.
2. Aim for 20% growth rate from year 1 to year 2.
a. Grow occupancy rates 10% per quarter in opening year
b. Create app and website by February 2018, in order for customers to quickly find
our service.
c. Encourage referrals through bonus system on mobile app.
d. Add two capsules per year to adjust for increasing occupancy rates.
3. Establish position and competitive advantage
a. Expand to San Jose International Airport by year 3.
b. Fully automatize check-in and alarm service by quarter 2 of year 2.
c. File for a provisional patent application to protect mobile app design.
1.4 Keys to Success
1. Introducing capsule hotels as a normal and useful part of airport culture
2. To utilize technology, offering online booking, online payment and grateful services for
our customers.
Retaining our customers through a positive first experience and our good reputation.
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2. Service Description
2.1 Overview
Our capsule hotel is a short-term service that provides high-quality, yet compact and simple
sleep accommodations to individual customers. We will be located in the San Francisco
International Airport (SFO), allowing travelers in between flights to have a comfortable and safe
place to rest and store their belongings.
2.2 Service Description
Customers may check in at any time, either by booking via app beforehand, or through an
automated kiosk at the front desk. Customers will provide their flight information at check-in,
which will give them a recommended checkout time and alarm service. Due to being located
after the security checkpoint, customers will be able to get a good rest and leave on time after
using our service. An hourly rate of $10.00 per hour or nightly (3 hours or above) rate of $27.00
will be available to suit customer needs accurately.
Our hotel features twenty small “rooms” (capsules) designed for a short-term stay, and other
basic hotel accommodations in communal areas. Each capsule will contain: a twin size bed with
sheets and pillow, US electrical outlets, a small TV and streaming device, alarm, lights, and a
safe for personal belongings. Restrooms will include shower stalls and clothes lockers for the
guests’ convenience. In the hotel lounge, customers can purchase refreshments and relax around
tables or on couches. A secure Wi-Fi connection will be available for all paying customers.
2.3 Competitive Comparison
Our competitors would be hotels near airports or lounges within terminals. First, compared to
hotels, we are able to offer greater convenience due to our capsules being located within the
airport and behind security checkpoints. Once you exit the airport, you need to check your
luggage and pass through the security checkpoints again in order to board a plane. Second,
compared to the lounges, we offer accommodations at a lower price and do not exclude travelers
based on the airline status. In addition to the above, our hotel would be able to optimize first-
mover advantage in our area because there are currently no accommodations that are accessible
to all people after the security checkpoint. A mobile app for booking our hotel and an automated
check-in system would differentiate us from the other competitors in the marketplace.
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2.4 Location
We will begin by targeting San Francisco International Airport (SFO) for our initial launch. With
an annual amount of 50 million passengers through SFO each year, this is a large market of
weary-eyed travelers. Our services will be located within the security checkpoints to offer quick
rest to travelers who have layovers. After success at SFO, we will be servicing downtown areas
by airports to provide travelers with extended layovers a chance to experience the city with
budget friendly accommodations.
2.5 Technology
Here at Capsule Co. we aim to lessen travel frustrations and provide an added sense of
convenience to our guests by ensuring everything is automated through our mobile app with one
click. Our guests will be able to book and locate their capsule, check-in or out, and even make
purchases and/or upgrades with our easy to navigate mobile app. Check-in will also be available
at an automated kiosk at the front desk in order to simplify and speed up the process for the
customer.
2.6 Future Products
One of our future products will be providing a sauna room. All travelers can use the sauna room
to relax and refresh in preparation for long trips. Another future product is a “first-class” room
that will allow you to select upgraded accommodations, i.e. mattresses and pillows. It would be
very convenient for business people who need to rest for a short term. Additionally, “first-class”
capsules are bigger than other capsules. The customer may upgrade to the additional services
through the mobile app in advance of their flight.
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3. Market Summary
3.1 Overview

As a new company, we are focusing our marketing efforts on millennials experiencing layovers
who are traveling for leisure. Every part of our service is optimized for the comfort and
convenience of a short-term stay, which gives us a competitive advantage in our target market.
With the amount of people flying in and out of SFO, we are positive that we will be able to
attract a sizeable number of customers within our first months of operation. Currently, the high
growth rate in our industry shows great potential for the growth and development of our
business.

3.2 Market Segmentation

Segmentation
● Leisure travelers
● Business travelers
● Airport & airline staff
Targeting
We intend for leisure travelers on layovers in SFO to be our intended target market. As a major
airport with an on-time flight arrival rate of 64.74% (Bureau Of Transportation Statistics), SFO
is notorious for extended layovers. To solve this problem, Capsule Co. provides a place for
people who are inconvenienced at SFO to rest and keep their belongings safe. In order to fit the
needs of leisure travelers, comfort and convenience will be of utmost importance in our service.
Although travelers of all ages can find benefits in our service, we plan to grow our business from
its introductory stage by capitalizing on the millennial generation’s interest in new products and
services.
Millennial Leisure Travelers
● Geographic: People within the premises of the San Francisco International Airport
● Demographic: Ages 18-30, male and female, middle to high class
● Psychographic: Values well-being, safety, comfort
● Benefits: Provides a safe place to rest and store belongings for people between layovers.
The business is designed for short-term stays, which is ideal for airline clients.
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Positioning
Our target customers consist of young travelers who are on layovers of two hours or more at
SFO. These individuals will likely be tired after a long flight and will find a comfortable and safe
place to rest at Capsule Co. We aim to take the stress out of layovers at our location, in order for
our customers to have a stress-free traveling experience.
3.3 Target Market Segment Strategy

Defining the Target Market

Our main target market will consist of 18 to 30 year old men and women who are traveling for
leisure. We chose leisure travelers as a target for our capsule hotel because direct spending on
leisure travel by domestic and international travelers totaled $650.8 billion in 2015. This is about
twice as much as spending on business travel. Additionally, nearly 4 out of 5 domestic trips
taken are for leisure purposes (79%). We also chose the age range of 18 to 30 because those
millennials can’t afford to spend money for many things, so our affordable but convenient
capsule hotel would be attractive to them. Airlines with a lot of short delays also experience
more long delays and cancellations. In fact 21% of all flights in the United States experience
short delays between 15 to 119 minutes, and 6.7% of all flights are delayed over 2 hours or are
cancelled (2016 Monthly Tourism Statistics). The consumer demands of the target segment are
to provide inexpensive and convenient spaces to take a short rest. Strategies for marketing our
capsule hotel will incorporate social media, posting our information on the travel web sites like
Expedia, and promoting our business within SFO.

3.4 Industry Analysis

The hospitality industry (NAICS 721110) is among the world’s largest and fastest-growing
industries. The industry encompasses hotels, restaurants, private clubs, food and beverage
eateries, and travel service providers. The hospitality industry has been undergoing globalization
for some time already with omni-directional cross-border investment and brand penetration and
internationalization of travel destinations. With the changes of the seasons and the large
holidays, there are peaks and valleys for ‘popular travel times’ witnessed by individuals traveling
and using hotels. However, there is constant traveling year round with travelers experiencing
layovers, delayed and cancelled flights. IBISWorld expects the hospitality industry’s revenue
over the next five years to grow at an annualized rate of 4.4% to reach $182.4 billion. In 2015 the
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U.S. witnessed a $1.6 trillion economic output in the travel industry, which represented 2.6
percent of GDP (IBISWorld). With the fast growth of the industry and potential delayed flights,
the industry and market are primed for our venture.

Our Position in the Industry

San Francisco International Airport (SFO) is a large international airport in the center of one of
the biggest tourist cities. San Francisco, in 2015, had 18.9 million leisure visitors, this being a
2.7% increase from 2014 (National Tourism Statistics). People are not only traveling to San
Francisco as a destination, but there are also people that begin their trip here, as well as connect
through the SFO as a hub. This represents a significant opportunity to acquire this business and
capture this target audience.

3.5 Competition

Our competitors would be hotels around airports. We don’t consider lounges after security
checkpoint because, in order to use the lounges, customers have to meet certain criteria. The
customers who can meet this criteria are not our target customers. There are many hotels around
the San Francisco Airport (SFO). Competitors would be all of them, but we would like to call the
5 closest hotels as our indirect competitors. Travelers into and out of SFO experiencing long
layovers or cancelled flights will need a place to stay. Therefore, they would select the closest
hotels in order to reach the airport in less time.
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Name Distance Price How to To reach SFO

(one night) Reserve a
room: check-in
and check-out

BEST 1.2miles $130 Reservation: on Free shuttle bus (every 10 min)

WESTERN the Website,
PLUS EI- check-in/out
Rancho Inn at front desk

The Westin San 1.2miles $203 Reservation: on Free shuttle bus (every 20 min)
Francisco the Website,
Airport check-in/out
at front desk

La Quinta 1.2miles $144 Reservation: on Free a ride (anytime you want)

the Website,
check-in/out
at front desk

Millwood Inn & 1.3miles $131 Reservation: on Free shuttle bus (every 35 min)
Suites the Website
check-in/out
at front desk

Aloft San 1.3miles $209 Reservation: on Free shuttle bus (every 15 min)
Francisco the Website
Airport check-in/out
at front desk
*According to tripadvisor.com (https://www.tripadvisor.com/)

Strength Opportunities
Unique stay style A lot of potential customers due to popularity
Cheapest of SFO in recent years
Nearest Hospitality industry is growing
No hassles of reservation, check-in, check-out
and re-entering security checkpoint
Low labor costs

Weakness Threats
Lack of technology Possibility of imitators
Overhead costs The government policy in regard to
High initial investments immigration regulations
Lack of brand and reputation
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Capsule Co. sets itself apart from similar competition in the following ways:

Location: We would place our business after airport security checkpoints to lessen the
frustrations of exiting and re-entering the airport. Furthermore, we can offer a safe and
convenient place to rest. As there are no direct competitors in the market, we would take
advantage of first-mover advantage.

Price: Our capsules would be less expensive than the competitors. Current competitors cannot
afford to imitate our price because they have many employees and additional expenses to sustain
their service.

Way of reservation, check-in and check-out: In terms of booking a reservation, our

competitors offer its customers the option of booking through the hotels’ website or third party
providers such as Expedia and Travelocity. We would build an app to book and pay for your
reservation, which enables customers to book our capsules easily and quickly. In addition to
above, we will provide an automated check-in and check-out system. This will decrease labor
costs, but also save our customers time because of a shorter check-in and check-out system.
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4. Strategy & Implementation Summary

4.1 Overview
As newcomers to the hotel industry, Capsule Co.’s main focus in its early stages, will be to
attract customers and obtain market share. We will be focusing on the convenience of our
location and price to set ourselves apart from large hotel chains. In order to reach out to potential
customers, we will be using online advertisements and physical advertisements to refer people to
our website and app. We hope to initially grow our sales by 20% from year 1 to year 2 through
our marketing methods and promotions.
4.2 Competitive Analysis

Capsule Co. Best The Westin San La Quinta Millwood Aloft San
Western Francisco Airport Inn & Francisco
Suites Airport

Strengths · Easy · Brand · Brand Currently · Budget · Part of

access to recognition Recognition target the minded the
travelers budget- hotel Marriott
behind minded chain
security traveler · Loyal
· Already customer
Convenient marketing base
and to our
affordable target
· App & market
kiosk
automated
check-in/out

Weaknes · Newness · Off · Customer · Off · Off · Off

s of brand and airport base expects airport airport airport
concept property high-end property property property
· Nothing · accommodations · More · More ·
proprietary Expensive and amenities Expensive Expensive Customer
about the · Off airport base
concept property expects
· Expensive luxury
amenities
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Opportun · 1st · Ability · Ability to · · ·

ity mover to adopt adopt Capsule Expand Expand Marriot to
advantage Capsule concept market market come
· Expand concept presence presence launch own
to all airports capsule
brand

Threats · Airline · Erode · Erode brand · Late to · Change · Erode

premier brand and and following market in brand brand
lounges following and concept image
· Copycat position
competition

The biggest strengths of our competitors are their customer base and loyal following. Capsule
Co. will focus on attracting customers and gaining market share. It will develop a customer
loyalty program to offer reward incentives to keep customers returning. In addition to the loyalty
program, there will be a referral program that will offer incentives to provide referrals for new
customers to stay at Capsule Co.
Capsule Co. will be capitalizing on our competitors through its location and pricing strategy.
Capsule Co. is located behind airport security checkpoints. This will provide travelers a
convenient and worry free option to obtain rest. The pricing structure that will be introduced will
be new to the hospitality industry. Capsule Co. will be providing budget-minded hourly, or short
term pricing. This makes Capsule Co. a lower cost and attractive alternative to the traditional
hotel industry pricing.
Capsule Co. will have a first mover advantage over its competition. There will be a window of
opportunity to take market share from competition and build a brand-loyal following. Capsule
Co. will be quickly implementing a large-scale marketing campaign to build brand awareness.
This is included in the marketing plan. With the advantage of being new to the market, Capsule
Co. will not have to worry about cannibalizing its existing brand, image, and market presence.
4.3 Marketing Strategy & Programs

We intend for leisure travelers on layovers in SFO to be our intended target market. As a major
airport with an on-time flight arrival rate of 64.74% (Bureau Of Transportation Statistics), SFO
is notorious for extended layovers. To solve this problem, Capsule Co. provides a place for
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people who are inconvenienced at SFO to rest and keep their belongings safe. Our main targets
are Millennial Leisure Travelers.

Millennial Leisure Travelers

● Geographic: People within the premises of the San Francisco International Airport
● Demographic: Ages 18-30, male and female, middle to high class
● Psychographic: Values well-being, safety, comfort
● Benefits: Provides a safe place to rest and store belongings for people between layovers.
● The business is designed for short-term stays, which is ideal for airline clients.
Capsule Co. will get targeting customers and grow rapidly along with these Buy Cycles.
By following these buy cycles, we can acquire new and repeat customers efficiently.
● Awareness: At the onset, we need to be recognized for providing those services by
targeting consumers who are millennial leisure travelers. We are marketing to gain
awareness through our website, social media channels, and various advertisements
through posters throughout the airport. Our web site will display all of our services, for
example: plans, prices and locations.
● Discovery: Our capsule hotel will be in prime demand when people have determined that
their flights will be delayed. Because most layovers are between 15min-199 minutes,
travelers with layovers would be in SFO to prepare for their flights at that time.
Therefore, getting a message to those delayed passengers would be a preferred way to
market our services. Using Google AdWords as an advertising tool would be efficient for
our customers because most travelers will consistently check Google to receive
information about the delayed flights. We will monitor this activity and send selective
advertisements to Google by focusing on people who are searching “SFO layovers” and
“SFO flights canceled”. Additionally, we will position advertising posters around the
information desk in SFO. This is a prime location because many travelers on layovers
make this their first stop. Both web advertisements and posters will display a QR code to
download our app. Advertising on Yelp and Trip Advisor would also be an excellent
marketing tool. While waiting for their flights, travelers on layovers will check these
social media forums periodically to find various hotels, restaurants, coffee shops, etc.
Advertising on Yelp, Trip Advisor, etc. will target travelers needing a place to rest for a
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few hours or longer. Aside from using online methods, we also plan to partner with
airlines for joint marketing activities.
● Engagement: On our app, we need to sign up with Facebook and Gmail and provide
information about our services including delayed flight information. Our business is
focusing on obtaining new customers rather than gaining repeat ones. Therefore, we
suggest a discount to new customers on the app. Our goal is to increase our customer
base.
● Active Customer: We provide a great service for customers in the Capsule Hotel. If we
can satisfy our customers, they will share their positive experience by word of mouth
with their friends and colleagues.
● Successful Customer: For successful customers who repeat our services, we constantly
announce discount information and new service information to them. A customer loyalty
point card system will be introduced encouraging repeat discounted stays. Successful
customers will also be encouraged to refer friends to our service in exchange for
incentives. Additionally, our app will retain “successful customer” database, allowing us
to express our gratitude directly to them. This will encourage repeat customers.
● Referrals: Word-of-mouth is very important to the success of Capsule Co. in obtaining
new customers and growing the business. We need to provide an incentive to encourage
referrals. This incentive provides a discount code to both the individual providing the
referral and the person receiving the referral. Both parties receive incentives to use and
introduce our services. We will not limit the number of referrals. This is the same
promotion that has been implemented by Uber. They have successfully used this type of
promotional marketing worldwide to grow their business. This would be a great and
efficient way to acquire new customers.
4.4 Marketing Budget

● We have 4 marketing campaigns:

● Preparing the website and the app
● Developing web advertising on targeted websites and apps
● Placing printed media based advertising in the airport
● Providing discount promotions/incentives.
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The marketing budget will be developed as outlined in the book titled, “How to Determine the
Perfect Marketing Budget for Your Company”(Laurel Mintz, Founder and CEO of Elevate My
Brand.

● Preparing website and app

Customers can book a room through the website or app. It is imperative we develop an
outstanding website and app using the best tools available. The website must include the ability
to purchase and book rooms. We anticipate the cost to be approximately $3,500 with an
additional $2,000 or more if we include a plug-in shopping cart.

Putting web advertising on some web sites and apps

To do marketing efficiently, we need to put advertisements on selective websites to target

customers. We anticipate our social media marketing costs to run between $300 and $500 a
month. We expect our targeted advertisements on relevant websites to cost approximately $500 a
month.

● Implementing print media advertising in the airport

We anticipate this to be very costly and will only use this in the short term. The costs are as
follows:

• Backlit Diorama: Range of $3,500 - $9,900 per ad per 4-week period

• Mini-Spectacular: Range of $5,500 - $12,900 per ad per 4-week period

• Spectacular: Range of $11,500 - $19,900 per ad per 4-week period

● Providing discount promotion

If we provide a 5% incentive discount for referrals to both parties who use our service and 50%
of all customers use these incentives, we anticipate the total cost to be under 3% of all sales or
$810 per month. The average cost per person is $27 expecting approximately 1,000 customers
per month.

4.5 Sales Strategy

Capsule Co. receives revenue from 2 main areas of services:

1. Hotel charge
2. Advertising fee
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Our services differ in price during daytime and nighttime. The price is $10 hourly during the
daytime and $27 per night. If customers stay over 3 hours, the price is $27.

We would be able to partner with companies that aim to advertise their information to layovers
or customers who are millennial leisure travelers. They will have the app allowing them to book
our capsules. The hotel charge can be paid through the app. The advertisement fees will be paid
to the vendor through the Internet. It is our goal to acquire most of our customers from the
website or an app.

We will have cleaning staff on-site at the capsule hotel. We will incent the staff with bonuses
based upon positive customer feedback. In addition, we will incent the cleaning staff to
maximize rapid turnover of the capsules. The incentive will be a recognition program for those
employees who clean and turnover the capsules the fastest. This will help keep employee morale
and lower employee turnover.

Capsule Co. has two primary goals in regard to sales and the number of customers. This is a
hypothesis and the condition is the following:

Occupancy Year 1

Time/price Capacity Occupancy Occupancy Occupancy Occupancy

Q1 Q2 Q3 Q4

12am-7am (night) 20 capsules 50% 60% 70% 80%

$27

7am-12pm 20 capsules 30% 40% 50% 60%

(daytime) $20

Expected Daily Occupancy Year 1

Price Turnover Occupancy Occupancy Occupancy Occupancy #

Rate # Q1 # Q2 # Q3 Q4

>3 Hour Rate = $27 0 10 12 14 16

<3 Hour Rate = $20 7 42 56 70 84

Daily sales= ((Rate 1)*(Rate 1 Occupancy))+((Rate 2)*(Rate 2 Occupancy))

Quarterly sales = (Daily sales)(91 quarter days)

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Q1: (10*27)+(42*20) = 1110*91 = $101,010

Q2: (12*27)+(56*20) = 1444*91 = $131,404

Q3: (14*27)+(70*20) = 1778*91 = $161,798

Q4: (16*27)+(84*20) = 2112*91 = $192,192

According to the above tables, sales would be approximately $586,404, assuming perfect
conditions. Due to the seasonal nature of airport business and the amount of time needed to grow
our customer base, we are not likely to perform at quite this high of a level. Assuming roughly
$400,000 in sales, we can reach these numbers through aiming for a growth rate of 20% from
year 1 to 2, and 25% in year 2 to 3. We will attain this goal by acquiring new customers through
optimizing market strategy. We will also keep relationships with customers who have stayed
with us before and retain their patronage by providing exceptional comfort and safety in our
service. In terms of the number of customers, we will increase approximately 8% each year by
obtaining new customers and repeat customers as previously mentioned. Capsule Co. will
implement several strategies to encourage customers to start and continue using our services.
First incentive is providing a discount promotion. As we mentioned, it will encourage new
customers and repeat customers to use our service. We would implement a stamp card in order to
attract repeat customers. All customers who collect 5 stamps can stay one night, or a certain
amount of time for free with discounts.

4.6 Sales Forecast

Annual
Product Lines Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Totals

1 Hour Stay

Units Sold 222 262 328 342 355 335 354 362 316 324 359 369 3,928

$
Total Sales 2,220 2,620 3,280 3,420 3,550 3,350 3,540 3,620 3,160 3,240 3,590 3,690
39,280

$
Total Margin 2,220 2,620 3,280 3,420 3,550 3,350 3,540 3,620 3,160 3,240 3,590 3,690
39,280

2 Hour Stay
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Units Sold 555 600 686 702 711 735 792 832 726 734 812 845 8,730

$
11,10 13,72 14,04 14,22 14,70 15,84 16,64 14,68
Total Sales 12,000 14,520 16,240 16,900 174,60
0 0 0 0 0 0 0 0
0

$
11,10 13,72 14,04 14,22 14,70 15,84 16,64 14,68
Margin 12,000 14,520 16,240 16,900 174,60
0 0 0 0 0 0 0 0
0

3+ Hour Stay

Units Sold 333 360 420 456 455 456 485 521 462 475 505 525 5,453

$
11,34 12,31 12,28 12,31 13,09 14,06 12,82
Total Sales 8,991 9,720 12,474 13,635 14,175 147,23
0 2 5 2 5 7 5
1

$
11,34 12,31 12,28 12,31 13,09 14,06 12,82
Margin 8,991 9,720 12,474 13,635 14,175 147,23
0 2 5 2 5 7 5
1

Advertisement
Hosting

Units Sold 1,900 2,200 2,100 2,000 1,900 2,100 2,200 14,400

Total Sales - - - - - 114 132 126 120 114 126 132 $ 864

Margin - - - - - 114 132 126 120 114 126 132 $ 864

Total Units Sold 1,110 1,222 1,434 1,500 1,521 3,426 3,831 3,815 3,504 3,433 3,776 3,939 32,511

$ $ $ $ $ $ $ $ $
$ $ $ $
Total Sales 22,31 28,34 29,77 30,05 30,47 32,60 34,45 30,85 361,97
24,340 30,274 33,591 34,897
1 0 2 5 6 7 3 9 5

$ $ $ $ $ $ $ $ $
$ $ $ $
Total Margin 22,31 28,34 29,77 30,05 30,47 32,60 34,45 30,85 361,97
24,340 30,274 33,591 34,897
1 0 2 5 6 7 3 9 5
 21

Assumptions

● Online advertising will begin after the company website gains substantial traffic.
● Hotel charge revenues were estimated using the hypothesis table information and growth
assumptions from section 5.
● Based upon seasonal air traffic at SFO, expected peak seasons are from July to August,
and November to December. (SFO)
 22

5. Management Summary
5.1 Overview
Capsule Co. LLC is managed by four skilled founders: Mr. Sandico (CEO), Mr. Carbrey (COO),
Mr. Sugai (CMO), and Mr. Takizawa (CFO) with experience consisting of operations, customer
satisfaction, and management. Within the first year, we plan on staffing small and contracting
with an individual for software design. We are confident that after the first year of operations we
will have enough success to begin increasing our staff utilizing our combined experiences and
analysis of the market.
5.2 Organizational Structure
The company will form as an LLC. Founding members are contractually obligated to focus their
efforts on the company until it reaches profitability. After the first year of operation, distribution
of profits among founders will be determined by their agreed level of contribution to the
business. In order to ensure optimal performance in our early years, advisors will be sourced
from local professionals and advisory board programs. The board of advisors will be critical to
our business, since we are all fairly new to our industry and the entrepreneurial world.
5.3 Management Team
Jona Sandico, CEO
Jona has gained management skills and customer service experience through his time as an intern
at Business Cards Thermography. He has completed the business program at Ohlone College and
is currently working toward an undergraduate degree in Entrepreneurship at San Jose State
University.
Sean Carbrey, COO
Sean has held positions within marketing, operations, and accounting. He has worked as an
intern for Zerve and Egnyte working on marketing, SEO, and business development. Prior to
that, he assisted with operations and sales for 24 Hour Fitness in San Ramon, California. He is
currently studying Entrepreneurship at San Jose State University.
Masashi Sugai, CMO
Masashi has worked for a Japanese BBQ restaurant for 2 years and has gained experience in
marketing by becoming involved in the restaurant's operation. He is currently studying
Entrepreneurship at San Jose State University and business in general at Keio University.
 23

Yusaku Takizawa, CFO

Yusaku had managed his own company, Wind Spirits, which provided cleaning services for
Airbnb houses in Japan. He managed about 40 part-time employees and serviced about 10
clients. He has acquired knowledge in financial management and business development skills.
He is knowledgeable in cash flow management, business strategy, and account settlement.
A copy of each member's resume may be found in the Appendix.
5.4 Management Team Gaps
This section explains the positions that our management team lacks. There are three positions we
still need: CTO, Lawyer, Senior Advisor. We need a CTO or person who is highly familiar with
technologies such as computer science and electronics. Our outstanding customer service will be
provided through our convenient app and website. Therefore, we need a person who can create
those services and manage engineering issues in the future. We will recruit a person for the
position by utilizing the San Jose State student network. Also, we need a person who is familiar
with legal issues and the law. There are many regulations and laws that regulate the hotel
business.
The first capsule hotel would be at an airport. This will require negotiation skills and contract
development. At first, we will use free law consultants in order to save money. Ongoing, we will
contract with a lawyer when our business becomes successful. Finally, we need a senior advisor
who can teach us business strategies and provide us with many business networks. To acquire
this person, we are thinking about an angel investor to fill the role of senior advisor. This
individual will provide a wealth of experience and advice. This will allow our company to obtain
an advisor as well as an investor to begin our company.
5.5 Other Personnel
There are three positions that we need to fill in order to run Capsule. Co successfully. First, we
will look for a support staff that will be responsible for conducting the everyday operations of the
business, such as cleaning and check-in services. The co-founders will fill these roles until
employees can be hired. Second, we need a software engineer and support staff to develop the
app and maintain the website. Third, we will need a marketing individual who will be hired in
year 3 to oversee, expand and internationalize our business. This individual will need to be
familiar with the hotel business and have experience in hotel marketing.
 24

5.6 Personnel Growth Plan

Capsule Co. plans to not pay its founders for the first year of operations. We plan to contract
with a software engineer to build our app. We will also be hiring two full-time employees to help
run and maintain the Capsule Co. location at SFO. In year 2 we plan to hire two programmers
and one part-time employee. By year three we plan to contract with a marketing individual to
oversee our Capsule Co.’s marketing efforts, and hire two more part-time employees to help
maintain our on premise location.
 25

6. Financial Plan
6.1 Financial Assumptions
Sales:

● Year 1 sales: $361,975.00

● Year 2 Sales: $450,514.00
Expenses:
● Year 1: Founding members are unpaid. The paid members include two support staff and
one software engineer.
● Year 2: Founding members are paid. The current staff members receive a pay raise.
Programmer and one extra support staff are hired.
● Benefits at 10.8% of compensation
● $50,000 in tenant improvements are desired.
Operational Financing:
● Inventory subject to change based upon demand for food and refreshment items.
Financing:
● $30,750 Contribution from each founding member
● $107,839 Capital goal from outside investment
● Startup funding of $230,839 comprised of $ 120,380 in fixed assets and $ 110,459 in
operating capital
6.2 Start-up Expenditures
Fixed Assets:
● All costs of Fixed Assets required at the beginning is $117,680
● In Fixed Assets, the leasehold improvement cost is $50,000.
● In Fixed Assets, Furniture Fixtures cost is $52,380.
○ Capsules account for $35,000 for furniture and expenditures. (Shenzhen
Pengheng)
○ Remaining cost to be used on sofas, chairs, tables, and lighting.
● Equipment cost of $15,000 to be used to purchase computer equipment, vending
machines, cleaning equipment, and signage.
● In Operating Capital in Year 1, we need a total of $110,459, which is almost occupied by
Rent Deposit cost.
 26

● In Operating Capital, Rent Deposit begins at $93,394 due to our service being operated in
SFO. This presents challenges with limited space and unique issues associated with
operating in an airport. This is why costs would be higher than any other business.
● In source of funding, owner’s equity is 100,000 which is 53.28% of the total. The number
for Outside Investors is $107,839.

Depreciation
Fixed Assets Amount (years) Notes

Partitioning, reception ($70

Leasehold Improvements 50,000 7 /1 sf)
Computers, Vending
Equipment 15,000 7 machines
Furniture and Fixtures 52,380 5 Capsule, Pods, Tables, Chairs
Other 3,000 5
Total Fixed Assets $ 117,680

Operating Capital Amount Notes

Pre-Opening Salaries and Wages - No salary is given to founders in 1st yr.

Prepaid Insurance Premiums 1,300 Workers Comp, Liability
Inventory 2,000 Food & Drinks
Legal and Accounting Fees 2,500 CPA, 5Hrs w/ Attorney
Rent Deposits 93,394 First/Last/Security (66.71 sq/f, 700 sq/f)
Utility Deposits 500 PG&E, Waste Disposal
Supplies 1,490 Sheets/Pillows/Paper/etc.
Advertising and Promotions 1,500 Brochures, Ads
Licenses 1,275 Business, Food & ABC
Other Initial Start-Up Costs 6,500 Software engineer & Misc.
Total Operating Capital $ 110,459
Total Required Funds $ 228,139

Loan Monthly
Sources of Funding Percentage Totals Rate Term in Months Payments
 27

Owner's Equity 53.91% 123,000

Outside Investors 46.09% 105,139
Total Sources of Funding 100.00% $ 228,139 Cell D 42 must equal cell C31 $-
Total Funding Needed $- You are fully funded (Balanced)

6.3 Projected Cash Flows

● Year 1 total cash inflows: $361,975
● Year 1 total cash outflows: $200,926
● Year 1 total net cash flows: $160,049
● Year 2 total cash inflows: $ 450,514
● Year 2 total cash outflows: $ 307,193
● Year 2 total net cash flows: $ 143,321
● Year 3 total cash inflows: $579,360
● Year 3 total cash outflows: $393,513
● Year 3 total net cash flows: $185,847
 28

6.4 Projected Income Statement

● We predict that 20% of stays will be for 1 hour, 50% will be for 2 hours, and 30% will be
for 3 or more hours.
● 20% growth rate goal from year 1 to 2, 25% growth rate goal from year 2 to 3.
● $4000 spent on advertising in first 4 months, $2500 monthly afterwards.
● $208 spent monthly for legal services.
● $42 spent monthly for general liability insurance.

Revenue 2018 2019 2020

1 Hour Stay 39,280 49,178 61,860

2 Hour Stay 174,600 216,240 280,710

3+ Hour Stay 147,231 183,519 234,819

Advertisement Hosting 864 1,577 1,971

Total Revenue $ 361,975 100% $ 450,514 100% $ 579,360 100%

Operating Expenses

Advertising 34,500 35,535 36,601

Insurance (other than health) 504 519 535

Legal and Professional Services 2,496 2,571 2,648

 29

Licenses 1,275 1,339 1,406

Supplies 1,490 1,535 1,581

Total Operating Expenses $ 40,265 11% $ 41,498 9% $ 42,770 7%

Income (Before Other Expenses) $ 241,508 67% $ 235,609 52% $ 280,250 48%

Other Expenses

Amortized Start-up Expenses 36,153 36,153 36,153

Depreciation 14,490 16,808 19,793

Total Other Expenses $ 50,643 14% $ 52,961 12% $ 55,946 10%

Net Income Before Income Tax $ 190,865 $ 182,649 $ 224,304

Income Tax $- $- $-
Net Income/Loss $ 190,865 53% $ 182,649 41% $ 224,304 39%

6.5 Projected Balance Sheet

● We plan to budget $8,000 worth of leasehold improvements per year in order to adjust
our business for larger consumer demand.
● $4,500 will be spent to purchase more equipment for customer use, such as new computer
kiosks and bathroom equipment.
● Leasehold improvements, equipment, Furniture, and Fixtures are getting increased
because we need to change the equipment and interiors in the capsule hotel every year in
order to adjust customer needs and refresh the environment.
● Two capsules will be added to our hotel per year, adding $3,000 yearly to furniture and
fixtures.

ASSETS 2018 2019 2020

Current Assets
Cash 202,446 345,767 531,614
Inventory 2,000 2,000 2,000
Prepaid Expenses 67,973 33,986 (0)
Other Initial Costs 4,333 2,167 0
Total Current Assets $ 276,752 $ 383,920 $ 533,614

Fixed Assets

Leasehold Improvements 54,000 62,000 70,000

 30

Equipment 18,000 22,500 27,000

Furniture and Fixtures 54,380 57,380 60,380
Vehicles - - -
Other 3,000 6,000 9,000
Total Fixed Assets $ 129,380 $ 147,880 $ 158,380
(Less Accumulated Depreciation) $ 21,062 $ 44,441 $ 70,805
Total Assets $ 385,070 $ 487,359 $ 621,188

LIABILITIES & EQUITY

Line of Credit Balance 41,397 41,397 41,397

Total Liabilities $ 41,397 $ 41,397 $ 41,397

Equity

Common Stock 230,839 230,839 230,839

Retained Earnings 112,834 215,123 356,952
Dividends Dispersed/Owners Draw - - -
Total Equity $ 343,673 $ 445,962 $ 587,791
Total Liabilities and Equity $ 385,070 $ 487,359 $ 629,188

$- $- $-
Balance sheet in or out of balance?
Balanced! Balanced! Balanced!
 31

7. Appendix
7.1 Capsule Concept Photos
- Interior

- Exterior
 32

7.2 Jona Sandico Resume (CEO)

Jona D. Sandico
jonasandico@gmail.com • Cell:510-449-1814 • Newark, Ca. 94560 • https://www.linkedin.com/in/jona-sandico-
279358130/

PROFESSIONAL SUMMARY
Goal-oriented, confident, and creative individual with skills in customer service and
organization. Keen eye for detail, quality assurance, and areas of improvement.
Core Competencies:
- Highly capable in solo or group work environments
- Advanced presentation and communication skills
- Proficient in Microsoft Office and similar office software
- Able to produce results under time constraints
- Experienced with entertainment equipment (performance lighting, sound, etc.)

EDUCATION
Business Administration:
San Jose State University - San Jose, CA
Bachelor of Science, Business Administration, Concentration in Entrepreneurial Business
(Expected Spring 2018)

PROFESSIONAL EXPERIENCE
Business Cards Thermography • Fremont, CA • September 2010 – March 2013
Intern
● Organization of current invoices, sales orders, and yearly archives.
● Operation of fax machine and phone lines to communicate with customers.
● Shadowed co-founders daily to learn management skills.
Stage 1 Theatre • Fremont, CA • Summer 2014
Sound Design Contractor
● Operation of sound equipment for live theatre performances.
● Communicated with actors and director to ensure optimal sound quality for the
enjoyment of theatre patrons.

VOLUNTEER EXPERIENCE
StarStruck Children’s Theatre • Fremont, CA • December 2011 – January 2014
Tech Crew
● Worked in a fast-paced team environment with little room for error.
● Operation and handling of entertainment equipment, set pieces and power tools.
St. James The Apostle Choirs • Fremont, CA • September 2011 – Present
Saxophonist
● Delivering musical performance for large church congregation.
● Learning of new music shortly before performance.

INTERESTS
● Triathlon, Performing Arts, Foreign Cultures

7.3 Masashi Sugai Resume (CMO)

 33

M ASASH I W ORK EXPERI EN CE

SUGAI
I w orked a t a Ja p a n ese BBQ resta u ra n t from 6 /1 /1 4 to
3 /1 /2 0 1 6 a s a server a n d ch ef.
On e th in g th a t I lea rn ed th rou g h th e j ob w a s h ow to
im p rove cu stom er sa tisfa ction . Th e oth er w a s h ow to
tea ch m y skills to m en w h o w orked u n d er m e.
MASASH I 7 1 1 0 6 @ GMAI L. COM

6692612458

ED UCATI ON

H TTPS : //W W W . LI N KEDI N . COM /I

K EI O U N I VER SI TY
N /MASASH I -SUGAI -
EN R O LL Y EA R : 4 /1 /1 4
3 3 B6 0 2 1 3 A/ G U R A D U A TI O N : 3 /3 1 /1 9
M A JO R : BU SI N ESS
OBJECTI VE S A N JO SE STA TE U N I VER SI TY ( STU D Y A BR O AD )
CMO EN R O LL Y EA R : 8 /1 /1 6
GR A D U A TI O N : 5 /3 1 /1 7

CERTI FI CATI ON M A JO R : EN TR EPR EN EU R SH I P

TOEI C: 8 5 5 ACTI VI TY

TOEFL I BT: 7 2

I w a s volu n teerin g a t Sa n Jose Ja p a n tow n . W e h a d a n

a n n iversa ry even t from 4 /2 1 /1 7 to 4 /2 3 /1 7 w h ich w a s for
celeb ra tin g sister city rela tion sh ip b etw een Sa n Jose a n d
Oka ya m a . I w a s in ch a rg e of volu n teer sta ffs. W h a t I d id w a s
to lia ise w ith Ja p a n ese p rofe ssors a t Sa n Jose Sta te
Un iversity in ord er to solicit volu n teers a n d org a n ize
7.4 Yusaku Takizawa Resume (CFO)
volu n teers.
 34

Yusaku Takizawa
(818) 036-1838 ·
380 S 9th St, San Jose · yusaku.taki64@gmail.com

EDUCATION
Keio University, Tokyo Japan, 3.0 / 4.0 GPA April 2014 - Present
· Economics major
· Anticipated graduation in Spring of 2019

Teacher’s Assistant August 2015- Present

· Responsible for taking class attendance
· Managing the class notes
· Tutoring students after school and at lunch

San Jose State University, San Jose, USA

· international student
· Business major

EXPERIENCE
Livesense, Tokyo, Japan April 2014 – June 2016
Manager/ HR
· Manage contract staffs in 3 different areas
· have job interviews with candidates to hire them

ACTIVITIES AND LEADERSHIP

College baseball club, Tokyo, Japan September 2010 - September 2013
· Practiced baseball everyday to win other colleges in the national competitions.
· Managed teammates as a captain in order for every teammates to focus on what they should play in the
team.

SKILLS
Computer Skills
· Programs: Proficient in Microsoft office suite (e.g., Word, PowerPoint, Excel) Macintosh
programs (e.g., iMovie, iDVD, iWeb, GarageBand, FrontPage)

INTERESTS
Reading – Running – Basketball – Web Design – Business - Startup
 35

7.5 Sean Carbrey Resume (COO)

Sean F. Carbrey
E: scarbrey326@gmail.com • M: 925-683-2749 • Danville, CA 94506 • linkedin.com/in/seancarbrey

PROFESSIONAL SUMMARY
Confident, energetic, and highly motivated individual with experience in operations, sales, and customer
service; undertakes complex assignments, meets tight deadlines, and delivers outstanding performance.
Core competencies include:
● Thrives in a Fast-Paced Environment ● Extensive Knowledge of QuickBooks and
Microsoft Office
● Ability to Communicate Effectively with ● Possess Working Knowledge of
Management and Peers Photoshop CS6
● Exceptionally Organized with Excellent ● Complex Problem Solving Ability
Multi-Tasking Ability

EDUCATION
Business Administration:
San Jose State University – San Jose, CA
Bachelor of Science, Business Administration, Concentration in Entrepreneurial Business (Expected
December 2017).

PROFESSIONAL EXPERIENCE
Egnyte • Mountain View, CA • February, 2017 – May, 2017
Business Development Intern
● Conducted marketing outreach to senior managers of Egnyte's Technology Partner Ecosystem.
● Collaborated with over 70 ISV channel partners to collect partner company confidential
information and record: joint integration solution overview, pain points, target market, key
differentiators.
● Utilized Salesforce, email, spreadsheets, Box doc forms, and EFSS product Egnyte, Skype, to
collaborate with senior managers with Egnyte’s partners.
● Companies in this program ranged from Microsoft and Google to small innovative start-up app
developers.
● Worked in tandem with Business Development team to update partner information to profile the
value for sales enablement and education.
Zerve • San Francisco, CA • April, 2016 – July, 2016
Operations Intern – Flywheel Team
● Keyword optimized activity listing pages for search engine optimization (SEO).
● Drafted/Published on average 5 keyword optimized listing pages to acquire future clients.
● Conducted business development through company research to profile potential Zerve clients.
● Managed time efficiently between assigned projects and customer service.
24 Hour Fitness • San Ramon, CA • June, 2015 – May, 2016
Membership Sales, Member Services, and Juice Bar
● Supported operations management within the facility.
● Reversed member cancellations by using effective listening skills to overcome objections.
● Served customers at the juice bar by taking orders and preparing customized smoothies.
● Communicated effectively with management and provided superior customer service to members
and prospects.
● Recognized for dedication to company’s core values. Also, recognized for employee of the
 36

month.
Baroumand & Associates • Danville, CA • September, 2014 – May, 2015
Bookkeeping, Accounting, and Auditing Clerk
● Performed personal bookkeeping services, reconciled and created financial statements for 6
businesses each week.
● Compiled statistical, financial, accounting or auditing reports pertaining to such matters as cash
receipts, expenditures, accounts payable and receivable, and profit & losses.
● Performed general office duties such as filing, answering telephones, and handling routine
correspondence.

EXTRACURRICULAR PROFESSIONAL ACTIVITIES

Professional Business Fraternity Delta Sigma Pi – Theta Chi • San Jose, CA • August, 2016 –
November, 2016
Pledge Class Vice President of Corporate Sponsorship
● Obtained three sponsors for my Pledge Class resulting in $750 in revenue.
● Worked in tandem with other department heads to ensure prompt marketing of sponsors.
● Conducted cold calls and in person calls which resulted in over 150 leads for prospective
Fraternity sponsors.

CERTIFICATIONS
● CPR/AED certified on infants, children and adults
● TrustLine Certified
● Top rope Belay
● Accelerated Free Fall (A.F.F.) – Skydiving
 37

Works Cited
Airline On-Time Statistics and Delay Causes. Bureau of Transportation Statistics,
www.transtats.bts.gov/OT_Delay/OT_DelayCause1.asp?pn=1
“Air Traffic Statistics 2016.” Air Traffic Statistics 2016, SFO, www.flysfo.com/media/facts-
statistics/air-traffic-statistics/2016.
Hotels & Motels in the US: Market Research Report. IBISWorld, Apr. 2017,
clients1.ibisworld.com/reports/us/iexpert/default.aspx?entid=1661.
“I-94 Program: 2016 Monthly Arrivals Data.” 2016 Monthly Tourism Statistics, National
Tourism and Trade Office, travel.trade.gov/view/m-2016-I-001/index.asp.
International Visitation in the United States. National Tourism and Trade Ofice,
tinet.ita.doc.gov/outreachpages/inbound.general_information.inbound_overview.html.
“Latest Beautiful Design Patented Transverse Capsule Hotel Bed.”Alibaba Manufacturer
Directory, Shenzhen Pengheng Capsule Hotel Equipment, www.alibaba.com/product-
detail/Latest-Beautiful-Design-Patented-Transverse-Capsule_60418900307.html.
Sciacca, Annie. “SFO Reaches Record-High Annual Passenger Traffic.” Bizjournals.com, San
Francisco Business Times, 30 Dec. 2015,
www.bizjournals.com/sanfrancisco/blog/2015/12/sfo-airport-highest-annual-passenger-
traffic.html.
Travel, Tourism & Hospitality Spotlight. SelectUSA, www.selectusa.gov/travel-tourism-and-
hospitality-industry-united-states
Weinberg, Cory. “S.F. Office Rents Just Hit an All-Time High. Is a Bubble Going to
Burst?”Bizjournals.com, San Francisco Business Times, 1 Oct. 2015,
www.bizjournals.com/sanfrancisco/blog/real-estate/2015/10/sf-office-tech-boom-bubble-
fitbit-pinterest-apple.html.