METRO HOME STAGERS

MHS

STRATEGIC PLAN

A Strategic Plan Prepared By

Alice Cannella Kevin Haulsee Billy Mooney Frank Pool Priya Santi Jamal Shahid

ENGM 555 Technical Entrepreneurship and Leadership Jan Evans Instructor

Metro Home Stagers Chattanooga, Tennessee 37407 423-280-0685 http://www.MetroHomeStagers.com Email: METRO HOME STAGERSHelpsSellHomesFaster.com

Date Prepared: April 13, 2010

EXECUTIVE SUMMARY
As the economy is struggling to recover, one may find markets that will flourish. Identifying such flourishing markets as the economy struggles may be difficult and risky but this team believes that Metro Home Stagers, a home dressing business, is a business that can be very successful in the current economic climate. Home staging creates for the seller a home that is neutral to buyers, where buyers can see themselves in the home. Statistically home staging sells homes faster and for a higher price so one would believe, with the current downturn in real estate prices, sellers would have a significant interest in the home staging service. The barriers to entry are low and competition in the Chattanooga area is little to nonexistent. The cost to enter the market is very low and with the current unemployment rate, qualified human resources are readily available. The management team with the necessary skills has been chosen and a high-level task schedule has been generated. The date to open the business has been determined to be June 7 th. A detailed financial plan has been created that suggests the business will breakeven the first year and will become profitable after the second year. The financial plan reflects sales increases of 5% each year, while the cost associated with doing business remains relatively flat. The management team has contacted partner companies that will supply the necessary furniture and another company that will provide delivery of the home furnishing. The customer has been defined as an individual that currently has their home on the market or intends to put their home on the market in the near future. Real estate agencies have also been targeted as a customer. This team believes real estate agencies

that have had homes on the market for a lengthy period of time or know the property will be difficult to sell will want to utilize this service to keep their customers happy. This business venture has been examined from many points of view by the entire team and the team believes this business in this economy will be successful and profitable. The team also believes this business can be successfully setup in other areas in the Southeast United States and it is estimated that after two years franchises can be sold in other parts of the country. The team believes this is a low risk business and has made a decision to move forward with a successful launch.

Table of Contents
EXECUTIVE SUMMARY Description of Business ........1 Mission Statement ........2 Vision Statement .......2 Metro Home Stagers Customer .....2 Metro Home Stagers Target Market ........3 Metro Home Stagers Competition ............4 Metro Home Stagers Suppliers ................................................................................4 Economic Conditions .................................................................................................5 Social Conditions ........................................................................................................7 SWOT Analysis .........................................................................................................8 Goals of the Business .................................................................................................9 Action Plan Management and Organizational Structure ...................................11 Overview .........................................................................................................11 Management Core Competencies ....................................................................11 Management Professional Affiliations and Personal Development ................12 Management Advisory Group .........................................................................13 Contracts ..........................................................................................................14 Action Plan Utilization of Metro Home Stagers Purpose and Strategy ...........14 Action Plan Financing ............................................................................................15 Summary ....................................................................................................................16 Recommendations .....................................................................................................17 References ..................................................................................................................18

Works Cited ...............................................................................................................19

Description of Business Home dressing is a unique business that functions similar to a decorating service. Unlike traditional decorating, home dressing or staging is not focused on reflecting the personal style of the homeowner. In fact, it is intentionally focused to NOT reflect personal style at all. The goal is to create an environment in which potential buyers can visualize their belongings in which they can visualize living, which will reduce the onmarket time for the seller. One may believe the home dressing or staging business may not be an appropriate business to enter into todays economy but this team believes todays economy creates an excellent motivation for home sellers to utilize this service. Staging potentially provides increased profit for the seller and a decrease in the time the property is on the market. Staging creates additional wealth for home sellers, which is why one may think staging is a worthwhile investment. In nearly every case where trained stagers are involved, its an investment that pays off handsomely. Statistics show that staged homes sell faster and at higher prices than non-staged homes. Barb Schwarz, creator of StagedHomes.com, conducted a nationwide survey of houses staged by staging professionals in todays market. Approximately half of the houses were staged before they went to the market and the rest were staged after they had lingered without offers for an average of 212 days. Homes listed for sale after they were staged, sold in 37 days on average, or took 83% less time comparable to new listings that were not staged. Adam Rostocki, author of HOME STAGING: A Practical Guide To Real Estate Marketing suggests staged homes had an equity increase of 7% to 10% higher than the normal asking price.

We feel that there is a great opportunity in the Chattanooga area to provide home staging services to local home sellers. We also feel that it is a much-needed service for any individual or family who is looking to sale their house quicker and at a greater price. Mission Statement Metro Home Stagers is a professional home staging company that partners with realtors and homeowners to make homes more marketable by enhancing the look and feel of the home and transform it into a house that will sell faster and for more money. Our goal is to ease the process of selling by effectively packaging the house and creating warm, inviting spaces that will connect with a buyer's emotions. Vision Statement Metro Home Stagers will be the selected partner for all home sellers in Southeast Tennessee and North Georgia for the enhancement of their property. Metro Home Stagers Customer The intended customer of Metro Home Stagers (MHS) either owns a home in the range of $150,000 to $1,000,000 and is in the market to sell or is a real estate agent contracted to sell a home within that price range. Our primary focus will be customers who will want to purchase our service because of the convenience it offers them by allowing them to either go ahead and relocate their furniture into their new home or by saving them time and money of furnishing the home on their own. Customers in this group are both reachable and receptive since all home sellers are eager to sell their home as quickly as possible. Customers will be receptive to this service because it will improve the

marketability of their home, reduce the number of days on the market, and in the end, save them money. Reactions by customers to the home dressing service have been positive based on Internet research. An example of a testimonial from the competition to Stage One Home Staging & Organizing, a successful home dressing organization is the following: Stager Recommendation to Realtors: "I went out on a limb and tried a new stager called Stage One. They were amazing, so I have to recommend them to you. Here is what the seller (a relocation company took time to email a compliment!) had to say"At a time when home purchasers are way down you managed to sell this home at a fair price in record time." I have to give credit where credit is due. Stage One was the reason this house stood out beyond the competition and sold faster than the market average. I highly recommend them!" Steve S. Coldwell Banker Burnet Realty

This customer testimonial is one of many positive reactions from customers who have used home dressing to aid in the sell of their home and shows the incredible impact that the service can have on the sale of a home. Metro Home Stagers Target Market Our target market is the metropolitan Chattanooga area, which consists of six counties three in Southeast Tennessee, which includes Hamilton, Marion, and Sequatchie and three in Northwest Georgia, which includes Catoosa, Dade, and Walker. Excluded from the metropolitan area but included in our target market is Dalton, Georgia, which is located in Whitfield County. The population of these counties and Dalton as estimated by the United States Census Bureau is 618,441. Out of the residents, 381,384 are over the age of 21 and 418,728 occupying households. We will be targeting homeowners and real estate agents in the metropolitan area. We are forecasting that we will control 80% of the market

in 2010, 85% in 2011, and 90% in 2012. These percentages are aggressive but with little comparable competition we believe they are attainable. Metro Home Stagers Competition While there are no certified home stagers in the metropolitan area, there would be some local competition from realtors and rental retailers. Our main source of competition would be Coldwell Banker Reality, ASP Realtors, and Rent-A-Center. ASP Realtors are realtors that have been certified to stage homes and they have nine locations in the Chattanooga area. Our service is premium to both competitors due to the fact that we offer expertise from a professional interior designer. We are also able to provide more options to our clients because of our contract with Ashley Furniture, Carpets of Dalton, and Rooms To Go and our specialization in this service. Realtors specialize in helping homeowners to buy or sell a home and Rent-A-Center specializes in renting various home appliances, furniture, and office equipment, instead of only focusing on home dressing.

Metro Home Stagers Suppliers Our major suppliers are Ashley Furniture Home Store, Carpets of Dalton, and Rooms To Go because they have a local furniture warehouses. Ashley Furniture, Carpets of Dalton, and Rooms To Go have agreed to work with MHS at a commission rate of 10% of sales, which is based on an automatic renewing annual contract. Either party can cancel the contract with a 90 day written notice after the first year. Ashley Furniture is not responsible for any deliveries that need to be made. At MHS, we will subcontract all Ashley Furniture deliveries with the local company, Two Men and A Truck. They will charge a discounted delivery rate of $65 per hour. They will pick up the furniture at the

warehouses and deliver and unload it at each clients home. We will have an on-site MHS consultant on hand every time a delivery is made to guarantee the home is staged appropriately. All Carpets of Dalton and Rooms To Go deliveries have free delivery within a 50-mile radius of Dalton, Georgia. All deliveries over 50 miles (one way) have a $1.00 per mile adder. MHS also has the option to do business with Kinders Furniture Mall in Fort Oglethorpe, Georgia. They have agreed to an annual contract with MHS, but are asking for a 12.5% commission on all sales and will not provide any delivery options. MHS has decided to use Ashley Furniture, Carpets of Dalton, and Rooms To Go as our primary suppliers and Kinders Furniture Mall will be the preferred backup supplier if Ashley, Carpets of Dalton, or Rooms To Go cannot fulfill an order in a timely manner. Economic Conditions Regarding the economics of the business, certain factors can affect the company. With the recent market declines and the resulting buyers market, staging ones home can give the seller a significant advantage over competing homes. Market studies show that staged homes sold in an average of 33.6 days versus 171.2 days for homes that were not staged (Figure 1). Even in a sellers market, staging can provide the added advantage and warrant a higher sales price. Figure 2 shows several returns on investment for a variety of home staging products.

Figure 1 Staged Home vs. Non-Staged Homes

Figure 2. Various Staging Improvements With Return

One negative impact could be apprehension a seller might have in investing additional money up front. In a tight economy, with everyone trying to stretch their income and save wherever possible, spending additional money on a home sale may not be alluring. Getting the homeowner to look beyond the short term and realize the benefit of this investment provides a significant hurdle for the sale of service.

Social Conditions Social conditions may also affect business. Typical markets for home staging services are in the middle to high-end homes. Research has shown that a staged home will attract more affluent buyers, which could equate to a higher sales price for the home. Based on this, the market for the product would not include homes priced at the low end of the market. This could present an opportunity to develop a market for homes in the range with a scaled down version of the service. Handling this could also be an issue as any negative impact to the bread and butter market must not be compromised. Social media network tools will also be used to market the product. A presence on Facebook and other sites will provide great opportunity for clients to be exposed to our service. One of the fastest growing users of Facebook are those in the 26-34 age range; an excellent target group for sale of the home staging service. Forty-five percent of Facebook users are 26 and older. Facebook has already been rapidly growing in the age range of 4554. Both of these statistics indicate a presence on Facebook would reach an audience of potential homebuyers for whom our services could be sold.

According to CNN, on average, Americans move every five years. Job changes, divorces, economic shifts, and other factors are the cause of these moves. Based on this data, the age group that can be reached via social networking media is well within this range. There are no foreseeable regulatory or environmental issues that would affect the home staging business. S.W.O.T Analysis The following strengths are noted for this business: Metro Home Stagers agents will know current real estate market conditions. Metro Home Stagers agents may have previous experience during 2003-2005 sellers market. Metro Home Stagers agents will have modern business skills: negotiation, financial expertise, marketing, project management, risk management, and consulting. Metro Home Stagers agents will be Internet savvy & use online tools extensively. Metro Home Stagers agents have already developed strong relationships with many people in the real estate market. Some Metro Home Stagers agents own other properties and will be familiar with real estate transaction process. Some Metro Home Stagers agents have a real estate license or are an attorney and are prepared to disclose and assume the additional legal liability required of those licensees. Metro Home Stagers agents will ensure that all pre-sale inspections and disclosures are completed. Metro Home Stagers agents will ensure that the house is in ready to show state.

The following weaknesses are noted for this business: Customers may have sellers market mentality in current buyers market. Customers may have urgent need to sell due to job change, debt or no real need to sell at all. New point of sale regulatory disclosure and compliance requirements not fully known. MHS agents may not pre-qualify buyer financials properly. MHS agents may not be able to show house during hours needed by potential buyers.

Customers may be unfamiliar with home staging to sell house faster for higher price in current buyers market. Property may sell or appraise for less than the current mortgage debt. The following opportunities are identified for this business: New market with unknown potential Future planned expansions Franchising opportunities Economic rebound MHS hopes to use the strategy of eliminating real estate commission fees Use of commoditized (passive) Internet services to sell home Internet technology can be specifically targeted to move the transaction forward Seller may have high equity available for purchase of next property and investment Seller can capitalize on the current buyers market for the purchase of their next home

The following threats may be present for this business: Bargain hunters looking for deals Buyers offer automatic 6% discount from any asking price Infomercial investors & fraudsters Thieves and burglars Market prices currently in decline Little home value appreciation Old School agents not adapted to current market or technology High Volume agents with minimal contact and assembly-line processes

Goals of the Business To gain an 80% markets share in our first year, 85% in our second year, and 90% in our third year of operation. To have a website ready for use within two months. Technology can affect the business in several ways. For instance, the Internet can be used to quickly search new furniture offerings from Ashley Furniture and get ideas for a home staging even before setting foot in the store. A website will be a great marketing tool to let people know exactly what home staging is and the services that we offer. We will also be able to display

before and after pictures and share success stories from clients to show people how effective the service can be. To have a sales force of 5 agents employed within 60 days We plan to start out by locating in Chattanooga, Tennessee and then possibly growing to other areas depending on the level of our success. By partnering with Ashley furniture, Carpets of Dalton, and Kinders Furniture we would have the opportunity to expand to other cities where they already have established stores. Regarding future expansions, our initial focus would be to expand in Tennessee, Georgia, and Alabama. Possible areas to consider for growth would be all Tennessee locations including Brentwood, Cordova, Jackson, Cookeville, and Johnson City. Possible Georgia locations include Athens, Duluth, Augusta, Brunswick, Kennesaw, and LaGrange. Possible Alabama locations include Ft. Payne, Gadsden, Scottsboro, Huntsville, and Birmingham. With the economy forecasted to improve over the next 6-9 months, the industry should grow each year based on the fact that home staging is such a results-oriented field. Once a seller stages their home and sees how quickly it sells and the positive impact that it creates, they will continue to use the service for future home sales. The home staging industry will have the same effect on real estate agents because once they see how much home staging speeds up the sale process, they will be inclined to continue use of the service.

Action Plan Management and Organizational Structure Overview The success of Metro Home Stagers will be highly dependent on the core competencies of its management team and on the ability of its management strategy to reflect and emphasize the business values, mission, and culture. The management team must be able to represent to the customer the value of the art of home staging, the ability to enhance the look and feel of the customers home and to transform it into a house that will sell faster and for more money. The management team must be able to build a reputation among customers that the stress of selling a home can be greatly reduced by effectively packaging the house and creating warm, inviting spaces that will connect with a buyer's emotions. The management team must be able to build a portfolio of projects with before and after representations in order to increase market share over time. The management team must be able to maintain professionalism, credibility, networking, awareness, and community presence in order for the business to remain competitive and to head off new entrants in the local area. The management team must be visionary by remaining aware of market environmental shifts and how these could impact customer preferences and decisions.

Management Core Competencies The management team will consist of the following: Chairperson of the Board and Lead Designer Interior designer, Certified Professional Home Stager, and business knowledge.

Chief Executive Officer background in business administration with the ability to evaluate market and environmental conditions, strong organizational and communication skills, ability to develop business relationships.

Chief Operational Officer background in business administration with the ability to manage contracts with affiliate organizations, ability to resolve customer concerns, ability to carry out and evaluate customer satisfaction surveys.

Chief Financial Officer background in finance and accounting, and business financial regulations.

Management Professional Affiliations and Personal Development It is important that all members of the management team reflect credibility in their profession. For this reason, all members of the team, and most particularly the Chairperson of the Board and the Chief Executive Officer, shall become members of the American Society of Home Stagers and Redesigners (ASHSR) as well as the International Association of Home Staging Professionals (IAHSP). The Chairperson of the Board shall be a Certified Professional Home Stager and shall acquire the designation of Accredited Staging Professional through the IAHSP. All members of the management team will participate in continued training and updates on trends in the home staging industry, market and environmental trends, and small business trends by attending regular web seminars, mini-symposiums, educational workshops, and forums sponsored by home staging and business professional organizations.

For establishing a well-known reputation in the home staging business, to maintain business and customer relationships, and to maintain a presence in the community, the management team will be affiliated with the following organizations: East Tennessee Chapter of American Society of Home Stagers and Redesigners (ASHSR) Nashville Chapter of International Association of Home Staging Professionals (IAHSP) Chattanooga Association of Realtors Chattanooga Home Builders Association Small Business Administration

Management Advisory Group The management team will work with a group of advisors that can assist with identification of local trends, customer preferences, and market conditions. The advisory group will consist of the following: Real Estate Advisor a representative of the real estate industry knowledgeable of local home sales statistics, foreclosures, buyer preferences, and other trends. Home Builder Advisor a representative of the home building industry knowledgeable of the speculative home building market, builder inventories, growth areas, target customer characteristics, and design preferences. Furnishings Advisor a representative of the home furnishing industry knowledgeable of local preferences in color, furniture, style, accessories, and customer values.

Contracts The management team will establish contracts with Ashley Furniture Home Store, Carpets of Dalton, Rooms To Go, and other local furniture companies as needed for acquisition of staging props and with a local moving company for transportation and setup. The management team will seek opportunities to establish contracts with local home builders and real estate agents for exclusive rights to provide staging services for either newly built, empty homes, foreclosed homes, or other homes needing improvement before being placed on the market.

Action Plan Utilization of Metro Home Stagers Purpose and Strategy Metro Home Stagers will take advantage of our strengths and features as follows to sustain this business: We help our customers to sell their homes quickly. The best price is offered. We entice potential buyers by highlighting a homes best feature and making it feel spacious, warm and inviting. Our interior decorating and design provides a beautiful and functional home. Easy to manage We will make the most of what is available to stage each home. We will concentrate on affordable and outstanding transformations Well trained professionals unlock their potential

We improve the look and feel of the space without making the customer break their banks.

Innovative furniture layouts, new color schemes and creative displayed accessories. We help our customers achieve their dream homes by creating beautiful functional spaces that reflect their lifestyles.

It provides universal appeal so that all potential buyers appreciate the style and features of a property.

Absolutely worth every penny invested. We help our clients sell their homes quickly and for the best price. We deal with from a cozy condo to a luxurious mansion. Staging enables homes to be sold faster that the other homes in the market We have legally qualified professionals Statistics prove that staged homes sell at a much faster rate and at a higher profit than homes that are not "show ready"

Makes homes that make one feel like living in your own style and your own tastes and easier to upgrade and add on

Action Plan Financing The estimated startup funding is estimated to be $100,000. This funding will primarily come from the officers of MHS and any significant shortage will be come from a small business loan. The officers of MHS will secure a loan by the end of April if the additional funding is necessary. The next step will be to complete contracts with Ashley Furniture Home Store, Carpets of Dalton, Rooms To Go, and Two Men and A Truck. In

parallel with completing the contract our attorney will proceed with obtaining a charter of incorporation. MHS will contract the development of a web page through an experienced web master. This will consist of the initial development cost of the web site plus a monthly fee for Internet service. A small office space will be acquired and an employee will be hired to answer the phones, monitor email communication and arrange for contract services delivery. Phone service will be obtained from a local carrier and a computer and printer will be purchased from Dell. These tasks will begin on April 30th and will be completed by the end of May. Five employees trained in home staging will be hired before the end of May. Initial advertising using television, radio, and relevant trade publications will begin on May 3rd. Advertising methods will be reviewed after two months to determine which method of advertising yields the greatest results. Bonding and insurance will be procured and will go into effect on June 7th. MHS will open its doors for business on June 7th. Demographic surveys real estate sales data will be purchased as geographic expansion is considered.

Summary Metro Home Stagers intends to entice potential buyers by highlighting a homes best features and making it feel spacious warm and inviting inside out. MHS plans to advertise to our customers on the Internet because most of them do their home shopping on the internet in this fast pace moving world. Other features of home staging are summarized below: Home staging lessens the clutter around a house.

Staged homes are inspected by the buyers and the inspectors so the issue of bad or low quality will not arise.

MHS has identified factors such as the type of neighborhood, target homebuyers, price range of the buyers, budget of the home seller and the staging expense.

Staging differs from home to home. The needs and the capacity of the buyer should be known.

Recommendations In the economic downturn we are currently in, we believe the home staging business will be very profitable. Sellers now, more than ever, have a need to separate their homes from other sellers in a way that will potentially sell their home sooner and at a higher price. The investment to enter the home staging business is very low at this time and there are no significant barriers to entry. The competition in the Chattanooga area is low or nonexistent. Because of the poor economy, contract services such as Rooms to Go and Ashley Furniture are eager to enter into a business relationship. The development of the web site and the office personnel can also be obtained for relatively low cost. The analysis suggests the officers should start this business as planned.

References American Society of Home Stagers and Redesigners; www.ashsr.com Home Staging Resource; www.homestagingresource.com International Association of Home Staging Professionals; www.iahsp.com http://transcripts.cnn.com/TRANSCRIPTS/0108/05/sun.10.html http://www.insidefacebook.com/2009/02/02/fastest-growing-demographic-on-facebookwomen-over-55/

Works Cited American Society of Home Stagers and Redesigners. Web. 16 Apr. 2010. <http://www.ashsr.com>. Home Stager :: International Association of Home Staging Professionals. Web. 15 Apr. 2010. <http://www.iahsp.com>. Home Staging/Stagers Resource Classes, Real Estate House Staging. Web. 16 Apr. 2010. <http://www.homestagingresource.com>. QC Design School. Web. 16 Apr. 2010. <http://www.qcdesignschool.com/qcdesign/homestaging.asp> Rostocki, Adam. "Home Staging & Home Stagers." Home Staging. Web. 21 Mar. 2010. <http://www.home-staging-home-stager.com/index.html>. Schwarz, Barb. "ASP Home Staging Statistics." Staged Homes. Stagedhomes.com, 2009. Web. 21 Mar. 2010. <http://www.stagedhomes.com/mediacenter/stagingstatistics.php>. Smith, Paula. "Price Your Home To Sell." Buzzle Web Portal: Intelligent Life on the Web. Web. 16 Apr. 2010. <http://www.buzzle.com/articles/price-your-home-tosell.html>.