Creating space for business and innovation

Yash Talwar, Nour El-Din Ayad, Garvit Dhingra Business Plan NLC 2018 Internationalhttp://1000logos.net/wp Community-content/uploads/2017/07/Color School -FBLA -Logo.jpgWashington State 0 | SPACES

[email protected] SpacesBellevue.com

Table of Contents

1.0 Executive Summary…………………………...………………………………………2 2.0 Company Profile………………………………..……………………………………..3 2.1 Legal Form of Business 2.2 Effective Date of Business 2.3 Mission Statement 2.4 Company Governance 2.5 Immediate Development Goals 2.6 Financial Status 2.7 Company Location 3.0 Industry Analysis…………………………….…………………………………….……5 3.1 Description, Trends, and Opportunities 4.0 Target Market…………………………………………………………………………..6 4.1 Market Analysis 5.0 Competition Analysis………………………………………………………………....7 5.1 Key Competitors 5.2 Potential Future Competitors 5.3 Barriers for Future Entry 6.0 Marketing Strategy…………………………………………………………………..10 6.1 Key Message 6.2 Business to Business (B2B) and “SoLoMo” Tactics 6.3 Media Platforms 6.4 Sales Procedure and Strategy 7.0 Operations……………………………………………………………………….....…14 7.1 Business Facility 7.2 Production Plan 7.3 Personnel Plan 7.4 Impact of Technology 8.0 Management and Organization………………………………………………….21 8.1 Key Employees, Board of Directors, and Human Resources 8.2 Identifying, Recruiting, and Securing Key Participants 8.3 Compensation and Incentive Plans 9.0 Company Analysis…………………………………………………………………...21 9.1 Important Assumptions 9.2 Short- and Long-Term Development 9.3 Risk Analysis 9.4 SWOT Analysis 10.0 Financial Plan…………………………………………………………………………25 10.1 Accounting System 10.2 Capital Expenditures and Loan Request 10.3 Monthly Income Statement 10.4 Annual Income Statement 10.5 Cash Flow Statement 10.6 Breakeven Analysis and Return on Investment 11.0 Appendix………………………………………………………………………………30

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1.0 Executive Summary

After generations of structure and restraining work environments, creative thinkers and innovators alike are now looking to expand beyond the confining walls of a cubicle, and to pursue their unique visions without boundaries. With the rise of the digital era, entrepreneurship is no longer limited by financial advantages and prior opportunities. In fact, according to the Global Entrepreneurship Monitor, nearly 27 million Americans have started or are running their own businesses, amounting to nearly 14% of the population. However, nearly nine out of ten aspiring entrepreneurs face financial obstacles due to burdensome initial capital expenditures (Forbes). Meanwhile, a new generation of Americans are rejecting the traditional office environment, searching for new alternatives that foster more possibility in the business world. For aspiring business leaders, Spaces will be their solution, creating more opportunities for business and innovation.

Spaces is a unique coworking office in the heart of , offering a variety of work environments and business amenities to help foster the inventive spirit of entrepreneurship. By building a shared workplace, entrepreneurs and freelancers will find a dedicated community of business pioneers. Spaces will offer a wide range of services, from hot desks and student passes to fully fledged custom offices. With a fully functioning work environment already in place, entrepreneurs can worry less about the hassles of leasing a building, furnishing an office, or purchasing equipment and amenities, and instead focus on the priorities of their small business.

The industry of coworking is growing exponentially, with the number of coworking locations almost doubling in America every year (Pasquier). The internet and cloud services have untethered the average worker from the traditional office, while rapid advancements in the technology and media sectors have created an explosion of new startups. All this has cultivated a huge demand for alternative work environments, and with a renewed emphasis on networking and connections, coworking has evolved from a concept to viable industry.

The growing Bellevue metropolitan area will serve as Spaces’ central location. Over the past couple years, downtown Bellevue has become a fast-growing city, cultivating more business and economic opportunities to many of its inhabitants. Although Bellevue is home to one other major coworking institution, Spaces will undercut their prices and serve to other members of the innovative community that aren’t accounted for (i.e. students). In fact, “even if the Seattle area had 50 coworking spaces, we wouldn’t be anywhere near capacity” (Sayles). Ultimately, by residing in the 5th largest Washington city, Spaces will expand the office opportunities available to not only locals, but to the rest of the Pacific Northwest.

Spaces will obtain its initial financial expenditures through the Small Business Administration (SBA). The company will acquire an SBA 7(a) Small Business Loan for about $2.2 million. The SBA will secure the loan from the local Bank of America, and in return Spaces will pay a loan guarantee fee. The company plans to pay off the loan with an interest rate of 7.25% within a 15-year maturity period. Although we have prepared for early losses, we are confident that Spaces can become financial stable. By aiding a growing movement in a top city of entrepreneurship, Spaces will establish itself as a leader in the commercial movement towards a more innovative community.

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2.0 Company Profile

2.1 Legal Form of Business Benefits of an LLC Spaces will form a Limited Liability Company Management Flexibility: An LLC can opt to (LLC). An LLC shares the same advantages as a be managed by its members, which allows all sole proprietorship and general partnership: no owners to share in the business’s day-to-day double taxation and management flexibility. An decision-making, or by managers, who can be LLC will go under “Pass Through Taxation”; either members or outsiders. which means all profits and losses will be recorded under each co-owner’ tax return. An Limited Protection from liability: Owners LLC will also benefit with limited liability, will enjoy limited liability, which means they resulting in a 0% risk of the owners’ personal are personally protected from any liability of the assets. With recent amendments to the U.S. Tax LLC and successful judgments, as well as from code in Congress, subjects to Pass Through the LLC itself. Taxation will be able to deduct 23% of their Pass-Through Federal Taxation on Profits: taxable income. An LLC is a pass-through entity, meaning its profits go directly to its members without being

taxed by the government on the company level. 2.2 Effective Date of Business

Spaces will begin operations on January 15th, 2019. Before opening day, the Spaces team will organize and create a working environment for our beginning clients.

2.3 Mission Statement

Spaces strives to create a professional and vibrant environment for small businesses and young entrepreneurs. Whether it be an emerging business searching for a startup location, or an established company looking to expand, Spaces offers an array of workspaces in the Bellevue area, and provides these organizations with the proper resources such as conference rooms, private study-quarters, and other business amenities. In short, Spaces attempts to not only be an office co-op, but also to enhance the small business community by encouraging networking among entrepreneurs and small businesses.

2.4 Company Governance

Since Spaces will run as an LLC; the three chief officers will be Yash Talwar, Nour El-Din Ayad, and Garvit Dhingra. Under the legal agreement, Yash Talwar will act as the C.E.O (Chief Executive Officer), Nour El-Din Ayad as the C.F.O (Chief Financial Officer), and Garvit Dhingra as the C.O.O (Chief Operations Officer). All three co-owners will hold limited liability within the company.

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2.5 Immediate Development Goals

For the company to experience success as soon as we begin operations, it is critical that Spaces begins to develop its company assets directly from the company’s initiation. Within the first three months of operation, Spaces must:

- Fully train employees and community managers to ensure smooth operations - Conduct efficient advertising in multiple channels, including social media and physical branding throughout the downtown area - Attain about 50 students and businesses, to ensure we meet our financial projections and build an initial customer base

2.6 Financial Status

Although Spaces’ three chief officers possess substantial personal assets, under Washington state law, co-owners of an LLC are not required to provide their personal assets as a collateral to the agreement. However, to launch Spaces properly, significant additional funds are needed. For this reason, Spaces will apply for an SBA 7(a) loan from the United States Small Business Administration for about $2.2 million dollars, with an interest rate of 7.25%. 2.7 Company Location

Spaces will be in the heart of Bellevue downtown, a bustling metropolitan area quickly becoming the leading business hub of the greater Seattle area. Spaces will lease the 8th and 9th floor at the Bellevue Pacific Center, a 40,809 square feet facility at 188 106th Ave NE #400, Bellevue, WA 98004. Located walking distance from , Bellevue Downtown Park, the , and the City Center, Spaces is minutes away from entertainment, dining, transportation, and the heart of a bustling city, an attractive feature of working in the Spaces office.

Population Economy Coworking

th 5 largest city in 1.69% Annual Job Home to 23,889+ Washington Growth local businesses

Annual population Median Income of 49.2% partake in growth rate of 5.1% $100,703.00 business & tech fields

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3.0 Industry Analysis 3.1 Description, Trends, and Opportunities The turn of the 21st century brought the boom of the internet and a new era of business and innovation. As of 2014, 96% of those under fifty years-of-age in the U.S. actively use the internet, and 94.7% of businesses report having a reliable internet connection. This has enabled a drastic shift in the global workforce. Entrepreneurship is no longer dominated by venture capitalists and the upper-class, instead start-ups are now a thriving field for the middle-class. Not only is creating a business increasingly more prominent, but the resources to do so have paved the way for innovation unlike ever before. The days of a nine-to-five in a small cubicle have been replaced with a new era of freelancing and working from home. In fact, according to the Inuit report, 40% of the American workforce will either be freelancers, temps, or independent contractors by the year 2020. Survey results indicate that over a period of time, employees in co- working areas felt more focused, confident, and creative.

Coworking Client Survey Results (2020 Inuit Report)

68% 71% 90% Feel more focused Feel more creative Saw an increase in in a coworking in a coworking their confidence area area

Nearly 43% of the American workforce worked from outside the office in 2016. This has all culminated in a desire for a new type of workspace, one which enables the freelancer, the entrepreneur, and the digital nomad to break free of the high-costs and hassles of a traditional office. Coworking, a new emerging business industry, has quickly begun to fill that demand. Created in 2005, coworking is the concept of non-traditional office spaces, enabling customers to rent desks or office space in a shared community. Fully furnished and equipped with amenities such as Wi-Fi and business resources, coworking enables small and medium enterprises, as well as the digital nomad and entrepreneur, to drop in and focus on work instead of the hassles of real-estate and the traditional office. Coworking has exploded onto the business scene in the past decade, and since 2005 the demand for coworking spaces has increased exponentially every year, with an estimated 4,528 coworking spaces across the United States in 2018. This is the prime opportunity for Spaces to enter the field and find demand and success in the market.

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Coworking Spaces in the U.S. Since 2005

6,219 As seen in the figure to the left, coworking has been growing across the 5,476 nation at an almost linear rate. 4,528 Specifically, between the years of 2012 and 2015 there was a significant increase in the amount of coworking 2,876 offices. This is directly correlated with 1,096 the amount of businesses created. With the shift to an alternative working 283 14 environment, small and emerging firms had decided to switch to a better and 2005 2010 2012 2015 2018* 2020* 2022* more innovative setting: coworking.

4.0 Target Market

Spaces will primarily target small businesses, entrepreneurs, and freelancers seeking to engage in Greater Seattle Area the Seattle area as its chief market for business. Although establishing high-quality products and reputable services are often a priority for startup companies, according to a Small Business Administration (SBA) report published in 2016, a business’ location largely impacts its brand image, reputation, accessibility, primitive finances, and market, among other crucial items. To adhere to this matter, Spaces aims to provide small and emerging businesses with an array of workplaces in the Bellevue metropolitan area. Our secondary target market will consist of high school students in the Bellevue, Lake Washington, Seattle school districts, and university students. Spaces aims to attract these students in order to spur networking with the small businesses and entrepreneurs. Students may get the opportunity not to only complete their work at Spaces but also to attain possible internships from these small businesses.

Primary Target Secondary Target Market Market Small Businesses High School

Entrepreneurs University Students

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4.1 Market Analysis Small Businesses and Freelancers In the past year, small businesses in Washington state employed about 1.3 million people in their workforce; as seen in the figure to the left, that number made up about 51.7% of people in the working sector. Meaning a majority of people who work are under some sort of small business. Furthermore, in the private sector, employment has increased by 3.1% in the past year; this was due to the significant growth of small businesses. In 2014, the average loan amount was under $100,000.00 among small firms. This is correlated with the spread of co-working and other services alike. These trends will play to the successes of Spaces as we not only hope for small businesses to bring in a significant number of employees but also to start their firms with a low financial burden.

High School and University Students

With a significant amount of school districts surrounding the Spaces location, we hope to establish a strong base that consists of a variety of students. Our goal is to motivate and encourage students to network and connect with entrepreneurs, freelancers, and other businesses alike to grasp a variety of opportunities. This will be a good method for students to have possible internships or even create their own businesses in the near future. Specifically, for university students, we plan to market and advertise at the University of Washington in Seattle. This university not only has one of the most prestigious business schools but a majority of students seek jobs and internships at small startups. Therefore, we hope that Spaces will act as a business hub for these students.

5.0 Competition Analysis

Since its inception in 2005, coworking has quickly become a flourishing industry. In the past decade, Seattle has become a hotbed for coworking offices. While analysts are confident the area is nowhere near capacity, and demand is at an all-time high, it is still of utmost importance for Spaces to evaluate competitors and ensure it stand out in a crowded market. While there is a plethora of competitors across the state, Spaces will prioritize local coworking offices as our primary competitors.

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5.1 Key Competitors WeWork

WeWork is by far the largest competitor to Spaces. As an established international coworking space, this company dominates a majority of the market share. According to the Wall Street Journal and CNNMoney, WeWork is now worth over $10 billion, with some estimates as high as $20 billion. With buildings in over 60 cities, WeWork is our main competitor not only globally, but also locally. WeWork’s Lincoln Square office is the largest coworking space in downtown Bellevue. While they offer many of the same services and amenities as Spaces, WeWork’s brand comes at an exorbitant premium which can deter small businesses. Not only does Spaces undercut their prices by at least 15-20%, WeWork makes no effort to cater to high school students, a key secondary market for Spaces.

Davinci Meetings & Coworking

With 2 locations in downtown Bellevue, Davinci is another local competitor. While Davinci does have coworking locations across the state, their Bellevue offices operate under a different business model. They offer conference rooms and day offices by the hour, instead of permanent locations. Not only are they expensive, there is none of the added value of working in a shared workspace alongside other entrepreneurs. Most of their amenities are not included in the cost of renting an office. They operate in archaic and bare offices, with a highly unappealing website. Spaces is branded to appeal to a new generation of entrepreneurs, while offering not only temporary conference rooms and day passes, but also permanent solutions to help business grow, making Spaces stand out as a superior option to Davinci.

Regus

Regus is another local competitor in Bellevue, with a satellite in Key Center in Bellevue. They offer both hot desks and permanent desks. However, their website is extremely difficult to navigate, and prices are not offered upfront until after a tour of the facility. They offer few amenities, limited to a desk, internet access, and a phone line. They offer meeting rooms for rent and some basic coworking services. However, Regus is not a singular business offering spaces, rather offering satellites and directing customers to affiliated buildings with available space. Spaces offers one dedicated space, with better amenities, dedicated offices and desks, and better services to help businesses grow, and thus stands out over Regus as a premier coworking option

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Competition Overview

spa ces

5.2 Potential Future Competitors Bellevue Square As a flourishing city center, Bellevue Square is currently one of the highest performing shopping centers in the nation, rapidly expanding into 3 separate malls covering all facets of shopping and entertainment, from fast casual to luxury experiences. Currently, the mall has limited to no work areas, but with plans to expand, the center could potentially create work spaces and areas that could attract both entrepreneurs and especially students.

Office Nomads A successful coworking space in the heart of Seattle, Office Nomads has achieved national recognition as a premium coworking business. Given their extreme success and rapid growth, there is potential risk for Office Nomads to expand into Bellevue, creating further competition in an already crowded field.

5.3 Barriers to Future Entry Service Differentiation As Spaces will be the first coworking space to provide amenities and services that targets students, it will be difficult for other startup companies to apply this into their business successfully. Spaces will aim to create partnerships with the Lake Washington, Bellevue, and Issaquah school districts. By creating strong bonds with educational organizations, Spaces will secure a significant number of customers from the student base.

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Location Spaces will be the second start up firm for co-working services in the Bellevue downtown area. Currently, WeWork is located in this area, however with our price modeling strategy we will provide a cheaper alternative to WeWork, with the same location. This will make it harder for future startups to locate themselves in the Bellevue downtown area as Spaces will soon be the new local firm.

Price Currently, the average price per square foot in the downtown area is about $35.00. However, since Spaces is located on the outskirts of this area, the company pays an average $29.50 per square foot. Due to this, we are able to undercut prices of WeWork and other competitors. Therefore, new coworking businesses striving to locate near the similar area will find it difficult to gain a strong customer base due to the already competitive prices that Spaces offers.

6.0 Marketing Strategy 6.1 Key Message

“Here at Spaces we encourage an environment for entrepreneurs, students, and professional individuals to develop new ideas- ideas that will solve the technological, economical, and social challenges we face today.”

6.2 Business to Business and SoLoMo strategies Since the company’s target markets are split into primary and secondary components, Spaces will implement two strategies for customer relations: Business to Business (B2B) and SoLoMo (Social, Local, Mobile). For small businesses, entrepreneurs, and freelancers, we hope to gain their attention through our B2B strategy, and for our student base, we will utilize the SoLoMo tactic to gain attention. Business to Business (B2B) Our B2B strategy will be used to attract our primary target market: entrepreneurs, small businesses, and freelancers. This tactic will be split into three components: search engine optimization, email marketing, and digital platform marketing. With automated email marketing platforms such as mail chimp, Spaces will not only be able to create various online campaigns but be able to deliver them in an efficient manner. Second, our digital platforms will include networking hubs such as LinkedIn, Marketo, Eloqua, and HubSpot. These platforms allow businesses such as Spaces to connect and link with prospective clients. With a sense of

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professionalism, we will create advertisements on these platforms to attract small businesses. Finally, Spaces Website our most critical component of our B2B strategy will be the search engine optimization tactic on our online website. In order for prospective clients to enter the decision stage, they must be comfortable with the seller. Therefore, having a clean and efficient website will help Spaces generate legitimate leads. Current search engines like Google, Bing, and Yahoo implement algorithms to help provide users with relevant information to their searches. To make sure that the Spaces website will appear on page 1 search results, it is pivotal we implement a strong SEO. When developing a website, we will focus on two components: onsite and offsite. Our onsite factors will include posting fresh and relevant content on a consistent basis, as well as including keyword density like “Small Business” “Space” and “Cheap Location.” Our offsite factor will include reaching out to small business blogs and creating partnerships so other websites would include portals to our platform.

SEO Breakdown

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SoLoMo (Social, Local, Mobile) Spaces will also target high school and university students; therefore, it is essential to also create an efficient marketing strategy that is structured around the interests of this specific consumer segment. Spaces will implement SoLoMo strategies that are centered around our secondary target market.

Social With regards to social media, a large emphasis will be placed on customer interaction. Social media platforms can no longer be considered places where businesses simply share information or promotions, but rather are mediums by which to communicate directly with customers. As stated in an article by Huffington Post, “A growing number of customers expect real-time responses from their service providers. When customers are not happy with the service they are receiving and want to vent their frustration, they increasingly turn to public channels, aware that no company wants the negative publicity.” (Eldridge). In response to this, many firms are adding social media (usually Twitter and Facebook pages) as a permanent channel for customer interaction, which are fully integrated into their Customer Relationship Management (CRM) systems.

Local Being a small business, the company’s advertising and sales strategies will depend on local interactions. Therefore, it is pivotal that Spaces establishes local connections within the growing market. To implement this, hosting local events like Small Business Day will help increase awareness of our brand. These events will be centered around spreading awareness about the coworking industry and Spaces as a liable brand.

Spaces Mobile App Mobile Spaces’ mobile application allows interested or current customers to schedule and receive notifications for appointments with our community managers. In addition, it will include information regarding both Spaces’ typical business packages and general information on Co-op spaces. Finally, customers will be able to create a personal profile on the mobile app to chat with customer service agents to report any problems that may arise.

6.3 Media Platforms As stated in section 6.2, our media platforms will mainly consist of LinkedIn, Marketo, Facebook, Instagram, and Twitter. On these platforms, the Spaces team will create various

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promotional posts. For example, as seen in the figure to the right, a sample post on our Promotional Advertisements Instagram will mainly target students who are interested in networking with small businesses and freelancers. On our LinkedIn, our posts will target small businesses interested in saving initial expenditures by moving to coworking. Our platforms are split accordingly with our target market. Digital advertising on Facebook, Twitter, and Instagram will be targeted towards students, while platforms like LinkedIn and Marketo will be used for attracting small businesses and entrepreneurs.

6.4 Sales Procedure and Strategy Our sales strategy will be structured under the Sales Funnel “Sales Funnel” concept and will be interconnected with our SoLoMo and B2B tactics (Section 6.2) To organize this into a procedure, we have created various steps for the potential customers. The first step in the sales procedure would be “Awareness.” Through the implementation of our SoLoMo and B2B strategies, we hope to catch the attention of many prospective customers. Then we will strive to make it apparent in this phase, that Spaces is a cheaper alternative to buying property. Next, the customer will enter the “Interest” stage, in which we will discuss if their needs are met with the services we provide. This will then lead into the “Decision” period in which the customer will purchase the service that best fits their desires; this is the most critical stage as the conversion of perspectives into active buyers takes place. Finally, the last stage is what Spaces will anticipate the most: we will encourage the customers to do a referral also known as the “Action” stage.

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Pricing Strategy Pricing Overview To convert prospects into active buyers, we will need to have an upper edge against our main competitors. Therefore, we used the “Business Modeling” strategy to create prices for our unique services. The financial department took prices side by side from our main competitor, WeWork, and undercut them by 10%-20%. This strategy is realistic for the company as the Spaces headquarters is not as big as WeWork, which allows us to charge less and still gain profits.

7.0 Operations 7.1 Business Facility

1st Floor 2nd Floor

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Spaces’ facility will be in Bellevue, Washington. In the heart of downtown area, business clients as well as students will enter in through the front doors. They will be met by the community managers who will supervise incoming customers. The first floor will consist of many hot desks, group tables, high tables, office amenities, and a cafe. The first floor is mainly for the students and customers who work alone or in small groups. The second floor will be for clients who own businesses. That is where many of the employees of the small firms will work. Since Spaces will provide customized offices for the small businesses, it is not possible to scale and map out the second floor. However, the second floor will consist of bathrooms as well as more office amenities. The registered address for the company will be 188 106th Ave NE #400, Bellevue, WA 98004. Spaces will be closed for Christmas and Thanksgiving due to national holidays. Furthermore, to give an environment of modernity and style, the offices will consist of glass doors and windows and the furniture will consist of “smart” chairs and tables that will have various outlets. Finally, we will also provide a cafe for clients who like to drink coffee or eat other snacks

7.2 Production Plan

Spaces will operate as a multifaceted coworking area, and thus the vast majority of Spaces’ offerings are not goods but services, thus Spaces’ is not dependent on manufacturing partnerships or other supply chains. Instead, the major factor influencing cost of our services is our location retail lease. To generate revenue, Spaces offers are priced to ensure they cover both the cost per square foot of the office as well as first floor layout other services provided. With that in mind, Spaces chose a location not within the city center, to reduce location costs and thus reduce service prices. However, even with a more inexpensive location, Spaces is still located in the heart of downtown Bellevue, and thus office space is at a premium. Services such as coworking desks and student passes will not generate nearly enough revenue to cover the office space they occupy, instead serving as attractive incentives to build a customer base. Once our customer base is established, Spaces makes every possible effort to help business expand and grow, which not only builds a reputable brand, but business that are growing are more likely to stay with Spaces, and upgrade to business tiers which generate our company revenue. Below, the different services Spaces provides are outlined Student Day and Annual Passes Our secondary target market consists of high school and university students, and thus we have created an explicit tier tailored to these populations. With a valid student ID, any student has purchase access to a hot desk or lounge area, as well as limited access to conference rooms and other business amenities. High-speed internet access, as well as projectors and other presentation technology ensures students can work individually or as a group in a professional work environment. Students also will have the opportunity to meet and network with business professionals, building valuable connections. With access and partnerships with both the Lake Washington and Bellevue School Districts, Spaces will market heavily to the student base.

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Student Day Pass Student Annual Pass

Single Day Pass- $10.00 Annual Pass-$15.00

Partial Amenity Access Partial Amenity Access

Hot Desks Reserved Desk Space

Bronze and Silver Business Passes For business professionals and entrepreneurs looking for coworking options, Spaces offers two tiers of desks in the facility. Our Bronze level offers access to all of Spaces business amenities and services, as well as the opportunity to use any available hot desk on the first floor. The Silver level package is for more established or longer-term entrepreneurs, who will be given permanent access to the same desk, while still being immersed with other entrepreneurs and innovators. The Bronze level access costs $250 a month, while obtaining a permanent desk for the Silver level access is $350 a month.

Bronze Level Pass Silver Level Pass Gold Level Pass

Bronze level- $250/month Silver level- $350/month Gold Level- pricing varies

Partial Amenity Access Full Amenity Access Full Amenity Access

Permanent Desk Enclosed Office Hot Desks

Gold Business Passes For larger small business or entrepreneurs looking for privacy and an enclosed office, Spaces offers our highest tier, the Gold level. Customers of this pass are given an enclosed office with a desk on our second floor. As seen in section 6.4, pricing is dependent on the number of employees the business or group has. These customers are also given access to all the amenities and privileges of the lower passes.

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7.3 Personnel Plan Employees will be hand-selected by the three chief officers after being evaluated by the human resources employee. Evaluation will be based on their expertise, shared belief in the company vision, and dedication for the success of the company. Prior to selection, all potential employees must fill out and send Spaces’ job application form. All hired applicants will be subject to monthly employee evaluations to ensure the company runs smoothly and efficiently. Prior to the company’s initiation, Spaces plans to hire 13 employees in order to support the company efficiently in the opening years of business. However, as Spaces expands, the company will hire more employees to accommodate the growing business. In addition, to gain employee loyalty, all employees’ base salaries will increase by 10% after three years of operation.

Company Hierarchy

Yash Talwar Garvit Dhingra Nour Ayad Chief Executive Officer Chief Operations Officer Chief Financial Officer

General Manager Human Resources Community Manager

Company Building Marketing Janitor I.T Maintenance Consultant Marketer Café Baristas

Personnel Wages

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Full Time Positions To maintain steady operations throughout the day, Spaces will hire a general manager, an IT specialist, client marketing consultants, and company marketers. As vital employees, the full- time staff will determine the long-term success of the company; therefore, the selected applicants must possess a passion for their work and shared interests for the company’s goals.

General Manager Employee Count: 1 Job Description: The general manager at Spaces will direct and coordinate activities of all departments of the company, including IT, operations, and sales. The manager will report directly to the Chief Operations Officer, and will conduct monthly employee evaluations to ensure company productivity.

Job Requirements: Any candidate applying for this position must have an MBA degree, a standard 4-year college degree, and previous working experience in business management. The general manager must be a natural leader with outstanding organizational skills.

IT Specialist Employee Count: 1 Job Description: With the implementation of innovative technology, Spaces will require an IT specialist. The selected applicant will be working with computer systems as well as various other technologies to help Spaces maintain smooth operations. The IT specialist will also be working to resolve issues regarding software and internet access.

Job Requirements: Candidates must have obtained an associates or bachelor’s degree in a technological field. Furthermore, the employee should have knowledge in various computer languages and must be able to work independently for long periods of time. Certifications by IT companies like Oracle, Cisco, or Microsoft would be a good asset to each applicant.

Client Marketing Consultant Employee Count: 1 Job Description: To set Spaces apart from its competitors, we will hire consultants that would help the small businesses in our coworking space by providing certain marketing expertise. Various tasks would include, creating small marketing campaigns and budgets.

Job Requirements: Candidates must have a degree in either marketing or another business field. Knowledge in marketing strategies as well as content creation would be vital to completing common tasks for this opening. Certification in marketing will elevate an applicant's status.

Company Marketer Employee Count: 1 Job Description: To gain media and community attention, we will require an employee to advertise and promote the Spaces brand. This employee will be tasked to implement the SoLoMo strategy for the company. Social media platforms and other traditional advertising channels shall

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be tools that this employee will utilize to spread awareness of the company. The selected applicant will also work with the IT specialist to develop a mobile app for the customers.

Job Requirements: Like the client marketing consultants, the company marketers should have a degree in a respective advertising field. Having worked with marketing tools is recommended as most of the tasks involve this type of work. Any certificates or endorsements that are marketing related, will act as bonuses to each application received.

Part Time Positions Separate from full-time employees, janitors, community managers, building maintenance workers, and human resources employees will be required to work part-time for at least 4 hours each day. Employees will be selected based on their dedication and motivation for the success of the company.

Janitors Employee Count: 2 Job Description: The janitors will be responsible for cleaning and sanitizing offices, meeting rooms, and bathrooms daily. In addition, they will vacuum the office grounds weekly, organize the storage space, and clean any accidents that may occur in the office.

Job Requirements: Candidates must have at least a high school diploma; however, no additional education requirements are required for this position. The majority of this job is manual labor, including bending, walking, pushing, and lifting objects for a vast portion of hours. Therefore, candidates must not have physical limitations that hinder their efficiency of work. Previous experience will be taken into consideration.

Community Managers Employee Count: 2 Job Description: Community managers will be tasked to greet clients and students at the front desk. Organizing open slots for conference rooms, or work alone desks will be common work for these employees. Answering phone calls and customer concerns should fit the forte for every selected applicant in this opening. Using Microsoft office products will be common for these employees as well.

Job Requirements: Since the community managers are the first contact a potential customer will encounter, they must be professional towards all clients. For this reason, they must possess patience, English proficiency, and be familiar with office appliances (scanners, printers, etc.). Furthermore, organization is crucial, as they schedule appointments and consultations.

Human Resources Manager Employee Count: 1 Job Description: The human resources manager will maximize the productivity of employees by improving workforce relations in the office. They will be responsible for recruiting talent to the company, and will also organize employee benefits and compensation. This includes

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preliminary screening of potential employees and conducting administrative duties. The human resources manager is a pivotal position for the success of the company.

Job Requirements: Being a manager position, applicants must possess an HR management degree and be proficient in workforce management, statistics, and incentive programs. They must have plenty of experience in an office environment as to understand proper workforce relations.

Building Maintenance Employee Count: 1 Job Description: Having a safe work environment is not only expected by our employees but our customers as well. Building maintenance staff will be tasked with conducting inspections for the Spaces headquarters in Bellevue. Adjusting the property to fit both the customer and employee needs will be required by this employee. The worker will also be tasked with developing a safety code for a natural disaster or other harmful incidents.

Job Requirements: Having experience in building creation and inspection will be required for this job. Carrying heavy objects, walking, running, and using tools should be comfortable for the selected employee. At minimum, the worker should have obtained state safety licenses and a high school diploma.

7.4 Implementation of Innovative Technology By implementing emerging technology into our business model, the staff will be able to create an organized and efficient work environment. The Spaces workforce will strive to make day to day operations more lean and concise. The community managers, general managers, client marketers, company marketers, IT specialist, and chief officers will each have desktop computers with all the relevant software for the company. This will allow us to implement emerging technology in the following ways: - Accounting – The chief financial officer of Spaces will use QuickBooks Premier 2018 to efficiently organize the company’s accounting needs. This desktop application gives Spaces more flexibility and marketing power, and helps the company save time and money. - Open Space Availability – Open spaces for students and young adults will be updated online by our community managers. This will allow customers to see when the perfect time is to come in. - Renovation Designs – The company will implement Chief Architect Design Software to design renovations and structural changes for our gold level clients. Using the software’s realistic 3D renderings, the customers will be able to see how their future business office will look like. - Employee Communication and Employee/Consumer Communication – Through Microsoft Outlook, employees can email or chat with one another, host online meetings, and email clients. This allows employees to communicate even when not in the office, and keep clients informed about our work. - Digital Advertisements – Spaces’ website, mobile application, and social media accounts will provide the public with information about the company and our services, access for customers to schedule consultations for our service.

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8.0 Management and Organization

8.1 Key Employees, Board of Directors, and Human Resources

Spaces will structure its management functions and operations by the company hierarchy As shown, the chief officers will generally overlook the performances of the general manager, human resources, and community managers. Furthermore, each chief officer will have their own set of tasks and agendas to complete. As Chief Executive Officer of Spaces, Yash Talwar will create an integrated operations plan that will fit each departments requirement. This will ensure consistent day to day operations. As acting Chief Financial Officer, Nour Ayad will oversee financial aspects and decisions, and will be expected to create quarterly reports on the financial stability of the company. Garvit Dhingra, who will act as the Chief Operations Officer, will supervise the management structure of the company. By working closely with the human resources worker and general manager, he will ensure that appropriate candidates are selected for the various other positions. Finally, Spaces will no acquire a board of directors during its time as an LLC.

8.2 Identifying, Securing, and Recruiting Key Participants

As a start up in Bellevue, Washington, Spaces will not close doors on young adults who are striving to break the barrier into the business world. Our human resources employee will use strategies to recruit a mix of experienced professionals and young adults. This will allow a stable balance between professionals and new recruits. As located near University of Washington, Spaces will target young adults who have graduated with a bachelor's degree in their respective fields. Spaces will also recruit through various online platforms such as Indeed and Zip recruiter. These platforms are essentially hubs for recruiters and employers. Companies can view resumes and cover letters through these platforms and are able to choose the most qualified applicant in an efficient way. 8.3 Compensation and Incentive Plans

To enhance the company’s services, a proper management and organization structure is necessary. To develop a structured management, it is best that the company executives provide compensation plans and incentives. Since Spaces is a co-working space, we will be providing discounted and or free prices for our employees. Staff that stay with the company for at least 1 and half years, will receive special passes for hot desks or open space desks at a cheaper price. Brand awareness is essential to turning prospective customers into engaged buyers. Therefore, awarding the success of the marketing department would help motivate the employees to put consistent effort. Based on each year’s marketing achievements, we will also be providing commission to the marketing employees.

9.0 Company Analysis

9.1 Important Assumptions Spaces financial and logistical projections are based on the following assumptions regarding the current economic market and financial trends: - Seattle’s small business and entrepreneurship market will continue to grow at the current rate

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- The Washington state and United States economy will not experience significant change or major recession - Retail prices will continue to increase, thus making owning an office a financial burden on small businesses - The government will continue the trend of supporting small businesses, with tax breaks and other incentives - A percentage of businesses who use our coworking services will eventually move into more permanent offices as their firms grow For the company to keep moving in the right direction, it is imperative that Spaces sets goals both in the short-term and long-term. By achieving these goals, our company will grow at a healthily rate and achieve both economic and commercial stability. 9.2 Short- and Long- Term Development Goals Short-Term Goals The first three years of Space’s development are where the company is most vulnerable. The coworking business model works because the gold level customers make up for the steep retail costs in downtown Bellevue, and thus our first years are focused on establishing a customer base that will in the long term become gold business. To achieve this, within the first three years of operation Spaces plans to:

- Secure numerous businesses as bronze and silver, and retain them with excellent customer service and business amenities and consulting - Breakeven by year 2 of operation, as outlined in our financial analysis in section 10.6. - Establish partnerships with both local school districts in the area, the Lake Washington School District and , to build a growing base in our secondary market of high school students - Increase our gold level pass customers by 80% over our first 3 years Long-Term Goals Once Spaces is established in its first five years, the focus of the company is not only on remaining relevant in an ever-evolving and expanding coworking field, but also the expansion to become a leader in the market outside of Bellevue. Thus, Spaces plans to do the following after five years of operation: - Establish a Spaces business network through the creation of a business forum where clients can communicate and collaborate with former and current users of the service. - Secure partnerships with larger businesses in the greater Seattle area, creating custom gold level offices for companies of 20+ employees. - Expand current office location by 50% by purchasing a third floor of the Bellevue Plaza Center, as well as renegotiate a permanent purchase of the location after our initial lease expires - Become a regional leader in the coworking industry by reassessing our target market analysis and identifying potential expansion locations in our tenth year of operation.

As our customer base is established, and the Spaces brand become recognizable within the Bellevue coworking industry, then expansion becomes a key priority. However, it is also necessary to insure we maintain our current customer base, as coworking has a high turnover rate. Once small businesses are established, they move on from coworking into permanent facilities, and thus we must constantly attract new businesses and entrepreneurs to keep our offices and desks filled.

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9.3 Risk Analysis Understanding the risks present in our business industry is essential in overcoming any extemporaneous obstacles and changing our reputational, financial, and marketing stance. Financial Risks The biggest financial risk facing Spaces, and the coworking industry as a whole, lies in the financial burden in leasing or purchasing offices to create coworking spaces. Spaces chose to purchase land in downtown Bellevue, where retail prices are at a considerable premium. To mitigate these costs, Spaces chose to not purchase land within the city centers in Lincoln Square or Bellevue Square, and instead move a couple blocks down, where prices are considerably lower. Thus, while still being located within walking distance of the city center and its services, Spaces can obtain a lease at an 30% discount. However, even with the reduction in cost, the lease is still a major expense. Empty and unfilled offices result in a direct loss for the business, as they are a significant cost which doesn’t make profit. Until Spaces can establish a customer base of the gold level, it will operate at a loss. To quicken this transition, Spaces will focus heavily on customer acquisition, as well as convert unused offices into more bronze and silver.

Natural Disasters Natural disasters pose a prominent threat. Seattle sits on the Seattle Fault Line, presenting a significant threat of earthquakes. According to the Seattle Office of Emergency Management, an earthquake is the single greatest risk facing the Puget Sound, with the probability of an earthquake in the next ten years extremely likely. This means Spaces must prepare for a major natural disaster, equipping the office with first aid kits and other supplies. By investing in insurance and property damage safeties, Spaces can effectively prepare to mitigate the long-term consequences of a major seismic event. Business Model Risks As we push businesses to develop from idea to reality, many will eventually outgrow coworking and move into permanent solutions. This means we risk losing our initial customer base after a couple years, and as such risk facing potential deficits in our later years of operation. To mitigate this risk, we will continue to focus on customer acquisition through consistent public outreach and outreach, ensuring that after our initial focus shifts towards acquiring gold level businesses, we continue to replenish vacated bronze and silver offices. We also intend to offer discounted bronze and silver rates to graduating high- schoolers to continue replenishing vacated levels.

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9.4 SWOT Analysis

Strengths Weaknesses

• Specialized employees, headed • Keeping a community requires significant

by community managers to personnel, resulting in high personnel

People ensure a well-trained and excited expenses

workforce

• Coworking builds a community of • Potential for competing businesses to be dedicated entrepreneurs, helping within the same coworking space each other succeed • Lack of privacy until gold level business • Secondary market of students is encouraged to return to Community entrepreneurship • SoLoMo strategy ensures • Marketing strategies are limited as a small

marketing reaches all our target business in comparison to larger businesses

markets • Competing with numerous other companies • Unified theme between congesting our marketing channels marketing, office décor and

layout, and website leads to a Marketing contemporary brand and brand

recognition Internal Factors Internal

• Receiving a SBA 7(a) loan for • High initial capital expenditures result in a small businesses establishes a longer period before breaking even relationship between the • Revenue is based heavily on gold level

Finance company and bank businesses

Opportunities Threats

• State and Federal government • Unstable political atmosphere results in are both heavily focused on uncertainty in the market, as well as

Political increasing small business growth potential for shifting economic factors such

as taxes

• Puget Sound experiencing huge • This results in inflated retail costs and

economic growth, especially in increased wages the tech sector • Small businesses competing with lucrative job offers from established companies in the

area Economical

• Rapid advancements in new • Technology is making working from home technologies such as AI have much easier, a direct competitor to resulted in an explosion of new coworking tech startups • Easy to lose relevance and fall behind in an • Internet enables Spaces to enact evolving market inexpensive and targeted Technological marketing

• No major product or good being • Chief officers are subject to liability External Factors External

sold means no issues with • Potential for legal conflict between business

copyrights and patent who share the space together Legal

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10.0 Financial Plan

10.1 Accounting System

Spaces will use the QuickBooks Desktop Premier 2018 computer application to keep track of the company’s transactions. The Premier 2018 comes with industry-specific tools and reports, and creates sales orders and tracks backorders. For a professional service like Spaces, Premier 2018 can set different billing rates by business tier and analyze profitability between client and office, although it has many features to analyze our business, it is extremely comprehensive and easy to use. For these reasons, the QuickBooks Desktop Premier 2018 is the ideal accounting system for Spaces.

10.2 Capital Expenditures and Loan Request

To fund the company’s initial capital expenditures, as well as cover some expenditures for years one and two of operation, Spaces’ three chief officers will apply for a $2,212,166.38 7(a) loan from the United States Small Business Administration. Much of the loan covers the annual lease payment, as well as initial office remodel and capital expenditures, and thus the loan is classified as a real estate loan with a maximum maturity period of 25 years. However, Spaces plans to pay back the entirety of the loan, both principal and interest, within the first 15 years of operation. The loan principal is above $50,000 and the maturity period above 7 years, so a 2.75% markup spread is added to the 4.50% base interest rate, amounting to a 7.25% total interest rate. In addition to the loan request, each of Spaces’ three main shareholders will each inject a personal investment of $200,000, resulting in a total of $600,000 to assist the initial development of the company.

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Loan Amortization

10.3 Monthly Income Statement

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10.4 Annual Income Statement

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10.5 Cash Flow Statement

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10.6 Breakeven Analysis and Return on Investment Breakeven Analysis

To break even, Spaces’ total revenue must exceed the total expenditures of the company. As previously mentioned, much of Spaces’ revenue comes from our gold level businesses, a customer base which will take time to develop and establish. Thus, until that base is established, the company will operate at a loss for the first two years of operation, and even out around the third year. Spaces will officially break even and begin earning revenue in the end of the second year of operation. The chief officers have considered the longer period required to break even by increasing our initial loan amount to cover some expenditures for years one and two (as explained in section 10.2). Spaces has used conservative financial estimates to minimize the risk of overestimating profits.

Return on Investment

By analyzing Spaces’ return on investment, we will be able to evaluate the efficiency of the company in terms of our total revenue versus expenditures. In this way, we will be able to gauge the profitability of our business. Until we break even, we will suffer a negative return on investment, as we will still be establishing our business in our target market. However, as our marketing strategies attract more businesses, and our customer base is established we can expect to continue to grow our return our investment, and a 52.23% ROI by the end of the fifth year of operations.

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11.0 Appendix

LLC Agreement Job Application Form

Work Cited

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