Step 9: Sales and Capital

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Sales & Profitability Forecasts and Capital required

License Fees

The fees and costs payable by the Area Developer to us are:

  • License fee
  • Entrance fee
  • Costs for certain services
License Fee

The license fees payable by the Area Developer amount to 25 % of all invoiced sales by the Area Developer in the Territory, with a 50% discount during the first 12 months of operations. They are charged and paid on a monthly basis.

Entrance Fee

The entrance fee for the right to become an Area Developer is payable at the signing of an Area Development License Agreement and amounts to £10,000.

Costs For Certain Services

Costs for mandatory CRM and administrative systems and web site domains supplied by us will be charged to the Area Developer at cost.


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Sales And Profitability Forecast

If the Area Developer initiates the appropriate sales and marketing strategies as outlined by our recommendations at the beginning of the venture, in the case of a territory with around 3-4 million inhabitants, the following monthly cash projections should be attained:

Operations, year 1 2 3
Total Sales (in pounds) 91 667 191 667 316 667
Contribution Margin 1 (after direct costs) 66 708 121 958 201 833
Contribution Margin 2 (after indirects) 49 625 96 708 167 000
EBT -10 375 16 708 47 000
EBT % of sales -11,3% 8,7% 14,8%

Sales last more or less all year, but with three distinct sales peaks in January and before and after the summer holidays.


  • A salary to the area developer is included in the costs.
  • The total staff consists initially of two people focusing on marketing and sales, whereof one also providing the Management, and one person focusing on operations.
  • No external project managers are employed during the first year (the two initial staff are expected to lead all events during the first year for training purposes).
  • The marketing budget is set at 6 % of total sales.
  • The Franchise Fee amounts to 12.5 % during the first year and then 25 % following years.
  • Salaries are set at an average of £43,000 per annum including social security and pensions.
  • Travel expenses are those on top of direct travel expenses for events.

Capital Required

Based on our experience and cash flow assumptions, the following capital should be required to start a Green Hat People Venture for a large city, with two full time staff:

Investments in pounds  
Office equipment 625
Computers 833
Tablets 3 333
Green Hat People franchise rights 8 333
Total Investments 13 125
Loss Y1 10 000
Cash reserve 25 000
Funds needed 38 125

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