1. Preface
Memo of Transmittal
To: Luke McElfresh
Tammy Reynolds
Nadège Levallet
Tom Marchese
From: PM 107 Cohort Team 1
Nicole Bick
Matt Nowak
Spencer Reece
Stephen Sarajian
Junya Wang
Date: April 6, 2015
Subject: Patriot Segway Tours, Washington D.C.
In response to the request by the senior partners of Copeland Associates, our group has
analyzed the segway tour industry in Washington D.C. and have determined a business
concept.
As requested the business concept we have created as a group is Patriot Segway Tours. The
business will take place in Washington D.C. and will include tours of the nation’s capital.
We concluded that this is a market that is suitable to enter due to the high demand and small
competition.
We thank you for selecting our group to complete this project. If you have any questions or
concerns feel free to contact any member of this team.
2. Feasibility Analysis of a Tour Operating
Business Concept, Washington D.C.
Prepared by:
PM Cohort 107 – Team 1
Nicole Bick
Matt Nowak
Spencer Reece
Stephen Sarajian
Junya Wang
Prepared for:
Professor Levallet
Professor Marchese
Professor McElfresh
Professor Reynolds
April 6, 2015
Patriot Segway Tours
Washington D.C.
3. EXECUTIVESUMMARY
The purpose of this report is to provide the senior partners of the Copeland Associates a feasibility
analysis of the business concept of Patriot Segway Tours, which will take place in the Washington
D.C. area. Our responsibilities for conducting research of this project included conducting an external
analysis on the tour operating sector by examining the micro-environment, macro-environment,
market, and competition within the industry. It was also asked of us to evaluate the feasibility of this
business concept by developing demand scenarios to prove if there will be a sufficient enough demand
for our provided services.
Our conclusion of the feasibility of starting a Segway tour business operation in Washington D.C. is a
valid business concept supported by the following factors covered in this report. The projected
financial statements for the first five years of our business suggests that we will be profitable for those
first five years. Our research from competitors in the market already have revealed they have a high
demand for Segway tours that they are having trouble to fulfill. Our marketing strategy suggests how
we will get the word out to consumers to advertise our brand. Finally, our information systems will
assist our business in day-to-day activities and assist with future business decisions.
The following factors of this report allowed us to determine that Patriot Segway Tours is a feasible
business concept for a tour operator in Washington D.C.:
External analysis of the tour operating industry by examining the micro-environment, macro-
environment, market analysis, and competition analysis.
Business concept that discusses the business location and point of difference from competitors.
Target market of the specific demographics for what consumers will purchase our services.
Marketing strategy that reveals how our business will raise awareness to consumers about our
business concept.
Information system that will allow are business to effectively and efficiently conduct daily
operations.
Demand scenarios that takes multiple factors into account to prove the feasibility of our business
concept.
Financials that reveal the projected costs and expenses for the first five years of business.
Based on the research conducted, our recommendation is to pursue the development of the business
concept Patriot Segway Tours. Our analysis of the factors above show that a Segway tour operating
business in Washington D.C. would be feasible.
Executive Summary
6. INTRODUCTION
Introduction
1
The purpose of this report is to identify the business concept of Patriot Segway Tours which will operate
in the nation’s capital of Washington D.C.. “In 2013, D.C. welcomed a total of 19.0 million visitors,
setting a new record for the city“ (Washington.org, 2014). With a rising demand in tourism within the
Washington D.C. area, our group has come up with the business concept of Segway tours. In the tour
operating industry, companies are always trying to find new and innovative ways to separate themselves
from their competitors. With there already being Segway tours in Washington D.C., our group has come
up with a point of difference that will separate our business from the competition. This point of difference
will include our tour guides dressing in costume of famous American leaders from past history, as well as
fun tour trivia that includes winning prizes. This will give our customers more than just a touring
experience. By examining the Segway tour industry in Washington D.C. through an environmental
analysis of the micro-environment, macro-environment, local competition, and local market, the business
concept of Patriot Segway Tours emerged. After demand and financial research, we have concluded that
Patriot Segway Tours will be a profitable and feasible business venture, due to a net present value of
$533,432 and an internal rate of return of 146.48%.
Patriot Segway Tours
(Projected Year 1)
Capital Segway LLC
Washington D.C.
Segs in the City
Washington D.C.
Average Customers per Day 23 people 80 people 60 people
Price per Segway Tour $55-$65 per person $65-$80 per person $60-$80 per person
Number of Segways 15 Segways 40 Segways 50 Segways
Number of Years in Service 1 year 12 years 12 years
Point of Difference Costume Tour Guides
Trivia/prizes
Only Segway repair in
Washington D.C.
Experience in the
industry
Figure 1
7. EXTERNALANALYSIS
2
External
Analysis
Business
Concept
Target
Market
Marketing
Strategy
Information
Systems
Demand
Scenarios
Financials
External Analysis
Tourism Industry
Tourism in the Unites States has seen a steady
increase since the economic downturn in the late
2000s. As you can see in Figure 2, the United
States tourism revenue has seen an annual
increase of 4.5 percent over the last four years,
increasing to $960.2 billion in 2014
(Ibisworld,2015). This number is expected to
grow, with a projected annual increase of 2.2%
until 2019 to $1.1 trillion (IbisWorld, 2015). In
2013, the largest age demographic group for
tourism was aged 35-49, with roughly 80 million
travelers (Passport, 2014). Technology has also
changed in the industry with the use of the
Internet to book reservations through online
agencies. These allow customers to go online
and get a reservation themselves, and also view
reviews from people who have already used that
company’s services.
Washington DC Segway Tours
With Washington D.C. breaking their previous
records of tourism in both 2011 and 2013, we
can only assume that this will continue,
especially as we enter 2016 – the year of the
next presidential election. Within this large
number of tourists, the target market our
business is mainly focused on is Generation X
Being the historical and monumental city that
Washington D.C. is, it is home to almost 100
city tours, with many different options and
means of transportation (Washington.org,
2015). Despite the many different options
available, there are only four Segway
businesses that are currently operating
throughout the city. Two of which have
expressed in an interview that they are
currently having trouble meeting the demands
that they have during the popular months
(Justin, 2015). Where the four Segway tour
businesses cannot meet their demand, we see
room for another business to enter the market
and be sustainable due to the growth patterns
that the market and the current businesses
have seen. In a seemingly saturated city-tour
market, Segway tours stand out as the newest
and most efficient way to travel through the
city. Segway tours allow tourists to see the
many landmarks that the city has to offer,
without the tiredness of walking, and the lack
of excitement of being cooped up on a bus
with multiple other people (Washington.org,
2015).
When asked about the difficulty of entering
the Segway tours market in Washington D.C.,
Bill, who works at Segs in the City, said that
they experienced no specific barriers due to
the Segway’s new and questionable
technology during their time of opening, in
2003 (Bill, 2015). Bill noted that they only
experienced normal start up business issues
that were minimal and “expected” (Bill,
2015). Justin, from Capital Segway LLC, said
that they continue to grow and have a great
base of local customers who often use Segway
tours to show their friends visiting from out of
town, around the city (Justin, 2015).
Figure 2 (IbisWorld, 2014)
8. ExternalAnalysiContinued
3(Google Maps, 2014)
External
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Competition
Overview
Due to the heavy population and high tourism
traffic, the market of tours in Washington D.C.
is heavily saturated, having more than 100 tours
to be offered (TripAdvisor, 2015). The
competition level remains on the lower level of
high though, due to the vast offers of tours and
types that are offered. There are a variety of
tours that are offered in Washington D.C. that
operate on many different means of
transportation. Some tours include bike tours,
bus tours, double-decker bus tours, and even
Segway tours (TripAdvisor, 2015). Despite the
high saturation in the market, the direct
competition that our business faces consists of
only four Segway tour businesses. When
interviewing Justin from City Segway LLC,
and Bill from Segs in the City, both stated that
their businesses have been growing steadily,
and even do run into problems meeting the high
demands that their businesses receive, showing
an area of the market for our business to
capitalize on.
With tourists flocking to Washington D.C. for
all different things to see what the district
offers, there are a number of tour types that are
offered
including tours for sightseeing, tours of food,
historical tours, and many more (TripAdvisor,
2015). According to IBISWorld industry
reports, Washington D.C. is among the top
four areas in the Northeast that are heavily
saturated by the tour operation industry due to
their high population in cities and their
historical landmarks and sightseeing areas
(Imbruglia, 2014).
Prices
With tourists trying to get the most value for
their money, the price competition is very
strong, leading to a vast number of options
being offered by companies, as well as a price
point that is not as profitable as it could be if
the location were less saturated, ranging from
about $60 to $80 per person (Imbruglia, 2014).
“City Segway Tours” is rated the best overall
Segway tour in Washington D.C. and the #3
sightseeing tour in Washington D.C. out of 99,
with more than 92% of reviewers on
TripAdvisor rating it “excellent” (TripAdvisor,
2015). They stand out to people due to their
enticement of offering tours year-round at an
affordable price (City Segway Tours, 2015).
Figure 3
9. EXTERNALANALYSISCONTINUED
4(Statista, 2014)
External
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Market Analysis
Market
Figure 4
Figure 5
In 2013, Washington DC was the 8th most
visited city in the U.S. with 17.4 million
domestic visitors and generating an estimated
$6.5 billion (Vela, 2014). A significant amount
of the travelers that visited hoped to seek out
cultural and historical based experiences while
they were visiting (Washington DC, 2012).
60.46 percent of the tourists in Washington DC
also said one of the vacation activates they
enjoy doing is sightseeing which ends up being
2 percent higher than the overall U.S. average
of 58.49 percent (SimplyMap, 2013).
The most-visited federal attractions include the
National Museum of Natural History, National
Air and Space Museum, and the Lincoln
Memorial (Connolly, 2013).
As you can see in Figure 4, tourists ages 30-50,
which is very close to our 35-55 aged target
market, were far less likely to enjoy guided
tours in comparison with young children and
older tourists. Even though sightseeing tours
are in the top 5 most popular vacation activities
as seen in Figure 5 consumers are beginning to
demand more unique and entertaining guided
tours while visiting Washington DC (Statista,
2014).
(Audience Insight, 2011)
10. 5
BUSINESSCONCEPT
External
Analysis
Business
Concept
Target
Market
Marketing
Strategy
Information
Systems
Demand
Scenarios
Financials
Business Concept: Sole Proprietorship
Concept Overview
Patriot Segway Tours offers an experience
unlike any other in Washington, D.C., bringing
excitement to sightseeing tours. Our point of
difference that sets us apart from our direct
competition is the patriotic theme that no other
Segway tour offers. With the high demand not
being met by the current competitors in
Washington, D.C., we will revolutionize the
industry with the presidential costumes that our
guides will be wearing as seen in Figure 6, as
well as the prizes and trivia that our customers
will play, combating the boring stigma
associated with it.
Business Model
Patriot Segway Tours accepts walk-ins, in-store
payments, and also allows customers to book
their tours online, as well as pay online using our
RezWare 8 integrated system. Our storefront
will be located at 1530 Connecticut Ave NW
Washington, D.C., 20036, where we will house
the 15 Segways that we will buy prior to the
grand opening of our business in our back
storage room. Based on our financial projections,
we plan to purchase four new Segways each year
with retained earnings. In the heart of downtown
Washington, D.C., centered between the DuPont
Circle and Logan Circle, within a 10-minute
walk from the White House, our location is a
desirable choice for our business.Tours
Our tour guides each have a license to be a tour
guide in Washington, D.C., and have gone
through an extensive one-week training period
prior to guiding any tours. The training session
for new guides requires them to accompany a
trained guide on two tours each day, for one
week. Our first year, we will have six tour guides
and two receptionists working part-time shifts.
During years 2-5, we will add one new tour
guide to our fleet each year. Our tour guides will
be paid $12 an hour, and our receptionists will
be paid $9 an hour. Both tour guides and
receptionists will be on schedules of 28 or less
hours each week.
Employees
(Google Images ,2015) Figure 6
Customers
Patriot Segway Tours accepts walk-ins, in-store
payments, and also allows customers to book
their tours online, as well as pay online using our
RezWare 8 integrated system. Upon arrival,
customers are required to go through a 10-
minute basic Segway operational as seen in
Figure 7. Following the operational, every
customer will be given a helmet and will then
begin their tour of choice.
(Google Images, 2015) Figure 7
11. BusinessConceptContinued
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Location and Tours
Location Overview
Washington, D.C. has a total population of
658,893 people. Because of this large population
and large amount of tourists, we chose to locate
our storefront in the heart of downtown
Washington, D.C., located just North of the
Dupont Circle. This was an ideal spot for our
business, located within a 10-minute walk to the
White House and near other famous scenic
monuments, buildings, and memorials, such as
the Lincoln Memorial and the U.S. Capitol. In
addition to this, our location is close to many
hotels, sitting within the most saturated area of
hotels in Washington, D.C., offering
convenience and easy access to the store.
Patriot Segway Tour’s storefront is within a strip
of small businesses. The area of the street that
our location lies within is a street where people
often walk, as it is downtown and near many
popular areas to shop (Refer to Figure 9).
(Google Maps, 2015) Figure 8
6(GoogleMaps, 2015) Figure 9
Tours
Physical Location
We will offer two tours, which will include the
Freedom Tour (Figure 10) and the Independence
Tour (Figure 11). The Freedom Tour is a 3-hour
tour that visits all of the destinations that we
offer, while the Independence Tour is a 2-hour
tour that visits six of the eleven stops that the
Freedom Tour visits. Each tour will have one
tour guide who will be guiding groups of 1-6
customers. Each customer will receive a helmet
prior to the operational and will sign a waiver,
which will allow them to tour through
Washington, D.C. on one of our Segways
A/H: Patriot Segway
fffffffTours
B: Navy Memorial
C: Vietnam Memorial
D: Washington
ffffMonument
E: WWII Memorial
F: Lincoln Memorial
G: Presidents Park
(MapQuest, 2015)
(MapQuest, 2015) Figure 11
Figure 10
A/H: Patriot Segway
B:White House
C: Navy Memorial
D: Vietnam Memorial
E: Capitol
F: U.S. Supreme Court
G:U.S. Library of
iinCongress
H: Washington
ffffMonument
I: Jefferson Memorial
J: Franklin D. Roosevelt
hhMonument
K: WWII Memorial
L: Lincoln Memorial
Freedom Tour
Independence Tour
12. BUSINESSCONCEPTCONTINUED
7(Machine Design, 2014)
External
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Marketing
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Information
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Financials
Technology
Technology Needs
Just as any business that is growing and
expanding after the year 2005, our business will
require the use of technology to help run our
business. Not only will we need the Segways to
operate our tours, but we will need computers to
operate our business as well. Aside from our
tours requiring Segways to move throughout the
city, our tours also require in-ear headphones
with incline microphone and controls, allowing
the tour operator to communicate the
information to the tourists without having to yell
to each and every person on the tour. To handle
the transactions, we will have a cash register that
is compatible with the computers inside the
office of the store, which would be accompanied
by office phones at each computer desk.
Segways
The Segways that will be offered for touring will
be RANGER SEG 2 Wheel Standup Self -
Balancing Personal Transporter Scooter; each
Segway costs $2,387 (Discover My Mobility,
2015). This scooter can go up to 12 MPH and it
has a zero turning radius, meaning maneuvering
through the city streets in Washington D.C. will
be no problem for this vehicle (Discover My
Mobility, 2015). This Segway is especially
convenient for our business due to its
convenience of storage. The handlebars allow
for easy removal, allowing it to collapse into a
manageable shape, easy for storing or
transporting. We will be starting with 15 extra
batteries for the Segways, each costing $80 and
lasting 5 years.
Communication
As for the communication aspect while on
tours, we would use Galaxy Audio’s AS-900-4
Band Pack Wireless in Ear Monitor System,
which would allow tour guides to clearly speak
without having to yell in order for the tourists
to hear. Each pack of four will cost $550 and
we will start with four packs (Galaxy Audio,
2015).
Computers
The computers we will be using will be 21.5-
inch iMacs, despite their steep price of $1,100
for each desktop (Apple, Inc., 2015). We feel
that in order to be able to rely on a desktop for
years to come, this desktop is needed and will be
best suited for our business. The cash register
that complies with this desktop is the Mac-POS-
Kit-B, which is able to convert your iMac
desktop into a fully functional point-of-sale
system, costing $675 (POSGuys, 2015). Our
phone system would be made up of two Cisco
7940 IP Phone, each costing $35 (Cisco, 2015).
Figure 12
13. Slogan
Touring doesn’t have to be
boring!
Personality
Friendly, outgoing, and
knowledgeable
Emotional Benefits
Being productive while learning but still
having fun
Functional Benefits
More entertaining city tours
Credibility
Licensed, trained, and ensured
Product Attributes
Guided tours on Segways from operators in costumes
to help liven up the experience with triva
Essence/Consumer Value
Proposition
A fun and exciting way to explore the nation’s
capital
Positioning
To generation X tourists interested in sightseeing, Patriot
Segway Tours is the new and exciting way to tour the nation’s
capital that offers innovative and informational tourism
experiences
Competitive Context
PRIMARY: City Segway Tours, Capital
Segway
Others: Bike/Bus Tours
Insight
City tours are a way to see the major
landmarks of a city, but are usually boring
Target
Generation X tourists
interested in sightseeing
7
BusinessConceptContinued
8
External
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Brand Identity
Figure 13
14. TargetMarket
9
GENERAL SPECIFIC
OBSERVEDMEASURES
DEMOGRAPHICS BEHAVIOR
Generation X (35 - 55)
Household income $75,000-
$150,000
Married
College graduate
Travels to new places often
Visits museum, historical, and
cultural sites when on vacation
INFERREDMEASURES
LIFESTYLE ATTITUDES
Travels with family, friends, or
significant other
Interested in new experiences
Gets bored with ordinary guided
tours
Enjoys sightseeing
Often looks for new and exciting
opportunities
Segmentation
The strategy for Patriot Segway
Tours is to market to the right
demographic to generate the most
profit. The main target audience
will be aimed towards people who
travel to new destinations and are
interested in new experiences.
From conducted research it was
determined that this demographic
would be a good fit for the types
of consumers we are looking for.
Targeting
The main segment that will be
targeted is the generation x
demographic which includes
adults from an age range of 35-55
years old. This age range is
mostly made up of couples who
are married and have families
with disposable income to spend
on a Segway tour. This
demographic often looks for new
and exciting opportunities.
Positioning
Patriot Segway Tours will be the
only Segway tour operator in the
Washington D.C. area to have its
tour operators dress in costume of
famous American leaders of our
past history. It will also be the
only Segway tour operator to
offer a tour trivia game with
winning prizes included to keep
the customers involved and
interested.
“To generation X tourists interested in sightseeing, Patriot Segway Tours is the new
and exciting way to tour the nation’s capital that offers innovative and informational
tourism experiences.” –Product Positioning Statement
External
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Target
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Marketing
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Target Market
Figure 14
15. MarketingStrategy
10
External
Analysis
Business
Concept
Target
Market
Marketing
Strategy
Information
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Marketing Strategy
Integrated Marketing
Patriot Segway Tours will use various types of
integrated marketing communications to help
promote our business. The first, and most
obvious, is advertising. The first advertising
method we will have is outdoor advertising
including billboards, which cost a little over
$1000 per four weeks (Lamar, 2015). there will
be two along highways on the way to D.C. from
larger cities, like New York and Philadelphia for
six months. There will be multiple billboards
along the same highway, so that potential
customers receive more exposure and are more
likely to use or service.
Two of the other advertisements we will use are
brochures and newspaper ads. The brochures
will be placed in 50 hotels in Washington D.C.
These brochures will cost between 10 and 30
cents per piece, and these hotels will receive 50
flyers per month (Vasquez, 2012).
Advertisements in the Washington Post cost
$8,947.38 for 26 weeks of daily advertisements,
and $3276.66 for six Sunday advertisements
(Washington Post, 2015). This number of
advertisements reaches the community during
the peak season without over advertising during
down seasons. Six Sunday spots will allow us
to reach a larger audience before weekends we
expect to see more customers. This way we can
hit a large number of people without extreme
costs.
To go off of newspaper ads, we will also
incorporate sales promotions. These newspaper
advertisements may include a coupon along with
them for our service. Another way we can offer
different sales promotions is through the trivia
trivia that we will be incorporating during our
tours. The prizes may be, although not limited
to, coupons for a return visit, or a gift card for
our service. These sales promotions will lower
some of our ticket prices but will bring in more
customers per day.
Digital Marketing
Due to the Segway companies often having
previous customers and local residents
recommend their services to visitors, we chose
the customer experience designer digital
marketing model for our business strategy as
seen in the chart below. Our website and
advertisements will contain content marketing
with multiple attention-grabbing images,
videos, and blog posts that build a positive
outlook of our brand. Our business model and
marketing techniques will also focus greatly on
segmentation, innovation, and omnichannel
experience to gain a superior end-to-end brand
experience for the costumers. To increase
traffic to the website we will use a local search
engine optimization. For the first 5 years we
will purchase a monthly SEO campaign for
$1000 that includes up to 80 key phrases.
Figure 15
16. InformationSystems
11
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Information Systems
Systems
To support online and in-store booking and
payments, our business utilizes the RezWare 8,
designed by iRez Systems. This system is easily
compatible to our in-store iMac desktops, as well
as the point-of-sale system that is designed to
process payments through the desktop. The cost
of implementing the system would be a base cost
of $1,000, along with a monthly fee of $300.
Features
The most valuable features that RezWare 8
includes the ability to perform online booking,
process payments, and make online single or
group reservations. Not only will these be
important to us, but our business strives to attract
repeat customers, which is why the CRM feature
of the system will help us to provide satisfactory
services. An important part of a system is the
ability to analyze the data afterwards, and
Rezware 8 features a number of versatile reports
that will aid the business in making sense of the
data and how it can be improved. The system
also has the ability to integrate accounting
software to be included into the data to be
analyzed.
We believe that this is the strongest system for
our business due to the customization that the
software offers, allowing us to tend to our
business’ specific needs. The decision to
integrate this system was not difficult to make,
since its reputation of being “easy to
understand,” and the live reps that are available
24/7 that are known to be very helpful in
training businesses to get the most out of the
system. RezWare 8 makes it easy to create and
modify reservations through its simple user
interface.
Why We Chose It
Figure 16
17. ForecastDemand
12
Patriot Segway Tours
(Projected Year 1)
Capital Segway LLC
Washington D.C.
Segs in the City
Washington D.C.
Average Customers per Day 23 people 80 people 60 people
Price per Segway Tour $55-$65 per person $65-$80 per person $60-$80 per person
Number of Segways 15 Segways 40 Segways 50 Segways
Number of Years in Service 1 year 12 years 12 years
Point of Difference Costume Tour Guides
Trivia/prizes
Only Segway repair in
Washington D.C.
Experience in the
industry
Primary Demand Forecast
In order to realistically forecast demand, we
contacted two out of the four businesses that
operate tours throughout the city of Washington
DC. Justin from Capital Segway LLC and Bill
from Segs in the City both provided us with
useful information involving their businesses and
the overall Segway tour industry. They provided
us with their specific business features including
number of Segways they own, amount of daily
customers, and years in business. Destination
DC, a tourism information center, also provided
us with market share estimates for Patriot
Segway Tour.
Segs in the City
Bill from Segs in the City informed us that they
have been in business for 12 years and have
consistently been growing. They currently own
50 Segways and average around 60 customers
per day depending on seasons and holidays.
They are open year round but close on holidays
and days with poor weather.
Capital Segway
Justin explained that Capital Segway has been in
business since 2003 and "has been growing at a
steady rate" with more than tripling the size of
their business since they began. They currently
have 40 Segways and average about 80 people
per day with highs around 120 . Despite this
strength in numbers, Justin did state that they do
run into trouble when meeting the high
demand during peak seasons and holidays. This
high demand proves that there is room for
expansion and new entry for Patriot Segways.
Destination DC
After explaining Patriot Segway Tour's
business concept to Kate from Destination DC,
she provided us with an estimated market share
that she believes we would capture in the first
year of operations. Based on the other four
competitors, she estimated a market share
between 8 percent and 10 percent for the first
year.
Ending Primary Demand
Based on the information we received from
Segs in the City, Capital Segway and
Destination DC, we estimated our starting
demand to be an average of 22 customers per
day. Assuming the two other current
competitors, that we could not speak with, have
similar customer averages to Segs in the City
and Capital Segway, all four companies would
then average a total of 280 customers per day.
With Kate's 8 percent market share estimation,
Patriot Segway Tours would then gain 22
customers.
280 x 8% = 22 customers
External
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Demand Forecast: Primary Research
Figure 1
18. ForecastDemand
13
External
Analysis
Business
Concept
Target
Market
Marketing
Strategy
Information
Systems
Demand
Scenarios
Financials
Demand Forecast: Secondary Research
Secondary Demand Forecast
A significant amount of visitors travel to
Washington DC every year; however, only a
small percent of those tourists would be likely to
go on a Segway tour. To find this demand,
factors such as number of visitors, visitor's
interests, visitor's vacation activities, and market
share were included in the calculations. With
these secondary statistics, the beginning demand
forecast calculated out to an average of 23
customers per day.
Washington DC Visitors
The base of our demand forecast begins with the
total number of domestic tourist that visit
Washington DC every year. In 2013, there was a
total of 17.4 million visitors that visited the city
(Vela,2014).
17,400,000
Visitors Who Takes Sightseeing Tours
Among these tourists, statistics showed that a
significant amount of visitors came to the city to
seek out cultural and historical based
experiences. To calculate the amount of these
tourist who actually go on a sightseeing tour we
used the national average. Out of all Americans
who travel domestically, 13 percent went on a
sightseeing tour(SimplyMap, 2013).
17,400,000 x 13% = 2,262,000
Target Market
With our target market focusing mainly on
generation X, we found that 56.6 percent of the
tourist who go on sightseeing tours are between
the ages of 35-55 (Mediamark, 2013).
2,262,000 x 56.6% = 1,482,920
Segway Tour Market Share
With 100 total guided tour businesses in
Washington DC and 5 of those being Segway
businesses, the estimated percent of the market
share that Segway tours have is 5percent.
1,482,920 x 5% = 74,146
Patriot Segway Tour Market Share
Based on the book, Product Innovation and
Start- up Business Market Share Performance,
their data shows that a similar start-up company
to Patriot Segway Tours on average would gain
9 percent market share in year one (Robinson,
2011).
74,146 x 9% = 6,673
With the average amount of rainy and snowy
days in Washington DC being 121 per year, we
expect to either close or lose a large amount of
costumers on an average of 80 days per year.
With weather closings and holidays deducted,
our full days in operation end up to be 285 per
year. The finalized demand calculates out to an
average of 23 customers per day.
6,673 / 285 = 23 customers
Primary
Demand
Secondary
Demand
Total
Raw
Customers
22 23 N/A
Weight 40% 60% 100%
Weighted
Customers
8.8 13.8 22.6
Finalized Weighted Demand
Ending Secondary Demand
We chose to weight the secondary demand
higher than the primary demand based on
secondary having a more accurate
representation. The demand calculates out to 23
customers per day for the first year.
Figure 17
19. External
Analysis
Business
Concept
Target
Market
Marketing
Strategy
Information
Systems
Demand
Scenarios
Financials
Monthly Customers and Employees
Due to seasonality, the number of average
customers per month will differ based on
change in weather and temperature. In
warmer months we estimate that Patriot
Segways will obtain between 30-35
costumers daily. To service this amount of
costumers there will need to be at least six
employees working everyday during those
months.
(Yen, 2015) Figure 18
14
ForecastDemand
In the colder months we estimate that our
customers demand will drop dramatically to a
rage of 8-22 customers. These months will only
need between three and five employees to
service the lower demand. Over the entire year
the average customer demand calculates out to
be 23 customers per day with an average of five
employees needed to service these customers.
8
12
20
22
30
32
35
32
30
22
20
13
3 3 4 5 6 6 6 6 6 5 4 3
Daily Averages per Month
Customers Employees
Figure 19
20. FinancialAnalysis
15
External
Analysis
Business
Concept
Target
Market
Marketing
Strategy
Information
Systems
Demand
Scenarios
Financials
Financial Analysis
Overview
After completing the various financial pro forma
statements, we have come to the conclusion that
Patriot Segway Tours will be a profitable and
feasible business venture. Please refer to
appendices E through H for full details on the
financial statements for the company.
Revenue
We are projecting Patriot Segway Tours to
generate a large amount of revenue from the
start. Our forecasted demand for year one of 23
customers per day with an average spending of
$58 per customer, while operating for 285 days
comes to projected revenue of $373,578. We
expect our company to grow 8% per year,
which is slightly higher than the Washington
D.C average growth rate for a small business of
5.9% in 2013 (Arora, 2013). Our growth rate is
slightly above the average because of our
unique tour offerings and the rising demand for
Segway tours. This growth leads to our revenue
in year five coming to a total of $508,249.
$300,000
$400,000
$500,000
$600,000
1 2 3 4 5
Revenue
Year
Revenue Per Year
Figure 20
Decision Making Criteria
Net Present Value
The net present value, which discounts future
cash flows back to equal what they would be
worth today, is positive. More specifically,
when the free cash flows for the five years and
the enterprise value of $742,685 at the end of
year five are discounted back to the present, we
come to an NPV of $533,432, showing that
Patriot Segway Tours is a smart investment;
one that will be profitable.
Internal Rate of Return
In order to fully understand if the internal rate
of return is displaying that a business venture
will be profitable or not, one must compare it to
the weighted average cost of capital. The total
WACC for Patriot Segway Tours is 15.11%,
which is significantly lower than our IRR of
146.48%. This displays that investing in our
company will be a sound decision that will
make the investor money.
Payback Period
The payback period displays the amount of
time it takes for a project to recoup the money
invested at the start, not taking into account
discounting. However, in the case of Patriot
Segway Tours, discounting is not a factor, as
the money invested will be remade in a matter
of .908 years, or slightly over ten months. This
demonstrates that Patriot Segway Tours will be
a smart investment, because the investor need
not wait even a year to earn their money back.
21. FinancialAnalysis
16
External
Analysis
Business
Concept
Target
Market
Marketing
Strategy
Information
Systems
Demand
Scenarios
Financials
Financial Analysis
A way to benchmark a company’s yearly
performances against each other is through the
usage of financial ratios. A few relevant financial
ratios to look at are net profit margin, retention
ratio, debt ratio, and times interest earned.
Financial Ratios
Net Profit Margin
Net profit margin displays how much of a
company’s generated revenue is actually
converted into profit. The net profit margin for
Patriot Segway Tours is displayed in figure 21,
and it indicates that the biggest increase is from
years one to two, with a steady increase every
other year, as well.
Retention Ratio
The retention ratio displays what percentage of
net income is plowed back into the firm for
future business endeavors. For Patriot Segway
Tours, we decided to plowback $20,000 each
year, and paying the rest to the owner. This
money will be used to purchase additional
Segways at the start of each year.
Debt Ratio
The debt ratio of a company demonstrates
how financially leveraged a company is. The
more debt a company uses to finance its
operations, the riskier it is. As displayed in
figure 22, at no point does Patriot Segway
Tours use a large amount of debt in its
operations. This is because their assets are
continually rising, while their debt is
lowering.
Figure 21
Times Interest Earned
The times interest earned ratio demonstrates
how well a company is able to cover their
interest expense on their loan each year. The
number represents how many times a year the
company earns the amount of their interest
expense. Patriot Segway Tours’ first year
times interest earned is just over 98, and
continually rises each year all the way to just
over 368, or about a 375% increase.
Figure 22
Figure 23
10.000%
12.000%
14.000%
16.000%
18.000%
1 2 3 4 5
Year
Net Profit Margin
0%
10%
20%
30%
1 2 3 4 5
Year
Debt Ratio
0
200
400
1 2 3 4 5
Timescovered
Year
Times Interest
Earned
22. CONCLUSION
Conclusion
Based on our forecasting of demands and financial predictions over the next five years, Patriot Segway
Tours is a feasible business venture. As a new, fun, and engaging way to adventure and sightsee
throughout Washington, D.C. Based on the record breaking years that Washington, D.C. has recently
experienced in their number of tourists, and the shortcoming of current Segway businesses in
Washington, D.C. to meet the growing demand, this market is a perfect fit for our business.
By forecasting our projected demand through the demands of comparable Segway tours, we were able
to determine that our business will be successful in this market, attracting an average of 22 customers
each day. We then obtained demographic research through database statistics to determine an average
number of customers each day to be 23 customers. We weighted our primary research of comparative
business with 40%, and our secondary research of statistics and data with 60% because we feel that
statistics and data has a stronger structure to base our demand forecasting off of due to the validity of
this information, comparable to a business owner’s perspective on their demand.
Based on our demand scenarios, our financial projections and analyses, the implementation of
information systems, and the strategy of our marketing, we have concluded that Patriot Segway Tours
will be profitable within our first year of business, and will provide a fun and new way to tour
Washington, D.C.
Patriot Segway Tours
(Projected Year 1)
Capital Segway LLC
Washington D.C.
Segs in the City
Washington D.C.
Average Customers per Day 23 people 80 people 60 people
Price per Segway Tour $55-$65 per person $65-$80 per person $60-$80 per person
Number of Segways 15 Segways 40 Segways 50 Segways
Number of Years in Service 1 year 12 years 12 years
Point of Difference Costume Tour Guides
Trivia/prizes
Only Segway repair in
Washington D.C.
Experience in the
industry
Figure 1
17
23. References
18
REFERENCES
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store.apple.com/us/buy-mac/imac
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for-small-business-growth/
Bill. (2015, March 16). Segs in the City. (N. Bick, Interviewer)
Brennan, A. (2014, August 1). Tourism in the US. Retrieved March 12, 2015, from http://
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2529134
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www.gaebler.com/Cost-of-Radio-Advertising-In-Washington---DC
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Destination DC(2013) Washington DC 2013 visitor statistics. Retrieved from
http://washington.org/sites/default/files/2013_Visitor_Statistics_v2_1.pdf
Discover My Mobility. (2015). RANGER SEG 2 Wheel Standup Self Balancing Personal Transporter
Scooter. (Discover My Mobility) Retrieved March 19, 2015, from Discover Your Mobility:
http://www.discovermymobility.com/store/scooters/greetransporter/ranger-seg/index.html
Fun Facts and Trivia- D.C. (2007, October 1). Retrieved April 6, 2015, from
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Galaxy Audio. (2015). Any Spot Wireless Personal Monitor. (Galaxy Audio) Retrieved March 19, 2015,
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Join the Chamber! (2015, January 1). Retrieved April 6, 2015.
Justin. (2015, March 18). Capital Segway LLC. (S. Reece, Interviewer)
24. ReferencesContinued
References
19
Kate, (2015) Destination DC (N. Bick Interviewer)
Lamar Advertising Company. (2015, January 1). Retrieved April 6, 2015, from
http://www.lamar.com/InventoryBrowser
MapQuest Maps - Walking Directions - Map. (2015, January 1). Retrieved April 6, 2015,
from http://www.mapquest.com/?version=1.0&hk=7-LnsBhzhn
MapQuest Maps - Walking Directions - Map. (2015, January 1). Retrieved April 6, 2015,
from http://www.mapquest.com/?version=1.0&hk=3-dnof
Mediamark (2015) Last Trip Sightseeing. Retrieved from
http://www.mriplus.com.proxy.library.ohiou.edu/account/home.aspx
POSGuys. (2015). MAC-POS-KIT-B. (POSGuys.com) Retrieved March 19, 2015, from POSGuys.com:
https://posguys.com/pos-kit_5/Mac-POS-Kit_1219/MAC-POS-KIT-B_1070871/?
src=GB&kpid=1070871&gclid=CLbB8eCsvMQCFQ6MaQodyI4AJg
Private DC Segway Tour. (2012, January 1). Retrieved March 18, 2015, from http://www.dcsegtours.com/
PROFESSIONAL SIGHTSEEING TOUR GUIDE BASIC BUSINESS LICENSE. (n.d.). Retrieved April
6, 2015, from http://asisvcs.com/publications/pdf/680998.pdf
Pulse. (n.d.). Retrieved April 6, 2015, from https://www.pulseportal.com/selectStateAndBoard.do
Rezware XP7. (2015, January 1). Retrieved April 6, 2015, from http://www.capterra.com/tour-operator-
software/spotlight/11261/Rezware XP7/iRez Systems
Robinson, W. (Oct, 2011) Product Innovation and Start- up Business Market Share Performance, Vol. 36
No. 10, pp 1279-1289
Segway Rotterdam. (2013, January 1). Retrieved March 22, 2015, from http://www.splashtours.nl/en/
tickets-and-prices/segway-rotterdam-2/
Sightseeing Bus Tours Business Plan. (n.d.). Retrieved April 6, 2015, from http://www.bplans.com/
sightseeing_bus_tours_business_plan/market_analysis_summary_fc.php
SimplyMap (2013), Vacation activities- like to do sightseeing. Retrieved from http://
sm2.simplymap.com.proxy.library.ohiou.edu/index.html
Special Industry Ad Rates. (2015, January 1). Retrieved April 6, 2015, from http://
www.washingtonpostads.com/sites/default/files/RC_SI_15-0174-01.pdf
Statista (2014) Most popular summer vacation activities for travelers in the United States in 2014.
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summer-vacation-activities-for-travelers-us/
Tax Brackets. (2015, January 1). Retrieved April 6, 2015, from
http://www.bankrate.com/finance/taxes/tax-brackets.aspx
25. ReferencesContinued
References
20
Travel and Tourism in the US. (2014, September 14). Retrieved March 12, 2015, from http://
www.portal.euromonitor.com.proxy.library.ohiou.edu/portal/analysis/tab
Vela, H. (May, 2014) Washington D.C. tourism report shows 17.4 million visitors in 2013. Retrieved from
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tuesday-102836.html
Washington DC (2012) Washington DC Fact Sheet. Retrieved from http://washington.org/DC-information/
washington-dc-fact-sheet
Washington.org. (2015). Tours & Sightseeing. (Washington.org) Retrieved March 16, 2015, from
Washington.org: http://washington.org/topics/tours-sightseeing
Wildman, M. (2013, April 26). The Answers Column: How Are Segways Regulated in D.C.? Retrieved April
6, 2015, from http://www.washingtoncitypaper.com/blogs/citydesk/2013/04/26/the-answers-
column-how-are-segways-regulated-in-d-c/
World Weather & Climate Information. (2015, January 1). Retrieved April 6, 2015, from http://www.weather
-and-climate.com/average-monthly-Rainy-days,Washington-DC,United-States-of-America
XBlue Networks, LLC. (2015). X16 Small Office Phone System - Big on Value. Small on Price. (XBlue
Networks, LLC) Retrieved March 19, 2015, from XBlue Networks: http://xbluenetworks.com/
our-products/x16-small-office-phone-systems.html
27. APPENDIXB
Primary Research & Laws
22
Competitors
City Segway Tours of Washington DC
Address: 502 23rd St NW, Washington, DC 20037
Phone: (877) 734-8687
Website: www.citysegwaytours.com
Capital Segway LLC
Address: 1350 I St NW, Washington, DC 20005
Phone: (202) 682-1980
Website: www.capitalsegway.com
Segs in the City
Address: The Old Post Office Pavilion, 1300
Pennsylvania Ave NW, Washington, DC 20004
Phone: (800) 734-7393
Website: www.segsinthecity.com
Private DC Segway Tours
Address: 626 Irving St NW, Washington, DC 20010
Phone: (703) 296-9867
Website: www.dcsegtours.com
Questions for Competitors
1. How long have you been in business?
2. Have you experienced any growth in the past 5
years?
3. Is it affected by seasonality?
5. What is your average ticket price per tour?
6. Who is your main target market?
7. What types of advertising have you conducted?
8. How many employees do you currently have
working?
9. How many Segways do you currently have?
10. What are their current lifespans?
11. How many tours do you conduct per day?
Laws & Regulations
There are several regulations that our company
must follow while operating in Washington D.C.
First, every business must have a license. A general
business license in Washington D.C. costs $324
and must be renewed every two years (dc.gov,
2015). Likewise, each tour guide must be licensed
in order to give tours, which costs $150 (Pulse
Portal, 2015). However, our business has decided
that we will hire already registered tour operators,
which is what most companies do. This will help us
avoid paying $150 for each employee to become
certified.
As for actual Segway regulations there are several
Patriot Segway Tours must follow. Segways are
not considered motor vehicles and follow
Washington D.C. bicycle laws.
Like bikes, Segway riders are not required to use
the bike lane except in the Central Business
District (Wildman, 2013). They are also not
required to wear helmets, however our company
offers that option if a rider wants to wear one.
There are some differences between the laws for
Segways and bicycles. First, a Segway rider must
be at least 16 years of age. This hinders our
business to an extent, because it lessens the
likeliness that a family will be able to use our
service. Segway riders are also only allowed to
have an earphone in one ear, which our company
must follow since we give each rider a set of
headphones for the tour (Wildman, 2013).
28. APPENDIXC
Tour Trivia
23
1. Which organization does not have its headquarters in Washington, D.C.?
a. CIA
b. FBI
c. IRS
2. How many museums does the Smithsonian Institution include?
a. 6
b. 12
c. 19
3. What poet worked as a nurse in Washington’s Civil War hospitals?
a. W. H. Auden
b. Walt Whitman
c. Robert Frost
4. What British band performed their first live stateside concert at the Washington Coliseum?
a. Rolling Stones
b. The Who
c. The Beatles
5. What play was Abraham Lincoln watching when he was assassinated at Ford’s Theatre?
a. Romeo and Juliet
b. Love’s Comedy
c. Our American Cousin
6. A larger-than-life-size statue on the grounds of the National Academy of Sciences allows you to climb
into whose lap?
a. Albert Einstein
b. Ben Franklin
c. Isaac Newton
7. Which D.C. neighborhood predates the city?
a. Georgetown
b. Dupont Circle
c. Adams Morgan
8. Which of the following is depicted in Washington National Cathedral?
a. Mickey Mouse
b. Darth Vader
c. Abominable Snowman
9. T/F: The average life of a $1.00 bill printed by the Bureau of Printing & Engraving is 20 months.
a. True
b. False
10. What was the original name of Washington, D.C.?
a. The Government’s Palace
b. Federal City
c. Land of The Free
31. APPENDIXF
Business Model Canvas
26
Key Partners
-Segway
Key Activities
-Marketing brand name
-Promoting ticket sales
Key Resources
-Fuel
-Trained Employees
-Updated/Latest technology to
stay competitive within the
industry
Value Propositions
-Offer numerous vacation
experiences that include many
different destination options
-Offer different types of cruises
with flexible duration options to fit
the needs of the consumer
Customer Relationships
-Take pride in offering numerous
vacation experiences to all
-Offer loyalty benefits to repeat
customers
-Include packaged deals to
customers that include multiple
amenities bundled together
Customer Segments
1. City Segway Tours of
Washington DC
2. Capital Segway LLC
3. Segs in the City
4. Private DC Segway Tours
Channels
-Social Media
-Magazine
-Newspaper
Cost Structure
-Fuel expenses
-Marketing expenses
-Purchases of Segways
Revenue Streams
-Ticket sales
-Merchandise sales
