BUSINESS PLAN

CRYSTAL CAVERNS / GLOWSTONE CAVERNS

DEVELOPMENT (AND MARKETING)

LOCATION: Crystal Caverns is located at 7940 FM 1863, San Antonio, TX 78266. This is about 2 miles from Natural Bridge Caverns. The caverns are situated under my family's 1600-acre cattle ranch, but the entrance is near the road.

THEORY: Natural Bridge Caverns pulls in alot of money. They have billboards on all major highways coming into the San Antonio area, as well as far away highways. If we were to develop the caverns on my family's ranch, we could feed off their advertising, and put up fewer billboards than would normally be required.

The caverns are not as large as Natural Bridge, but are highly decorated, and have a unique type of formation which I call "glowstone". If you hold a light behind a glowstone, the whole things starts to glow. Glowstone exists in numerous locations in the caverns.

BELOW IS A VERY BASIC DESCRIPTION AND PLAN. IF YOU ARE INTERESTED IN HEARING MORE, CALL ME.

BACKGROUND: There is a residence which is near the caverns. Currently, my uncle (Elgin) lives there, but he desires to move to another part of the ranch. The house has it’s own water well down to approximately 500 feet, and electricity as well. The distance to the caverns is minimal, requiring very little in the way of electrical line.

It would be wise to have both an entrance and exit tunnel, since the natural entrance (50 foot vertical drop) is right in the middle of the caverns, and we are likely to get ALOT OF SPILLOVER from Natural Bridge Caverns, which, 10 years ago had 70 person tours going down every 7 minutes in the summer time between 10:30am and 4:30pm. We basically need a "pipe" to funnel people through the caverns in an efficient manner. The gift shop would be situated with the entrance tunnel in close proximity. The exit tunnel however could either come to the surface near the visitor center, or further away, thereby creating a "nature walk". If the nature walk is utilized, a covered walkway is a consideration. Cave trails are priced as "gravel-based".

Work starts with the tunnels.

Assuming a 20% walking grade, the short tunnel (exit) will have a length of 250 feet. Assuming a grid of 9 holes (24" depth) per blast, there would be 125 such blasts. After each shot, the gravel debris would have to be moved out of the ever-increasing length of the tunnel. (best achieved w/ a 4-wheeler and mini tow cart) The long tunnel (entrance) will be 500 feet long and will begin the tour at a depth of 101 feet. Internal construction begins after the short tunnel is completed.

The majority of trails will be simplistic and gravel-based, with 2 exceptions.

EXCEPTION #1: There is one vertical drop that will require either a zig-zag metal-frame staircase or concrete-based switch-backs. The metal frame seems to be the logical choice as it would require much less material.

EXCEPTION #2: There is one passage which has a low ceiling for about 30 feet. The floor is composed of weakened limestone and clay, and therefore is diggable. This is a job for one of the hydraulic hammers, and perhaps for some demolition powder. (non-explosive chemical rock breaker)

Attached, please find projected expenses, and pictures of the caverns.

Thank You for Your Interest......For more info or discussion, contact Brandon Kuhn at 210-492-5288 or manager@satutor.net

Pictures of the caverns can be viewed at www.satutor.net/caverns.htm

DEVELOPMENT COST:

gift shop 75000
entrance tunnel explosives 3325
exit tunnel explosives 1675
Dexpan demolition powder 2500
blast fans (2) 2000
4 wheeler w/ trailer 8000
hydraulic power pack (2) 11000
hydraulic drill (2) 5000
hydraulic breaker (2) 4000
entrance tunnel labor (1428 man hrs) 10000
exit tunnel labor (714 man hrs) 5000
gravel 8000
handrails, structural steel, cement 9000
caverns labor (2857 man hrs) 20000
electrical supplies 5000
gift shop inventory 5000
snack bar inventory 1500
snack bar machines (ice, cola, etc) 5000
cash register, credit card machines 3000
marketing bank 25000
insurance down payment 1000
<emergency fund> 15000

TOTAL 225000

COST SHAVING: It is possible to shave cost in numerous areas, but I advise caution in doing so. In general, I'd rather overestimate than underestimate. Explosive cost is a $1000 overestimate. The use of Dexpan can be eliminated, saving $2500. Blast fans with a crude tunnel sealing apparatus can be put together in a simplistic way, saving $1000. Instead of a 4-wheeler, we can use my uncle's go kart. It couldn't pull as quickly, but that would save $7000. The entire operation can be done with electric tools, although that will slow down the rock drilling by a factor of 10. And electric tools would need special protection if left in the caverns. This concept is do-able, and could save around $17000. (minus increased labor costs) The gravel estimate is high. Take off $6000. The handrail budget is also high. Take off $4000. These reductions total $38,500, resulting in a budget of $186,500. If you remove the emergency fund, the budget comes down to $171,500. Also, I believe the labor estimates are too high.

REVENUE FORECAST

Revenue will come from 3 primary sources:

1) tickets for the caverns tour

2) snack bar (after tour)

3) gift shop

TICKETS:

Revenue is concentrated in the summer months. I worked at Natural Bridge Caverns from 1989 to 1993. Every summer is the same. Things get really busy between Memorial Day and Labor Day. They opened for guests at 9:00am and last tour went down at 6:00pm. From 10:30am to 4:30pm, there was always a constant line, at times going outside the visitor center and down the sidewalk. Tour prices are currently $15 per adult, $14 per senior, and $9 per child. When I worked there, we had 70 person tours going down every seven minutes during the above 6 hour time frame. That equates to $840 per tour, or $7140/hour. The 6 hour time frame would yield $42,840. The other 3 hours would typically yield 40 person tours every 30 minutes. That’s $960/hour or $2880 for that time frame. Total ticket sales for the day would be $45,720.

SNACK BAR:

After the tour, the majority of people would buy cokes, nachos, and hot dogs. Assuming 3840 people visit the cave per summer day and assuming 1900 cokes @ $1.00, 400 nachos at $1.50, 200 hotdogs at $1.25, and 200 popcorns at $1.50, the snack bar will yield $3050 per day.

GIFT SHOP:

Many people loved the gift shop, but I never understood why. The prices were highly inflated. Assuming 500 out of the 3840 guests make a trip to the gift shop and spend $4, that makes $2000 per day.

TOTAL REVENUE:

So that makes $50,770 per day. Assuming 10 weeks of summer, or 70 days, that would be $3,553,900 for that part of the year. Assuming a 90% reduction in volume for the other 293 days of the year (caverns are closed on Christmas Day and New Years Day), that would make $5077 per day or $1,487,561 for the non-summer period. Total annual revenue comes to $5,041,461.

COST FORECAST

PAYROLL:

Assuming 20 tour guides working at $8/hour during the summer, that would be $160 per hour or $1440 per day. Assuming 3 managers at $15 per hour, that would be an additional $45 per hour or $405 per day. So payroll is $1845 per summer day.

Assuming 7 tour guides working at $8/hour during the non-summer, that would be $56 per hour or $392 per the shorter non-summer days. (caverns close 2 hours earlier) Assuming 2 managers at $15 per hour, that would be an additional $30 per hour or $210 per day. So payroll is $602 per non-summer day.

ELECTRIC BILL:

Cascade Caverns 2004 summertime electric bills ran around $500 per month. For calculation purposes, I will assume that we will consume $1500 per month, regardless of season.

SNACK BAR COSTS:

I will assume that 20% of snack bar revenue is cost. (Prices are typically marked up several hundred percent.)

GIFT SHOP COSTS:

I will assume that 20% of gift shop revenue is cost. (Prices are typically marked up several hundred percent.)

TOTAL COST:

Annual payroll is $305,536. Annual electric bill is $18,000. Annual snack cost is $60,573. Annual gift cost is $39,720. Total annual cost is $423,829.

TOTAL PROFIT:

$5,041,461 revenue minus $423,829 cost yields $4,617,632 annual profit BEFORE MARKETING COSTS ARE ADDED. Assuming 15% of profit is continually assigned to marketing, that would mean $461,763 to marketing, resulting in $4 million profit per year.

For discussion, contact Brandon Kuhn at (210) 492-5288

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