The executive summary provides an overview of the different aspects of our service AQUAPURE.

Welcome to AQUAPURE, a unique water purification service in Roatan, one of the Bay Islands of Honduras. The Executive Summary below will persuade the reader of the benefits of such a service through summaries of each of the following sections, which we included in our business plan: • • • • • • • Service Analysis Market Analysis Marketing Plan Management Plan Financial Analysis Cross-Cultural Analysis Implementation Plan

This section thoroughly discusses the construction process, business location, and contract agreements. The 400,000 tourists that visit Honduras itself and the amount of tourists that visit our initial business location of Roatan is touched upon too. Construction of the water purification system is not an easy process. We will need to build and maintain the many parts of the system, which include the following: inner structure, outer structure, tube well, inlet reservoir, and tanks. After construction is complete, having the clients sign our contracts to either a long-term or short-term contract will be our next priority. We will give them an option to sign a three-month, six-month, or one-year contract. To gain customer trust and references, we will be offering a discount to clients that refer us to other clients and that actually sign with us. Along with this, a figure of the initial business location is given and shows the 23 vacation spots on the island. You are able to tell visually with this figure that there are many places that tourists go and visit in Roatan. This is ideal because tourists are our target market. Future expansion possibilities are identified, which consist of Utila, Guanaja, and other places in the Bay Islands. This section recommends that the reader takes into consideration all these advantageous situations and makes a better decision of investing into our company because of what they have read.


This section examines, based on sufficient research about Roatan, whether or not our service will be marketable in this region of the world. Problems with water contamination are very big in this region and the number of tourism is increasing every year. We are directing our service towards hotels and restaurants so that they can accommodate to their guests in the best and safest way possible. Our plan is to make this problem not a concern of tourists when deciding on Roatan as a location for vacation. The World Health Organization estimates that 80% of all diseases are associated with contaminated drinking water (Gelting, 1998). Studies have shown that drinking the water in this region is a major concern and there are serious guidelines to follow when visiting the country. Another attraction to this area is that Roatan’s hotel industry has grown which in turn makes business for us better. Between 1985 and 1996 the number of Bay Island hotels and resorts grew almost 400% from 17 (248 units) to 80 (954 units) (Stonich, 2000, p.75). Because Roatan is very popular as a vacation destination, our service will help make the experience while vacationing a lot more pleasant. Although there is existing competition, we have concluded that our service is still profitable in this region and will be easily marketable. AQUAPURE is unique in that it will provide the best quality for a reasonably cheaper price. We are targeting the main tourist locations such as three- to five- star hotels and restaurants and we plan to expand our service in Utila and Guanaja, Bay Islands of Honduras.

The marketing plan outlines the marketing strategies we will implement. Our company will begin to market the AQUAPURE name and service to prospective customers through a web of sales pitches and advertising, concentrating on the tourist industry in Honduras. According to Honduras Exporter Guide Annual 2003, in a span of three years (20002002), Honduras has increased food and drink establishments by 76%, hotels by 41%, and cruise ship visitors by 168% (Foreign Agricultural Service, 2003). We will begin by hiring sales representatives to go and give our service pitch. Through a series of graphs, demonstrations of how our service works, and personal charisma we hope to save on advertising costs by gaining business from the high-end hotels such as Fantasy Island in the French Harbor, Anthony’s Key Resort in Sandy Bay, and the Henry Morgan in the West Bay. We plan only market to high-end hotels, resorts, and restaurants, thereby establishing our service as high-quality, suited for the best. For our advertising we plan to distribute informational brochures and place ads in travel magazines, both of which will pinpoint which businesses utilize our service and informing tourists of the possible diseases that they may contract without proper preparations (diarrhea, malaria, headaches, etc.). According to the most recent available data from The World Bank Group, tourism increased steadily every year from 2000-2004 and U.S. dollar income from tourists increased by 75% from the years 1999-2002 3

(Foreign Agricultural Service, 2003). Through our sales representatives’ pitches, advertising through informative brochures, travel magazines, and the internet we plan to take advantage of the ever-increasing tourism industry on Roatan and eventually Honduras. By tapping into a relatively new market we plan to establish ourselves as a reliable business entity that customers can appreciate and come to anytime for service needs.

This section details how AQUAPURE will function as a compilation of talented team members. Our team will work to provide water purification services for hotels, resorts, and restaurants. We will have a main office in Roatan where we will base our operations. AQUAPURE has seven founders who will hire the chief plant operator. AQUAPURE will hire four employees at first. The team consists of a chief plant operator, lead mechanic, lab technician, and security guard. The management division will implement all policies of AQUAPURE. The employee’s salaries will depend on their job title and experience. Yearly salaries will range from $30,000 to $48,000. Each employee will be required to wear an AQUAPURE uniform. Employees will work from 6am to 4pm everyday. Employees must meet all qualifications in order to be considered for the position. There are many expansion opportunities throughout Honduras, especially with the tourism increasing each year. AQUAPURE plans to provide water purification services to other areas in Honduras soon after Roatan is established.

This section demonstrates our prospective success and reveals the logic behind our expenditures and revenues. AQUAPURE will begin raising capital through debt and equity transactions. Our business will take a $1,000,000 loan from a financial institution with an interest rate of seven percent and matures in ten years. We will also take a loan valued at $460,000 from a private home lender with a 13 percent interest rate, and will mature in ten years. Each member is also going to invest $20,000 into AQUAPURE, giving our equity a value of $140,000. After raising our capital through debt and equity issuances, AQUAPURE will have a total of $1,600,000 to make the purchases necessary to start our water treatment business. Our start-up costs will be equipment, which will buy for $1,500,000, the lease of our office includes the purchase price of land valued at $40,000. Our office equipment, which we will pay cash for, will cost $15,000. It should be noted that we will use straight-line depreciation to amortize the water treatment equipment and the office equipment over their useful life. Other start-up costs for AQUAPURE include the acquirement of patent and business visas, with an estimated purchase price of $4,300 and $7,000. Our monthly expenses will include: salaries expense of $13,500, depreciation expense on our water 4

treatment and office equipment valued at $8,458 per month, amortization expense for our patent for $287, rent expense at a cost of $2,500, interest expense on our loans for $10,817 and advertising expense for $880. We will also accrue utilities and repair expenses that will vary each month. We plan to immediately set aside five percent of our cash after our first sale, and start our proceeds for a new wastewater purification system that will be available strictly for the citizens of Honduras.

This section of the business plan will take an in-depth look at the cultural differences and differences between the United States and Honduras. Honduras is a poverty stricken country with a 28 percent unemployment rate, one of the highest in the Western Hemisphere, almost 20 percent higher than other countries. We will provide jobs by hiring security guards, as they exist virtually everywhere in Honduras. This may be a difficult as commitment means nothing in their culture. Finding loyal workers to show up everyday may be a challenge, as workers make commitments they do not plan to follow through. In addition it is in their culture to not tell a superior that something is wrong, so this will be a burden to our service. If an employee notices that something is wrong and does not tell a superior, the problem could become worse. Water pollution affects Lake Yojoa, Honduras’ largest source of fresh water, making our business a necessity. Tourism boosts the economy in addition to providing jobs for the many unemployed. Our service is aimed towards tourists, so we do not need to worry about too many cultural differences, plus our service is simply providing clean water, which is a necessity to all cultures.

This section outlines the precise implementation schedule for AQUAPURE. Maintaining an implementation schedule for our business is crucial for our success. To make sure we can start our business as planned, we will follow this schedule, which shows start and stop dates of each task that needs to be completed.

After reading the above Executive Summary, the success of an aqua purification service in Roatan, Bay Islands of Honduras, is apparent. We hope you find the time to read the following business plan. Each section provides an in-depth look of the different aspects of AQUAPURE and the benefits of an investment in our company. Please do not hesitate to ask any questions or concerns that may come up.




“Blessed with turquoise waters, white sand beaches and dense foliage, [our resort] Cabana Roatana is a heaven to those looking to escape from the stresses of daily life. We are nestled in the center of Roatan's West Bay Beach in the Bay Islands of Honduras... a true unspoiled tropical paradise.” (“Hotel Cabana Roatana”, n.d., intro section, para.1) Do these words not form an image in your mind of the place you want to be? This advertisement and similar advertisements can be found on the front of almost every homepage of Hondurans´ five star luxury hotels and resorts, surrounded by unbelievable looking pictures. It is almost a natural response to this, that Honduras and especially the Bay Islands attract large amounts of tourists every year, making the tourism industry, as reported by World Bank (2006), the largest industry of Honduras. According to a Honduran newspaper, an estimated 738,667 people visited the country in 2006. The tourism alone generated over $470 million (Arms, 2007). However, most people do not know the other side of paradise when they decide to spend their vacation in Honduras. According to the CIA World Factbook (2007), Honduras is the second poorest country in Central America and one of the poorest countries in the Western Hemisphere. Water Missions (2006) reports, that many Honduran citizens are caught in a cycle of poverty, caused by the poor conditions of their drinking water. More specifically, the Honduran citizens face several life-threatening diseases deriving from the consumption of contaminated water. The contaminated water produces diseases such as cholera, typhoid, and parasitic infections; all of which cause an intestinal disorder known as diarrhea, which causes the high mortality rate of young children in Honduras. Becoming aware of these problems the country has, Honduran tourists will want to know: How does Honduras’s situation affect me and my vacation? Would I willingly shower and brush my teeth with that water? Providing answers to this kind of questions from their high demanding customers therefore becomes crucial and indispensable for exclusive hotels in order to offer the unforgettable vacation experience they promised. It is at this point where our service AQUAPURE comes into play to aid the hotels with the problem. This introductory section will give an overview of the following:

• • •

our service AQUAPURE our unique aspects our expansion plans


The following paragraphs introduce our service AQUAPURE and its unique aspects.

2.1.1 What is AQUAPURE?
Our service AQUAPURE is a water purification service. We intend to improve the quality of the water supply for three- to five-star hotels and exclusive restaurants in Roatan, the largest of the Bay Islands in Honduras. As Travel Guides of Honduras note, Roatan is surrounded by the world’s second largest coral reef; white beaches, colonial towns, and living cultures and therefore attracts more and more tourists every year (“Honduras Tips”, n.d.). We will have a central water purification plant and install underground piping leading to tourist hotels, resorts, and restaurants of Roatan, for example West Bay Beach and Sandy Bay. Our purified water will then become available to these hotels, resorts, and restaurants, in turn providing revenue for AQUAPURE. To use our service, the hotels and restaurants will sign three-month starting leases, followed by six-month and one-year leases. While payments for the three-month and six-month agreements will be monthly, the one-year payments will be on a bi-monthly basis. The hotels and restaurants we target have their main emphasis in offering their guests a luxury and high-standard vacation and therefore will want to spend the money to provide their guests with safe, clean water. To give a first impression of the tremendous effects of water purification, figure 2-1 shows the result of a water quality test, conducted by Water Missions (2006). The left side shows the result of a test run on water before any treatment. The dots are bacterial colonies and pathogens, which can cause diarrhea. The right side shows the results of the test run on the same water after the use of a purifying procedure. The difference is obvious and enormous: The treatment eliminated all bacteria and pathogens.

Figure 2-1: Water Quality Tests

2.1.2 How are we different?
Our service AQUAPURE is unique in three important aspects. First, one difference to our competitors is the connection between targeting the tourism while simultaneously helping the country. We believe that Honduras´ tourism diversity is extraordinary and has huge 8

potential. Therefore, we believe that the tourism should not only benefit the country by creating new jobs and bringing in money, but also by increasing development in Honduras and giving Hondurans a higher standard of living. To accomplish this, AQUAPURE plans to donate a portion of the proceeds earned from our business with the hotels towards a second service intended for the citizens of Honduras. We will take a portion of our proceeds to provide purified water to communities that still have unsafe drinking water to make safe water available to all citizens, regardless of their socioeconomic status. World Bank (2006) identifies the specific problems Honduras has and the desired development trends for the next years, which AQUAPURE incorporates in its business goals. Namely, problems are still the high number of Honduran people without access to clean water, the high mortality rate among children, and the high percentage of people living on less than $1 (or $2) a day, all of which figure 2-2 shows.

Figure 2-2: Trends and Problems in Honduras

The special area focus AQUAPURE has is the second difference, which sets us apart from our competition. Although we plan to expand our service within Honduras, we will still specialize in the needs and the unique situations in Honduras, while our competitors provide water purification globally in areas of current needs. Third, AQUAPURE will provide its customers with high quality water for a reasonably cheaper price.

While Roatan is the perfect location for starting and promoting our service idea, it is only the starting point. To help the country’s development, our long-term goal is to expand. Our success in Roatan will enable us to offer our service to other parts of Honduras, namely the Bay Islands Guanaja and Utila, both also famous tourist spots. Once our service is established in these Bay Islands, we plan to target other departments in Honduras (e.g., San Pedro Sola and Tegucigalpa). Figure 2-2, provided by the Honduran Institute of Tourism (2003), shows a detailed map of Honduras. To indicate our target area within Honduras, we highlighted Roatan, our initial service location, with a red circle and the other locations, where we want to establish our service later, with a green


circle. Please review the service analysis section for further information on our expansion plans.

Figure 2-3: Service Locations in Honduras

This introductory section provided an overview about AQUAPURE by pointing out our main service idea, our unique qualities, which differentiate us from our competition, and our expansion plans. The following pages illustrate our unique business idea and the benefits of an investment in our company in great depth. Included in full detail are the following sections: • • • • • • • Service Analysis Market Analysis Marketing Plan Management Plan Financial Plan Cross-cultural Analysis Implementation Plan




An average of over 450,000 tourists visit Honduras a year (U.S. Department of Commerce, 2000). Out of that amount, over 100,000 tourists visit the island of Roatan in Honduras alone. Knowing the specifics of what you are selling to the client, the locations, and the strategies of that business are important to running that business successfully. Knowing this, we had to learn about our target markets’ income and specific locations to help us gain a better sales strategy. We also needed to know how to construct and operate the water purification system in a cost-effective and satisfactory manner. While learning about all of these details we have come up with some questions that you, the investor, may come up with. Now we know what problems, what advantages, and what possible solutions we can get out of our business and we hope to have you and ourselves benefit from it. In this section we will identify all of these specifics and we will clarify any last minute questions that you the reader may have.

The system consists of many parts that will require us to have them properly installed by our employees. One of the parts put into the system is the tube well, which is where the water will come in from one side of the system. The outer structure will be made of reinforced brick or concrete, whichever is available, and whichever one is more effective for that environment. We will construct four internal walls at the same time as the outer walls and these walls will separate the system into the following parts: the inlet reservoir, the precipitation tank, the absorption tank, the water lock and the reservoir for purified water. (Crisp, P.T. and Chowdhury, A.H., 2002, p.2) After purifying the water, it will finally come out through the other side, through one of the constructed taps. You can see all parts along with the outer structure in figure 3-1 and the inner structure in figure 3-2.

Figure 3-1: Outer Structure of the Water Purification System


Absorption Precipitation Inlet Tank

Inlet Tank

Precipitation Tank

Absorption tank

Water Lock Reservoir


Figure 3-2: Inner Structure of the Water Purification System

These figures are just a generalization of how our water purification system will work.

3.1.1 Precautions Taken
We will take precautions during and after construction of our water purification systems to ensure that the system is always running effectively. With these precautions taken we will be able to ensure low costs in the long run and give our clientele the satisfaction that we have guaranteed them. The height of the outer structure along with everything else in the purifying system will be tall. This is due to the fact, that as we all know and as Hurricane Mitch told us in 1998, the unexpected can happen. The tallness of the outer walls is to prevent flooding from contaminating the water inside the purifying system and to help prevent the system from hurricanes, possible human contamination, or possibly some other type of natural disaster. We will be putting netting on top of the water system at all times in order to prevent insects and other animals from entering and contaminating the water. Along with their other duties, the employees that we hire will run regular maintenance tests to ensure that the water has not been contaminated or that other problems with the system have occurred, such as structural damage or other forms of damage that may prevent the water system from working in the future. For more information pertaining to employee duties, reference section


There are over 78 travel agencies in Honduras (U.S. Department of Commerce, 2000) and every one of them is located in a location where tourism flourishes. We needed to find a location in which our business could start and thrive with the tourism as well.

3.2.1 Initial Location
Roatan is 40 miles in length and has a total land mass of 49 square miles (Honduras Tips, 2007). It is an ideal place to start off our business. As seen in figure 3-1, Roatan contains many hotspots for tourists in which our target market is located. In these locations you can expect to see many hotels and a much more profitable community to sell our service to.

Figure 3-3: Various Tourists Spots in Roatan. Reasons for Roatan
We can see the reasons for choosing Roatan as a place to start our business by describing the cities in Roatan. The French Harbor, which has the largest fishing fleet in the Western Carribean and is quoted as “the economic motor of the island,” the Coxen Hole which is the largest city and the capital of the Bay Islands, and the Sandy Bay which is said to be “the cultural center of Roatan”. (Honduras Tips, 2007, para. 2)


These places have an abundant amount of tourists as proven by the amount of hotels, as shown in Table 3-1.
Table 3-1: Hotels in Cities Located Around Roatan

CITY IN ROATAN Sandy Bay French Harbor Coxen Hole Oak Ridge / Punta Gorda Cayos Cochinos Brick Bay Milton Bight Parrot Tree Plantation Paya Bay


As seen in the chart and by the information given about the island, you can see that Roatan is an ideal place for future growth and can be profitable. Future Expansion
Starting our company in Roatan is just a footstep for us. We are planning to eventually pursue an even more profitable adventure, once our services have become known throughout the Bay Islands. As you can see in Table 3-2, aside from Roatan being one of the most marketable places in the amount of major hotels available, there are many other locations in the Bay Islands that maintain a strong amount of major hotels (Roatan Hotels, 2003).
Table 3-2: Number of Hotels on Different Islands

ISLAND NAME Utila Roatan Guanaja


For more information pertaining to the Bay Island and Roatan look at section 4.3.

“Sixty-eight percent of Honduran families are poor, mainly in rural and urban areas. There are significantly more poor families in rural areas (75 percent) than in urban areas (57 percent).” (UNICEF, 2007) Our target market does not consist of the local populous living in Honduras. Unfortunately, Honduras is one of the most poverty-stricken countries on the western side of the hemisphere. That is why we will be looking towards the tourism industry.


Most people that travel to the Bay Islands are wealthy. This is why we will be targeting the places they commonly choose to stay. A person of this stature will want this type of service available to them and will see it as a big factor for choosing a hotel.

3.3.1 Why They Would Choose Us
People that come to Honduras need to know the statistical facts about the region. They need to realize the dangers that Hondurans unknowingly face and because they do not know about it, they make it unnoticeable to people traveling to their country too. In this case we will use an example of an American traveling to Honduras. In figures 3-4 and 35 you can easily tell that an Americans way of life, compared to a Hondurans way in life does differ. % of Population Using Improved Drinking Water Sources
100 80 60 40 20 0 Urban Rural Total 100 95 100 81 100 87 100 80 U.S. Honduras 60 40 20 0 Urban Rural Total 54

% of Population Using Adequate Sanitation Facilities
100 87 100 100 69 U.S. Honduras

Figure 3-4: Comparison of Improved Drinking Water

Figure 3-5: Comparison of Adequate Sanitation Facilities

Even though this may seem unfair because we are using a first world country, we must, because those are the type of people we plan on selling our services to.

Like any starting company we will have to give some leeway in order to make some sales and have our customers take interest in us. Some of the ways that we will do this are by giving some leniencies in some of our sale promotions. Eventually as time goes on and we have our concrete customer base, we will gradually get rid of these factors that are not letting us have a fully secure and profit maximizing company.


3.4.1 Contract Terms
It has come to our attention that since we are a new company most companies will have a hard time signing a long-term contract with us. That being the case we have made some special company start-up contracts. Here are how the contracts would go, as we gradually experience growth in the market. • A three-month starting lease, with a base fee. • • Payment of the base fee is only a onetime payment and helps us with the construction of the water purification system.

A six-month continuing lease after the use of the starting lease. • Payment of the three and six-month contracts will be on a monthly basis.

A one-year extended lease after the use of the three and six-month leases. • • Payment of the one-year extended lease will be on a bi-monthly basis. If the client decides to opt out of the contract there will be a termination fee. This is to help us make up for our losses and helps us pay for the manual labor to take out the water purification system. Extra Incentives
If a client refers us to another client and we sign that recommended client, we will give a discount to the client that referred us. Note: We cannot do this deal more than once. For example, a client who recommends us to two people that we both happen to sign will not gain a bigger discount.

In conclusion, the specifics of the water purification system plan are all very important parts on how well this business will run. The specifics of our water purification system, our locations, our target market, and our sales strategy will turn us into a profitable company at a faster rate. We will now have less of a hard time running our company.




In marketing I've seen only one strategy that can't miss -- and that is to market to your best customers first, your best prospects second and the rest of the world last. - John Romero (Museum Marketing Tips, p.3) Best known for their great diving and the second largest coral reef in the world, the Bay Islands is an ideal location for tourists. The largest of the Bay Islands, Roatan, lies about 50 miles from the northern coast of the Honduran mainland (Travel to Roatan, para.2). Tourism is the primary industry for Roatan, making it the most prosperous region in Honduras. It is for this reason that we have decided to target the tourist market for our service. We feel that the tourist industry will be our best customers and as John Romero recommends, the one strategy in marketing that cannot miss, is to market to our best customers first. The tourist industry will provide us with prospective customers such as hotels and restaurants. Tourism thrives on this island, with thousands of tourists traveling here each year, not just for the sea, but also for enjoying the local culture, the mild climate, and the fascination of Roatan’s colorful history (Roatan’s land for sale, para.5). Because tourism is rising at a steady pace, we feel it would be in the best interest of our customers to use our service in order to maintain their increasing numbers in tourism. We plan to aid hotels and restaurants in accommodating tourists in the best and safest way possible. Contaminated water has always been a problem and over the years has become worse due to natural disasters. Health is one of the primary concerns of tourists and our service will play a hand in making them feel safer when visiting Roatan. With our service in motion, we foresee that Honduras will attract even more tourists.

4.1 GEOGRAPHY 4.1.1 Location
Central America’s second largest country, Honduras, borders the Caribbean Sea, between Guatemala, Nicaragua and El Salvador. Honduras is the second poorest country in Central America and one of the poorest countries in the Western Hemisphere, with an extraordinarily unequal distribution of income and massive unemployment. The economy relies heavily on a narrow range of exports and more recently tourism. (CIA, 2007). Figure 4-1 demonstrates the location of Honduras, its various regions, and its neighboring countries.


Figure 4-1: Map of Honduras

Unfortunately, hurricane Mitch hit Honduras the hardest and left devastating effects. One of the reasons that we have chosen this location is Honduras’ problem with contaminated water. We feel that this region of the world will need our service the most. Another factor that attracted us is the fact that Honduras has a lot of tourism potential. With the increasing number of tourists visiting every year, safety is important. With our service in motion, we will alleviate tourist concerns regarding contaminated water so that they can feel comfortable enough to bring their families. The Bay Islands
The Honduras tourist board best puts the description of the Bay islands when they say: “The perfect islands in the eye of your dreams could not surpass the scenic beauty and special appeal of the Bay islands of Honduras. Tucked away in a corner of the Western Caribbean and protected by the hush of time, the Bay Islands are the classic portrayal of forgotten tropical isles – unspoiled, sensuous, and totally irresistible.” (Stonich, 2000, p.1) The Bay Islands are located in the western Caribbean Sea from 30 to 64 km north of mainland Honduras (Stonich, 2000, p.27). Several islands within the Bay Islands include: Utila, Roatan, and Guanaja. English is widely spoken here even though Spanish is the official language of Honduras (Honduras institute of Tourism, para.1). The Bay Islands of Honduras offers a very different world from that of mainland Honduras. People tend to generalize Honduras as an unattractive site because of its status as a third world country and the extremely high poverty levels. What people need to know is that this part of Central America also offers beautiful and desirable locations. The Bay Islands is in fact a very desirable destination that more people have yet to discover. By bringing our service to the Bay Islands, we are sure that it will be a lot easier for hotels and restaurants to advertise their services as more reliable and safer. As a result, it will increase their business by attracting more tourists; and in turn, help us gain a lot more profit by the increasing level of water consumption. Figure 4-2, which was retrieved from the bebelebe website, shows an aerial photograph of the Bay Islands.

Figure 4-2: Aerial Photograph of the Bay Islands


4.1.2 Climate
The Bay Islands has a tropical climate with a rainy season from mid-October to late November. Roatan’s median temperature is 80 degrees Fahrenheit with equally warm waters. Even during the rainy season, Roatan’s weather can be easily compared to that of Florida’s; periodic showers with plenty of sun. (Bay Islands Weather and Climate Overview, p.2, para.1). Because of the reasonably hot climate in this region, water is very essential to tourists for hydration. This is where our service comes into play. With our service in action, people will feel at ease when wanting to drink water or use ice in their drinks. Tourists will no longer have to worry about the dangers associated with contaminated water.

4.2 DEMOGRAPHICS 4.2.1 Local population
The Bay Islands is home to a diverse population. Roatan has a mixture of ethnic backgrounds making it an attractive site. The special touch of Roatan is highly accentuated by the different personalities of the people that live there (Honduras this week, 2002). Several different cultures are evident among the 30,000 residents of Roatan, including English, Spanish, Honduran, Payan Indian, Garifuna, and Antillean (Roatan Bay Islands, 2001). English is the language predominantly spoken on the island even though Spanish is the official language of Honduras. These are just a few of the characteristics that draw tourists to this location but they are significant ones.

4.3 TARGET MARKET 4.3.1 Tourism
Tourism is the primary means for the Bay Islands, and more specifically Roatan. Recent data from the Ministry of Tourism indicate that, by 1997, approximately 93,000 tourists visited the islands annually. (Stonich, 2000, p.74). Over the years, the number of hotels has increased along with tourism. Between 1985 and 1996 the number of Bay Island hotels and resorts grew almost 400% from 17 (248 units) to 80 (954 units) (Stonich, 2000, p.75). Because the tourist industry in Roatan is fairly new, we foresee that it will become an even bigger industry in the near future. For this reason, we feel that this region of the world will need our service the most. We will attract business from many high-end hotels and restaurants.


One of the main reasons that people hesitate to visit Honduras is due to the health issues. Because water contamination is one of the main concerns, we plan to attack it, and as a result increase AQUAPURE’s business. With the increase in tourists, we expect the consumption of water to be greater and increase AQUAPURE’s revenue.

4.3.2 Roatan
Roatan is one of the three largest islands that make up the Bay Islands and one of the most popular tourist destinations. It is a beautiful tropical Caribbean island with stunning views of the sea with its shades of blue, lush vegetation, and gorgeous sunsets (Travel to Roatan, para.1). Roatan is a long island, measuring almost 40 miles in length and with a total landmass of 49 square miles (Honduras Institute of Tourism, p.2, para.3). A couple of the qualities that this island has to offer are the surrounding coral reefs and its excellent diving locations. Tourism is the primary industry for Roatan making it the most prosperous region of Honduras. By 1996, Roatan had more than three times the absolute number of hotel units/rooms than did Utila and Guanaja (Stonich, 2000, p.75). Tourism thrives on Roatan, with thousands of tourists traveling here each year, not just for the sea, but also for enjoying the local culture, the mild climate, and the fascination of Roatan's colorful history. (Roatan’s land for sale, para.5). Due to Roatans growing tourism industry, we have selected this island as the primary location for our service. With the increasing number of hotels we feel business will be available. Roatan is broken up into seven sections, which are the following: Coxen Hole, French Harbor, Parrot tree, West Bay, Sandy Bay, West End and Oakridge/Punta Gorda. Table 41 demonstrates what each area has to offer. The main features from each of the areas come from the Honduras Institute of Tourism website. Figure 4-3 shows Roatan’s location and the two other main islands.

Figure 4-3: Location of the Three Main Islands


Table 4-1: Seven different regions in Roatan

Coxen Hole French Harbor Parrot Tree West Bay Sandy Bay West End Oakridge/Punta Gorda

Largest city, and Capital Economic motor of the island The best planned development in Roatan Most popular part of the island sharing most tourists with West End Cultural center of Roatan Most popular part of the island with the most tourists Located on southern end, tourists are scarce Coxen Hole
Coxen hole is the capital of the Bay Islands and the largest city. Even though it is not one of the main tourist attractions, it is the main gateway to Roatan. Both the airport and the dock where the ferry arrives are located in Coxen Hole. There is also a regular bus and van service leading both, east towards French Harbour and Oakridge, as well as west towards Sandy Bay and West End. (Honduras Institute of Tourism, para.7). This part of the island also offers monetary services. When visiting the West End, which is the most popular location for tourists, one must keep in mind that there is no bank so tourists must do their monetary transactions in Coxen Hole. French Harbor
French Harbor is the economic motor of the island and the second largest community (Honduras Institute of Tourism, para.12). It is a thriving business center, with one of the largest grocery stores, banks, real estate offices, shrimp boat docks, and shipping companies (Roatan’s land for sale, para. 7). Although it is not one of the main tourist locations, it is still one of the well-known locations of the island. West End/ West Bay
One of our main locations for the distribution of our service will be on this area of the island. The reason for our choice is that West End is the main tourist location of Roatan. It offers a choice of many hotels, restaurants, shops, and great diving locations. Tourists can easily reach West End by public transportation. A bus departs regularly in front of H.B Warren in Coxen Hole and the ride is short and inexpensive. (Honduras Institute of Tourism, para.52). Because contaminated water greatly concerns tourists, we feel that by making the use of water safe here, this site will attract even more tourists with the proper marketing 23

strategies. We also feel that by situating our service in this area, we will be able to see profit at a faster rate. Figure 4-4 gathered from the Honduras Institute of Tourism website demonstrates Roatan’s popularity by highlighting the variety of hotels and restaurants in this area.

Figure 4-4: Tourist Map of West End’s Hotels and Restaurants

Because water contamination is a life threatening problem it is only obvious that there are already existing companies that are tackling this problem. What sets them apart from us is that most of these companies are using their services in multiple countries. AQUAPURE’s primary competition is U.S Microbics Inc. This company has formed World Wide Water Systems Inc., in a joint venture with C.TradeUsa, Inc., a water systems integrator and International Project Development Firm, to provide pure drinking water to people in Third World countries (Business Wire, 2004). What makes our company unique is that we plan to target Roatan solely in order to put all of our efforts into making the quality of our purified water superior to others. We are also only marketing our service to high-end hotels and restaurants.


Another existing problem is that most of the hotels we plan to sell our service to already have their own forms of purifying water. Many of the middle-class owners of the moderately priced hotels are fearful of jeopardizing the health of their guests and are taking steps to try to ensure them a safe water supply through the purchase of “pure” bottled water (Stonich, 2000, p.138). Our solution to this problem is to provide them with an overview of how much easier it will be to have AQUAPURE do the work for them at a reasonably cheaper price. To their advantage, they will also be able to advertise their use of our water purification company. This in turn will help people decide where they want to lodge and eat.

As a team, we have chosen Roatan as the location to start our service because this area of the world needs it the most. The market for our business is ideal in this location. Roatan is the largest of the Bay Islands and the most prosperous region in Honduras. Roatan attracts tourists from around the world every year and health risks are always on the top of all concerns. Drinking contaminated water causes many diseases and we plan to eliminate a significant amount of concerns with our service. We will provide our customers with the highest quality and best tasting water. Not only will tourists feel safe when drinking our purified water, but they will desire it while enjoying the beautiful weather and amazing attractions that this island has to offer.




Tourism has become a burgeoning industry in Honduras, with tourist arrivals up 42% from 2000-2004 (The World Bank Group, 2004). Expecting to seize on the ever-growing tourist industry throughout the country, our company feels that by pinpointing the water problem in Honduras and seeking to absolve tourist concerns over water-related diseases we can gain a foothold in the water purification industry in Honduras, first focusing on the Bay Islands and in particular Roatan. We plan to attract high-end hotels, resorts, and businesses by presenting the image of a quality service that is both affordable and safe. Our company feels that with the right sales pitch, accompanied by great service, a clean image, and effective advertising, we should tap into the water purification market on Roatan with as little problems as possible. This section describes how we will effectively reach our target market and keep our customers coming back through the projection of our image, sales pitch, advertising through print media and the World Wide Web to take advantage of the booming tourism industry in Roatan and eventually the greater part of Honduras.

The image of our company will be a key component to our success in establishing AQUAPURE as a staple of the tourist environment throughout Roatan. We plan to acquire business from high-end hotels, resorts, and restaurants with a fiscally responsible sales pitch that will be both personable and effective, using our logo to project a clean and professional image.

5.1.1 Logo
Our company logo, displayed in figure 5-1, features a water-based tone, complimented by a water droplet falling into the “U” in AQUAPURE. Our company believes that our logo personifies the purity, quality, and taste that AQUAPURE water purification provides. We want customers to view our logo and remember the great taste of water that our purification provides, subconsciously enticing customers to keep coming back

Figure 5-1: AQUAPURE Company Logo


and provide our company with additional business.



Introducing a new product or service into a market will always prove a difficult and daunting task. Taking into consideration that AQUAPURE’s customer base will consist of hotels, resorts, and restaurants in Roatan and eventually the greater part of Honduras, we will initially rely heavily on our sales representatives’ ability to pitch our service to these potential customers. After we have established our service in these businesses, we can then begin to market to the public, advertising through travel brochures, travel magazines, and the World Wide Web.

5.2.1 Sales Pitch
Upon the outset of our business, AQUAPURE will not necessarily market to the public; we first need to establish our service in hotels, resorts, and restaurants. Having said this, our sales people will represent the most important part of our marketing strategy. Our sales representatives must have success when pitching our business for AQUAPURE to gain any initial business. Tourists will only reap the benefits of our service and will not pay AQUAPURE directly. Our business will come from the hotels, resorts, and restaurants who will market their improved water quality to tourists, gaining more business for our customers. After gaining the initial business our company can move to marketing to the public through travel brochures, magazines, and the World Wide Web, informing the public of the water problem in Honduras and showcasing the advantages of our water purification service and displaying which businesses currently use our service. We plan to have three company representatives go to these businesses (hotels, resorts, and restaurants) and give a sales pitch directly to management. These representatives will use demonstrations showing exactly how our water purification system works including a powerpoint presentation with information such as costs and advantages of using AQUAPURE compared to other methods of water purification. Sales representatives will also distribute attractive brochures that will cover the basic information laid out in their presentation. AQUAPURE will require these sales representatives to know our company in absolute detail, so any questions that may arise from potential customers can have a concrete and competent answer.

5.2.2 Print Media
AQUAPURE will advertise most of our print media through brochures and magazines. As stated earlier, our company must initially have success in pitching our company to prospective customers before we can market to the public. Once we have established business throughout Roatan we can then use brochures to market ourselves to prospective tourists and attract these tourists to come to businesses


that utilize our service. The brochures, shown in figure 5-2, will feature attractive pictures of our customers’ hotels, resorts, and restaurants on the cover with an AQUAPURE logo above (Roatan & Bay Islands Visitors & Travel Guide, 2003). The insides of the brochures will continue with the picture theme, but also provide detailed information on our service and feature some of the most visited businesses that utilize AQUAPURE water purification.

Informational Brochure

Figure 5-2: AQUAPURE brochure cover

Our travel magazine ads, displayed in figure 5-3 below, will try to demonstrate a lighter theme, yet still accomplishing our goal of informing tourists of the water problem in Roatan. AQUAPURE believes that by having lighter themed advertising campaign we will fit with most of the other ads in travel magazines. The ads will use various graphics to entice tourists into finding more information about the water problem in Honduras, which we will have available through our web site. If tourists can create concern among businesses in Roatan, this will convince these hotel, resort, and restaurant owners to act on the water problem and come to AQUAPURE in need of our water purification service.

D m the sam m on’t ake e istake twic e! Next tim drink AQ e UAPUREwater

Have you be n a vic of c e tim ontam inate wate d r when trave ling to R oatan?

Provided to hotels and restaurants throughout Roatan

For more information visit our web site at www.aquapurewater.com


Figure 5- 3 : Potential AQUAPURE Travel Magazine Advertisement

5.2.3 World Wide Web
The internet has become a great way for businesses to advertise cheaply and effectively in the last decade. AQUAPURE plans to develop its own website (www.aquapurewater.com) where prospective customers can read information about our service, view pictures of our filtration system and how our service works, see the advantages of AQUAPURE water compared to other purification methods, ascertain how to contact the AQUAPURE team, as well as decide if AQUAPURE is right for their business. In addition to these attributes, we will also feature a section on our web site informing tourists of the water problem in Honduras, citing figures such as 40 out of every 1,000 children die in Honduras before the age of five from diseases associated with unsafe water (Finley, 2003). We believe this information will lure tourists into looking to hotels, resorts, and restaurants that use our water purification service, giving tourists a clear conscience when drinking the water on Roatan. We will also advertise on various tourism web sites such as www.roatanet.com. These web sites can help to develop and promote through search engine optimization, pay-perclick positioning, website hosting, as well as additional promotional activities through newsletter services, which will save AQUAPURE money on advertising expenses. During our first year our initial internet advertising costs will exceed no more than $150 (Roatan & Bay Islands Visitors & Travel Guide, 2003). After establishing our company in Roatan and gaining revenue we can then think about promoting AQUAPURE through additional travel web sites and increasing web-advertising costs.



According to TravelAgent magazine, Central America has become a booming tourist vacation destination and in 2005 logged the highest growth in tourism of any region in the world at more than 14 percent. The Honduran government is developing infrastructure to attract international hotel chains and increasing marketing and promotion efforts. Augusto Huescar of the World Tourism Organization (WTO) has stated that “Honduras has a lot of tourism potential. Many travelers are looking for new destinations to discover and Honduras offers authenticity with its rich culture, history, and nature.” (Mangan, 2006, p. 62). Roatan in particular is targeted for further development. Only 1,200 hotel rooms exist currently on Roatan, but with 400 new rooms currently under construction with more slated for the future, these new additions will have tourists flocking to Roatan at a much higher rate than previous years (Mangan, 2006, p. 62). A new high-speed ferry will cut travel time from the main island of Honduras to just over an hour, making it easy for tourists to travel to Roatan even if their hotel lies on the main island of Honduras


(Mangan, 2006, p. 62). Table 5-1 shows how tourism has expanded throughout Honduras in the years of 2000-2004. As this data shows, tourism has grown and continues to grow in Honduras and AQUAPURE plans to capitalize on this continuing expansion (The World Bank Group, 2004).
Table 5-1: International Tourism to Honduras 2000-2004

Number of Arrivals (in thousands) Number of Departures (in thousands) Tourist Expenditures (current US$ in thousands) Tourist Expenditures (% of total imports) 471 277 194,000

518 279 205,000

550 285 221,000

611 277 256,000

672 295 269,000






5.3.1 Marketing Advantages
With the recent tourism growth in Honduras, hotels, resorts, and restaurants will have more funds available to upgrade their facilities. AQUAPURE plans to take advantage of the incoming revenue by marketing our service during this boom in tourism. Prospective tourists concerned with the Honduran water problem will motivate these hotels, resorts, and restaurants to acquire our service to help alleviate the concerns of tourists. If these businesses can minimize tourist concerns about potential diseases from harmful water it helps the businesses as well as AQUAPURE, in turn providing additional business for each party involved.

5.3.2 Marketing Concerns
Good relationships with prospective customers are essential if AQUAPURE is to penetrate the water purification market (Foreign Agricultural Service, 2003). Our main concern in breaking into the water purification market in Honduras lies in our sales representatives’ ability to gain initial business from hotels, resorts, and restaurants. These representatives must have the knowledge and people skills necessary to market our company as a water purification service that sets itself apart from the competition.


5.3.3 Seasonal Marketing
The high-tourist season in Honduras and in particular Roatan begins in February and ends in late April. Highlighted by Semana Santa, a celebration during the week leading up to Easter, hotels and resorts fill up quickly in anticipation of this celebration (Roatan & Bay Islands Visitors & Travel Guide, 2003). During our first few years AQUAPURE plans to market to potential customers during the months leading up to the busy tourist season, mainly during the fall and early winter months. We feel that by using this marketing strategy, by the time tourist season arrives in Roatan, we will have established our service in enough hotels, resorts, and restaurants to market our service to the public through travel brochures, magazines, and the internet. As mentioned earlier, we can minimize our marketing costs by having businesses that utilize our service print a small caption informing tourists of the water quality provided to our customers’ businesses by AQUAPURE.



After successfully establishing ourselves as a reliable, safe company and gaining a good percentage of the water purification market in Roatan, which we conservatively estimate between five and seven years, we plan to expand marketing throughout other parts of Honduras. Reasoning that because the company has established a first-class reputation throughout Roatan, recommendations will come from customers (hotels, resorts, restaurants) and marketing to other Honduran vacation destinations will be much more economically feasible and just as if not much more successful than our initial marketing strategy in Roatan. As of December 4, 2006, more than 900 hotels with 20,453 total rooms exist throughout Honduras, with more than a third of those rooms built within the past five years (Mangan, 2006, p. 62). With the continuing expansion provided by government funding, AQUAPURE hopes to expand our business and increase our customer base throughout the country.

Our company plans to capitalize on the ever-increasing tourist industry that Honduras has become known for. Water related diseases have become a constant worry for tourists coming into the country and we hope to squash these concerns with our water purification service. Through our sales representatives’ pitches, advertising through informative brochures, travel magazines, and the internet we plan to take advantage of the everincreasing tourism industry on Roatan and eventually market to the greater part of Honduras. By tapping into a relatively new market we plan to establish ourselves as a


reliable business entity that customers can appreciate and come to anytime for service needs.



Motivational coach and author Brian Tracy once said, “Rule one of management in everything you do is to manage others the way you would like to be managed” (Brian Tracy). AQUAPURE will base its management off of this quote. The management will treat each employee fairly and value each one. The AQUAPURE management team will create a friendly atmosphere, which will lead to a friendly company as a whole. AQUAPURE will work to improve the water situation in Roatan, Honduras by providing water services for many hotels, resorts, and restaurants. This section of the plan will go over topics such as company organization, employee policies, Honduras policies and expansion opportunities.

AQUAPURE has seven founders, Erika Wiese, Lena Meyer, Leo Solis, Mitch Sandberg, Ryan Kendall, Brandon Vena, and Casey Hutchinson. The founders will remain in the U.S., except for Lena Meyer who will travel to Honduras to oversee the company. Figure 6-1 below shows the organization of AQUAPURE.

Chief Plant Operator

Lead Mechanic

Lab Technician

Security Guard

Figure 6-1: Company Structure Diagram


6.1.1 Employee Positions
All employees except the marketers and legal representative will be official AQUAPURE employees. Chief Plant Operator
The chief plant operator will be in charge of the entire plant. The chief plant operator is in charge of the lead mechanic as well. He or she is also in charge finding and extracting the water from the wells. Lead Mechanic
The lead mechanic will be held responsible for all water purification equipment repairs. He or she will also be responsible for running the equipment. Lab Technician
Performs daily tests on the water within the parameters of the plant to make sure the that the water is safe to drink. Security Guard
The security guard will patrol the plant’s premises to ensure that nobody touches or takes any of the water. Marketers
Although they will not be a part of the AQUAPURE team, AQUAPURE will hire people to market the service. Legal Representative
AQUAPURE will hire a legal representative to help with licensing and other legal issues.

The following section of the management plan will go over the employee salaries and policies. 35

6.2.1 Employee Salaries
According to the Country Reports on Human Rights Practices, the minimum wage in Honduras depends on the type of industry and the size of the company. The minimum wage in Honduras ranges from $3.24 (61.3 lempiras) to $5.17 (97.8 lempiras) (Acceptable Conditions of Work, 2005, par. 1). AQUAPURE will pay well above the minimum wage. Table 6-1 below shows the salaries for each of the employees at AQUAPURE. AQUAPURE employees will be paid yearly.
Table 6-1: Employees’ Salaries

Position Chief Plant Operator Lead Mechanic Lab Technician Security Guard

United States 48,000 United States Dollars(USD) 42,000(USD) 42,000(USD) 30,000(USD)

Honduras 906,719 Honduran Lempira(HL) 793,379(HL) 793,379(HL) 566,699(HL)

6.2.2 Hiring Procedures
AQUAPURE will hire employees based on a criterion that deals with their particular employment. The founders of AQUAPURE will hire the chief plant operator. The chief plant operator will be responsible for hiring the rest of the AQUAPURE team. Employee Qualifications
AQUAPURE requires a background check as well as a drug test for all employees. Honduras citizenship is required for all positions as well. • Chief Plant Operator 36

-Must be a qualified T3 (which means they are capable of running a water treatment plant) • • Lead Mechanic -Qualified T2 (which means he or she is able to run and repair the equipment) Lab Technician -Bachelor of Science in Chemistry -Water treatment experience Security Guard -Prior armed forces experience

6.2.3 Employee Attire
AQUAPURE will have a strict dress code. Any employee not in uniform will not be allowed to work. The chief plant operator, lead mechanic, and lab technician are required to wear a long sleeve collared shirt that AQUAPURE will provide. These employees must also wear work pants provided by AQUAPURE. They must also wear steel-toed boots at all times.

6.2.4 Probationary Period
A 90-day probationary period is required upon initial employment. The purpose of the 90-day probationary period is to provide the Chief Plant Operator a means by which they can evaluate the lead mechanic and lab technicians work. If the employee proves unsuitable for the job, the Chief Plant Operator will terminate the employee prior to the end of the probation period.

6.2.5 Work Hours
AQUAPURE employees will work from 6am to 4pm everyday. Employees may also need to work additional hours if an emergency occurs.

6.2.6 Personnel Incentives
Employees of AQUAPURE will be paid above the minimum wage in Honduras. Employees will be allowed to take a two-week paid vacation each year.


Table 6-3 below created by the World Bank Group shows all 13 procedures AQUAPURE must do in order to start the business in Honduras.
Table 6-2: Startup Procedures and Costs
Nature of Procedure (2006) Proc# Duration (Days) Procure a certificate of deposit at a local bank; pay the registry fee Constitute the company before a Notary Public, who is to draw up the instrument of organization Publish the registration notice in "La Gaceta", the official journal or an ordinary newspaper Purchase the bar stamps from the Banco Atlántida S.A File the articles of incorporation with the Mercantile Registry at the Chamber of Commerce Apply for the tax identification code (Registro Tributario Nacional, RTN) at the Dirección Ejecutiva de Ingresos (DEI), Ministry of Finance Acquire legal accounting and minutes books Apply for an operational permit (Permiso de Operación) from the municipal authorities via an attorney Register for Sales tax and acquire the authorization of the company books Register at the Hand Labor Training Institute (Instituto Nacional de Formación Profesional - INFOP) 1 2 1 2 Cost (US) 0.00 384.22




4 5

1 7

0.00 19.48




7 8

1 30

180.00 122.50

9 10

7* 1*

0.00 0.00


Register at Social Security Institute (Instituto Hondureño de Seguridad Social - IHSS) Register at Social Fund for Housing (Régimen de Aportación, (RAP) al Fondo Social de la Vivienda (FOSOVI)) Register with local and national Chambers of Commerce Totals:

11 12

7* 1*

0.00 0.00

13 13

1* 44

0.00 $721.20

According to the Honduras Institute of Tourism, “The Honduran Government In 1992, created the tourism incentive law (TIL), which allows investors a 10-year holiday on profits gained from any government-approved project in tourism”( Law of Tourism Incentive, 1992, pg 2, par 6.). The tourism incentive law will help AQUAPURE increase profits in Roatan. However, the law covers the entire country as well; AQUAPURE plans to expand throughout Honduras after AQUAPURE is well-established in Roatan.

6.4.1 Possible Locations
AQUAPURE is already researching other possible locations in Honduras. Tourism Minister Ricardo Martinez says, “The government is planning to boost the performance of tourism industry by building more hotels. An estimated $22 million has been invested by private sectors for the construction of two resorts. The government has allocated $15 million to improve the public infrastructures of the city of Tela” (Honduras anticipates increase in hotel construction, 2007, Vol. 66 pg 34). AQUAPURE will continue research on new developments throughout Honduras and search for possible sites for water purification systems.

AQUAPURE’s management will create a friendly work environment while providing purification systems throughout Roatan, Honduras. AQUAPURE will also maintain the purification systems and ensure that the customer is satisfied.




The Bay Island Environmental Management Project (PMAIB) is looking to, “Improve the conditions and quality of life for inhabitants of the islands by improving the drinkable water supply” (Washington Times Advertising Department, PMIAB Protects Island Ecosystem and Improves Quality of Life for Islanders, 2000). Although Honduras is a third-world country and half of its citizens live in poverty, AQUAPURE feels there is great potential on the island of Roatan to achieve success as a provider for purified water. Since Roatan is the biggest attraction cite amongst tourists in the Bay Islands (Roatan & Bay Islands Visitors & Travelers Guide, 2003). AQUAPURE will be a purified water supplier to the high-end hotels and restaurants in Roatan, Honduras. We plan to purchase our start-up costs that will be mandatory in the beginning phases of our business. These costs include: water treatment equipment, office equipment, office plant, patent, and business visas. After acquiring our start-up costs, AQUAPURE will accrue monthly expenses such as: salaries, rent, advertising, depreciation, amortization, income tax, interest, utilities, and repairs expense. Due to the large amounts of tourism throughout Roatan and a high demand for purified water, we can generate sufficient results in revenue and profit for our business. As we continue to expand our business and build our clientele, AQUAPURE will also create an account accumulating over time intended to provide purified water for the citizens of Honduras. Since nearly half of Hondurans live in poverty, we will offer purified water at an affordable price so that the citizens can adopt a healthier way to consume water.

AQUAPURE plans to effectively invest every dollar into our water treatment business as if that dollar was our last. What does this exactly mean for our investors? By budgeting and balancing our money towards our start-up costs and our monthly expenses, AQUAPURE will have more money available to return a respectable rate to our investors. Our budget plan will also allow us to cover any sudden expenses that arise during business operation, assuring our investors the security of their investment in AQUAPURE.

7.1.1 Start-Up Costs


Our start-up costs are the mandatory expenditures taken during the beginning phases of our business and serve as the official opening of AQUAPURE. Our start-up costs consist of five components, which are: water treatment equipment, office equipment, office, patent, business visas. Below, figure 7-1 shows the distribution of each start-up costs in relation to the total amount of cash needed to acquire these assets. The expenditures towards our start-up costs will use 97.9% of the capital AQUAPURE raises through debt and equity issuance.

Water Treatment Equipment Office Office Equipment Business Visas Patent

Figure 7-1: Distribution of Start-Up Costs Water Treatment Equipment
AQUAPURE has agreed to buy our water treatment equipment on account with maturity due at the end of ten years. The purchase price of AQUAPURE’S equipment is expected to cost $1.5 million. This cost includes the installation of the equipment and all of the materials needed to begin our water purification business. Special features of our equipment include a safety device that protects the pump from running dry when an insufficient feed of water pressure occurs. Once installed, materials and maintenance will be the only future costs incurred to keep our equipment operating; which are economically cheap compared to the sales we are generating from the production our equipment. Office Plant
AQUAPURE has strategically agreed to a 10-year lease on a 10,000 square foot office in Roatan, Honduras. Why emphasize the strategic part of acquiring our office? For one, the current price to build your own office in Roatan is about $70 per square foot. Multiplied by 10,000, the cost just to build our office would be $700,000. This price does not even include the purchase of the land where we would build our office. Therefore, it is economically cheaper and smarter for AQUAPURE to lease our office at a monthly expense of $2,500. Land will also have a cost of $40,000. Second, like any business, AQUAPURE plans to expand our business by building our clientele (high-end hotels and 42

restaurants). As we are expected to provide more of our purified water to our customers, we will need enough space in our office to install additional equipment; which will produce more purified water. Our 10,000 square foot office is the perfect size that fully maximizes the utility of our space. Office Equipment
AQUAPURE will office equipment such as: computers, office desks, office chairs, laboratory equipment, and filing cabinets. Our equipment has amounts to a total cost of $15,000. Business Visas
Since AQUAPURE will be based in Roatan, Honduras, it is mandatory for us to acquire business visas, which has an estimated cost of $1,000 for each member. With seven members in AQUAPURE, we will have a $7,000 expenditure on our business visas. The acquisition of business visas has validity for three months (, and if desired, we can apply for a six-month extension for our stay in Honduras. The application requirements for the purchase of business visas include two applications, a valid passport, and paperwork indicating the sufficient funds to cover the duration of stay. Patent
By acquiring a licensed patent for our business, AQUAPURE is guaranteed that no other company can obtain the legal rights of our business. We accurately estimate the acquirement of our patent at a cost of $4,300 since the invention is considered to be highly complex. The patent will have the same estimated useful life as our water equipment, so we will amortize (have to amortize intangible assets rather than depreciate them) our patent over its estimated useful life of 15 years. Included in the purchase price of our patent are search and consultation, professional drawings, attorney fees, and USPTO fees. Table 7-1 presents the variety of patent prices affiliated with the type of invention.
Table 7-1: Patent Costs


Invention Relatively Simple Minimally Complex Moderately Complex Intermediately Complex Relatively Complex Highly Complex

Search & Consultation $500 $500 $500 $500 $500 $500

Professional Drawings $200 $300 $400 $500 $700 $800

Attorney Fees $1,000 $1,250 $1,500 $1,750 $2,000 $2,500

USPTO Fees $100 $100 $100 $100 $100 $100

Estimate Total $1,080 $2,050 $3,300 $3,550 $3,800 $4,300

7.1.2 Monthly Expenses
Through devising our financial plan, AQUAPURE has come to the realization to have enough cash on hand (after our start-up costs) to cover three months’ worth of monthly expenses, excluding our income tax expense, in the case that we do not generate any revenue from our water treatment service. We feel the extra cash on hand provides a sense of security for AQUAPURE and for our investors since it solves any problems before these problems turn into costly nightmares. The good news is that our combined monthly expenses are only 29% of our start-up costs, guaranteeing that the extra cash on hand is not worry for our investors. Salary Expense
AQUAPURE will have three employees strictly for our water treatment service. The chief plant operator is in charge of the distribution of the plant, which means he is expected to verify that the piping, lines, and the infrastructure of our plant is running effectively. The chief plant operator is a qualified T3 employee (capable of running the plant), and earns a monthly salary of $4,000. Our second employee, the lead mechanic, works under the chief plant operator and is in charge of maintaining the water purifying aspects of our business. The lead mechanic also repairs the equipment when required, which saves AQUAPURE the time and money in hiring another employee strictly for the maintenance on our equipment. Being a qualified T2 (capable of running the water treatment equipment), the lead mechanic earns a monthly salary of $3,500. AQUAPURE’s lab technician earns $3,500 per month and performs daily tests of our water within the parameters of the plant to make sure our water is in drinking standards with the island of Roatan. Our lab technician will preferably have a bachelor’s degree in chemistry. AQUAPURE will also hire a security guard that will patrol the parameters of our office from 10AM to 6PM. Although there has been a reduction of crime in Honduras (Honduras Travel Tips, par. 5), AQUAPURE will take all precautions necessary to


guarantee the safety of our business. We will pay our security guard $2,500 per month. We will have a monthly salary expense of $13,500. Advertising Expense
AQUAPURE intends to promote our service towards the high-end hotels and restaurants in Roatan, Honduras. Since Roatan is one of the most popular tourist destinations in the Bay Islands, AQUAPURE feels Roatan is the best location to market our service; giving us the best opportunity to generate sufficient revenue as a supplier in the water treatment business . We intend to advertise our service mainly through print media; mainly in the form of broachers. These broachers are intended for the hotel and restaurant managers, which will then be provided for the tourists, and will include information about our company and what sets AQUAPURE apart from our competitors. AQUAPURE will be able to produce 5,000 colored pamphlets for $880. The pamphlets will only get us so far, so we need company representatives to close the deal. We will have two of the company owners’ as company representatives since it is our owners’ that best understand the possible success that can be achieved in the water treatment business. By having our company owners’ as company representatives, AQUAPURE can avoid further advertising expenses. The broachers will also include our home website. Rent Expense
As mentioned earlier, our rent expense on our office will be $2,500 a month. Depreciation Expense
AQUAPURE will use straight-line depreciation to allocate the cost of our tangible assets to the periods benefited from their useful life. Depreciation expense is computed by subtracting the salvage value of the asset at year end from the purchase price of the asset, and then dividing that number by the expected number of the asset’s useful life of. The purchase price of the equipment, as mentioned earlier, is $1,500,000. The equipment is not expected to have a salvage value after 15 years of its useful life. Our office equipment is will cost $15,000, and have a useful life of 10 years. AQUAPURE’s acquirement of our furniture will be able to serve seven years as a useful life and will cost $10,000. The tenyear lease on our building allows AQUAPURE to install additional equipment to our plant as we build our clientele.
Table 7-2: Depreciation Expense Depreciable Item Water Equipment Office Equipment Total Cost $1,500,000 $15,000 $1,515,000 Useful Life 15 years 10 years Depreciation Expense $100,000/year $1,500/year $101,500 Income Tax Expense


The value after tax (VAT) system in Roatan is 16%. This means that our net income at year end multiplied by the 16% will equal our income tax expense for the year. Interest Expense
AQUAPURE will accrue a monthly interest expense of $129,800. This amount comes from the financial institution loan as well as the private home lender loan. Utilities Expense
Our Utility bill will include gas and electric. AQUAPURE’s utility expenses will increase each month as we provide more of our purified water. More electricity is required to purify the water coming from the commercial wells and rain water to our holding tank. Our electricity will be supplies by the Roatan Electric Cooperative (RECO), which a subscriber is owned utility (Roatan Vista Villa Utility Systems, par 1). Amortization Expense
We will have a monthly amortization expense of $287 deriving from our patent. Intangible assets are amortized to match the expense incurred with the benefit received from their service.

AQUAPURE will need to raise approximately $1,600,000 in capital to begin our water treatment business. This amount covers our initial start-up costs, as well as three months worth of our monthly expenses excluding income tax expense. AQUAPURE will resort to debt and equity issuances to meet our expectations for raising capital. Figure 7-2 presents the resources AQUAPURE will use to raise capital.

Debt Equity Through Financial Institution Debt Equity Through Private Lenders Equity From AQUAPURE Owners


Figure 7-2: Percentage of Resources AQUAPURE Will Use to Raise Capital

7.2.1 Principal Equity
Each member of AQUAPURE has agreed to invest $20,000 into our water treatment business. This will immediately give us $140,000.

7.2.2 Debt Equity
AQUAPURE will take a $1,000,000 loan that matures in ten years with a seven percent interest rate from a financial institution. We have also agreed on a $460,000 loan with a 13 percent interest rate from a private home lender with a mature for ten years. With these two loans combined, we will have a monthly interest expense of $129,800.

7.2.3 Common Stock
AQUAPURE will issue 10,000 shares of common stock with a $1.00 par value to our investors. We will not include this $10,000 in our total amount of capital raised because it is not a guarantee in collecting all $10,000 from our investors. We will use whatever amount invested as extra cash on hand to cover any sudden expenses.

Financial statements are used by a business to properly demonstrate their financial position in accordance with the Generally Accepted Accounting Principles (GAAP). As the financial analyst, I feel the income statement and the balance sheet provide the best information for external users of the financial statements.

7.3.1 Income Statement
The income statement measures the success of our business over a given period of time and will arrive at our net income. Net income is found by deducting a company’s expenses from their revenue. Revenue
Our inflow of cash from the sale of our service can be calculated by taking 50% of our customer’s electricity bill. We are more concerned with our customer’s electricity bill rather than the amount of water they use from our service since a large amount of electricity is used in the process of transferring the purified water from our holding tank (also know as the reservoir tank) to our customer’s holding tank. Our customer’s


electricity bill will obviously vary, but the average electricity bill according to Debbie Wagner (personal communication, March 7, 2007), the average electricity bill for a hotel and a restaurant is about $20,000 a month. Therefore, AQUAPURE will charge 50% of $20,000 to calculate monthly revenue earned for each customer. Adding up the revenue earned from each customer will give us our total revenue at month end. (Components of the income statement are displayed in financial statements at the end of every month). Expenses
All of AQUAPURE’s operating expenses will be paid at the end of every month. Since we know our revenue and expenses, AQUAPURE can calculate our estimated net income. Table 7-3 depicts our company’s projected income for the first three years.

Table 7-3: Projected Income Statement Gross Profit from Sale of Service Operating Expenses: Salaries Expense Rent Expense Interest Expense Repair Expense Depreciation Expense Amortization Expense Advertising Expense Utilities Expense Total Operating Expenses: Operating Profit Income Tax Expense Net Income Dec 31, 2008 $480,000 $162,000 30,000 129,800 20,000 101,500 287 880 9,600 $454,067 $25,933 $4,149 $21,784 Dec 31, 2009 $600,000 $162,000 30,000 129,800 25,000 101,500 287 880 12,500 $461,967 $138,033 $22,085 $115,948 Dec 31, 2010 $720,000 $162,000 30,000 129,800 30,000 101,500 287 880 16,000 $470,467 $249,533 $39,925 $209,608

7.3.2 Balance Sheet
The balance sheet demonstrates a “snapshot” of the company’s assets, liabilities, and stockholders’ equity. Table 7-4 shows AQUAPURE’s balance sheet for the first three years.


Table 7-4: First three years of AQUAPURE’s balance sheet Jan 1, 2008 Current Assets: Cash and Cash Equiv Total Current Assets Property, Plant, and Equipment: Water Equipment Less: Accumulated Depreciation Office Equipment Less: Accumulated Depreciation Office Plant Total Property, Plant and Equipment Other Non-current Assets: Business Visas Intangible Assets: Patent Less: Amortization Expense Total Assets Liabilities: Long Term Debt Total Liabilities: $33,700 $33,700 Dec 31, 2008 $55,484 $55,484 Dec 31, 2009 $171,432 $171,432 Dec 31, 2010 $286,676 $286,676

$1,500,000 0 15,000 0 40,000 $1,555,000

$1,500,000 (101,500) 15,000 (1,500) 40,000 $1,452,000

$1,500,000 (203,000) 15,000 (3,000) 40,000 $1,349,000

$1,500,000 (304,000) 15,000 (4,500) 40,000 $1,246,500

$ 7,000 $4,300 0 $1,600,000 $1,460,000 $1,460,000

$7,000 $4,300 (287) $1,518,497 $1,356,713 $1,356,713

$7,000 $4,300 (574) $1,531,158 $1,275,210 $1,275,210

$7,000 $4,300 (861) $1,543,615 $1,194,007 $1,194,007


Stockholder’s Equity: Common Stock Net Income Total Liabilities and Stockholder’s Equity

$140,000 0 $1,600,000

$140,000 21,784 $1,518,497

$140,000 115,948 $1,531,158

$140,000 209,608 $1,543,615

AQUAPURE has a vision to not only succeed as a provider for purified water, but we also have a vision to improve the quality and availability of water for the tourists and the citizens of Honduras asked by the Bay Island Environmental Management Project. Purified water is essential to maintain one’s health, and because Honduras could use a dependable business as a means of providing purified water to its tourists and citizens, AQUAPURE plans to reach great success.



“Honduras is one of the poorest and least developed countries in the Western Hemisphere” (Encarta “Honduras” D). Honduras is a country that has suffered from natural disasters, water pollution, and unsanitary health conditions. In recent years tourism has grown, providing new jobs, boosting the economy, and providing the customers necessary for our business. Few cultural differences affect our business as our target market is tourists, however false promises common to their culture may cause problems. AQUAPURE will provide more jobs, in addition to improving sanitation. Therefore, the following sections consist of false promises, poverty, environmental issues, health, and tourism.

A cultural difference that may cause problems for our company is “commitments.” In English, commitment means commitment, but it has no meaning to Hondurans. For example, a promise made to come to fix our pipes by 2 PM in Honduras does not really mean anything. The man may come by a week late, a month late, or never. This will cause problems for our company because we will need to have repairs done quickly, and will need reliable work. Even if you confront the person, they will say they had a commitment, only to someone else. The gist of it is that it is rare for a person to tell the truth if they are actually going to show up for work. Another cultural difference we must watch out for is payment in advance. If work is still in progress, and the full payment has been made, it will take a long time to get the job done. In order to get work finished, you must constantly be nagging the workers. These false promises may also be a contributing factor as to why poverty is so high in Honduras.


Honduras has been a country of poverty throughout history and has suffered for it. The country’s economy is based mostly on agriculture, which fluctuates with world prices; making the economy highly unstable. Unemployment is high in the country, with over 28 percent of the population unemployed. Our service will help Honduras by providing new jobs for the unemployed in addition to improving sanitation. A cultural difference we have with Honduras is that armed guards exist almost everywhere, so we will be in need of armed guards. It will help protect our service which provides the best quality water to tourists from clean, well-protected sources. Family is very important in Honduran culture, and although women are generally submissive to men, due to extreme poverty, women have also begun to take jobs. Poverty and unemployment means that workers will be easy to acquire for our business. Table 8.1 compares the unemployment rate of Honduras to neighboring countries in the Western Hemisphere:
Table 8-1: Unemployment Rates Country Honduras Ecuador Panama Guatemala Costa Rica Canada El Salvador United States Nicaragua Mexico Unemployment Percent 27.9 10.6 8.8 7.5 6.6 6.4 6 4.6 3.8 3.2

Throughout Honduras’ history, Honduras has suffered from many environmental issues which range from water pollution to natural disasters.

8.3.1 Water Pollution
Honduras has long suffered from water pollution, making it hard for citizens and tourists to come across clean water. Heavy metals from mining activities pollute Lake Yojoa, making the largest source of fresh water contaminated. This makes it hard for residents, especially of rural areas to have access to clean drinking water. Our service will therefore take care of the contaminated water by providing fresh water to citizens and tourists in the area. Clean water is a necessity to restaurants, hotels, and other businesses in order for them to thrive in every culture, so our business should also thrive. 52

Figure 8-1 shows Lake Yojoa, Honduras’ major source of fresh water, which is undrinkable due to pollution.

Figure 8-1: Lake Yojoa (Encarta “Honduras” )

8.3.2 Hurricane Mitch
Honduras was the country hardest hit by Hurricane Mitch in 1998. During this hurricane the eastern coast was struck, killing over 5,000 people and causing damage to crops, roads, towns, and villages. This natural disaster is said to have set back economic development in Honduras by decades. AQUAPURE will be a great asset to Honduras by providing a new source of fresh, sanitary water. Simple companies such as AQUAPURE are necessary to Honduras, as their homes and lives have been so negatively impacted by natural disasters. Fresh water is a necessity to any culture, used for bathing, drinking, cooking, and so on. Figure 8-2 displays the aftermath of Hurricane Mitch in Honduras.

Figure 8-2: Hurricane Mitch (Encarta “Honduras” G)


Recently in Honduras more public health services have been made available through an increase in mobile health units and the development of community participation in health programs. Effective programs have helped control malaria and improved sewerage. AQUAPURE will be another of these services which will help improve public health as it will clean the infested water that people are drinking, leading to less diseases and improved health in this poverty stricken country. It will improve the quality of life in Honduras and be a great asset to their culture.

Tourism has grown in Honduras in recent years as a solution to poverty. It provides the country with much-needed income in addition to providing jobs for many, as over 28 percent of the country is unemployed. Most of the tourists come from the United States, in addition to visitors from elsewhere in Central America. People come to see the ancient Mayan ruins at Copan in addition to gorgeous beaches that offer scuba diving and snorkeling. Tourism relates to our service because tourists who come to enjoy the beautiful country need clean water. It is a burden to have to go in search of clean water, or avoid drinking water at all to refrain from becoming sick. AQUAPURE will bring clean water to Honduras in hotels, restaurants, and other businesses near Roatan, where tourism is huge. Travelers will be willing to spend extra money for sanitary living conditions that come with clean, running water. As our business will be aimed towards these tourists, many cultural differences we may have with Honduras simply do not affect our business, such as language. Although Spanish is the national language, our service is providing water, and this difference is not of too much importance. However we will warn our staff that another cultural difference is that pointing with the chin is as rude as pointing with a finger is to us. Although this is not a huge concern facing out service, it is helpful fact for our employees and tourists to know. Figure 8-3 displays a resort in Roatan, which potentially will use AQUAPURE’s service.


Figure 8-3: Resorts in Roatan (Travel to Roatan, Para. 5).

Honduras is a country of poverty, suffering from natural disasters to water pollution, resulting in poor sanitary conditions. We will hire security guards to protect our service and will hopefully hire loyal, consistent workers who will show up everyday. This may be difficult to as it is common for an employee to promise to come to work at 8 AM, but then may or may not show up. A promise means nothing, which will hurt our business if we hire these types of workers. Tourism in recent years “will not only benefit the country by creating new jobs and bringing in foreign currency, but also by strengthening our national identity, increasing development, and giving Hondurans a higher standard of living” (Honduras Tourism, Para. 1). AQUAPURE will provide jobs, improve sanitation, strengthen the poverty stricken country as a whole, and will thrive in Honduras.


Starting a business requires a thorough planning in order to be successful. The following paragraphs outline our implementation schedule and a detailed description of it.

To make sure we can start our business as planned, we will follow a precise schedule. The Gantt chart in Table 9-1 below shows start and stop dates of each task that needs to be completed.


March Obtain Licenses Obtain Land Order Equipment Receive Equipment Install Equipment Interview Employees Hire Employees Advertise Begin Operations

April May June July August September October

Table 9-1 Schedule of Implementation

After reading our implementation schedule it should be clear that we will be able to stay on schedule. We are confident and look forward to move ahead with our plans.



AQUAPURE and its Board of Directors are confident that AQUAPURE has the potential to succeed as a unique service in Roatan, Honduras. This business plan provided the Service Analysis, Market Analysis, Marketing Plan, Management Plan, Financial Analysis, Cross-cultural Analysis, and Implementation Plan of our business and illustrated the benefits of an investment in our company throughout each of these sections. As we know the main concerns our investors may have are in terms of money, table 10-1 provides one more time the key numbers of AQUAPURE that speak for themselves.
Table 10-1: Key Numbers for Potential Investors


First Year 480,000 58

Second Year 600,000

Third Year 720,000

Operating Expenses Net Income

454,067 21,784

461,967 115,948

470,467 209,608

Looking at these numbers, it is obvious that as time progresses, AQUAPURE’s revenue will increase rapidly, while our operating expenses are only slightly increasing. Therefore, our net income will increase by 532 percent after the first year and by 181 percent in between the second and the third year. In addition to that, the Honduran culture presents many advantages to us, we will implement a variety of effective marketing strategies, we identified all the cultural differences we need to be aware of, and we have an efficient management structure already outlined. We also hope potential donors will keep in mind the uniqueness of our service and the humanitarian aspect we could include. In conclusion, we believe that Honduras has more to offer than five-star hotels within “(...) a true unspoiled tropical paradise” (“Hotel Cabana Roatana”, n.d., intro section, para.1) and we believe that our service can make a contribution to develop Honduras into what it really is: A true five-star country.

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