Here Today

Dividend Distribution and Projections

founder @ Here Today

Published on Nov 19, 2020

Hey all,

I thought it would be useful to provide some clarity on how dividends will be distributed and when you can expect to realize your investment.

All of these percentages have been taken directly from the business plan. These were made based on revenue projections for years 1-10 of the business. I'll focus on the first 5 years as this is the timeline that we project you will have realized your investment and be receiving profit on top of your initial investment.

DISCLAIMER: All investments carry risk, an investment in Here Today is no exception. There is no guarantee we will be profitable and you will recoup your investment. Also, the percentages and timeline presented below are projections and could be subject to change due to a variety of factors. See our Risks section to read more on the potential risks this startup could face. 

First, let's take a closer look at the structure of how dividends will be distributed and then we'll move on to our projections.

Structure: We're using a 70/30 flip model, meaning that Class B equity holders (that's you) will receive 70% of dividends distributed until you realize your investment (get your money back) and Class A equity holders (Me, Chris, and Mario) will receive 30%.

Once your investment is realized this will flip, with Class B equity holders receiving 30% of all future dividends and Class A equity holders receiving 70%. This will remain this way for the life of the business.

EX: $1,200,000 of total Class B equity 
First distribution is $200,000
Class B group receives $140,000 (70%) distributed based on each individual's percentage of Class B equity
Class A receives $60,000 (30%)
Remaining $ to realize Class B investment: $1,060,000

So if Investor X owned 10% of the $1,200,000 Class B stake ($120,000), they would receive 10% of that first Class B distribution ($14,000) leaving another $106,000 until they realized their investment.

Projections:

We have made revenue projections in our business plan based on hard numbers from our other bars and restaurants (i.e. average guest spend, average guests per day/week/month) and wholesale/brewing targets made with confidence from our experience in this field. This also assumes that we are utilizing 100% of profits to pay dividends -- there is a likelihood we will take some portion of profits to maintain working capital (i.e. put back into the business), but if we are hitting these projections then that will be less likely.

Currently we have projected the following percentages of return on your investment for years one through five.

Y1: 25%
Y2: 53%
Y3: 95% (the "flip" is projected to happen sometime this year)
Y4: 125% 
Y5: 160%

Meaning that Investor X from the example above would have received $30,000 of their initial investment in Y1 with that total rising to $63,600 in Y2, $114,000 in Y3, $150,000 in Y4 ($30,000 on top of their initial $120,000 investment - A Profit!), and $192,000 in Y5.

Again, I do want to be clear that these are projections and variance may occur that causes these payouts to be delayed or smaller depending on the health of the business. We are confident though in the projections and made them modest and achievable as we are fully aware of the ups and downs any food/beverage establishment may face in their early years.

I'll be adding the projections portion of this post to the Q&A section but please don't hesitate to reach out with questions either here or via email - info (at) heretodayseattle.com

Cheers,

Dave

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