Steven B. Belkin Case

Steven B. Belkin

Opportunity Evaluation

Belkin's company, TTG, is in an industry in which, at that time, is very young with high potential for growth. The case makes a point that the industry has low penetration and has not yet reached a level which is difficult to start and succeed. Additionally, there is little sophisticated competition in the industry essentially leveling the playing field. Belkin points out that TTG could also be attractive for public offering given example of a large tour operator in the US that had gone public with an initial share price of $10 and risen to $93 per share within two years.

Business and Marketing Strategies

The group tour industry is small at that time. Nationally there were ten major group tour operators, including among them the company Belkin worked for previously. Belkin plans to market TTG's tours through direct mail offerings rather than through third party distributors. This method of marketing achieves a higher target audience and allows for higher numbers in sales. The strategy is well put together, and Belkin has experience in this type of business. As an investor however, the problem exists in that you are lending without backing of any assets. The money borrowed by TTG is going straight to operating expenses. Should the business fail, investors wouldn't have any assets to sell in order to regain some of their lost.

Management

The management team at TTG is composed of Steven Belkin and Alan Lewis, both with prior experience in the tour group industry. Belkin has the adequate knowledge to make this type of business profitable as he did with Group Touring Associates. Lewis is experienced in sales as he is described as GTA's most productive salesman. As far as management, they are both adept to handle the operations of TTG. They have agreed that Belkin will maintain 51% of shares while Lewis gets 25%. The rest of the shares are left for future investors or for Belkin.

Analysis and Recommendations

TTG offers a good opportunity to investors because it has a very solid, well rounded business plan and an experienced team of executives running the business. It seems they have the knowledge and skill to make the company profitable. TTG estimates they require an initial investment of $250,000. $155,000 will be spent before their first tour. All of their expenses will be going into working capital. No machinery, plants, land, or assets of any kind will be purchased that could be used against the loan. Should the company fail, there would be no means of recovering any loss. For any investor, the risk is tremendous. I believe I would pass on this opportunity.