Executive Summary
This business plan will outline these products and services thoroughly. It will describe in detail the organization and its operations. It will carry out various analyses which will help understand the market and the industry the business will operate in. As we move on, this plan will outline the strategy that will be adopted by the business over the introductory period. Towards the end, forecasted financial statements will be developed which will enable us to have a clear idea of what the business will be financially over different time periods in the next couple of years.
A2. Mission, Goals and Objectives There are a number of goals and objectives that have been set for the organization. Before we move on the goals, we must understand the organizations mission. Its mission is to serve and cater to the accounting needs of its customers profitably. The goals and objectives of the organization are as follows.
To breakeven in the first year and earn a profit in the following years
Growth of at least 5 percent over the first 4 years
Capture an 11 percent market share after the first 5 years of operation
Be in a position to give back to the society by the end of the first 3 years of operation
Innovate and come up with the newest services and programs for the customers over the years
A3. Keys to Success There are a number of strength and opportunities that we plan on cashing upon. These will become our keys to success over the years. These include a strong team with who understand how to run a business and at the same time have accounting knowledge and hence can contribute to the business. Second key to success is the potential that lies in the market. The market for accounting products and services is huge. There are a number of medium and small businesses that do not take professional help for their accounts. These businesses can be targeted and hence the results can be great for our business. The third key to success is the nature of the business. Accounting has an ever growing nature. The scope of the business is very vast therefore there is a lot that can be targeted and hence this becomes an opportunity for us.
B- Company Summary
B1. Industry History Accounting has been used by businesses since a very long time. Businesses use this to record various transactions and keep track of their business. However, very recently, accounting has been incorporated with information technology. Before this, all the accounting processes were manual. As information technology was incorporated with accounting procedures, a number of companies switched over to make use of the benefits of such methods (Miller Center for Undergraduate Career Service, 2008).
In addition to this, the culture of outsourcing various departments to outside companies also increased in the market. Therefore more and more companies are now outsourcing functions like accounts and human resource to external organizations. This also increases the size of the market for us.
In the industry, there are a number of businesses that have been operating. These range from small to large accounting firms. The large ones have majority of the market share. The small ones target smaller amount of companies and hence end up capturing a relatively smaller market share. Our direct competitors will be the large ones considering the size and operations of our Freeman Co. These are relatively fewer in number, however, they have become very strong and known in the market therefore creating a name and space for us will be a challenge over the years.
B2. Legal Form of Ownership The form of ownership will initially be a partnership. A total of 6 partners will contribute to the organization in the beginning. However, since there are plans to grow in future, the organization is expected to turn into a corporation as soon as the operations become large enough.
There are a number of benefits that partnerships will bring to the organization. The 6 partners that will come together will bring in capital to the organization therefore increasing the capital employed amount and making the introductory survival easier. In addition to this, the various partners have different backgrounds and skills and once they come together under a partnership, these skills and backgrounds will translate into a successful profitable accounting firm.B3. Location and Facilities As mentioned before in the summary, the business will operate in Southern California. This is where the business will start from. There are a number of reasons why this area has been selected. First of all, the owners of the business have a number of contacts in this area which increases the market ready to consume our products and services. Also, since the accounting industry work on the basis of referrals to a great extent, these contacts will become beneficial for the organization in the long run. The details of the products will be discussed in the coming portions. However, the majority of the products will be produced in house. These softwares will be developed by developers working internally. In the beginning some of the work may be outsourced, however, we ultimately aim to become independent as time passes therefore all of the outsourced functions will be internalized in the future.
There are a number of accounting firms that are operating in this region before us, however, since this is not the cosmopolitan area of the United States, the competition is relatively weaker her. This makes this geographic location more suitable for us.
When we talk about the regulations that have been imposed in the region, there are not many that apply to us therefore we do not need to be bothered about that. Since we help organizations with taxation, we need to consider the tax policies of the area where we are conducting business. This was done in this case as well and we found out that there are no additional tax policies in this region which make it ideal location for our business to start
. B4 Management Structure The management structure of any organization is very important because this determines the business will operate in the future. As mentioned before, the business is a partnership with 6 partners in all. Out of these 6 partners, 2 will be sleeping partners. This means that these partners will not be directly involved with the business and they will only be providing the financial support and will supervise the operations of the business as and when the need arises. The other four partners will head various departments and areas of the business. These four partners will also make up the board of directors for the organization. These four individuals have different backgrounds and the area of business they will be handling is decided based in this background.
The four departments that will be headed by these four partners will be Human Resource, Accounting Finance, IT development, and Sales Marketing. Each of these four departments will have a manager and employees working in it. In addition to this, a general manager position will be there which will monitor all the departments as a whole. If a large project that needs individual attention arises, a project manager will be selected from within the organization to manage and look after the project. The structure will have minimal chain of commands and a wide span of control. This will ensure effective communication and motivation throughout the organization.
B5. Products and Services- There are a number of products and services that Freeman Co. will offer to the market. These will be discussed in this section.
When we talk about products, these include accounting program applications and softwares. These programs carry out various accounting transactions and functions for organizations that implement them in their organization.
In services, Freeman Co. will provide basic accounting services like Bookkeeping to the organizations. In addition to this, it will also be involved in more specialized services like taxation planning, preparation, control and management. Lastly, it will also provide advisory services to organizations. For instance, it could advice the organizations regarding various accounting issues that and organization may be facing. 60 percent of the firms revenue comes to the large range of services it provides to its customers (Taxwise, 2009).
There are a number of businesses that are involved in such products and services. What makes Freeman Co. different from others in the market is the fact that all these products and services are being provided by the same accounting firm. Usually, businesses have to go to a number of accounting firm to satisfy their accounting needs, however, when we talk about Freeman Co., the customers can obtain all the accounting products and services under one roof.
Market Analysis
C1 Target Market- Freeman Co. will provide a number of products and services for its customers. Its target market includes most businesses. Since Freeman Co. will produce and provide a range of products and services, it targets a range of businesses. These businesses are therefore of all sizes. The small businesses largely use off the shelf products that are relatively cheaper than other customized products produced by Freeman Co.
Freeman Co.s main target market are medium to large sized businesses. These businesses go for customized products and services. They outsource their accounting functions to accounting firms like Freeman Co. and use software and program applications to manage their accounting transactions. These businesses generally have employees more than 40. All these businesses have a motive to grow and this is the reason why they hire Freeman Co. There are no specific industries that are targeted. The reason behind this is that accounting procedures are used in all industries and because of the vast experience of the team at Freeman Co., there was no point in restricting the target market to a specific industry. More than 80 percent of the firms revenue will come from products and services provided to these businesses.
In addition to businesses, Freeman Co. also targets individuals who have enough wealth to need external accounting services to manage it. These people are from the highest income level in the region and the services that will be provided to them will basically manage their personal accounts for them. In addition to this, Freeman Co. is involved in providing such businesses with advice regarding what to do with their income, debts, and how to improve the records etc.
Initially, the entire market that will be targeted by Freeman Co. will be from Southern California. However, as time will pass, Freeman Co. plans on growing and hence the target market will increase over the years.
C2 Industry Analysis- When discussing a business plan, it is imperative that we take into consideration the industry in which the business will operate in. The reason behind this is that the industry greatly affects the operations of the business. To understand these effects, industry analysis is very important.
When we talk about growth trends, there are a number of things that we need to consider. First of all, we need to consider the fact that this industry only started growing as information technology became common. This was when businesses switched from manual recording of transactions to using accounting products. In addition to this, there was no concept such as outsourcing different functions in the past. Very recently, have organizations started to outsource various functions to external organizations. These factors increased the opportunities for accounting firms like Freeman Co. and this is when this industry started to grow.
The industry will grow as more and more medium to large sized businesses increase in number. We expect the number of such businesses to grow by 8 percent annually. If this is accurate, the growth of the industry will be at least 8 percent or more.
It is very important to consider the labor market when we talk about industry. There are not too many accounting graduates in the country. As a result, there is a shortage of people who can carry out the services that we will be providing. This is an opportunity for accounting firms like us because such conditions result in businesses coming to us for accounting assistance. However, this can also become a challenge for accounting firms like us because we will have a hard time finding suitable people who will be able to provide such services effectively. Once we can overcome this challenge, we will be in a very strong position in the market.
C3 Competitive Analysis- The competition is very strong when it comes to this industry. All the accounting firms try to gain as many customers as possible. Since the relationship between the customer and the company is usually long term, the marketing of the accounting firms has to be very strong and effective.
The industry, as mentioned before, has a lot of potential because of its nature. There are not many accounting firms that are in the region. These accounting firms are of different sizes. Our main competitors include the accounting firms our size or larger. However, since the smaller ones also make up a significant portion of the industry, it is important that we consider them.
Our direct competitors that include the relatively larger accounting firms have a total of 57 percent market share. These organizations have a reputation in the market of being the best and hence it will be challenging to create a position for ourselves in the market. We believe this will be possible because of the quality or innovativeness of the products and services that we offer to the customers. Also, since the industry works on referrals and since we have a number of contacts in the market, we believe that further referrals will help us gain a market share in the first few years of operation.
Market Strategy
D1 4 Ps- The first P that will be discussed is the product. As mentioned before, the products that we will be offering to the customer would include various accounting softwares, applications, and programs to the businesses. These products will digitalize the accounting procedures and transactions for the organization and will make their operations more efficient. These products can be off the shelf or customized according to the needs and description of the customer.
In addition to this, Freeman Co. will also be providing a range of services to its customers. These services include carrying out basic accounting transactions. This could include bookkeeping or similar accounting transactions. Besides this, specialized accounting services will also be provided to the customers. This would include tax preparation and planning. This is a rather complicated procedure therefore organizations mostly consult an outside specialist to help them out with this. This is the reason why most of our revenue comes from such specialized services. Lastly, we will also provide advisory services to our customers.
The second P that will be discussed is the pricing of the products. We have priced our products after keeping a number of factors into account. The detailed pricing of the products will be given in the next section however, the factors and methods used to decide on a price will be discussed here. The pricing of the products has been done by keeping the costs, positioning and the competitors in mind. We will charge a relatively higher price for our products and services and this high price will reflect the quality in them. When compared to the direct competitors, the price charged by us will be almost the same.
The third P that we will be discussing is promotion. When we talk about an accounting firm, most of the promotion is done mouth to mouth. This industry works on the basis of referrals to a great extent. Therefore the best form of promotion is a good reputation in the market. However, there is always a need for other forms of promotion that will use various mediums. These other forms include advertising in business magazines. Also, one of one presentation is a very important method of promotion that we will be using. This will allow us to customize our approach towards every large business which could possible become a major customer in the future. Another very important touch point between the customer and us will be our company website. This website will promote the various products and services that are provide by our organization and different benefits businesses could obtain by hiring us for their accounts handling.
Lastly, Place or distribution will be the last P discussed in this section. There will be central head office in the middle of the city which will be the main point of interaction between the customer and us. In addition to this, since we are providing a service, there will be no specific place.
D2 Price List- The pricing of the products and services that will be provided by us will be mostly premium. The prices will be high compared to others in the industry. These high prices will reflect the high quality of the products and services that will be produced and provided by us. One challenge will be to ensure that the customers see the value for the money they are paying for the products and services.
The prices of the products will depend whether they are off the shelf or not. The off the shelf products will be cheaper because there is no customization involved. When the products are customized, it will take more time on the part of our agents and hence it will be expensive. This is the reason why the prices of these products cannot be listed here.
The services will be charged on an hourly basis. They will be as following.
ItemBasis of PricePriceFull-time Accounting PartnerHourly160CPA Accounting StaffHourly105Lower Level Accounting StaffHourly50-60Staff for BookkeepingHourly40-50
D3 Selling Strategy- There will be a number of steps that will have to be taken in order to increase the sales of our business. As it is mentioned again and again throughout this plan, the business depends largely on referrals. Therefore it is very important that each and every customer is 100 percent satisfied with the products and services that we are providing to them. Then only will we get positive referrals and the market will grow. For this, we will have to work on making the customer happy from the first point of interaction we have with them.
It is known to all that it is much more expensive to attract a new customer compared to retaining an old one. Therefore this will be kept in mind throughout the time we will be carrying out business. The service provided to old customers will not be compromised in any way. Long term relationship will be developed by customers and this will automatically help up get new ones in the future.
As mentioned before, a very significant portion of our income comes from the services that we provide to the customers therefore we have to make sure that the amount of service increases. Therefore we will have to make sure that the number of billing hours are increased with every customer. However, at the same time, we have to ensure that the value to the customer also increases because then only will the customer remain satisfied.
D4 Sales Forecast-
20092010LargeMedium Sized Businesses 1.3 Million 1.3 MillionSmall Businesses 0.2 Million 0.3 MillionPrivate Individuals 0.1 Million 0.1 MillionTotal Sales 1.6 Million 1.7 Million
The sales forecast has been developed on the total sales and has been broken down on the basis of different customer as well. As mentioned before, majority of these sales will be from medium sized and large customers. Individual private customers will make the smallest amount of the total revenue earned.
Implementation Strategy
E1. Overall Strategy- As mentioned before, there will be 6 different partners. Out of these 6 partners, 2 will be non working partners while the other 4 partners will be working partners. These 4 partners will handle the 4 different portfolios on which the entire business will run. It will have to be ensured that all 4 departments of the business effectively communicate with each other. These 4 departments have to be aligned in terms of their operations and future plans. Then only will the entire business function properly as a whole.
In addition to this, another strategy of the implementation of the business will be to build upon the contacts each of the partners has over the years. The partners will have to dig up their contacts, use their referrals to gain more contacts and grow in this manner. Since long term relationships are the core essence of the business, this will be worked upon once a contact is turned into a customer.
Another factor that will have to be kept in mind is that the name of the business will be established before the operations of the business will start. This would give the businesses a chance to think about what accounting firm they will be using over the next financial year and hence we will have a higher chance is they know about it from before hand.
E2. Implementation.- The following is a timeline which will be followed when the time for implementation comes. Before we start with this, we must keep in mind that the business will start from July 2009. This is when the financial year of most businesses starts and hence this would give us ample time to create a name in the market, build upon our contacts and prepare for the normal operations of the business.
1st January, 2009 Finalize the business plan15th January, 2009 Website development and design complete
20th January Start advertising in business magazines and brochures and other methods decided by the marketing department
2nd March, 2009 Obtain the location for the head office that was decided upon
5st March, 2009 Finalize the entire workforce and develop the final structure
1st April, 2009 Develop samples for the products that will be offered in the market.
15th April, 2009 Finalize the range of products and services that will be offered.
1st June, 2009 Start normal business operations and understand how the operations work and different possible problems that might rise
1st July, 2009 Formally launch
E3. Control Plan- There are a number of control measures that will be taken by the business in order to make sure that the implementation is going as it was scheduled initially. A detailed timeline will be developed once this business plan is approved. This timeline will be documented and each and every member of the organization who will be responsible during the implementation phase will have this timeline available.
Each department will contribute to the making of this timeline and each department will present when its functions will fulfilled. Once this timeline is finalized, each department would be expected to ensure that their department has fulfilled their own tasks. The board of directors would meet from time to time to discuss the performance and the implementation schedule. In this meeting any corrective measure that may seem appropriate will be finalized and this measure will be taken in order to ensure that everything goes smoothly.
Lastly, since the timelines extends from the day the business plan is finalized to the official launch, the goals and plans will have to be broken down into further short term goals. Therefore, each department will have shorter term goals which will help in development of the action plans. This is very important as only once the short term goals are met, the bigger picture will be completed.
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