Legal Requirments of Business Management

8/6/2019 Legal Requirments of Business Management

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Legal Requirements

There are a number of legal requirements that you need to understand when setting up your own company. You will also

need to decide on your company name, your agreement terms with other business partners, and other legal requirements.

It sounds daunting, but you will find lots of advice available from local business links and the Inland Revenue. Local solicitors

and accountants can often help, too.

Some of the things that you need to consider are:

Forming your business

You will need to decide whether you will operate as a sole trader, a limited company, partnership or a limited liability

partnership.

Insurance

What insurance will you need? The possibilities include fire insurance, consequential loss, health and sickness and public

liability to name but a few. An insurance broker or your bank can help you decide.

VAT

Whether or not you should register for VAT will depend on the company's expected turnover. Your local VAT office will

advise.

Inland Revenue

You are required to advise the Inland Revenue that you have started trading and there are penalties if you do not. Call the

Inland Revenue or visit their website for more info.

Company name

Your company name needs to be registered at Companies House if you are forming a limited company. It is also advisable

that sole traders and partnerships check their trading name to ensure that no-one else is using it.

National Insurance

You will be liable for National Insurance Contributions - check with your local Inland Revenue Office.

Licences

Some businesses require licences to operate (e.g. child minders, nursing homes, pubs etc). Speak to your local LicensingDepartment and the Environmental Health Department to check.

Data Protection

if you are capturing personal details and keeping them on a computer then it is very likely you will have to register with the

Information Commissioner's office. Call or visit their website at www.ico.gov.uk for free advice.

Legal advice

Take legal advice to ensure you haven't missed anything that you weren't even aware of.

Legal Requirments for starting a business

To operate a business legally one needs to meet all the laws for operating a business in your

country and local community. In the United States that means the laws of the federal

government, state governments of every state in which you do business, and in many


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locales, even city and/or county laws governing business operation. While this may sound

intimidating, there are multiple sources of helpful information

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All of the U.S. states havebusiness resource offices that provide information on the legal

requirements for operating a business in that state. Note that you need to meet the legal

requirements for every state in which you will be conducting business. This applies to

internet transactions if you are going to be mailing a product into a particular state. Most

states consider that a form of doing business in their states.

For the U.S. government, most businesses are going to need an Employer Identification

Number even if they don't have employees. The Internal Revenue Service (IRS) providesclearly written documentation of what is required in terms of reporting. Other agencies may

also have legal requirements. If you have employees, you will also have labor laws that you

will need to follow. The Small Business Administration operates local offices in every state.

These offices can be a great source of information about other local regulations you may

need to be following.

For businesses operating in other countries, there are a wide variety of regulations. Check

withinternational resources for locating the regulations that may apply for the country you

are in or would like to do business in.

Not only are there laws and regulations governing the actual registration of the business and

the business name, but there may also be licenses and permits needed to operate certaintypes of businesses. For instance, a restaurant may need health department or liquor

licensing, a hair stylist may need to be licensed within their profession, or a child care

service may need to have special permits from social service or educational agencies. You

can find out more about such regulations from your state business resource offices.

You also may want to trademark your business name and/or logo. Take a look at Patents,

Copyrights, and Trademarks to find out how to protect that valuable name you worked so

hard to choose.

The one step we have ignored so far, but that is an integral part of your legal structure is

what kind of business do you want to have? Your choices are a sole proprietorship, a

businesspartnership, a limited liability company (LLC) or a corporation. Follow the

simple How to Choose the Legal Form of a Business if you have no idea which would be

right for you. The legal structure you choose is not permanently binding, but there can be

complications in changing so consider it carefully.

One final step you may want to take to provide a good legal base for your business - and that

is to identify a good attorney that you can use should you need legal advice. Establishing a

relationship now can be good for opening opportunities in the future as well as having


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someone well versed in your business goals as an advisor as your business develops. To find

a good attorney, ask your banker, your accountant or other professionals in your field for

recommendations. Then put together a list of questions and interview more than one finalist

to see who is a good fit for you and your business.

Executive SummaryWe are currently in a highly lucrative market in a rapidly growing economy. The current trend towards an increase inthe number of entrepreneurs and competition amongst existing companies presents an opportunity for an increaseddemand for market information and services that will enable companies to stay ahead of the pack.Our services will be positioned very carefully: they will be of extremely high quality, relevant, timely and accurate,tailored to the clients' needs so as to enable them to make the right decisions, in turn leading towards growth of theircompanies, benefiting the overall economy.Palms and Bonds offers the expertise that a proactive-oriented and market-opportunity seeking company needs to

develop and enter new product distribution and new market segments in new markets. We intend to provide anumber of necessary services to the business community and to the public. These can be summed up in two maindivisions -- Business and Training Services. Our business services can be taken as marketing research, marketresearch reports, project-based consulting, business and marketing plans, plan consulting and writing, high-levelretainer consulting and company registration. Our training services include workshops and seminars on such topicsas sales and marketing, as well as in-house training of receptionists, secretaries, and sales and marketing personnel.Our marketing strategy will be based mainly on ensuring that customers know what needs the services are able tofulfill, and making the right information available to the right target customer. We intend to implement a marketpenetration strategy that will ensure that we are well known and respected in our respective industry. We will ensurethat our services' prices take into consideration people's budgets, and that these people appreciate the services,know that it exists, and where to find it. The marketing will convey the sense of quality in every picture, everypromotion, and every publication. Our promotional strategy will involve integrating advertising, events, personalselling, public relations, direct marketing and Internet marketing, details of which are provided in the marketingsection of this plan.Our target markets will range from persons in the corporate towers, small or medium businesses, to home institutionsneeding information on their particular area of concern. The common bond will be the appreciation of the importanceof quality information that will enable correct decisions to be made, holding all things equal. Palms and Bonds pridesitself on its analytical ability, its value-added service, competitive fees, its high standards of quality and its adaptabilityto changes in the market and in the method of its practice.Palms and Bonds intends to provide the client with more than just information and planning tools. We intend toprovide quality information that is customized to the client's needs, in the process assisting them on how best to usethe available information. By employing our services, our clients are assured of consultants dedicated to finding theright answers for their business and enabling them to benefit long after we have finished our work. We are in this lineof work because we like efficiency and because we understand and believe in problem solving and market/marketingresearch.

As we grow we want to grow right. For example we recognize that we have to be in constant touch with ourstakeholders to ensure market knowledge at all times. This is the nature of the channels we deal with. Also, we intendto build our management team correctly. We need the right people in the right place at the right time if we are toensure optimum growth. We intend to develop our team so that our people can grow as the company grows -- a

mutually beneficial relationship.In a nutshell, we don't just intend to market and sell our service, but to market and sell customized information,solutions and a total-quality environment. This will ensure we establish a reputable corporate image.Note: All displayed currency values represent Botswanan Pula (P).


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Need actual charts?We recommend using Business Plan Pro as the easiest way to create graphs for your own business plan.Edit this sample plan 1.1 ObjectivesOur business strategy will revolve around the need to provide quality information to our various targetclients/customers, in the process fully satisfying their needs. This shall be undertaken through recruitment of aprofessional marketing research and business consultancy team and the production of good quality reports designedto cater to the client's needs. These reports/proposals shall be professionally done so as to be reflective of ourintended image and reputation. We shall position ourselves as a quality service provider that strives to provideaccuracy, relevancy and specific information. We intend to establish a good rapport with all the relevant governmentagencies and private institutions that may in turn refer us to aspiring entrepreneurs.With time our presence on the World Wide Web will increase the knowledge of our services to the various marketsegments we shall be targeting. This is particularly so with foreign firms looking at establishing themselves inBotswana, hence providing them easy access to local information. In such a case Web presence is a naturalobjective in reaching the appropriate potential customers. We also intend to have brochures that will enable clients tohave an understanding of the types of services we offer and advantages of doing so. In addition to well-donebrochures, company profiles and business cards often have a triggering effect on clients contemplating investing inBotswana. These will undoubtedly generate increased sales of our products.1.2 Keys to SuccessThe keys to Palms and Bonds success will undoubtedly be effective market segmentation through identification ofseveral niche markets and implementation strategies. Along these lines the company intends to implement personalselling and direct marketing strategies to the target markets. Our personal selling marketing strategies will rotatearound keeping in touch with investment and finance bodies for major clients and word-of-mouth for more individualinvestors. our key success factors will include the following:

1. Excellence in fulfilling the promise: completely confidential, reliable, trustworthy expertise and information. Thisdictates that we have the latest technology and software.

2. Uncompromising commitment to the quality of the work: that is, quality data, information and solutions.3. Developing visibility to generate new business leads.4. Leveraging from a single pool of expertise into multiple revenue generation opportunities: retainer consulting, project

consulting, market research, and market research published reports.5. Successful niche marketing: we intend to find and target the quality-conscious customer in the right channels, makingsure that the customer will find us through aggressive marketing.

6. Timeous response to clients orders: we cannot afford to delay the client's order for whatever reason as this will havea negative bearing on our image and reputation, including future business. We need to be continually communicatingwith the client.

7. Marketing know-how: in an increasingly competitive market there is need to aggressively market our business andthe services we provide so as to be continuously at the top of our prospective and current clients minds.

8. Entrepreneurial Flair: market volatility and increasing duplication of business ideas advocates that we continuouslykeep abreast of new trends and our competitors.


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1.3 MissionPalms and Bonds offers clients reliable, quality information and proposals for business development, marketdevelopment, and channel development that will maximize business development. A true alternative to in-houseresources we offer a very high level of practical experience, know-how, contacts, and confidentiality. At Palms andBonds we are able to provide comprehensive solutions to our clients' problems that will foster business development.Clients must know that working with Palms and Bonds is a more professional, less risky way to develop new areaseven than working completely in-house with their own people. Palms and Bonds must also be able to maintain

financial balance, charging a competitive and realistic value for its services, and delivering an even higher value to itsclients. Initial focus will be development of the local market clientele.Our mission statement is:"We endeavor to understand our customers' business so well as to be able to offer comprehensive solutionsto their problems."

Company SummaryPalms and Bonds is a relatively new company providing high-level expertise in local business development, marketidentification and development, channel development, distribution strategies, and marketing strategies for all types ofproducts and services. It will focus initially on providing and satisfying two kinds of markets:

1. Providing market research to local clients looking at developing their businesses for the increasingly competitivemarkets, be they new or established.

2. Providing market research services to foreign investors looking at investing in the local markets.As it grows it will take on people and consulting work in related markets. It will also look for additional leverage byestablishing relationships and representations with international market research organizations.2.1 Company OwnershipPalms and Bonds is a Private Limited company. Its fiscal year is the calendar year. Messrs. TTT. and SSS. equallyown the company.2.2 Start-up SummaryTotal start-up capital and expenses covered (including legal costs, logo design, stationery and related expenses)came to approximately P49,600. Start-up assets required and utilized included personal computers, vehicles, officefurniture, and other office equipment. Please find below the start-up table.Note: All displayed currency values represent Botswanan Pula (P).

Need actual charts?We recommend using Business Plan Pro as the easiest way to create graphs for your own business plan.Edit this sample plan


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Start-up Funding

Start-up Expenses to Fund $49,600

Start-up Assets to Fund $20,400

Total Funding Required $70,000

Assets

Non-cash Assets from Start-up $0

Cash Requirements from Start-up $20,400

Additional Cash Raised $0

Cash Balance on Starting Date $20,400

Total Assets $20,400

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabilities $0

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $0

Total Liabilities $0

Capital

Planned Investment

Mr. T. $35,000

Mr. S. $35,000

Other $0

Additional Investment Requirement $0

Total Planned Investment $70,000

Loss at Start-up (Start-up Expenses) ($49,600)


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Total Capital $20,400

Total Capital and Liabilities $20,400

Total Funding $70,000

Need real financials?We recommend using Business Plan Pro as the easiest way to create automatic financials for your own businessplan.Edit this sample plan

Start-up

Requirements

Start-up Expenses

Legal $1,200

Stationery etc. $2,000

Brochures $3,000

Sales Calls $1,200

Expensed equipment $20,000

Rent $1,200

Staff training $5,000

Communications system $5,000

Other $11,000

Total Start-up Expenses $49,600

Start-up Assets

Cash Required $20,400

Other Current Assets $0

Long-term Assets $0

Total Assets $20,400

Total Requirements $70,000


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ServicesPalms and Bonds offers expertise in market research, channel distribution, channel development, and marketdevelopment that allow clients to choose their preferred relationship: these include retainer consulting relationships,project-based consulting, sales representation and market representation, project-based market research, publishedmarket research, information forum events, business plans, and marketing plans.

Palms and Bonds offers the expertise a proactive-oriented and market-opportunity seeking company needs todevelop and enter new product distribution and new market segments in new markets. We intend to provide anumber of necessary services to the business community and to the public. These can be summed up in two areas --Business and Training Services. Our business services can be taken as high-level retainer consulting, marketresearch reports, project-based consulting, business and marketing plans, plan consulting and writing, and companyregistration. Our training services include workshops and seminars on such topics as sales and marketing, as well asin-house training of receptionists, secretaries, and sales and marketing personnel.3.1 Service DescriptionOur business planning services include: assisting companies with the research and structuring of comprehensive,written business and marketing plans; providing a written business plan package, which delivers a complete, detailedbusiness plan to the client, specifically designed to meet their needs, that is, FAP applications, bank loans, NDBloans, restructuring, new product development, market expansion, etc.In many cases, small businesses often consider next year's budget an acceptable business plan. Any investor orbanker will disagree and insist on much more information prior to making a financial decision regarding funding abusiness. We want to provide the opportunity for businesses, which have potential to receive the funding that would

help them become solid employers.y Market research: (Discussion omitted in this sample business plan)y Retainer consulting: (Discussion omitted)y Cash Flow Analysis: (Discussion omitted)y Project consulting: (Discussion omitted)

3.2 Sales LiteratureThe business will begin with a general corporate brochure establishing the positioning. This brochure was developedas part of the start-up expenses including the business cards and Company Profile, mainly for the large organizationsthat often recommend services to potential investors. Compliment slips are also on the cards so as to raiseawareness of the company and its services.Literature and mailings for the initial market forums will be very important.3.3 TechnologyPalms and Bonds will maintain the latest market research software and Windows capabilities including:

1. Complete email facilities on the Internet for working with clients directly through email delivery of drafts and

information.2. Complete presentation facilities for preparation and delivery of multimedia presentations on Windows machines, informats including on-disk presentation, live presentation, or video presentation.

3. Complete desktop publishing facilities for delivery of regular retainer reports, project output reports, marketingmaterials, and market research reports.3.4 Future ServicesIn putting the company together we have attempted to offer enough services to allow us to always be in demand byour clients. However, economics has provided us with a new era of opportunities for the small business in which wecan only guess at the needs. The most important factor in developing future services is market need. Ourunderstanding of the needs of our target market segments is one of our competitive advantages. It is critical to oureffort to develop the right new services. We also have what we call a "core service engine" (market research) that willbe the foundation of future products. In the future, Palms and Bonds will broaden its coverage by expanding intoadditional markets (e.g., the whole of southern Africa) and additional product areas. However in doing so we willstrive to ensure that it is compatible with the existing services.Now we have the possibility of new money being loosened for entrepreneurs and that means there will be a

substantial increase in the number of feasibility studies and business plans. This provides additional business forvirtually every area of business service we provide.

We are also studying the possibility of newsletter or electronic newsletter services (for the international market), orperhaps special on-topic reports, pending further research on client needs.

Market Analysis SummaryWe are today experiencing a rapid growth in the economy of unsurpassed nature. This has been brought about byamongst other things, the relaxation of foreign exchange policies and macro economic policies geared towards


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attracting foreign investors into the country. The fiscal and monetary policies of the government geared towardsmaintaining growth with social justice have largely contributed towards this, evidenced by our economy averaging agrowth rate of 7% since 1990 -- very high by international standards.The current drive and emphasis by the government on diversification of the industrial base away from the mineralssector presents an opportunity for Palms and Bonds to make a valuable contribution towards achieving this goal. Thiswill result in implementation of modern market research techniques and transfer of knowledge. Having undertaken athorough and comprehensive research of the market we realized that there was a need for a specialized market

research firm that focuses on producing market research reports that are tailored to the clients needs. Though thereare business consultancy firms currently on the market, some of whom have been in existence for a relatively longperiod of time, we believe that there is a market need for one (ourselves in this instance) that particularly focuses onmarket research. We intend to provide services of extremely high quality -- something that cannot be over-emphasized in the international arena with the current drive towards globalization.We appreciate that entering such a market is not a bed of roses and intend to implement an aggressive marketingstrategy, well supported by the other business functions. The above prognosis influenced our decision to enter thebusiness consultancy industry.4.1 Market SegmentationPalms and Bonds will be focusing on local businesses and foreign investors looking at investing in the country. Thesewill be small, medium, and large-sized companies looking for a total service and quality work.Our most important group of potential customers are foreign investors. These are potential investors who want tohave a feel and understanding of the local markets and the opportunities, and constraints they present to them. Theydo not want to waste their time or risk their money looking for bargain information or questionable expertise. As theygo into markets looking at new opportunities, they are very sensitive to risking their company's name and reputation.

Large corporations: one of our most important market segment is the large organization looking at penetrating new orexisting markets. These companies will be calling on Palms and Bonds for development functions that are betterspun off than managed in-house, for market research, and feasibility studies.Medium-sized growth companies: particularly in rapidly expanding markets, Palms and Bonds will offer an attractivedevelopment alternative to the company that is management constrained and unable to address opportunities in newmarkets and new market segments.Small-sized companies: in an increasingly competitive environment entrepreneurs are becoming more cautious in themarkets they seek to enter and on establishing new market opportunities. They are often seeking for prior research tobe done to identify possible markets that are suited to their resources and capabilities.Hence the most likely types of businesses to require our services would include:

y New businesses seeking investment or start-up capitaly New firms looking at investing in the countryy Existing companies which are expanding or introducing a new product/ service.

The table below summarizes the total market potential.


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Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Small sized companies 2% 200 204 208 212 216 1.94%

Medium sized

companies 8% 1,200 1,296 1,400 1,512 1,633 8.01%

Professional firms 9% 900 981 1,069 1,165 1,270 8.99%

Large sized companies 1% 100 101 102 103 104 0.99%

Financial institutions 14% 70 80 91 104 119 14.19%

Other 3% 150 155 160 165 170 3.18%

Total 7.60% 2,620 2,817 3,030 3,261 3,512 7.60%

Need real financials?We recommend using Business Plan Pro as the easiest way to create automatic financials for your own businessplan.Edit this sample plan 4.2 Target Market Segment StrategyOur marketing strategy will be based mainly on making the right information available to the right target customer. We

will ensure that our services' prices take into consideration people's budgets, and that these people appreciate theservice and know that it exists, including where to find it. The marketing will convey the sense of quality in everypicture, every promotion, and every publication. There is already a sense of segment strategy in the way we defineour target market. We are choosing to compete in areas that lend themselves to local competition, service andchannel areas that match our strengths, and avoid our weaknesses.Our strategy calls for the development of relationships with investment bodies, attorneys, accountants and financialinstitutions to support our business with referrals. Interviews with commercial loan officers have indicated that there isa serious need for a professional firm like ours to help their clients in market/marketing research, and development ofcomprehensive and concise business and marketing plans.4.2.1 Market NeedsPalms and Bonds intends to provide the client with more than general market information. We intend to provideaccurate, relevant, specific and timely information that will enable our clients to make more accurate decisions. Thisinformation we intend to be available to our clients at competitive rates.We understand that our target markets need more than just information but information that will enable them to makemore informed decisions. Our target client wants information that is relevant to their needs and easily understandable

so as to make the right decisions. We don't just intend to provide a service, but to provide one of unparalleled naturerelative to the market.4.2.2 Market TrendsOur intended markets are increasingly growing towards recognizing the difference between poor quality businessconsultancy service and that of high quality. This development is an important trend for us as it represents our targetmarket, and hence opportunity. We now are having an increasing number of people who appreciate qualityinformation and the importance of having comprehensive and concise market and business plans undertaken.

Another trend is the one toward greater use of specialized and focused consultants, instead of in-house resources.Companies are looking for out-sourcing (but unfortunately few offer such a service) and, in general, a preference forvariable costs instead of fixed costs.


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4.3 Positioning StatementAlthough there are a number of attorneys and accountants who write or assist in writing a business plan, the reality isthat these professionals provide invaluable services in the areas in which they specialize, but lack the imagination towrite a comprehensive and effective business plan. The attorneys tend to dwell on the legal aspects and contractualarrangements while accountants sweat over the balance sheets, cash flow statements, product costs and incomestatements. Additionally, these vitally necessary professionals cannot afford to spend the many hours necessary towork on a business plan when they could be earning much more per hour concentrating on their particular field of

expertise.Our expertise lies in the ability to listen to a business owner and perceive their vision for their company over the nextfew years. We can envision what the business person is looking for in the future, then put it in writing and at a costthey can live with.4.4 Service Business AnalysisThe consulting "industry" is pulverized and disorganized, with many smaller consulting organizations and individualconsultants for every one of the few dozen well-known companies. These other organizations often offer a service,which is not to the client's satisfaction. In addition they often claim to offer a service, which they are not fully capableof providing satisfactorily.Consulting participants range from major international name-brand consultants to hundreds of individuals. One ofPalms and Bonds' challenges will be establishing itself as a real consulting company, specializing in market research,positioned as a relatively risk-free corporate purchase. The business consulting industry may be segmented byeconomics and needs patterns. This incorporates some of the service type differences, but in a more practical sense:Mainline Services: these include marketing/market research undertaken through advertising, direct mail, referralsand sales literature. Essentially these will be customized to the client's needs.

Ancillary Services: these include services such as trading licenses and company formation, which tend to be similarwith not much to differentiate amongst providers except speed of execution. We intend to have an extremely efficientand 'state-of-the-art' business centre that will cater to our clients' needs. Service provider decisions don't tend to bemajor decisions/events covering relatively insignificant amounts.4.4.1 Distributing a ServiceConsulting is sold and purchased mainly on a word-of-mouth basis, with relationships and previous experience being,by far, the most important factor.The major name-brand houses have locations in the main mall, and executive-level managers or partners developnew business through industry associations, business associations, chambers of commerce and industry, etc., and insome cases social associations such as country clubs.The medium-level houses tend to be general in terms of services and specific in terms of target market -- targetingFAP seeking clients/individuals. They are not easily able to leverage their business through distribution, which weintend to be one of our competitive advantages.4.4.2 Competition and Buying PatternsThe key element in purchase decisions made at the Palms and Bonds client level is trust in the professional

reputation and reliability of the consulting firm. The most important factor in this market is the quality of the service.The majority of the investment referrals said they were not satisfied with the current plans often submitted for theirapproval as they were of poor quality.4.4.3 Main CompetitorsThere are numerous companies operating in Gaborone who classify themselves as "business consultants". However,upon contacting these, it appears that the vast majority of these companies are bookkeeping and secretarial servicescompanies. There are some companies that provide services similar to those offered by us and that is good, but noneof them specialize in market/marketing research. The following are some of our main competitors:The high-level prestige management consulting firmsStrengths: Prime locations managed by owner-partners with a high level of presentation and understanding ofgeneral business. Enviable reputations, which make purchase of consulting an easy decision for a manager, despitethe very high prices.Weaknesses: General business knowledge doesn't substitute for the specific market, channel, and distributionexpertise of Palms and Bonds, focusing on local markets and products/services. Also, fees are extremely expensive,and work is generally done by very junior-level consultants, even though sold by high-level partners.General Business Consultancy firmsStrengths: Expertise in certain functional areas particularly bookkeeping. Palms and Bonds intends not to competewith general business consultancy firms in these markets.Weaknesses: The inability to spread beyond a specific focus, or to rise above a specific focus, to provide actualmarketing and market research expertise, experience, and wisdom beyond the specifics.The most significant competition is no consulting at all, companies choosing to do market research, businessdevelopment and channel development in-house.Strengths: No incremental cost except travel; also, the general work is done by the people who are entirelyresponsible, the planning is done by those who will implement it.


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Weaknesses: Most managers are terribly overburdened already, unable to find incremental resources in time andpeople to apply to incremental opportunities. Also, there is a lot of additional risk in market and channel developmentdone in-house from the ground up. Finally, retainer-based antenna consultants can greatly enhance a company'sreach and extend its position into conversations that might otherwise never have taken place.Attorneys and Accounting firmsStrengths: Able to provide sound accounting or legal advice and services with the plans being done by the partners.Weaknesses: They often lack the imagination to write a comprehensive and effective business plan. The attorneys

tend to dwell on the legal aspects and contractual arrangements while accountants sweat over the balance sheets,cash flow statements, product costs and income statements. Very little market research, if any, is often undertaken,and often ineffectively.4.4.4 Business Participants

At the highest level are the few well-established major names in management consulting. Most of these areorganized as partnerships established in major markets around the world, linked together by interconnecting directorsand sharing the name and corporate wisdom. Some evolved from accounting companies and some frommanagement consulting. These companies charge very high rates for consulting, and maintain relatively highoverhead structures and fulfillment structures based on partners selling and junior associates fulfilling.(Discussion omitted in this sample plan)4.4.5 Competitive ComparisonWe have sought to identify competition in terms of companies that satisfy the same client needs that we intend to.Our competitors are few in our main service, and, including Government agencies, numerous in our ancillaryservices. There will be a need to strongly differentiate ourselves from these other businesses. However on a broaderscale our competition comes in several forms:

1. The most significant competition is no market research consulting at all, companies choosing to do market research,business development and channel development in-house. Their own managers do this on their own, as part of theirregular business functions. Our key advantage in competition with in-house development is that managers arealready overloaded with responsibilities, they don't have time for additional responsibilities in new marketdevelopment or new channel development. Also, Palms and Bonds can approach alliances, investment bodies, andchannels on a confidential basis, gathering information and making initial contacts in ways that the corporatemanagers can't.

2. The high-level prestige management consulting: XXX and international firms. These are essentially generalists whotake their name-brand management consulting into specialty areas. Their other very important weakness is themanagement structure that has the partners selling new jobs, and inexperienced associates delivering the work. Wecompete against them as experts in our specific fields, and with the guarantee that our clients will have the top-levelpeople doing the actual work.

3. The third general kind of competitors are the various trading and Investment bodies. These companies are formidablecompetitors for published market research and market forums, but cannot provide the kind of high-level customizedconsulting that Palms and Bonds will provide.

4. The fourth kind of competition are the business consultancy firms, which undertake business plans for variousorganizations. For example: LLL, MMM, NNN, and OOO Consultancy.

5. The fifth kind of competition are the numerous "fly-by-night" business consultants that claim to offer the sameservices as we do. Often they offer a below par service with no qualified personnel.

Strategy and Implementation SummaryOur marketing strategy emphasizes focus. This will be the key. We are a relatively small company and hence mustfocus on certain kinds of services with certain kinds of users. Initially Palms and Bonds will focus on the local marketand in the market research and training fields. The target customers will include key decision-makers in the large,medium and small-sized organizations in a start-up and growth periods.

y We are currently building image and awareness through consistency and distinctiveness in our service provision.y We intend to focus on delivering quality service and end product that in turn produces good referrals, which can then

generate revenue.

y We intend to always have a relatively heavy personal selling component to our marketing. Hence we intend to always

be active in personal relationships with clients and strategic allies keeping abreast of their needs and wants.y We are focusing advertising on several key media.

5.1 SWOT AnalysisWe are presently in a highly lucrative market in a rapidly growing economy. We foresee our strengths as the ability torespond timeously to the market dictates and to provide custom designed market research services to our clients. Inaddition through aggressive marketing and quality management we intend to become a well respected leader in ourrespective industry. Our key personnel have a wide and thorough knowledge of the local and international marketsand expertise, which will go a long towards penetrating the market. However, we acknowledge the fact that fewcompanies are aware of the actual importance of market research and marketing and its contribution to the wholebusiness strategy. Below are the summarized strengths, weaknesses, opportunities, and threats.


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5.1.1 Weaknesses

y Lack of a solid well-established network in the market research arena.y The introduction of new organizational practices and personnel who have not previously worked together presents a

challenge to the organization.

y Establishment on the Internet will produce technological challenges.5.1.2 Opportunities

y Specific niche. Appreciation for high quality, accurate, unbiased and relevant information.y The introduction of the International Financial Services Centre (IFSC) presents a vast opportunity, as both foreign

and local firms will be looking for information, which may assist on entering their respective markets.

y Current growth of the economy in comparison to other economies presents an opportunity for an increased number offoreign investors to invest in the markets.

y The current drive towards localization is causing an increasing number of local individuals to invest and start theirown businesses.

y The new generation of entrepreneurs, corporations, professionals, business owners has a far greater appreciation forthe need for adequate planning and relevant information.

y Internet marketing and sales -- though still in its infancy.y Increasing number of foreign firms, especially from South Africa looking at penetrating the local markets.y Financial assistance given by the government on the credibility of business plans. However the results of the review

of the FAP by the Botswana Institute of Development Policy Analysis need to be taken into consideration as it couldbe scrapped or replaced by a new scheme.

y

Existence of well-established government organs that deal directly with aspiring entrepreneurs -- local and foreign,presents us with a networking opportunity.5.1.3 ThreatsThe present growth in the economy may result in increased numbers of business consultants, leading to increasedcompetition and confusion amongst clients. This competition could emerge from a variety of given sources including:

y Established mass-market consultants' development of new lines and vertically integrating so as to be totally in controlof all services required by the client.

y New marketing strategies and tactics by established companies.y Existing competition.y The current plethora of 'fly-by-night' business consultancy firms in existence.y Other start-up companies generated by healthy economic growth nation-wide.y Existence of well established government organs that deal directly with aspiring entrepreneurs, both local and foreign.

5.1.4 Strengths

y Strategic market segmentation and implementation strategies.y Diversified market segments. Ensures the lack of dependency on one particular market.y Combination of skills in directorship. The directors intend to jointly develop business strategy and long-term plans,

having wide experience in market and product know-how, and strong financial management and business know-how.

y Establishment and maintenance of a well-known business name.y An aggressive and focused marketing campaign.y A marketing plan with clear goals and strategies.

5.2 Macro-environmentAt a large scale, market research demonstrates that the business consultancy market we intend to enter is growingand changing. Generally there is a trend toward executive turnover in medium to large companies today. That is,corporate restructuring, privatization, and increased small business development providing for a younger moreambitious market in the executive and small business sector. Research indicates that this new generation ofexecutives being more educated and aware of the global environment assesses and implements information to amuch higher degree than past trends have indicated. This is exacerbated by the increase in competition in allindustries making it necessary for individuals to have relevant information at their fingertips. Therefore with the

emergence of this generation of individuals, the appreciation of quality information and business solutions/recommendations that provide for and enables the company to grow, dictates that our service lines will be popular.The current drive by the government towards a more diversified economy presents an opportunity for our business topropel and excel in our intended markets, benefiting from the support of the concerned institutions and trade bodies.In addition with the country increasingly becoming an economic hub we foresee the demand for high qualityinformation to be on the rise. Through undertaking of our business activities professionally we foresee that it shouldnot be too difficult to gain market acceptance provided we deliver the final product timeously and of good quality, atcompetitive prices.Furthermore Small, Medium and Micro Enterprises are well recognized as a potentially important source ofemployment generation apart from the diversification that they inevitably result in. They in turn reflect the declining


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importance of centralized mass production, along with technical change, the growth of information technology and thegrowth of the service sector.Employment in Botswana by the type ofEmployer

Government 36%

Large Employer 32%

Medium Employer 4%

Small Employer 14%

Micro Employer 14%

Source: BIDPA estimates5.3 Competitive EdgeOur competitive edge will be our dominance of market information, customer orientation and traditional hard work.

Although there are many "supposed" business consultants we intend to offer more than just a professional servicebut mesh well the various crafts together harmoniously.Though we shall be serving different market segments we intend to focus on the individual or group who wants high

quality information and plans customised to their needs. In the case of marketing and business plans they should beable to work harmoniously/beautifully in the intended environment, both on a macro and micro scale. Though ourclients might range from large corporations, small or medium businesses, institutions or resellers what is important tothe customer is total satisfaction with the end product matched to their capabilities and resources.5.4 Sales StrategyThe sales forecast monthly summary is included in the appendix. The annual sales projections for three years areincluded in the table below. It should be noted that as we become established and known on the market we projectsales to increase at a faster rate than the initial year.Note: All displayed currency values represent Botswanan Pula (P).



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Sales Forecast

Year 1 Year 2 Year 3

Sales

All services $366,300 $612,000 $734,400

Other $0 $0 $0

Total Sales $366,300 $612,000 $734,400

Direct Cost of Sales Year 1 Year 2 Year 3

All services $79,500 $117,000 $140,400

Other $0 $0 $0

Subtotal Direct Cost of Sales $79,500 $117,000 $140,400

Need real financials?We recommend using Business Plan Pro as the easiest way to create automatic financials for your own businessplan.Edit this sample plan 5.5 Marketing StrategyOne core element of our strategy will be that of differentiation from our competitors. In terms of marketing, we intendto sell our company as a differentiated strategic ally, not just our services. In price, we intend to offer reasonable andcompetitive prices in comparison to competition and we need to be able to sustain that. Market penetration throughlower prices shall be undertaken where need be whilst premium pricing in the case of high quality services targeted atthe upper-end of the market. Our service marketing will recognize more that our product. Service and establishing


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long relationships with clients will be key to our future service marketing. We primarily intend to sell a relationshipmore than services.Our service marketing will emphasize the benefits of conducting adequate planning and the use of quality informationand identification of 'windows of opportunity'. We intend to sell access to market knowledge and quality. This willcome out in our advertising, delivery and collateral such as sales literature and business cards. Our servicemarketing's most important challenge will be the problem of being accepted and appreciated on the market as aprovider of quality marketing research services and business plans. Hence we intend to not only meet client's

expectations but to exceed them.We intend to focus on the individual or group who wants information that may not be readily available, speciallycustomized to their requirements. However not wanting to limit our horizons in the initial period we intend to serveother clients requiring services such as company registration and trading licenses.In all cases we intend to provide a thorough understanding and appreciation of the service to the client as well asfollow up to ensure customer satisfaction. We also intend to inform the customer on how best to maintain and/orimprove their market positions.5.5.1 Pricing StrategyPalms and Bonds will be competitively priced in relation to the dictates of the market. The pricing fits with the generalpositioning of Palms and Bonds as providing high-level quality expertise.We intend our income structure to match our cost structure, so as to ensure that the salaries/consultants fees we payto assure good reports and service are balanced by the fee we charge. We will make sure that we charge for theservice, workmanship and any delivery with our aim being to achieve a gross profit margin of at least 50%. Naturallyservices targeted at the higher end of the market will have higher mark ups as these clients are less price sensitive.

All in all we intend our prices to be extremely competitive on the market.

Consulting will be based on Pula per hour per project in the initial year for project consulting, market research, andretainer consulting. With time and as we become known on the market we foresee an increase in our consultancy fee-- tempered by market dictates. Market research reports should be competitively priced which will, of course, requirethat reports be very well planned, focusing on very important topics, and well presented.5.5.2 Promotion StrategyOur promotion strategy will be based primarily on informing potential customers of our existence and making the rightinformation available to our target customer. Since we shall be targeting different segments the promotional tools andmessages may vary slightly to match the intended market. However in all cases the marketing will convey the senseof quality and professionalism in every picture, every promotion and every publication. In such a market we cannotafford to appear in or produce second-rate material with poor labels that make our services look less than they are.Hence we intend to leverage our presence using quality brochures and other sales literature, including promotionalmaterial such as pens, complimentary slips and stickers. We intend to spread the word about our business throughthe following:

y Advertising (Discussion omitted)y Personal Selling (Discussion omitted)y Public Relations (Discussion omitted)y Direct Marketing (Discussion omitted)y Internet Marketing (Discussion omitted).

5.6 Strategic AlliancesIn today's volatile and competitive environment it is becoming increasingly essential for organizations to concentrateon their core activities so as to gain and maintain a competitive advantage. This brings out the advantage ofundertaking strategic alliances with organizations that the firm may benefit from and vice versa.

At this writing, strategic alliances with ZZZ and YYY are possibilities, given the content of existing interest anddiscussions. We are also looking at establishing alliances with several accounting and legal firms, which often comeinto contact with our target market. Given the background of prospective partners, we might also be talking to UnitedStates and South African companies in the near future.

Management Summary

The management team mainly comprising the shareholders has wide expertise and broad knowledge of the servicesand markets, which if well planned for, will enable the business to realize its goals and objectives. As we grow, we willtake on additional consulting help and personnel.Management style will reflect the participation of the shareholders. The company intends to respect its communityand treat all employees well. We will develop and nurture the company as community. We do not intend to be veryhierarchical.6.1 Organizational StructurePalms and Bonds shall be managed by working partners. The company, simply because of its size, will function moreas a partnership than a corporate organization, in the early stages. With such a group, it will be simple tocommunicate with and support one another. As the company grows there will be more structure to the organization,


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with new employees being assigned a supervisor or subordinate. When the company is at its full staff potential, it willoperate as any closely held organization, but maintain the personal interest in each employee's personal and familywelfare and their contributions to the business. In the beginning we assume four partners: (Discussion omitted in thissample plan).6.2 Management TeamPalms and Bonds business requires a very high level of knowledge, analytical ability and expertise, which means thatit will not be easily leveragable in the common consulting company mode in which partners run the business and

make sales, while associates fulfill. Partners will necessarily be involved in the fulfillment of the core businessproposition, providing the expertise to the clients. The initial personnel plan is still tentative. It should involve three tofive partners, one to three consultants, with good staff support, an office manager, and a secretary. Later, we intendto add more partners, consultants, and sales staff.Partners' resumes were included as an attachment to this plan, but have been omitted in this sample plan.6.3 Personnel PlanThe detailed monthly personnel plan for the first year is included in the appendix. The annual personnel estimates areincluded here. We believe this plan is a acceptable compromise between fairness and expedience, and meets thecommitments of our mission statement. We do not intend to be a large organization or "top heavy" as our industrydoes not require our doing so. We want the company to stay lean and flexible so that we can respond to a client'sneeds quickly. To do this, we will use outside consultants whose fees, in most cases, will be passed on to the client,indirectly, through our fees. However as we expand and increase in size (increase in the number of projects received)we do expect to increase our personnel.We intend to compensate our personnel well, so as to retain their invaluable expertise and to ensure job satisfactionand enrichment through delegation of authority. Our compensation will include health care, generous profit sharing,

plus a minimum of three weeks vacation.In-house training shall be continuous with regular external training being undertaken particularly following any newdevelopments in the market. This is to ensure that we are continuously able to anticipate our client's problems andneeds and provide them with solutions -- a proactive approach, which is so essential in our line of business.We acknowledge the fact that successful recruiting, motivation and discipline procedures are keys to the growth ofthe organization. Hence we intend to promote and maintain good labour relations, strong morale and high qualitywork per employee through undertaking the following: (Discussion omitted).Note: All displayed currency values represent Botswanan Pula (P).

Personnel Plan


Partners $0 $72,000 $82,800

Internal Consultants $16,000 $16,000 $16,000

External Consultants $26,000 $18,000 $20,700

Office Manager $9,000 $18,000 $20,700

Personal Assistant $9,200 $9,000 $10,356

Secretarial Staff $3,600 $6,000 $6,900

Research Staff $4,500 $3,600 $4,140

Other $9,000 $0 $0

Total People 0 0 0

Total Payroll $77,300 $142,600 $161,596


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Financial PlanWe want to finance growth mainly through cash flow and equity. We recognize that this means we will have to growmore slowly than we might like.The most important factor in our case is collection days. We can't push our clients hard on collection days, becausethey are in larger companies and will normally have marketing authority, not financial authority. Therefore we need todevelop a permanent system of receivables financing, using one of the established financial companies in that

business. In turn we intend to ensure that our investors are compatible with our growth plan, management style andvision. Compatibility in this regard means:1. A fundamental respect for giving our customers value, and for maintaining a healthy and congenial workplace.2. Respect for realistic forecasts, and conservative cash flow and financial management.3. Cash flow as first priority, growth second, profits third.4. Willingness to follow the company and contribute valuable input to strategy and implementation decisions.

Of these only the last two are flexible.7.1 Important AssumptionsThe financial plan depends on important assumptions, most of which are shown in the following table as annualassumptions. The monthly assumptions are included in the appendix. From the beginning, we recognize thatcollection days are critical, but not a factor we can influence easily. At least we are planning on the problem, anddealing with it. Interest rates, tax rates, and personnel burden are based on conservative assumptions.Some of the more important underlying assumptions are:

y We assume a strong economy, without major recession.y We assume, of course, that there are no unforeseen changes in economic policy to make our clients' products

immediately obsolete.The table below summarizes key financial assumptions, including 30-day average collection days, sales entirely oninvoice basis including the 30% deposit policy, expenses mainly on net 30 basis, 30 days on average for payment ofinvoices, and present-day interest rates.

General Assumptions


Plan Month 1 2 3

Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 25.42% 25.00% 25.42%

Other 0 0 0

Need real financials?We recommend using Business Plan Pro as the easiest way to create automatic financials for your own businessplan.Edit this sample plan 7.2 Key Financial IndicatorsThe following benchmark chart indicates our key financial indicators for the first three years. We foresee major growth

in sales and operating expenses, and a bump in our collection days as we spread the business during expansion.Collection days are very important. We do not want to let our average collection days get above 30 under anycircumstances. This could cause a serious problem with cash flow, because our working capital situation ischronically tight. However, we recognize that we cannot control this factor easily, because of the relationship with ourclients.


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Need actual charts?We recommend using Business Plan Pro as the easiest way to create graphs for your own business plan.Edit this sample plan 7.3 Break-even AnalysisThe following table summarizes our break-even analysis. With fixed costs at a bare minimum, we don't really expectto reach break-even until several months into the business operation. The break-even assumes variable costs of 20percent of revenue. This assumption is probably too high, and therefore conservative, because, at least in thebeginning, most of our cost of fulfillment is actually the compensation of the consultants.Note: All displayed currency values represent Botswanan Pula (P).



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Break-even Analysis

Monthly Revenue Break-even $11,807

Assumptions:

Average Percent Variable Cost 22%

EstimatedMonthly Fixed Cost $9,244

7.4 Expense ForecastInitial marketing expenses were relatively high as we sought to become known on the market. This was broughtabout by the development of sales literature, advertising expenses, function expenses including lunches and dinnerswith interested stakeholders. As our market share increases and capital is generated, further marketing programs andthe expansion of those in existence at the time will be undertaken, to ensure market development. The expensesgenerated by our marketing strategies will be high in the initial stages of design and implementation. However withtime these programs will start generating revenue for the business, which we shall in turn reinvest. The fruits of theabove are soon to be gained.7.5 Projected Profit and Loss

Our projected profit and loss is shown on the following table, with sales increasing from more than P366,000 the firstyear to P612,000 the second, and P734,400 in the third year. Profits may not seem that impressive, but are relativelygood for a start-up firm in our business. Hence we do expect to more than break-even in the first year of operation.

As with the break-even, we are projecting very conservatively regarding cost of sales and gross margin. Our cost ofsales should be much lower, and gross margin higher, than in this projection. Initially, we will depend on our internalconsultants for most of fulfillment, which is why costs should be lower than shown, although occasionally we shallengage the services of outside consultants as discussed in our personnel plan. We prefer to project conservatively sothat we make sure we have enough cash.Note: All displayed currency values represent Botswanan Pula (P).



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Need actual charts?We recommend using Business Plan Pro as the easiest way to create graphs for your own business plan.

Edit this sample plan


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Pro Forma Profit and Loss


Sales $366,300 $612,000 $734,400

Direct Cost ofSales $79,500 $117,000 $140,400

Other $0 $0 $0

Total Cost of Sales $79,500 $117,000 $140,400

Gross Margin $286,800 $495,000 $594,000

Gross Margin % 78.30% 80.88% 80.88%

Expenses

Payroll $77,300 $142,600 $161,596

Sales and Marketing and Other Expenses $15,030 $12,000 $14,400

Depreciation $0 $0 $0

Public Relations $2,400 $2,400 $3,600

Utilities $1,800 $1,800 $2,400


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Insurance $0 $0 $0

Rent $14,400 $18,000 $19,200

Payroll Taxes $0 $0 $0

Other $0 $0 $0

Total Operating Expenses $110,930 $176,800 $201,196

Profit Before Interest and Taxes $175,870 $318,200 $392,804

EBITDA $175,870 $318,200 $392,804

Interest Expense $0 $0 $0

Taxes Incurred $44,148 $79,550 $99,838

Net Profit $131,723 $238,650 $292,966

Net Profit/Sales 35.96% 39.00% 39.89%

7.6 Projected Cash FlowCash flow projections are critical to our success. The first year monthly cash flow chart appears below andthe monthly figures are shown in the appendix. The annual cash flow figures are included here.Note: All displayed currency values represent Botswanan Pula (P).



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Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $91,575 $153,000 $183,600

Cash from Receivables $205,695 $412,697 $527,733

Subtotal Cash from Operations $297,270 $565,697 $711,333

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0

New Long-term Liabilities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $0 $0 $0

Subtotal Cash Received $297,270 $565,697 $711,333

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $77,300 $142,600 $161,596

Bill Payments $139,989 $229,073 $275,803

Subtotal Spent on Operations $217,289 $371,673 $437,399

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0


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Long-term Liabilities Principal Repayment $0 $0 $0

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $217,289 $371,673 $437,399

Net Cash Flow $79,981 $194,024 $273,934

Cash Balance $100,381 $294,406 $568,340

7.7Projected Balance SheetThe balance sheet shows healthy growth of net worth, and strong financial position.Note: All displayed currency values represent Botswanan Pula (P).

Pro Forma Balance Sheet


Assets

Current Assets

Cash $100,381 $294,406 $568,340

Accounts Receivable $69,030 $115,333 $138,399

Other Current Assets $0 $0 $0

Total Current Assets $169,411 $409,738 $706,739

Long-term Assets

Long-term Assets $0 $0 $0

Accumulated Depreciation $0 $0 $0

Total Long-term Assets $0 $0 $0

Total Assets $169,411 $409,738 $706,739

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable $17,289 $18,966 $23,000


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Current Borrowing $0 $0 $0

Other Current Liabilities $0 $0 $0

Subtotal Current Liabilities $17,289 $18,966 $23,000

Long-term Liabilities $0 $0 $0

Total Liabilities $17,289 $18,966 $23,000

Paid-in Capital $70,000 $70,000 $70,000

Retained Earnings ($49,600) $82,123 $320,773

Earnings $131,723 $238,650 $292,966

Total Capital $152,123 $390,773 $683,739

Total Liabilities and Capital $169,411 $409,738 $706,739

Net Worth $152,122 $390,773 $683,739

Need real financials?We recommend using Business Plan Pro as the easiest way to create automatic financials for your own businessplan.Edit this sample plan 7.8 Business RatiosThe following table provides important business ratios for the consulting industry, as determined by the StandardIndustry Classification (SIC) Index code 8742, Management Consulting Services.

Ratio Analysis

Year 1 Year 2 Year 3 Industry Profile

Sales Growth 0.00% 67.08% 20.00% 8.60%

Percent of Total Assets

Accounts Receivable 40.75% 28.15% 19.58% 24.40%

Other Current Assets 0.00% 0.00% 0.00% 46.70%

Total Current Assets 100.00% 100.00% 100.00% 74.90%

Long-term Assets 0.00% 0.00% 0.00% 25.10%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 10.21% 4.63% 3.25% 42.80%


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Long-term Liabilities 0.00% 0.00% 0.00% 17.20%

Total Liabilities 10.21% 4.63% 3.25% 60.00%

Net Worth 89.79% 95.37% 96.75% 40.00%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 78.30% 80.88% 80.88% 0.00%

Selling, General & Administrative Expenses 42.29% 41.89% 40.77% 83.50%

Advertising Expenses 2.14% 0.98% 0.98% 1.20%

Profit Before Interest and Taxes 48.01% 51.99% 53.49% 2.60%

Main Ratios

Current 9.80 21.60 30.73 1.59

Quick 9.80 21.60 30.73 1.26

Total Debt to Total Assets 10.21% 4.63% 3.25% 60.00%

Pre-tax Return on Net Worth 115.61% 81.43% 57.45% 4.40%

Pre-tax Return on Assets 103.81% 77.66% 55.58% 10.90%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 35.96% 39.00% 39.89% n.a

Return on Equity 86.59% 61.07% 42.85% n.a

Activity Ratios

Accounts Receivable Turnover 3.98 3.98 3.98 n.a

Collection Days 56 73 84 n.a

Accounts Payable Turnover 9.10 12.17 12.17 n.a

Payment Days 27 29 27 n.a

Total Asset Turnover 2.16 1.49 1.04 n.a

Debt Ratios


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Debt to Net Worth 0.11 0.05 0.03 n.a

Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios

Net Working Capital $152,122 $390,773 $683,739 n.a

Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios

Assets to Sales 0.46 0.67 0.96 n.a

Current Debt/Total Assets 10% 5% 3% n.a

Acid Test 5.81 15.52 24.71 n.a

Sales/Net Worth 2.41 1.57 1.07 n.a

Dividend Payout 0.00 0.00 0.00 n.a

ControlsThe local business consultancy market has been growing steadily over the last several years. With this in mind weintend our marketing programs to expand accordingly. The introduction of quality sales and marketing literature willenable Palms and Bonds to effectively market to potential customers with a positive image and impression. Weproject sales to increase accordingly, as we continue establishing a reputation for ourselves, especially in the marketresearch area. With time a presence on the internet and participation in local and regional conferences and tradeshows will be key milestones to expanding sales and marketing potentials through the utilization of new channels andidentification of potential customers.

Throughout the year we intend to undertake regular evaluations of our business and marketing programs so as toensure that we are in line with our intended objectives. In summary we intend to undertake the following:1. Tracking and follow-up: we intend to have the discipline, as an organization, to track results of the business plan and

make sure that we implement.2. Market segment focus: we intend to have the discipline to maintain the market segment focus.3. Saying no: though difficult initially we intend to be able to say no to special deals that take us away from the target

focus and are unprofitable.8.1 Implementation ProgramsPalms and Bonds will start to establish alliances with reputable and reliable suppliers of information. We will continuepreparing our sales literature mainly in-house with the assistance of a reputable printing organization agency. Wealso intend to engage the services of well qualified consultants. Thereafter there shall be delegation of responsibilityfor maximum effectiveness.8.2 Contingency PlanningWe intend to watch our results very carefully. We may need to concentrate less on certain services than others, if weintend to get the margin up or clients become difficult to attract. We might be able to avoid the straight competition

with the major companies by focusing more on the previously mentioned services -- market and marketing research.

Appendix

Sales Forecast

Month Month Month Month Month Month Month Month Month Month Month

Month 12


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1 2 3 4 5 6 7 8 9 10 11

Sales

All services 0% $8,500 $6,800 $10,800 $16,800 $25,800 $34,800 $40,800 $40,800 $40,800 $46,800 $46,800 $46,800

Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Sales $8,500 $6,800 $10,800 $16,800 $25,800 $34,800 $40,800 $40,800 $40,800 $46,800 $46,800 $46,800

Direct Cost of Sales

Month

1

Month

2

Month

3

Month

4

Month

5

Month

6

Month

7

Month

8

Month

9

Month

10

Month

11 Month 12

All services $1,250 $1,500 $2,250 $3,000 $5,000 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Direct Cost of

Sales $1,250 $1,500 $2,250 $3,000 $5,000 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500

Need real financials?We recommend using Business Plan Pro as the easiest way to create automatic financials for your own business

plan.Edit this sample plan

Personnel Plan

Month

1

Month

2

Month

3

Month

4

Month

5

Month

6

Month

7

Month

8

Month

9

Month

10

Month

11 Month 12

Partners 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Internal Consultants 0% $0 $0 $0 $0 $0 $0 $0 $0 $4,000 $4,000 $4,000 $4,000

External Consultants 0% $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $4,000 $4,000 $4,000 $4,000

Office Manager 0% $0 $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Personal Assistant 0% $600 $600 $600 $600 $800 $800 $800 $800 $800 $800 $800 $1,200

Secretarial Staff 0% $0 $0 $0 $400 $400 $400 $400 $400 $400 $400 $400 $400

Research Staff 0% $0 $0 $0 $500 $500 $500 $500 $500 $500 $500 $500 $500

Other 0% $0 $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Total People 0 0 0 0 0 0 0 0 0 0 0 0

Total Payroll $600 $600 $600 $5,500 $5,700 $5,700 $5,700 $5,700 $11,700 $11,700 $11,700 $12,100

General Assumptions

Month

1

Month

2

Month

3

Month

4

Month

5

Month

6

Month

7

Month

8

Month

9

Month

10

Month

11 Month 12

Plan Month 1 2 3 4 5 6 7 8 9 10 11 12


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Current Interest

Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Long-term

Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate 30.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9

Month

10

Month

11 Month 12

Sales $8,500 $6,800 $10,800 $16,800 $25,800 $34,800 $40,800 $40,800 $40,800 $46,800 $46,800 $46,800

Direct Cost ofSales $1,250 $1,500 $2,250 $3,000 $5,000 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $1,250 $1,500 $2,250 $3,000 $5,000 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500 $9,500

Gross Margin $7,250 $5,300 $8,550 $13,800 $20,800 $25,300 $31,300 $31,300 $31,300 $37,300 $37,300 $37,300

Gross Margin % 85.29% 77.94% 79.17% 82.14% 80.62% 72.70% 76.72% 76.72% 76.72% 79.70% 79.70% 79.70%

Expenses

Payroll $600 $600 $600 $5,500 $5,700 $5,700 $5,700 $5,700 $11,700 $11,700 $11,700 $12,100

Sales and Marketing

and Other Expenses $1,500 $1,230 $1,230 $1,230 $1,230 $1,230 $1,230 $1,230 $1,230 $1,230 $1,230 $1,230

Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Public Relations $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Utilit ies $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150

Insuranc e $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Rent $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200

Payroll Taxes 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating

Expenses $3,650 $3,380 $3,380 $8,280 $8,480 $8,480 $8,480 $8,480 $14,480 $14,480 $14,480 $14,880

Profit Before

Interest and Taxes $3,600 $1,920 $5,170 $5,520 $12,320 $16,820 $22,820 $22,820 $16,820 $22,820 $22,820 $22,420

EBITDA $3,600 $1,920 $5,170 $5,520 $12,320 $16,820 $22,820 $22,820 $16,820 $22,820 $22,820 $22,420

Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Taxes Incurred $1,080 $480 $1,293 $1,380 $3,080 $4,205 $5,705 $5,705 $4,205 $5,705 $5,705 $5,605


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Other Liabilities Principal

Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities

Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Other Current

Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $779 $5,959 $5,412 $11,850 $12,983 $16,748 $22,235 $23,685 $29,635 $28,235 $29,685 $30,082

Net Cash Flow $1,346 ($4,047) $3,620 ($2,450) $1,717 $4,778 $7,540 $12,765 $11,165 $14,065 $12,765 $16,718

Cash Balance $21,746 $17,699 $21,319 $18,869 $20,586 $25,363 $32,903 $45,668 $56,833 $70,898 $83,663 $100,381

Need real financials?We recommend using Business Plan Pro as the easiest way to create automatic financials for your own businessplan.Edit this sample plan

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9

Month

10

Month

11 Month 12

Assets

Starting

Balances

Current Assets

Cash $20,400 $21,746 $17,699 $21,319 $18,869 $20,586 $25,363 $32,903 $45,668 $56,833 $70,898 $83,663 $100,381

Accounts Receivable $0 $6,375 $11,263 $13,030 $20,430 $31,530 $44,805 $55,830 $60,180 $60,180 $64,680 $69,030 $69,030

Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Assets $20,400 $28,121 $28,961 $34,349 $39,299 $52,116 $70,168 $88,733 $105,848 $117,013 $135,578 $152,693 $169,411

Long-term Assets

Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Assets $20,400 $28,121 $28,961 $34,349 $39,299 $52,116 $70,168 $88,733 $105,848 $117,013 $135,578 $152,693 $169,411

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9

Month

10

Month

11 Month 12

Current Liabilities

Accounts Payable $0 $5,201 $4,601 $6,112 $6,921 $10,498 $15,936 $17,386 $17,386 $15,936 $17,386 $17,386 $17,289

Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Current Liabilities $0 $5,201 $4,601 $6,112 $6,921 $10,498 $15,936 $17,386 $17,386 $15,936 $17,386 $17,386 $17,289


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Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Liabilities $0 $5,201 $4,601 $6,112 $6,921 $10,498 $15,936 $17,386 $17,386 $15,936 $17,386 $17,386 $17,289

Paid-in Capital $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000

Retained Earnings ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600) ($49,600)

Earnings $0 $2,520 $3,960 $7,838 $11,978 $21,218 $33,833 $50,948 $68,063 $80,678 $97,793 $114,908 $131,723

Total Capital $20,400 $22,920 $24,360 $28,238 $32,378 $41,618 $54,233 $71,348 $88,463 $101,078 $118,193 $135,308 $152,123

Total Liabilities and Capital $20,400 $28,121 $28,961 $34,349 $39,299 $52,116 $70,168 $88,733 $105,848 $117,013 $135,578 $152,693 $169,411

Net Worth $20,400 $22,920 $24,360 $28,238 $32,378 $41,618 $54,233 $71,348 $88,463 $101,078 $118,193 $135,308 $152,122

LEGAL REQUIREMENTS OF YOUR BUSINESS

Before starting a business, the legal environment of your establishment should be researched. Thereare many laws, rules, and regulations that must be followed to start and run your business. Almostevery aspect of your business is under some form of legal ruling. Specific forms, licenses and otherdocumentation must be filed with state and local government offices in order to begin. Without thisdocumentation, you may be prevented from opening. It is important for you to take a close look atCalifornia's legal business requirements.

Aspects of Business under Legal Guidelines

Major aspects of business governed by business law can be divided into the following areas: legalstructure, business name, trademarks and patents, licensing and permits, contracts and legal liability.

Legal Structure

What legal structure will your business take? This decision is of primary importance because lawsgoverning many aspects of the business vary depending on its legal structure. The four maincategories are: sole proprietorship, partnership, Limited Liability Company and corporation. Thesefour types of business entities are discussed in the chapter on "Structuring Your Business".

Business Name

Even though a business name has no magic that will guarantee success, the name is neverthelessvery important to a new business. As a small business prospers and grows, the public will begin torecognize and associate the name with the product or service.

There is a body of law that specifically governs the business name. For example, if a businesscontains anything other than the actual names of the owners, then it is classified as a "firm name" ora "fictitious name." If the legal structure of the business is a corporation, then it must beincorporated and the business name must reflect this fact.

The Fictitious Business Name Statement must be filed within 30 days of the date you open yourbusiness. The statement is valid for five years. There is a fee for initial filing and a charge forrenewal. The chosen business name is valid in the county where you file, and must not be similar toany other business as to mislead the public. It must not violate any federally protected names. The


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fictitious name must also be printed in the newspaper for four consecutive weeks. Your localnewspaper may be willing to assist in this process.

To file your fictitious name or find out if the name you have chosen is still available, contact:

San Luis Obispo County Clerk Recorder

1055 Monterey Street, Room D120San Luis Obispo CA 93408(805) 781-5245

OR

5955 Capistrano Suite BAtascadero CA 93422(805) 461-6041

Trademarks and Patents A trademark is a symbol that identifies a specific product. If your businesssells services, then the trademark is the one that you use in advertising; it will enable the public to setyou apart from your competition. Both trademarks and service marks can be registered for your

protection. You can do this by going to www.uspto.gov.

A patent grants a monopoly right to produce, use, sell, or gain profit from a specificinvention. Patents are extremely important in business. There is a specific body of patent law thatprotects the rights of the registrant. Patent lawyers are usually listed separately in the telephonedirectory. In fact, general practice lawyers usually refer most inquiries about patents to thesespecialists.

Licenses and Permits

Several federal, state and local licenses and permits are required for starting a new business. Beforeyou even apply for a license, you must first find out the land use requirements, zoning requirementsand detailed building code requirements for your type of business, and should do so before signing arental, lease, or purchase agreement. Requirements may vary for each incorporated city in thecounty, and the county itself. For assistance call the appropriate number shown in the Resourceschapter.

Permits required for new businesses are different depending on the type of business. The mostcommon licenses and permits include: a business license, building permit, sales permit, State ID andsales tax schedule, and occupational license.Business License Business licenses are issued by individual cities within the county, or by the county incounty areas. These must be posted on the business premises for public inspection. The fee variesdepending on the type of business. If you are going to locate your business in more than one city, aseparate business license is required for each city and/or county. For county areas:

County of San Luis Obispo Tax and License CollectorCounty Government Center, Room D290

1055 Monterey StreetSan Luis Obispo CA 93408(805) 781-5832

For city offices, please see the Resources chapter.

Home Occupation Permit

To set up a business in your home, you first need to make sure that the proposed use of the property


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is consistent with the zoning. To check the zoning, you first must know the Assessor's Parcel Numberof the property. If you are the property owner, this can be obtained from your property taxstatement. If you are a renter or lessee, your landlord will have this number. If this number is notreadily available, contact (you will need the exact address of the property):

County Assessor's OfficeCounty Government Center, Room D3601055 Monterey StreetSan Luis Obispo CA 93408(805) 781-5643Fax (805) 781-5641

Once you have obtained the Assessor's Parcel Number, go to your local City or County PlanningDepartment to 1) check the zoning and 2) to obtain information regarding allowable homeoccupations. For the city offices see the Resources chapter.For the County of San Luis Obispo, go to:

County of San Luis Obispo Planning Department976 Osos Street, Room 200San Luis Obispo CA 93408

(805) 781-5600Fax (805) 781-1242www.sloplanning.org

Sign Permit

If you are planning to place a sign on the exterior of your business, you need a SignPermit. Regulations regarding the types of signs and placement depend on the zoning for the parceland the type of business. The Sign Permit application requires you (the business owner) or your signcontractor to submit drawings indicating the advertising message, location, dimensions, construction,electrical wiring and components and the method of attachment. The fee for the permit dependsusually on the value of the sign.

Start your permit process with the planning people at the addresses and phone numbers shownabove, the Planning Departments of the County or City in which you will belocated. (Resources chapter).

Building Permit

If you are planning to construct your place of b

Documents

Legal Requirments of Business Management