Реферат: Business Plan
There are 355,2 thousand people between 18 and 60 years old. Ten percent of them 35,5 thousand have an average annual income between 120,000 to 240,000 rubbles. Thirty percent of them do shopping as necessity. So, my target market size is 10,650 clients a year. If every client makes four purchases a year in average than total annual purchases are 42,600.
MARKET STRATEGY
Product
The product of the venture will be the information about available goods in the shopping center «Irkutskiy» at first. Then we will broad our service and offer information about the shopping center «Fortuna». Finally, we will create database, where each person will be able to get information about products that are available at the shopping center «Irkutskiy», the shopping center «Fortuna», and the shopping center “Complex”.
Price
Price policy will be based on the market demand. The small survey, I made, gave information that the best price will be 24 rubles ($ 0,8).
Place
We plan to develop three ways of delivering information. First, we open the consulting center in the shopping center «Irkutskiy», then in the shopping center «Fortuna», and finally in the shopping center “Complex”. Each center will have one consultant that will sell clients necessary information for cash. Second, after the establishment of the consulting center in the shopping center «Fortuna» we plan to create the wed site, which will offer the same service as consulting centers. After the establishment of the consulting center in the shopping center “Complex” we plan to offer phone consultation about available products at these markets.
Promotion
The key promotion tactics will be that clients will lose nothing. I plan to sell necessary information and give a coupon that will offer a client a discount of $0,8 (the price of my service). He or she will give this coupon to salesperson when will make a purchase, as a result a client of a market will lose nothing. In addition, before the beginning of operations I will make contracts with the managers of pavilions and shops. The main point of them is that I will publish information about their product in my database and will take nothing from them, but they will have to compensate clients the $0,8, when they will make purchases in the pavilions with my coupons. So, clients will be motivated to make a purchase in the pointed pavilions and managers will get new clients.
I also will give advertisement in newspapers and on printed buckets that will be spread at the doorways of the shopping centers.
Finally, I plan to use the Internet advertising; mostly banners that will be located at the Irkutsk on-line shops. I plan to make the exchange of banners to avoid the payment for advertisement.
SELLING TACTICS
Cash and Accounts Receivables
All sales will be made in cash, as invoices and credit cards are not yet actively used in Russia. So for the first three year I will not plan to use accounts receivables. Only after the third year, when the phone-consulting center will be opened, I plan to sell information on credit by phone bills. Such system assumes that the phone companies will clear these bills, and then their clients pay for the whole phone bill, in which the amount of my bill will be included. So, the management of account receivables will not be complex, and will be secured by the phone companies’ liabilities.
Peak sales
As I plan to establish consultant service by using database that helps to find products, my sales will depend on the sales of market. Within Russia, most retail sales occur during the New Year holiday season and during the season of the men’s and the women’s holidays (February 23 and Mart 8). As a result, the biggest sales will be during the winter season because during that time there are the biggest quantity of clients, but at this time there is also a downturn in cash. I think that some decline will be at other seasons, especially during summer because a lot of people are going on vocation. There is an increase in sales at the end of summer because students prepare for school and colleges and buy a lot of non-food things. So, the best time is the end of December, the end of February, the beginning of Mart, the end of August and the beginning of September. During this time, I will have the biggest cash inflow.
OPERATIONS PLAN
Each consulting center will be located at the doorways of the shopping centers. The average square of a center will be 16 m2 . One center will have the computer (Pentium 3, 550-750 hertz, 128 RAM) with a monitor and a modem, the printer (Canon LBP-800) and a telephone/fax. Each computer will have the database of goods at markets, Windows 2000, Microsoft Office package, the Internet application and Web-design programs. Office equipment will be a computer table, a chair, and the document cupboard. In addition each consulting center will have the pack of paper for printing and some writing implements. A manager will deliver the cartridges for a printer, when they are necessary.
The working time of my business will be the same as the working time of the shopping center «Irkutskiy», the shopping center «Fortuna», and the shopping center «Complex». The «Irkutskiy» and the «Complex» working hours are from 10 am to 8 pm, so the consulting centers in these markets will be opened during this time. The consulting center in the shopping center «Fortuna» will work from 9 am to 7 pm. The web site will be available 24 hours a day. The phone center will work from 9 am to 9 pm.
The information will be updated by consultants of consulting centers that have liabilities to collect changes in information after the workday and put it in the database.
FINANCIAL PLAN
Necessary Financing
For my operation I will need $2,250 at the beginning of the second year of existence. If the demand for my service will be as projected then I will open the second consulting center in the shopping center «Fortuna», so I will need financing to buy the fixed assets. This loan will be necessary to support my development.
Cash Budget
| 2003 | 2004 | 2005 | |
| Operating activities | |||
| Net income | $1 331 | $3 075 | $3 510 |
| Depreciation | $694 | $1 674 | $2 073 |
| Net cahs provided by operating activities | $2 025 | $4 750 | $5 583 |
| Long-term investing activities | |||
| Cash used to acquire fixed assets | -$1 273 | -$1 336 | -1403,31 |
| Cash used to acquire intangible assets | -$829 | -$871 | -$914 |
| Net cash provided by investing activities | -$2 102 | -$2 207 | -$2 317 |
| Financing activities | |||
| Owner's investments | $2 102 | $0 | $0 |
| Increase in notes payable | $0 | $2 207 | $0 |
| Net cash provided by financing activities | $2 102 | $2 207 | $0 |
| Net change in cash | $2 025 | $4 750 | $3 266 |
| Cash at the beginning of year | $0 | $2 025 | $6 774 |
| Cash at the end of year | $2 025 | $6 774 | $10 040 |
Balance Sheet
| Assets | |||
| 2003 | 2004 | 2005 | |
| Current assets: | |||
| Cash | $2 025 | $6 774 | $10 040 |
| Fixed assets: | |||
| a computer | $500 | $1 025 | $1 576 |
| a monitor | $250 | $513 | $788 |
| a modem | $80 | $165 | $253 |
| a printer | $153 | $313 | $481 |
| office equipment | $200 | $410 | $631 |
| a telephone/fax | $90 | $185 | $284 |
| Less accum. depreciation | $420 | $1 434 | $2 689 |
| Total fixed assets | $853 | $1 175 | $1 323 |
| Intangible assets: | |||
| a database | $661 | $1 355 | $2 083 |
| Other software | $168 | $345 | $531 |
| Less accum. depreciation | $274 | $934 | $1 752 |
| Total intangible assets | $556 | $766 | $862 |
| Total assets | $3 433 | $8 715 | $12 225 |
| Liabilities | |||
| Long-term notes payable | - | $2 207 | $2 207 |
| Owner's equity | |||
| Nikolay Belih, capital | $3 433 | $6 508 | $10 018 |
| Total Liab. and Equity | $3 433 | $8 715 | $12 225 |
Income Statement
The amounts are given as they are in Russia
| 2003 | 2004 | 2005 | |
| Revenues | $8 464 | $18 050 | $33 940 |
| Operating expenses: | |||
| Salary expense | $2 400 | $5 040 | $15 876 |
| Office rent expense | $1 600 | $3 480 | $6 854 |
| Depreciation furniture and equipment | $694 | $1 674 | $2 073 |
| Advertising | $659 | $631 | $609 |
| Insurance | $105 | $210 | $315 |
| Utilities expenses | $62 | $131 | $413 |
| Total operating expenses | $5 520 | $11 167 | $26 141 |
| General expenses: | |||
| Telephone & Internet | $525 | $630 | $756 |
| Other expenses: | |||
| Interest | $0 | $662 | $662 |
| Total expenses | $6 045 | $12 458 | $27 559 |
| Net income before taxes | $2 420 | $5 591 | $6 381 |
| taxes (45%) | $1 089 | $2 516 | $2 872 |
| Net income | $1 331 | $3 075 | $3 510 |
Ratio Analysis
| 2003 | 2004 | 2005 | |
| Leverage ratios | |||
| Debt ratio | - | 0,25 | 0,18 |
| Debt -to-net worth ratio | - | 0,46 | 0,30 |
| Times interest earned ratio | - | 8,44 | 9,64 |
| Asset Management | |||
| Fixed assets turnover | 9,93 | 15,36 | 25,65 |
| Total assets turnover | 2,47 | 2,07 | 2,78 |
| Profitability ratios | |||
| Profit margin on sales | 0,16 | 0,17 | 0,10 |
| Return on total assets | 0,39 | 0,35 | 0,29 |
| Return on equity | 0,39 | 0,47 | 0,35 |
I did not indicate accounts receivables and accounts payables, as my business will be very small and all operations will be done in cash by personal sales during first three years. In addition, invoices and credit cards are not common in Russia, so it is one more reason of not indicating them. So, I did not count liquidity ratios, as all of them are based on current liabilities.
From my analysis of projected future operations, we can see that debt ratio will decrease in 2004 and 2005 from 0,25 to 0,18. It tells about the decrease of funds provided by creditors and increase in the attractiveness of business for investments, as creditors prefer lower ratios. Debt -to-net worth ratio will also decrease in 2004 and 2005 from 0,46 to 0,30, what tells about the increase of business’s ability to meet both its creditor and owner obligations in case of liquidation. The times interest earned ratio will decrease. It indicates that the firm will have fewer difficulties in meeting the interest payments of loan. The net income can decrease almost by ten times until the business will not be able to pay its interest obligations in 2005.
The fixed assets turnover will constantly increase, what indicates the increase of effectiveness of the fixed asset usage. The total assets turnover ratio will decrease from 2003 to 2004 and increase from 2004 to 2005. It tells about the decrease of the volume of the business produced on the total asset investment in 2004 and increase of it in 2005. The main cause of decrease will be more significant increase in total assets and less significant in sales.
The profit margin on sales ratio will slightly increase in 2004 and more significantly decrease in 2005. It indicates the decrease of income per dollar for the first three years of existence. The cause of the decrease in 2005 will be the more intensive use of debt.
The ROA will constantly decrease in the first three years of existence of the business. It indicates the decrease of the return on assets. The cause of it will be more significant increase in total assets and less significant in net income.
The ROE will increase from 2003 to 2004. It will indicate the increase in the rate of return on the owner’s investments. The cause of it will be more intensive use of debt. But in 2005 there will decrease in ROE, what is explained by the more significant increase in equity and less significant in net income.
Depreciation Estimation
I will use the modified accelerated cost recovery system method of depreciation. According to my opinion it is the best for me because it will allow getting some tax savings because of the decrease of income due to accelerated depreciation.
| All assets | Fixed assets | Intangible assets | ||||||
| Depreciation | Depreciation | Depreciation | ||||||
| 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 |
| 33% | 45% | 15% | 33% | 45% | 15% | 33% | 45% | 15% |
| 33% | 45% | 33% | 45% | 33% | 45% | |||
| 33% | 33% | 33% | ||||||
| Accumulated depreciation | Accumulated depreciation | Accumulated depreciation | ||||||
| $694 | $1 674 | $2 073 | $420 | $1 014 | $1 255 | $274 | $660 | $818 |
Fixed Capital Estimation
I made the estimation for the first year. As all assets are almost the same in each consulting service than I determined the price for the next period by making inflation adjustments.
| Name of assets | Costs | |||
| Pessimistic | Realistic | Optimistic | Most probably | |
| a computer | $550,00 | $500,00 | $450,00 | $500,00 |
| a monitor | $275,00 | $250,00 | $225,00 | $250,00 |
| a modem | $96,00 | $80,00 | $66,06 | $80,34 |
| a printer | $180,00 | $150,00 | $135,00 | $152,50 |
| the database | $1 040,00 | $650,00 | $325,00 | $660,83 |
| Other software | $400,00 | $150,00 | $10,00 | $168,33 |
| office equipment | $220,00 | $200,00 | $180,00 | $200,00 |
| a telephone/fax | $100,00 | $90,00 | $80,00 | $90,00 |
| Total: | $2 861,00 | $2 070,00 | $1 471,06 | $2 102,01 |
Working Capital Estimation
I also made the estimation for the first year, as with the fixed capital, and than determined the price for the next period by making inflation adjustments.
| Name of assets | Costs | ||
| Pessimistic | Realistic | Optimistic | |
| Paper | $36,00 | $24,00 | $13,00 |
| Cartridges | $27,50 | $25,00 | $22,50 |
| Writing implements | $15,00 | $12,71 | $7,14 |
| Total: | $78,50 | $65,71 | $42,64 |
Basing on the cash receipt forecast, I will need 1*$78,50+4*$62,71+1*$42,64= $62 a year for working capital.
Marketing Estimation
The sales estimation I based on the next assumptions:
1. The share of the ''Irkutskiy'' market will decrease, as there will appear some competitors.
| 2003 | 2004 | 2005 |
| 45% | 43% | 41% |
The amount of purchases a day in average in the "Irkutskiy" market:
in items
| 2003 | 2004 | 2005 |
| 193 | 219 | 242 |
2. The share of the the ''Fortuna'' martet will decrease as there will appear some competitors.
| 2004 | 2005 |
| 12% | 10% |