Business plan for DC Bookkeeping Services startup

Start Up Company That Offers Bookkeeping Services

The purpose of this business plan is to identify how the financial services firm we are opening will be able to address the specific needs of customers. In this chapter we will focus on select aspects of the business itself including: business identification, the mission / goals / objectives and the keys to success. Once this takes place, it will provide us with specific insights about the company and how it will be established.

Business Identification

Evidence of the growing demand for these kinds of services can be seen by looking no further than, the total number of bookkeepers that are will be required in the next ten years. As, this is expected to increase by: 10% during this time with industry adding over 200 jobs. ("Occupational Handbook," 2011) This is significant, because it is illustrating how there is a shortage within the sector for these kinds of services well into the future. For DC Bookkeeping Services, this is presenting us with the opportunity to take advantages of: this growing demand and address these needs well into the future. The purpose of this business plan is to illustrate how the company has the potential to address the needs of: businesses, nonprofits and individuals. At the same time, we will highlight how the approach that we are taking to grow the corporation over the long-term is financially prudent. When you put these different elements together, they will demonstrate how the strategy that we are taking is economically sound. This is the point that it will be clear to everyone about how successful the company can be in future by following these basic principles.

Mission, Goals and Objectives

The basic mission of the firm is to provide customers with superior services and competitive prices. As a result, DC Bookkeeping Services will be focused on achieving a number of different objectives. Below are the various goals and objectives that we will be focused on.

To provide the community with bookkeeping services that will address the needs of: businesses, nonprofits, governments and individuals.

To offer all clients specialized services that will address their needs.

To ensure that the fees charged for our services are competitive in comparison with everyone else.

Keys to Success

The keys to success of the organization will depend upon a number of different factors. The most notable include: offering competitive fees in comparison with similar services in the area / industry, providing superior customer service and working with clients to create a customizable solution that will address their specific needs. These different elements are important, because the combination of them will allow the company to build its brand name and image. Over the course of time, this will allow us to stand out in the minds of customers and to create a level of professionalism that will be unmatched by competitors. Once this takes place, we will be offering a unique product that will address the specific needs of competitors.

Chapter 2: Company Summary

In this chapter, we will be discussing how the origins of the industry and how the business will be established. This will be accomplished by looking at a number of different variables including: the history, legal forms of ownership, the location / facilities, the management structure and the products / services that are being offered. Once this takes place, it will provide everyone with a basic overview of DC Bookkeeping Services.

2.1: Industry History

From the earliest times in recorded history, bookkeeping has played an important part in helping a variety of organizations to be able to keep track of a host of financial transactions. As, this dates back as far as 8000 B.C. when bookkeeping was utilized in the City of Jericho to keep track of the properties owned by various kings. Once trade began to increase, is when the field began to expand, with bookkeepers playing a major role in helping a variety of organizations to stay on top of their transactions. Over the course of time, scientific advancements meant that bookkeepers played a vital part is helping to ensure that they were able to provide new methods of analyzing and understanding the underlying profits for: individuals, government, businesses and nonprofits. Where, everyone from the ancient Egyptians to the Romans demanded that these kinds of services are being utilized, as a critical element of their strategy in monitoring the success of their organization. (Campbell, 2010)

During the Renaissance period, the field began to shift with use of the decimal system in Venice and other hotbeds of commerce. At which point, many of the different European countries accepted the various techniques that were being utilized as an effective way of evaluating their underlying entities and how successful they were at maintaining their profit margins. This meant that a basic ledger was created, that highlighted the expenses and profit margins of an organization.

During the modern age, these basic principals have been applied to the way an entity is functioning by: using various computer spread sheets in the place of traditional hand written ledgers. However, the basic concepts that are utilized to analyze the underlying financial condition have remained consistent throughout the course of time. At the same time, globalization has meant that bookkeepers and the services they are offering are playing a significant role in helping to keep everyone on top their overall financial situation. As a result, these different elements are significant, because they are illustrating how the bookkeeping business that we are opening will be able to provide services that will continually remain in demand. This is regardless of changes that take place in the economy or shifts that occur based upon transformations in technology. (Ferguson, 2010, pp. 23 -- 29)

2.2: Legal Form of Ownership

The legal form of entity that will be selected for the business is a corporation. This is when a separate legal unit has been established. It will allow us to keep: the salaries and costs of the business separate. At the same time, we have the ability to possibly sell a percentage of the company to shareholders in the future. They can provide us with additional working capital that can be used to help the firm grow. A few other advantages that this form of ownership is offering include: an unlimited lifecycle, it is easy to set up, there is some form of legal protection against creditors and the management can remain in place if the business is sold at some point in the future. These different elements are important, because they are showing how establishing the firm as a corporation will offer us significant advantages. As, they will help us to: establish a way of allowing the company to grow well into the future and lower any kind liabilities as much as possible. ("Corporations," 2011)

2.3: Location and Facilities

The geographic location where DC Bookkeeping Services will be located is Newberry, Florida. This is a community that has a population of 3,360 people that is located in North -- Central Florida. The reason why this location was chosen is because it is located approximately 20 miles from Gainesville. At the same time, it is strategically situated in close proximity to Jacksonville. While, being within a few hours drive from a number of major urban areas including: Miami, Orlando and Atlanta. These elements are important, because the city is an ideal location for the company given its low cost structure. This means that we can market our services to clients in these different areas for a fraction of the cost of traditional bookkeeping services. Over the course of time, this will help to increase our overall bottom line results and it will allow us to attract a large client base. ("Newberry," 2011)

When it comes to different regulators issues, there are the requirements for the State of Florida to include: developing internal agreements, filing with the state, protecting our trademark and in the hiring of employees. As far as developing internal agreements, this is when you are drafting specific accords that will outline what each person owns of the business and the overall goals of the corporation. Filing with the state is when you are letting them know that we will be establishing a corporation and paying all of the various fees / taxes. Protecting the trademark is when we are registering the name DC Bookkeeping Services, so that it cannot be used by anyone else in the future. The hiring of employees is when we will have to file and pay various forms of taxes / compensation for numerous laws that are in place such as: Workman's Compensation. These different elements are important, because they are illustrating the various state regulations that are relevant to the business that we are opening. ("Florida's Business Start Checklist," 2011)

As far as the county is concerned, there are a few different laws that we must follow to include: registering the business and paying the corporate taxes. Registering the business is when we are filing the appropriate paperwork with the country to ensure that we are licensed to conduct business inside the county and within the city itself. Once this occurs, we are responsible for paying the corporate taxes on annual basis. At the same time, we must ensure that we are locating the business inside areas of Newberry that are properly zoned for commercial activity. These different elements are important, because they are highlighting how we must ensure that we are in compliance with these regulations prior to starting our operation. Once this takes place, we will be able to begin engaging in the activities of promoting ourselves and the services that we offer to the public. ("Alachua Florida Code of Ordinances," 2011)

2.4: Management Structure

To effectively run DC Bookkeeping Services we will be utilizing a management structure that will enable us to streamline the decision making process and ensuring proper oversight. The way that that this will be accomplished is through having a traditional corporate structure that involves: a board of directors and key personal placed in strategic locations. The below diagram illustrates how this will be accomplished.

Management Structure for DC Bookkeeping Services

Board of Directors

Chief Executive Officer

Chief Financial Officer

President

Chief Compliance Officer

Supervisors

Supervisors

Supervisors

Supervisors

Supervisors

Under this basic structure, the Board of Directors will have the responsibility for hiring and determining what officers will run the company. At the same time, they will oversee their different activities and ensure that they are helping to make corporation successful inside the industry. While simultaneously, making certain that they are staying within the different regulations and laws. The CEO will have responsibility of running the company and helping to build the business. The Chief Financial Officer will be in charge of preparing different financial reports and distributing information about how successful DC Bookkeeping Services was at achieving their underlying objectives. The President will assist the CEO in running the company and attracting new clients. At the same time, he will concentrate on the kinds of services and products that are being delivered to customers. The Chief Compliance Officer will have the responsibility for ensuring that that company and the personnel that work for the organization are following the various provisions of the law. They will report their finding to the Board of Directors, while maintaining a working relationship with each of the different executives. These elements are important, because they are showing how this basic approach will address the issues that are affecting the company. Once this takes place, it will improve oversight and ensure that employees are able to achieve the various benchmarks that have been established by the Board of Directors.

Products and Services

The different products and services that we will be delivering are based on addressing the specific needs of the clients. To achieve these objectives we will be providing them with a number of products to include: business consulting services, tax preparation, quarterly / annual reports, itemized expense reports, income statements, consolidated balance sheets of the total net worth, an analysis of these findings and possible strategies that could be used to help improve efficiency / reduce expenses. These different elements are important, because they are showing how our basic approach is to find a way of building relationships with each client and addressing their basic needs. As, we will be offering these products / services to: individuals, large / small corporations, nonprofit entities and governments. In general the fees that we are charging for these products and services will be lower in comparison with other bookkeeping firms. The reason why, is because we are helping ourselves to standout in the minds of customers through: offering superior products and services with lower fees. These different elements are important, because they are illustrating how this philosophy will help the company to build long-term relationships with a wide variety of clients. As, they will see that: the cost structure and products can provide them with a greater value to address their specific needs.

Chapter 3: Market Analysis

In this chapter we will focus on how DC Bookkeeping Services will be able to promote the different products and services to customers. This will be accomplished by examining: the target market, conducting an industry examination and a competitive analysis. Once this occurs, it will provide us with specific insights about how we will be able to find and build relationships with customers.

Target Analysis

Currently the need for various products and services that DC Bookkeeping is offering is in high demand. The reason why, is because a host of different businesses ranging from various governments to individuals will require them no matter what has been happening with the economy. As, they need someone that kind provide them with an accurate assessment of the different bookkeeping services to ensure that they have an accurate accounting of their overall financial picture.

Evidence of this can be seen with statistics that have been provided by the Bureau of Labor. They found that over the next ten years that the industry is expected to grow by at least 10%. The reason why, is because globalization and the basic needs for bookkeeping services will continue to spur demand growth well into the future. This is significant, because it is illustrating that our core market will require these services in one way or another. Therefore, we will be aggressively targeting a wide variety of decision makers and people who will be in most need of the products we are offering.

As a result, our target market will start out by focusing on reaching out to businesses and individuals that are need of what have to offer. This will be accomplished by providing them more services at lower costs in comparison with what they are currently receiving. At the same time, we will focus on how to receive large government contracts ranging from: the city and county governments to state entities. We will then, take this one step further through contacting various nonprofits and letting them know about how the company can help them to address their basic needs. When you put these different elements together, this means that we will be able to reach out to a wide variety of organizations and individuals. This will allow us to address their basic needs and offer them a greater value in comparison with the services they are currently utilizing. Once this takes place, it will help us to be able to increase and build the business over the long-term. This will be accomplished by: focusing on the costs and establishing relationships that clients will not be able to find elsewhere.

Industry Analysis

According to a study that was conducted by the Kaufman Foundation, they determined that between 1996 and 2004 the total number of small businesses grew by 550 thousand every single month. This takes into account the up and down swings the economy has been going through. ("550 Thousand New Opportunities for Bookkeepers Every Month," 2010) These figures are important, because they are illustrating how there is a tremendous amount of demand for bookkeeping services at a number of different organizations. As, they need people to help address their underlying needs from everything ranging from: the basic handling of receipts to conducting the more extensive accounting functions. As a result, this means that DC Bookkeeping Services is well positioned to take advantage of these shifts inside the industry itself.

A good example of this can be seen within the state of Florida. As, the average hourly rate for bookkeeping services is: $15.87 per hour or a total of $33,010 per year. This is less than the national average of $16.71 an hour or $34,760 per year. However, inside the sector itself the state is employing 13.79% of the workforce in this particular field in comparison with 11.94% nationally. The below table demonstrates the comparisons between the state and the national average. ("Bookkeeping, Accounting and Auditing Clerks," 2011)

The State of Florida Employment Levels in the Bookkeeping Sector in Contrast to the United States

Location

Employment

% of Workforce

Avg. Hourly Fee

Avg. Salary

Florida

97,950

13.79%

$15.87

$33,010

United States

100,630

11.94%

$16.71

$34,670

("Bookkeeping, Accounting and Auditing Clerks," 2011)

When you compare this with the 10% growth projections that were discussed earlier, it is clear that this sector accounts for a major portion of the employment in the state. This is significant because, it is highlighting how there are tremendous amounts of demand for the services that are being provided by bookkeeping firms.

At the same time, the industry average for bookkeeping services will be between: $20 to $50 per hour. In some cases, a number of businesses will seek to reduce these costs by outsourcing these services to offshore companies based in India. As, they will normally charge between: $10 to $25 per hour. (Debayah, 2010) These different figures are important, because they are highlighting how there is the need for bookkeeping services that are in the lower end of this range.

The way that this will help DC Bookkeeping Services, is we will come in below the national average for bookkeeping services by: remaining in line with the state's mean number for the industry. This will help to keep our services competitive by offering these products and services at a discount. While at the same time, being able to highlight how our services are located within the close proximity to many of the clients that we are serving. This will give the company an advantage of: offering more personalized attention and maintaining a low cost structure. When you put these different elements together, this will help to increase demand for the various products and services that are being offered by the firm over the long-term.

Competitive Analysis

Inside the City of Newberry there are a total of 15 different bookkeeping firms that are serving the Gainesville area. Using the numbers that were discussed in the previous section for the average hourly rate in the state ($15.87), there is room for the company to compete effectively against these firms. The reason why, is because we will be focusing on all of the different segments of the population, businesses, nonprofit organizations and governments. This will allow the company to attract a wide variety of clients that will have a number of different requirements. What will make our firm so unique is that we will be able to address these specific needs and provide superior service, in comparison with the others that are located in the region. At the same time, we will concentrate on marketing these products and services to locations from as far away as Miami and Atlanta. This will increase our target audience and the ability of the company to be able to attract a wide variety of clients. ("Newberry Billing Service," 2011)

When you put these different elements together, they are highlighting how we can be able to increase our client base by: offering lower fees and more personalized services. What will help to make us so successful is that we will not be focusing on just the area surrounding Gainesville. Instead, we will be searching for clients that are outside of the geographic region by advertising in locations such as: Atlanta and Miami. This will increase the ability of the company to be able to offer customizable solutions that can be found inside Florida or within close proximity to the client. Over the course of time, this will allow us to build a wide variety of cliental that can have their specific needs met. Once this takes place, it means that we can create a solution that is providing innovative products and services that cannot be found elsewhere.

Chapter 4: Market Strategy

In this chapter we will examine the marketing strategy that will be utilized to attract a wide variety of clients to DC Bookkeeping Services. This will be accomplished by examining a number of different variables to include: how the 4 P's will help us to successfully reach out to customers, looking at the price list, the selling strategy and providing a sales forecast. Once this takes place, it will offer specific insights about how we will be effectively marketing the products and services that are being provided by the company.

The 4 P's

To determine how we will promote the different products and services for DC Bookkeeping Services we will utilize the 4 P's of marketing. These include a number of different elements to include: the product, price, place (distribution) and promotion. The product is referring to the physical products and services that are being sold to customers. In our case, we will be offering unique products and services that will address the specific needs of the client. The price is when you are looking at the precise costs associated with the products and services that are being sold. In our case, we will be focusing on offering clients bundled discounts for using a wide variety of services and there will be lower hourly fees for those who will be utilizing them individually. The place (distribution) strategy is when you are looking at how the various products and services will be delivered to customers. This will be accomplished by communicating with customers directly over the telephone, receiving emails that will provide us with detailed information about the project and them sending emails with the final product. Promotion is when you are focusing on how the final product will be delivered to customers. In the case of DC Bookkeeping Services, we will be concentrating on understanding what the customers current costs are for different products and services they are utilizing with competitors. This will be accomplished by having salesmen in various regions that will help to promote what the company has to offer. At the same time, we will focus on reaching out new customers through traditional forms of advertising such as: newspapers and direct mail. We will then, utilize targeted email advertisements to reach out to different decision makers. These elements are important, because they are providing us with a basic strategy as to how we will promote the various products and services to customers. At the same time, it is illustrating the way they will be delivered to clients in a timely manner. ("The Marketing Mix," 2011)

Price List

The price list will offer customers two different fees for our products and services on an hourly basis. This will take place, by outlining the costs for products that are sold individual and those that are bundled together. Below is sample of the pricing list that will be utilized.

A Sample of the Pricing List for DC Bookkeeping Services

Product

Individual (Costs Per Hour)

Bundled (Cost Per Hour)

Consulting

$15.10

$14.00

Accounting

$20.00

$18.00

Tax Preparation

$17.00

$15.00

Bill Paying

$15.00

$14.00

Itemized Expenses

$16.00

$15.00

Profit / Loss Statement

$18.00

$16.00

Quarterly Reports

$20.00

$18.00

Annual Reports

$20.00

$18.00

These different figures are important, because they are highlighting how our basic strategy will involve charging customers more for services on an hourly basis if they are utilized individually. However, in situations where they will be bundling all of them together, the overall costs will decrease on an hourly basis. This will provide the company with greater amounts of flexibility and it will allow us to offer customers a pricing structure that is adaptable to their underlying needs. Over the course of time, this will help the firm to stand out in comparison with competitors and it will allow us to create customizable solutions that will address the needs of each client.

Sales Forecast

To highlight the underlying sustainability of the strategy, we will examine the sales forecast. Based on the previous figures, that were outlined earlier there are a total of 550 thousand small businesses that are beginning each month. In the State of Florida this means that there is an average of 11 thousand new businesses. Using this number for simplification purposes, if we targeted these businesses in the very beginning and 1% of them became clients. This means, that the company should average 110 new customers per month. Assuming that each customer will need an average of 10 hours of basic services, this will mean that our underlying profitability will range from: $150 to $200 per month.

At the same time, if we are able to increase our underlying client base by adding about 50 existing businesses and nonprofits per month. This will provide us with an average monthly fee of between: $300 to $800 per month. These figures are based on the fact that these businesses will require between: 20 and 40 hours of bookkeeping services per month. The below table is illustrating the total monthly and yearly sales forecasts for DC Bookkeeping Services.

Monthly and Annual Sales Forecasts for DC Bookkeeping Services (based on new business that is being generated)

Clients

Monthly Project

Annual Projection

New Businesses

$16,500

$198,000

Existing Businesses

$15,000

$180,000

Total

$31,500

$378,00

These different figures are significant, because they are highlighting how our basic approach will provide the company with new sales of $378,000 by targeting businesses and addressing these basic needs. However, these numbers will begin to multiply on a monthly and yearly basis. As a result, these underlying projections are very conservative and are based on the fees generated from new clients individually. They are not taking into account the earnings that will be made off of existing customers. Over the course of time, as: nonprofits, governments and individuals seek out these services the underlying costs will begin to increase exponentially. Therefore, based on our projections, it is logical to assume that within in the course of 5 years DC Bookkeeping Services will more than likely be averaging around $500 million in sales. This is based on: building the existing number of business clients and focusing on other segments of who are interested in the products we have to offer.

Chapter 5: Implementation Strategy

In this chapter we will examine how the company will implement the strategy to reach out to new clients and build the business over the long-term. This will be accomplished by looking at a number of different factors to include: the overall approach that will be utilized, implementation and the control plan. Once this occurs, it will provide us with specific factors about how we will increase the overall bottom line of the company and achieve the organizational objectives of the firm.

Overall Strategy

For successfully launching DC Bookkeeping Services we will need to focus on a number of different factors. The most notable include: ensuring that there is sufficient time to promote the business itself, hiring a sales force to obtain various contracts, finding support staff, building rapport within the Gainesville area and actually launching the business. Ensuring that there is sufficient time to support the business, is when we will conduct a massive advertising / promotional campaign to introduce DC Bookkeeping Services to the community. This will take place at least six months prior to opening of the business through various forms of media to include: TV, radio, direct mail pieces and targeted emails that are sent to decision makers at a number of different companies. The basic idea behind this part of the strategy is to introduce the company to the community and to ensure that everyone will begin to recognize the brand image that has been established.

Hiring the sales force is when we will be looking for salesmen in select regions that will go out and market the company to potential clients. The way that this part of the strategy will work, is to focus on various demographics of the population and select communities that are within close proximity to Gainesville. We will then expand out to areas as far away as Miami and Atlanta at some point in the future. In general, this part of the strategy will involve us working on developing the sales force at least three months prior to the opening of the business. It will continue to take place for as long as the company is building a large base of clients.

Finding support staff is when we are seeking out individuals who can be able to perform various bookkeeping services. The way that this will be accomplished is to visit some of the local colleges and universities in the area. Where, we are looking for students that can work on part time basis to help supplement their income. Once they graduate is when they will be eligible to begin working for the corporation on a full time basis. At the same time, we will concentrate on finding those people who have experience working in the field. This will take place by looking for qualified candidates at: the state unemployment offices and going to various job fairs. In general, this part of the preparation process will take place at least six months prior to the opening of the business. It will continue throughout the entire life of the corporation. This will ensure that the company is provided with a number of different candidates that can easily fill any kind of roles.

Building support within the Gainesville area is when we are going to various civic organizations and business groups. The basic idea behind this kind of approach is we are networking with different entities to be able to help promote the business. The reason why, is because we are focusing on establishing a rapport within the business community in the North -- Central Florida region. This will help to improve the brand image of DC Bookkeeping Services. At the same time, it will assist us in: locating corporate, government, nonprofit and astute individuals who are in need of our services. Once this takes place, we will be able to easily increase the number of clients that we are working with. In general, this part of the strategy will involve a lead time of at least six months prior to actually opening the doors of business.

The launching of the firm is when we have all of the different pieces mentioned above in place. Our main focus is to ensure that the business will be able to have customers who are familiar with DC Bookkeeping Services and the products that we are selling. At which point, we will be able to begin providing the kinds of services that are in demand. While simultaneously, ensuring that we can offer a customizable solution to quickly address each individual customer's specific needs.

Implementation

During the implementation phase we will be focused on specific areas and targets for the business itself once it has opened its doors. Below is a timeline that will detail how and when these objectives will be reached.

Six months after the startup of the business: During this phase we will be concentrating on finding new clients and building long-term relationship with them. The monthly goal of our sales force is to bring in 160 new customers per month. This will be accomplished by having everyone focus on finding businesses that are need of these different services. At the same time, we will be concentrating on locating nonprofits that require the different products and resources that we can provide to them.

One year after the opening of the company: This part of the strategy will involve our sales force locating affluent individuals and various governments that are in need of the services we are offering. In general, this aspect will have us targeting large contracts. The basic objectives for this approach will require having at least 120 different long-term agreements in place during this time frame. As, this will more than likely encompass millions of dollars in services and having the company addressing specific issues that are impacting these customers.

Two to five years after the opening of business: During this part of the strategy, is when we will work on building as many clients as possible. The objectives are to ensure that the company is having gross sales of at least $500 million per year. At the same time, we want to be able to accumulate a customer basis of at least 5,000 clients. Once this take place, it will ensure that we are able to build up the number of customers that we are serving.

These different elements are important, because they are outlining the various objectives that will be set for building the business over the short- and long-term. Once we can reach these milestones, is the point that we will be able to create a bookkeeping services firm that will offer customizable solutions for a fraction of the costs. This will help to create a unique brand name and an entity that will be to address the changes that are taking place.

Chapter 6: Financial Statements and Projections

In this chapter, we will focus on the different financial projections for the first year of the business. This will be accomplished by looking at the revenues / cost estimates, the forecasted profit / loss statement and examining the projected balance sheet. Once this takes place, it will provide us with specific insights that will help us determine how DC Bookkeeping Services will be able to meet these objectives and the probable costs that will be faced during our first year of operation.

Revenues and Cost Estimates

The revenues and expenses for the company will discuss the how we will be able to control costs as well as the projected earnings. This will be accomplished by looking at these different figures on a monthly basis. The below table is providing us with this information for the first year of operation.

Revenues and Expenses for DC Bookkeeping Service for the First 12 Months

These numbers are important, because they are showing how during the first year sales will be consistently increasing on monthly basis. As, the total revenues will start out at: $32,000 and the operating expenses are $15,000. However, based on the strategy that we are proposing these figures will easily increase with the revenues reaching $65 million dollars. While at the same time, the total expenses will encompass $30 million. When you subtract the two numbers from each other, this means that DC Bookkeeping Services will have a net profit going from: $17,000 in January to $34 million by the end of the first year. This is significant, because it illustrating how we can be able to dramatically increase the overall profit margins during this time.

Forecasted Profits and Losses

In this section we are examining the forecasted profits and losses of DC Bookkeeping Services. This will be accomplished by looking at the total amount of expenses and subtracting them from the interest to determine the total net profit that is being realized by the firm. In the below table we are illustrating what is expected from the business during the first year of operation.

Forecasted Profits and Losses for DC Bookkeeping Services in the First Year

The above figures are indicating that the net monthly profit will go from: $16,000 to over $35 million dollars. While the expenses will increase from: $15,000 to $30 million. As a result, this is indicating that DC Bookkeeping Services is a financially viable entity. That can see a significant, increase in profit margins by following our basic strategy. Once this occurs, it means that within the first year we will be able to see a dramatic increase in our overall bottom line and it will help to begin to quickly address the needs for a wide variety of customers.

Forecasted Balance Sheet

In this section we will provide a basic balance sheet for the company. As, we will be focusing on: the cash, income, liabilities, assets and capital that we have available. Once this takes place, we will be able to provide specific insights about the underlying financial strength of the company and how we will be able to achieve the different profit margins that we listed in the above sections.

Forecasted Balance Sheet for DC Bookkeeping Services

These different figures are significant, because they are showing how the balance sheet is indicating that there is enough capital to ensure that the business will be able to grow over the long-term. This will help us to be able to achieve the different objectives of: the organization and to ensure that we are able to build the firm. Once this takes place, DC Bookkeeping services will easily meet the profit projections. At the same time, this will help to ensure that the company is able to offer better products and services in comparison with competitors. This is the point that we will begin to redefine the marketplace and the kinds of services that clients can expect from our organization.

When you step back and analyze the above figures that were discussed in this chapter, it is clear that our basic approach will help DC Bookkeeping Services to redefine the marketplace. The reason why, is because we are focusing on addressing the underlying needs of each individual client. This is accomplished by offering them more specialized services and competitive prices that they will find nowhere else.

Once you combine this with the increasing demand in this field, we will begin to have a major impact in redefining the marketplace and the kinds of services that are being delivered. This is the point that the number of clients and underlying sales will grow exponentially. Therefore, the basic approach that we are taking is considered to be financially sound. As, we are concentrating on two of the most important aspects for growing the business in: the short- and long-term (increasing sales as well as providing superior customer service).

Chapter 7: Financial Projections

In this chapter, we are going to discuss the various financial statements and projections that were covered in chapter 6. This will be accomplished by focusing on a number of different aspects to include: analyzing the breakeven point, the financial position and the capital / investment needs. Once this takes place, it will provide us with even greater insights about how we will be able to grow the company over the short- and long-term.

The Breakeven Point

One of the biggest factors that will determine the success of any business is its breakeven point. This is when the company is making enough money to be able to cover the various expenses. Over the short and long run, this will help us to identify if the corporation is economically viable based upon the following formula.

Fixed Cost

- = Unit Volume

Price -- Variable Unit Costs

In the case of DC Bookkeeping Services, the breakeven point is .23. This was calculated by taking the average fixed cost of 30 and then subtracting it from 160 -- 30. This means that in order for the business to be able to make any kind of money off of the products and services, we have to be working with less than one quarter of one customer. Given the fact that we are serving one customer at a time, we can be able to increase our overall bottom line results through: providing these services to every single client that we are working with. As a result, our underlying costs are so low for delivering these different products and services that we will be able to maximize our overall profit margins.

Financial Position

The financial position of DC Bookkeeping Services will be a monthly profit margin of over $35 million. While at the same time, the underlying costs will account for $30 million. The estimated net capital investment will be approximately $200,000 upfront. The reason why this was selected is because; these figures will include all costs that are associated with any kind of lead up time in promoting the business before it opens. This when we will be conducting a massive advertising campaign and we will hire a sales force to find new clients that can begin working with the company right away. At the same time, we will focus on ensuring that our marketing efforts will be able to consistently increase the overall bottom line results as much as possible.

These different elements are important because, they will help to make certain that we are able to maximize our underlying profit margins. While ensuring; that we can promote the business to a host of potential clients in the region and build upon the foundation that was established during these efforts. Once this occurs, we can be able to increase the overall bottom line results of the company dramatically. This is one of the major keys in helping to make certain that the firm is able to effectively grow well into the future.

Capital / Investment Needs

Like what was stated previously, the investment capital needs of the company are a total upfront investment of $200,000. This is based on accounting for: upfront advertising costs, hiring salesmen that can promote the business in advance, renting a suitable location, printing various marketing materials and hiring support personnel. These costs are important, because they will help to establish a basic foundation for bringing in new clients. At which point, we can focus on finding ways to ensure that business has a consistent amount of customers the moment we open the doors. Then, we can build upon this level to ensure that we are continually bringing in the required amounts of new customers to: meet the different financial goals and objectives that were outlined earlier. The below table is illustrating how we will be able to achieve these objectives based upon the initial capital investment that is required.

Initial Capital Investment for Starting DC Bookkeeping Services

Category

Initial Costs

Advertising

$40,000

Salesmen

$75,000

Rent on Office Space

$15,000

Printing / Promotional Materials

$20,000

Support Personnel

$50,000

Total

$200,000

Once we have received the initial $200 thousand, we will not require any kind of additional capital injections. This is because, the strategy that we are using of promoting the company in advance will: help to increase the number clients and it will give the sales force momentum to build upon the brand image from the advertising.

At the same time, we have enough support personnel in place to ensure that we can offer a customizable solution. This is despite the fact that we have not begun to aggressively marketing the firm at this point. As a result, we will not need any kind of significant equity investments other than a handful of investors, who are willing to provide us with the startup capital to make the company a success. Once this occurs, we can quickly begin focusing on the local markets inside the Gainesville area and then expanding outward.

When step back and analyze the approach that we are taking, it is clear that the strategy we have laid out for DC Bookkeeping Services is financially sound. The reason why, is because we have identified a basic need that a number of organizations and individuals require. This is accomplished through: focusing on providing effective advertisement and promotion. At which point, we can begin aggressively attracting new customers based on: the underlying costs and offering customizable solutions. This will take place, by concentrating our marketing efforts in the Gainesville area. Then, moving to cities as far away as: Miami and Atlanta. Over the course of time, this will help to ensure that the company has a consistent number of clients and it will allow us to aggressively build our business. This is point that we will begin to redefine how these services are being offered and the kinds of solutions that bookkeeping firms are providing. Once this takes place, we will be able to redefine the marketplace and the customer -- firm relationship.

Clearly, the basic approach that we are using will help to achieve these objectives in both the short- and long-term. The most important parts of our strategy are: making certain that we have effective advertising, sales and support personnel to achieve the objectives. If these kinds of elements can be utilized on a consistent basis, they will help DC Bookkeeping Services to redefine the relationship that clients are having with these kinds of firms. Therefore, the basic approach that we utilizing, is financially sound and can help to provide measureable figures the moment the company begins serving clients. As a result, these elements are illustrating how the business plan and the basic philosophy that we are embracing is considered to be economically prudent. Over the long-term, this will allow the firm to maximize its profits and address the various needs of clients.