Steps to Mastering Business - Case Study Example

Business feasibility analysis Name: Instructor: Background of the industry Currently The business will be operated in the accounting sector. This is an industry that had faced stagnation for fairly a longer period of time. Unchanged for the past millennium, accounting world has undergone some major technological shifts in the past few decades. Technological shifts and operational advancement have not been so far achieved. As the memories of accounting gurus like Enron and Arthur Andersen starts to fade in the industry, their contributions are still evident (International Business Publications, 2015). The industry is fast redefining itself not only by major legislative bodies that have taken control of legislation in accounting like CIMA, but also major required need of accountability and transparency on qualified accountants. Accountancy firms are employing increased numbers of qualified staff to deal with increasing. Outsourcing of qualified accountants from accounting firms has been embraced as a trend picking up in central Sydney. The Economic Policy Foundation has estimated that the Australian economy will suffer a shortfall of 8 million workers by 2018, and 36 million workers by 2023. Future Major accounting trends will hit the industry in the next 5 years. Computer technology will revolutionize the big four accounting fields; Accounting and record keeping, Auditing, Assurance and Tax compliance accounts (Stainbank & Ramatho, 2010). In accounting Automated Data entry and Balance software (ADBS) are emerging to replace the manual journal entries. Computerized audit trails have also simplified how an audit is done. Apart from technical advancement in the field, the market players have embraced consolidation and new business practices like mergers to help strengthen their base. From different research on accountancy firms in Sydney, many of them deal in record keeping and auditing services leaving a wide niche in consultancy and tax compliant record keeping services. This will be the central gap to fill to avoid overcrowding in one or two competitive areas. Besides, with the studies on dynamism in the sector, a vast experience is needed which will help cope with the cut-throat competition; Eight-year experience and in the senior management position is a vital strength to back in setting up an accountancy consultation firm. This company will provide consultancy for SMEs and accountancy services to local companies. Its main services are to assist in selection and implementation of computer accounting systems and programs and provide a technological reference. Other services would include conducting accounting record keeping about tax compliance giving ways of sales improvement through the application of accounting guidelines expense trail. Sound accounting techniques and management information system using available information technology will be used to collect data accurately, reducing chances for human error. It could also be applied in the analysis of the report on the data faster and relay the information to accountants and auditors. With the increased number of highly experienced retirees in the sector, I plan to employ them to make a pool of experience needed in consultation services. This will also assist make a good image in the market and boost percentage market control. The government has also eased the registration of businesses by reducing the costs and processes hence a boost for the start up. Finally, with most accountancy firm not celebrating their 2nd birthday in practice, this will help us a lot to assure them of going concern as we will provide an incubation program from their start up. Target market. From Directories of businesses in Sydney and Australian Economic Development Authority and data on legal business registry, a list of new business start-up search indicates 4000 SMEs located in Sydney City alone and with an annual growth of 12% and a 3-year exit of 8% Our target clients are stratified from Small and medium accountancy firms to companies having the accounting department. According to the available statistics on accountancy firms, large numbers of market players are medium businesses. Businesses with less than $6 million annual returns and with less than ten employees in the accounting department will be our primary focus. With 60% of the registered accounting firms in Sydney suggesting to meet this bracket, a wider market is expected. On the other hand, the consultancy will target service, Retail, Wholesale and other large manufacturing industries located within Sydney geographical area. With the numbers being more than 3000 registered companies and businesses in Sydney, no expansion will be done till they have all embraced the system and our consultancy services. The market growth is anticipated to be 5% annually and at this rate, a need of more professional to help do the work will be necessary even at our startup. Market penetration An average of 2 major engagements with the clients weekly would represent an approximated 20 new clients each year, with possibly more than half of those giving continuous support. This would result in a 100% maximum client load a single individual could carry. We will undertake voluntary training of accountants on simpler record keeping to build on our relationship with many companies. We will rely upon face to face engagement with the prospected clients to help us know the specific area of need and get to know the reasons why most of these businesses don’t celebrate their 3rd birthday. Competitive analysis A large number of direct and array of indirect competitors exist within our area of location. A partial list from the registrar of businesses shows the following major companies. Research on their estimated market share is also shown. Business Direct/Indirect Market Share MC Mahon Worth Indirect 5.0% Waston Business Accountants direct 4.0% Ernst & Young accountants Indirect 2.0% Jirsch Sutherland Indirect 1.5% Collins Barrow consultants Direct 7.3% Compleat Accounting Solutions Direct 2.25% C.A.T.S. Computer Technologies Direct 1.3% Talbots Chartered Accountants Indirect 4.5% Business Accountants Services Ltd. Direct 1.3% Gordon Blender Accounts Direct 1.2% From the list above, there are some larger competitors who have a broader base of skills and experience drawn from the many years in accounting practice. Some of the companies above draw their strengths internally from a wide range of funds and investments at their disposal enabling them to afford the cream of experience from the field. Also, larger firms like Collins Burrow consultants have broader capital bases to obtain new skills and technologies, arrange for faster licensing agreements and give financial support to their clients which we are limited. Some companies in this list charge between $70 and $125 per hour for of their consultancy services. Also, these businesses are less flexible in face to face meetings with the clients and don’t meet smaller needs with urgency (ABEYSEKERA, 2015).They are also slower in adapting to variations in their markets. In fact, most of our indirect competitors are more concerned with actual returns and profits received from the sales of software or book balancing than with understanding and meeting the client needs in the long run. Furthermore, a great number of our prospected competitors have big office space and big number of employees resulting in much higher direct and indirect overhead costs that must be met by charging higher amounts on few client volumes. We intend to counter these weaknesses by lowering our charges a little bit without putting questions on our professionalism. We will also work on our flexibility to meet many customers need in a single visit, for example, tracing vouchers to receipts and counter balancing of books with consultation on the same on one visit. Our office space will be smaller since our consultations will mainly be at the client’s premises. This will, in turn, reduce our overhead charges. Operation plan Our business will be located in Radisson Blu Plaza next to Hotel Sydney. This will be a central location as the hotel will be able to provide for our conference meetings with clients where necessary. On the accountancy part, our operations for Accounting Management Systems will still be based in our host office in Sydney town. Most of our software configuration and most of the writing of consultation proposal papers and documentation will be done in the main office. Actual consulting services and conferences with clients will be done at the client’s place of business since it will allow us meet all the workers at their comfort. Networking will form one of a main pillar of operation. A good network with future, current customer and other consultants even other business acquaintances will be at the top of my list for marketing my business. Posting small information at CBD bulletin boards, in state newspapers and on all electronic bulletin board within the City will also be pursued. Participation in accounting and consultation software forums is already ongoing and will be intensified at startup. Most of these forums are underway in social media form while few others are less frequent, and I attend in person. Spirited participation in industry seminars, trade fairs and exhibitions will be intensified as the business moves from different phases of the cycle. As we work on our reputation and the first image, it may be possible to accept invitations to give guidelines in relation to book keeping on public events and shows. This process will need a high degree of expertise, experience and credibility from my staff. In our operations, we shall rent an office at the blu plaza in the beginning of operations. Renting will reduce the costs associated with purchase and leasing. In order start over, 20 high-end computers will be needed in the management department and task force area. Each employee will be provided with a laptop to facilitate mail communication and efficient data entry. The computer will be purchased locally from computer stores. Three neat work tables will also be bought to facilitate in office consultations and give space for computer placement. In the case of any expansion more worktables will be acquired to fit the rented space. 2 Office telephones will also be necessary as it will allow employees in the field communicate with the people back in the office. It will also facilitate the booking of appointments by the clients easily. The gadgets will also be acquired locally from communication firms. A large waiting seat fitted in the waiting room will also be necessary as it will provide a resting place for clients who may need in office consultation and any inquiry. Waiting for seats will also assist during office meetings. The seats will also be bought from the local market. Smaller equipment like Clock watch, locks, and stationary like files will also be bought. Our hours of operation are scheduled to be from 7:30 AM to 6:00 PM Monday to Friday. Jobs on new implementations or abrupt engagements will always be done outside of these schedules. Our employees will be allowed overtime stayed in the office still 7:00 pm and remunerated on an hourly basis. Any requested support work having no relationship with accountancy e.g. audit engagement not related to new implementations will be charged 35% premium to the normal rate for that service or client. Client file management system The file management system will assist in differentiating the clients using their need as either accounting or consultation. A server will then keep the full information of these clients in a central place and secured with series of passwords. The clients will also be able to register so as to obtain their information online. The major benefits we expect from the File Management System are Immediate availability and relay of Information by the auditors or the clients themselves Store of Incomplete files or entries and status of any pending files Ready availability of reports and information on various dimensions be it Accounting or consultation Easy and quick retrieval of reports when needed to help save time Quick dissemination of detailed reports to various departments. Legal framework Being a Certified Public Accountant (CPA), I will be legally qualified for business registration. The business will be registered by the registrar of businesses as an Accounting consultancy firm. This will take 3 to 4 weeks as we obtain the necessary stamps and pay the required fees. Environmental approval from the relevant authorities in our area of operation will also be sorted. The business will only employ graduates of CPA and only those with practicing certificate will be employed. Retired accountants with vast experience will be employed to help assist in consultancy. Financial needs Approximately $7000 of initial financial outlay is required to purchase initial assets like computer hardware and software. The money will also help establish any licensing agreements with several computer vendors and software suppliers. Beyond these important needs, most of the initial costs are projected to be met from any payments received at the early stages of operations or any cash inflow of the business after startup. The funding will be vital within the first seven months of after initiating operation to help in putting up the premise. The funds will be acquired from my private savings and private borrowing at current market rates. No amortization of loan will be done. Debt retirement is fully limited to the initial capital outlay and will be paid from cash inflow within a period of 7 days. I intend to micro-manage the business at the startup phase and see it through the startup and growth stage to ensure steady growth and strong foundation based on good reputation and name. Since this business is a service, a pool of experts will be ideal. References ABEYSEKERA, I. (2006). Accounting Meets Politics: Theoretical Interpretation of Key Events (1940-2003) of the Accounting Profession in Australia. Australian Accounting Review, 16(40), 66-74. http://dx.doi.org/10.1111/j.1835-2561.2006.tb00327.x Carkenord, B. A. (2009). Seven steps to mastering business analysis. Ft. Lauderdale, Fla: J. Ross Pub. International Business Publications, U. (2015). Doing business and investing in Australia. [Place of publication not identified]: Intl Business Pubns Usa. Lao, L., & University College of Cape Breton. (2012). Feasibility analysis of replicating COMACO's business model in Mashan China. Loucks, K. (1990). Training entrepreneurs for small business creation: Lessons from experience. Geneva: Int. Labour Office. Palo Alto Software. (2006). Business Feasibility Analysis Pro. Prentice Hall. Stainbank, L. & Ramatho, G. (2010). Professional accountancy education in selected ECSAFA countries: a comparative study. Meditari Accountancy Research, 16(2), 153-173. http://dx.doi.org/10.1108/10222529200800018 Weese, S., & Wagner, T. A. (2011). CBAP / CCBA: Certified business analysis study guide. Indianapolis, Ind: Wiley Pub. Read More