Development of Small Business - Research Proposal Example

This will not only result in the minimal amount of taxes but will result in the least amount of legal regulations and restrictions right at the start of the business.

It is necessary to put forth a set of assumptions before a business plan can be built. The details of the financial statements and the projections of the business require a lot of tasks to be carried out – this will require the separation of tasks and duties. Furthermore, it is necessary to consider the tax implications of a business structure before deciding upon a structure.

In order to keep things simple, we will have a set of assumptions on the basis of which our other decisions will be based. These assumptions are as follows:

• A sole proprietorship form of business will reduce the amount of taxes that have to be paid significantly.

1. Business Structure

The aim and objective of any business are to maximize the return from operations of a business. The business structure in this case will have to be a sole proprietorship. Though there will be a complete organizational chart and hierarchy with the division of tasks and responsibilities, the business will be owned single-handedly in order to reduce the income tax expenses that the business will have to bear. A partnership structure will result in partnership profit taxes too and thus sole proprietorship will be the best structure for this case.

Though there is the concern of risk management in this scenario, the division of profits, and the responsibility assignment, it has to be considered that the entity needs a stable structure in the first few years of its operations. Stability in the structure can be maintained by a smaller board – a sole proprietor – running the company in tandem with the other partners without any structural interference. The business operations would be easier to converge and manage if there is single ownership of the business.

In spite of the fact that there could be succession issues in the business upon the death of the sole proprietor, it is necessary to go on with the sole proprietorship format. The safeguard here can be a contract between the partners can be of loaning the sole proprietor the funds for the business for which they can claim the original amount they invested in the business.

Alternatives such as a private limited company or a public corporation will include a lot of legal issues right at the beginning and profit erosion through corporate and shareholder taxes and dividends. Keeping into account the scope, the best business structure is a sole proprietorship.

2. The strategic business plan

Trends in the market suggest that the business has great potential in the near future. The cash flows speak the same, however, it is important to consider

The financial information to be prepared for the business plan gets its justification from the objectives and proposed business features identified by the earlier sections of the plan. This part of the business plan needs to follow the basic topic format that is laid out in this course’s Reading 7-3. It should cover those topics in a manner that provides sufficient information to glean a clear picture of the proposed business activities. The format is:

• Title Page
• The Business – Description, History, Objectives
• Marketing – Environmental Trends, Products/Services, Customers, Competitors, Marketing Methods & Controls
• Staffing – Management, Organisational Structure, Advisers, Staff Controls
• Purchasing – Suppliers, Purchasing Controls
• Production – Capacity, Method & Output, Quality Controls

3. Financial Information/40%

This is the forward quantification of the actions defined in the previous part of the business plan.

The marks awarded in this area relate to the following:

• That the following budgetary financial information has been prepared for at least the period of 1 October 2007 to 30 June 2010:
• Cash Flow ü
• Income Statement ý For Inc St. and CF, monthly for 12 mths
• Balance Sheet þ then quarterly thereafter
• Breakeven Analysis (either as done through a spreadsheet or as a separate calculation).
• Statement of approximate taxable income and tax payable for all taxable entities (annual)
• That the information contained in these statements is:
• Consistent with base information provided in the assignment (eg lease costs, capital, etc)
• Based on an adequately justified and quantified sales forecast, including service/product pricing.
• Contains a reasonable quantity of other relevant data (eg expenses, etc)
• Realistic (eg inclusion of GST and PAYG implications in cash flow) and is in general based upon cited research.
• That the financial information is primarily produced using a spreadsheet
• That worst-case and best-case financial expectations are disclosed.
• What calculations are relevant and correct.
• The financial information is laid out in a manner that is clear and readable.

4. Conclusion/ recommendation /15%

A summary is to be presented to the clients. The summary should:

• Be obviously addressed to, and written for the named clients, including the use of appropriate language and presentation.
• Draw on the information in the business report as justification.
• Give clear direction as to advice in terms of going ahead or not.
• Ensure that the ultimate conclusion is congruous with the information in the plan.