Marketing of Planning Business - StructureAll Limited - Case Study Example

StructureAll Limited, Business Plan Index Page Start-up Summary 1-1 Start-up expenses and Assets 2-3 Sales Forecast 2-3 Gantts Graphs 3-3 Financial Indication Benchmark 4-4 Budget as Policy Document 5-6 Profit and Loss Pro Forma 8-9 Balance sheet 9-10 Policy guidelines 10-11 Cash Flow and Capital Investment 11-12 Stock Control and Depreciation 12-12 Works Cited 13-13 Date: 2012 Budget Process Start-up summary The start-up expenses will be used for initial legal expenses, stationary, licenses, office equipment, furniture, permits, and specialty software. An initial balance will also be deposited in the company accounts. The three promoters will contribute towards the overall start-up costs as shown below (Pinson 25). Start-up Expenses to Fund $13000 Start-up Assets to Fund $12000 Total Funding Required $25000 Start-up Requirement Start-up Expenses and assets legal $500 Stationary etc. $600 Business licenses $1200 Professional Liability Insurance $1000 Permit order $500 Website development $600 Office furniture $600 Software purchases $7000 Computer and office equipment $500 Other $500 Total Start-up expenses $13000 Cash required $12000 Other current assets $0 Long term assets $0 Total assets $12000 Total Requirement $25000 Sales Forecast 1st year 2nd year 3rd year Sales Real Estate companies $33000 $56000 $98000 Local and state governments $93000 $145000 $224000 Construction Companies $69000 $110000 $93000 Utility companies $68000 $85000 $90000 Other projects $36000 $45000 $45000 Total sales $299000 $441000 $550000 Graph of start-up expenses and assets Sales Focust Grantt chart Gantt Project, which uses Gantt chart, is a project schedule and management tool for project management. From the start up expenses graph, it can be seen that the start-up expenses are slightly higher than the total assets. Again, from the Gantt chart, the sales of the first year are few compared to the second and third year. There is gradual increase in the number of sales made over the three years. The benchmark diagram above also shows the StructureAll Ltd key financial indicators in the first 3 years of operation. The company foresees modest growth in sales and reduction of operating expenses for the three years. Budget as a policy document Budget is a policy document, which is designed as a plan for implementing the policy of the company. Budgets are used as a tool to implement policy in retrospective setting. The budget as a policy document has various functions, which include control, management and planning. The modern model applies the monitoring function, steering function and the strategic brokering function. The monitoring function deals with the consequences of expenditure. The steering function is used as a guide for managing while the strategic brokering uses the budget document to constantly look for possible directions and to react to the environment. The budget is also referred to as the financial plan or list of planned expenses and taxes. The budget will help the company to borrow, save and spend. The budget will provide a forecast of taxes and money expenditure. A well-organized budget will construct a good model of how the company will perform financially in the three-year strategy if certain events, plans and strategies are carried out. The budget will also enable the actual financial operation of structureAll ltd to be measured or evaluated against the forecast (Flyvbjerg, Holm, and Buhl 256). The budget is a policy document, which covers the essence of management areas such as organization, Planning, leadership, negotiation and control. Planning: plan is vital before the company starts. It sets out the practices to be undertaken at different periods. The plan enables sequential completion of various projects the company undertakes. A well-organized plan will leave no place for mistakes and impulse expenditure. Planning skills are vital to enable well organization of the company procedures and policies. Project managers are required to plan the delivery of milestones, plan meeting with management teams, clients etc. A well-structured, planned and organized budget will be explicit and easy to understand. This is very important since if the projects or services StructureAll is offering are not clear, explicit or complete to the customers, they will shun the company or derail the project (Siegel 56). Organizational Skills: an organized budget will take care of all aspects of the company. An organized budget looks at all corners that the company is involved and gives the various departments that are shared according to the pressing needs. Project officers are required to organize information well, organize meetings and put together teams. A well-organized budget will give project officers humble time to do their work. Leadership: Not all project officers have the leadership qualities. A well-organized budget will reflect an organized leadership. Good budgets, just like a good leader, will impart vision, establish direction, motivate and inspire the team and gain consensus for strategic goals. A good budget will give the leaders confidence as they undertake different duties in the company (Flyvbjerg, Holm, and Buhl 256). Control: control of the company expenditure is very important. A budget shows the various projects alongside the expenditure of each project, therefore, controlling the expenditure of the company. Budget also lays down the requirement needed by the company, hence, avoiding impulse buying. For a company to realize profits there should be manageable and strict business plan and budget to avoid mismanaging funds. Project managers should strictly follow the budget to avoid mismanagements and impulse buying. Hence, a good budget controls the way a company provides its services, hence, it has a big say on the outcome of the projects. Start-up Expenses legal $500 Stationary etc. $600 Business licenses $1200 Professional Liability Insurance $1000 Permit order $500 Website development $600 Office furniture $600 Software purchases $7000 Computer and office equipment $500 Other $500 Total Start-up expenses $13000 Cash required $12000 Other current assets $0 Long term assets $0 Total assets $12000 Total Requirement $25000 Profit and Loss Pro Forma 1st year 2nd year 3rd year sales $117680 $129600 $180,000 Cost of sales $35304 $32400 $27600 Total sales cost $35304 $32400 $27600 Gross margin $82376 $97200 $152400 Gross margin % 70% 75% 84.67% Expenses payroll $50000 $60000 $70000 Promotion $0 $0 $0 Depreciation $0 $10 $20 Website Hosting fees $0 $0 $0 Engineering A. Annual Fees $0 $200 $200 Software purchases $0 $0 $0 Utilities $100 $150 $200 Rent 0 0 0 Payroll Taxes $8000 $9000 $11000 Total Operating Expense $57000 $70000 $80000 Profit before interest and taxes $24875 $28200 $71900 EBITDA $24876 $28200 $71900 Interest Expense $0 $0 $0 Taxes Incurred $7463 $8460 $21570 Net profit $17413 $19740 $50330 Net profit/sales 14.8% 15.23% 27.96% Balance Sheet 1st year 2nd year 3rd year Assets Current assets Cash $13380 $31073 $73584 Accounts receivable $20139 $22179 $30804 Other current assets $0 $0 $0 Total current assets $33519 $53251 $104388 Total long-term assets $100 $100 $100 Total assets $33519 $53251 $104388 Liabilities and Capital 1st year 2nd year 3rd year Current liabilities Accounts payable $4106 $4098 $4904 Current borrowing $0 $0 $0 Other current liabilities $0 $0 $0 Subtotal current liabilities $4106 $4098 $4904 Long term liabilities $500 $300 $300 Total Liabilities $4106 $4098 $4904 Paid-in Capital $25000 $25000 $25000 Retained earnings $13000 $4413 $24153 Earnings $17413 $19740 $50330 Total capital $29413 $49153 $99483 Total Liabilities and capital $31519 $52251 $104388 Net worth $29413 $49153 $97483 Policy Guidelines Cash flow and Capital investment Guidelines will provide a window into how the company will go about reviewing its liabilities, reassuring external financiers about the business’s economic soundness, and discussing better and improved terms with lenders. The treasurer is supposed to prepare cash budget and a cash flow statement. In cash budgeting, cash receipts and disbursements are estimated to help in determining cash availability. The treasurer will identify the major cash items of the company by examining an annual budget, past cash flow and payment and collection records. The treasurer is supposed to prepare cash flow data on monthly basis for the first year of operation. As the company grows, the treasurers will have to prepare the cash flow data more frequently, on a daily or weekly basis. Cash flow summaries should be prepared using two main basic categories of inflows and outflows of money, recurring and extraordinary. Recurring receipts and payments include the payroll expenses and property taxes payments. These payments can be anticipated regularly. Extraordinary receipts and payment result from nonrecurring items or programs, such as the capital expenditures and federal grants. The various departments of the company should maintain adequate money at hand to the daily cash requirements of the company while at the same time maximizing the amount available for capital investment. The departments also obtain the maximum earnings on funds invested while ensuring the funds’ safety. The treasurers of various departments should strive to: 1. Establish best procedures for collecting taxes 2. Develop or establish strong internal control of disbursements and cash receipts. 3. Develop strong professional relationship with members of the investment community and the local bankers. 4. Develop smooth and clear lines of communication between the heads of departments and the treasurer. Stock Control and Depreciation The system for controlling stock movement should be satisfactory. The movement of stock should only occur through a properly authorized documentation. There should also be a segregation of duties, computer operator and stock control. The auditor should find out whether there are goods in the warehouse and whether the goods are in good condition. The company should also withdraw the goods in the warehouse on rotational basis for test checking. The auditor should then enquire of the results of the tests and all other investigations the company will carry out. The old stock should always be cleared first before using the new stock. The stock should be kept in a good environment to prevent it from going bad. Before new stock is added to the warehouse, the older stock should be cleared first. The old stock should not be mixed with the new stock (Alleny 25). The depreciation policies of the company should be determined and counterchecked with the global basis to find out whether the depreciation charge is reasonable. The company’s reconciliation between depreciation recorded in the fixed assets register and the charge in profit and loss account should be obtained. If there are any discrepancies, enquire for reasons. The older stock should go for less than the new stock. This is because as time goes on, the value of a commodity goes down. Older stock depreciates with time, hence should be sold at a lower price. Works Cited Alleny, Jude. Marketing Your Event Planning Business: A Creative Approach to Gaining Competitive Edge. New York: John Wiley &Sons, 2010. Print Flyvbjerg, Bent, Mette Holm, and Soren Buhl. "How (In) Accurate Are Demand Forecasts in Public Works Projects?"Journal of the American Planning Associations 71.2 (2005): 131-46. Print. Flyvbjerg, Bent, Mette Holm, and Soren Buhl. "Underestimating Costs in Public Works Projects: Error or Lie?"Journal of the American Planning Association 68.3 (2002): 279-95. Print Pinson, Linda. Anatomy of a Business Plan: A Step-by-Step Guide to Building a Business and Securing Your Company’s Future. Chicago: Dearborn Trade, 2004. Print Siegel, Eric, Brian Ford, and Jay Bornstein. The Ernst & Young Business Plan Guide. New York: John Wiley and Sons, 1993. 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