Market Feasibility Analysis of Easy Done LLC - Case Study Example

Running Head: MARKETING PLAN Marketing Plan Name Institution Table of Contents Table of Contents 2 Company Summary 4 Objectives 5 Mission 5 Keys to Success 5 Products 6 Positioning 7 SWOT Summary 7 Strengths 7 Weaknesses 7 Opportunities 8 Threats 8 Market Analysis Summary 8 Market Needs 9 The Market 9 Market Segmentation 10 Market Trends 11 Target Market Segment Strategy 12 Competition and Buying Patterns 13 Marketing Strategy 14 Marketing Mix 14 Financials 15 Market Feasibility Report 15 Executive Summary This is a marketing plan for Easy Done LLC. Easy Done LLC is a start-up accounting firm that employs twenty employees. It is an exciting firm founded by a former regional manager of Smith and Associates LLC and registered with The Public Company Accounting Oversight Board in the beginning of 2013 (Schneider & Yocum, 2004). The firm is seeking to target the small and medium size businesses (SMEs) by offering these low cost services. Easy Done LLC intends to offer two crucial services; tax preparation as well as bookkeeping services. Bookkeeping is essential for SMEs as it helps to lower costs, manage cash flow, as well as help in processing tax. The bookkeeping service will involve remote bookkeeping services, that is, our bookkeeping experts will visit the office or place of work of the client on a regular basis to process their accounts and make management reports. It also intends to provide onsite bookkeeping service to its clients by the end of the year. This will involve the use of a full time bookkeeper in the premises of the client who will be advising the client while also giving recommendations (Werner, 2007). These onsite “staff” will be available on daily, weekly, or monthly basis depending on what the client likes. Easy Done LLC intends to offer these services cheaply with the cost conscious client in mind. That is why it is targeting SMEs. In additional to this, it will also go after two client segments it has identified. The first is the individual client. This includes all people in need of tax returns services. The second segment represents businesses; small and mid size business. These include schools, clinics, café, shops, start ups, and other business that are conscious of the costs they incur in accounting. All that will be done by using low cost and easy bookkeeping methods and systems that will accurately prepare as well as track accounts using the transactions in the statements of the client. The likelihood of success of Easy Done LLC is ensured by its experienced staff. Most our staff have worked in big accounting firms for years. The management is also experienced with the Chief Executive Officer having been a manager before he founded the company. The young accountants also have received adequate training to per take the job accordingly. They also receive a lot of mentorship from the experienced accountants. Easy Done LLC has forecasted earnings of $1,000,000 in the first year of business. This is expected to increase two fold in the next three years. The number of employees is also expected to increase significantly in the coming years as the number of clients increase. The expected success is down to the combination of an insight to a great market opportunity and experienced management and workforce. We also intend to provide other services as we grow in market (Boudreau & Jesuthasan, 2011). Leveraging on our key strengths as well as diversifying our business will maximize our growth in to the future. Company Summary Easy Done LLC is a three month old accounting firm that was established in January 2013 by its founder Carl Peters. It offers bookkeeping services as well as tax compliance services to low-end clients in the small and medium size businesses. It has target first year revenue of $1,000,000. It intends to add other regulatory services such as cost consulting and management services as its client base increases. Carl Peters is the majority shareholder in the company with each of the rest of the staff owning a part of it. Objectives Easy Done LLC will offer low cost bookkeeping and tax compliance services to SMEs. It has set the following financial and nonfinancial objectives: Financial objectives To launch a low cost bookkeeping service starting with twenty accountants. To attain earnings of $1,000,000 in the first year of operation To double earning two fold in the next three years (Scarborough, 2010). Nonfinancial objectives Launch a company website Introduce other accounting services in three years time Continuously maintain a strong relationship with the clients Enter new geographic markets Mission Easy Done LLC seeks to provide SMEs with low cost bookkeeping and tax compliance services. This will not only allow them to save money but also ensure correct tax returns. The businesses will also continue to grow from our advice. Keys to Success Adopt simple, efficient and cost saving accounting practices Build strong bond with the clients Not only cut costs of regulations but also advice the client on how to grow their business Ethical and legal practices in taxes, transparency, and reporting. Products Easy Done LLC core services include bookkeeping and tax compliance for SMEs and individuals. These services are low cost services tailored to enable the clients to best attain their financial obligations. It is crucial that the services offered are of high quality. This is because our individual clients as well as the business clients are conscious of how we treat them to gauge our competence. The services offered therefore must be the best so as to create a long lasting business relationship with the clients. The services offered for our clients will differ differently as follows: Individual client Consulting services, including: Retirement planning General personal financial planning Pension planning Tax compliance – advising, planning, and preparation Business client – these are the SMEs owners. The services to be offered to them include: Tax compliance services – advice, plan, and prepare Bookkeeping services, including: Monthly bookkeeping service Onsite bookkeeping service Weekly bookkeeping service Remote bookkeeping service Positioning Easy Done LLC has a unique workforce who is greatly conversant with accounting and bookkeeping services (Scarborough, 2010). Our accountants and bookkeepers are experts in what they do. They also are very experienced in bookkeeping and accounting having been in the industry for more than two years. We will be providing bookkeeping services and tax compliances services. Additionally, we will be advising our clients on how to minimize their exposure to tax as well as how to increase their profits and grow their businesses. We will offer quality services at a low, affordable price. SWOT Summary SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis addresses all these issues in relations to the business environment (Schneider & Yocum, 2004). The analysis thereby identifies those areas that should be leveraged and highlights areas of improvement within the firm as well as within the market and industry. Strengths The high client retention due to close bond formed High experienced workforce Use of free software to lower costs Weaknesses Lack of diversification in our services due to overdependence on bookkeeping and tax compliance services Perceptions of offering too traditional services which may make new clients overlook us. Difficulty to generate enough billable hours during the off-season periods Opportunities Steady growth of the SMEs Increased income levels for celebrities in the sport, music, and movie industries Continued increase in population as well as market for SMEs Threats New and established firms that intend to get to the target market Software that is usually cheap that can replace the role of accountants and bookkeepers Government efforts that tend to simplify tax laws Market Analysis Summary Easy Done LLC will offer bookkeeping, tax compliance, as well as financial-based planning to its clients. The firm aims to establish trust and loyalty with its client base. Its client base will consist of SMEs and individuals. We intend to diversify to other services in the future (Cooper, Edgett, & Brady, Lean, Rapid and Profitable New Product Development, 2009). As a result, we expect increased competition from a number of rival accounting firms. Easy Done LLC will be highly dependent on earnings from bookkeeping as well as tax preparation and planning for both individuals and businesses. In our first year, this area will account for 100% of our total earnings. This could be risky to the firm as a result of competition from new entrants in the market. It is therefore crucial to diversify our revenue base so as to ensure stability as well as realize continuous growth in business. Market Needs Easy Done LLC will be of great value to the clients. It will provide intangible value as well as tangible value. Our goal will be to make sure our clients adhere to all federal and state tax laws. We will also aim to reduce the exposure of our clients to tax. This means offering our clients advice that will help them utilize their money to the fullest to grow their business without any legal implications. All in all, we will work to ensure that the client understands well enough the complex regulatory laws as well as work to ensure the client continues to make more money. The Market Small and medium size businesses (SMEs) are very crucial to the growth of a market economy. More than 90% of all businesses in Australia are small and medium size businesses. Research by the government as of 2011 showed that the SME sector employs an estimated 3.5 million people in the whole economy. The growth of SMEs has also been significant of the last decade and is projected to grow even more in the future. It can therefore be concluded that the SME sector is an important sector for growth and sustainability of the economy in Australia. In spite of this, recent research has shown that most small and medium size businesses in Australia face many problems when it comes to regulatory issues. Some of the regulatory issues are payroll, taxation, employment, superannuation, and safety, as well as health and environment. Small businesses are increasingly being burdened by the costs relating to these regulations. Complex tax structures and high cost of compliance are a problem. Among the highest burden in compliance is the issue of rated tax for businesses. Similarly, the system of superannuation is very complex and its interaction with tax has even made it more complex for SMEs. Different territories and states in Australia levy different tax on payroll. This proves burdensome for SMEs operating across different jurisdictions. The result of the costs of government regulations has in a way affected the whole economic growth negatively. Accounting firms and agencies have in the past moved in to address this issue. SMEs are increasingly relying on accountants to relieve them from the burden of regulation. They perceive that accountants are competent, trustworthy, and capable of providing quality service worth their money. Nevertheless, most accounting firms such as KPMG, Deloitte Touche Tohmatsu, Ernst & Young, and PwC Australia offer similar services to these SME (Boudreau & Jesuthasan, 2011). These services are high-end services such as auditing, superannuation, environmental regulations, as well as health and safety regulation. However, very few accountancy firms offer low-end services such as bookkeeping and tax compliance. Easy Done LLC will be an accounting firm that will primarily offer these low-end services of bookkeeping and tax compliance. It will serve both individuals and small and medium size businesses. All of our clients are important to us as they depend on our expertise for their financial accounting needs. Bookkeeping and tax compliances are just the start of what we aim for (Cooper, Winning at New Products: Creating Value Through Innovation, 2011). Our goals will be to become an important part of the planning and management process of the finances of the clients. Our clients will always see and value the services we offer as we aim to limit their tax obligations and utilize their money and time. Market Segmentation The market that Easy Done LLC seeks to explore can be divided into three categories: Individuals Businesses – these represent people who have a constant stream of money and want to insure against their tax liability. They need to prepare and plan for tax returns and do not know how to use software programs of bookkeeping. This group includes musicians, actors, sports persons and many others who are a business on their own. This base of business will not bring a lot of revenue to the company but will offer consistent revenue base for the firm. Small Businesses – these include businesses employing a handful of people and usually with one branch. They represent the majority of the clients the firm targets. This is because 85% of all SMEs are small businesses. These clients include shopkeepers, small hoteliers, dentists, and many others. The long term goal for the firm is to help these clients grow continuously to midsize businesses. This means fulfilling their needs and helping them expand. Medium Businesses – these include businesses employing more than 50 employees. They also usually have more than one branch in a different geographical location. They may not represent the majority of the clients the firm targets but they are the most profitable clients. They also have the most financial accounting needs. The businesses will also generate the most revenue compared to the others on a per hour basis. It will also be the most consistent revenue base all year round. Due to their many accounting needs, these clients are very crucial to the firm as it aims to diversify in to other financial accounting services. Market Trends Two categories can be used to represent the current market trends: key growth of client, and the increasing software use. Key growth of client - After the financial crisis, most of the SMEs are experiencing significant growth and success. With increasing growth, the businesses become increasingly burdened by their accounting needs. Similarly, globalization has brought about the culture of celebrities who in themselves are businesses. These individuals need to submit their tax returns yearly. Easy Done LLC aims to meet these needs as well as help them expand their business by offering financial advice. This will in turn help us grow and expand into other accounting services as well as expand into other geographical areas. As we gain reputation in bookkeeping and tax compliance services, we will attract other clients thereby growing our business. Increasing use of accounting and bookkeeping software – the biggest competitor we will have is the tax and bookkeeping software. Software such as QuickBooks from Intuit, Xero from ABC Business, and other free bookkeeping software will significantly continue to erode earnings from small businesses and individual clients who are savvy with them. The free software will be one of the resources we intend to utilize to reduce costs and increase efficiency within the firm. The target markets are currently experiencing growth (Bagley, 2013). This is due to the stimulant packages introduced by the government of Australia to help the growth of the SMEs sector. The growth is expected to continue increasing in the near future with the government projecting a growth rate of approximately 5 % in the SMEs sector by 2015. Target Market Segment Strategy Easy Done LLC will focus on individuals, small businesses as well as medium size businesses because of several reasons: Bond with clients – because of the direct contact with individual clients, a stronger business bond based on trust and loyalty will be developed. This is crucial as it will provide the core reasons of maintaining clients in the firm (Cagan, 2008). Market margins – the market of bookkeeping and tax compliance services to the SMEs is basically unexploited. Venturing in to the market represents an opportunity capable of bringing better margins to the firm. Competence – the competence of our staff is essential to our success. The experience of our work force in dealing with the target clients will be crucial to good business. It will also ensure effectiveness and efficiency in carrying out our work. Competition and Buying Patterns Major competitors in the market are as follows: a. Sam & Mark Associates – they pose the biggest threat. They are in other states and have a large geographical market. They are new in this area but their reputation is already known. They provide bookkeeping only. b. Underwriters LLC – they compare closely with Sam & Mark Associates. They offer high quality services. They are also well known. They provide tax services only. c. Lincoln and Associates – this firm is a big firm with regional presence everywhere. It has recently ventured into tailor made bookkeeping and tax services for medium size businesses in the area. It poses as a threat in the medium size businesses. d. Webster & Wife – this is our weakest competitor. Their quality of service is low probably because of their inexperienced staff. We also expect to face indirect competition from various sectors. The biggest indirect competitor is the tax software. Software like QuickBooks and Sage are continually being used for bookkeeping and taxes services (Competing for growth: How business is growing ). However, most of our target clients lack knowledge of such software. Sole bookkeepers and accountants also offer indirect competition. However, such bookkeepers might not be experienced as our service. The cost of a bookkeeping service is also lower than that of freelance bookkeepers. Marketing Strategy The needs of the client form the basis of our marketing strategies. Understanding the competition and leveraging on our strengths will help us meet these strategies. The strategies are also tailored towards our mission and objectives (Abraham, 2012). To promote the business Easy Done LLC will: Conduct web marketing through social media and online ads. Conduct door-to-door advertising using brochures to prospective clients. Create a referral program for clients and their contacts Advertise through print media which will be tracked to determine its effectiveness Create a website through which we can convey info to the public To gain a competitive edge over our rivals, Easy Done LLC will offer cheap low-end services to its clients at the same price as the sole bookkeeper. Although the margins will be small, the overall margins for the many clients will augment each other. Marketing Mix The sales strategy for Easy Done LLC is to first sell the services to clients from contacts established earlier in the former firms. It will need prior convincing of these contacts to get into business with us. New inquiries will then follow from marketing. Client retention is also essential to our business. This is why we aim to offer quality services to our client. We will also aim get referrals from our existing clients as this will determine our failure or success. The website will be used for advertising as well as to communicate with current and future clients. Tax compliance services will cost $300 for individual, $500 for small businesses and $1000 for medium size businesses. Bookkeeping services will be at a flat rate of $200 for individuals. However, small businesses as well as Medium size will have to pay an hourly fee of $25. Financials The starting capital for the firm is $500,000. The founder of the firm will contribute $400,000 while the other employees will contribute the remainder for a share of the company. The annual target revenue for the first year is $1,000,000. We anticipate that the annual growth rate of the company at 10%. This ensures that the earnings for the next year will be $1,100,000. With the extra cash being invested back in to the business, the growth rate is expected to be 25% in five years time. The expenses used in marketing will depend on the revenues. 4% of the annual revenue will be used in marketing for the first three years before this is increased to 10% thereafter. Market Feasibility Report The SMEs sector is fast-growing together with the financial needs of the businesses. Bookkeeping and tax compliance services are rarely offered by most accounting firms. Easy Done LLC is being set up to offer these services to the SMEs sector. Similarly, the economy in Australia is growing. Many rich individuals are coming up particularly celebrities and retirees. The tax laws still require these individuals to remit their tax returns. Likewise, these same individuals need advice and planning on investment. Easy Done LLC is being set up to fulfill the needs of these individuals. References Abraham, S. C. (2012). Strategic Planning: A Practical Guide for Competitive Success. London: Emerald Group Publishing Limited. Bagley, R. O. (2013, March 18). Innovate, Grow, Succeed: Staying Competitive in Today's Economy. Retrieved April 3, 2013, from Forbes: http://www.forbes.com/sites/rebeccabagley/2013/03/18/innovate-grow-succeed/ Boudreau, J., & Jesuthasan, R. (2011). Transformative HR: How Great Companies Use Evidence-Based Change for Sustainable Advantage. San Francisco: Jossey-Bass. Cagan, M. (2008). Inspired: How To Create Products Customers Love. New York: SVPG Press. Competing for growth: How business is growing . (n.d.). Retrieved April 3, 2013, from Ernst & Young: http://www.ey.com/GL/en/Issues/Business-environment/Competing-for-growth--how-business-is-growing-beyond-boundaries Cooper, R. G. (2011). Winning at New Products: Creating Value Through Innovation. New York: Basic Books. Cooper, R. G., Edgett, S. J., & Brady, L. (2009). Lean, Rapid and Profitable New Product Development. Ontario: BookSurge. Hiebing, R. G., & Cooper, S. W. (1997). How to write a successful marketing plan. NTC Business Books. Scarborough, N. M. (2010). Effective Small Business Management. New York: Prentice Hall. Schneider, J., & Yocum, J. (2004). New Product Launch: 10 Proven Strategies. London: Stagnito Communications. Werner, S. (2007). Managing Human Resources in North America: Current Issues and Perspectives (Global HRM). New York: Routledge. Wright, K. (2007). Strategy in entrepreneurship. Chicago: McGraw Hill. Read More