Accounting Central - Crater High School
Section I: Executive Summary
Accounting Central will provide their clients with the many aspects of accounting. They will provide service for individuals and businesses. The major service provided will be tax help. The major service that businesses will need is payroll. After substantial computation Jonathan Melbo concluded that a loan of $19,858.12 is needed to start Accounting Central.
The professional manner in which Accounting Central operates would draw in people and businesses from around Southern Oregon. Clients would benefit from Accounting Central’s vast amount accounting services. With the personalized services clients would have a greater hold on their business and personal financial position.
Accounting Central will provide their clients with the help they need to keep the clients from going into debt. Businesses don’t need to be constantly worried about keeping track of how much they can buy and spend. The professionally trained employees allow for each client to be assisted in a timely manner.
Local professionals bring a friendly face to accounting. Keeping their client’s information confidential gives them a sense of greater security. Only allowing our personal CPA’s to access clients accounts allows them to be all the more trusting in Accounting Central.
Section II: ANALYSIS OF THE BUSINESS SITUATION
Self Analysis
In this rough economy businesses are more than ever turning to accountants to manage their money. Accounting Central will be one of those businesses that others turn to for help. Not only businesses turn to accountants for help. The everyday person goes to an accountant, maybe not to manage their money, but to get the most out of their taxes. Accounting Central will offer tax help, book keeping, payroll, and HOA services to all who qualify. Offering all of these services will contribute to the success of Accounting Central. Personal one-on-one service will make clients feel welcome.
To be a successful business one must have the experience. The owner of Accounting Central has interned with an accountant at a local business for the past year. He has the experience in using a database. Having participated in the Crater School of Business was great for learning how marketing and other aspects of a business works. Making a client feel like the business wants them plays a major part in the success of the business. The owner has experience working as a courtesy clerk at Ray’s Food Place.
The greatest weakness of a new business is the fact that it is new. The owner of Accounting Central is also young. This weakness could become the company’s greatest asset. The owner is young he has the time and energy to put everything he has into creating a successful business. It is a very risky time for someone to start a business in this economy. The economy is bouncing back though. This is a great time for Accounting Central to begin. Now more that ever people are turning to accountants to manage their money and spend less, this is why Accounting Central is starting now.
The owner of Accounting Central is will to take the necessary risks to ensure the success of the business. He is young and can push through any setback that may befall the business. Currently in this economy a business either makes it or doesn’t. The owner believes that this is the best time for Accounting Central to enter the business world.
With their one-on-one service Accounting Central would make their clients feel like they care. Accounting Central would care about what happens to their clients. They wouldn’t just be there to make a dollar.
Even with this rough economy Accounting Central is willing to push itself to succeed. People need a business like Accounting Central to start in the Rogue Valley. Companies seem to drift away from the ideas that their clients are people. They seem to only care about how much their bringing in, not who their bringing in. Mr. Melbo cares about his clients.
Trading Area Analysis
Geographical Area Analysis
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While the Rogue Valley is just a few hours drive from the coast, the weather isn’t severe because of the surrounding hills. The geographical location of Medford is a great location to open a financial firm. The location of Medford provides great climate and topography.
The location of the city is located along the I-5 corridor. This major interstate brings in businesses from all over. Businesses are constantly trucking their supplies along I-5 allowing the Rogue Valley to expand its economy.
The climate in Medford is ideal to any business. While businesses in places like Ashland close due to severe weather, businesses in Medford stay open most days during the year. According to the National Weather Service Medford received 10.3 inches of snow last year. This allows Accounting Central to stay open any day of the year. They will not close as often due to too much snow.
The vast amount hills and rivers allows for many outdoor activities. Theses activities are consistently bring new residents into the Rogue Valley. A new resident means a new client.
The location and climate provide exceptional business conditions. Allowing Accounting Central to expand, the topography brings new clients into the area.
Competitive Data
|Competitors |H&R Block |B & R Tax Service|Capital Accounting |
| | | |Services |
|Products |Tax software |Tax service |Bookkeeping and Tax |
| | | |service |
|Price |Low |High |Medium |
|Place |501 Medford Ctr, |414 E Pine St |25 N Holly St |
| |Medford, OR |Central Point, OR|Medford, OR 97501-2720 |
| | |97502 | |
|Types of Promotion |Television |Web page |Web page |
| |Web page | | |
Market Segment Analysis
Whether it’s Nike targeting high school and college athletes or daycares targeting parents, every successful business has some sort of target market. Accounting Central has two main target markets. These are businesses and the community.
|Accounting Central Inc. |
|Size |Small Businesses | |
|Location |Medford | |
| |Central Point | |
|Employees |7-15 | |
|Building |Rented | |
|Office Rooms |1-4 | |
Businesses are Accounting Central’s main target. The businesses Accounting Central is targeting are generally small. These small businesses would have around seven to fifteen employees. In a small business they usually rent the office space. The offices have one to four rooms. The reason behind this choice is that small businesses don’t want to hassle with the financial aspects of their businesses. This is where Accounting Central would come in. We would handle their payroll and money management.
|Accounting Central Inc. |
|Age |25-35 |Strivers |
| |35- | |
| | |Strivers are trendy and fun loving. Because they are motivated by |
| | |achievement, Strivers are concerned about the opinions and |
| | |approval of others. Money defines success for Strivers, who don't |
| | |have enough of it to meet their desires. They favor stylish |
| | |products that emulate the purchases of people with greater |
| | |material wealth. Many see themselves as having a job rather than a|
| | |career, and a lack of skills and focus often prevents them from |
| | |moving ahead. |
| | | |
| | |My interpretation |
| | | |
| | |These people want to succeed they aren’t happy if they don’t |
| | |succeed. They value everyone’s opinions. |
|Marital Status |Family | |
|Household |Family Households | |
|Income |Average income | |
|Gender |Male and Female | |
|Education (Highest |Associate Degree | |
|Received) | | |
When it comes to the community Accounting Central’s main target are twenty-five to thirty-five year olds with a family. These people generally have an average income and have graduated from some sort of college. Accounting Central has chosen these attributes because these people have busy lives and their finances could get really complicated. The amount of people in the public that Accounting Central is targeting is 57,236 people. This is thirty-one point fifty-seven percent of the total population in Oregon.
Accounting Central focuses on their clients with what kind of people they are. These people are concerned about the opinions of others. They value what other people have to say about the issue at hand. They believe that people with a greater amount of materials are wealth. The vals survey classifies these as strivers.
A target market is a key aspect in starting a business. Accounting Central will focus mainly on small businesses. This would be the largest source of income for Accounting Central. They focus on strivers who are concerned with other
Analysis of Potential Location
A target market is a key aspect in starting a business. Accounting Central will focus mainly on small businesses. This would be the largest source of income for Accounting Central. They focus on strivers who are concerned with other
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Section: III Planned Operation of Proposed Business
Proposed Organization
Business Forms
The type of business chosen is a Sole Proprietorship. The advantages of this form of business greatly out way the disadvantages. One person is in charge and all of the profits go to that person. The income for the business is taxed as a personal income which is less than the other types of business. Even though all of the liability lies on that one person they end the business any time. So if things start to go bad they can get out with something left.
Organization Writing
The organization that Accounting Central will possess is an authoritian-demographic. This would allow the employees to give their input on a matter, but the final decision would lie in the hands of the owner or manager. Giving employees a voice in the company would instill a feeling of importance in the employees.
Accounting Central would approach each problem from a strategic standpoint. They would plan how to deal with each problem before addressing the problem. Accounting Central would have an owner, general manager, accountants and a receptionist. When a client walks in the door they are greeted by the receptionist. They are directed to an accountant. The general manager is in charge of the business when the owner isn’t there or available.
Proposed Service
Suppliers
|Accounting Central suppliers |
|Company Name |Address |Phone Number |Web Address |
| |342 Shelbyville |1-866-900-PENS (7367) | |
| |Mills Road, | | |
| |Shelbyville, TN, | | |
| |37162 | | |
|Staples | |1-800-378-2753 |
| | | |brand-_-staples |
|HP |3000 Hanover |(650) 857-1501 | |
| |Street | | |
| |Palo Alto, CA | | |
| |94304-1185 USA | | |
Proposed Service
Every great business is dependent on their product or service. If they don’t have a great product or service a business won’t succeed. There are many other important factors when it comes to selling a product or service. These factors include a product mix, the suppliers, and inventory policies.
The first factor is the product mix. Accounting Central has two main types of services they provide. These services are bookkeeping and taxes. Under bookkeeping there are five different types. These would include trusts, payroll, consultation, individual and business tracking. Accounting Central also provides tax services for individuals and businesses.
Behind every great business is a supplier. Without the supplier there wouldn’t be any product. The main supplier for my product is Staples. They will provide our paper for our hard copy records to give to the client for their reference. This hard copy would allow for Accounting Central to have the records of every client even if the computers crash.
An inventory policy is very important to a business. Accounting Central’s clients must walk into the business to receive service. This system is called the JIT system. Accounting Central uses this to show that they care about their clients.
All of these aspects are needed to run a successful business. A vast amount of services are needed to entice customers into the business. The supplier provides the equipment in which the business operates on. The JIT system allows the business to operate in a timely fashion.
Proposed Marketing Strategies
Proposed Pricing Policies
If a product isn’t priced correctly a business could loose money. They could price it so high that no one will be willing to purchase the product.
• Cost plus pricing will be used for Accounting Central’s services. This type of pricing will be most effective because each client that comes through has different needs. There will be a general service fee. On top of each service fee, depending on the client’s needs would cause the price of the service to increase.
• For the pricing techniques used in Accounting Central will be both prestige and promotional pricing. Prestige will show the potential clients that Accounting Central has highly qualified staff.
• To introduce a new service to the area Accounting Central would use a penetration pricing. Taking a service and setting it at a low rate would draw people in. After the client has seen how great the service is then Account Central would raise the price to be able to make a profit from the service.
Promotion- Marketing Strategy
What do Apple, Walmart, and McDonalds have in common? They all advertise. All the greatest products in existence are advertised. Accounting Central’s promotional mix will be described in the following section. The promotional mix would consist of publicity, advertising and sales promotions.
Publicity is great when introducing a new business to an area. This is also a very inexpensive way to promote the business. Accounting Central is planning to submit a press release to the media when it first establishes an office in Medford.
As many great companies do, Accounting Central will use places like the Yellow Pages to advertise. The Yellow Pages is a great place to do this, because people use them to find businesses in a certain profession. Another way Accounting Central will promote their business is in advertising. This would not be a tool used right away. Accounting Central would have to establish themselves in the Rogue Valley first.
One of the best ways to draw a customer into certain services is called a sales promotion. These are ways to entice people to see what Accounting Central is all about. Sales promotions are usually limited time offers so a potential client wouldn’t be able to postpone coming.
Overall we at Accounting Central believe that promotional activities work. They’ve worked for H&R Block and AAA they will work for us. You can’t have a successful product or service if people don’t know about it.
Section IV: Planned Financing
Projected Income and Expenses
Projected Sales Forecast
|Company |% of Market Share |% of Target Market |10% |Estimated Sales |Estimated Earnings |
|Accounting Central |14.00% |8013 |801 |$96,155.76 |$48,077.88 |
|Four Brothers Financial, LLC |18.00% |10302 |1030 |$123,628.83 |$61,814.42 |
|Granger Accounting Service |11.00% |6296 |630 |$75,550.95 |$37,775.48 |
|H&R Block |28.00% |16026 |1603 |$192,311.52 |$96,155.76 |
|Jackson Hewitt Tax Service |11.00% |6296 |630 |$75,550.95 |$37,775.48 |
|Marilyn's Tax Service |10.00% |5724 |572 |$68,682.69 |$34,341.34 |
|Hyatt David P. |8.00% |4579 |458 |$54,946.15 |$27,473.07 |
| |100.00% |57236 |5724 |$686,826.86 |$343,413.43 |
|Estimated Customer Spending per Month |$120.00 | | | | |
Projected Income Statement
| |Monthly Income Statement | |
|Revenues | | |
| | | |
|Sales receipts |$48,077.88 | |
|Less - Cost of goods sold |$0.00 | |
|Total revenues | |$48,077.88 |
| | | |
|Expenses | | |
| | | |
|Employees salaries |$7,923.23 | |
|Commissions |$1,144.25 | |
|Rent |$2,206.77 | |
|Utilities (from other SG and A expense - See Detail) |$10,759.83 | |
|Materials |$0.00 | |
|Office Expenses |$1,456.76 | |
|Advertising |$288.47 | |
|Professional services |$312.51 | |
|Insurance |$677.90 | |
|Home Office Expenses |$581.74 | |
|Depreciation |$1,086.56 | |
|Taxes |$918.29 | |
|Maintenance |$0.00 | |
|Interest |$451.93 | |
|Miscellaneous |$961.56 | |
|Other expenses |$5,043.37 | |
|Total expanses | |$33,813.17 |
| | | |
| | | |
|Net profit | |$14,264.71 |
Balance Sheet
| |Balance Sheet |
|Assets | |
|Cash |$171,176.48 |
|Inventory |$85.59 |
|Accounts Receivable |$0.00 |
|Total Current Assets |$171,262.07 |
| | |
|Fixed Assets | |
|Building |$0.00 |
|Equipment |$3,000.00 |
|Total Fixed Assets |$3,000.00 |
| | |
|Intangible Assets | |
|Goodwill |$1,000.00 |
|Other Intangible Assets |$0.00 |
|Total Intangible Assets |$1,000.00 |
|Total Assets |$175,262.07 |
| | |
|Liabilities | |
|Current Liabilities | |
|Accounts Payable |$16,906.59 |
|Notes Payable |$0.00 |
|Total Current Liabilities |$16,906.59 |
| | |
|Fixed Liabilities | |
|Long-Term Loan | |
|Mortgage | |
|Total Fixed liabilities |$0.00 |
|Total Liabilities |$16,906.59 |
| | |
|Net Worth | |
|Owner's Capital |$158,355.49 |
|Total Liabilities and Capital |$175,262.07 |
\
Proposed Plan to Meet Capital Needs
Short-term and Long-term Borrowing
| |Working Capital |Equipment |
|Total cash needed |$14,350.30 |$10,796.24 |
|20% down payment |$2,870.06 |$2,159.25 |
|3% loan fees |$344.41 |$259.11 |
|Total out of pocket cash needed |$3,214.47 |$2,418.36 |
| | | |
|Loan amount |$11,480.24 |$8,377.88 |
| | | |
|Prime rate |3.25% |3.25% |
|Additional interest |1.75% |1.75% |
|Total interest rate |5.00% |5.00% |
| | | |
|Length of loan in years |5 |7 |
| | | |
|Monthly payment |$215.75 |$117.92 |
| | | |
|Interest on 12th payment |$526.94 |$395.61 |
Investment Sources
Personal and Internal sources of cash
o The owner currently has $3,000 to invest in the business for the down payments on the working capital and equipment
o $2,000 is supplied by the family of the owner.
External sources of cash
o There are no external sources of cash for Accounting Central.
Repayment plans
o Accounting Central is using the SBA’s 7(a) Loan Program. This program is a $250,000 to $2,000,000 loan. This provides Accounting Central with a working capital and the funds to purchase equipment. Accounting Central expects to have the working capital loan paid off in five years at a rate of 526.94 dollars per month. The loan on the equipment will be paid off in seven years with monthly payments of 395.61 dollars.
Section V: Conclusion
Accounting Central would be a great asset to the Rogue Valley. It will provide the area with a friendly, professional accounting agency. Located in downtown Medford along Main Street allows Accounting Central to keep their office doors open all year round. With the vast amounting of bookkeeping and tax services that are emerging in Southern Oregon, Accounting Central would bring all that to one central location. With our best customers being small business Accounting Central would be run as a sole proprietorship. Those small businesses would come to Accounting Central other than an accounting firm that is run under a corporation. Our greatest supplier is Staples. They provide all of the office supplies needed in any office. The services offered by Accounting Central are greatly needed in the current state of the economy. Accounting Central will obtain a SBA 7a loan. To obtain this loan the owner will need to have five thousand dollars.
Section VI: Bibliography
"The Entrepreneurship Test." The Entrepreneurship Test. 1 2009. Liraz Publishing Co.. 30 Mar. 2009 .
Staples. 27 May 2009
.
H&R Block. 31 May 2009
.
Yellow Pages. AT&T Intellectual Property. 31 May 2009
.
"Tax Preparation Prices and Fees." About. 1 Jan. 2009. 29 May 2009 .
Google Maps. 28 May 2009 .
"City of Medford." City of Medford. 26 May 2009 .
"Property Data Online." Jackson County. 26 May 2009 .
"Welcome." Four Brothers Financial, LLC. 25 May 2009 .
"Free business statistics and financial ratios." Biz Stats. 22 May 2009 .
Section VII: Appendix
Business Card
Business Letter
Accounting Central Inc.
975 Sydney Court
Central Point, Oregon 97502
541-890-5054
March 30, 2009
Mr. Frances Hedge
SBA Loan Officer
ACME Bank
845 Indian Plaza
Roseburg, Oregon 97228
Dear Mr. Hedge:
I am writing to you about funding for Accounting Central Inc. This business will be located in the Rogue Valley. Based on my recent research most of the accounting firms in the Rogue Valley are small. Accounting Central will bring a new face into the Rogue Valley. By providing the Rogue Valley with personal service
I believe there are many large companies located in the Rogue Valley. You don’t here a lot in advertising about accounting firms. In my opinion the demand for accountants in the Rogue Valley is great. This would allow Accounting Central to thrive because of the all-inclusive accounting services that they will provide. These services would be book keeping, tax help, and trusts. The city of Medford was chosen, because it’s the largest city located in Southern Oregon. We will offer professional help to all our clients.
Accounting Central would like to thank you for considering us for a loan. I am looking forward to discussing this issue further with you. You can reach me at 1-800-account (222-6868). If I do not here from you within the next week, I will contact you about this issue.
Sincerely,
Jonathan Melbo
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