Get documents about "Discuss the Profit Maximization Model
Description
Discuss the Profit Maximization Model. document sample
Document Sample
Exogenous Variable Box (000s) Quantities Price, Pure #s Compliance Consulting Group
Money Available $ 100
Loan $ 200
Interest 0.06
Time Horizon 30
Year 1
Employees 3
Salary $ 300 $ 100
Attorneys 2
Salary $ 400 $ 200
Lease $ 24 12 $ 2
Office Equipment $ 10
Depreciation Rate $ 1 0.1
Turnover Costs 0 20
Conferences $ 24 4 $ 6
Survey Expenses $ -
Marketing $ 75 $ 75
Misc. Office Expenses $ -
Yearly Dues $ -
Number of Members 0
Small Firms $ - 0 $ 2
Medium Firms $ - 0 $ 3
Large Firms $ - 0 $ 4
Ledger Cash Receivable Physical Assets Liabilities Net Worth
Start of the Year $ - $ - $ - $ - $ -
Money Available $ 100 $ 100
Loan $ 200 $ 200
Principal $ (3) $ (3)
Interest $ (12) $ (12)
Wage Bill (Attorney) $ (400) $ (400)
Wage Bill (Non-Attorney) $ (300) $ (300)
Lease $ (24) $ (24)
Office Equipment $ (10) $ 10
Depreciation $ (1) $ (1)
Turnover Costs $ - $ -
Conferences $ (24) $ (24)
Survey Expenses $ - $ -
Marketing $ (75) $ (75)
Misc. Office Expenses $ - $ -
Yearly Dues $ - $ -
End of Year $ (548) $ - $ 9 $ (626) 87
Assets= $ (539) Liabilities= $ (539)
Balance Sheet
Cash $ (548)
Receivable $ -
Physical Assets $ 9
Subtotal $ (539)
Liabilities $ (626)
Net Worth $ 87
Subtotal $ (539)
Cash Flow Cash Subtotal Total
Start of the Year $ -
Money Available $ 100 Financial
Loan $ 200 Financial
Principal $ (3) Financial
$ 297
Interest $ (12) Operating
Wage Bill $ (700) Operating
Lease $ (24) Operating
Conferences $ (24) Operating
Marketing $ (75) Operating
Survey Expenses $ - Operating
Misc Office Expenses $ - Operating
Turnover Costs $ - Operating
Yearly Dues $ - Operating
$ (835)
Office Equipment $ (10) Investment
$ (10)
$ (548)
Income Statement Subtotal Profit
Interest $ (12)
Depreciation $ (1)
Lease $ (24)
Fixed Subtotal $ (37)
Wage Bill $ (700)
Conferences $ (24)
Survey Expenses $ -
Marketing $ (75)
Mis Office Expenses $ -
Turnover Costs $ -
Variable Subtotal $ (799)
Yearly Dues $ -
Revenue Subtotal $ -
Profit $ (836)
mpliance Consulting Group
I forced the employees number to reflect 2 attorneys and 3 non-attorneys because I believe you
have to start the business with at least this many people. The salary will remain at this level until
the business makes more than $2,000,000.
The initial expense for office equipment is $10,000, but is variable because it will increase as
profits and employees increase.
The number of conferences that can be attended is reduced until the firm shows a greater
increase in profits and employees.
The cost of marketing is reduced from Scenario 3 because the profits haven't topped $2,000,000.
With no customers, there would be no need to spend money on surveys, so that cost will be zero.
Again, with no customers, there would likely not be any misc. office expenses.
Financial
Financial
Financial
Operating
Operating
Operating
Operating
Investment
Investment
Operating
Operating
Operating
Operating
Operating
Fixed $ 37
Variable $ 799
Revenue $ -
Profit $ (836)
mployees number to reflect 2 attorneys and 3 non-attorneys because I believe you
he business with at least this many people. The salary will remain at this level until
makes more than $2,000,000.
ense for office equipment is $10,000, but is variable because it will increase as
ployees increase.
f conferences that can be attended is reduced until the firm shows a greater
ofits and employees.
arketing is reduced from Scenario 3 because the profits haven't topped $2,000,000.
mers, there would be no need to spend money on surveys, so that cost will be zero.
customers, there would likely not be any misc. office expenses.
Exogenous Variable Box (000s) Quantities Price, Pure #s Compliance Consulting Group
Money Available $ 100
Loan $ 200 In this scenario, I targeted only large
Interest 0.06 is still reduced because we haven't re
Time Horizon 30 Miscellaneous office expenses and s
Year 1 continue to increase as the number o
Employees 3 As noted before, there are a certain n
Salary $ 300 $ 100 increase as members increase.
Attorneys 2 The amount of money spend on conf
Salary $ 400 $ 200 markets and enjoy higher profits.
Lease $ 24 12 $ 2 We're still able to operate on the amo
Office Equipment $ 10
Depreciation Rate $ 1 0.1
Turnover Costs 0 20
Conferences $ 24 4 $ 6
Survey Expenses $ 3
Marketing $ 75 $ 75
Misc. Office Expenses $ 3
Yearly Dues $ 1,220
Number of Members 380
Small Firms $ 45 30 $ 2
Medium Firms $ 125 50 $ 3
Large Firms $ 1,050 300 $ 4
Ledger Cash Receivable Physical Assets Liabilities Net Worth
Start of the Year $ - $ - $ - $ - $ -
Money Available $ 100 $ 100
Loan $ 200 $ 200
Principal $ (3) $ (3)
Interest $ (12) $ (12)
Wage Bill (Attorney) $ (400) $ (400)
Wage Bill (Non-Attorney) $ (300) $ (300)
Lease $ (24) $ (24)
Office Equipment $ (10) $ 10
Depreciation $ (1) $ (1)
Turnover Costs $ - $ -
Conferences $ (24) $ (24)
Survey Expenses $ (3) $ (3)
Marketing $ (75) $ (75)
Misc. Office Expenses $ (3) $ (3)
Yearly Dues $ 1,220 $ 1,220
End of Year $ 667 $ - $ 9 $ (631) 1307
Assets= $ 676 Liabilities= $ 676
Balance Sheet
Cash $ 667
Receivable $ -
Physical Assets $ 9
Subtotal $ 676
Liabilities $ (631)
Net Worth $ 1,307
Subtotal $ 676
Cash Flow Cash Subtotal Total
Start of the Year $ -
Money Available $ 100 Financial
Loan $ 200 Financial
Principal $ (3) Financial
$ 297
Interest $ (12) Operating
Wage Bill $ (700) Operating
Lease $ (24) Operating
Conferences $ (24) Operating
Marketing $ (75) Operating
Survey Expenses $ (3) Operating
Misc Office Expenses $ (3) Operating
Turnover Costs $ - Operating
Yearly Dues $ 1,220 Operating
$ 380
Office Equipment $ (10) Investment
$ (10)
$ 667
Income Statement Subtotal Profit
Interest $ (12)
Depreciation $ (1)
Lease $ (24)
Fixed Subtotal $ (37)
Wage Bill $ (700)
Conferences $ (24)
Survey Expenses $ (3)
Marketing $ (75)
Mis Office Expenses $ (3)
Turnover Costs $ -
Variable Subtotal $ (804)
Yearly Dues $ 1,220
Revenue Subtotal $ 1,220
Profit $ 379
mpliance Consulting Group
is scenario, I targeted only large firms because I receive the most money in membership dues from this market. The marketing budget
ll reduced because we haven't reached the profitability in scenario 3.
ellaneous office expenses and survey expenses are beginning to increase because the number of members is increasing. These will
inue to increase as the number of members increases.
oted before, there are a certain number of employees that you must start with. The model reflects those numbers. The numbers will
ease as members increase.
amount of money spend on conferences is still lower than scenario 3, but is increasing and will increase more as we target larger
kets and enjoy higher profits.
e still able to operate on the amount we spent on office equipment, but his will rise as employees and members increase.
Financial
Financial
Financial
Operating
Operating
Operating
Operating
Investment
Investment
Operating
Operating
Operating
Operating
Operating
Fixed $ 37
Variable $ 804
Revenue $ 1,220
Profit $ 379
eive the most money in membership dues from this market. The marketing budget
ity in scenario 3.
beginning to increase because the number of members is increasing. These will
es.
es that you must start with. The model reflects those numbers. The numbers will
r than scenario 3, but is increasing and will increase more as we target larger
ice equipment, but his will rise as employees and members increase.
Exogenous Variable Box (000s) Quantities Price, Pure #s Compliance Consulting Group
Money Available $ 500
Loan $ 200
Interest 0.06 In this scenario, we targeted only larg
Time Horizon 30 marketing budget isn't as large as it i
Year 1 Miscellaneous office expenses and s
Employees 3 of members increases.
Salary $ 300 $ 100 As noted before, there are a certain n
Attorneys 2 The amount of money spend on conf
Salary $ 400 $ 200 We're still able to operate on the amo
Lease $ 24 12 $ 2
Office Equipment $ 10
Depreciation Rate $ 1 0.1
Turnover Costs 0 20
Conferences $ 30 5 $ 6
Survey Expenses $ 5
Marketing $ 75 $ 75
Misc. Office Expenses $ 5
Yearly Dues $ 2,163
Number of Members 695
Small Firms $ - $ 2
Medium Firms $ 675 270 $ 3
Large Firms $ 1,488 425 $ 4
Ledger Cash Receivable Physical Assets Liabilities Net Worth
Start of the Year $ - $ - $ - $ - $ -
Money Available $ 500 $ 500
Loan $ 200 $ 200
Principal $ (3) $ (3)
Interest $ (12) $ (12)
Wage Bill (Attorney) $ (400) $ (400)
Wage Bill (Non-Attorney) $ (300) $ (300)
Lease $ (24) $ (24)
Office Equipment $ (10) $ 10
Depreciation $ (1) $ (1)
Turnover Costs $ - $ -
Conferences $ (30) $ (30)
Survey Expenses $ (5) $ (5)
Marketing $ (75) $ (75)
Misc. Office Expenses $ (5) $ (5)
Yearly Dues $ 2,163 $ 2,163
End of Year $ 2,000 $ - $ 9 $ (641) 2649.5
Assets= $ 2,009 Liabilities= $ 2,009
Balance Sheet
Cash $ 2,000
Receivable $ -
Physical Assets $ 9
Subtotal $ 2,009
Liabilities $ (641)
Net Worth $ 2,650
Subtotal $ 2,009
Cash Flow Cash Subtotal Total
Start of the Year $ -
Money Available $ 500 Financial
Loan $ 200 Financial
Principal $ (3) Financial
$ 697
Interest $ (12) Operating
Wage Bill $ (700) Operating
Lease $ (24) Operating
Conferences $ (30) Operating
Marketing $ (75) Operating
Survey Expenses $ (5) Operating
Misc Office Expenses $ (5) Operating
Turnover Costs $ - Operating
Yearly Dues $ 2,163 Operating
$ 1,312
Office Equipment $ (10) Investment
$ (10)
$ 2,000
Income Statement Subtotal Profit
Interest $ (12)
Depreciation $ (1)
Lease $ (24)
Fixed Subtotal $ (37)
Wage Bill $ (700)
Conferences $ (30)
Survey Expenses $ (5)
Marketing $ (75)
Mis Office Expenses $ (5)
Turnover Costs $ -
Variable Subtotal $ (814)
Yearly Dues $ 2,163
Revenue Subtotal $ 2,163
Profit $ 1,311
mpliance Consulting Group
is scenario, we targeted only large and medium firms because those two markets represent more in membership dues. We're not targeting
keting budget isn't as large as it is in Scenario 3.
ellaneous office expenses and survey expenses are beginning to increase because the number of members is increasing. These will contin
embers increases.
oted before, there are a certain number of employees that you must start with. The model reflects those numbers. The numbers will increas
amount of money spend on conferences is still lower than scenario 3, but is increasing and will increase more as we target larger markets a
e still able to operate on the amount we spent on office equipment, but his will rise as employees and members increase.
Financial
Financial
Financial
Operating
Operating
Operating
Operating
Investment
Investment
Operating
Operating
Operating
Operating
Operating
Fixed $ 37
Variable $ 814
Revenue $ 2,163
Profit $ 1,311
s because those two markets represent more in membership dues. We're not targeting all markets yet because our
beginning to increase because the number of members is increasing. These will continue to increase as the number
es that you must start with. The model reflects those numbers. The numbers will increase as members increase.
r than scenario 3, but is increasing and will increase more as we target larger markets and enjoy higher profits.
ice equipment, but his will rise as employees and members increase.
Exogenous Variable Box (000s) Quantities Price, Pure #s Compliance Consulting Group
Money Available $ 100
Loan $ 200
Interest 0.06
Time Horizon 30
Year 1
Employees 3
Salary $ 300 $ 100
Attorneys 2
Salary $ 400 $ 200
Lease $ 24 12 $ 2
Office Equipment $ 10
Depreciation Rate $ 1 0.1
Turnover Costs 0 20
Conferences $ 30 5 $ 6
Survey Expenses $ 8
Marketing $ 100 $ 100
Misc. Office Expenses $ 8
Yearly Dues $ 3,100
Number of Members 1200
Small Firms $ 450 300 $ 2
Medium Firms $ 1,250 500 $ 3
Large Firms $ 1,400 400 $ 4
Ledger Cash Receivable Physical Assets Liabilities Net Worth
Start of the Year $ - $ - $ - $ - $ -
Money Available $ 100 $ 100
Loan $ 200 $ 200
Principal $ (3) $ (3)
Interest $ (12) $ (12)
Wage Bill (Attorney) $ (400) $ (400)
Wage Bill (Non-Attorney) $ (300) $ (300)
Lease $ (24) $ (24)
Office Equipment $ (10) $ 10
Depreciation $ (1) $ (1)
Turnover Costs $ - $ -
Conferences $ (30) $ (30)
Survey Expenses $ (8) $ (8)
Marketing $ (100) $ (100)
Misc. Office Expenses $ (8) $ (8)
Yearly Dues $ 3,100 $ 3,100
End of Year $ 2,505 $ - $ 9 $ (673) 3187
Assets= $ 2,514 Liabilities= $ 2,514
Balance Sheet
Cash $ 2,505
Receivable $ -
Physical Assets $ 9
Subtotal $ 2,514
Liabilities $ (673)
Net Worth $ 3,187
Subtotal $ 2,514
Cash Flow Cash Subtotal Total
Start of the Year $ -
Money Available $ 100 Financial
Loan $ 200 Financial
Principal $ (3) Financial
$ 297
Interest $ (12) Operating
Wage Bill $ (700) Operating
Lease $ (24) Operating
Conferences $ (30) Operating
Marketing $ (100) Operating
Survey Expenses $ (8) Operating
Misc Office Expenses $ (8) Operating
Turnover Costs $ - Operating
Yearly Dues $ 3,100 Operating
$ 2,218
Office Equipment $ (10) Investment
$ (10)
$ 2,505
Income Statement Subtotal Profit
Interest $ (12)
Depreciation $ (1)
Lease $ (24)
Fixed Subtotal $ (37)
Wage Bill $ (700)
Conferences $ (30)
Survey Expenses $ (8)
Marketing $ (100)
Mis Office Expenses $ (8)
Turnover Costs $ -
Variable Subtotal $ (846)
Yearly Dues $ 3,100
Revenue Subtotal $ 3,100
Profit $ 2,217
mpliance Consulting Group
During the last six years, I have served in several different capacities as a broker/dealer compliance person.
year as an interim CCO of two broker/dealers within a firm that had over $100 billion in assets under managem
that a day went by without us wondering how others were interpreting and implementing FINRA and SEC rule
Through web-based searches and through discussions with vendors at some of the largest compliance confe
U.S., I never found a solution for discovering what others were doing. Of course, there was always networkin
compliance folks aren’t always the most extroverted people and many times are reluctant to reach out for ass
of the fear that the other firm would tell FINRA what they were asking about.
Many consulting firms out there are willing to come in and review your procedures to give you their insight bas
interpretation of the rules, but you still weren’t able to tell how others in the industry were complying. They ma
knowledge based on what others were doing, but their fees were high and you only had access to them at the
the office. Once their contract is up, you don’t usually have access to them.
Because of our fear of asking others and our lack of network, we resorted to spending nearly $300 an hour on
Again, the best information we could get from them was their interpretation of the rules.
I decided one afternoon that a solution would be for all broker/dealers to have a forum where they could anon
the way they were complying with certain rules. It would give the b/ds a chance to discuss the results of their
exams, which would help others effectively comply with the rules.
Because there are rules mandating the retention of both incoming and outgoing correspondence, there would
anonymous surveys given to the members of the group through a web portal where they logged in to review r
questions. There are hundreds of survey firms out there that range anywhere from free to hundreds of thousa
would be reasonable to expect to pay approximately $10,000 for every 1500 members.
Before we get too far into expenses, it is important to note that the customer base for this business is limited t
broker/dealers registered with FINRA and the SEC. At this time, there are approximately 5,000 registered bro
Financial
Financial FINRA classifies the 5,000 broker/dealers into three categories. Small firms have from 1 to 150 registered pe
Financial firms have from 151 to 499 registered persons and large firms are those with more than 500 registered person
Operating able to find out how many firms are within each category, but this would obviously be imperative to properly p
Operating services.)
Operating
Operating Because most small firms have a small compliance budget, you would want to have lower prices for the small
Investment increase the price as you moved into the larger firms. In this model, small firms are charges $2,000 a year, w
Investment are charged $3,000 a year. Large firms would be charged $4,000 a year. This membership fee gives each fi
access to the database of questions already asked and gave them year
Operating
In terms of employees, I believe you would need at least two attorneys and 3 non
Operating
employees would need to have extensive industry experience and have a large network of friends in the indus
Operating believe this is a minimum, I have set the minimum in as at least 2 attorneys and 3 non
Operating customers. Once you have more than 1500 customers, you will notice that the number of attorneys and non
Operating increase.
The beginning salary for the non-attorneys will be $100,000 and the attorney salary will be $200,000. This wo
decrease in salary for most industry-
beginning salary until profits are high enough to increase their pay. You’ll notice in the models that once the
than $2,000,000, all employees receive a higher base salary. It would be my intent to hand out nice year
saving plenty of money to invest in new technology to attract even more customers.
This business model would not require a large initial investment in office space or equipment. Because custo
directly visit the office, we would set up in a small space with a lease of $1000 per month. Because the space
there are only a few employees, the miscellaneous office expenses, such as internet connections and utility b
minimal. Miscellaneous office costs are tied to the number of customers that would be served.
minimal. Miscellaneous office costs are tied to the number of customers that would be served.
Minimal office equipment would be needed, so I’ve budgeted approximately $10,000 in office equipment. Onc
employees increase, you will notice that the cost of office equipment goes up.
While the employees hired would have many contacts in the industry, it would still be important to spend at lea
marketing. This would include advertisements in trade magazines, conference space and web
up over $1,000,000, the amount spent on marketing will increase, as you see in this scenario.
It would be important to attend industry conferences, such as the FINRA Spring conference and the Pershing
conference. $6,000 per trip has been set aside for these conference visits. As the number of employees incr
increase, more conferences will be attended.
Fixed $ 37
Variable $ 846
Revenue $ 3,100
Profit $ 2,217
ars, I have served in several different capacities as a broker/dealer compliance person. I even spent one-
O of two broker/dealers within a firm that had over $100 billion in assets under management. It was rare
hout us wondering how others were interpreting and implementing FINRA and SEC rules.
earches and through discussions with vendors at some of the largest compliance conferences in the
solution for discovering what others were doing. Of course, there was always networking, but let’s face it,
’t always the most extroverted people and many times are reluctant to reach out for assistance because
er firm would tell FINRA what they were asking about.
out there are willing to come in and review your procedures to give you their insight based on their
les, but you still weren’t able to tell how others in the industry were complying. They may have had some
what others were doing, but their fees were high and you only had access to them at the time they were in
contract is up, you don’t usually have access to them.
f asking others and our lack of network, we resorted to spending nearly $300 an hour on outside counsel.
ation we could get from them was their interpretation of the rules.
on that a solution would be for all broker/dealers to have a forum where they could anonymously discuss
mplying with certain rules. It would give the b/ds a chance to discuss the results of their FINRA and SEC
elp others effectively comply with the rules.
es mandating the retention of both incoming and outgoing correspondence, there would need to be
iven to the members of the group through a web portal where they logged in to review results and ask
hundreds of survey firms out there that range anywhere from free to hundreds of thousands of dollars. It
o expect to pay approximately $10,000 for every 1500 members.
nto expenses, it is important to note that the customer base for this business is limited to the number of
red with FINRA and the SEC. At this time, there are approximately 5,000 registered broker/dealers.
5,000 broker/dealers into three categories. Small firms have from 1 to 150 registered persons. Medium
o 499 registered persons and large firms are those with more than 500 registered persons. (I haven’t been
any firms are within each category, but this would obviously be imperative to properly pricing these
rms have a small compliance budget, you would want to have lower prices for the small firms and would
you moved into the larger firms. In this model, small firms are charges $2,000 a year, while medium firms
year. Large firms would be charged $4,000 a year. This membership fee gives each firm year-round
e of questions already asked and gave them year-round opportunities to ask questions to the group.
s, I believe you would need at least two attorneys and 3 non-attorney employees. The majority of the
d to have extensive industry experience and have a large network of friends in the industry. Because I
um, I have set the minimum in as at least 2 attorneys and 3 non-attorneys until you reach over 1500
have more than 1500 customers, you will notice that the number of attorneys and non-attorneys will
-attorneys will be $100,000 and the attorney salary will be $200,000. This would be a
most industry-experienced individuals. The initial employees would have to be willing to take a low
profits are high enough to increase their pay. You’ll notice in the models that once the profits are higher
mployees receive a higher base salary. It would be my intent to hand out nice year-end bonuses, but
y to invest in new technology to attract even more customers.
would not require a large initial investment in office space or equipment. Because customers would not
, we would set up in a small space with a lease of $1000 per month. Because the space is small and
mployees, the miscellaneous office expenses, such as internet connections and utility bills would be
us office costs are tied to the number of customers that would be served.
us office costs are tied to the number of customers that would be served.
ent would be needed, so I’ve budgeted approximately $10,000 in office equipment. Once the number of
you will notice that the cost of office equipment goes up.
hired would have many contacts in the industry, it would still be important to spend at least $75,000 in
d include advertisements in trade magazines, conference space and web-based ads. Once the profits go
he amount spent on marketing will increase, as you see in this scenario.
to attend industry conferences, such as the FINRA Spring conference and the Pershing INSITE
er trip has been set aside for these conference visits. As the number of employees increase and profits
ences will be attended.
Exogenous Variable Box (000s) Quantities Price, Pure #s Compliance Consulting Group
Money Available $ 100
Loan $ 200
Interest 0.06
Time Horizon 30
Year 1
Employees 4
Salary $ 820 $ 200
Attorneys 3
Salary $ 1,093 $ 400
Lease $ 24 12 $ 2
Office Equipment $ 20
Depreciation Rate $ 2 0.1
Turnover Costs 20 20
Conferences $ 42 7 $ 6
Survey Expenses $ 14
Marketing $ 150 $ 150
Misc. Office Expenses $ 14
Yearly Dues $ 4,575
Number of Members 2050
Small Firms $ 1,500 1000 $ 2
Medium Firms $ 1,500 600 $ 3
Large Firms $ 1,575 450 $ 4
Ledger Cash Receivable Physical Assets Liabilities Net Worth
Start of the Year $ - $ - $ - $ - $ -
Money Available $ 100 $ 100
Loan $ 200 $ 200
Principal $ (3) $ (3)
Interest $ (12) $ (12)
Wage Bill (Attorney) $ (1,093) $ (1,093)
Wage Bill (Non-Attorney) $ (820) $ (820)
Lease $ (24) $ (24)
Office Equipment $ (20) $ 20
Depreciation $ (2) $ (2)
Turnover Costs $ (20) $ (20)
Conferences $ (42) $ (42)
Survey Expenses $ (14) $ (14)
Marketing $ (150) $ (150)
Misc. Office Expenses $ (14) $ (14)
Yearly Dues $ 4,575 $ 4,575
End of Year $ 2,664 $ - $ 18 $ (1,959) 4641
Assets= $ 2,682 Liabilities= $ 2,682
Balance Sheet
Cash $ 2,664
Receivable $ -
Physical Assets $ 18
Subtotal $ 2,682
Liabilities $ (1,959)
Net Worth $ 4,641
Subtotal $ 2,682
Cash Flow Cash Subtotal Total
Start of the Year $ -
Money Available $ 100 Financial
Loan $ 200 Financial
Principal $ (3) Financial
$ 297
Interest $ (12) Operating
Wage Bill $ (1,913) Operating
Lease $ (24) Operating
Conferences $ (42) Operating
Marketing $ (150) Operating
Survey Expenses $ (14) Operating
Misc Office Expenses $ (14) Operating
Turnover Costs $ (20) Operating
Yearly Dues $ 4,575 Operating
$ 2,386
Office Equipment $ (20) Investment
$ (20)
$ 2,664
Income Statement Subtotal Profit
Interest $ (12)
Depreciation $ (2)
Lease $ (24)
Fixed Subtotal $ (38)
Wage Bill $ (1,913)
Conferences $ (42)
Survey Expenses $ (14)
Marketing $ (150)
Mis Office Expenses $ (14)
Turnover Costs $ (20)
Variable Subtotal $ (2,153)
Yearly Dues $ 4,575
Revenue Subtotal $ 4,575
Profit $ 2,384
mpliance Consulting Group
In scenario 4, you'll see that the number of
employees has increased because the
number of members has increased.
You'll also notice that at this level of
profitability, we have increased the salary
of all employees. This will greatly increase
our total costs, but will be worth it to keep
turnover costs low and will also allow to
seamlessly handle member requests while
working to attract new members.
At this level, we'll also spend more money
on marketing and increase the number of
industry conferences that the firm will
attend.
We're getting closer to needing more space
and need to be prepared to move to a
larger space as the employees increase.
While we're not moving yet, we did notice
an increase in office equipment and survey
costs to accommodate more employees
and members. Of couse, miscellaneous
office expenses continue to increase as
Financial members and employees increase.
Financial
Financial We're likely able to attract more small firms
because it is more difficult for them to
Operating
gather this type of information on their own.
Operating
Their membership dues are half of what the
Operating large firms pay.
Operating
Investment We may need to think about whether it
Investment makes more sense to offer discounts of
some kind to the larger firms to attract more
Operating of them.
Operating
Operating
Operating
Operating
Fixed $ 38
Variable $ 2,153
Revenue $ 4,575
Profit $ 2,384
hat the number of
d because the
increased.
his level of
eased the salary
ill greatly increase
e worth it to keep
ill also allow to
ber requests while
end more money
se the number of
t the firm will
eeding more space
to move to a
oyees increase.
et, we did notice
pment and survey
ore employees
, miscellaneous
to increase as
s increase.
t more small firms
lt for them to
ation on their own.
are half of what the
out whether it
er discounts of
rms to attract more
Exogenous Variable Box (000s) Quantities Price, Pure #s Compliance Consulting Group
Money Available $ 100
Loan $ 200
Interest 0.06
Time Horizon 30
Year 1
Employees 6
Salary $ 1,120 $ 200
Attorneys 4
Salary $ 1,493 $ 400
Lease $ 36 12 $ 3
Office Equipment $ 20
Depreciation Rate $ 2 0.1
Turnover Costs 20 20
Conferences $ 42 7 $ 6
Survey Expenses $ 19
Marketing $ 150 $ 150
Misc. Office Expenses $ 19
Yearly Dues $ 6,200
Number of Members 2800
Small Firms $ 2,100 1400 $ 2
Medium Firms $ 2,000 800 $ 3
Large Firms $ 2,100 600 $ 4
Ledger Cash Receivable Physical Assets Liabilities Net Worth
Start of the Year $ - $ - $ - $ - $ -
Money Available $ 100 $ 100
Loan $ 200 $ 200
Principal $ (3) $ (3)
Interest $ (12) $ (12)
Wage Bill (Attorney) $ (1,493) $ (1,493)
Wage Bill (Non-Attorney) $ (1,120) $ (1,120)
Lease $ (36) $ (36)
Office Equipment $ (20) $ 20
Depreciation $ (2) $ (2)
Turnover Costs $ (20) $ (20)
Conferences $ (42) $ (42)
Survey Expenses $ (19) $ (19)
Marketing $ (150) $ (150)
Misc. Office Expenses $ (19) $ (19)
Yearly Dues $ 6,200 $ 6,200
End of Year $ 3,567 $ - $ 18 $ (2,681) 6266
Assets= $ 3,585 Liabilities= $ 3,585
Balance Sheet
Cash $ 3,567
Receivable $ -
Physical Assets $ 18
Subtotal $ 3,585
Liabilities $ (2,681)
Net Worth $ 6,266
Subtotal $ 3,585
Cash Flow Cash Subtotal Total
Start of the Year $ -
Money Available $ 100 Financial
Loan $ 200 Financial
Principal $ (3) Financial
$ 297
Interest $ (12) Operating
Wage Bill $ (2,613) Operating
Lease $ (36) Operating
Conferences $ (42) Operating
Marketing $ (150) Operating
Survey Expenses $ (19) Operating
Misc Office Expenses $ (19) Operating
Turnover Costs $ (20) Operating
Yearly Dues $ 6,200 Operating
$ 3,289
Office Equipment $ (20) Investment
$ (20)
$ 3,567
Income Statement Subtotal Profit
Interest $ (12)
Depreciation $ (2)
Lease $ (36)
Fixed Subtotal $ (50)
Wage Bill $ (2,613)
Conferences $ (42)
Survey Expenses $ (19)
Marketing $ (150)
Mis Office Expenses $ (19)
Turnover Costs $ (20)
Variable Subtotal $ (2,863)
Yearly Dues $ 6,200
Revenue Subtotal $ 6,200
Profit $ 3,287
mpliance Consulting Group
In this scenario, we still see an increase in large firms
despite the fact that we didn't decrease their membership
fees. However, we would still like to see an increase in
large firms, so we'll change their price in the next scenario.
The number of employees has grown to a point, that we
now need a bigger space, so you see an increase in the
lease.
As we've seen before, as the members and employees
increase, we see an increase in expenses, survey costs,
etc.
Financial
Financial
Financial
Operating
Operating
Operating
Operating
Investment
Investment
Operating
Operating
Operating
Operating
Operating
Fixed $ 50
Variable $ 2,863
Revenue $ 6,200
Profit $ 3,287
ee an increase in large firms
dn't decrease their membership
still like to see an increase in
ge their price in the next scenario.
s has grown to a point, that we
, so you see an increase in the
the members and employees
ase in expenses, survey costs,
Exogenous Variable Box (000s) Quantities Price, Pure #s Compliance Consulting Group
Money Available $ 100
Loan $ 200
Interest 0.06
Time Horizon 30
Year 1
Employees 8
Salary $ 1,520 $ 200
Attorneys 5
Salary $ 2,027 $ 400
Lease $ 36 12 $ 3
Office Equipment $ 30
Depreciation Rate $ 3 0.1
Turnover Costs 20 20
Conferences $ 84 7 $ 12
Survey Expenses $ 25
Marketing $ 250 $ 250
Misc. Office Expenses $ 25
Yearly Dues $ 8,350
Number of Members 3800
Small Firms $ 2,400 1600 $ 2
Medium Firms $ 3,250 1300 $ 3
Large Firms $ 2,700 900 $ 3
Ledger Cash Receivable Physical Assets Liabilities Net Worth
Start of the Year $ - $ - $ - $ - $ -
Money Available $ 100 $ 100
Loan $ 200 $ 200
Principal $ (3) $ (3)
Interest $ (12) $ (12)
Wage Bill (Attorney) $ (2,027) $ (2,027)
Wage Bill (Non-Attorney) $ (1,520) $ (1,520)
Lease $ (36) $ (36)
Office Equipment $ (30) $ 30
Depreciation $ (3) $ (3)
Turnover Costs $ (20) $ (20)
Conferences $ (84) $ (84)
Survey Expenses $ (25) $ (25)
Marketing $ (250) $ (250)
Misc. Office Expenses $ (25) $ (25)
Yearly Dues $ 8,350 $ 8,350
End of Year $ 4,618 $ - $ 27 $ (3,770) 8415
Assets= $ 4,645 Liabilities= $ 4,645
Balance Sheet
Cash $ 4,618
Receivable $ -
Physical Assets $ 27
Subtotal $ 4,645
Liabilities $ (3,770)
Net Worth $ 8,415
Subtotal $ 4,645
Cash Flow Cash Subtotal Total
Start of the Year $ -
Money Available $ 100 Financial
Loan $ 200 Financial
Principal $ (3) Financial
$ 297
Interest $ (12) Operating
Wage Bill $ (3,547) Operating
Lease $ (36) Operating
Conferences $ (84) Operating
Marketing $ (250) Operating
Survey Expenses $ (25) Operating
Misc Office Expenses $ (25) Operating
Turnover Costs $ (20) Operating
Yearly Dues $ 8,350 Operating
$ 4,351
Office Equipment $ (30) Investment
$ (30)
$ 4,618
Income Statement Subtotal Profit
Interest $ (12)
Depreciation $ (3)
Lease $ (36)
Fixed Subtotal $ (51)
Wage Bill $ (3,547)
Conferences $ (84)
Survey Expenses $ (25)
Marketing $ (250)
Mis Office Expenses $ (25)
Turnover Costs $ (20)
Variable Subtotal $ (3,951)
Yearly Dues $ 8,350
Revenue Subtotal $ 8,350
Profit $ 4,348
mpliance Consulting Group
In this scenario, we decided that by decreasing the
membership dues for our large firms, we can attract
more of them. By attracting more large firms, the small
and medium-sized firms might be more likely to join
because the compliance budgets for the large firms
allows them to hire more people and the small and
medium firms are more likely to "trust" the responses
from these firms.
In order to tout the number of large member firms, we've
increased the marketing budget to $250,000.
We've also increased the number of employees that will
attend the conferences and man the booths.
We've added another $10,000 in office equipment costs
to ensure that we are efficiently responding to the needs
of the customers.
At this point, the group would likely also look at different
survey tools to be sure they are using the best
technology. It's possible that $25,000 isn't enough for
us to remain keep our customers happy.
Financial
Financial
Financial
Operating
Operating
Operating
Operating
Investment
Investment
Operating
Operating
Operating
Operating
Operating
Fixed $ 51
Variable $ 3,951
Revenue $ 8,350
Profit $ 4,348
ecided that by decreasing the
our large firms, we can attract
acting more large firms, the small
ms might be more likely to join
nce budgets for the large firms
ore people and the small and
re likely to "trust" the responses
mber of large member firms, we've
ng budget to $250,000.
the number of employees that will
es and man the booths.
$10,000 in office equipment costs
efficiently responding to the needs
p would likely also look at different
e they are using the best
ble that $25,000 isn't enough for
r customers happy.
Scenarios 0 1 2 3 4 5 6
customers 0 380 695 1200 2050 2800 3800
variable 0 804 814 846 2153 2863 3951
fixed 37 37 37 37 38 50 51
revenue 0 1220 2163 3100 4575 6200 8350
profit 37 379 1311 2217 2384 3287 4348
total cost 37 841 851 $ 883 2191 2913 4002
average profit 1.00 1.89 1.85 1.16 1.17 1.14
average revenue 3.21 3.11 2.58 2.23 2.21 2.20
average variable cost 2.12 1.17 0.71 1.05 1.02 1.04
average total cost 2.21 1.22 0.74 1.07 1.04 1.05
marginal revenue 3.21 2.99 1.86 1.74 2.17 2.15
marginal cost 2.12 0.032 0.063 1.54 0.96 1.09
3.5
3
2.5
average revenue
2 average variable cost
average total cost
1.5 marginal revenue
marginal cost
1
0.5
0
0 380 695 1200 2050 2800 3800
8350 Revenue maximizing output
37
1.89 Average profit is maximized here. this is where most businesses target.
PRICE
minimum of avg variable cost exit.
0.71 If the price falls below the minimum variable cost, I would shut down, but notmarks the shutdown point
0.74 Greatest efficiency of production. Efficiency, cost effectiveness is the minimum of the average cost curv
how are we doing for next set of customers
MR=MC=profit maximization
Diff in s1 and S2/dif in s1 in quantity - s2
A.) My firm is a monopoly. A monopoly's product slopes downward and
price is greater than marginal revenue. It appears that in my model that if
I hadn't change the price of the larger firms, the marginal revenue would
have crossed over the price curve. What does that mean?
I also know I am a monopoly because I am familiar with the market and
know that there are no other firms like this.
B.) N/A
average revenue C.) It's difficult to tell if my business will be viable in the long-run. There
average variable cost are only 5,000 possible customers in my market. Because of the large
profits, I believe others would try to enter the market. Also, there are not
average total cost
many barriers to entry - other than the fact that it may be tough to find
marginal revenue highly educated, highly connected compliance personnel to hire. The
marginal cost overhead is low and there are plenty of options for the technology.
D.) As said above, the large profits would attract others. In order to
differentiate yourself, I believe you would have to have unbelievable
relationships with the members. They would have to trust you more than
anyone else. Additionally, I believe you could differentiate yourself by
getting an endorsement from FINRA. My group would actually benefit
FINRA because it would be helping firms to become more compliant
through their communication with each other. We could work with FINRA
to have them attend on-line conferences to discuss certain hot topics. By
helping them, they could help the firm by providing them with an
endorsement. This would greatly differentiate our firm from others.
E.) Of course, I would want to operate where my total costs are the least,
but in my market, I believe you can still be profitable without working
where the costs are less. You would want to spend more money on things
like surveys and other technology to keep attracting members. This would
increase total costs, but would pay off when you increased memberships.
F.) I would not want to "produce" at my profit-maximizing scenario
because there are still too many customers within my market that need to
be contracted with.
G.) I learned a lot about determining the long-run viability of any business I
am setting up.
I hadn't thought about what would happen when competition entered a
market with a limited number of customers. I underestimated the need to
have very knowledgeable and well-connected employees. It's the
knowledge of your employees and their contacts within the industry that
will set you apart from the competition.
It also serves as a barrier-to-entry. There are not a lot of highly-
It also serves as a barrier-to-entry. There are not a lot of highly-
knowledgeable individuals that would be interested in leaving a firm that
likely pays more than what my firm offers.
In the end, I hadn't really thought about what I would do if the firm maxed
out in terms of customers. If there are no more customers left, what do
you do?
In my case, I've been thinking that you might offer other information-
sharing programs, such as broker/dealer technology. The technology that
a broker/dealer offers their reps is very important in attracting new recruits
and retaining current reps. I'm thinking that the firm could offer packages,
with different membership dues that allows for different types of
information-sharing.
By breaking down the market into sectors, I was able to better understand
how I should price. In the end, I realized that having large firms in the
group would actually build the firm's credibility in the industry and would
attract more small firms. This caused me to eventually give the large firms
a discount, which would allow me to attract more of them.
I also learned that in a market where others are likely to enter, I must not
overextend myself or hire too many people.
arks the shutdown point
he minimum of the average cost curve.
Exogenous Variable Box (000s) Quantities Price, Pure #s Compliance Consulting Group
Money Available $ 100 0 $ -
Loan $ 200 0 $ - In this scenario, I targeted only large
Interest $ - 0 $ 0 is still reduced because we haven't re
Time Horizon $ - 0 $ 30 Miscellaneous office expenses and s
Year $ - 0 $ 2 continue to increase as the number o
Employees $ - 3 $ - As noted before, there are a certain n
Salary $ 300 0 $ 100 increase as members increase.
Attorneys $ - 2 $ - The amount of money spend on con
Salary $ 400 0 $ 200 markets and enjoy higher profits.
Lease $ 24 12 $ 2 We're still able to operate on the am
Office Equipment $ 10 0 $ -
Depreciation Rate $ 1 0 $ 0.1000 year 2 more equipment
Turnover Costs $ - 0 $ 20
Conferences $ 24 4 $ 6 year 4 hire 4 employe
Survey Expenses $ 3 0 $ - year7 plant
Marketing $ 75 0 $ 75
Misc. Office Expenses $ 3 0 $ -
Yearly Dues $ 1,364 0 $ -
Number of Members 429 $ -
Small Firms $ 59 39 $ 2
Medium Firms $ 150 60 $ 3
Large Firms $ 1,155 330 $ 4
Ledger Cash Receivable Physical Assets Liabilities Net Worth
Start of the Year $ 667 $ - $ 9 $ (631) $ 1,307
Money Available
Loan
Principal $ (3) $ (3)
Interest $ (12) $ (12)
Wage Bill (Attorney) $ (400) $ (400)
Wage Bill (Non-Attorney) $ (300) $ (300)
Lease $ (24) $ (24)
Office Equipment $ (50) $ 50
Depreciation $ (11) $ (11)
Turnover Costs $ - $ -
Conferences $ (24) $ (24)
Survey Expenses $ (3) $ (3)
Marketing $ (75) $ (75)
Misc. Office Expenses $ (3) $ (3)
Yearly Dues $ 1,364 $ 1,364
End of Year $ 1,138 $ - $ 48 $ (1,461) $ 2,648
Assets= $ 1,186 Liabilities= $ 1,186
Balance Sheet
Cash $ 1,138
Receivable $ -
Physical Assets $ 48
Subtotal $ 1,186
Liabilities $ (1,461)
Net Worth $ 2,648
Subtotal $ 1,186
Cash Flow Cash Subtotal Total
Start of the Year $ 667.40
Money Available $ - Financial
Loan $ - Financial
Principal $ (3) Financial
$ 665
Interest $ (12) Operating
Wage Bill $ (700) Operating
Lease $ (24) Operating
Conferences $ (24) Operating
Marketing $ (75) Operating
Survey Expenses $ (3) Operating
Misc Office Expenses $ (3) Operating
Turnover Costs $ - Operating
Yearly Dues $ 1,364 Operating
$ 524
Office Equipment $ (50) Investment
$ (50)
$ 1,138
Income Statement Subtotal Profit
Interest $ (12)
Depreciation $ (11)
Lease $ (24)
Fixed Subtotal $ (47)
Wage Bill $ (700)
Conferences $ (24)
Survey Expenses $ (3)
Marketing $ (75)
Mis Office Expenses $ (3)
Turnover Costs $ -
Variable Subtotal $ (804)
Yearly Dues $ 1,364
Revenue Subtotal $ 1,364
Profit $ 513
mpliance Consulting Group
s scenario, I targeted only large firms because I receive the most money in membership dues from this market. The marketing budget
reduced because we haven't reached the profitability in scenario 3.
ellaneous office expenses and survey expenses are beginning to increase because the number of members is increasing. These will
nue to increase as the number of members increases.
oted before, there are a certain number of employees that you must start with. The model reflects those numbers. The numbers will
ase as members increase.
amount of money spend on conferences is still lower than scenario 3, but is increasing and will increase more as we target larger
ets and enjoy higher profits.
e still able to operate on the amount we spent on office equipment, but his will rise as employees and members increase.
50 0.2
Financial
Financial
Financial
Operating
Operating
Operating
Operating
Investment
Investment
Operating
Operating
Operating
Operating
Operating
Fixed $ 47
Variable $ 804
Revenue $ 1,364
Profit $ 513
ive the most money in membership dues from this market. The marketing budget
y in scenario 3.
beginning to increase because the number of members is increasing. These will
s.
s that you must start with. The model reflects those numbers. The numbers will
than scenario 3, but is increasing and will increase more as we target larger
ce equipment, but his will rise as employees and members increase.
Exogenous Variable Box (000s) Quantities Price, Pure #s Compliance Consulting Group
Money Available $ 100 $ - $ -
Loan $ 200 $ - $ - In this scenario, I targeted only large
Interest $ - $ - $ 0 is still reduced because we haven't re
Time Horizon $ - $ - $ 30 Miscellaneous office expenses and s
Year $ - $ - $ 3 continue to increase as the number o
Employees $ - $ 3 $ - As noted before, there are a certain n
Salary $ 300 $ - $ 100 increase as members increase.
Attorneys $ - $ 2 $ - The amount of money spend on con
Salary $ 400 $ - $ 200 markets and enjoy higher profits.
Lease $ 24 $ 12 $ 2 We're still able to operate on the am
Office Equipment $ 10 $ - $ -
Depreciation Rate $ 1 $ - $ 0.1000 year 2 more equipment
Turnover Costs $ - $ - $ 20
Conferences $ 24 $ 4 $ 6 year 4 hire 4 employe
Survey Expenses $ 3 $ - $ - year7 plant
Marketing $ 75 $ - $ 75
Misc. Office Expenses $ 3 $ - $ -
Yearly Dues $ 1,527 $ - $ -
Number of Members 486 $ -
Small Firms $ 76 51 $ 2
Medium Firms $ 180 72 $ 3
Large Firms $ 1,271 363 $ 4
Ledger Cash Receivable Physical Assets Liabilities Net Worth
Start of the Year $ 1,138 $ - $ 48 $ (1,461) $ 2,648
Money Available
Loan
Principal $ (3) $ (3)
Interest $ (12) $ (12)
Wage Bill (Attorney) $ (400) $ (400)
Wage Bill (Non-Attorney) $ (300) $ (300)
Lease $ (24) $ (24)
Office Equipment
Depreciation $ (11) $ (11)
Turnover Costs $ - $ -
Conferences $ (24) $ (24)
Survey Expenses $ (3) $ (3)
Marketing $ (75) $ (75)
Misc. Office Expenses $ (3) $ (3)
Yearly Dues $ 1,527 $ 1,527
End of Year $ 1,822 $ - $ 37 $ (2,292) $ 4,152
Assets= $ 1,859 Liabilities= $ 1,859
Balance Sheet
Cash $ 1,822
Receivable $ -
Physical Assets $ 37
Subtotal $ 1,859
Liabilities $ (2,292)
Net Worth $ 4,152
Subtotal $ 1,859
Cash Flow Cash Subtotal Total
Start of the Year $ 1,138.31
Money Available $ - Financial
Loan $ - Financial
Principal $ (3) Financial
$ 1,135
Interest $ (12) Operating
Wage Bill $ (700) Operating
Lease $ (24) Operating
Conferences $ (24) Operating
Marketing $ (75) Operating
Survey Expenses $ (3) Operating
Misc Office Expenses $ (3) Operating
Turnover Costs $ - Operating
Yearly Dues $ 1,527 Operating
$ 687
Office Equipment $ - Investment
$ -
$ 1,822
Income Statement Subtotal Profit
Interest $ (12)
Depreciation $ (11)
Lease $ (24)
Fixed Subtotal $ (47)
Wage Bill $ (700)
Conferences $ (24)
Survey Expenses $ (3)
Marketing $ (75)
Mis Office Expenses $ (3)
Turnover Costs $ -
Variable Subtotal $ (804)
Yearly Dues $ 1,527
Revenue Subtotal $ 1,527
Profit $ 676
mpliance Consulting Group
s scenario, I targeted only large firms because I receive the most money in membership dues from this market. The marketing budget
reduced because we haven't reached the profitability in scenario 3.
ellaneous office expenses and survey expenses are beginning to increase because the number of members is increasing. These will
nue to increase as the number of members increases.
oted before, there are a certain number of employees that you must start with. The model reflects those numbers. The numbers will
ase as members increase.
amount of money spend on conferences is still lower than scenario 3, but is increasing and will increase more as we target larger
ets and enjoy higher profits.
e still able to operate on the amount we spent on office equipment, but his will rise as employees and members increase.
50 0.2
Financial
Financial
Financial
Operating
Operating
Operating
Operating
Investment
Investment
Operating
Operating
Operating
Operating
Operating
Fixed $ 47
Variable $ 804
Revenue $ 1,527
Profit $ 676
ive the most money in membership dues from this market. The marketing budget
y in scenario 3.
beginning to increase because the number of members is increasing. These will
s.
s that you must start with. The model reflects those numbers. The numbers will
than scenario 3, but is increasing and will increase more as we target larger
ce equipment, but his will rise as employees and members increase.
Exogenous Variable Box (000s) Quantities Price, Pure #s Compliance Consulting Group
Money Available $ 100 $ - $ -
Loan $ 200 $ - $ - In this scenario, I targeted only large
Interest $ - $ - $ 0 is still reduced because we haven't re
Time Horizon $ - $ - $ 30 Miscellaneous office expenses and s
Year $ - $ - $ 4 continue to increase as the number o
Employees $ - $ 3 $ - As noted before, there are a certain n
Salary $ 300 $ - $ 100 increase as members increase.
Attorneys $ - $ 2 $ - The amount of money spend on con
Salary $ 400 $ - $ 200 markets and enjoy higher profits.
Lease $ 24 $ 12 $ 2 We're still able to operate on the am
Office Equipment $ 10 $ - $ -
Depreciation Rate $ 1 $ - $ 0.1000 year 2 more equipment
Turnover Costs $ - $ - $ 20
Conferences $ 24 $ 4 $ 6 year 4 hire 4 employe
Survey Expenses $ 3 $ - $ - year7 plant
Marketing $ 75 $ - $ 75
Misc. Office Expenses $ 3 $ - $ -
Yearly Dues $ 1,712 $ - $ -
Number of Members 552 $ -
Small Firms $ 99 66 $ 2
Medium Firms $ 216 86 $ 3
Large Firms $ 1,398 399 $ 4
Ledger Cash Receivable Physical Assets Liabilities Net Worth
Start of the Year $ 1,822 $ - $ 37 $ (2,292) $ 4,152
Money Available
Loan
Principal $ (3) $ (3)
Interest $ (12) $ (12)
Wage Bill (Attorney) $ (400) $ (400)
Wage Bill (Non-Attorney) $ (700) $ (700)
Lease $ (24) $ (24)
Office Equipment
Depreciation $ (11) $ (11)
Turnover Costs $ - $ -
Conferences $ (24) $ (24)
Survey Expenses $ (3) $ (3)
Marketing $ (75) $ (75)
Misc. Office Expenses $ (3) $ (3)
Yearly Dues $ 1,712 $ 1,712
End of Year $ 2,292 $ - $ 26 $ (3,523) $ 5,841
Assets= $ 2,318 Liabilities= $ 2,318
Balance Sheet
Cash $ 2,292
Receivable $ -
Physical Assets $ 26
Subtotal $ 2,318
Liabilities $ (3,523)
Net Worth $ 5,841
Subtotal $ 2,318
Cash Flow Cash Subtotal Total
Start of the Year $ 1,822.26
Money Available $ - Financial
Loan $ - Financial
Principal $ (3) Financial
$ 1,819
Interest $ (12) Operating
Wage Bill $ (1,100) Operating
Lease $ (24) Operating
Conferences $ (24) Operating
Marketing $ (75) Operating
Survey Expenses $ (3) Operating
Misc Office Expenses $ (3) Operating
Turnover Costs $ - Operating
Yearly Dues $ 1,712 Operating
$ 473
Office Equipment $ - Investment
$ -
$ 2,292
Income Statement Subtotal Profit
Interest $ (12)
Depreciation $ (11)
Lease $ (24)
Fixed Subtotal $ (47)
Wage Bill $ (1,100)
Conferences $ (24)
Survey Expenses $ (3)
Marketing $ (75)
Mis Office Expenses $ (3)
Turnover Costs $ -
Variable Subtotal $ (1,204)
Yearly Dues $ 1,712
Revenue Subtotal $ 1,712
Profit $ 462
mpliance Consulting Group
s scenario, I targeted only large firms because I receive the most money in membership dues from this market. The marketing budget
reduced because we haven't reached the profitability in scenario 3.
ellaneous office expenses and survey expenses are beginning to increase because the number of members is increasing. These will
nue to increase as the number of members increases.
oted before, there are a certain number of employees that you must start with. The model reflects those numbers. The numbers will
ase as members increase.
amount of money spend on conferences is still lower than scenario 3, but is increasing and will increase more as we target larger
ets and enjoy higher profits.
e still able to operate on the amount we spent on office equipment, but his will rise as employees and members increase.
50 0.2
400 100 4
Financial
Financial
Financial
Operating
Operating
Operating
Operating
Investment
Investment
Operating
Operating
Operating
Operating
Operating
Fixed $ 47
Variable $ 1,204
Revenue $ 1,712
Profit $ 462
ive the most money in membership dues from this market. The marketing budget
y in scenario 3.
beginning to increase because the number of members is increasing. These will
s.
s that you must start with. The model reflects those numbers. The numbers will
than scenario 3, but is increasing and will increase more as we target larger
ce equipment, but his will rise as employees and members increase.
Exogenous Variable Box (000s) Quantities Price, Pure #s Compliance Consulting Group
Money Available $ 100 $ - $ -
Loan $ 200 $ - $ - In this scenario, I targeted only large
Interest $ - $ - $ 0 is still reduced because we haven't re
Time Horizon $ - $ - $ 30 Miscellaneous office expenses and s
Year $ - $ - $ 5 continue to increase as the number o
Employees $ - $ 3 $ - As noted before, there are a certain n
Salary $ 300 $ - $ 100 increase as members increase.
Attorneys $ - $ 2 $ - The amount of money spend on con
Salary $ 400 $ - $ 200 markets and enjoy higher profits.
Lease $ 24 $ 12 $ 2 We're still able to operate on the am
Office Equipment $ 10 $ - $ -
Depreciation Rate $ 1 $ - $ 0.1000 year 2 more equipment
Turnover Costs $ - $ - $ 20
Conferences $ 24 $ 4 $ 6 year 4 hire 4 employe
Survey Expenses $ 3 $ - $ - year7 plant
Marketing $ 75 $ - $ 75
Misc. Office Expenses $ 3 $ - $ -
Yearly Dues $ 1,925 $ - $ -
Number of Members 629 $ -
Small Firms $ 129 86 $ 2
Medium Firms $ 259 104 $ 3
Large Firms $ 1,537 439 $ 4
Ledger Cash Receivable Physical Assets Liabilities Net Worth
Start of the Year $ 2,292 $ - $ 26 $ (3,523) $ 5,841
Money Available
Loan
Principal $ (3) $ (3)
Interest $ (11) $ (11)
Wage Bill (Attorney) $ (400) $ (400)
Wage Bill (Non-Attorney) $ (700) $ (700)
Lease $ (24) $ (24)
Office Equipment
Depreciation $ (11) $ (11)
Turnover Costs $ - $ -
Conferences $ (24) $ (24)
Survey Expenses $ (3) $ (3)
Marketing $ (75) $ (75)
Misc. Office Expenses $ (3) $ (3)
Yearly Dues $ 1,925 $ 1,925
End of Year $ 2,975 $ - $ 15 $ (4,755) $ 7,744
Assets= $ 2,990 Liabilities= $ 2,990
Balance Sheet
Cash $ 2,975
Receivable $ -
Physical Assets $ 15
Subtotal $ 2,990
Liabilities $ (4,755)
Net Worth $ 7,744
Subtotal $ 2,990
Cash Flow Cash Subtotal Total
Start of the Year $ 2,292.08
Money Available $ - Financial
Loan $ - Financial
Principal $ (3) Financial
$ 2,289
Interest $ (11) Operating
Wage Bill $ (1,100) Operating
Lease $ (24) Operating
Conferences $ (24) Operating
Marketing $ (75) Operating
Survey Expenses $ (3) Operating
Misc Office Expenses $ (3) Operating
Turnover Costs $ - Operating
Yearly Dues $ 1,925 Operating
$ 686
Office Equipment $ - Investment
$ -
$ 2,975
Income Statement Subtotal Profit
Interest $ (11)
Depreciation $ (11)
Lease $ (24)
Fixed Subtotal $ (46)
Wage Bill $ (1,100)
Conferences $ (24)
Survey Expenses $ (3)
Marketing $ (75)
Mis Office Expenses $ (3)
Turnover Costs $ -
Variable Subtotal $ (1,204)
Yearly Dues $ 1,925
Revenue Subtotal $ 1,925
Profit $ 675
mpliance Consulting Group
s scenario, I targeted only large firms because I receive the most money in membership dues from this market. The marketing budget
reduced because we haven't reached the profitability in scenario 3.
ellaneous office expenses and survey expenses are beginning to increase because the number of members is increasing. These will
nue to increase as the number of members increases.
oted before, there are a certain number of employees that you must start with. The model reflects those numbers. The numbers will
ase as members increase.
amount of money spend on conferences is still lower than scenario 3, but is increasing and will increase more as we target larger
ets and enjoy higher profits.
e still able to operate on the amount we spent on office equipment, but his will rise as employees and members increase.
50 0.2
400 100 4
Financial
Financial
Financial
Operating
Operating
Operating
Operating
Investment
Investment
Operating
Operating
Operating
Operating
Operating
Fixed $ 46
Variable $ 1,204
Revenue $ 1,925
Profit $ 675
ive the most money in membership dues from this market. The marketing budget
y in scenario 3.
beginning to increase because the number of members is increasing. These will
s.
s that you must start with. The model reflects those numbers. The numbers will
than scenario 3, but is increasing and will increase more as we target larger
ce equipment, but his will rise as employees and members increase.
year 1 2 3 4 5
quantity 380 429 486 552 629 2500
revenues 1220 1363.5 1526.55 1712.415 1925.03 profit, revenue, and c
costs 841.0667 850.9149 850.754 1250.583 1250.403
profit 378.9333 512.5851 675.796 461.8316 674.6268 2000
av profit 0.997193 1.194837 1.391386 0.837243 1.073233
cash 667 1138 1822 2292 2975
1500
$/year
1000
500
0
1 2 3
Year
av profit
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1 2 3
revenue, and costs
revenues
costs
profit
4 5
av profit
3 4 5
Related docs
Other docs by ypt17268
Discuss the Impact of Flexibility on the Management of Human Resource in Firms
Views: 55 | Downloads: 1
Discuss the Fundamental Liberties Guaranteed in Federal Constitution in Malaysia
Views: 38 | Downloads: 0
