Business plan

VR Legal Consulting incorporating business brokering BUSINESS PLAN PRESENTATION CONTENTS • • • • • • • • • • • • • • Executive Summary Mission Statement Our Services Our Prices Competition Our Team Market Analysis Opportunities and Threats Marketing Plan Operational plan Goals and Objectives Financial Plan Resources Requirements Appendices Executive Summary • • • VR Legal Consulting incorporating business brokering will commence operations on 1 March 2010 (preferably 1 Jan 2010) to coincide with the tax year. This business is a culmination of many years of study (full and part-time collective of 7 years) and 15 years of experience in the legal and business sectors. It provides those services which have been identified as lacking in quality-skills, coherence, access and affordability in a competition-deficient business sector. This business will trade as a sole proprietorship as this form best suits our current staff complement and has no cumbersome formalities. Should a “conversion” to a close corporation (alternative preferred form) become necessary then this transition will be done speedily without any negative impact on the core business. This business will be run from an home-based office for at least 2 years and through the utilization of personal resources for at least the first 6 months of operations. This format will cause maximum savings in costs and it will encourage growth of this business. This business plan has multiple purposes. It is intended to: 1. to determine the feasibility and viability of starting this business; 2. to plan, track and implement the creation and commencement; 3. to set clearly defined revenue, market share, staffing goals; 4. to determine the amount and sources of finance; 5. to monitor progress, identify problems and implement corrective responses; 6. to serve as a basis for future comparative analyses of performance. This business plan will be subject to continuous review, amendment and refinement. • • • Mission Statement Our Mission is to continuously engage and recruit SME’s to use our excellence based customer –oriented legal consulting and business brokering services with a view to forging and maintaining membership or partnerships in a developing network of clients whom are assured of the best possible results for their needs. Our Vision is to provide a comprehensive legal consulting and business brokering solutions for an established network of small to medium sized profitable enterprises. OUR SERVICES • • • • We are a sole proprietary practice servicing Durban and surrounding areas. Our core business with regard to legal consulting is drafting and vetting of business contracts and business documentation. Our core business with regard to business brokering is the facilitation of sales and purchases of businesses, preferably SMME’s. We also offer incidental business brokerage services such as Valuations, Business plans, BEE structuring and advice, and franchising support. OUR PRICES • • • • • Legal consulting and business brokering support services are provided at an hourly rate, derived from the rate payable on the open market for the qualifications, skills and experience possessed by ourselves – R1000,00 per hour. However, in order to break into the specialist business brokering market and be competitive our fees are set at between R600,00-R800,00 per hour. Prior agreement on fees to be charged is available but is reserved for deserving circumstances. Commission is charged for sales of businesses at the industry standard of 8-10 % of the gross selling price. Variations will be agreed to depending upon the size and price of the business involved in relation to the quantity and quality of extraordinary services that are to be provided. Fees and commissions are payable in cash. Credit is unusual for this type of business but will be available in exceptional cases in return for payment of interest, equity or profit share. • Competition • Competition: There are no (zero) listed specialist business brokers in our immediate area of operation (Chatsworth) and just 4 listed in our market region (Durban and surrounds). They do not appear to be of a sufficient size to service the available market nor do they appear to be the recipients of structured education and training in this field. The impression given is that the business brokering services provided are ad hoc, fragmented and is a fraction of the full range of the business brokering services that should be provided. With regard to business legal consulting there are a number of attorneys but none of them in Chatsworth provide business legal services. Those providing such legal services in Durban form part of large firms whom are expensive, rigid, impersonal, not easily accessible and are limited by business hours. Qualified specialist staff providing high-quality service; Network support to guarantee professionalism and efficiency; Access to professionals, business people and organizations to gain and retain market share; Capacity to provide a wide range of business solutions; Giving clients personal attention and keeping promises. New entrant into market. Associated risks minimized through network support and membership.; Limited start-up capacity. Capacity will be expanded as targets are met. • Our competitive advantage: • • • • • • • • Our weaknesses: Our Team • We are currently a sole practitionership staffed and managed by Vivendra (Viven) Rajoo, who holds BCom and LLB degrees from the University of Natal, Durban obtained in 1992 and 1994 respectively. He also holds professional qualifications in the legal field, first as an Attorney (1995) and then since 1997 as an Advocate of the High Court of South Africa. He has also been involved in business legal consulting over these years. He is a notable achiever in his profession. He currently also sits as a part-time Military Court Judge in the SANDF. Viven Rajoo is also a qualified and accredited business broker through the distinguished Business Brokerage Coach network, and is a member thereof. Through this network over 20 years of business brokering expertise is accessed for the ultimate best results for our clients. Our broker’s credentials in conjunction with his network membership is in itself an edge over competing business brokers. • • Market Analysis • Approximately 180 000 small businesses are sold on the open market annually at an average selling price of R650 000,00. It is therefore fair and reasonable to deduce that a sizeable fraction of these businesses are located in and around the major cities. Nevertheless, even on an extremely conservative assumption that 0,5% of these sales emanated from Durban and surrounding areas, then approximately 900 small businesses are on sale annually in Durban and surrounding areas. This is a sizeable market considering the number of qualified specialist business brokers servicing the region.xxxxxxxxxput stats and details!!! With sales commissions averaging 7-10% (R55 000,00-R80 000,00) per sale the average annual gross commission income by sole practitioners is R410 000,00 based upon 5 sales per year. Majority (65%) of sole practitioners earn in excess of R700 000,00 per annum. Further income on support services (valuations and advice) is estimated at an average of R50 000,00 per annum per practitioner. It is clear from these statistics, courtesy of the Business Brokerage Network, that a sizeable under-serviced market exists with high income potential. It is not envisaged that there will be any significant changes in these statistics. In fact, an increase in brokerage activity is predicted for South Africa and the African continent! • • • Opportunities • • There are a large number of SME’s available for sale annually but there is a substantially disproportionate number of specialist brokers servicing these sales which compromises service delivery, quality and costs. A quality new entrant will thrive in this environment. Threats • • These are external economic factors that are beyond our control and which affects all indiscriminately. It is anticipated that we have seen the worst of the current economic recession and an upswing is on the horizon in the short-term. This will have a positive impact on access to finance and business brokering. Marketing Plan Our target market: The established and emerging SMME’s in my immediate area of operation (Chatsworth), expanding radially outwards. It is roughly estimated that there are over 250 SMME’s within a 5km radius of our office location. Promotion: • • • • • • Personal letters and/or e-mails to owners and acquainted professionals; Frequent advertising in local and regional newspapers; Pamphlet distribution of opening; Advertising in religious organizations’ festivals brochures; Word-of-mouth. Distribution channels are generally irrelevant to this business. To the extent that it is relevant, we intend listing sale/purchases on the network listing service prior to our own marketing efforts. This could result in huge savings in marketing costs. Our marketing goal: to tap into, capture and retain 50% of our target market. • Operational Plan • • • • Our location for the formative 2 years of this business will be a fully equipped home-office. This is intended to cause savings in start-up and operating expenses. It is also convenient and accessible to our immediate target market. “Outside” clients will be given user-friendly directions charts to facilitate easy access. Irregular personal interaction, alternative modes of communication and existence of transport does not make this business too sensitive to location. Goals and Objectives • • • • • Short-term goals: Finalize minimum of 5 sales per year; Minimum turnover of R500 000,00 per annum; Capture and retain significant portion of target market; Build capacity to handle larger sales volumes. • • • • • • Long-term goals: Established client base; Finalize minimum of 10 sales per annum; Trained and skilled staff to handle any deal; Minimum turnover of R1million per annum; Business occupying premises it owns. Financial Plan • Estimated start-up capital. Only strictly necessary items are considered. Budgeted/forecast income statement • This also serves as cash flow indicator. Opening day balance sheet • • Finance needs for capital expenditure and operating expenses for 6 months. Computations/permutations: External office without use of personal resources = R107 200 External office with use of personal resources = R105 200 Home office without use of personal resources = R 80 200 Home office with use of personal resources = R80 200 Resource Requirements • • • • • Personnel – initial staff complement of 1.Trainee broker/s and a secretary/personal assistant will be recruited after at least 6 months of operations when its efficacy will become clear. Informal sourcing in progress. Technology – Computer and printer (preferably 1x desktop and 1x laptop) E-mail – ideally secure internet service provider email but at start-up free (reasonably secure) services will suffice. Internet: absolute necessity for sending/receiving e-mails and research. Wireless preferred to ADSL – cheaper and sufficient capacity to serve needs. Fax: not too important. Fax to e-mail will suffice for receiving. Cellphone – a must; telephone – preferred for office (Telkom vs. Neotel products and prices) Finances – Current business banking account Accounting/book-keeping; do self using software (pastel/quickbooks) Cash (owner’s equity)/bank loan (collateral – equity, bond, sureties) Investor funding; personally undesirable Promotion – Logo and letterhead design Promotional letters; direct mailing Pamphlets and flyers Advertisements in newspapers Draft samples for each purpose Services – Office infrastructure and equipment Operating capital for first 6 months Motor vehicle Office signage Appendices 1. 2. 3. 4. 5. 6. 7. 8. Practitioner’s and employees’ curriculum vitae Copy of I.D.’s Market research with annexures of different sources List and details of strategic partners/alliances/associates Franchise agreement and details Network details and financials List of security/collateral available with documentary proof annexures Quotations of assets requiring financing