Business Plan Outline
XYZ cleaning company is a business venture that is to start its operations in the year 2013 in London. The business is to be set with an aim to deliver quality and satisfactory cleaning services to clients. Its services target private property owners who provide student accommodation services. The company is set to start operating under a sole proprietorship. As a small business venture, the proprietor is to employ a start-up capital amounting to $10,000. This is to manage its initial plans and activities that will expand with time. The capital is to cater for purchasing basic cleaning equipment that is essential for the initiation of the business. This will give an estimated profit margin of $90,000 in the first year followed by $100,000 and $120,000 in the subsequent years.
XYZ Corporation is to be a residential cleaning service provider that operates in London. It seeks to offer cleaning services in the student accommodation halls to enhance their hygiene standards. The company will deliver its services at a favorable rate or premium in consideration of the client’s financial capacity. This is to enable students and low-income property owners to hire the offered services with limited reservations. The business is to operate under a leaner organizational structure with one center of authority. It will have three staff members who include the owner and two assisting members. Due to the company’s limited capacity, it plans to outsource the resources that are not in its possession. The company is to adopt viable marketing strategies to expand its market share and competitiveness. It will also employ an effective market positioning strategy. The initiatives are to enable the corporation to expand its operations systematically and in turn develop a strong profit margin capacity.
Description and the Purpose of the Business
XYZ cleaning service provider is a company that is to be initiated to serve the growing need for cleaning services among university students in London. It will be located at ABC Street, London. It is to be owned by a graduate from a local university in London who understands students’ needs. The main purpose of the business is to provide quality cleaning services to students and private property owners. These are the target customers of the company’s services that will be offered at a minimal cost.
The company seeks to adopt a leaner organizational structure to foster efficiency and effectiveness in service delivery. This is vital since the company is a new entity with limited resources that cannot sustain a bigger structure. Particularly, the company is to have three stakeholders. They include the owner who is to resume the administrative role and two support staff. The staff members will participate in service delivery to clients appropriately. The aim of the leaner organizational structure is to maximize the cost of staff upkeep or remuneration. This will aid the effective injection of the available resources in securing basic cleaning equipment. Indeed, the manager will coordinate most of the activities including financial management, outsourcing of resources, HR and marketing activities. The two staff members will focus their energy to service delivery and marketing of the company’s products to potential clients.
The company is to be owned by Williamson who is a graduate under a sole proprietorship arrangement. As stated in the memorandum of understanding and articles of association, he will be the owner, the director and the coordinator of activities. He is to be assisted with two assisting staff partners to be hired under remuneration terms. The key provisions contained in the articles and memorandum of understanding documents is as follows:
- The company will run as a sole proprietorship institution;
- The administrator will execute the management activities;
- Its operations will cover a sustainable geographical area;
- The staff and the proprietor will all participate in marketing the company’s services.
Financial Plan: Income Statement
Based on the statistical values contained in XYZs income statement, the company is set to generate a substantial amount of revenue in its first year of operation. This will be followed by a sound performance in the subsequent years. In particular, the company is to generate $90,000, $100,000 and $120,000 in the respective years under review. The value or return on investment (ROI) that the company seeks to generate stands at $19,250 in the year 2013, m$19,950 in the year 2014 and $25,900 in the year 2015. This shows that the company would register immense growth in terms of structural expansion and personnel capacity.
|Pro-forma Profit and Loss for 2013 to 2015|
|Cost of Sales||$8,500||$9,500||$10,500|
|Total Operating Expenses||$59,500||$ 71,500||$ 83,000|
|Profit Before Interest and Taxes (PBTR)||$27,500||$28,500||$37,000|
Table 1: Profit and Loss account of XYZ Cleaning from 2013 to 2015. Source: Self generated
Cash Flow Forecasts
From the projected figures, it is clear that the company will record positive performance. The cash flow statement depicts an increasing figure of cash inflow from the year 2013 to 2015. This is evident since the company’s revenue is set to exceed its cost obligation. That is an effective balance between cash inflows and outflows is evident.
|Pro Forma Cash Flowfor 2013 to 2015|
|Cash Flow from Operations||$90,000||$100,000||$120,000|
|Interest Liability (Other)||$2,000||–||–|
|Subtotal Spent on Operations||$62,525||$70,200||$83,500|
|Subtotal Cash Spent||$62,525||$70,200||$83,500|
|Net Cash Flow||28,475||$29,800||$36,500|
Table 2: Pro Forma Cash Flow of XYZ Cleaning Company from 2013 to 2015. Source: Self generated
Projected Balance Sheet
As indicated in the balance sheet, the Cleaning Company will have $16,500 total liabilities and capital. This figure will be $39,000 and $54,000 in the second and third years respectively. The table also projects the institution’s asset and liability strength that will aid decision-making.
|Pro Forma Balance Sheet for 2013 to 2015|
|Total Liabilities and Capital||$16,500||$28,000||$39,000|
Table 3: Pro Forma Balance Sheet of XYZ Cleaning Company from 2013 to 2015. Source: Self generated
Since the company is a sole proprietorship organisation, all the eminent risk that may accrue is to be incurred by the owner. He would incur all the risks arising from the financial sector, administration and operation areas. This would expose the company to severe losses that can impede its growth potential. Therefore, the proprietor must develop a viable operating plan to facilitate prompt mitigation of possible risks.
The XYZ Cleaning Corporation has to prepare for the potential financial risks to guarantee its market sustainability. For instance:
- It will be an uphill task for the new company to mobilize or raise sufficient capital to finance its activities.
- Competition from rival firms would pose a serious challenge since it would impede the income capacity of the company.
- Legal cost and brand awareness requirements may also pose a strong financial challenge for the company.
The viability of the project
Scholars asserts that Return on investment (ROI) is the most effective way to evaluate the viability of a venture. That is, it shows the level of performance. For instance :
Return on investment (ROI) of XYZ Cleaning Company
|ROI||Return on investment (%) = Net profit ($) / Investment ($) × 100|
|ROI||= ($19,250 / $10,000) x 100 |
|= (19,950 / $10,000) x 100 |
|= (25,900 / $15,000) x 100 |
|Return on investment of the XYZ Cleaning Company is high and shows an increasing trend that indicates its viability. This shows how promising and competitive the company is to be in the future.|
Table 4: Return on Investment of XYZ Cleaning Company. Source: Self-generated
Indeed, the financial figures contained in the financial statements show that the company would record an exemplary performance. That is, the company has the potential to grow and expand its operations or capital base. Consequently, it shows that the company is a promising corporation that will compete effectively with rival corporations in the UK.