Chapter 1 Business Planning and Organization - PowerPoint PPT Presentation

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Chapter 1 Business Planning and Organization


Taxes, Permits, insurance, and licenses. Professional Services ... System for withholding taxes to ensure prompt payment. Business Plan. Site locations ... – PowerPoint PPT presentation

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Title: Chapter 1 Business Planning and Organization

Chapter 1 Business Planning and Organization
  • BCN 4753 Fall 2008

Business Planning
  • Idea
  • Feasibility Research
  • Strategic Plan
  • Decide on Business Type
  • Business Plan
  • Revisit Strategic Plan
  • (continuous over the life of the company)

Feasibility Research
  • Can we do what we want to do?
  • Are there any laws against it?
  • Are there huge costs associated with doing it?
  • What other barriers to entry are there?
  • Is there a real future in what we want to do?
  • What other risks are associated with it?
  • Is there someone already doing what we want to do?

Strategic Plan
  • Serve as a framework for decisions or for
    securing support/approval.
  • Provide a basis for more detailed planning.
  • Explain the business to others in order to
    inform, motivate involve.
  • Assist benchmarking performance monitoring.
  • Stimulate change and become building block for
    next plan.

Strategic Plan
  • Mission Statement
  • Long term i.e. 5 years
  • Owners/directors (need all EEs)
  • Matters of strategic importance
  • Separated from day-to-day work
  • Realistic, detached and critical
  • Review periodically
  • Written down.

Strategic Plan
  • Vision
  • Mission
  • Values
  • Objectives
  • Strategies
  • Goals
  • Programs

Decide on Business Type
  • Sole Proprietorship
  • Partnership
  • General Vs Limited
  • Joint Ventures
  • Corporation
  • S-Corporation aka Subchapter S

Sole Proprietorship
  • Simplest form of Business organization
  • Owner is manager and makes all decisions
  • Compliance with state and local business
    licensing requirements only
  • Advantages easy to create, total control by
    owner, transferable, and liquidity
  • Disadvantages personal liability, death of
    owner, must use property to secure loans, taxes
    and benefits not tax deductible.

  • Two or more persons in an agreement
  • Co-owners
  • liability
  • Partnership agreement (like a Business Plan)
  • General Partnership
  • Pooled resources
  • Limited Partnership
  • At least one general partner and one or more
    limited partners
  • Limited partner Capital for Return on capital
  • Limited say limited liability

  • Advantages increased ability to raise capital,
    pooling of resources, pooling of talents, shared
    responsibility and minimal administration costs.
  • Disadvantages General partners have unlimited
    liability, termination upon death, bankruptcy or
    withdrawal, non-transferable, benefits not

Joint Ventures
  • Special combination of two or more persons or
  • Specific Venture
  • No designation as a partnership or corporation
  • Same rules as partnership
  • Usually limited to single transactions

  • Creations of statutes
  • Separate legal entity under the laws of state
  • Same rights as individuals have
  • Most costly to form
  • Issues Stock

  • Advantages Exemption of liability, continuity of
    existence, death has no effect, high level of
    management, transferable ownership, fringe
    benefits are tax deductible, and able to raise
  • Disadvantages Lack of centralized control,
    closely regulated, expensive, record keeping, and
    double taxation.

  • Shareholders absorb all corp. income or losses
    report as individual taxpayers.
  • Eliminates the problem of double taxation.
  • IRS regulations
  • Has most of the same advantages and disadvantages.

  • Must be domestic
  • One class of stock
  • Only individuals and estates can be shareholders
  • Cannot be part of another organization
  • Max number of shareholders
  • No non-resident alien shareholders
  • 20 of revenue must be from domestic sources
  • Dividends, interest, royalties, rents, annuities,
    and securities transactions lt 20 of total

  • Owners will be the same from the beginning to the
  • There is no stock in an LLC. 
  • The ownership is represented by 100 membership
  • Typically used when you have investment in real
    estate or a rental property,
  • The tenants should have no doubt that the owner
    is not you, it is a company. 
  • An LLC is treated like a corporation for tax
  • It can have the same flow through attribute an S
    corporation is allowed. 
  • It can also have a closed status, like a C
  • There is no record keeping requirements with an
  • There is no board of directors. 
  • No requirement to hold board of directors or
    shareholders meetings. 
  • Therefore there are no corporate minutes. 

Control of Business
  • Sole Proprietorship absolute power over all
  • Partnership Control is shared between partners
    as per the agreement
  • Corporation- depends on stock ownership,
    exercised through regular board meetings by the
    board of directors

Business Plan
  • Purpose is to provide a written summary of the
    contractors goals and objectives
  • Defines how plans are to be carried out
  • Gives a plan for implementing the business
  • Detailed business operation plans
  • Needed to acquire capital

Business Plan
  • Nature of Business
  • Markets
  • Competition
  • Expense of Start-up
  • Projecting Income and Expenses
  • Employment Needs
  • Taxes
  • Regulations
  • Financing
  • Site Location
  • Expansion
  • Insurance
  • Record Keeping Standards
  • Advertising Needs

Business Plan
  • Good plan should answer
  • Type of constructing contracting
  • Type of experience needed
  • What is the nature of the business environment
  • Capital Requirements
  • Benchmarking pricing structure in the market
  • Costs of your service offering
  • Profit margin
  • First year expenses, Volume needs, Breakeven
  • Foreseen liabilities and risks and plan

Business Plan
  • Nature of your Business
  • Define your exact business
  • What does your business do for its customers?
  • What doesnt it do for customers?
  • What distinguishes you from competition?
  • What do you want it to do in the future?

Business Plan
  • Markets
  • What is it that you sell?
  • Is there a need for your product?
  • What is included in the market?
  • Competition
  • Who is that competition and where are they?
  • Benchmarking
  • What sets you apart?

Business Plan
  • Expense of start-up
  • Initial Capital
  • Purchase or lease Equipment
  • Deposits and installation fees
  • Taxes, Permits, insurance, and licenses
  • Professional Services
  • Advertising
  • Employees

Business Plan
  • Projecting Income and expenses (Working Capital)
  • Determine prices
  • Monthly targeted sales, profits, variable costs
  • Expected rate of growth
  • Basic costs Labor, Materials, Equipment
  • Fixed costs
  • Lines of credit
  • Your rate of pay
  • Basis for projections
  • Plan for covering cash flow problems
  • Add in a margin of error

Business Plan
  • Employment
  • Hire other people or not
  • Where to find employees
  • Duties and responsibilities of employees
  • Skills, experience, training and other
    characteristics needed
  • Wage rate
  • Training plan
  • Rules and regulation for employees
  • Governmental regulations
  • Other requirements
  • Employee regulation laws

Business Plan
  • Taxes
  • Federal and State
  • Investment tax credit
  • When do you file taxes
  • Employment taxes
  • Unemployment taxes
  • Other taxes
  • Impact fees

Business Plan
  • Regulations
  • What federal regulations apply?
  • Filling Requirements
  • Licenses
  • Zoning laws, building codes, health , fire, and
    police standards
  • Norms of community
  • Special corporate requirements

Business Plan
  • Financing
  • Net income projections
  • Reinvestment requirements
  • What additional capital requirements are there?
  • Where to get a business loan?
  • Are government loans available?
  • If A/R are late how will the cash flow problem be
  • System for withholding taxes to ensure prompt

Business Plan
  • Site locations
  • Specific location requirements
  • Proximity to suppliers or customers
  • Resource considerations
  • Traffic, Parking , and other businesses
  • Expansion
  • Capital requirements
  • Restrictions

Business Plan
  • Leasing Arrangements
  • Lease or buy
  • How is rent determined?
  • Rent comparison
  • Improvements
  • Insurance needs
  • Renewal issues
  • Sublet rules and regulations
  • Expansion options
  • Restrictions
  • Terms of lease
  • Zoning

Business Plan
  • Insurance Coverage
  • Property Insurance
  • Casualty Insurance
  • Life Insurance
  • Fidelity or Surety Bonding
  • Employee Insurance

Business Plan
  • Record Keeping
  • What records do you need?
  • Financial Statements
  • Statement use
  • Record-keeping system
  • Record keeping services

Business Plan
  • Advertising and Marketing
  • Visibility
  • Image of Company
  • Identify business site
  • Identify Market how to reach them
  • Frequency and allocation
  • Message to potential customers
  • Trade associations and other groups

Business Management
  • Planning
  • Organizing
  • Directing
  • Controlling
  • Standardizing
  • Assigning
  • Communicating

Guidelines to Organizing
  • State
  • Corporate Filling fees
  • Articles of incorporation
  • Compliance with Florida General Corporation Act
  • County
  • Fictitious Names Registration
  • Fulfill requirements to operate under fictitious

Other Considerations
  • Solid Hazardous Waste Laws Regulations
  • Florida Department of Environmental Protection
    Division of Waste Management
  • Permit to Discharge into Navigable Waters
  • Permit for Construction over Navigable Waters
  • U.S. Army Corps of Engineers Regulatory Division

Other Considerations
  • Qualifying Agents
  • Obtain all Required Licenses and Permits
  • IRS Registration
  • State Tax Fillings
  • Occupational Licenses
  • Certificate of Occupancy
  • Zoning Permits

Sources of Information and Assistance
  • The Florida Department of Commerce
  • Division of Economic Development
  • Minority Business Development Center
  • The Florida Small Business Development
  • Small Business Administration
  • SCORE- Service Corps of Retired Executives

Dissolving or Terminating of Business
  • Consideration of all consequences
  • Sole Proprietorship
  • Partnership
  • 1 Dissolution
  • 2 Winding up
  • 3 Termination
  • Corporation
  • Voluntary
  • Involuntary
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