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1.0 Executive Summary
The purpose of this business plan is to raise $135,000, via a line of credit, for the development of an accounting firm based in Miami, Florida. Accounting Firm, LLC (“the Company”) was founded by John Curry, CPA. The business will provide a wide range of accounting and tax preparation services for clients throughout the South Florida area market. The business will also provide business advisory services to complement the accounting services.
1.1 The Services
The primary revenue center for the business will come from ongoing accounting services including bookkeeping and payroll services. The business will employ several staff bookkeepers that will ensure that client’s ledgers are updated and accurate. The Company will charge $40 per hour for these services. In addition to this revenue center, the Company will produce substantial income from tax preparation services. Accounting Firm, LLC will employ staff CPAs and enrolled agents to properly prepare quarterly and annual tax returns.
The Company will earn significant revenues from the ongoing advisory services that will be offered to clients as well. These services will include strategic planning, business development, incorporation, and related services.
The third section of the business plan will further provide an overview of the Accounting Firm’s operations and services.
1.2 Financing
The Company, via a line of credit, is seeking $135,000 for the development of the business. This document assumes that Accounting Firm, LLC will receive a 10 year revolving credit facility that will incur an 8% interest rate. The funds will be principally used for the following aspects of the practice’s development:
• Office development in Miami
• Furniture, fixtures, and equipment
• Working capital (one year)
As the practice expands its client base, the Company could easily secure additional capital for growth purposes. In the event that Management acquires and existing practice, the Company will acquire a practice acquisition loan. However, this event is not expected to occur within the next three years.
1.3 Mission Statement
The Accounting Firm’s mission is to provide comprehensive accounting, tax, and business advisory services to the Miami general public while providing comprehensive services that effectively help clients grow their enterprises.
1.4 Management Team
John Curry, CPA has more than 12 years of professional public accounting experience. Mr. Curry will be able to effectively launch the operations of this practice, and he will expand it through the continued hiring of CPAs and enrolled agents that will work as associates.
1.5 Sales Forecasts
1.6 Expansion Plan
Over the next three years, the Company will expand its marketing operations so that new clients are obtained on an ongoing basis. The business may integrate complementary services such as operating as a registered agent among businesses that are completing their incorporation through the practice. As mentioned earlier, the Company may also acquire existing accounting practices. Additional avenues of growth will come from potentially integrating registered investment advisory (RIA) services into operations.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Accounting Firm, LLC. The business is registered as a limited liability company in the State of Florida.
2.2 Required Funds
A $135,000 revolving line of credit is needed to establish the operations of the Accounting Practice in Miami. Mr. Curry will invest $15,000. The funds are to be used as follows:
2.3 Investor Equity
Mr. Curry does not require an equity partner. However, in the event that the Company seeks to acquire an existing practice, he may work with an equity partner if a substantial down payment is required.
2.4 Management Equity
John Curry, CPA is currently the sole member and sole owner of Accounting Firm, LLC.
2.5 Exit Strategy
In all likeliness, Mr. Curry will work with his staff of CPAs and enrolled agents in order to transition their practice to their ownership once he decides to retire. The Company, through an equity buyout program, would be sold for one times the previous year’s revenue. This type of transition plan is not expected to occur for at least ten to fifteen years.
3.0 Operations
As stated in the executive summary, Accounting Firm, LLC will provide a wide range of in-demand accounting and business advisory services to the Miami public. As it relates to tax returns, the Company will generate the bulk of these revenues between the months of February to April. To a lesser extent, additional revenues will be produced in August through October among people that have filed extensions. Approximately 50% of the Company’s revenues will come from tax return services.
In addition to these services, the Company will offer a full suite of bookkeeping and payroll management services. These operations will produce highly recurring streams of revenue for the practice on a monthly basis. The Company will employ several bookkeepers to provide these services. Enrolled agents will provide services specific for payroll including the filing of W2, W3, 940, and 941 forms.
Beyond standard accounting services, the practice will offer business advisory services as well. This will include advising clients in regards to their investment portfolios, expansion strategies, business planning, and related matters pertaining to their businesses. The Company anticipates that 15% of its income will be derived from consulting.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the business plan will discuss the economy, the accounting industry, and competitive matters that will occur once the practice establishes its operations.
The economy is doing well, and both the rates of interest and inflation have declined. It is expected that the US Federal Reserve will continue to enact policies in tandem with the Department of the Treasury to ensure that fiscal policies that promote stability are applied to the economy.
Any future issues with the economy will not impact the Accounting Firm’s ability to operate a profit. The services offered by the practice require professional licensure, and there are very few business owners that are able to complete their own tax returns. Additionally, the Company will produce substantial recurring income from its bookkeeping and payroll management services.
4.2 Industry Analysis
There are 125,000 accounting practices within the United States employing over 500,000 people (including CPAs and enrolled agents). Each year, these industries aggregately generate $178 billion of revenue.
One of the common trends within this industry is to use state-of-the-art technology that allows clients to upload their relevant tax and financial documents. This allows CPA firms to provide services to a greater scope of people as clients do not need to come directly to the location in order to work with their CPA or EA. The business will use video conferencing technology in order to render services for clients throughout the entirety of the State of Florida.
4.3 Customer Profile
Among individuals that need the Company’s services, the following demographic profile will be used when marketing the practice:
• Annual household income exceeding $75,000
• Lives within six miles of the Company’s location or will use video conferencing to communicate with the firm
• Will spend $800 per annum on the Company’s services
For business owners in the Miami area market, the following profile is noted:
• Operates as a small to medium sized enterprise with no more than 10 owners
• Annual revenues ranging from $250,000 to $10,000,000
• EBIDTA of $50,000 to $1,000,000
• Will require payroll services
• Will spend $2,500 to $10,000 per year with the business
Here, you can further expand on the types of clients that are you seeking to acquire for your accounting firm.
4.4 Competition
Given the large number of people and small-to-medium sized enterprises that operate within any given area, there usually a number of accounting, CPA, and enrolled agent firms. One of the ways that the Accounting Practice will differentiate itself from competitors in the market is by providing comprehensive business advisory services. In the event that registered investment advisory services are offered, this will further create a strong differentiating factor and advantage for the business. In this section, you can further discuss ways in which you will set your firm apart within your respective market.
5.0 Marketing Plan
Given the level of competition that exists among accounting firms, the Company will use a number of marketing strategies that will drive substantial awareness among Miami area individuals and businesses in this market.
5.1 Marketing Objectives
• Maintain ongoing relationships with consulting firms and attorneys within Miami that will provide referrals.
• Develop and launch a search engine friendly and mobile device friendly website.
• Enroll among numerous professional and small business organizations/associations throughout the South Florida market.
5.2 Marketing Strategies
Foremost, the Company will leverage numerous online platforms that will showcase the Company’s services. In regards to the Company’s proprietary website, this platform will be geared towards the Miami and greater South Florida metropolitan area. The Company’s retained web development firm will create a website that showcases the tax preparation, bookkeeping, payroll management, incorporation, and business advisory services offered. In regards to SEO, Management anticipates that these campaigns will take three to nine months to take hold. New content will be added to the website on a regular basis with a focus on information regarding tax planning.
The business will also maintain pages among all social media platforms. Of special importance to these marketing operations are LinkedIn and Facebook. The Company will use targeted advertisements among individuals that have recently conducted searches for accounting firms in the greater South Florida area market. The business, on Facebook, will receive ongoing reviews from prior clients. On both platforms, the Company will distribute articles that have been written by John Curry regarding tax planning, business expansion, and general information about successfully running a business.
The Company will also use print advertising (half page and full page) throughout lifestyle and business publications in the Miami and South Florida market. Management will coordinate these efforts with a regional advertising firm.
John Curry, CPA and the Company’s staff of CPAs/EAs will become members of area professional organizations, small business associations, and chambers of commerce. This will further drive referrals. The Company will also maintain referral relationships with third party consulting firms, attorneys, and business advisors.
5.3 Pricing
For bookkeeping services, the Company will charge $50 per hour depending on the complexity of the bookkeeping work. Management will charge clients $175 per hour for providing tax advice and consulting services to the general public.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Payroll
7.0 Financial Plan
7.1 Underlying Assumptions
• The Accounting Firm will acquire $135,000 via a revolving credit facility to establish operations.
• John Curry, CPA will provide $15,000 towards the venture.
7.2 Sensitivity Analysis
Accounting Firm, LLC’s revenues are not sensitive to negative changes in the economy. Only highly skilled accounting professionals (CPAs and enrolled agents) are properly able to manage complex transactions and tax returns. The substantial gross margins from all facets of operation will ensure that the business is able to remain profitable, cash flow positive, and economically viable at all times.
7.3 Source of Funds
7.4 Profit and Loss Statement
7.5 Cash Flow Analysis
7.6 Balance Sheet
7.7 Breakeven Analysis
7.8 Business Ratios
Accounting Firm SWOT Analysis
Strengths: Given the level of complexity regarding proper accounting and submitting tax returns to agencies, most individuals and small business owners will continue to need comprehensive services in this regard. The scale and scope of the tax code is beyond most non-professional’s ability to address. Additionally, accounting firms are able to generate highly recurring revenue from the ongoing management of payroll remittances, sales tax, and other ongoing monthly and quarterly accounting tasks. These businesses are often able to acquire capital on an as needed basis given the economic stability of accounting firms.
Weaknesses: The primary weakness faced by accounting and CPA firms is that there is generally a substantial amount of competition in any market. Initially, many accounting firms incur substantial upfront marketing costs in order to establish a client base within their respective market.
Opportunities: Accounting firms are able to capitalize on numerous opportunities to expand their operations. Foremost, many firms will continue to hire CPAs, enrolled agents, and tax return preparation specialists that can organically boost the billings of the firm. Second, many accountants will become registered investment advisors that allows them to manage investments. Generally, these operations will produce highly recurring streams of revenue via asset under management (AUM) fees. This not only creates more predictable income but it can also greatly expand the valuation of the accounting firm. Additional means of growth can come through the acquisition of existing accounting firms that can be integrated into the Company’s ecosystem. Given the economic stability of these businesses, most financial institutions are willing to provide business loans (SBA and conventional) for the acquisition of profitable firms.
Another major avenue of growth for accounting firms is to engage in online marketing strategies so that clients can be acquired from anywhere in the country. Accounting Firm, as discussed earlier, will continue to engage in high impact search engine optimization strategies that will drive numerous potential clients to the Company’s website.
Threats: The primary threat faced by accounting firms is the continually changing landscape as it relates to technology within this industry. There is a substantial amount of accounting software that allows people to do their own taxes. However, while this is a threat – it is a muted risk given that any person that earns income from outside a paycheck typically needs ongoing accounting advice in order to remain within the letter of the law. Although AI technologies regarding accounting services are on the horizon, most people will continue to need to work with an actual person when completing their tax returns, establishing businesses, and planning for retirement.