Offshore Enterprise in Cyprus: Business Plan

This assignment focuses on the arrangement for setting up a business in Cyprus, and the potential continental requirement necessary for running an ‘off shore’ enterprise in that country. Consideration is given to set-up processes, image concepts, operational and financial aspect that will impact on the business.

Show the process of setting up a business, using the example of Aristo Develops Company in Cyprus as a case study.

Contents (Jump to)

1. Introduction

2. Potential Company Profile

3. Products and Services

4. Marketing

5. Operations

6. Financial Planning

7. Conclusions

8. Bibliography

9. Appendices:-

Appendix A: Entreprenuer’s Curriculum Vitae

Appendix B: Legal and Taxation Considerations

Appendix C: Banking Matters

1. INTRODUCTION

This document is a reflective paper on the aspects of setting up a business in Cyprus, in which it offers some of the conceptual aspect of business planning, Cypriot regulations and aspect of ‘how to financially plan for businesses. It draws on other established businesses and aspects of financial requirements that any entrepreneur would need to consider in some depth. Appendices are provided with some aspects noted in the paper.

2. POTENTIAL COMPANY PROFILE

The business plan is written to reflect the aspirations of Cyprus Interiors as a new and vibrant company set up to provide excellence in interior design and architecture.

Mission Statement

The mission of Cyprus Interiors is to assist clients in locating prime real estate properties, and through proven design and concepts technology provide the ‘know how’ expertise to ensure that the properties are professionally finished and furnished to a level of superior quality and ultimate excellence that reflect the unique tastes of each client

Company Goals

Our target is to provide a high and unique class of interior design service that meets the specific requirements of each client. In doing so:

• Source materials and suppliers that reflect the high standards of a professional interior designer;

• Offer a seamless service from initial consultation to expert finish through to ongoing maintenance and upgrading;

• Continually provide services that reflect new design technology, changes in concept, construction and client tastes;

• Engage staff, contractors and associates in continuing professional development that keeps the company at the edge of new and exciting developments in interior design.

Potential

The potential of the business will be reflected in the continuation of the ‘new build era’ that is currently engaging Cyprus. Many new and exciting developments are planned and executed to reflect the growing trend in, holiday property, timeshare and professional residential dwellings.

Similarly the ongoing and exciting dialogue with the European Union (EU) for greater integration also has extremely positive and exciting potential for professional interior design companies.

The opportunity for diversity is also a clear indicator of the market trends across the property industry. Potentially, the company could move comfortably into professional letting, building and leisure facilities to which a small number of competitors are slowing becoming engaged (Aristo Developers 2008; Medina 2008).

Strengths

The company will be managed by a professional designer with a clear track record; British degree standard education; professional experience of customer service and related industries and a network of associations to professional businesses and associated that can engage with and through the company.

The company will be incorporated under Cyprus, UK and wider EU legislation in order to ensure that its operational impact can be as fare reaching as possible for our potentially international client base.

3. PRODUCTS AND SERVICES

As interior designers we will provide a full range of services. In that we will bring together a team of architects, planners, interior designers and graphic designers in our business. In doing so our services will maintain a professional seamless experience for our clients.

We will recruit associates that have proven track records in their professional fields, with visible portfolios that carefully reflect the growing trends and experiences of our clients.

This in itself will engage a collaborative integrated approach for our clients in which they will be guided through the seamless professional design of their project with a professional consultant who will project manage their requirements to a high level of standard and expertise.

In doing so we will focus our interior design excellence with clear and professional note of our clients’ residential and commercial needs.

Uniquely our competitive advantage will be in engaging the client collaboratively in each project, ensuring that the seamless nature of each clients design is professionally executed to a high standard using products and services that reflect their budget.

Our costs will be competitive, in that we will take reflection of the market trends and in particular take note of our competitors but, uniquely, set our costs, to reflect the professional levels within the current commercial standing our industry.

4. MARKETING

To ensure the success of the company it has been imperative that some key research has been undertaken to consider the wider market, competitors and potential niche markets.

The growth industry that interior design has become is reflected in the many larger companies that are now engaging in this aspect of property services. We have considered some of the larger companies currently successfully operating in the market place, many of which are after some considerable time in the market, diversifying to ensure maximum impact.

Currently, we have four main competitors:

1. Aristo Developers, who are in the main a property, Leisure Company that also, provides interior design services (Aristo 208)
2. Medina A younger British company that builds, renovates and provides interior design concepts.
3. Ampersand Interiors, again a British company that is engaged in providing furnishings and fittings into the Cyprian market.
4. Scott Brownrigg again a British company, with a proven track record of renovation expertise for older buildings across a wide international portfolio.

There are also a number of smaller companies that provide aspects of services and appear to have a returning client base for design services.

Marketing Concepts

From engaging in market sampling it is apparent that most competitors are operating successfully though a network of building agents, developers and associated industries. Thereby engaging contracts through ‘competitive tendering’, carefully targeted sales forces and brochure campaigns.

The smaller companies appear to work through advertising concepts, press articles and networking with smaller building contractors: plumbers, electricians, building maintenance etc.

Customer Niche Market

To ensure that the company engages customer’s attention it will be important to offer specific services that others either omit or do not provide. Therefore, it is apparent that the specific interior design focus needs to be customer focused, and offer unique designs that are not copied into other designs or properties. Thereby offering the customer their own product designed and integrated to their choices. Many of the competitors offer similar concepts, and copy designs over and over, thereby loosing the uniqueness aspect. Therefore, it is crucial that all marketing brochures reflect the unique and necessary nature of the client centred approach to our design and product packages.

Pricing Concepts

Our services will engage a wide range of products that can be easily sourced, in some cases, freighted at low costs to our locations. Retaining a large volume of stock would not be economically viable and so a full range of professional brochures would be necessary to offer the client a range of choices.

Each project would be prices according to the clients’ budget, and where necessary our professional expertise would offer advice and direction towards products that will support the clients needs and also be at a level of finish that reflects their product vision. However advise by PSYBT (2007) carefully notes that:

Low price and good value is not the same thing. Don’t think that if you drop your price, customers will come flocking to you. Instead, they might think you are cheap and nasty and avoid you.

People should squeak (slightly) at your price. You can always lower your price by offering them a special discount, which will make them feel good.

You don’t want to win every customer. It is much better to have 5 customers paying you £20 an hour than ten paying £5.

Give a menu of prices. Perhaps have a low entry price for your service, but concentrate on offering the value-added extras to your product or service.

Be very careful of VAT implications as often the threshold for registration can be reached quicker than you think. For more information contact your local Customs and Excise office.(PSYBT 2007 p.22).

Location

Our initial location would be a small office/studio that is easily reach by potential and current clientele. This base would afford the business a focal point for client and professional meetings as also, a base for preparing briefs and designs.

5. OPERATIONS

Initial Management

A director would manage the Business, initially while the business establishes itself within the market place. The director has proven experience in customer service industries and is qualified and professionally experienced in interior design to degree standard (Appendix A)

However, the engagement of key personnel, associates and sub-contractors would be undertaken as soon as appropriately possible according to the development of the business.

Continuing Professional Development (CPD)

To ensure that all areas of the business operation is competently managed, it will be a requirement for all personnel to engage consistently in CPD. Therefore, contact would be made with educational institutions that could support the venture in ensuring optimum personnel competence. In this respect, contact would be made with Alexandra College who offer specialist training in Interior Design and associated learning in Cyprus. (Alexandra College 2007)

Legal & Taxation Considerations

There are a number of residential and commercial considerations that need to be clearly clarified in that, residency within Cyprus hold two specific roles: residential permit, temporary permit and permanent permit requirements. As also other major property taxation VAT issues. These are explained in more detail in Appendix B.

Banking Considerations

Cyprus is a low taxation country and also offers a considerable range of banking facilities, concepts and arrangements for business. Many of the UK larger banks are represented in Cyprus. As also many other EU banks and credit agencies. The legalities and regulations within Cyprus are managed by the Central Bank of Cyprus, whose website provides a wealth of information and operates on similar lines to that of the Bank of England. However, appendix

6. FINANCIAL PLANNING

In order to ensure the success for the business, the following documents would be prepared:

12 Months Profit and Loss Projections

The 12-month forecast can be seen as the crucial centerpiece of a potential business plan where the entrepreneur focuses on the realities of running a business. Fictitious figures do not provide a real picture; the figures need to reflect a period of concentrated effort on the venture by the owner (SBA 2004).

Four-Year Profit Projections

This ambitious tool is excellent for those potential owners who want to take the business finance forecast beyond the first crucial year of operation.

Personal Finance Statement

This crucial tool is vital for any arrangements with banks or investors; it reflects the financial standing of the owners. Moreover, many will have invested their own assets in the venture, which may include mortgaging or re-financing homes and other assets (SBA 2004).

PSYBT (2007) note the caution is essential in providing a sound financial basis for a new venture in that:

Many businesses with fantastic potential, great products and customers lined up can go bust simply because they don’t have enough cash in the bank for a short period. All it takes is a few of your customers paying late, a series of regular overhead payments, and a limited overdraft to do this. Ironically it is often businesses growing fastest that run into these problems. Good cash flow will not make your business a success PSYBT 2007 p,27).

Sound financial planning is crucial for the business, from the projection targets the business director can manage and try to ensure that the forecasts are achieved at the target dates in the plan. Failure to do so will provide, careful warning towards potential problems and remedial action can be taken before those problems are pitfalls.

7. CONCLUSIONS

The most important aspect of the business planning stage is to ensure that the entrepreneur has a complete and comprehensive knowledge of the business, its environment, concept, market and moreover, its finances.

The PSYBT (2007) offer a tracking list of important aspect for potential business entrepreneurs, much of which has been explored in this document. This critical preparation is noted in appendix D.

8. REFERENCES

ALEXANDER COLLEGE (2007) Interior Design Course Insights: undated; [online] (cited 6 November 2008) Available from:< http://www.alexander.ac.cy/~website/interiordesign.html>

ARISTO DEVELOPERS (2008) Company Profile; undated; [online] (cited 6 November 2008) Available from: < http://www.aristodevelopers.com/profile/>

BURNS; F (2008) Get Big, by Starting Small; Online: 26 September 2008; [online] (cited 7 November 2008) Available from: <http://interiordesignbusiness.net/>

BURNS; F (2008) Going Abroad for a Boost; Online: 30 October 2008; [online] (cited 7 November 2008) Available from: <http://interiordesignbusiness.net/>

CENTRAL BANK OF CYPRUS (2008) Banking in Cyprus: 6 May 2004; [online] (cited 6 November 2008) Available from: < http://www.centralbank.gov.cy/nqcontent.cfm?a_id=28>

EDWARDS; P, (1997) Getting Business to Come to You: Complete Do-it-yourself Guide to Attracting All the Business You Can Handle; Jeremy Tatcher; London.

EYRE; E, & PETTINGER; R (1999) Mastering Basic Management; Palgrave Master Series; Third Edition; Palgrave Macmillan; Basingstoke.

MEDINA (2008) Interior Design and Garden Services: undated; [online] (cited 6 November 2008) Available from: < http://www.medina-cyprus.com/interior.php>

MIRZA; R (2007) How to Start your Interior Design Business; Online: undated; [online] (cited 7 November 2008) Available from: < http://www.mydesigninterior.com/howtostartyourinteriordesignbusiness.html>

PSYBT (2007) The Business Start-Up Guide; The Prince’s Scottish Youth Business Trust; Glasgow.

REID; C & SMITH; J, (ud) What makes a New Business Start-Up a Successful?; Conference Paper; CRIEFF; University of St Andrews Scotland.

SBA (2008) Plan Your Business; Online: undated; [online] (cited 7 November 2008) Available from: <http://www.sba.gov/index.html>

ST JOHN; A (1999) Understanding Your Accounts: A Guide to Small Business Accounts; Revised Edition; Kogan Page; London.

WOLVERHAMPTON UNIVERSITY (2008) BA Interior Design; Online: undated; [online] (cited 7 November 2008) Available from: <http://courses.wlv.ac.uk/Course.asp?id=11585&type=1>

Scott Brownrigg Architects Interior Designers

http://www.scottbrownrigg.com/home/>

Ampersand Interiors

http://www.interiordesignersandceilingfans.eu/aboutampersand.htm>

http://www.score.org/pdf/Profit and Loss Projection_12 Months_08.pdf>

9. APPENDICES

Appendix A: Entreprenuer’s Curriculum Vitae

Appendix B: Legal and Taxation Considerations

Appendix C: Banking Matters

Appendix D: PSYBT Critical Preparation Checklist

APPENDIX A: ENTREPRENUER’S CURRICULUM VITAE

SOURCE:The Client

	Date of birth: 02/05/1986 Gender: Female Marital Status: Single Nationality: Cypriot
OBJECTIVE	A career opportunity in the field of Interior Design utilizing my educational foundation and personal skills. An opportunity to contribute to the success of your company.
EDUCATION
09/2006-05/2009	BA (Honours) – Interior Design University of Wolverhampton, Wolverhampton, United Kingdom
09/2005- 06/2006 09/2003 –06/2005 09/2002- 07/2004 09/2001- 07/2004	O’ Levels Including Greek, English Language and Maths Technical School of Pafos, Cyprus Certificate grade: 19.9 Architecture Technical Drawing lessons Art private lessons
PERSONAL SKILLS AND ATTRIBUTES
Personal:	Successful communication skills in persuading people at all levels Good negotiation skills Creative thinking Ability to work in teams and networking Good analytical and research skills Hard working and work on own initiative High sense of responsibility and determination Energetic and highly motivated Operate at a professional level Visualising –sketching-3D Excellent technical drawing-hand drawing Ability to write good design briefs Good managing projects and project planning High quality of presentations
Computer:	Microsoft Office (Word, Excel, Power Point, Access), Internet, Adobe (Illustrator CS, Image Ready CS, Photoshop CS), AutoCAD 2002-9, ArchiCAD 9-10
Languages:	English (fluent), Greek (fluent), French (basic)
Others:	Clean driving licence
WORK EXPERIENCE
06/2008- 09/2008 06/2007- 09/2007 09/2003- 09/2005	Promoting different products all around Pafos Promotion Ltd, Pafos, Cyprus Responsibilities: selling the products Assistant Secretary-Designer on CAD Kastelano Holdings Ltd, Pafos, Cyprus Responsibilities: answering the phone and dealing with client inquiries, filing, typing of different documents and designing on CAD technical drawings – Visuals Customer relations assistant Camel café Ltd, Pafos, Cyprus Responsibilities: assisting in handling customer requirements
06/2005- 06/2005	Customer relations assistant Vienna café- Restaurant, Pafos, Cyprus Responsibilities: assisting in handling customer requirements
INTERESTS	Art admirer, travelling, swimming, photography, Greek and Latin dancing

APPENDIX B: LEGAL AND TAXATION CONSIDERATIONS

SOURCE: ARISTO DEVELOPERS (2008) Company Profile; undated; [online] (cited 6 November 2008) Available from: < http://www.aristodevelopers.com/profile/>

Residential Permit Residential Permit is easily obtained for persons living in Cyprus, who have purchased property. Temporary Permit The granting of this permit requires the existence of a bank account in Cyprus and a sales agreement of the property purchased. Temporary residence status can be from one to four years. Permanent permit In addition to the above requirements, the applicant must establish evidence of a secured annual income of not less than CYP 5.600 per person plus CYP2.700 for each dependant person. (Because of the entry of Cyprus to the EU, it is possible that for Europeans the law in respect of permits will change.) For more information please contact the Ministry of Interior, Nicosia.

Property Taxes, Fees, Rates

Immovable Property Tax

The annual immovable property tax is imposed on the market value of the property as at 1st January 1980 and applies to the immovable property owned by the taxpayer on 1st January each year.

Market value of property (1/1/1980)(CYP)	Annual Property tax (‰)
up to 100,000	–
100,001 to 250,000	2.5
250,001 to 500,000	3.5
over 500,000	4.0

Capital Gains Tax On gains from disposal of immovable property situated in Cyprus, capital gains tax will be imposed at the rate of 20% with the first CYP10.000 being exempt for each person. The gain is the difference between the sales proceeds and the original cost of the property. In the case of a property which was purchased before 1/1/1980, the gains are the difference between the sales proceeds and the market value of the property as of 1/1/1980. The seller is entitled to a further allowance regarding the transfer fees paid, inflation rate per year and the cost of any additions made to the house. Gains from the disposal of a private residence are exempt up to CYP 50.000 in total if the owner resides in it continuously for at least five years prior to disposal. Gains from the disposal of a dwelling house are exempt up to CYP 50.000 in total if the owner resides in it continuously for at least five years prior to disposal.

Stamp Duty on Contracts The purchaser is liable for the payment of stamp duty on the purchase price of the property at the rate of CYL1.50 per thousand up to CYL100.000 and thereafter at the rate of CYL2.00 per thousand. This should be paid within 30 days from signing of the contract of sale. For example if the purchase price is CYPL150.000

first CYP 100 000	1.5‰	CYP 150
next CYP 50 000	2.0‰	CYP 100
	Total	CYP 250

Estate Duty Estate Duty tax has been abolished as from the first of January 2000 (Statute No.78(1)/2000).

Local Authority Taxes & Rates A rough guide could be approximately CYP 50 -150 per year depending on the size of your property. This tax is for refuse collection, street lighting, sewerage, etc. The basic utilities, electricity, water and telephone are payable individually in accordance with the consumption and based on a meter reading.

VAT Since 1/5/04 a new statute in respect of VAT on properties has been introduced. Disposals of newly-constructed properties for which a proper application for planning permit has been submitted with the relevant authorities after 1/5/04 are subject to VAT at standard rate.

Under certain conditions, a grant is given to entitled persons for the purchase of newly-constructed properties that are used as the main permanent residence.

The application for the grant is submitted to the Ministry of Finance by any physical person citizen of the Republic of Cyprus or of any other EU member state who resides permanently in the Republic of Cyprus. The grant is for properties whose total covered area does not exceed 250 m2 and is restricted to 130 m2. For more details you may contact a local accountant.

Tax Advantages Cyprus is unique when it comes to the taxation aspects of living on the island.

The following income tax rates apply to individuals:

Chargeable income (CYP)	Tax Rate (%)	Accumulated tax (CYP)
0 – 10.000	–	–
10.001 – 15.000	20	1.000
15.001 – 20.000	25	2.250
over 20.000	30

Retirees who become residents in Cyprus are taxed on their pensions from abroad at the rate of 5% per annum while an annual exception for the first L2.000 is granted.

Additionally, Cyprus has established Double Taxation treaties with the majority of European and non-European countries, safe-guarding that its residents will avoid paying tax in both countries. This gives the option to the citizens of these countries to take advantage of the very low rates in Cyprus.

APPENDIX C: BANKING MATTERS

SOURCE: CENTRAL BANK OF CYPRUS (2008) Banking in Cyprus: 6 May 2004; [online] (cited 6 November 2008) Available from: < http://www.centralbank.gov.cy/nqcontent.cfm?a_id=28>

The Central Bank of Cyprus was established in 1963, shortly afterCyprusgained its independence, as an autonomous institution in accordance with the Central Bank ofCyprus Law 1963 and the relevant articles of the Constitution. Today the Bank is governed by the Central Bank of Cyprus Laws 2002-2007, which ensure the Bank’s independence as well as compatibility with the relevant provisions of the Treaty establishing the European Community and the Statute of the European System of Central Banks and of the European Central Bank. The law’s amendment in March 2007 paved the way for the legal integration of the Bank into the Eurosystem in January 2008.

The main functions of the Central Bank include:

• implementing the European Central Bank’s monetary policy decisions;
• holding and managing the official international reserves;
• supervising banks;
• promoting, regulating and overseeing the smooth operation of payment and settlement systems;
• safeguarding the stability of the financial system.

BANKS INCORPORATED IN CYPRUS

1. BANKS LISTED ON THE CYPRUS STOCK EXCHANGE

1. Bank of Cyprus Public Company Ltd
2. Marfin Popular Bank Public Co Ltd
3. Hellenic Bank Public Company Limited
4. Universal Bank Public Limited

2. SUBSIDIARIES OF FOREIGN BANKS

1. Αlpha Bank Cyprus Ltd
2. BNP Paribas Cyprus Ltd
3. Emporiki Bank – Cyprus Limited
4. Kommunalkredit International Bank Ltd
5. National Bank of Greece (Cyprus) Ltd
6. Russian Commercial Bank (Cyprus) Ltd
7. Societe Generale Cyprus Ltd
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