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Having identified this potentially lucrative niche market I conducted a feasibility study to appraise the attractiveness, the competitiveness of the market and exploring market entry strategies to employ to penetrate the market. During the feasibility study we also conducted a SWOT analysis were we appraised our internal strengths and weaknesses and also opportunities and threats that are going to be presented by the external environment.
Since we will be a new player in this business we are not going to wield tangible strengths aside from our very strong desire to succeed in this market however we intend to build and consolidate our success on the following strengths:
Creation of a motivated and talented team of distinguished academics who will have a good relationship with professional accounting and business institutions.
Creation of strong and mutually beneficial relationships with industry and commerce players whom we intend to built strategic relationships with.
At the point of entry in the business education market we have identified the following potential weaknesses:
Lack of solid experience in the education industry
Lack of actual and potential financial muscle and marketing resources to thwart potential competitive pressures emanating from established business colleges should they decide to compete in our selected market niche.
The United Kingdom economy particularly the London economy is experiencing a bull run hence people may be able to afford to spend on education.
The potential of introducing new business courses is enormous especially considering the ever changing business environment which now more than ever before demands a very skilled and technically talented work force.
Potential increase in interest rates which may affect the costs of our long term loan which may become more expensive.
Response by our competitors that may undermine our profit margins and hence the attractiveness of the business.
Initially we are going to enter the market only offering one business course, which is Association of Certified Chartered Accountants' CAT (Certified Accounting Technician) Diploma course. In our first semester in operation we are going to be offering all the CAT's ten subjects. We are going to price our course at market rates however we are going to bundle this with guaranteed employment for our students to make us more attractive.
We are going to create awareness of our existence by aggressive advertisements in local newspapers, community newspapers and handing out flyers in high streets and shopping malls. We are also going to run a parallel telemarketing campaign to compliment our print media advertisements. To compliment these promotional activities we are also going to market ourselves on our website.
I am penciling an open day in June 2005 where all potential students get the opportunity to meet me and my team and discussing how we may be able to work together in assisting them achieve their career objectives.
We are intending to finance this business venture mainly from two sources of finance that is my own initial capital contribution of 16,500. We also intend to acquire long term finance in the form of a long term loan of 16,000 and a long term lease of 35,000. We intend to retire the long term loan in ten years.
To build on the capital base of the college I will forgo all my earnings in the first year after commencement of the college and these will all be credited to the Owner's Equity.
We are going to use a very prudent financing strategy where initially all our capital needs whether they are fixed assets or working capital requirements will be financed by long term capital. I am also going to negotiate a short term bank overdraft facility with our bank to finance any unanticipated shortfalls in working capital.
Bank overdraft finance will only be used to finance unanticipated financing needs whose chance of occurrence is likely to be very remote because we have undertaken a rigorous budgeting exercise. Capital expenditure will be acquired using new money.
Our operational costs have been classified as variable and fixed costs. Fixed costs include costs that we will incur in paying our staff, marketing costs, accreditation costs and promotional costs. Capital costs will include costs of acquiring our lease, Furniture and Fittings.
Break even analysis
In the interim we do not assume that we will break even however in the long term we anticipate to reduce the percentage of fixed costs/Income to reduce our operational gearing.
The investment in the business college will recoup my initial investment in under two years and the investment will earn a Net Present Value of around 1,200,000. I have included in this report our operating budget for the first year, opening and closing balance sheets for the first year and a schedule of the investment appraisal (payback and NPV methods) on pages 5, 6 and 7 respectively.
I am going to recruit two assistants to assist me with marketing and general administration of the college. I will be responsible for strategic formulation, liaising with strategic partners, course leading, championing our marketing campaign and lecturing the two subjects.
The business plan is scheduled to see the light of the day as from the beginning of June 2005 however marketing and staff recruitment is scheduled to have commenced by the end of April.
At the moment I am in the process of applying for accreditation with ACCA to get the permission to be a recognised tuition provider and also to make sure we appear on their website as a recognised tuition provider.
Control and Monitoring
Both our financial and non financial performance will be evaluated at the end of every semester however we will endeavour to anticipate problems and adverse situations, build them into our planning and correct them before they are forced on us.
We will also be benchmarking our service delivery against both our competitors and other organisations that are standard setters in provision of quality service. I will review this business plan at the end of the semester
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Notes and Assumptions to the Operational Budget, Balance Sheets and Investment Appraisals shown on pages 5,6 and 7 below are as follows.
1) We will succeed in recruiting 10 students for each subject
2) We will recruit 8 tutors even though for costing purposes we are working with 10 tutors
3) Two additional staff will be recruited and each paid 2,000 per month
4) Fees are assumed to be 100 per subject and paid monthly
5) 75 students will be recruited for revision classes
6) Tutors will be paid at 40 per hour and work 8 hours per month
7) The lease term is assumed to be 10 years
8) Interest in assumed to be 12,5% to reflect risk taken by the investor