business feasibility analysis name: instructor · business feasibility analysis 2 2 background of...

Running Head: BUSINESS FEASIBILITY ANALYSIS

Business feasibility analysis

Name:

Instructor:

BUSINESS FEASIBILITY ANALYSIS 2

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Background of the industry

Currently

The business will be operated in the accounting sector. This is an industry that had faced

stagnation for fairly a longer period of time. Unchanged for the past millennium, accounting

world has undergone some major technological shifts in the past few decades. Technological

shifts and operational advancement have not been so far achieved. As the memories of

accounting gurus like Enron and Arthur Andersen starts to fade in the industry, their

contributions are still evident (International Business Publications, 2015). The industry is fast

redefining itself not only by major legislative bodies that have taken control of legislation in

accounting like CIMA, but also major required need of accountability and transparency on

qualified accountants. Accountancy firms are employing increased numbers of qualified staff to

deal with increasing. Outsourcing of qualified accountants from accounting firms has been

embraced as a trend picking up in central Sydney. The Economic Policy Foundation has

estimated that the Australian economy will suffer a shortfall of 8 million workers by 2018, and

36 million workers by 2023.

Future

Major accounting trends will hit the industry in the next 5 years. Computer technology

will revolutionize the big four accounting fields; Accounting and record keeping, Auditing,

Assurance and Tax compliance accounts (Stainbank & Ramatho, 2010). In accounting

Automated Data entry and Balance software (ADBS) are emerging to replace the manual journal

entries. Computerized audit trails have also simplified how an audit is done. Apart from technical


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advancement in the field, the market players have embraced consolidation and new business

practices like mergers to help strengthen their base.

From different research on accountancy firms in Sydney, many of them deal in record

keeping and auditing services leaving a wide niche in consultancy and tax compliant record

keeping services. This will be the central gap to fill to avoid overcrowding in one or two

competitive areas. Besides, with the studies on dynamism in the sector, a vast experience is

needed which will help cope with the cut-throat competition; Eight-year experience and in the

senior management position is a vital strength to back in setting up an accountancy consultation

firm.

This company will provide consultancy for SMEs and accountancy services to local

companies. Its main services are to assist in selection and implementation of computer

accounting systems and programs and provide a technological reference. Other services would

include conducting accounting record keeping about tax compliance giving ways of sales

improvement through the application of accounting guidelines expense trail. Sound accounting

techniques and management information system using available information technology will be

used to collect data accurately, reducing chances for human error. It could also be applied in the

analysis of the report on the data faster and relay the information to accountants and auditors.

With the increased number of highly experienced retirees in the sector, I plan to employ

them to make a pool of experience needed in consultation services. This will also assist make a

good image in the market and boost percentage market control. The government has also eased

the registration of businesses by reducing the costs and processes hence a boost for the start up.

Finally, with most accountancy firm not celebrating their 2nd birthday in practice, this will help


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us a lot to assure them of going concern as we will provide an incubation program from their

start up.

Target market.

From Directories of businesses in Sydney and Australian Economic Development

Authority and data on legal business registry, a list of new business start-up search indicates

4000 SMEs located in Sydney City alone and with an annual growth of 12% and a 3-year exit of

8%

Our target clients are stratified from Small and medium accountancy firms to companies

having the accounting department. According to the available statistics on accountancy firms,

large numbers of market players are medium businesses. Businesses with less than $6 million

annual returns and with less than ten employees in the accounting department will be our

primary focus. With 60% of the registered accounting firms in Sydney suggesting to meet this

bracket, a wider market is expected. On the other hand, the consultancy will target service,

Retail, Wholesale and other large manufacturing industries located within Sydney geographical

area. With the numbers being more than 3000 registered companies and businesses in Sydney, no

expansion will be done till they have all embraced the system and our consultancy services. The

market growth is anticipated to be 5% annually and at this rate, a need of more professional to

help do the work will be necessary even at our startup.

Market penetration

An average of 2 major engagements with the clients weekly would represent an

approximated 20 new clients each year, with possibly more than half of those giving continuous


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support. This would result in a 100% maximum client load a single individual could carry. We

will undertake voluntary training of accountants on simpler record keeping to build on our

relationship with many companies. We will rely upon face to face engagement with the

prospected clients to help us know the specific area of need and get to know the reasons why

most of these businesses don’t celebrate their 3rd birthday.

Competitive analysis

A large number of direct and array of indirect competitors exist within our area of

location. A partial list from the registrar of businesses shows the following major companies.

Research on their estimated market share is also shown.

Business Direct/Indirect Market Share

MC Mahon Worth Indirect 5.0%

Waston Business Accountants direct 4.0%

Ernst & Young accountants Indirect 2.0%

Jirsch Sutherland Indirect 1.5%

Collins Barrow consultants Direct 7.3%

Compleat Accounting Solutions Direct 2.25%

C.A.T.S. Computer Technologies Direct 1.3%

Talbots Chartered Accountants Indirect 4.5%

Business Accountants Services Ltd. Direct 1.3%


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Gordon Blender Accounts Direct 1.2%

From the list above, there are some larger competitors who have a broader base of skills

and experience drawn from the many years in accounting practice. Some of the companies above

draw their strengths internally from a wide range of funds and investments at their disposal

enabling them to afford the cream of experience from the field. Also, larger firms like Collins

Burrow consultants have broader capital bases to obtain new skills and technologies, arrange for

faster licensing agreements and give financial support to their clients which we are limited.

Some companies in this list charge between $70 and $125 per hour for of their

consultancy services. Also, these businesses are less flexible in face to face meetings with the

clients and don’t meet smaller needs with urgency (ABEYSEKERA, 2015).They are also slower

in adapting to variations in their markets. In fact, most of our indirect competitors are more

concerned with actual returns and profits received from the sales of software or book balancing

than with understanding and meeting the client needs in the long run. Furthermore, a great

number of our prospected competitors have big office space and big number of employees

resulting in much higher direct and indirect overhead costs that must be met by charging higher

amounts on few client volumes.

We intend to counter these weaknesses by lowering our charges a little bit without

putting questions on our professionalism. We will also work on our flexibility to meet many

customers need in a single visit, for example, tracing vouchers to receipts and counter balancing

of books with consultation on the same on one visit. Our office space will be smaller since our


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consultations will mainly be at the client’s premises. This will, in turn, reduce our overhead

charges.

Operation plan

Our business will be located in Radisson Blu Plaza next to Hotel Sydney. This will be a

central location as the hotel will be able to provide for our conference meetings with clients

where necessary. On the accountancy part, our operations for Accounting Management Systems

will still be based in our host office in Sydney town. Most of our software configuration and

most of the writing of consultation proposal papers and documentation will be done in the main

office. Actual consulting services and conferences with clients will be done at the client’s place

of business since it will allow us meet all the workers at their comfort.

Networking will form one of a main pillar of operation. A good network with future,

current customer and other consultants even other business acquaintances will be at the top of

my list for marketing my business. Posting small information at CBD bulletin boards, in state

newspapers and on all electronic bulletin board within the City will also be pursued.

Participation in accounting and consultation software forums is already ongoing and will

be intensified at startup. Most of these forums are underway in social media form while few

others are less frequent, and I attend in person. Spirited participation in industry seminars, trade

fairs and exhibitions will be intensified as the business moves from different phases of the cycle.

As we work on our reputation and the first image, it may be possible to accept invitations to give

guidelines in relation to book keeping on public events and shows. This process will need a high

degree of expertise, experience and credibility from my staff.


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In our operations, we shall rent an office at the blu plaza in the beginning of operations.

Renting will reduce the costs associated with purchase and leasing. In order start over,

20 high-end computers will be needed in the management department and task force area.

Each employee will be provided with a laptop to facilitate mail communication and

efficient data entry. The computer will be purchased locally from computer stores.

Three neat work tables will also be bought to facilitate in office consultations and give

space for computer placement. In the case of any expansion more worktables will be

acquired to fit the rented space.

2 Office telephones will also be necessary as it will allow employees in the field

communicate with the people back in the office. It will also facilitate the booking of

appointments by the clients easily. The gadgets will also be acquired locally from

communication firms.

A large waiting seat fitted in the waiting room will also be necessary as it will provide a

resting place for clients who may need in office consultation and any inquiry. Waiting for

seats will also assist during office meetings. The seats will also be bought from the local

market.

Smaller equipment like Clock watch, locks, and stationary like files will also be bought.

Our hours of operation are scheduled to be from 7:30 AM to 6:00 PM Monday to Friday.

Jobs on new implementations or abrupt engagements will always be done outside of these

schedules. Our employees will be allowed overtime stayed in the office still 7:00 pm and

remunerated on an hourly basis. Any requested support work having no relationship with


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accountancy e.g. audit engagement not related to new implementations will be charged 35%

premium to the normal rate for that service or client.

Client file management system

The file management system will assist in differentiating the clients using their need as either

accounting or consultation. A server will then keep the full information of these clients in a

central place and secured with series of passwords. The clients will also be able to register so as

to obtain their information online.

HOST A

Host on accounting records

HOST B

Host on Consultancy records

File of client A File of client B File of client C

ROOT DIRECTORY SERVER

(MAIN HOST)


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The major benefits we expect from the File Management System are

Immediate availability and relay of Information by the auditors or the clients themselves

Store of Incomplete files or entries and status of any pending files

Ready availability of reports and information on various dimensions be it Accounting or

consultation

Easy and quick retrieval of reports when needed to help save time

Quick dissemination of detailed reports to various departments.

Legal framework

Being a Certified Public Accountant (CPA), I will be legally qualified for business

registration. The business will be registered by the registrar of businesses as an Accounting

consultancy firm. This will take 3 to 4 weeks as we obtain the necessary stamps and pay the

required fees. Environmental approval from the relevant authorities in our area of operation will

also be sorted. The business will only employ graduates of CPA and only those with practicing

certificate will be employed. Retired accountants with vast experience will be employed to help

assist in consultancy.

Financial needs

Approximately $7000 of initial financial outlay is required to purchase initial assets like

computer hardware and software. The money will also help establish any licensing agreements

with several computer vendors and software suppliers. Beyond these important needs, most of

the initial costs are projected to be met from any payments received at the early stages of


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operations or any cash inflow of the business after startup. The funding will be vital within the

first seven months of after initiating operation to help in putting up the premise. The funds will

be acquired from my private savings and private borrowing at current market rates. No

amortization of loan will be done. Debt retirement is fully limited to the initial capital outlay and

will be paid from cash inflow within a period of 7 days.

I intend to micro-manage the business at the startup phase and see it through the startup

and growth stage to ensure steady growth and strong foundation based on good reputation and

name. Since this business is a service, a pool of experts will be ideal.


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References

ABEYSEKERA, I. (2006). Accounting Meets Politics: Theoretical Interpretation of Key Events

(1940-2003) of the Accounting Profession in Australia. Australian Accounting Review,

16(40), 66-74. http://dx.doi.org/10.1111/j.1835-2561.2006.tb00327.x

Carkenord, B. A. (2009). Seven steps to mastering business analysis. Ft. Lauderdale, Fla: J. Ross

Pub.

International Business Publications, U. (2015). Doing business and investing in Australia. [Place

of publication not identified]: Intl Business Pubns Usa.

Lao, L., & University College of Cape Breton. (2012). Feasibility analysis of replicating

COMACO's business model in Mashan China.

Loucks, K. (1990). Training entrepreneurs for small business creation: Lessons from experience.

Geneva: Int. Labour Office.

Palo Alto Software. (2006). Business Feasibility Analysis Pro. Prentice Hall.

Stainbank, L. & Ramatho, G. (2010). Professional accountancy education in selected ECSAFA

countries: a comparative study. Meditari Accountancy Research, 16(2), 153-173.

http://dx.doi.org/10.1108/10222529200800018

Weese, S., & Wagner, T. A. (2011). CBAP / CCBA: Certified business analysis study guide.

Indianapolis, Ind: Wiley Pub.

http://dx.doi.org/10.1108/10222529200800018


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