P 1.1; Develop a business case for a new product, service or process built upon recent research; The business case provides justification for undertaking a project, in terms of evaluating the benefit, cost and risk of alternative options and rationale for the preferred solution. Its purpose is to obtain management commitment and approval for investment in the project.
After conducting a detailed research based on the economical, social, political, and environmental elements for the purpose to yield maximum return from investment in the current situation, I would like to suggest to set-up a 'Bookkeeping & Accountancy' firm based in London.
Bookkeeping and accounting services involves the systematic and chronological recording of the financial transactions. It also includes maintaining correct and up to date financial records of any organization. Effectively maintained bookkeeping and accounting records enables the business owners actually aware of the true financial situation of their business. These are the fundamental requirements of any business. For the purpose of financial record keeping different organization use different software packages, these bookkeeping software can be custom made or one of the highly trusted and widely accepted like Peachtree, SAP ERP Financial, Sage Line etc. where the business is very small this record keeping can be done manually by writing daily books. Irrespective of the fact whether the organization opts manual or computerized way of bookkeeping, it requires an experienced bookkeeper to record different transactions. Bookkeeper is a person who has knowledge, experience and training to record financial transactions in accordance with the GAAP (Generally Acceptable Accounting Principles), IFRS (International financial Reporting Standards) and the locally applicable laws.
By outsourcing the bookkeeping needs all the information that the client will require will be available at his/her fingertips. By outsourcing the bookkeeping, the business owners can concentrate more on the core business activities. Following are just a few reasons why business owners will prefer the outsourcing of their bookkeeping and accountancy needs. Honestly these factors will equally be the reason for our proposed project's success;
Many business owners still prefer to handle books of accounts by themselves that eventually results in significant errors because of lacking the double check whether they have done things correctly. The bookkeeping firm will make sure that the client's books of accounts are handled in the most professional way that avoids any sort of errors or misstatement.
If the client outsources his/her small business bookkeeping system, he/she will be assured that their books are reconciled properly. e.g: Cash book will be properly reconciled with the bank accounts and sales day book's & purchase day book's balances will be reconciled with the sales and purchase ledger control accounts respectively.
The client will be assured that appropriate back-up of his accounting records is being maintained, since the bookkeeping will offshore, the client will be assured that their data is easily recoverable in the event of disaster in their area.
Bookkeeping by inexperienced people usually results wrong categorization of transactions leading to erroneous financial reflection of the organization, in such a situation that organization may have to face difficulties while obtaining loans from the banks and similarly the stake holders confidence will may be hurt. Outsourcing will make sure that transactions are filed under the right category and there are no redundant categories created.
The firm will be providing all these financial services to its potential customer under one roof. With the passage of time to exceed the expectations of the clients the firm may opts integrated approach that will combine handy and innovation from multiple disciplines with business knowledge and industry expertise.
P 1.2; REVIEW CURRENT THEORETICAL DEBATE THAT SUPPORTS THIS BUSINESS CASE;
In this very part of this research report we will be discussing specifically that the demand for bookkeepers and why it's a great business to get involved into.
It goes without saying that there is more than one reason as to why trends of outsourcing of Bookkeeping & Accounting needs have become so very popular. If we can indicate the most prominent of these reasons that would certainly include the ability of these service providers in the countries like United Kingdom to sustain, achieve and deliver the benefits of requisite cost and efficiency required as per the client's demand. According to a survey conducted by the 'Times 100 International' in august 2009 revealed that competitive pressure is increasing considerably day by day in this age of corporate life hence off shore outsourcing of such services is becoming the preferred choice for business owners through out the United Kingdom so that they could concentrate on the core business activities. By outsourcing the bookkeeping and accounting needs the business owners will have enough time in which they can optimize their core process and it will be easier for them to achieve targeted organizational goals and objectives. This naturally allows them to build competence, sometime that is prerequisite for emerging a winner in today's highly competitive market. In order to boost the business and stake holder's interest, it is not surprise to know that more and more small business owners are now opting offshore outsourcing of bookkeeping and accountancy services.
Apart from the benefits stated above, outsourcing makes sure that well qualified and skilled team is dealing with the business's financial reporting matters with low turn around time, high quality work, saving on cost up to 50% or more and quick working methodology.
As the conclusion of this debate we can say, since competition is anticipated to intensify in the near future, it would be correct to assume that demand for business outsourcing will increase as well. That bodes well for the outsourcing services industry, as far as its future is concerned.
P 1.3; INCORPORATE INTO THIS BUSINESS CASE INFORMATION ON MARKET COMPETITIVITY AND ACTIVITY;
Bookkeeping outsourcing is one of those businesses which can be started with very less investment of finances. Due to this element there are many people who are involved into this business. According to a report published by the 'Institute of Certified Bookkeepers', which is a regulatory professional body for the bookkeepers in the United Kingdom, there are more than 1300 bookkeeping firms operating only with in London. If we just have a glance at this figure for a moment, it doesn't seems a wise decision to enter into this industry. But I believe taking a decision yet will be an immature action. Let's have a look at the potential clients. If on one end there are 1300 bookkeepers in the London, on the other part there are 32 borough/councils in London and 416 high streets in London. Now on every high street all the small business owners like, chicken shop, cash and carries, photo shop, clubs, pubs, advertisement agencies, car hire, fuel station, McDonald, KFC, pharmacy etc can be the potential customers who might be interested into outsourcing their bookkeeping and accounting activities. Now we can estimate that how many potential clients can be just on the 416 high streets only. After considering above calculations it is sure that demand for this very business is very high.
The next step is to investigate those elements that will bring our bookkeeping firm outstanding than others and attracting more customers. These two elements are;
Lowest price charged for the services.
Highest level of customer satisfaction.
First I would like to discuss about the level of customers satisfaction, the customers will be satisfied if their accounts are up to dated, tax returns are filed on behalf of the client in time and with out any error and in short their bookkeeping and accounts are prepared in such a way that presents a true and fair view of the companies financial information.
Every business's objective is profit maximization, and clients are very much concerned about the prices they will be charged for these services. Firm is able to provide cheap quotations when it will be having cheap cost for providing services. Bookkeeping firm's employee different number of bookkeepers, the firms marketing department gets the contracts of different clients, these clients send their invoices, debit notes, credit notes, bank statements and other primary documents to prepare the ledgers, trial balances and other financial reports etc to the bookkeeping firm by fax etc. Now the firms permanently employed bookkeepers prepares the client's accounts and send them its copy by email or fax.
It was a snapshot how a bookkeeping firm operates, as an average an accountant having average experience employed by the firms is paid £10 to £15 an hour, and one accountant can process maximum 30 transactions in an hour. Hence the direct cost of processing one transaction is 50p. The firm charges as an average £1 for processing one transaction.
We will get the contracts from the clients in the UK and for the processing of those transactions will engage highly experienced accountants and bookkeepers in Pakistan who has ample experience of preparing accounts in accordance with the IFRS and GAAP. Processing transaction abroad will cost just £1 an hour and hence the cost of processing a single transaction will be (1£/25) just 4p. Since the labour and wage rate is much cheap in the Pakistan hence we can save 46p direct cost per transaction. Using this approach will enable us to provide the cheapest quotation for services to the clients. To make sure that all the processed accounts are error free and supervisor will be appointed in United Kingdom who will give a review to those processed accounts before they are being passed on to the client.
Hence the bookkeeping services provided by out firm will be cheapest in price (processed abroad) and highest in standard (as prepared by highly IFRS and GAAP experience staff), and it is a key element for our firm to be successful in short term and long term as-well.
TASK 2
CALCULATE, AGREE AND PLAN FOR THE NECESSARY RESOURCES REQUIRED FOR THE PROJECT.
P 2.1; IDENTIFY AND COST ALL MATERIALS, EQUIPMEN, LABOUR AND OTHER RESOURCES REQUIRED FOR DEVELOPING THE PRODUCT, SERVICE OR PROCESS.
Incorporation of the firm with the 'Companies House';
First of all we need to select a trading name and get it incorporated with the Companies House as a private limited company. For this purpose will have to fill out the fill our a form number 'N01 Application for registration of a company', in this application form we have to write the name and the details of the registered office address, name of the company secretary and details of the share holdings etc. This form is submitted to the Companies House along with the memorandum of association, articles of association and with a fee of £50 (urgent).
Bookkeeping Practicing Licence;
Once the company is registered with the companies house now we will apply to obtain a 'Bookkeeping Practicing Licence' from the 'Institute of Certified Bookkeepers' which is a professional body regulating all the bookkeepers in the United Kingdom. Membership of the ICB will provide the technical and legal advice regarding the bookkeeping business. Apart from it if at any stage any employee of the firm faces any difficulty in processing any particular transaction the 24/7 technical helpline of the institute will help our staff as how to deal with this problem. Since we will be processing our transaction abroad so it will make sure that all the transactions are processed with due professionalism. The membership and the bookkeeping licence will cost £275 ever year.
Liability Insurance;
Liability insurance covers the risk in case any mistake is done by the firm while providing its bookkeeping services; i-e; filing wrong tax return etc. Though we will be appointing very highly experienced staff even then there have always been chances for mistake. If such a situation arises and the client claims compensation, the insurance company will settle down the amount of compensation. After an investigation for this purpose I have selected the AVIVA Liability Insurance, it will cover the compensation of maximum £5.0 million and firm will have to pay an annual premium of £360 ever year.
Office Premises;
We require an office premises, since most of our services will be off shore and the staff will be working online from Pakistan, so honestly we need a small single room office just for the clients support. We will rent a business room in East London that will cost approximately £650 per month including utilities with an advances of approximately £1300.
Highly Structured Automated Website;
Our business will need a very good website that will not only provide useful information to the potential customers but also provide a hub of services. The client will be given a unique username and password for the website to access his personal account on the firm's website. Client can upload his invoices and statements for processing that will be sent to the company's processing department automatically. The processing department will prepare its accounts and upload at the firm's website. When the client needs to access any of its bookkeeping record he can log on to his account of the firm's website and can access his business financial information from anywhere. Further the website will have an option for making online payments. The approximate cost of making such a website will be approximately £500.
Accounting Software Package;
We will be making the clients accounts on the Sage Line 50, the most widely used software for the bookkeeping. To use this software we will require its licence for multi computer systems that will cost £1,075 one time and £100 every year as support and back up.
Other office equipments;
We will need different other office equipments like printers, computers, laptop, scanner, fax machine, telephone connection, photocopier and office furniture etc that has been carefully estimated as £3000.
Human Resources Requirements;
In the beginning we will need one office administrator in London who could answer customers' calls and queries and provide liaison between the firm and the client. Office administrator is paid approximately £18,000 per annum. Besides that we will hire one experienced accounts supervisor who will thoroughly review the finally prepared accounts from the accountants working for us in Pakistan before passing on to the clients. It will make sure that accounts are being prepared without error in accordance with the IFRS & GAAP. The salary of the supervisor is estimated from http://www.reed.co.uk salary survey as £24,000 per year. For the marketing we will hire commission based staff that will reduce the fixed business cost of salaries. The staff processing the transactions for us in Pakistan will also be paid on the basis of number of transactions processed again to save the fixed cost of the business.
P 2.2; IDENTIFY AND COST THE TRAINING AND DEVELOPMENT OF STAFF REQUIRED;
While running a bookkeeping outsourcing business different staff will require different type of training and development. Following is the brief discussion of the train and development needs of the proposed business;
SAGE LINE SOFTWARE TRAINING;
Those processing the financial transactions into the final accounts of the clients will be using Sage Line accounting software. Sage Line 50 is one of the most used software programmes in Britain and it is a prerequisite for the professional bookkeeper that they should know how to use it. The Sage Line 50 programme is different from many because it focuses on training that how to "drive" the accounts function rather than simply doing data entry. For this reason, we strongly recommend that out employees are well trained in using the software and can confidently prepare accounts to trial balance, profit & loss and balance sheet level. Sage line software training will cost £200 per employee.
BASIC TRAING ABOUT BOOKKEEPING;
Other than the operating staff the other people will also be working within the firm such as the admin staff and marketing staff. The admin and marketing are entirely different professions so they need to be trained about the basis of the bookkeeping business so that it could be helpful while dealing with the day to day official matters. Similarly the marketing staff can be in the better positions to convince the prospective customer about our services once he has full knowledge of the product he is going to sell. For this purpose in-house training will be arranged that will cost approximately £100 per employee.
HEALTH AND SAFETY TRAINING;
According to the Health & Safety Act the organization must appoint someone competent to help you meet health and safety duties. The could appoint (one or a combination of) one or more person but it can not be an external consultant. Hence the training of such an appointed person will cost approximately £150.
TRAINING OF THE FIRST AID APPOINTED PERSON;
The Health and Safety (First-Aid) Regulations 1981 require you to provide adequate and appropriate first-aid equipment, facilities and people so your employees can be given immediate help if they are injured or taken ill at work. Such a first aid appointed person needs training about it. This training will cost approximately £90.
P2.3; IDENTIFY SOURCES OF ALL RESOURCES REQUIRED;
Following are the details of the sources by which all the resources discussed in P2.1 & P2.2 can be acquired;
Since bookkeeping business requires a small amount of investment, so I would prefer to invest these amounts from personal savings however bank loans may also be acquired if necessary. To obtain a bank loan we need a project proposal to be approved by the bank authorities.
For the incorporation of the firm as a 'Private Limited Company' we will get professional advice from the David Solicitors LLP having there office at Ilford.
To obtain a bookkeeping practicing licence we will be filling an application to the Institute of Certified Bookkeepers using their online support system and after 15 days license will be issued subject to the terms and conditions.
Website for the firm will be developed by the 'Creative Origin' one of the well known website building companies in the United Kingdom. http://www.creativeorigin.co.uk
Office premises will be rented from the 'Prime Location' one of the leading estate agency in East London. http://www.pirmelocation.com
To obtain the office equipments and furniture we will prefer to search it from Argos, Asda Direct, Tesco Direct and E-buyer. Searching the equipments among these four distributers will provide us the desired products with the most competitive price.
To obtain the most competent human resources, we will advertise the required vacancies with the Job Centre Plus, REED and HAYS. I am confident by advertising the vacancies with them will give a sufficient number of individuals having desired abilities.
Training of SAGE LINE and BOOKKEEPING basics will be provided to the employees in collaboration with the London Collage of Accountancy. Similarly the other training regarding the first aid and health and safety will be provided in collaboration with 'The Trainers LLP' a leading training institution in East Ham London.
TASK 3
PLAN AND AGREE THE IMPLEMENTATION OF THE PRODUCT, SERVICE OR PROCESS AND THE MEASURES FOR MONITORING AND EVALUATING SUCCESS.
P 3.1; PLAN AND AGREE THE TIMESCALE FOR THE MANAGEMENT AND IMPLEMENTATION OF THE PROJECT SERVICE OR PROCESS.
ACTION PLAN
APPROXIMATE TIME REQUIRED
Incorporation of the firm with Companies House
7 Days
Registration of firm with the institute of certified bookkeepers
21 Days
Obtaining practicing licence from the ICB
15 Days
Website development
30 Days
Acquiring the office premises
7 Days
Acquiring the office equipment and fixture
10 Days
Recruitment and staffing
21 Days
Staff training
7 days
P 3.2; PLAN AND DEVELOP AN APPROPRIATE MARKETING STRATEGY FOR THIS IMPLEMENTATION;
Marketing a bookkeeping business can be done on the Internet and in person. Each strategy has tactics that will attract potential customers to allow you to turn them in to paying clients. Combine both marketing strategies to generate a greater client base for a bookkeeping business.
Personal Marketing;
ï‚· Make business cards and hand them out to everyone you have contact with. Make a list of businesses within a five mile radius of your location. According to Universal Accounting, "With this list, you will want to go to the library or city/county clerk's office and obtain the owner's name, mailing address, and type of business. This information is available to the public from the Business License records." Mail out a letter of introduction along with several business cards.
ï‚· Create a joint venture with businesses that can refer clients to each other. Tax preparers can send their clients to a bookkeeping business and vice versa.
ï‚· Attend trade shows. Trade shows are a way to meet people, be visible in the community and generate new customers.
Developing commission based marketing teams in every borough of London attracting customers from there borough. They will be paid only when they will be signing a new customer.
Internet Marketing;
ï‚· Start a website and have a presence on the Internet. This website should also provides site traffic reports showing how many visitors there have been, a contact-management system allowing frequent contact with visitors and online business applications that assist in managing your online business.
ï‚· Begin a blog writing short bits of information about your business. Blogs are a way of providing up-to-date information about your industry and valuable topics customers need to make an informed decision when choosing a bookkeeping business. Blogger, Blogspot, WordPress, and 360 Degrees are free blog sites to choose from, and all provide directions for getting started.
ï‚· Ping your Blog, Pinging will let the search engines know when you have put additional information on the blog. Ping sites include: Pingomatic, Google, King Ping, Feedshark, AutoPinger and FeedBurner. You will need the name of the blog and the blog url address and the ping site will send out the pings.
ï‚· Place a classified ad on many websites for free. This type of Internet advertising, for a small business, provides exposure just like classified ads in the newspaper. Place an ad in CliQs.com, Hoobly.com, DomesticSale.com, webclassifieds.us, pennysaverusa.com, or finditclassifieds.com. The content for marketing a bookkeeping business should focus on what individuals need and how your bookkeeping service can fill that need. Benefits for a bookkeeping business would be "reduce tax liabilities", "respect your privacy", or "peace of mind".
ï‚· Use the social websites to market a bookkeeping service. Create accounts on Craigslist, MySpace, LinkedIn, Facebook, and Twitter. Become part of those communities and become known as an expert in the field.
ï‚· Write articles about topics potential customers would find interesting and submit them to prominent article directories such as ezinearticles, goarticles, and articledashboard. The resource box will be about your expertise in the industry and have a link to your website or blog
P 3.3; DEVELOP APPROPRIATE MEASURES TO MONITOR AND EVALUATE PROGRESS;
To monitor and evaluate progress, ensure customer satisfaction and delight with the Bookkeeping & Accounting services firm, the following tactics will be used:
Satisfaction surveys after two weeks and then every six months with ongoing clients will be made.
Satisfaction surveys upon the completion of service for one-time clients
Compilation of this survey data into a database provided through the survey provider with the goal of "very satisfied" for at least 75% of responses and "not satisfied" for less then 5%
Answers of "not satisfied" will be looked into by all personnel involved and a common answer to solve the problem both for that client and future clients will be offered
Discounts or refunds will be offered for unsatisfied clients along with an apology for the problem.
