Business Plan for a Financial Divorce Software
Business Plan Divorce Software
Business Plan relating to the Sales of a new Financial Divorce Software.
Business Plan relating to the Sales of a new Financial Divorce Software
F
F1
F2
F3
G1
G1(a)
G1(b)
G1(c)
Business Identification
Keys to Success
Company Summary
Industry History
Legal Form of Ownership
Location and Facilities
Management Structure
Products and Service
Market Analysis
Target Market
Industry Analysis
Competitive Analysis
Market Strategy
Ps of Marketing
Price List
Selling Strategy
Sales Forecast
Implementation Strategy
Overall Strategy
Implementation
Control Plan
Financial Statements and Projections
Revenue and Cost Estimate
Forecasted Profit and Loss Statement
Forecasted Balance Sheet
Financial Assumptions
Breakeven Point
Financial Position
Capital/Investment Needs
Conclusion
References
Executive Summary
Financial planning is involved in every aspect of life. Individuals and businesses have to formulate their daily, monthly, and yearly budgets in order to achieve a balance between their incomes and expenditures. Among other matters, divorce is also a critical issue in individuals’ lives. In addition to family conflicts and break-ups, divorce also brings serious financial problems for both the parties (Women Advisors Forum, 2011). Therefore, it is very important to have advice from financial planners and analysts on matters related to divorce; including husband’s income and expenditures, wife’s incomes and expenditures, financial affidavits, marital and separate property calculation, assessment, and division, children support and custody, filing status, net worth statements, and the like (Association of Divorce Financial Planners, 2012).
In this modern era of rapid technological advancements, software companies are developing applications, programs, and software to meet the requirements of all types of individual and corporate clients. Financial divorce software is one of the latest developments in the field of Family Law. This software provides all kinds of assessment, analysis, and planning on different divorce matters to the specialized financial divorce planners and family law attorneys. At present, a number of financial divorce software are being offered by different companies which provide every type of planning and analysis options to their users. However, none of them is web-based.
A1: Business Identification:
The CleanDivision Company has developed its financial divorce software with an extra feature of web-connectivity. Before its launch to the potential target customers, the company has to formulate a full fledge business plan for this software. This report presents a complete business plan for the CleanDivision Financial Divorce Software which is to be offered to the potential customers in the United States and Canada. The report starts with an ample introduction to the Company; its mission and strategic objectives, history of the industry, legal form of ownership of the company, location and facilities, management structure, and major product offerings. The Market Analysis section describes the segment of the industry which the company intends to target for its financial divorce software, the current situation and conditions of the financial divorce industry, and the intensity of competition which the company will experience in this industry.
The next section of the report, Marketing Strategies discusses the major business development and promotional strategies which the company will implement to increase its awareness among potential customers and sales volume of its CleanDivision financial divorce software. These strategies include 4 Ps of marketing, pricing list, selling strategies, and sales forecast for the initial one to three years period. The ‘Implementation Strategy’ section gives an overview of the company’s procedures of ensuring a successful implementation of its software. Finally, the ‘Financial Statements and Projections’ section gives a detailed analysis of the projected financial performance of the company after the successful launch of its software product.
A2: Mission, Goals and Objectives:
The Mission of CleanDivision behind developing advanced financial divorce software is to assist the general customers of divorce cases and the family law attorneys, financial divorce planners, and other law professionals who deal these customers. The strategic objective of the firm is to establish its presence as a supreme quality software provider in the entire United States and Canadian market. The firm also aims to establish strong business relationships with its customers, suppliers, distribution agencies, business development firms, governmental agencies and regulatory bodies, and all other key stakeholders on the basis of strong business ethics, principles, and practices.
A3: Keys to Success:
a. Perceived usefulness of the software:
For CleanDivision financial divorce software, the key success factors can be determined on the basis of its growth potential in the market and acceptability among its customers. The most important success factor is the perceived usefulness among the potential customers. For example, the well-established and well-off family law attorneys and financial divorce planners will definitely need such software which can assist them in dealing with their divorce customers in a more efficient and effective manner (Women Advisors Forum, 2011). Similarly, the general public who passes through divorce cases will prefer those family law attorneys and financial divorce planners who have implemented some reliable and efficient divorce calculator and analysis software.
b. Pricing of the software:
The second most important success factor for the CleanDivision Financial Divorce software is its price and maintenance cost for the customers. If CleanDivision will set a reasonable price for its software, it will be able to target a larger customer segment (Association of Divorce Financial Planners, 2012). Conversely, if it will charge a high price for the software, only well-off and established businesses and professionals will buy it (Cadle, Paul, & Yeates, 2010).
c. Software features and functions:
Another success factor for the software is its features which distinguish it from other similar software. CleanDivision Financial Divorce Software comes up with an extensive range of advanced features and functions. The web connectivity feature will act as the strongest competitive advantage for the software. This feature will greatly contribute in ensuring a high level of acceptability of the software among its potential customers and competing with the existing competitor products.
B. Company Summary
B1: Industry History:
Financial Divorce Planning industry has always been among the most mature service industries of the world. There is always a steady inflow and outflow of industry participants. Old and established businesses keep on leaving the industry while the number of new entrants is on a growing pace (Women Advisors Forum, 2011). In such type of industry conditions, CleanDivision will try to penetrate the industry with its highly advanced web-based financial divorce software. Although the industry has gone mature, the businesses operating in this industry are making attractive returns due to the increasing number of divorce clients in the country.
Anticipating an attractive market for web-based business software, CleanDivision will offer its financial divorce software to a large number of customers throughout the United States and Canada. The company’s customers will be the financial divorce planners and analysts, family law attorneys, and divorce law professionals (Women Advisors Forum, 2011). The company will try to penetrate as a first mover in industry segment of web-based financial divorce software.
B2: Legal Form of Ownership:
The CleanDivision Company is established as a partnership firm. The partners of the firm are Michael Kothakota who hold 51% shares and Mike Programmer with 49% shares.
A partnership deed is signed between both these partners that contain all the legal aspects of this business; including name, address, and other particulars of the partners, unlimited liability, number of shares held, capital invested by each partner, and the rights and responsibilities in the normal and special course of business. CleanDivision is an unlimited liability partnership business where each of the partners will be responsible to fulfill the obligations of the firm with his invested capital as well as from his personal assets. In the future when the business will strengthen its position in the industry as a successful business, the partners will transform this partnership into a joint stock company by making its shares available for sale to the potential investors from the local and international markets. This transformation may also change the entire ownership status and management structure of the firm.
B3: Location and Facilities:
The CleanDivision Financial Divorce Software will be initially developed for the Divorce Law and Finance professionals from the United States and Canada. In the first year of the launch of this software, CleanDivision will target only the well-established businesses in the most urbanized areas of the U.S. And Canadian region. With the passage of time, it will expand its target market and offer its software in other potential geographical locations. The company will also have to keeps its business processes and product offerings in align with the local Laws and Regulations on financial software development (Association of Divorce Financial Planners, 2012). For example, the owners will have to register their business incarnation as a partnership firm with the Registrar of Firms in the United States and Canada.
Secondly, they will have to keep in mind the business ethics and quality standards while designing their marketing and promotional strategies and offering the software to the ultimate customers. In the future when the company will have established its brand image in the United States and Canadian region, it will expand its operations into other countries. The Laws and Regulations in those new markets may be totally different from those in the local regions. Therefore, CleanDivision will have to set new international strategies while setting up its business in new geographical locations.
B4: Management Structure:
The ownership of the CleanDivision business is in the hands of both the partners. Michael Kothakota is the majority shareholder in the firm with 51% shares whereas Mike Programmer is the second major shareholder with 49% shares. The Management functions for the firm will be performed by both the partners. Planning and decision making, leading, staffing, organizing, and controlling of the firm’s business will be done by the partners with mutual understanding, experience held, and the analysis of the present situation. The major shareholder, Mr. Michael Kothakota is a Certified Divorce Financial analyst and has gained experience with more than 60 attorneys. He also has a direct contact with the President of the Institute of Divorce Financial Analysts. This experience and communication will greatly benefit him in effectively managing his business.
B5: Product Offering:
The product which CleanDivision intends to offer to its customers is divorce software, named CleanDivision Financial Divorce Software. The product is developed in a view to fill the gap between what is required by the customers to bring innovation in their business processes and what is available to them. The CleanDivision Financial Divorce Software is a web-based program that will allow its users to access their uploaded information from any place in the world. It will come up with a multi-processing feature for its users which will facilitate them in completing their projects and orders with full efficiency and reliability.
The CleanDivision Financial Divorce Software will provide calculation and analysis techniques for assessing husband’s income and expenditures, wife’s incomes and expenditures, net worth statements, children support and custody, financial affidavits, marital and separate property assessment, and filing status. The software will also provide sample reports on different divorce matters which will be available to the general customers to get an overview of the whole divorce process.
C. Market Analysis
The market analysis helps a company in identifying the most potential segment of the market to target for its products. This analysis is made on the basis of current industry patterns, intensity of competition, and the behavior of customers towards a particular product or service (Kotler, Brown, Burton, Deans, & Armstrong, 2010). Therefore, a market analysis includes the identification of target customers, industry structure, patterns, and trends, and the competitive analysis for the company’s product or service (Kurtz, MacKenzie, & Snow, 2010). The following paragraphs present a complete market analysis for CleanDivision Financial Divorce Software.
C1: Target Market:
CleanDivision intends to become the first mover in its industry in introducing financial divorce software that is web-based. Therefore, the target market for the CleanDivision Financial Divorce Software will be greater than that of non-web-based divorce software. Reason being, web-based financial software will be able to provide more flexibility and convenience to its users. The target market for CleanDivision financial divorce software can be divided into three major categories; divorce financial planners (CDPs) or divorce financial analysts (CDFAs), family law attorneys, and other Accounting, Law, and Finance professionals who directly or indirectly serve the general public on divorce cases (Association of Divorce Financial Planners, 2012).
The largest target market for CleanDivision financial divorce software is the divorce financial planners and divorce financial analysts who provide their services to their clients at each and every stage of divorce process. These professionals are over 1,700 in number in the United States and Canadian region. Family law attorneys are the second largest target market for this software. Although they are above 2,000 in number, but they get divorce cases less frequently than the specialized financial divorce analysts or planners (Women Advisors Forum, 2011). The third largest target market consists of accounting, law, and finance professionals who take divorce cases. All these professionals will use this software to assist and serve their clients with greater efficiency and effectiveness (Association of Divorce Financial Planners, 2012).
Target Market Segmentation:
The target market for CleanDivision Financial Divorce Software can also be segmented on the basis of incomes or the level of business of divorce financial planners or analysts. For example, the divorce financial planners or family law attorneys who are well-off and have a strong business incarnation can easily invest in expensive business software like CleanDivision. On the other hand, those financial divorce planners or family law attorneys who are new in the industry hesitate in making a huge investment in implementing some business software for their newly established business (Association of Divorce Financial Planners, 2012). Therefore, CleanDivision will initially target those financial divorce planners and family law attorneys who have a good business potential due to their established name in the industry. In the later years, the CleanDivision Financial Divorce Software will get famous in the industry which will help the company in attracting a broader base of customers from all over the region.
C2: Industry Analysis:
The financial divorce planning industry typically constitutes specialized financial divorce planners and analysts, family law attorneys, and Divorce lawyers. These professionals provide unbiased services to their clients and assist them in making better assessment and division of their assets and obligations (Women Advisors Forum, 2011). Generally, certified financial divorce planners are categorized under the group of Special Lawyers who only deal with the clients of divorce cases. Therefore, the financial divorce planning industry has a very limited market. The industry has experienced an increase in the number of divorce cases during the last ten to fifteen years.
Analysts are of the view that the increase in this number has caused due to the more frequent family conflicts and issues during this period. Now, the life has become faster and more disturbed which also hampers the family relationships in different ways. When family conflicts take the form of serious relationship issues, couples go for divorce in order to get themselves free of those conflicts or issues and start a new life (Association of Divorce Financial Planners, 2012).
There are a large number of financial divorces planning software in the market which are developed by keeping in view the customers’ requirements (Frederic, Agnes, & John, 2011). However, the CleanDivision Financial Divorce Software brings certain extra features which are not present in the currently available financial divorce software. The most prominent feature is its web-connectivity. CleanDivision is totally web-based software which has just targeted this industry. The financial divorce planning industry will see certain changes in its operations and sales due to the introduction of this web-based financial divorce software; a decrease in the employment level, an improvement in service efficiency, and an increase in the sales are few of these major changes (Association of Divorce Financial Planners, 2012).
C3: Competitive Analysis:
CleanDivision Financial Divorce Planning software has a first mover advantage in the divorce software industry due to its web-based functionality. However, the software is new in the industry which can put hurdles in its acceptability among the potential customers (Francis, 2010). The biggest challenge for CleanDivision will be to compete with the existing financial divorce planning software offered by some well-known companies. The competitive analysis will help in analyzing the level and intensity of competition which CleanDivision divorce software will face in its industry. The analysis constitutes the assessment of competition on the basis of five different forces, known as Michael Porter’s Five Forces Model. They include; rivalry among the existing competitors, threat from the new entrants, threat from the substitute products, the bargaining power of suppliers, and the bargaining power of customers. These are now discussed below in detail:
a. Rivalry among the existing competitors:
The financial divorce software industry is dominated by a few large corporations that are selling their highly advanced software to the entire industry of the United States and Canadian region. The most famous financial divorce software currently available in the industry include; Fin Plan, Family Law Software, Divorce Settlement Analyst Software, Divorce Financial Planner, etc. These are the software offered by some well-established and renowned business corporations. Therefore, CleanDivision will face a very stiff competition from the existing rivals in the industry. These software and their companies are also the biggest threat for CleanDivision as they can put hurdles in the way of its successful emergence and establishment in the industry.
b. Threat from the New Entrants:
In addition to the top notch industry rivals, CleanDivision financial divorce software will also face a hard competition from the new entrants in the industry. The new software can either be web-based or non-web based, but can equally hamper the profitability and customer base for CleanDivision. In order to penetrate in the industry more competitively, CleanDivision will have to strategize the ways through which it can restrict the new entrants from establishing their presence in this industry. Most of the times, new software are the advanced versions of previous software developed by the same company. Therefore, it will be a more challenging task for CleanDivision that how it competes with the new software of well-established business software corporations.
c. Threat from the substitute products:
As CleanDivision financial divorce software is web-based program, the substitute or alternate for this program will be the non-web-based programs available in the market. CleanDivision can get benefit from its web connectivity feature in order to compete with these alternate products. Additionally, CleanDivision will also have a threat from those firms that provide consultation and advice on matters related to divorce and separation without using any internet application or any kind of software. These firms will also act as a substitute for the CleanDivision financial divorce software.
d. Bargaining Power of Suppliers:
The bargaining power of suppliers refers to the degree to which the financial divorce planners and analysts can charge any price for their services. There are various well-established and reliable businesses in the United States and Canada which are offering divorce planning and advice services to their clients, but they find it harder to charge high price for these services due to a high level of competition in the industry.
e. Bargaining Power of Buyers:
Each divorce case brings two customers to the whole industry participants at a time; a husband and a wife. Both of them consult different financial divorce analysts or family law attorneys according to reputation of these professionals and the budget of their own. Due to the presence of a large number of financial divorce planners and family law attorneys in the United States and Canadian market, the customers have a wide choice of choosing the ones which best meet their financial constraints and time limitations. Therefore, buyers are on the stronger bargaining edge than these professionals in the industry (Association of Divorce Financial Planners, 2012).
D. Marketing Strategies
Marketing strategies are among the most critical decisions for a business organization (Jenny & Scammon, 2010). They include all those marketing and promotional tactics which can be used to increase the company’s sales volume and strengthen its brand image among its customers (Jobber, 2009). The core marketing strategies which are widely used by business organizations all over the world include Marketing Mix (the 4 Ps of Marketing), pricing, selling strategies, and sales forecasting for a particular product or service (Lancaster & Withey, 2007). The Marketing Strategies for the CleanDivision Financial Divorce Software are explained in the following section:
D1: 4 Ps of Marketing for CleanDivision Financial Divorce Software:
The 4 Ps of Marketing (often called the ‘Marketing Mix’) help a company in deciding the four most important marketing strategies for its product or service. Each product or service offered by a company has its own marketing mix that plays the key role in the success or failure of that product or service. The 4 Ps of Marketing are Product Strategies, Pricing Strategies, Promotion (or Communication) Strategies, and Place (or Distribution) Strategies. The 4 Ps of Marketing for the CleanDivision Financial Divorce Software are discussed in the following paragraphs:
a. Product Strategies:
The Company’s aim behind introducing CleanDivision Financial Divorce Software is to bring an innovative product that is not available in the market. The biggest benefit which the company will realize from its web-based financial divorce software will be its high level of acceptability among family law attorneys and financial divorce planners. The new CleanDivision software will have some competitive advantages over all other non-web-based software. The company intends to store the software data on a server which will be easily accessible for all the authorized professionals and users from any location in the world.
2. Pricing Strategies:
Due to its extra features and high marketing and promotional costs, the CleanDivision Financial Divorce Software will be sold at a comparatively higher price than other non-web-based software. The company has decided to sell this software on subscription basis. That is, the customers can subscribe for the product on monthly, bi-annual, and annual basis. The monthly subscription charges are $30. The customers can enjoy discounted rate of $300 if they subscribe the software for the whole year. The software will have certain extra charges which the customers will have to pay while purchasing this software for their business. The limited feature version of the software will also be available for just $49. Other expenses include the purchase of initial website domain for $120 and design template for $15. The company has set this initial price high because it has to recover its investment in a short period of time. A high price for the software will also enable the company to get good profit margins on every unit of sale. However, it may make it difficult for the company to compete on the basis of price which is one of the key success factors in this business.
c. Promotion Strategies:
CleanDivision will promote its financial divorce software using all the promotional mediums including electronic media, print media, social media, and public relations. The electronic media, including television and radio will be the most expensive medium for the promotion of this software while social media networking and internet are the most cost-efficient mediums. Overall, the company will have to bear heavy marketing and promotional costs for its new software in order to create awareness among the most potential market segment. The print media will also be used for the advertisement of CleanDivision software; daily newspapers, publications, and circulars will be used for this purpose.
d. Distribution Strategies:
CleanDivision will take the services of distribution agencies and software houses to make its product available to all the potential market segments. The initial target of the company will be to reach all the attractive destination of the United States and Canada and market its products to the well-established businesses in the financial divorce planning industry. The distribution agencies and software houses will be offered attractive commission for each new subscription for the company’s software.
D2: Price List:
Sr. #
Particulars
Price
Monthly Subscription
Bi-Annual Subscription
Annual Subscription
1
Subscription Fee
$30
$175
$300
2
Setup Fee (Single Time)
$99
$99
$99
3
Purchase of Initial Website Domain
$120
$120
$120
4
Purchase of Design Template
$15
$15
$15
5
Testing and Maintenance Fee
$10
$55
$100
Total
$274
$464
$634
D3: Selling Strategy:
CleanDivision has set certain sales objectives for its financial divorce software for the initial three years period. These sales objectives or goals will help the Management team and the CleanDivision workforce in assessing their performance and progress with each passing day. The company has set both qualitative and quantitative objectives for this software. The qualitative objectives for the CleanDivision Financial Divorce Software are to create its awareness among the potential market segment in the United States and Canadian market, increase market share of the company with a rapid sales growth in the initial period of the software launch, and developing a strong brand image among the key stakeholders of the company. The quantitative objectives include the achievement of exceptional financial results through high Return on Investment (ROI) and shortest possible Pay Back Period (PBP).
During the first year of the software launch, the company intends to achieve a high sales volume by attracting a large number of customers towards this product. The second and third year milestones will be achieved by giving strong focus on developing the brand image in the financial divorce planning industry (Association of Divorce Financial Planners, 2012). The company has also set some distribution and delivery objectives for the initial three years period. The distribution agencies will sponsor the CleanDivision product through their public relations and high recognition in the market. They will be responsible to market and deliver the company’s product to well-established businesses in the industry.
D4: Sales Forecast:
The sales forecast for the CleanDivision Financial Divorce Software can be made on the basis of current industry patterns, market conditions, and the level of competition. It is anticipated that the company will get high recognition during the initial period due to its first mover advantage of web connectivity and more user-friendly interface than the other non-web-based financial divorce software. According to an estimate, more than 1.7 Million people get divorce each year while there are more than 7,000 financial divorce planners, family law attorneys, and finance or law professionals who deal divorce cases. On the other hand, the intensity of competition can bring hard challenges for the company in achieving a high sales growth in the initial period.
Based on these market conditions, it can be forecasted that the company will be able to sell its CleanDivision software to more than 100 financial divorce analysts or planners and 20-25 family law attorneys in the first year of its launch. Therefore, the projected sales figure for the first year is $34,250 if the company sells its software to 100 financial divorce planners and 25 family law attorneys on a one-month subscription basis. Similarly, if half of these customers get a bi-annual subscription while the rest purchase one-month subscription, the company can forecast its sales figure at $46,125. In case all the 125 customers get full year subscription for the software, the company’s sales figure will touch $79,250 at the end of the first year. If all the negative market conditions are kept constant, the company can make an annual income of $2,496,000 at the end of its first year of establishment.
E. Implementation Strategy
Introduction of a new product to the market requires high research & development, manufacturing, technology, marketing, and operational costs. Therefore, a company must ensure that the product is delivered to its ultimate customer or user in the most reliable way. The implementation Strategies are formulated in a view to ensure a successful launch and implementation of a project (McDonald, 2011). These strategies also include the testing and control activities which help the company in assessing the effectiveness of the project. The business software has to be run for all the major business operations of the company. Therefore, the Management must give an equal emphasis on its efficient and effective implementation (Paley, 2006). The implementation strategies for CleanDivision divorce software are as follows:
E1: Overall Strategy:
CleanDivision will find two types of customers for its financial divorce software; first, who have already implemented similar software and want to upgrade it to a newer and better version, and second, those who do not use any kind of web-services or computer applications to serve their clients. Therefore, the overall implementation strategy for both these types of customers will be different from each other depending upon the scale of their operations, size of their businesses, and projected use and traffic on the web-server.
For the first type of customers who have already instituted some business software to deal with their divorce clients, the company will use full implementation strategy. That is, the software will not be implemented in parts; rather than the full setup of the software will be available to the company for its usage. On the other hand, the company will use pilot implementation strategy for the new users who have never used any type of business software in their operations. In pilot implementation, the company will install the software with maximum 20-25% features. The pilot form of the software will help the company’s owners and employees in learning the basics of the software. The installation and implementation of the software will be completed in a very short time span in order to make the full functions and features available to the company.
E2: Implementation:
The implementation of the software is planned to be completed in a target period of six months from its purchase by the customer. CleanDivision has set a timeline which will help it in effectively implementing its software. The six-month required for the implementation of the software will be divided into three major timelines. In the first period of about one month, the company will implement the pilot version of its CleanDivision financial divorce software. The company will also provide training and development to the company’s employees on how to use the software and access all types of available features.
The training period will start soon after the implementation of the pilot version and will last till the full software is implemented at the customer’s work setting. At the end of six-month period, the customer will be using the software with its full functions and features. CleanDivision has set these implementation goals in order to provide its customers a specific time in which they will be able to transform their previous manual business processes into computerized and web-based business software.
E3: Control Plan:
A control plan will help CleanDivision in assessing its progress towards the set strategies and objectives for its financial divorce software. In this control plan, the company will measure its current performance and compares it with the set standards and milestones. If the company will find a consistent and satisfactory progress, there will be no need to take any corrective action. Conversely, if the company will find its performance poorer than the set milestones, it will revise its policies and procedures which were formulated to meet those milestones. In severe cases where the performance of the company will be highly unsatisfactory, it may have to redesign its entire implementation strategy.
F. Financial Statements and Projections
This section presents a set of projected financial statements for the CleanDivision Financial Divorce Software. These statements are prepared on the basis of assumptions, current market conditions, and the company’s competencies to operate in the industry.
F1: Revenue and Cost Estimate:
CleanDivision Revenues and Cost Estimate
Monthly Profit and Loss
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Amounts in USD 000′
Total Revenue
1,012
Cost of Revenue
Gross Profit
Operating Expenses
Research Development
12
11
14
18
20
23
25
29
26
28
32
27
Selling General and Administrative
15
19
34
40
43
50
54
66
56
67
56
60
Non-Recurring
10
10
10
Salary expenses
26
26
28
32
32
32
32
36
36
40
46
48
Payroll expenses
12
12
24
24
25
25
27
30
24
29
20
29
Repairs and maintenance
18
20
30
34
26
28
30
34
26
32
34
36
Marketing and Advertising
43
54
67
78
80
90
98
98
Accounting and legal
12
12
12
14
14
14
20
20
20
25
25
25
Utilities
24
25
30
34
37
41
45
47
25
28
32
32
Insurance
12
12
12
12
12
12
12
12
12
12
12
12
Total Operating Expenses
Operating Income/(Loss)
98
91
Income from Continuing Operations
Total Other Income/Expenses Net
Earnings Before Interest And Taxes
F2: Forecasted Profit and Loss Statement
Monthly Profit and Loss
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Amounts in USD 000′
Total Revenue
1,012
Cost of Revenue
Gross Profit
Operating Expenses
Research Development
12
11
14
18
20
23
25
29
26
28
32
27
Selling General and Administrative
15
19
34
40
43
50
54
66
56
67
56
60
Non-Recurring
10
10
10
Salary expenses
26
26
28
32
32
32
32
36
36
40
46
48
Payroll expenses
12
12
24
24
25
25
27
30
24
29
20
29
Repairs and maintenance
18
20
30
34
26
28
30
34
26
32
34
36
Marketing and Advertising
43
54
67
78
80
90
98
98
Accounting and legal
12
12
12
14
14
14
20
20
20
25
25
25
Utilities
24
25
30
34
37
41
45
47
25
28
32
32
Insurance
12
12
12
12
12
12
12
12
12
12
12
12
Total Operating Expenses
Operating Income/(Loss)
98
91
Income from Continuing Operations
Total Other Income/Expenses Net
Earnings Before Interest And Taxes
Interest Expense
32
35
36
36
40
42
43
45
46
48
51
54
Income Before Tax
Income Tax Expense
24
22
26
34
37
44
34
67
37
40
60
34
Minority Interest
Net Income From Continuing Operations
Non-recurring Events
Discontinued Operations
Extraordinary Items
Effect Of Accounting Changes
Net Income/(Loss) [Monthly
Net Income/(Loss) [Annual]
2,496
F3: Forecasted Balance Sheet:
Balance Sheet
Amounts in USD 000′
Assets
Current Assets
Cash And Cash Equivalents
2,450
Short-Term Investments
1,200
Net Receivables
Inventory
Other Current Assets
Total Current Assets
4,280
Long-Term Assets
Long-Term Investments
3,400
Property Plant and Equipment
1,200
Goodwill
Intangible Assets
1,230
Accumulated Amortization
Other Assets
Deferred Long-Term Asset Charges
Total Long-Term Assets
6,290
Total Assets
10,570
Liabilities
Current Liabilities
Accounts Payable
Short/Current Long-Term Debt
1,900
Other Current Liabilities
Total Current Liabilities
3,317
Long-Term Liabilities
Long-Term Debt
3,200
Other Liabilities
Deferred Long-Term Liability Charges
Minority Interest
Negative Goodwill
Total Long-Term Liabilities
4,060
Total Liabilities
7,377
Stockholders’ Equity
Misc Stocks Options Warrants
Redeemable Preferred Stock
Preferred Stock
Common Stock
Retained Earnings
1,883
Capital Surplus
Other Stockholder Equity
Total Stockholders’ Equity
3,193
G1: Financial Assumptions used in forecasting Revenues and Costs for CleanDivision Software
In projecting the revenues and costs for the CleanDivision software, it was assumed that the company will easily penetrate in the financial divorce software industry due to its competitive advantage of web-connectivity and more user-friendly interface. Therefore, it will generate attractive returns in the initial period of the launch. However, the marketing and promotional expenses for the business will also be higher due to a stiff competition in the market.
Research and Development expenses:
As far as the Research and Development expenses are concerned, they will also keep on increasing with the passage of time. It is because the company will have to expend higher amount on its R&D efforts in a view to keep its software, systems, and web-server updated. The expenses on R&D are also projected higher because the company will also have to ensure that the software never gives in-effective outcomes due to technical faults or malwares.
Other Operating expenses:
Similarly, the Selling and Administrative expenses, Salary and Payroll expenses, Repairs and maintenance Charges, Marketing and Advertising costs, Accounting and legal charges, and other expenses will increase during the year according to the increase in the scale and size of business operations. For example, the salary and payroll expenses will increase when the company will make hiring for its business setup. Due to this hiring, the training and development costs will also increase. Overall, if the company gets successful in attracting a large number of customers from different fields of Finance and Divorce Law, it will make an approximate income of $2,496,000 at the end of the initial year of the software launch.
G1 (a): Breakeven Point:
As per the projected costs and revenues for the first year, the company will be able to achieve its breakeven point at the beginning of the 10th month if its sales figures grow at a faster pace than its overall business costs in the initial 6 to 9 months period. The company’s total costs of revenues in the first 6 months will be $2,574,000 whereas the sales revenues will be $4,874,000. These costs also bear the burden of heavy operating expenses, interest expenses, and business taxation. After recovering all the operating and other expenses in the first 6-9 months period, the company will start generating revenues as its net income for the year. At the end of the first year, the net income is projected to be $2,496,000.
G1 (b): Financial Position:
At the end of the first year, the company’s financial position will show satisfactory figures to the owners. The current assets of the company are $4,280,000 whereas the current liabilities are $3,317,000. It means the company will be in a position to pay off its short-term obligations without taking financial assistance from creditors. The long-term assets of the company are $6,290,000 in contrast to the long-term liabilities of $4,060. The company has acquired these assets from long-term debts as well as from the partners’ stakes. At the end of the first year, the company will have retained earnings of nearly $1,883,000 which will be available in the short run for meeting the uncertainties and unexpected costs in the general business operations.
The Cash and Cash equivalents are $2,450,000 at the end of the first year. This is the figure which shows the readily available money with the company. The company can utilize this money whenever it will have to make cash purchases or pay off some short-term liabilities on urgent basis. The company will also make certain short-term investments in related businesses. For example, it can make contractual agreements with the cable manufacturers, PC vendors, and networking companies to provide their services for a pre-decided period of time. These business relationships will save the company’s costs if those vendors will offer attractive discounts on long-term purchase agreements. The company will also expend an approximate amount of $1,200,000 during the first year on acquiring its own computer systems, Research and Development plants, and machineries for the business. The controlling, testing, and maintenance costs are also associated with these types of acquisitions. These are the unavoidable costs which the company will have to incur in order to keep itself competitive and profitable in the industry.
While projecting this financial position of the company, it is assumed that the partners will rely more on their personal investments instead of taking short-term and long-term debts from financial institutions and other creditors. In order to avoid the heavy interest expenses for these loans, the owners have decided to start this business on small scale and grow it up with the passage of time with the help of its self-generated revenues.
G1(c): Capital/Investment Needs:
The initial capital invested by the owners will not be enough to meet the heavy business startup and operational costs. Therefore, the company will need investment from external parties to fund its penetration plans and marketing activities in the financial divorce industry. As per the projected balance sheet for the first year, the owners will contribute $120,000 as equity in the business. As the startup costs of business software are much higher than a consumer product launch, the company will need to attract more and more investors to fund its startup and operational costs in the first year. The Research and Development, marketing and promotional, legal requirements, and implementation costs will put a heavy financial burden on the company’s assets (Blythe & Megicks, 2010).
Conclusion
CleanDivision financial divorce software is being introduced to bring innovation in the divorce planning and analysis practices in the United States and Canadian regions. A number of financial divorce software is available in the market which facilitate the customers with divorce cases and the law professionals who deal these customers, but there is no software which is web-based. CleanDivision financial divorce software will fill this gap in the industry and provide such a business setting where divorce law professionals will be able to serve their customers in a more efficient and reliable manner. CleanDivision intends to target a large customer segment for its software.
The potential target market for this software constitutes family law attorneys and financial divorce planners that are operating in the United States and Canadian markets. The number of divorce cases has also been showing an increasing trend for the last few years which is a positive sign for the company (Association of Divorce Financial Planners, 2012). Moreover, the company will be able to attract a large customer segment with its core competencies of web-connectivity, advanced features, and user-friendly interface.
The business plan discussed in this report contains all the essential strategies which a company must formulate in order to sell its product in the most cost efficient and competitive fashion. The marketing strategies will help the company in deciding its product, pricing, promotion, and distribution strategies whereas the sales forecast and price listing will give it an estimate of the total expenses and incomes from this product launch. Finally, a set of projected financial statements is given which is developed on the basis of certain assumptions made in the light current market conditions and company’s competitiveness.
References
Association of Divorce Financial Planners, (2012). Divorce Financial Planning. Retrieved on July 7th, 2012, from
Blythe, J. & Megicks, P. (2010). Marketing Planning: Strategy, Environment and Context, 3rd Edition. U.K: Prentice Hall
Cadle, J., Paul, D., & Yeates, D. (2010). Business Analysis, 2nd Edition. Swindon: British Informatics Society
Francis, P. (2010). Creating the Marketing Executive of the Future Using Key Deming Principles, Journal of Executive Education, 9 (1): 127-138
Frederic, M., Agnes, V., & John, M. (2011). Pest Analysis, 2nd Edition. U.K: Gardners Books
Jenny, M., & Scammon, D.L. (2010). Principle-Based Stakeholder Marketing: Insights from Private Triple-Bottom-Line Firms, Journal of Public Policy & Marketing, 29 (1): 12-26
Jobber, D. (2009). Principles and Practice of Marketing, 6th Edition. U.K: McGraw Hill
Kotler, P., Brown, L., Burton, S., Deans, K., & Armstrong, G. (2010). Marketing, 8th Edition. U.S.: Prentice-Hall
Kurtz, D.L., MacKenzie, H.F., & Snow, K. (2010). Contemporary Marketing, 2nd Edition. Toronto: Nelson Education
Lancaster, G., & Withey, F. (2007). Marketing Fundamentals, 2nd Edition. U.K: Butterworth-Heinemann
McDonald, M. (2011). Marketing Plans: how to prepare them, how to use them, 7th Edition. Chichester: Wiley.
Paley, N. (2006). The Manager’s Guide to Competitive Marketing Strategies, 3rd Edition. London: Thorogood Corporation
Women Advisors Forum, (2011). What is a Divorce Financial Planner? Retrieved on July 7th, 2012, from
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