The Strong Investment, LLC Business Plan

The Strong Investment, LLC Business Plan| 3/14/20121

Betty Strong, Agent

770-474-8597 office

770-639-2345 cell

Contents

Pages

2. Executive Summary

Mission

Keys to Success

Objectives

3. Company Summary

Company Ownership

Start-up Summary

Services

4. Analysis Summary

Market Segmentation

Service Business Analysis

Competition and Buying Patterns

5. Strategy and Implementation Summary

Sales Strategy

Sales Forecast

Marketing Strategy

6. Management Summary

Personnel

7. Financial Plan

Important Assumptions

Break-even Analysis

Projected Profit and Loss

Projected Cash Flow

Projected Balance Sheet

Business Ratios

Executive Summary

Introduction
Strong Investment Group, LLC is a start-up company in the Stockbridge area. I started my own service business in 2001 and since then have been the sole proprietor of Strong Investment Group, LLC. To better understand my background and my business I was originally a Certified Medical Assistant (CMA) through NCCT and certified as a Registered Medical Assistant (RMA) though American Medical Technologists (AMT). This was my life until I attended a meeting at the Real Estate and Investors Association here in Atlanta, Georgia. I was instantly drawn to the real-estate business and I immediately decided to become a real-estate agent with GMAC, in Atlanta, Ga. and started selling homes.

As someone new to the field I started with no money as my work in the medical field working as an office coordinator was only paying at most $17 an hour. For about six months I did what is called flipping and made $5,000 and $10,000 at a time while learning the ropes of the business. After a period of time I had gained enough investment capital to start buying my own houses and fixing them up for resale with cash. At this point I applied to the court house for a business license in which I would work from my home. I hired a CPA which changed everything. He made my business a sole proprietorship and an S corporation which is an LLC.

In Georgia you have to have an LLC as one owner because of taxation and other legal issues. My CPA still handles my books. I have a very good understanding of accounting and the chart of accounts. I didn’t put everything in the accounts as the list would be extensive so it contains only what was required for the assignment. Since my business is in real estate some of my accounts are related.

The Company
Strong Investment Groupwill be a limited liability sole proprietor registered in the state of Georgia for tax purposes. Its founder is Mrs. Betty Strong, a former agent for GMAC real estate company, where she worked for 11 years.

The company plans to be leveraged through private investment and a limited number of loans. The company expects to begin offering its services in June.

The company's main clients will be family couples looking for a community that can offer significant services for their age group and income levels. Since Mrs. Strong is within this demographic group and knows and understands this market's needs, she believes that she can appeal to such clients far more than most other competitors.

The Strong Investment, LLC Business Plan| 3/14/20121

The Services
SIG, offers comprehensive real estate, mortgage and management services to our diverse clients. With Venture Capital, Inc. as our sponsor in the newly finished The Lakes at Spivey Ridge Community, we will have a premier position as the dominant seller of these new homes. In addition we will offer a full range of services to facilitate the purchasing and selling of real estate including the following:

Home search database.
Moving consulting, quotes, planning, etc.
Mortgage consulting and loan preapproval.
Community information.

Obtaining a comparative market analysis for potential sellers.

Appraising.
Property preparation.

Financial Considerations
Start-up expenses and funding required are modest. They include expenses and the rest in cash needed to support operations until revenues reach an acceptable level. Most of the company's liabilities willcome from outside

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private investors and management investment, however, we have current borrowing from Venture Capital Investments, the principal to be paid off in two years. A long-term loan through Bank of America will be paid off in ten years.

The company expects to reach profitability in the first year and does not anticipate any serious cash flow problems. We conservatively believe that during the first three years, average profitability per month per segment will be adequate. We expect that about one sale per month will guarantee a break-even point.

Mission

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It is the mission of SIG to provide real estate services in the newly established The Lakes at Spivey Ridge community, located Southwest of Stockbridge, Georgia. SIG is a full service real estate, mortgage, and management company.

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Keys to Success

SIG's keys to long-term survivability and profitability are as follows:

Establish and maintain close contacts with residential real estate listing services, and all other service organizations that SIG uses, such as Apria mortgage service company.
Keeping close contact with clients and establishing a well functioning long-term relationship with them to generate repeat business and obtain a top notch reputation.

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Establish a comprehensive

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service experience for our clients that includes consultation, sale preparation, community information, moving consultation, etc.

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Objectives

The three year goals for Strong Investment Group, (SIG) are the following:

Achieve break-even by year two.
Finalize and then expand our contract with Quadrant Homes, Inc. to broker real estate property in the Lakes at Spivey Ridge area.
Establish minimum 95% customer satisfaction rate to establish long-term relationships with our clients and create word-of-mouth marketing.

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Company Ownership

The company will be owned by Mrs. Betty Strong, who will be putting up all equity. All other financing will come from loans.

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Start-up Summary

Start-up expenses and funding required are shown in the table below. This includes expenses and the rest in cash needed to support operations until revenues reach an acceptable level. Most of the company's liabilities will come from outside private investors and management investment, however, we have obtained

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current borrowing from Venture Capital Investors, the principal to be paid off in two years. A long-term loan through Bank of America will be paid off in ten years.

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charts of Accounts,

Chart of Accounts
Acct. # / Account title
1100 / Cash
1200 / Supplies
1300 / Prepaid Insurance
1400 / Account Receivable
1500 / Equipment
1600 / Start up Expense
2100 / Accounts Payable
2200 / Notes Payable
2300 / Long Term Borrowing
3100 / Mrs. Betty Strong Capital
3200 / Mrs. Betty Strong Withdrawals
4100 / Services Revenue
5100 / Salary Expense
5200 / Supplies Expense
5300 / Utilities Expense
5400 / Depreciation Expense
5500 / Rent Expense

Start-up Requirements Start-up Expenses Legal $800 Insurance $1,500 utilities $200 Rent $3,000 Accounting and bookkeeping fees $2,000 Expensed equipment $8,000 Advertising $6,500 Other $8,000 Total Start-up Expenses $30,000 Start-up Assets Cash Required $44,500 Other Current Assets $3,500 Long-term Assets $5,000 Total Assets $53,000 Total Requirements $83,000

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Bottom of Form

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Start-up Funding
Start-up Expenses to Fund / $30,000
Start-up Assets to Fund / $53,000
Total Funding Required / $83,000
Assets
Non-cash Assets from Start-up / $8,500
Cash Requirements from Start-up / $44,500
Additional Cash Raised / $0
Cash Balance on Starting Date / $44,500
Total Assets / $53,000
Liabilities and Capital
Liabilities
Current Borrowing / $15,000
Long-term Liabilities / $45,000
Accounts Payable (Outstanding Bills) / $3,000
Other Current Liabilities (interest-free) / $0
Total Liabilities / $63,000
Capital
Planned Investment
Mrs. Betty Strong / $20,000
Additional Investment Requirement / $0
Total Planned Investment / $20,000
Loss at Start-up (Start-up Expenses) / ($30,000)
Total Capital / ($10,000)
Total Capital and Liabilities / $53,000
Total Funding / $83,000

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Internal control for my business means to safeguard my assets, encourage employees to follow company policy. I would need to promote operational efficiency. Because businesses cannot afford to waste resources. You have to ensure accurate, and reliable accounting records, they are essential. Without reliable records, the manages cannot tell which part of the business is profitable and which part needs improvement. (Horngren, Harrison & Oliver, 201

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Management Summary

The company will have only one full-time employee, Mrs. Betty Strong. The company's office will be in an office suite with four other businesses that will share the costs of a receptionist.

Personnel

Mrs. Betty Strong is a graduate of Colorado Technical University where she obtained her BA in Accounting in 2009. Since then, Mrs. Strong has had extensive experience in the real estate business, first working for GMAC Realty in Atlanta, GA and then later for RE/MAX, where she became head of south side operations. Mrs. Strong has recently retired from RE/MAX and desires to continue in the real estate business at a more "relaxed pace."

Personnel Plan
Year 1 / Year 2 / Year 3
Mrs. Betty Strong / $36,000 / $36,000 / $45,000
Part-time Receptionist / $10,500 / $13,000 / $13,000
Total of people / 2 / 2 / 2
Total Payroll / $46,500 / $49,000 / $58,000

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Financial Plan

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Since the firm has concluded our contract with Quadrant Homes, Inc., it is management's opinion that initial profitability will be fairly high for a start-up company. Our financial plan anticipates that we will achieve positive net income by the end of the first year. We have budgeted enough investment to cover any potential losses and have an additional personal financial resources available for equity investment if sales do not match predictions.

Important Assumptions

We are assuming approximately 15% sales on credit and average interest rates of 10%. These are considered to be conservative in case our predictions are erroneous.

General Assumptions
Year 1 / Year 2 / Year 3
Plan Month / 1 / 2 / 3
Current Interest Rate / 10% / 10% / 10%
Long – term Interest Rate / 10% / 10% / 10%
Tax Rate / 30% / 30% / 30%
Other / 0 / 0 / 0

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Break-even Analysis

Our break-even analysis is based on the assumption that our gross margin is 100%. In other words, we will have insignificant direct cost of sales. It is conservatively believed that during the first three years, average profitability per month per unit will be about an average 10% commission rate. Management expects that about one home sold per month will guarantee a break-even point.

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Sarbanes–Oxley Act

Due to scandals of company like Enron and Tyco, there was a need to set certain standard to determine the responsibility of public accounting firm, board of directors and management, to make sure that such events do not happen again. It was introduced in 2002.

Under this the senior executives are responsible for accurate and complete financial reporting. It also describes that they are also responsible for internal control to safeguard assets of the company. The also have to make sure that the internal control are implemented as designed, therefore they have to present a report of such compliance.

Keeping in view the above facts, as far as the business is in the category of sole proprietorship and it is not available to general public, the SOX does not apply to the business of real estate which is being established by Mrs. Betty as sole proprietor.

Integrity of accounting information

Financial reporting is done to give true and fair view of the financial condition of the business. One has to show the correct revenues, expenses, assets, liabilities and capital. The statement must match all these five items with the period for which the statements are being made.

The management responsibility of giving true picture of financial position of the business cannot be fulfilled without following the above process. This process also satisfies the requirement of basic principles of accounting known as GAAP such as cost principles, stable dollar, matching principle, revenue and expenses recognition principle.

It is the external auditor’s responsibility that management has fulfilled responsibility and has presented the financial statements in manner which gives true and fair view of the financial position of the company.

Start Here

Put all the charts in order, Start charts at start-up summary. I have the numbers needed in place already use them. Put them in the correct order. On the assignment sheet which is the first one at the top follow that. Then answer the questions below.

Consider how the Sarbanes-Oxley Act applies. I don’t really understand this
Discuss the challenges that you will face in ensuring the integrity of your company's accounting information.

The deliverable for this assignment is one Excel spreadsheet with worksheets for the journal, the ledger, and the trial balance, with the narrative part of the assignment pasted in from Word.