Strategic Plan

Josalyn Dietrich

STR/581

7/21/14

David Geerinck

Strategic Plan

Table of Contents Executive Summary 3 The Company 4 Environment Assessments 5 External Environment 5 Internal Environment 7 Long Term Goal 9 Value Discipline 9 Generic Strategies 9 Grand Strategies 10 Implementation Plan 10 Key Success Factors 14 Risk Management 14 Conclusion 15 Reference 16

The bookkeeping business being proposed in this document is being formed due to the owner’s perceived need in the industry. After working with small businesses, Josalyn Dietrich has seen that there are common problems facing small business owners, primarily related to the administrative tasks of bookkeeping and systemizing. The mission statement for this company is to provide bookkeeping and systemization services to small businesses. The vision statement is to get small business owners back to what they went into business to do.

After an internal and external environmental assessment, there are a few things that need to be noted in regards to the competitive position of this new business. The remote environment presents social and technological implications that can affect the way this business is to be run. This industry has low barriers to entry and the price competitiveness is the most important factor for the operating environment. Internally, the age of the business will be the most difficult factor to overcome, but also presents flexibility for the clients.

The long term goal of the company is to fill a full, forty-hour work week that is profitable. This will be realized by focusing on customer intimacy, a focus on differentiation, and product development, and will be achieved by the end of a two year timeline. The main risk will be a lack of continuous income through the transition into being fully self-employed and can be overcome by following the short term goals identified.

By combining the skill set and experience of the owner with the clear strategic plan presented here, the mission and vision can be realized.

When Josalyn Dietrich first started working with a small business, she knew that there was no way other businesses weren’t facing the same problems. After going through multiple business coaching sessions and hearing the same concerns addressed there, she knew that there had to be a way to help all of these people achieve this goal. She decided to open her own small business in hopes of helping other people run theirs.

After successfully creating systems for one business and managing the finances, the opportunity came to take more classes to help sharpen the skills she had and to work for another small business in a totally different field. Along with attaining a Master’s degree in Business Administration, these opportunities have come together to create a sort of perfect storm for the start of her own bookkeeping business.

The mission of this company is to provide bookkeeping and systemization services to small businesses. Being resourceful is very important to a small business. In the case of this business, the unique selling point is that the owner of this bookkeeping business happens to be good at, and enjoy, doing the administrative side of running a business. The idea of having an “administrative side” of a business is somewhat lost to many people looking to turn what they love to do into a business. This business provides a bridge to that gap.

The vision of this new business is to get small business owners back to what they went into business to do. This is the most important concept as it is really the start of why this business is being created. So many small business owners end up hating running their business because they aren’t doing what they had intended to do. Businesses need to be run; the goal of this business is to lessen that burden to the small business owner.

Bookkeeping for small businesses is an industry that is very open to new businesses forming, which is exactly what this new owner has decided to do. In the beginning stages of the company, it is important to analyze and interpret the internal and external environments of the business in order to assess the organization’s competitive position. Among this analysis, it is important to also address the organizational structure to ensure all the appropriate trades and skills are brought to the table.

In terms of the remote external environment, the most important factors for this business are the social and technological aspects of the business. The social implications to be considered here include the privacy that most people value when it comes to their finances. Many people have expressed that they are uncomfortable with the idea of letting other people have access to their financial information. This can be a huge factor because in order to be a bookkeeper, there is no degree that is required, whereas to be an accountant or a professional tax preparer require certain levels of certification, so it gives the client a sense of security when hiring. It would be in the owner of a bookkeeping business’ best interest to attain a variety of certifications or other ways to gain credibility with the potential client base.

The technological aspect of the remote environment is mostly concerned with the software the business will be using to keep track of the finances for the client, and how the financial information will physically get to the bookkeeper. Luckily, there is one main software system that most small businesses are willing to use or are already attempting to use. For this situation, the bookkeeping business will need to become an expert in this software and be able to have access to each different section of this program, whether it is on an external hard drive or cloud based. The second factor that will need to be addressed is the fact that the bookkeeper will need to either attain the supplemental documentation (receipts, check carbon copies, etc.) physically or electronically. Many people that are running a small business on their own do not have an electronic way of tracking receipts and checks because there has not been a need for it in the past due to the small scale on which they have been doing business. This has created a sort of resistance to moving to electronically attaining the financial documentation because the business owners just have a bag of receipts. This can potentially limit the target market to owners that are physically located in the same city as the bookkeeping business.

For the industry environment, the most important factor to consider is the low barrier to entry. As stated previously, because of the technological aspect of the remote environment, the industry is limited to the competitors that work within the same city of the bookkeeping business. The target market for this company, generally speaking, are small business owners, who are very active with local networking groups and/or business coaching. These business owners, especially those in business coaching, are there because they value their time and are looking for ways to maximize it, which is what this bookkeeping business is providing. The competitive aspect of this industry is fairly low, because it is so heavily word of mouth, networking oriented, and very location specific. By being involved as an owner of a small business, it creates a sort of common ground and a sense of loyalty and credibility with a huge reach, not only to the people in the business coaching, but also to other people that they might meet who are in a similar situation. There are, of course, other businesses that do the same type bookkeeping work, but because it is a one person job, there are much more businesses in the city than any one person can handle. So while these other businesses are considered the competition, it is also in the business’s best interest to use these other businesses for referrals of clients that they just don’t have the time to take on.

In the case of this bookkeeping business, there are no actual resources, physical location needs, or personnel requirements because it is a single person doing the work electronically. Therefore, the most important factor in the operating environment is the price competitiveness and knowing what the customer profiles are. The business owners are currently able to do the services the bookkeeping business is looking to provide on their own. The pricing needs to be considerate of the fact that these are small businesses that are most likely on small budgets. The price needs to reflect the amount of income that the small business owner can bring in by spending time on their work instead of making entries in their accounting software. Also, the time spent at the end of the year to get the accounting in order to send to a tax preparer is almost completely eliminated along with the stress that comes from the last minute scramble.

Internally, the most important weakness is the lack of experience and clientele from the new bookkeeping business. The client is putting a lot of trust into a person keeping track of their financials and being new to the industry can be a deciding factor against a new bookkeeper for potential clients. That being said, the most important strength is the flexibility that not having a full schedule of clients provides. It is often advantageous to be able to work with a client to adapt to what their specific needs are in order to accommodate them, whereas a more established firm might not have that flexibility.

The owner of this bookkeeping business is new to bookkeeping independently, but has worked with several different types of businesses as an employee. Through this experience, there have been a few mentors that are available and willing to help with questions, but who are also willing to pass on smaller, manageable clients that require less work than the mentor wants to take on. An example of this would be a client that only would require this mentor to work about an hour a month, which for them isn’t worth taking on a new client for. This mentor then passes the potential client on to the new bookkeeping business. For the new bookkeeper, it might take two hours a month, but would cost less per hour since there isn’t as much experience that this owner is bringing to the table. While this seems a disadvantage at first glance, this is actually a huge selling point because it is less expensive now for the client. The owner also has the opportunity to work in an automatic yearly raise to adjust for the cost of living or inflation, plus the owner also has another year of experience under their belt. From the client’s point of view, this is reasonable because they can agree that if they are happy with the services they would be willing to pay a small amount more. In addition, each new client, however small, adds to the new bookkeeper’s client base and the more experience with a variety of businesses the better.

Due to the nature of the business, the organizational structure is fairly straightforward. There is one person as owner, manager, and employee. Beyond this, there needs to be a system of other businesses that can assist the bookkeeping business on areas that the owner is not an expert in. One major one is an accountant and tax preparer. Having another small business as a partner that will provide the necessary audits throughout the year, manage the state and federal taxes as they are due, etc. will provide the client with a complete service to handling all of their finances, as opposed to being limited by the lack of certifications.

The long term goal of the business is key when looking to identify the appropriate strategies for the business. In the case of the small bookkeeping business, the long term goal is to getting the business running as a full time work environment and to create a profitable business that will be able to customize the services to fit the clients’ needs. In order to accomplish this, the bookkeeping business will implement a value discipline, along with a generic and grand strategy that will help guide the business towards achieving that goal.

The value discipline this business will focus on is the customer intimacy value discipline. This small bookkeeping business can benefit from focusing on this value discipline because each client will have varying needs and will be looking for a bookkeeper that can adapt their services to fit those needs. In the beginning stages of the company, this will be fairly easy because there is a bit more time to be able to provide customized reports, etc. for the client. Considering the growth for the future, these customized reports will take less time to create because there will be templates created in the earlier stages that can be adjusted slightly to accommodate the client as opposed to starting an entirely new report.

The focus strategy is the generic strategy that is most appropriate for this business. It can also work in conjunction with one of the other generic strategies, in this case, the differentiation strategy will be used as the base for the implementation of this strategy. By specializing in a variety of different small business types, this business will be able to adapt its services to the needs of the individual customer. The focus strategy means that this bookkeeping business will be mainly concerned with adapting to the needs of small businesses that are looking for minor accounting services for a few specific reasons, including tracking sales and being prepared for tax season. While this bookkeeping business is not really providing a product or service that is above and beyond what others provide, the services it does offer are in alignment with what business owners that are in control of their business are looking for.

Product development is the most appropriate grand strategy for this bookkeeping business. Because this is a new business, the fist main focus should be getting the product out into the market at its most basic level. Once that is accomplished, the next step would be to add services that would include the traditional bookkeeping needs, but go a step further in providing individualized reports that the clients can then use to track the sales and other key performance indicators in their particular business. This will maximize all of the tools that the owner brings to the table from the experience in business coaching and from the business degree. Adding this feature will introduce the bookkeeping business to a whole new set of clientele that might have not considered hiring a bookkeeper if it had not been for the extra business evaluating that is now an option for them. This service can also be a standalone option for businesses that have a highly complicated system that might need a Certified Personal Accountant working on it daily, but would like to have someone interpreting what all the numbers mean for their business.

This small bookkeeping business has a long term goal of filling a full, forty-hour work week schedule that is profitable. In order for the owner to not have to work part-time as an employee elsewhere, the income level must meet or exceed the amount made working as an employee. The first short term objective that is set to achieve this long term goal is to fully create and establish the business with the required paperwork with the state as well as creating a few contract templates for anticipated client types by the end of the next quarter (Quarter 1). The next short term objective is to attain two clients that require no more than 4 hours of work each per month by the end of the third quarter. The next short term objective would be to work as an employee at one job part time and add three new clients that require about 20 hours a month of bookkeeping services by the end of the following years’ first quarter. The final short term objective will be to implement another added service to the existing clients by offering to develop systems and operating procedures for their business by the end of the second years’ last quarter. This means that each of these four goals will be accomplished within two years (See Table 1).

Table 1

There are a few key success factors that the business owner will be looking for from the start of the company to the achievement of the long term goal. The first is the conversion rate or the rate of which a prospective client becomes an actual client. This is very important to determine how much marketing and networking the owner will have to do in order to reach the goal. Recording this will also help the owner adjust the time frames of the short term goals based on how much time and effort it will take to get new clients. Another key success factor is the average dollar sale from each client. Studying this will not only help the owner see what type of clients are most profitable, but it will also help the client to see how much the clients are paying for the different services and what is most profitable. This will also be handy when looking at pricing for services in the future.

The transition from employee to self-employed as outlined above is very much reliant on the fact that one employer would be willing to allow the owner to cut back hours to just three days a week. There is also a very real possibility that the employer will not want to do this which will then result in either waiting to start the bookkeeping business until a later time, completely becoming self-employed at once and anticipating a few months of little to no income, or to start looking for an entirely new part-time job. In order to best plan for the worst case scenario, the owner should save income to be able to sustain expenses for a few months if they end up not having an employer or an income while the business is getting started. The second option would be to commit evenings and weekends to the bookkeeping business and still maintain a full-time job, though this would not be ideal as it can easily lead to burn out.

This need may seem trivial, but it is a very real problem for many small business owners who are trying to balance their actual work with running a business, not to mention their personal lives outside the business. The owner of this small bookkeeping business has the skills, training, education, and drive to help owners spend more time doing the things that they enjoy doing and what will ultimately bring in income for them.

Pearce, J. A. & Robinson, R. B. (2013). Strategic Management: Planning for Domestic and Global Competition (13th ed). New York, NY: McGraw Hill