A formal or written statement of a company's aims and objectives, along with justifications for why they are doable and a description of the strategies to achieve them, constitutes a business plan. The history of the institution trying to achieve the objectives is one section of a partial plan of activities, among other sections. A partial business plan is typically a piece of writing that markets a person's overall company concepts to prospective investors and stakeholders. However, the success of this piece depends on how well it communicates to the audience or reader (investors) the key prospects and development capabilities available for the business. (Kwong, Thompson & Cheung, 2012). Besides, the document should rationalize and define the business ideas and possibilities of business growth in future in a clear and concise manner. Any entrepreneur that has the dream of getting into a business should learn the art of preparing the best business plan. Some characteristics that can define a successful business plan include;
The document should depict the short-terms and the long-term goals precisely and clearly
Provide an accurate description of how the business will work to meet the stated goals. Additionally, the stated objectives must be realistic to attain under the general circumstance.
Finally, a successful business plan should give a description of how the accomplishment of the plans will meet the demands of the investors.
Mike’s Auto Parts is a business that has been operational for over a decade since its formation in 1990. The company has been performing over the last five years serving approximately 200,000 customers coming from different states. As a result, of the excellent services and quality products offered by the company, the number of customers has increased by approximately 2.5 percent over the last three years. The company projects an increasing trend of the demand for auto parts by 5.2 percent in the next five years. The assessment of the enterprise profitability level has necessitated the need to have the second store located within South Carolina State to meet the growing demand of the auto parts (Türkcan, 2011). The original store has been serving a large population of automobile consumers, but with increasing demand for cars, the store has been unable to supply enough for huge consumer population of auto spare parts.
Expansion of the business by establishing the second will be an important step made by the company to help it achieve its long-term goals. Besides, it will assist the organization to diverse its services within a larger geographical coverage. The demand for roads has been increasing in various stated brought by the rise in automobile use. Therefore, as long as the need for cars will keep growing, the demand for spare parts for these cars will continue to hike. Auto spare parts business is a profitable venture because it mainly deals with the replacement of torn, worn out or damaged auto parts.
The replacement of worn-out is a compulsory investment to those who have automobile and want to keep them in good condition to serve their purpose.
Wear and tear have been the greatest challenge facing the car industry; consequently, auto spare parts business is a lucrative business that has rapidly expanded since the invention of the first automobile. The document will provide adequate information regarding the type of business, the legal form of business found in this industry, the legal settings of the firm, location requirements, business license research costs and insurance requirements. Besides, propriety rights, employment law and requirements, purchase orders and contracts, torts and crimes protection, property and requirements, UCC considerations, other considerations for the business and finally give the conclusion.
Type of business (Product or services)
Auto parts business is one that supplies parts of automobile for replacing the damaged, worn-out or torn parts. Mike’s Auto Parts is one of the firm enterprises dedicated to providing automobile consumers with spare parts such as engine, brakes, batteries, advice regarding repairing of vehicles as well as other accessories (Türkcan, 2011). Besides, the company also does the replacement of the auto parts. The replacement of auto parts, oil change special and sales of flyers has been major services offered by the company for over a period of three years.
Mike’s Auto Parts is an old automobile company that has been supplying a massive number of consumers for over a long period. The opening of the second store in South Carolina will offer entry level for more supply of auto parts at affordable prices and quality services in the state. The second store of Mike’s Auto Parts will be located at 21 Main Street Randall Avenue, South Carolina. The location will allow the company to have a good visibility accompanied with accessibility for traveling. Besides, the region is strategically located making it possible for customers to access the second store.
Legal Form of Business
Limited Company
A limited company is one of the common legal forms of business ventures. The companies are ‘integrated’ to establish an entity with a separate legal person. A separate legal entity refers to an organization that performs business and get into a treaty in its own name (Prosser & Hingle, 2016). On incorporation under the Companies Act 2006, the local authority requires the limited companies to have two constitutional documents including memorandum and article of association (Adamchik, 2015).
The form of business can offer the owners increased credibility. The high credibility of the company can increase the sources of funds for the business, therefore, increasing the profitability (Geeraerts, 2017). Besides, the business has a great take-home pay that is the company gets paid in regular dividends where they pay less taxes and take more money as their profits. The business has a lower personal risk; the investors are protected from the jeopardy of personal financial loss as a result of separation with the company (Maříková et al., 2015).
Advantages of limited company
Some of the advantages of a limited company include;
The firm has its own separate legal personality. A limited company’s existence will only end if the shareholders accept to dissolve
The shareholders have limited liability up to the capital contributions for their shares in the company.
The company enjoys tax benefits. Business forms such as sole proprietor or partnership pay income tax while the limited companies pay corporate taxes. The corporate taxes are lower than the income taxes.
Disadvantages of limited company
Cost
The cost of starting a limited company is high and therefore, needs contribution of each member to meet the threshold of commencing the operations.
Restriction in amount of capital raised
A private limited company has restriction on the capital raised through the sale of shares. Therefore, this limits the company from raising huge capital for its operations and increasing profitability.
Complex protocol during formation
There are tedious and time-consuming process involved in the formation of a limited company. The process involves drafting of memorandum of association, article of association among other documents that are mandatory for its formation.
Company officers
Limited companies generally have directors and secretaries collectively named ‘officers.’ The directors are often appointed by the shareholders and guarantors to manage the operations of the company.
Company director
The company director has the following responsibilities;
Registration of the company for business taxes.
The director should maintain an accurate accounting records of the company
He or she should manage the payroll and the PAYE
Making company and accounting records available for inspection.
Company secretaries
The responsibility of the company secretary is to reduce the task load of the director.
Manage the company records and registers
Oversees the payroll
Signing of contracts and documents on behalf of the director
Arrangement of meetings and keep of minutes of a meeting.
As per the information available on the state’s Secretary of State Website the cost of establishing a limited company is not costly. Registering an entity name requires approximately $10 as a filling form fee. If I was not living in the US, I would choose Canada as my state for establishing this kind of company.
Legal Setting of Business
There are several legal settings of business that any company whether a sole trader or partnership must meet. As a limited company, the business must pay federal business taxes, which goes to the federal government. However, the company must also pay the state and local taxes to the state government. The government levies taxes on the company as a separate entity different from its owners.
The company also pays the cooperate taxes to the state government. In South Carolina, the limited liability companies can consist of one or more individual entrepreneurs who wish to open a business and file articles of organization. The zoning requirements published by the state government will allow the company to focus on a particular group of customers within the region. There are several zoning districts identified by the state government. These include;
R-1 to R-3 are single- family residential
R-5 mixed residential
R-6 multifamily residential
R-7 mobile home and trailer parks
B-1 residential business
B-2 neighborhood business center
B-3 general business
I-1 limited industrial
I-2 industrial
AC agricultural
PL public lands
PUD planned unit development
According to the zoning state of South Carolina the company will be situated at zoning I-1, where the limited companies are situated. The management of the company through market analysis considered a home based business to be appropriate especially that there is need to exploit the large number of consumer market in South Carolina. The state has zoning laws that prohibits the home based business that restricts the exterior physical change to the home for the purpose of leading business. One of the zoning law states that a home based business should not engage in other business activities, packing or exhibition that it was not registered for. Environmental, safety and other restriction are available to ensure the business is objective to the consumers and the communities around.
Location Requirements
Mike’s Auto Parts is an old automobile company that has been supplying a substantial number of consumers for over an extended period. The opening of the second store in South Carolina will offer entry level for more supply of auto parts at affordable prices and quality services in the state. The second merchandise of Mike’s Auto Parts will be at 21 Main Street Randall Avenue, South Carolina. The location will allow the company to have a good visibility accompanied with accessibility for traveling. Besides, the region is strategically located making it possible for customers to access the second store. In selecting the location for this second warehouse, the team of expert considered the ease of accessibility by the customers to the warehouse and the existence of other utilities in this place such as power, proximity to the first store.
Business License Research and Costs
A business license is a document that permits an organization or individual to undertake some particular business activities within the state’s local jurisdiction. The local government of the state has the responsibility of issuing licenses to the organization. South Carolina as a state has do not have one business license; therefore, it requires the licensing of some particular business done by the state government only. The business organization has to meet some of the South Carolina state government requirements such as registration through the South Carolina Secretary of State’s office. Other conditions will include registering with the Department of Revenue for Business Property Tax as well as conceivably for Use Tax. The cost of license in South Carolina is approximate $130 for all local limited liability companies. The organization must also fill files of an article of organization which costs $110.
Insurance Requirements
For a limited liability company to commence its operation it requires insurance certificates. There are a number of insurance policies that the government requires a limited liability company to hold. These include;
General Liability Insurance
The policy can cover both the limited liability company and its employees. The policy can help to cover the damages caused by individuals working for the enterprise. Besides, the policy safeguards an individual’s house, bank account as well as other assets of a member.
Malpractice Insurance
Apart from other professions such as doctors, limited liability companies need malpractice insurance cover especially when it consists of health care providers. Malpractice insurance is also known as professional liability insurance protecting the company’s accountants as well as medical practitioners.
Property Insurance
The policy helps the company to cover for damages caused by fire, floods or robbing. These uncertainties if not provided for against they can lead to the closure and collapse of the business. The policy can also cover the actual value of the property at the occurrence of a menace.
Lost income or Key Personnel
Besides, the structure, computers, furniture and other assets that the property insurance may cover the corporation may need to cover itself against all lost income if the company stops its operation for a particular time.
Employees
The state of South Carolina requires that LLCs have the employees’ insurance to compensate workers injured during the working hours. The state will also require the company to pay unemployment insurance taxes.
For a company with employees, they can consider having these types of insurance cover:
Personal and worker’s insurance
The company must provide insuring for its employees against all workplace accidents or disease necessary for protecting the business against the losses incurred as a result of workers’ illness.
‘Workers’ Compensation Coverage A’
The insurance policy protects under the state laws. The coverage offers medical care, disability, death as well as rehabilitation benefits for employees killed or injured when on the job.
Auto Insurance
The company should also provide an auto insurance cover for all its drivers against all the accidents and hazards while on the road undertaking their duties.
Employees
The state of South Carolina requires that LLC have the employees’ insurance to compensate workers injured during the working hours. The state will also require the company to pay unemployment insurance taxes.
Proprietary Rights
Intellectual property is a set of ideas and concept that the company may possess during its operation. The company has a compilation of ideas that will help it start the new store in a region that has fashion stores already established. Innovation and invention of new ideas will improve the creativity in designing of the brands. Some of the intellectual property that the company owns include design patents, logos, trademarks, copyrights, and utility.
Copyright
A copyright protects the creative efforts in a physical practice. Copyright is a valuable intellectual property to an LLC that want to protect their ideas from theft.
Trademarks
The IP presents a mark that distinguishes the source of brands or services. A trademark can be in various forms such as logo, slogan, sound, and color.
Patents
These are special types of intellectual property, protecting the inventions as well as the functional designs of the brands.
Employment Law and Requirements
Some of the employees’ laws and regulations that an employer must comply with include;
Wages and Hours
The law provides that the employers must provide wages and overtime payment to the employees. The law needs employers to pay their employees who work overtime one-and-one-half-times the regular pay.
Workplace Safety & Health
Employers must offer their employees with workplace and work free from known, serious hazards. Therefore, management must ensure they provide a friendly environment for all its employees to prevent accidents and death of employees.
Unions and Their Members
The Unions & Their Members law requires that the union officials, employers as well as labor advisors to write a report concerning workers’ association and practices.
For every manager, it is important to determine whether those employed are working as independent contractors or employees (Lipton & Pollack, 2016). Therefore, the employer has to withhold all income taxes, as well as paying Social Security and Medicare taxes and paying all unemployment taxes on salaries and wages to employees. However, in the case of an independent contractor, the employer does not withhold or pay any taxes. As an employer, I will prefer having employees in the organization to in taking insurance cover for their health and safety in the working environment.
Purchase Orders and Contracts
Pricing arrangements is an agreement which the client and the business make with the contractors. The company will consider franchising and licensing as a form of pricing mechanism (Taylor, 2013).
Franchising
The term refers to the act of giving another business the right and privilege to use your companies model and name to operate in another location independent from your business. With this type of pricing arrangement, the original company still have lots of control over the undertakings of the other region.
Licensing
In this model, the company is selling the right to use its IP, brands or business processes to another company. However, in licensing the mother company does not control the operation of the licensee once sold. Besides, licenses do not have a restriction regarding offering a territory to the licensee. The standard contract laws govern the licensing arrangements.
Firm-fixed-pricing contract: This kind of arrangement works for a price that will not be subject to any modification based on the contractor’s value knowledge in undertaking the contract.
Fixed-price contracts with economic price adjustment: This type of contract provides for both upward and downward change of the stated contract price upon the occurrence of particular eventualities.
In determining other contract types to use in the company, I will consider using time. Time is one of the most decisive aspects of any organization in realizing its objectives and goals. With a satisfactory and suitable type of contract that puts time as an important factor the business will be capable of accomplishing its goals within the stipulated time frame.
Torts and Crimes Protection
Tort is an activity considered to harm or injure another individual.
Intentional tort
Intentional tort exists when an individual happens to perform an activity that causes harm to the other person. Therefore, the business needs to protect itself from such forms of crime that may lead to huge company losses.
Negligence tort
Negligence tort is one of the common type of crime performed by employees in a company. However, they are not deliberate actions of the employees to the company. Negligence tort occurs when an individual or an organization fails to act accordingly to persons who they owe something. Negligence can ruin the reputation of a company if not addressed and avoided at all cost.
Property and Requirements
The company is planning to buy some equipment and computer systems that will be essential for start-up. The computers will be necessary for ensuring data and business records are secure and safe for retrieval. However, the company will consider buying property especially the premises. The team considered buying as a cheaper option of acquiring property than leasing or renting in the long-term.
UCC Considerations
UCC compliance is an important strategy to allow smooth operations of the company. Firstly, the company will ensure it complies with the general contract rules governing the UCC (Howard Jenkins, 2015). Before entering into a new contract, the company will provide both parties put the deal in writing. Secondly, according to Article 2 of UCC to have a contract deal, there must be an offer and acceptance.
The rule is to facilitate the contract negotiation rather than impede the formation of a contract. Thirdly, the company will ensure when entering into a new contract with another party it does not provide wrong information in agreement with the Article 2 of UCC. Finally, if the company enters into an agreement with another party and a breach occurs then the non-breaching party will be liable to compensation by the enterprise.
Other Considerations
Some of the important consideration learned from this course that is essential in starting-up a business plan include environmental issues. Any business organization located in a region has the social responsibility of reducing the environmental pollution. Global warming is a major concern in the 21st century, and therefore, an upcoming business must consider reducing the effects of environmental contamination. Other considerations that a company can consider in closing a business is filing an annual return the year that the organization is going out of business. Filing the returns of the enterprise is important at closure year allows the government to determine the worth of the company at the year of closure.
Conclusion
Auto parts business is one that supplies parts of automobile for replacing the damaged, worn-out or torn parts. Mike’s Auto Parts is one of the firm enterprises dedicated to providing automobile consumers with spare parts such as engine, brakes, batteries, advice regarding repairing of vehicles as well as other accessories. As a limited company, the business must pay federal business taxes, which goes to the federal government. However, the company must also pay the state and local taxes to the state government. The government levies taxes on the company as a separate entity different from its owners. The company also pays the cooperate taxes to the state government.
In South Carolina, the limited liability companies can consist of one or more individual entrepreneurs who wish to open a business and file articles of organization. For a limited liability company to commence its operation it requires insurance certificates. There are a number of insurance policies that the government requires a limited liability company to hold. The company will consider franchising and licensing as a form of pricing mechanism with its contractors. These pricing arrangement are cost-effective and easier to monitor for a company that is expanding and opening a new store in the same region. UCC consideration is an important aspect in starting and opening a business in any state in the US. They mainly entail the steps that an organization must pursue to ensure that they continue their operations in a state.
References
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