BUSI 603 Week 6 Business Plan Part I Example

Steward Ledger Services, LLC: Business Plan Part I

Table of Contents

The Business Concept; Founding and Management Team; Industry and Market Analysis; Product and Service Development Plan; Operations Plan; Organization Plan; Bibliography; Appendix A: Treasurer Survey Summary; Appendix B: Launch Calendar.

The Business Concept

Steward Ledger Services, LLC will keep the books, run payroll and prepare donors' year-end statements for congregations and ministries too small to employ a finance staff, beginning with those under 250 in weekly attendance in the Lynchburg, Virginia, region. Each client will pay a flat monthly fee in one of three service tiers. The firm will be founded by a staff accountant who has served for eight years as the volunteer bookkeeper of a 180-member congregation and who has seen the same problems recur in neighboring churches.

The customer is the person responsible for a small church's money, usually a volunteer treasurer working with a pastor and a finance committee. The problem has three parts. First, the books are often kept by a single volunteer, so that receiving, depositing and recording offerings are not separated and records are hard to hand over when the volunteer steps down. Duncan et al. (1999) found that smaller churches tend to have weaker internal control systems than larger ones, with less segregation of duties over cash. Second, payroll for even one or two staff members carries obligations that volunteers find confusing. A church must withhold income tax for its lay employees and file quarterly returns, while a minister is generally treated as self-employed for Social Security and Medicare purposes and may exclude a properly designated housing allowance from income (Internal Revenue Service, 2015). Third, donors need accurate statements: the Internal Revenue Service (2015) does not allow a deduction for any single contribution of $250 or more without a contemporaneous written acknowledgment from the church.

The service solves these problems by moving recording and reporting outside the church while leaving cash handling with church members, which separates duties without adding volunteers. Each month the church receives a one-page financial report that a finance committee can understand, payroll is processed and filed on schedule, and giving statements arrive in January. In the account of Shane and Venkataraman (2000), opportunities persist because information about needs is spread unevenly, so a service can earn more than it costs until others notice the gap. Here the need is recognized by treasurers but rarely met by firms designed for it, since general bookkeepers seldom know church rules and CPA firms are priced for larger organizations.

The firm's mission is to help small churches keep accurate, trustworthy financial records so that their leaders can focus on ministry. Its values are integrity in every number, confidentiality for donors and staff, and service priced within reach of small congregations. These values rest on the conviction, expressed in 2 Corinthians 8:21, that those who handle money given for God's work should take care to do what is right in the sight of both God and other people.

The timing favors a launch now. Many small congregations moved to online giving in recent years, which multiplied the number of transactions to record and reconcile and made year-end statements harder to assemble by hand. Volunteer treasurers in many churches are older members nearing the point of stepping down, and younger members willing to take on the role are scarce. And the same cloud tools that allow a small firm to serve churches across a region without frequent travel have become inexpensive. A firm that combines those tools with church-specific procedures can reach clients that no local bookkeeper has been organized to serve.

Founding and Management Team

The founder holds a bachelor's degree in accounting, is completing an MBA and has spent four years in a manufacturer's accounting department doing month-end closes, account reconciliations and payroll review. As a church volunteer, the founder converted a congregation's records from paper ledgers to accounting software, set up designated-fund tracking for a building campaign and prepared giving statements for about 140 households each year. That combination of professional accounting and church-specific experience is the core of the venture's ability to deliver.

Research suggests that this kind of prior knowledge matters. Dencker et al. (2009) found that new firms whose founders entered with knowledge of the business were more likely to survive, in part because those founders learned faster after entry. The same research and broader work on teams also point to the risk of a founder who works alone. Ruef et al. (2003) found that founding teams commonly form around similar people and close ties, which can leave gaps in expertise, while Beckman et al. (2007) found that teams combining varied backgrounds and complete functional roles fared better with investors. Klotz et al. (2014) concluded from their review of new venture team research that both team composition and team processes affect outcomes.

The founder's gaps are in nonprofit tax law, legal structure and the pastoral relationships through which churches make decisions. The plan addresses them with an advisory board of three members, each of whom has agreed to serve without pay for the first two years: a CPA whose firm audits nonprofit organizations, a lawyer whose practice includes setting up ministries and other charitable corporations, and a former pastor who spent six years leading the finance committee of his regional denominational body. The board will meet quarterly, review the firm's procedures and fees once a year and advise on difficult client situations. The CPA adviser will also review the firm's payroll and housing allowance procedures before launch.

When the client count reaches 15, the firm will hire a part-time associate bookkeeper for about 20 hours a week. The preferred candidate will have bookkeeping experience and, ideally, church administration experience; the founder will train the associate on the firm's procedures manual. A second associate is planned for the third year if growth continues.

The founder will leave the manufacturing position in month seven, at public launch, after the pilot has confirmed demand, and will draw a modest salary from the firm's cash flow rather than from startup funds. Until then, the founder will work on the venture in the evenings and on weekends, which is feasible because the design and pilot stages require roughly 15 hours a week. Keeping the salaried job through the pilot limits personal financial risk and gives the founder a stable income while the first clients are signed.

Industry and Market Analysis

The Industry

Steward Ledger Services belongs to the accounting, bookkeeping and payroll services industry, which ranges from sole-proprietor bookkeepers to national payroll companies and CPA firms. The industry is mature and fragmented, with low barriers to entry for basic bookkeeping and higher barriers for audit and tax work that require licensure. Two trends shape it. Cloud accounting and payroll software have lowered the cost of serving clients remotely, which allows a small firm to serve organizations across a region without visiting each one. At the same time, the same software allows organizations to keep their own books more easily, so a firm must offer expertise and accountability rather than data entry alone.

The regulatory setting adds both demand and risk. Churches are not required to file the annual information return that most charities file, which means many small congregations never produce financial statements for anyone outside the church, yet they remain responsible for payroll withholding, quarterly payroll returns, wage statements and the written acknowledgments donors need (Internal Revenue Service, 2015). Mistakes in these areas bring penalties and interest, and they fall on the church even when a volunteer made them. For a bookkeeping firm, that same exposure means errors carry real costs, which is why the plan includes professional liability insurance and review by the CPA adviser.

The Target Market

Allen (2016) distinguishes the broad industry from the narrower target market a new venture can serve first. Here the target market is the subset of that industry's potential buyers the firm can serve well at launch: small churches and ministries near Lynchburg, defined by the attendance limit and a 50-mile radius. The founder compiled a list from denominational directories, county listings and church websites and found about 410 congregations within that radius, of which roughly 260 meet the attendance limit.

To estimate demand, the founder surveyed 42 treasurers and pastors from those churches in person and by phone. Appendix A summarizes the answers. Three in four respondents, 31 of 42, depend on an unpaid member for bookkeeping; 19 had received a payroll penalty notice within three years; and 12 indicated they could see their church paying in the $350 to $500 monthly range for a combined bookkeeping, payroll and statement service.

The plan does not assume that all 74 prospects will become clients. According to Cassar (2010), nascent founders' own projections typically promise more sales and hiring than their firms go on to deliver, so the financial plan in Part II will assume that about a third of prospects sign on over three years.

Customer Needs and Buying Process

Survey respondents ranked their needs in this order: accurate giving statements, payroll filed correctly and on time, a monthly report the finance committee can understand and continuity when volunteers change. Price was the most common concern, followed by worry about losing control of church money.

The survey and follow-up conversations suggest three customer profiles. The first is the very small church with no paid staff, where the treasurer is often a retiree who has kept the books for years and wants a successor more than a service; for this client, continuity is the selling point. The second is the church with one or two part-time employees, where payroll filings are the source of stress and penalty notices; this is the largest group and the natural fit for the Standard tier. The third is the larger small church with a full-time pastor and several staff, whose finance committee wants better reports for budgeting and is accustomed to paying for professional services. Each profile responds to a different message, which the marketing plan in Part II addresses. The buying decision typically involves three people: the treasurer, who feels the problem most, the pastor, who must trust the provider, and the finance committee or church board, which approves the expense. The sales process described in Part II will therefore include a meeting with all three.

The consequences of failed controls add urgency. In nonprofit filings, Petrovits et al. (2011) found that internal control problems in nonprofit organizations were more common where resources and financial expertise were limited, and that donations fell after such problems were disclosed. For a church, a theft or a payroll penalty damages trust as well as finances.

Competition

The strongest competitor is the volunteer, because the cost appears to be zero. Steward Ledger sits between the volunteer and the CPA firm, offering church-specific competence at a fee that fits a small congregation's budget. Its main competitive weakness, being new, is addressed by the pilot, the advisory board and references from pilot churches.

Product and Service Development Plan

The service will be developed in four stages before public launch, following the principle that a new venture should test its assumptions cheaply before committing resources (Kerr et al., 2014).

The pilot churches have been chosen to represent the three service tiers: a 70-member church with no paid staff, a 140-member church with a part-time secretary and a 220-member church with a pastor, a secretary and a youth director. Each will receive the full service for three months at half the planned fee in exchange for a weekly 15-minute feedback call and permission to serve as a reference. A pilot earns its cost only if it is allowed to change the plan. The founder will track the hours each client requires, the questions treasurers ask most often and any errors or delays, and those data will set the final prices and the capacity estimate used in Part II.

The pilot carries risks of its own. A pilot church might find the service less useful than expected, or the hours required might exceed the estimates, which would raise prices or lower the firm's capacity. Either result is valuable to learn before launch, and the plan treats a disappointing pilot as a reason to revise the service or the target customer rather than to proceed unchanged. If two of the three pilot churches decline to continue at full price, the founder will interview them in depth and delay the launch until the service is redesigned.

Future service development will consider additions requested during the pilot, such as annual budget preparation, assistance with capital campaign accounting and preparation for outside audits, but none will be offered until the core service is stable.

Operations Plan

The Client Cycle

Operations follow a predictable cycle. Bringing a new church on board takes roughly six hours of the founder's time, spent gathering last year's records, mapping them into the firm's standard accounts, linking the bank feeds and enrolling staff in payroll. Each month, a church member uploads deposit records, bills and receipts to the secure portal by the fifth; the founder records transactions and reconciles accounts by the tenth and delivers the monthly report by the fifteenth. Payroll runs on each church's schedule, and quarterly and annual payroll filings are made through the payroll service. Giving statements are prepared in January from the year's contribution records and reviewed by the treasurer before distribution.

Systems and Suppliers

The technology stack is deliberately ordinary: a mainstream online accounting package that supports fund tracking for nonprofits, an outside payroll processor responsible for federal and Virginia filings, a secure client portal with multifactor authentication and encrypted storage, and a password manager. These services are billed monthly, which keeps startup costs low and lets the firm add clients without new capital. The firm will maintain written backups of key procedures so that a change in any supplier would not interrupt client work.

Capacity

Because most clients are expected to choose the Standard tier, the plan uses 20 clients per full-time bookkeeper as its working capacity. The founder can serve about 15 clients while also handling sales, onboarding and administration, which is why the associate will be hired at that point.

Quality Control and Security

Every monthly close follows a written checklist, and each client's bank reconciliation is reviewed against bank statements before the report is sent. Once an associate is hired, the founder will review a sample of the associate's work each month. The engagement letter will specify that church members, not the firm, handle cash and sign checks, preserving the separation of duties that is part of the service's value.

Client data include donor names and amounts and employee pay, so security is part of operations. The investment model of Gordon and Loeb (2002) caps sensible protection spending well below the expected cost of the breach it guards against, and for a firm of this size that argues for disciplined basics, multifactor authentication, encrypted storage, limited access and cyber insurance, rather than costly enterprise systems.

Location

The firm will operate from a home office in Lynchburg during its first two years, meeting clients at their churches. Because all records are digital, no storefront is needed. Office space will be reconsidered when the second associate is hired. Working from home keeps fixed costs low during the period when the firm is most vulnerable, and visiting clients at their churches has an advantage beyond cost: it lets the founder meet the pastor and finance committee in their own setting, see how offerings are counted and recommend practical improvements to the church's cash handling, which strengthens the relationship and the service.

Organization Plan

Legal Form and Ownership

The founder will register Steward Ledger Services in Virginia as a limited liability company and will be its only member. The limited liability company separates the founder's personal assets from the firm's obligations and is simple to administer. Harhoff et al. (1998) found in German data that firms with limited liability grew faster than those whose owners carried full personal liability but also failed through insolvency more often, a reminder that limited liability encourages risk-taking and should be paired with prudent financial management. For federal tax purposes the company will at first be disregarded and reported on the founder's own return; whether to elect S corporation treatment will be revisited with the CPA adviser when profits grow.

Insurance and Licensing

The firm will carry professional liability insurance covering errors in bookkeeping and payroll, cyber liability insurance covering data breaches and a fidelity bond, which gives clients added assurance that funds handled through payroll are protected. The founder will register the business with the city and state and maintain continuing education in nonprofit accounting. Because the firm will not perform audits or issue opinions on financial statements, it does not require a CPA firm license.

Governance and Roles

The founder serves as managing member, responsible for client relationships, quality, sales and finances. The advisory board, described in the team section, advises but does not govern. Written role descriptions have been prepared for the founder and the future associate. The finding of Sine et al. (2006) that formalized young firms outperformed loosely organized ones applies with extra force to a firm entrusted with other organizations' money benefits from clear accountability from the start.

Policies

Four policies will be in place at launch: an engagement letter for every client defining services, fees and responsibilities; a confidentiality policy covering donor and employee information; a conflict-of-interest policy, since the founder's own church will become a client only at full price and with board approval; and a procedures manual that will grow from the pilot. These policies will be reviewed annually with the advisory board.

Continuity

A one-person firm that keeps other organizations' books must plan for the founder's absence. The plan includes a written continuity arrangement with the CPA adviser's firm, under which a qualified staff member would complete monthly closes and payroll for up to 60 days if the founder were ill or unable to work. All procedures, client credentials and calendars are kept in the procedures manual and the password manager, with emergency access granted to the adviser. Clients will be told about this arrangement in their engagement letters, since knowing that their payroll will run even if the founder is unavailable is part of what they are paying for.

Appendix A: Treasurer Survey Summary

Respondents: 42 treasurers and pastors of congregations under 250 attendees within 50 miles of Lynchburg, surveyed in person and by phone. Books kept by a volunteer: 31. At least one payroll penalty notice in three years: 19. Open to a monthly fee between $350 and $500: 12. Most important needs, in order: accurate giving statements, payroll filed on time, a clear monthly report, continuity when volunteers change. Most common concerns: price and control over church funds.

Appendix B: Launch Calendar

Months 1-2: templates and procedures; LLC formation and insurance. Month 3: systems and portal; engagement letter reviewed by attorney adviser. Months 4-6: pilot with three churches. Month 7: revisions, final pricing, public launch and first treasurer workshop. Month 12: target of 12 clients.

References

Allen, K. R. (2016). Launching new ventures: An entrepreneurial approach (7th ed.). Cengage Learning.

Beckman, C. M., Burton, M. D., & O'Reilly, C. (2007). Early teams: The impact of team demography on VC financing and going public. Journal of Business Venturing, 22(2), 147-173. https://doi.org/10.1016/j.jbusvent.2006.02.001

Cassar, G. (2010). Are individuals entering self-employment overly optimistic? An empirical test of plans and projections on nascent entrepreneur expectations. Strategic Management Journal, 31(8), 822-840. https://doi.org/10.1002/smj.833

Dencker, J. C., Gruber, M., & Shah, S. K. (2009). Pre-entry knowledge, learning, and the survival of new firms. Organization Science, 20(3), 516-537. https://doi.org/10.1287/orsc.1080.0387

Duncan, J. B., Flesher, D. L., & Stocks, M. H. (1999). Internal control systems in US churches: An examination of the effects of church size and denomination on systems of internal control. Accounting, Auditing & Accountability Journal, 12(2), 142-164. https://doi.org/10.1108/09513579910270084

Gordon, L. A., & Loeb, M. P. (2002). The economics of information security investment. ACM Transactions on Information and System Security, 5(4), 438-457. https://doi.org/10.1145/581271.581274

Harhoff, D., Stahl, K., & Woywode, M. (1998). Legal form, growth and exit of West German firms: Empirical results for manufacturing, construction, trade and service industries. The Journal of Industrial Economics, 46(4), 453-488. https://doi.org/10.1111/1467-6451.00083

Internal Revenue Service. (2015). Tax guide for churches & religious organizations (Publication 1828). https://www.irs.gov/pub/irs-pdf/p1828.pdf

Kerr, W. R., Nanda, R., & Rhodes-Kropf, M. (2014). Entrepreneurship as experimentation. Journal of Economic Perspectives, 28(3), 25-48. https://doi.org/10.1257/jep.28.3.25

Klotz, A. C., Hmieleski, K. M., Bradley, B. H., & Busenitz, L. W. (2014). New venture teams: A review of the literature and roadmap for future research. Journal of Management, 40(1), 226-255. https://doi.org/10.1177/0149206313493325

Petrovits, C., Shakespeare, C., & Shih, A. (2011). The causes and consequences of internal control problems in nonprofit organizations. The Accounting Review, 86(1), 325-357. https://doi.org/10.2308/accr.00000012

Ruef, M., Aldrich, H. E., & Carter, N. M. (2003). The structure of founding teams: Homophily, strong ties, and isolation among U.S. entrepreneurs. American Sociological Review, 68(2), 195-222. https://doi.org/10.2307/1519766

Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), 217-226. https://doi.org/10.5465/amr.2000.2791611

Sine, W. D., Mitsuhashi, H., & Kirsch, D. A. (2006). Revisiting Burns and Stalker: Formal structure and new venture performance in emerging economic sectors. Academy of Management Journal, 49(1), 121-132. https://doi.org/10.5465/amj.2006.20785590