BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
Business Plan for a Financial Services Company
Rosanna Corchado
A Capstone Research Project
Submitted in partial fulfillment
of the requirements for the degree
Master in Business Administration
School of Business and Leadership
Nyack College
March 6, 2012
Capstone Committee:
Dr. Gerard Becker, MBA Director
Professor Anthony Wilson, Advisor
Professor Edward Eskew
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BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
Copyright 2012, Rosanna Corchado
All Rights Reserved
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BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
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Table of Contents
List of Tables ............................................................................................................................ 5
List of Figures ........................................................................................................................... 6
Executive Summary .................................................................................................................. 7
Industry and Proposed Company .............................................................................................. 8
The Company and the Concept ............................................................................................... 10
Mission and Vision Statement ............................................................................................ 11
Services ................................................................................................................................... 12
Financial Education Program .................................................................................................. 13
College Seminars ................................................................................................................ 13
Workplace Seminars ........................................................................................................... 15
Personalized Consultations ................................................................................................. 17
Tax Preparation ....................................................................................................................... 19
Accounting/Bookkeeping Services ......................................................................................... 20
Market Analysis ...................................................................................................................... 21
Customers ............................................................................................................................... 23
Competition............................................................................................................................. 25
Barriers to Entry.................................................................................................................. 25
Competitive Advantage ...................................................................................................... 26
Exit Strategy............................................................................................................................ 28
Economics of the Business ..................................................................................................... 29
Pricing ..................................................................................................................................... 30
Gross Margin .......................................................................................................................... 33
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Break-Even ............................................................................................................................. 34
Service Guarantee ................................................................................................................... 35
Marketing Plan: Advertising and Promotion .......................................................................... 36
Marketing Tax Preparation Services ................................................................................... 36
Marketing Financial Education Services ............................................................................ 37
Public Relations .................................................................................................................. 38
Social Media ....................................................................................................................... 39
Design and Development Plans .............................................................................................. 40
New Products/Services ........................................................................................................... 40
Growth Strategy ...................................................................................................................... 41
Operations Plan ....................................................................................................................... 42
Geographical Location ............................................................................................................ 43
Legal and Regulations Issues .................................................................................................. 44
Management Team.................................................................................................................. 45
Organization ............................................................................................................................ 46
Sustainability and Impact ........................................................................................................ 48
Overall Schedule ..................................................................................................................... 49
Critical Risks, Problems, and Assumptions ............................................................................ 50
The Financial Plan .................................................................................................................. 51
Proposed Funding Requirements ............................................................................................ 54
References ............................................................................................................................... 55
Appendix A ............................................................................................................................. 59
Appendix B ............................................................................................................................. 63
Appendix C.............................................................................................................................. 63
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
List of Tables
Table I: Start-Up costs ...........................................................................................................28
Table II: Average cost for the services offered ......................................................................30
Table III: Units expected to be prepared during the first three years of operations ..............30
Table IV: Gross Margin .........................................................................................................32
Table V: Expected Compensation .........................................................................................45
Table VI: Milestone Dates and Cost ......................................................................................46
Table VII: Pro-forma Income Statement ...............................................................................51
Table VIII: Pro-forma Cash Flow ..........................................................................................51
Table IX: Pro-forma Balance Sheet .......................................................................................53
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BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
List of Figures
Figure I: Revenue expected during the first three years of operations ..................................30
Figure II: Break-even analysis for Year.................................................................................33
Figure III: Organizational Chart ............................................................................................45
Figure IV: Milestones ............................................................................................................48
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Executive Summary
Fine Start is a financial services company that will be located in Queens, New York.
The services the company will offer include tax preparation, accounting/bookkeeping,
financial seminars, and personalized financial consultations. The company will differentiate
itself from its competitors by offering services with the goal of increasing the client’s level of
financial literacy.
Fine Start understands there is no one-size-fits-all financial education program. The
services offered will be effective because it will address the concerns of the targeted group.
Individuals who take advantage of the services offered will increase their level of financial
literacy. Those who increase in knowledge will be able to make better financial decisions.
Fine Start was created to respond to the current financial problem. There is mounting
evidence that the increasingly complex financial system in the United States has become a
burden for most Americans (Anthes, 2004). Those with low levels of financial literacy are
more likely to have higher levels of debt (Lusardi, Mitchell, & Curto, 2010). The debt loads
are causing anxiety and have a harmful effect on major decisions. Financial illiteracy has a
negative effect on achieving long-term goals such as going to college, owning a home, and
financing for retirement. Financial illiteracy also leads to an increase in bankruptcies and
debt (Anthes, 2004).
The company was incorporated on February 1, 2011 and is planning to begin active
business operations in 2012. Currently, Fine Start is in the planning stage and has not
conducted any active business operations. The company expects that providing unique
services, along with consumer demand, will result in gaining an ample share of the financial
planning market.
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Industry and Proposed Company
Fine Start provides financial services with the goal to increase the client’s financial
literacy. Currently, there is an alarming financial illiteracy crisis. Most households do not
have a basic understanding of economic concepts in order to make beneficial investment and
savings decisions.
Financial education helps individuals create budgets, savings plans, and make
strategic investment decisions (Greenspan, 2002). Personal financial education is defined as
a process to improve an individual’s understanding of financial products and concepts. The
process involves the acquisition of information, instruction, or advice. One becomes more
aware of financial risks and opportunities, makes more informed choices, knows where to go
for help, and takes other effective actions to improve their financial well-being (Organization
of Economic Cooperation and Development [OECD], 2005).
Fine Start will provide financial education through seminars and personalized
consultations. The company will also offer individual tax preparation and accounting
services for small businesses. The goal is to assist individuals in making financially informed
decisions. As a result of the services offered, individuals will be able to take control of their
circumstances and build a more stable future.
The Industry
Interest to better educate Americans about financial literacy has become a growing
concern. To increase awareness, April was declared “Financial Literacy Month.”
Governments and nonprofit organizations created financial education materials and various
state bills about financial literacy have been introduced (Anthes, 2004). The Federal Reserve
participated in a national campaign to promote the value of personal financial education and
the variety of resources available (Bernanke, 2006).
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Within the financial planning market, there is a segment that focuses on improving
financial literacy. This provides financial service professionals the opportunity to reach out
to those in need of basic financial knowledge and skills (Anthes, 2004). Accountants have
become involved in addressing the financial literacy problem. Accountants help to ensure
companies are operating in the most effective manner, accurately keeping their records, and
paying their taxes properly and timely (U.S. Department of Labor, 2011). Accountants are
also in the best position to offer clients financial education services (Anthes, 2004).
Tax preparation services will be in demand as the tax code becomes more complex.
About 60% of individual tax filers pay for their tax return preparation. Over 65 million lowincome individuals are a part of the tax system. Many are required to file in order to claim
credits and receive a refund (I.R.S., 2011).
The market is highly fragmented and consists of tens of thousands of paid tax return
preparers. One of the most important components of filing income tax returns is electronic
filing. During the 2010 tax season, 72% of United States tax returns were filed electronically.
Electronic filing is the beneficial way because it includes acknowledgment of receipt of the
filing, better accuracy and faster tax refund processing (Jackson Hewitt Tax Service Inc,
2010).
Employment in the bookkeeping and accounting industry is projected to grow by ten
percent during the 2008-2018 decade. A growing economy will increase the amount of
financial transactions. In turn, it will require additional accounting services. (U.S.
Department of Labor, 2011). This industry is growing about as fast as the average for all
occupations. This occupation is one of the largest growth occupations in the economy (U.S.
Department of Labor, 2011).
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The Company and the Concept
The opportunity to create Fine Start arose because of the need for financial education.
The financial well-being of individuals and families are fundamental to national financial
stability (Lindsey-Taliefero, Kelly, Brent, & Price, 2011). Most adults in America believe it
is important to have a good understanding of economics. Usually, the most complex decision
an individual has to make concerns a financial issue (Bayer, Bernheim, & Scholz, 2009).
However, research indicates most people do not have enough of an understanding of
economics to make beneficial financial decisions (National Council on Economic Education
[NCEE], 2005).
In 2000, only 21% of youth ages 16-22 reported that they took a personal finance
course at school (Anthes, 2004). Despite the availability of material, many schools do not
teach the subject because the teachers themselves do not understand the material. Research
by Jump$tart Coalition for Personal Financial Literacy further indicates that most high school
students do not have basic knowledge about personal finances (Lusardi & Mitchell, 2007).
On February 1, 2011, Fine Start was incorporated. The company was developed to
provide financial education to individuals in the Queens, NY, area through the services
offered. The services will be promoted to companies who want to improve their employees’
financial decision-making skills and to colleges who want to improve their students’ financial
literacy. The company will also be distinct because it will provide tax preparation services
for individuals and accounting services for small businesses while focusing on improving
financial literacy.
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Mission and Vision Statement
The mission statement for Fine Start is to be regionally recognized as a leading firm
in the financial industry that will provide financial services to individuals located in Queens,
New York, with the intent to improve their financial literacy. The vision is that individuals
will develop personal financial management skills through education and assistance provided
by the firm.
The objective of Fine Start is to provide financial and accounting services that exceed
the customer’s needs. The firm recognizes the need for financial education. With the skills
learned, individuals will be able to better manage their finances and be in a better financial
situation.
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Services
Fine Start provides financial and accounting services to individuals and businesses in
the Queens, New York, area. The firm will be distinct because it will focus on improving the
financial literacy of their clients. Through the services offered by the firm, people will
realize their financial goals and improve their financial literacy.
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Financial Education Program
Fine Start will focus on obtaining a competitive advantage. Unlike other programs,
the content of the courses offered will relate to goal obtainment. Mandell and Klein (2007)
suggest that financial literacy programs begin with an analysis of goals. Many programs
neither set clear and obtainable goals nor explain the importance of basic financial literacy.
The program will explain how the services offered will add significant value to the client’s
life.
Movements to improve financial literacy have failed in the past because individuals
have been considered one homogeneous group of consumers. The courses will be on a
variety of topics to better address preferences, savings needs, and financial knowledge. In
addition to personalized consultations, the company will offer college and workplace
seminars. Through these services, the participant’s level of financial literacy will increase.
College Seminars
Offering financial literacy courses to college students is very important. Some
colleges may not believe it is their responsibility to offer financial education seminars for
their students. However, a college student’s debt may be a factor in retention (Norvilitis et
al., 2006). More students leave a college due to financial problems than to academic failure
(Breitbard, 2003).
College can be the first time young adults make financial decisions on their own.
Most young adults learn spending and savings habits from their parents at a young age. A
parent’s influence on their child’s financial behavior supported the new credit card
requirement that an older adult should be directly involved when a young adult gets a credit
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card. However, if a student’s parent lacks financial knowledge, the student is more likely to
engage in risky credit behavior (Xiao et al., 2011).
Studies show that those who go into debt might not understand the implication of
their financial behavior. However, most are self-aware that they do not have enough
financial knowledge to make beneficial decisions (Norvilitis, Merwin, Osberg, Roehling,
Young, & Kamas, 2006). Debt can cause an individual to worry about it frequently, put off or
not wish to further their education, and may take a job they would not have taken otherwise
(Lusardi, Mitchell, & Curto, 2010).
One of the main issues college students face is the rising cost to finance a college
education (Xiao et al., 2011). Although a college graduate earns more than a high school
graduate over their lifetime, a college student can incur a large amount of student loan debt to
pay for college. A financially literate student understands their responsibilities, is well
educated and is able to make the best financial decision regarding how they will finance their
college education.
In addition to accruing debt to pay for college, many students also accrue additional
debt due to credit card usage. College students constantly receive credit card offers. The
concern is that credit card usage has increasingly become more common among college
students. In 2009, 84% of undergraduate students surveyed had at least one credit card.
Half of those students possessed four or more. As a result of this risky behavior, 82% of the
students carried an average credit card balance of $3,173 (Sallie Mae, 2009).
One survey was conducted to identify factors related to credit card debt among
college students. The findings from the survey revealed that students in debt have several risk
factors. The strongest predictor of credit card debt is financial knowledge (Norvilitis et al.,
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2006). Another reason that college students get into debt is because they are optimistic about
future earnings. Students expect they will to earn more and will be able to pay their debt off
faster once they graduate (Norvilitis et al., 2006).
Studies show that students retain little of what they learn in a personal finance class
because they do not find it to be relevant to their lives. According to Mandell and Klein
(2007), a successful program must show the relationship between understanding basic
financial literacy and the ability for a student to reach and potentially exceed their level of
aspiration. A future-oriented student is more interested in understanding the effect of their
decision on their future. The key is to help the student understand how they will benefit in
the future if they set up a savings plan and lower their debt in the present.
The college seminars proposed will discuss topics specific to the financial issues
young adults face. Fine Start will provide information to help students make better financial
decisions and use credit wisely. This will include information about available options to pay
for college and the benefits of investing in a college education. Students will also learn to
make decisions that will be beneficial throughout their life.
Workplace Seminars
Companies in the area will be approached to consider offering financial education
seminars at their workplace. Many employers have shifted the responsibility for saving and
investing onto their employees. However, most employees are not equipped with basic tools
to make beneficial financial decisions (Lusardi et al., 2010). The workplace seminars offered
by Fine Start offer an opportunity for employers to obtain a competitive advantage. There
are many benefits of the program. The seminars are not only beneficial for the employees,
but it shows the employer cares about their workers.
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Studies show that financial education increases employees’ productivity (Mandell &
Klein, 2007). Employees who are financially stressed are less satisfied, more likely to be
absent, and spend 26% more time at work sorting out their financial issues (Jenkins, 2005).
High levels of debt may prevent employees from taking advantage of employer-provided
pensions and tax-favored assets, contributing to a retirement account, and having a savings
account that they regularly put money into.
For an individual to have a comfortable retirement, they need much more that Social
Security. However, many individuals are not planning for retirement although employers
typically provide information for their employees (Bayer et al., 2009). Due to a lack of
planning, many people plan to work at least part-time in retirement (Moschis & Burkhalter,
2007). Economists determined the lack of retirement planning is related to financial
illiteracy (Lusardi & Mitchell, 2007). Many families do not consider it a priority
(Birkenmaier & Curley, 2009).
Employers who have hosted seminars in the past may have had mixed results. This is
because a one-time seminar will not have an affect on long-term planning (Lusardi &
Mitchell, 2008). Therefore, Fine Start has decided not to offer one-day only seminars.
Instead, the seminars will be an hour long, one day a week, for four weeks. The seminar
will be on a specific topic, in order to better suit the preference of those who attend.
This approach will be better than a seminar on multiple topics trying to engage various
preferences.
Fine Start will offer a variety of seminar topics in order to engage all participants.
The program will help individuals meet their current financial obligations. Once participants
believe they have a better handle on their present situation, they will be more interested in
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planning for their future. Financial seminars have a positive effect on participants. After
receiving financial education, those with lower levels of financial knowledge have the
highest increases in levels of knowledge (Birkenmaier & Culey, 2009). Most feel they were
in better control and more confident in managing their money to achieve financial security
(Jenkins, 2005).
Personalized Consultations
Although seminars inform participants about financial management, those who attend
a one-time only seminar will not see much improvement in their financial literacy. A onesize-fits-all program is not able to address the needs of everyone (Lusardi & Mitchell, 2008).
Each consumer has different needs. By offering personalized consultations, Fine Start will
be able to attract clients who want a customized plan to address their needs.
Personalized consultations will include developing a plan on how to handle their debt.
People will also learn basic skills about how to handle money, create a savings plan and how
to budget income and expenses. With the skills learned, individuals will be able to better
manage their finances and be in a better financial situation. Those who are financially
literate are able to manage personal finances and make beneficial financial decisions
(Redmon, 2010).
Fine Start realizes that clients from low-to-moderate income families struggle
financially on a daily basis. These clients will have more difficulty meeting financial goals
than those who are more financially secure (Lyons, Palmer, Jayaratne, & Scherpf, 2006).
Personalized consultations will better address the constraints the individual faces. The goal is
for the client to work at continuously improving their situation.
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Fine Start expects the personalized consultations to be successful. Many employers
do not offer financial education programs (Lusardi & Mitchell, 2008). Instead individuals
are held responsible to learn about finances on their own. The services offered by Fine Start
will increase the individual’s financial literacy. Previous research shows that those with
higher levels of financial literacy are more likely to become successful planners (Redmon,
2010).
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Tax Preparation
As the economy becomes more complex, the need for tax preparers increases.
The firm will be open year round, allowing it to be fully available to clients. By offering
personal tax preparation services, the firm will introduce the customers to the personalized
consultation services the firm provides. The ability to split a tax refund has also created an
opportunity for the firm to assist consumers in financial planning. Splitting the refund was
created to encourage low-income filers to put some of their refund into savings.
The software that will be used to prepare tax returns is Drake Software. The product
will cost $1,495 for an unlimited amount of tax returns. Drake software had impressive
reviews in a recent tax software survey. Ninety-four percent of Drake users plan to stay with
the software. Nearly half of the respondents surveyed considered the price the most
attractive point. Drake also scored highly in speed and accuracy. The software is easy to use
to run updates, installations, and file returns electronically (Bonner, 2011).
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Accounting/Bookkeeping Services
The company will also provide a full-range of accounting and bookkeeping services
to small and mid-size businesses. The services are available for both businesses that are just
launching and those that are already established. Clients’ situations will be analyzed in order
to devise a plan that best meets their needs. The services offered will be attractive to these
businesses because it costs less to outsource the services than to hire in-house staff to
perform the functions. The firm will also be able to personally address any concerns the
customer may have while offering expertise accounting services.
The goal is to grow with the business. As the business grows, the business will
require additional accounting services. The services offered include accounts payable
management, accounts receivable management, bank reconciliations, inventory management,
and payroll. The firm will assist the business in managing their budget and increasing their
profit. The clients will also be eligible to receive discounts on financial seminars for their
employees.
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Market Analysis
Fine Start used a combination of primary and secondary data to research the market.
The primary data consisted of a questionnaire. The secondary data included industry profiles,
annual reports and market trends of similar companies. The opportunity to develop a
company focused on improving financial literacy was recognized after conducting a study of
a potential market at a college located in New York.
The questionnaire (refer to Appendix A) was administered in the cafeteria of the main
campus on April 15, 2011. College students were selected because they represent a unique
group to survey. Most respondents were young with little income. College students often
carry large amounts of student loans or credit card debt (Lusardi et al., 2010). However, they
are future-oriented and expect to increase their income after graduating (Norvilitis et al.,
2006).
The questionnaire consisted of three parts and a total of nineteen questions. The first
part of the survey collected the demographic information of the respondents. The second
part gathered information regarding the opinions and attitudes of the respondents towards
financial literacy. The third part of the questionnaire consisted of four multiple-choice
questions to determine the financial knowledge of the respondents. The responses to the data
collected can be found in Appendix B.
The relationship between the demographic information and their opinion and attitudes
toward financial literacy was analyzed using chi-square. Significant relationships (p<0.05)
were found for two variables. The first was for the respondent’s gender and their ability to
pay their bills. The second was for the respondent’s major and their management of their
finances.
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The results of the chi-square are consistent with previous research. Studies show
females were generally less confident about their financial situation (Loibl & Hira, 2006). At
the collegiate level, Ford and Kent (2010) found that females have lower levels of financial
market knowledge than males. Females were more intimated, less interested, and less aware
of financial markets (Ford & Kent, 2010).
The lack of financial knowledge also has an affect on women later on in their life.
According to research conducted by Lusardi and Mitchell (2008), older American women do
not have a retirement plan and have low levels of financial literacy. This is of concern
because women have a larger burden of raising families, live longer, and earn less during
their careers than men.
The results also agreed with the researcher’s hypothesis that those who receive
financial education (business majors) are more knowledgeable than those who do not receive
financial education (non-business majors). Business majors at the college who were
administered the questionnaire, receive financial education because the students must take
accounting, economic, and finance courses.
The third part of the survey was graded to determine the scores the respondents
received. A score of 75% is considered passing. Only 20% of respondents scored at least a
75% on the multiple-choice questions. The results indicate that most respondents are not
financially knowledgeable. The results agree with previous research that showed Americans
do not have adequate knowledge of personal finances (Volpe, Chen, & Liu, 2006). The lack
of financial knowledge often results in poor financial decision-making (Mandell & Klein,
2007).
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Customers
The financial education seminars offered by Fine Start will be promoted to local
colleges and businesses. The colleges selected will be those located in the five boroughs of
New York and Nassau County. Both public and private colleges will be encouraged to
consider offering the seminars. Nearby companies will also be encouraged to offer financial
education courses for their employees. The companies that will be approached will have
greater than 50 full-time employees.
The age range of customers targeted for personalized consultations will be from 25 to
40. The service will appeal to those who are supporting a family because they are most
likely to be in need of developing their financial management skills and believe it is valuable
information. This age group also has responsibilities not held by previous generations.
Many are expected to care for both their children and their parents (Moschis & Burkhalter,
2007). This may require paying for college education and in-home care or nursing home
living.
The income level targeted for personalized consultations will be less than $100,000 in
annual household wages. Fine Start has selected an income demographic that is usually not
targeted. There are few fee-based financial planning services available for low-to-middleincome families.
For the accounting services, the potential customers will be a business with less than
20 employees. The ideal company will be a start-up. The goal is for Fine Start to grow with
the business. Fine Start will be able to provide additional services as the company needs it.
The target market for the tax preparation services are low-to-middle-income
individuals. This group does not have complex tax situations. However, they may not feel
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
knowledgeable or comfortable enough to prepare their own tax return. This demographic
also wants to receive their tax refund quickly.
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Competition
Self-preparation tax software is the greatest competitor. This is due to an increase in
the availability and ease of free and at-home software products. Intuit Inc., the creator of
TurboTax, is a leading provider of tax preparation and filing. The TurboTax products and
services are designed to enable individuals and small business owners to prepare and file
their own federal and state personal and small business income tax returns (Intuit Inc, 2010).
The other competitors include other tax preparation companies, both corporately and
independently operated. H&R Block and Jackson Hewitt, for example, have national brand
recognition. H&R Block prepared 21.4 million tax returns in the U.S. during fiscal year
2011. This comprised of 16.4% of the Internal Revenue Service’s estimate of total individual
income tax returns filed during the fiscal year 2011 tax season (H&R Block Inc, 2011).
Jackson Hewitt is the second largest paid individual tax return preparer in the United
States based upon the number of individual tax returns prepared and filed with the IRS.
In 2010, Jackson Hewitt prepared approximately 3% of all tax returns prepared by a paid tax
return preparer (Jackson Hewitt Tax Service Inc, 2010).
The company will also have to compete with private businesses, nonprofit
organizations, and government agencies that offer financial education materials and tax
preparation. The Free File Alliance, a consortium of the IRS, and volunteer organizations
prepare tax returns at no cost for low-income taxpayers.
Barriers to Entry
Fine Start will face intense competition. Competition has increased over the past few
years and it is expected that this trend to continue. Some of the existing competitors have
more financial, technical and marketing resources than Fine Start. Many competitors are
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offering free or low-priced entry-level products to attract customers. In addition, the
competitive landscape can shift rapidly as new companies enter the market. This is
particularly true for personalized financial consultation services where the barriers to entry
are low.
New regulations have made it harder for individuals to enter the tax preparation
industry. I.R.C. Code Section 6109 requires all compensated tax return preparers and those
who assist in preparing all or substantially all of a tax return after December 31, 2010 to pass
a tax preparer examination. Preparers also have to apply for a Personal Tax Identification
number (PTIN) and then register the PTIN with the IRS. The PTIN is to be used as the sole
identification number for any tax returns prepared by a tax return preparer (Jackson Hewitt
Tax Service Inc, 2010).
Preparers have to undergo a limited background check and receive a minimum of
15-hours of continuing professional education each year including ethics and current year tax
law update beginning in 2011. Attorneys, certified public accountants and enrolled agents
who are active and in good standing with their respective licensing agencies are exempt from
the competency test and CPE requirements. All tax return preparers will be required to renew
the registration of their PTIN every three years, be subject to a renewal fee, a tax compliance
check and must self-certify that they have completed the CPE requirements for the prior three
years (Jackson Hewitt Tax Service Inc, 2010).
Competitive Advantage
Fine Start will be forced to adjust and expand service offerings in order to remain
competitive in the tax preparation industry. There are people who are not comfortable selfpreparing their tax return who would rather have a tax professional handle the return.
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Fine Start will be able to differentiate from other tax preparers because a CPA will prepare
tax returns. Recent regulations require paid preparers to register with the IRS, pass a
competency exam and meet continuing education requirements. CPAs are exempt from the
exam and the continuing education requirements (DeFelice, 2011). The knowledge,
experience and experience required to become a CPA gives Fine Start an advantage when
compared to local tax preparers.
The competitors that provide financial education mostly focus on adults and target
specific financial topics. For example, there are non-profit organizations that provide
financial education services when someone is about to purchase a house. The programs are
established to reduce the risk of default or delinquency (Bernanke, 2006). Many workplaces
offer education material or seminars on retirement planning (Hira & Loibl, 2005). While
these are important topics, Fine Start will focus on a variety of topics on financial education
in order to capture a greater audience.
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Exit Strategy
As Fine Start grows, the company will open additional locations. If the business is
very successful, instead of selling the business, Fine Start will consider becoming a franchise.
The owner’s role will then be to train and support the franchises.
Fine Start expects the business to be successful. However, if the company is unable to
create ample public interest, the business may fail and Fine Start may have to cease
operations. In the event the company is not successful and has surpassed the level of
acceptable losses, necessary measures will be implemented to exit the business with minimal
damage to the owner and investors. All equipment will be sold to cover any outstanding
debts. If there are remaining debts, it will be paid by the owner in monthly installments until
it is paid in full.
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Economics of the Business
Fine Start is dedicated to make the company successful and profitable. The income
will come from four primary sources: tax preparation, bookkeeping services, financial
education seminars and personalized consultations. Fine Start expects to incur start-up costs
of $15,700. Table I shows the break down of the costs.
Table I: Start-Up Costs
Description
Amount (in dollars)
Professional fees:
Legal fees
400
Technology costs:
Computer hardware
2,800
Computer software
2,000
Printers
300
Website development
300
Administrative costs:
Office supplies
Rent
Utilities
Furniture
300
2,000
200
1,000
Sales and marketing costs:
Marketing materials
1,500
Newspaper advertising
2,000
Public relations
400
Travel
200
Mailing lists
300
Wages and benefits:
Employee training
Total
2,000
15,700
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
30
Pricing
Fine Start researched the fees commonly charged to determine the pricing structure
for the services provided. The National Society of Accountants (2011) conducted a biennial
survey of approximately 8,000 tax preparers. The survey showed the average tax preparation
fee for an itemized Form 1040 with Schedule A and a state tax return was $233 for the 2011
tax season. A non-itemized Form 1040 and a state tax return was $128.
A typical practice had an annual gross income of $250,082 and a net income of
$85,247 in 2010. The typical practice derives 60% of gross income from the preparation of
federal and state tax returns. Forty-one percent of total expenses represent salaries and
benefits other than retirement. Ten percent represents expenses for technology needs, such
as hardware, software, licensing fees, and the Internet.
According to King (2012), the average hourly fee was $201 in 2011. The financial
planners on average provided services to 90 clients. Planners typically spend one to three
hours on the initial discovery meeting. Three to fourteen hours are then spent developing the
financial plan.
Many competitors are offering free or low-priced entry-level products to attract
customers. This was taken into account when designing the fee structure. Fine Start will
have a pricing structure that is less than the average fee charged. This approach will attract
the price sensitive customer. The cost of the tax return preparation varies depending on the
requirements. Table II shows the average cost for each service.
The company will not offer Refund Anticipation Loans, unlike other tax preparation
companies. This is a loan made by a third party financial institution to a customer and
secured by a customer’s anticipated federal tax refund. The loan amount consists of fees and
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
31
charges, including tax return preparation fees. Customers are attracted to this loan because it
is generally disbursed into their account approximately one day from the time the tax return
is electronically filed with the IRS (Jackson Hewitt Tax Service Inc, 2010). Fine Start will
not offer this loan because of the high percentage of fees that are taken out from the return.
Instead, the tax preparation services will have to be paid before the tax return is filed.
Customers will be encouraged to have their tax refund directly deposited into their account.
Table II: Average cost for the services offered
Type of Service
Tax Preparation – cost per return
Accounting/Bookkeeping – per hour
Financial Education Seminars/ 4-sessions,1-hour each
Personalized Consultation
Average Cost
$150
$60
$2,500
$30
Fine Start expects that the tax preparation and accounting/bookkeeping services will
generate a substantial amount of the total revenue expected in the first year of operations.
The company understands that the financial education services may not generate much
revenue in the beginning. However, the company expects that interest in the financial
education services will grow in the following years of operation. Table III shows the
expected number of services to be preformed in the first three years of business.
Figure I ( on next page) shows the amount of revenue expected from each service.
Table III: Units expected to be prepared during the first three years of operations
Units
Tax Preparation
Accounting/Bookkeeping
Financial Education Seminars
Personalized Consultation
Year 1
300
1,000
4
1,000
Year 2
400
1,250
12
1,200
Year 3
500
1,500
30
1,500
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
Figure I: Revenue expected during the first three years of operations
32
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
33
Gross Margin
The gross margin for the first year of services is 57%. The calculation for the gross
margin over the first three years of operations can be found in Table IV. The direct costs
include stationary, printing, travel, marketing brochures and salaries.
Table IV: Gross Margin
Revenue
Year 1
Year 2
Year 3
Tax Preparation
$45,000
$60,000
$75,000
Accounting/Bookkeeping
$60,000
$75,000
$90,000
Financial Education Seminars
$10,000
$30,000
$75,000
Personalized Consultation
$30,000
$36,000
$45,000
$145,000
$201,000
$285,000
Direct Costs
$62,340
$71,060
$82,580
Gross Margin
$82,660
$129,940
$202,420
65%
71%
Total Revenue
Gross Margin %
57%
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
34
Break-Even
The break-even analysis can be found in Figure II. The monthly revenue break-even
is $5,815.79. This is assuming the average percent variable cost is 43% and the estimated
monthly fixed cost is $3,314.67. The monthly fixed cost includes payroll taxes, rent, utilities,
insurance, and marketing expenses.
Figure II: Break-even analysis for Year 1
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
35
Service Guarantee
Fine Start wants to build a reputation for outstanding customer service and attention
to customer satisfaction. However, because of the type of services offered, the measure of
success will not be the same for all programs or clients (Lyons et al., 2006). Outcomes and
indicators will vary depending on the individual’s financial situation. As a result, Fine Start
will not be able to guarantee a refund for fees charged if a client is not satisfied.
There will be a service guarantee for tax preparations. It will be similar to that of
Fine Start’s competitors. If the client did not receive the maximum refund they were entitled
to, the client will receive a refund on the preparation fees. Fine Start will be responsible for
the resulting penalties and interest if there is an error made on the return. In order to
guarantee the tax preparation, Fine Start will ask questions to accurately determine the
client’s tax liability and identify the deductions and credits the client is eligible for. Fine
Start recognizes that in order to remain competitive, the company will need to provide the
same guarantee as their competitors.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
36
Marketing Plan
Fine Start realizes that the marketing plan is essential for the company to gain
business and remain successful. The marketing approach involves maintaining and
expanding the customer base in the target market. The marketing plan will focus on the
company’s commitment to improving financial literacy.
Advertising and Promotion
The goal is to build a sustainable company that will continue to increase the number
of clients served. Therefore, the company will work to attract new customers and maintain
current customers. Two main marketing strategies have been developed. The first is to
promote the tax preparation services. The second is to emphasize the financial education
programs the firm offers.
The company plans to open for business in November 2012. The promotional
strategies will focus on notifying people in the area that we will be opening. The approach
will create awareness and establish Fine Start as a trusted financial adviser in the community.
A website will be created to attract potential customers. Web marketing will include
purchasing key words from well-known search engine companies.
Marketing Tax Preparation Services
Since the opening date is near the beginning of tax season, marketing the tax
preparation services will be the primary objective. Fine Start wants to use effective marketing
strategies while keeping costs low. This will require the company to utilize creative
marketing approaches. Fine Start will buy ad space in a local newspaper in exchange for a
feature story on the business. Fine Start will also request to have a monthly column in the
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
37
newspaper. At the end of January, a coupon will also print with the advertisement in the
local newspaper. Promotional deals will be offered to increase word-of-mouth advertising.
Fine Start’s marketing strategy includes setting up partnerships with bookkeeping
clients. Personal income taxes will be prepared for the client’s employees at a discount.
This will help the company reach new customers. Fine Start will also obtain a mailing list of
the targeted customers in the area. Advertisements will be mailed to potential customers.
The company will also create a monthly newsletter that will be sent electronically. Each
issue will be primarily focused on a specific topic.
The company will also use the marketing toolkit the AICPA is offering free to its
members. This initiative provides tools to help members promote the value of CPA
providers of tax services and to distinguish them from their competitors. The kit includes
print ads, a radio spot, PowerPoint, brochures, and suggestions to use to pitch stories
presentations (DeFelice, 2011).
Marketing Financial Education Services
The company will approach potential colleges and businesses in the area. To promote
the college seminars, the marketing approach will focus on the benefits to the college. A
financially literate student is more likely to make better financial decisions. As a result, it
may reduce a college's loan default rate and increase a college’s retention rate.
An employer will not be willing to pay for a seminar if they do not understand the
value and importance of financial literacy. It is important for Fine Start to promote the
benefits of workplace seminars. According to Jenkins (2005), an analogy can be found in the
old proverb: “Give a man a fish and you feed him for a day. Teach a man to fish and you feed
him for a lifetime.” This approach will be taken to encourage employers to provide financial
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
38
education seminars for their employees. These seminars will present helpful tools and
educate workers. The marketing approach will focus on the benefits of financially
knowledgeable employees. Financial education seminars improve retention, recruitment and
motivation of employees (Jenkins, 2005). One study found that employees who participated
in workplace financial education are more likely to be satisfied with and supportive of their
workplace (Hira & Loibl, 2005).
Public Relations
Obtaining a press release prior to the grand opening is of great importance for the
company. It will be helpful in gaining the attention of potential customers. Press releases
will be distributed to the local media focusing on the firm’s interest in increasing financial
literacy. If a local media offers to release the story, it will establish enough creditability to
approach a larger media outlet. The importance of increasing financial literacy is sure to gain
media interest. The goal is to get a featured story of Fine Start in the local papers and radio
stations. This will help the company gain recognition in the community.
Fine Start will generate new clients through workplace seminars and free seminars in
the office. The objective is to trigger a need for the services offered by the company.
Additionally, the free seminars will be a great way for the company to give back to the
community. These seminars will be promoted at networking events. The seminar will give
the company the opportunity to introduce individuals, who may not have previously
considered personalized consultations, to the services offered. At the completion of the
seminar, the presenter will offer attendants a special discount on personalized consultations.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
39
Social Media
Retaining clients is critical in the tax preparation industry. Follow-up by
advertisements will be sent out to encourage clients to consider the other services offered by
the firm. Social media will also be used to stay in contact and keep the clients up to date with
what is happening with Fine Start. Making the clients awareness and directing traffic to our
Twitter, Facebook, and LinkedIn pages will encourages people remain engaged and
interested in the company. Providing multiple channels allows the client to choose the
channel they are most comfortable with and increases the likelihood that the customer will
remain in contact. Social media will also be used as a tool to generate discussion about
financial literacy. It will allow Fine Start to start conversations and raise awareness.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
40
Design and Development Plans
In addition to the initial services offered, new products and services are being
developed. In order to remain competitive in the tax preparation industry, Fine Start will need
to continually adjust and expand service offerings.
New Products/Services
Fine Start is working on several new products to be launched after the company has
opened for business. One such product is a mobile phone application. It will include a
budgeting calculator for clients to use. It will also have information about improving
financial literacy.
Fine Start will also develop an income tax preparation course. The courses will be
offered to the public. Participants will lean how to prepare income taxes. There will be
different levels of learning, varying from a basic understanding to an advanced course. It
will help to create public awareness of the company. It can also give Fine Start the
opportunity to hire trained tax professionals.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
41
Growth Strategy
As relationships are built with local and national retailers, Fine Start will look into
further expansions. After three years, the company expects to expand and open a second
location. The second location will be in the New York City area. The ideal location would
be with a retail-partner. A retail-partner location would be within another business, such as a
retail store or shopping mall. The partnership would be with a retailer with similar customer
and employee demographics as Fine Start’s target market. The partnership with the retailer
will allow Fine Start to set up a stand within the retail-partner’s location during the tax
season. This would be beneficial because it will only require Fine Start to pay rent during the
tax season and not have to commit to renting out a location for the entire year.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
42
Operations Plan
Due to the seasonality of the tax preparation industry, expected revenue will vary
throughout the year. Therefore the tax preparation services will be the main concern during
December through April. From May through November the concentration will be on hosting
financial education seminars.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
43
Geographical Location
Fine Start will be located in the northwestern part of Queens, New York. The ideal
location will be near a busy subway station and bus stop. It is also ideal for the location to
have high-visibility. Preliminary negotiations suggest the rent for such a location will be
$2,000 per month for a three-year lease for approximately 1,300 square feet.
This section of Queens was chosen because of its proximity to local colleges and
small businesses. There is also a large shopping mall and two shopping centers nearby. The
location was also chosen because the demographics of the area are similar to the target
market. According to the U.S. Census Bureau (2011), the population of Queens, New York,
was 2,230,722 in 2010. The median household income in 2009 was $54,671. A total of
236,900 firms were established in 2007.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
44
Legal and Regulations Issues
Neither the company nor management is subject to any existing or threatened legal
issues. Nor are there any pending regulatory changes that are expected to have an affect on
the company. However, there are new regulations which have been enacted that are relevant
to Fine Start.
Regulations in the tax preparation industry have changed in recent times. As of
January 1, 2011, a tax return preparer must be a CPA, attorney, enrolled agent, or a registered
tax return preparer in order to receive a preparer tax identification number (PTIN). A PTIN
is required for a preparer who is compensated to prepare all or substantially all of a tax return
(Rosenberg, 2011). Fine Start will be at an advantage because a CPA will prepare the tax
returns. A CPA is not required to take the competency exam to receive a PTIN.
The credit card accountability, responsibility, and disclosure (CARD) act of 2009 has
helped to encourage financial education. There are several provisions within the act to
protect younger credit card consumers. For example, a person under the age of 21, who
wishes to apply for a credit card, will need to have an adult co-sign or show proof they are
able to repay the debt. Also, people under the age of 21, will not receive pre-screened credit
card offers unless they opt-in.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
45
Management Team
Fine Start will be formed as a sole proprietorship owned and operated by Rosanna
Corchado. She has a Bachelors of Science in Accounting and is working on her Masters in
Business Administration with a Concentration in Accounting. She is currently working on
obtaining her CPA.
Rosanna was a supervisor at a large tax preparation company. She successfully ran a
new location, actively promoting the business and training new employees. Rosanna has also
worked at a college as a financial aid counselor. She educated students and their families
regarding financial aid and provided them with financial advice. With her previous
experience, Rosanna will be able to successfully lead Fine Start.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
46
Organization
Fine Start intends to hire a financial planner and two tax interns. The Organizational
Chart which can be found in Figure III, illustrates the structure of the company. The financial
planner and tax interns will report to the owner. Table V shows the expected compensation
that will be paid for each position for the next three years. The compensation is comparable
to others of the same position in the area.
Figure III: Organizational Chart
Table V: Expected Compensation
Employee
President
Tax Intern # 1
Tax Intern #2
Financial Planner
Total
Year 1
$0
$8,320
$8,320
$31,200
$47,840
Year 2
$0
$8,840
$8,840
$33,280
$50,960
Year 3
$0
$9,360
$9,360
$35,360
$54,080
The owner’s responsibility is to prepare individual tax returns and provide accounting
services for the small business clients. The owner will also network with others in order to
promote the company. The responsibilities also include managing the budget, hiring and
payroll.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
47
Tax interns will be individuals recruited from nearby colleges. The interns are to be
working on a Bachelor degree in accounting. The two interns will work part-time throughout
the year. The interns will have basic tax knowledge and will receive basic tax training.
The financial planner will be a full-time employee. The responsibilities include
providing personalized consultations and giving financial education seminars. The financial
planner should be able to provide satisfactory assistance and gather relevant information
from clients.
If needed, a receptionist will be hired part-time. The responsibilities include
managing the schedule, answering phone calls, and greeting clients as they enter the office.
It is not necessary to fill this position right away because it does not require a lot of training.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
48
Sustainability and Impact
The company is interested in building a sustainable, socially responsible venture.
The main goal of Fine Start is to improve the financial literacy of the community
The company is also interested in going green and making environmentally healthy
choices. In response to this, the company has developed an online account for each client
that has their tax return prepared at Fine Start. The account will save the client’s tax return in
an online document. The client will be able to access their tax return at any time. An
electronic record will drastically reduce the amount of paper used.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
49
Overall Schedule
Keeping the schedule and meeting deadlines is important, especially with the
seasonality of tax preparation. The new company cannot afford to miss out on potential
opportunities. Therefore, milestones have been established to keep the priorities in place.
Some of the key milestones are shown in Figure IV. Table VI shows the start and end dates
along with the expected cost for each milestone.
Milestone Description
October 2012
November 2012
December 2012
Obtain Bank Loan
Develop Website
Interview potential employees
Train new employees
Advertise Coupon in Newspaper
Figure IV: Milestones
Table VI: Milestone Dates and Cost
Milestone Description
Obtain Bank Loan
Start Date
10/1/12
End Date
10/31/12
Cost
$0
Develop Website
Interview potential employees
Train new employees
Advertise Coupon in Newspaper
11/1/12
11/15/12
12/1/12
12/15/12
11/15/12
11/30/12
12/15/12
12/31/12
$300
$0
$2,000
$200
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
50
Critical Risks, Problems, and Assumptions
In addition to competition from other companies, there are other factors that could
present a risk for Fine Start. The success of Fine Start will depend on the ability of the
company to create ample public interest. Due to the seasonality of tax preparation, Fine Start
will be at risk if the expected revenue from tax preparation is not earned. Most of the
revenue will be earned at the beginning of operations. Tax preparation services may not be
in demand if governments simplify tax return preparation. People reach out to tax return
preparers because of the level of complexity involved in preparing a tax return.
Businesses may be negatively affected by difficult economic conditions, especially if
unemployment levels remain high. As a result, it may negatively impact the company’s
ability to increase tax preparation clients. Higher unemployment levels may result in clients
no longer being required or electing not to file tax returns. Clients may also seek lower cost
preparation and filing alternatives. Furthermore, clients will not be interested in financial
education services if they are not currently working.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
51
The Financial Plan
Fine Start expects business to continue to grow. Due to the seasonality of the tax
preparation industry, Fine Start realizes that the bulk of revenue from tax preparation will be
during the tax season, which is January through April. It is expected that the seasonality will
most likely continue in the future.
The two main filing behaviors within the tax preparation industry consist of those
who file during the early season, between January and February, and those who file during
the late season, between March and April. Those who file during the early season typically
file their tax returns shortly after their Form W-2s become available in order to receive their
tax refunds as quickly as possible. According to Jackson Hewitt Tax Service Inc (2010),
most of the early season tax returns have been filed by the end of February. A late season
filer tends to have higher income and a more complex tax return preparation needs.
Fine Start prepared pro-forma financial statements. The 3-year income statement is
shown in Table VII. Appendix C shows the monthly income statement for the first year of
operations. Table VIII shows the pro-forma cash flow statement and Table IX shows the
balance sheet.
The company expects to be profitable in the first year of operations. The owner is
aware that it may take up to three years to start turning a profit and that the business could
operate at a loss during that time. Adjustments may need to be made in order to keep the
business running with a positive cash flow. The business will be constantly monitored.
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
52
Table VII: Pro-forma Income Statement
Year 1
Revenue
Tax Preparation
Accounting/Bookkeeping
Financial Education Seminars
Personalized Consultation
Total Revenue
Direct Costs
Gross Margin
Expenses
Payroll Taxes
Rent
Utilities
Insurance
Marketing
Start-Up Expenses
Total Expenses
Profit Before Taxes
Taxes
Net Profit
Year 2
Year 3
45,000
60,000
10,000
30,000
145,000
62,340
82,660
60,000
75,000
30,000
36,000
201,000
71,060
129,940
75,000
90,000
75,000
45,000
285,000
82,580
202,420
7,176
24,000
2,400
4,200
2,000
15,700
55,476
27,184
8,155
19,029
7,644
24,000
2,400
4,200
2,000
0
40,244
89,696
26,909
62,787
8,112
24,000
2,400
4,200
2,000
0
40,712
161,708
48,512
113,196
Table VIII: Pro-forma Cash Flow
Year 1
Year 2
Year 3
Cash Receipts
Tax Preparation
Accounting/Bookkeeping
Financial Education Seminars
Personalized Consultation
Total Cash Receipts
45,000
60,000
10,000
30,000
145,000
60,000
75,000
30,000
36,000
201,000
75,000
90,000
75,000
45,000
285,000
Cash Payments
Direct Costs
Total Expenses
Total Cash Payments
62,340
55,476
117,816
71,060
40,244
111,304
82,580
40,712
123,292
27,184
27,184
89,696
116,880
161,708
278,588
Net Cash Flow
Cash Balance
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
53
Table IX: Pro-forma Balance Sheet
Assets
Current Assets
Cash
Accounts Receivable
Total Current Assets
Fixed Assets
Equipment
Furniture & fixtures
Total Net Fixed Assets
Total Assets
Liabilities
Accounts payable
Total Long-term Liabilities
Shareholders' Equity
Retained earnings
Total Shareholders' Equity
Total Liabilities & Equity
Year 1
Year 2
Year 3
27,184
350
27,534
116,880
390
117,270
278,588
430
279,018
600
200
800
28,334
700
280
980
118,250
800
350
1,150
280,168
2,000
2,000
3,000
3,000
3,500
3,500
26,334
26,334
28,334
115,250
115,250
118,250
276,668
276,668
280,168
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
Proposed Funding Requirements
Fine Start is a developing business. There are no immediate sources of revenue.
The company is seeking a small business loan for $50,000 to use for start-up operations.
The loan will also be used to cover expenses for the first year of operations.
54
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
55
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Appendix A
Personal Financial Literacy Survey Questionnaire
Informed Consent Form
This study is part of a Capstone research proposal. The purpose of this survey is to
examine students’ personal financial literacy and the impact financial literacy has on decision
making. There are 6 demographic questions and 13 questions regarding financial literacy in
this survey. It will take you about 15 minutes to complete.
You must be 18 and over to participate in this survey. The survey is completely
anonymous and your participation is voluntary. Please do not write your name on this
survey.
I consent. I have read this form and agree to the conditions of the survey.
Agree …
Part I
1. What is your gender?
o Male
o Female
2. What is your age?
o 18-22
o 23-29
o 30-39
o 40-59
o 60 and over
Disagree …
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60
3. What is your major?
o Business
o Education
o Music
o Interdisciplinary Studies
o Other
4. What is your race/ethnicity? (OPTIONAL)
o African American
o Asian
o Caucasian
o Hispanic
o Native American/Pacific Islander
o Multiracial
o Other
5. What is your annual household income? (If you are a dependent student, include your
parents’ income.)
o $0-19,999
o $20,000-39,999
o $40,000-59,999
o $60,000-79,999
o $80,000 and over
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6. How much do you estimate you owe in debt? (Include credit cards, student loans, and
other debts.)
o $0
o $1 - 4,999
o $5,000 - 9,999
o $10,000 - 19,999
o $20,000 and over
Part II
Respond to each statement according to the scale below:
Strongly
Neither Agree
Disagree
Disagree
1
Strongly
Agree
Nor Disagree
2
3
Agree
4
5
7.
The current economy has affected my spending.
1
2
3
4
5
8.
I pay the full amount due for my bills each month.
1
2
3
4
5
9.
I use credit cards to pay for purchases I cannot afford.
1
2
3
4
5
10. I am knowledgeable about personal finances.
1
2
3
4
5
11. I can benefit from a financial education program.
1
2
3
4
5
12. I can manage my own finances.
1
2
3
4
5
13. It is important to contribute to a savings plan.
1
2
3
4
5
14. It is important to begin saving for retirement at a young age.
1
2
3
4
5
15. I need help to create a budget and track my spending.
1
2
3
4
5
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Part III
16. Which of the following does NOT define what a credit report is?
a. Determines your creditworthiness
b. Record of your credit activities
c. Your credit line
d. Can affect your ability to get a job, a mortgage or other types of loans
17. Negative financial information (excluding bankruptcy) can stay on your credit report for
a. 6 months
b. 1 year
c. 7 years
d. 10 years
18. Suppose you have $100 in a savings account earning 2 percent interest a year. After five
years, what would you have?
a. Less than $100
b. $100
c. $102
d. More than $102
19. You have a credit card with a balance of $1,000 that has an APR of 18%. You only pay
the minimum payment each month is $25 and do not make any additional purchases. About
how long will it take to pay off the balance?
a. 1 year
b. 5 years
c. 13 years
d. 25 years
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63
Appendix B
Question
What is your gender?
o Male
o Female
What is your age?
o 18-22
o 23-29
o 30-39
o 40-59
o 60 and over
What is your major?
o Business
o Education
o Music
o Interdisciplinary Studies
o Other
What is your race/ethnicity? (OPTIONAL)
o African American
o Asian
o Caucasian
o Hispanic
o Native American/Pacific Islander
o Multiracial
o Other
What is your annual household income? (If you are a dependent
student, include your parents’ income.)
o $0-19,999
o $20,000-39,999
o $40,000-59,999
o $60,000-79,999
o $80,000 and over
How much do you estimate you owe in debt? (Include credit cards,
student loans, and other debts.)
o $0
o $1-4,999
o $5,000-9,999
o $10,000-19,999
o $20,000 and over
Response
(N=63)
43
20
54
9
0
0
0
20
8
08
27
19
1
12
19
1
3
8
11
23
15
7
7
13
11
11
9
19
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
Question
The current economy has affected my spending.
o Strongly Disagree
o Disagree
o Neither Agree Nor Disagree
o Agree
o Strongly Agree
I pay the full amount due for my bills each month.
o Strongly Disagree
o Disagree
o Neither Agree Nor Disagree
o Agree
o Strongly Agree
I use credit cards to pay for purchases I cannot afford.
o Strongly Disagree
o Disagree
o Neither Agree Nor Disagree
o Agree
o Strongly Agree
I am knowledgeable about personal finances.
o Strongly Disagree
o Disagree
o Neither Agree Nor Disagree
o Agree
o Strongly Agree
I can benefit from a financial education program.
o Strongly Disagree
o Disagree
o Neither Agree Nor Disagree
o Agree
o Strongly Agree
I can manage my own finances.
o Strongly Disagree
o Disagree
o Neither Agree Nor Disagree
o Agree
o Strongly Agree
It is important to contribute to a savings plan.
o Strongly Disagree
o Disagree
o Neither Agree Nor Disagree
o Agree
o Strongly Agree
64
Response
(N=63)
5
7
10
20
21
9
8
12
14
20
36
8
7
6
6
2
5
14
18
24
0
3
6
24
30
5
5
19
19
15
0
1
8
18
36
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
Question
It is important to begin saving for retirement at a young age.
o Strongly Disagree
o Disagree
o Neither Agree Nor Disagree
o Agree
o Strongly Agree
I need help to create a budget and track my spending.
o Strongly Disagree
o Disagree
o Neither Agree Nor Disagree
o Agree
o Strongly Agree
Score on Multiple Choice Questions
o
0%
o 25%
o 50%
o 75%
o 100%
65
Response
(N=63)
1
1
11
18
32
4
4
9
19
27
6
17
27
12
1
BUSINESS PLAN FOR A FINANCIAL SERVICES COMPANY
Appendix C
66