8.5 Business Ratios

Return on Sales (see Table 14) will increase from 10,38 % in the third year to 23,21 % in the fifth year due to sharp growth of the corporate profit. Total assets will increase sharply and Return on Assents from third to fifth year will be not less 47 %.

KEY RATIOS	Year 1	Year 2	Year 3	Year 4	Year 5
Profitability Ratios
Return on Sales (NIBT/Sales)	-9,02%	0,00%	10,38%	10,79%	23,21%
Return on Investments ((NIBT*100)/avrg. TA)	-48,16%	0,00%	129,79%	79,53%	102,36%
Return on Equity (net inc/TE)	-365,12%	0,00%	87,78%	52,80%	60,85%
Return on Assets (net inc/TA)	-96,32%	0,00%	74,99%	47,69%	57,81%

Table 14. Key business ratios

WACC will very from 14,4 % to 20 % (see Table 15). Economic Value Added will grow more than in three times from third to fifth year of operations (see Figure 19) from 119 220 Euro to 388 820 Euro. It ensures that Marktune will deliver additional value over the time.

	Year 1	Year 2	Year 3	Year 4	Year 5
Net Sales	783.000	1.170.000	1.674.000	2.052.000	2.808.000
- Operating expanses	861.500	1.170.000	1.481.000	1.806.000	2.084.000
= Operating profit	-78.500	0	193.000	246.000	724.000
- Taxes	0	0	38.600	49.200	144.800
= NOPAT	-78.500	0	154.400	196.800	579.200
Invested Capital	71.500	71.500	175.900	372.700	951.900
Cost of Capital	14,4%	14,4%	20,0%	20,0%	20,0%
- Capital Charges	10.300	10.300	35.180	74.540	190.380
= EVA	-88.800	-10.300	119.220	122.260	388.820

Table 15. EVA calculation

Notes: Invested Capital: Total Assets - Non-interest Bearing Loans

CoC: WACC

Figure19. NOPAT and EVA

These rapid financial growths are being made possible as of the following factors:

• Successful sales derived from marketing strategy,

• Low production cost derived from achieved economic of scale,

• Low Capital Charges derived from sound investment policy.

6. Conclusion and recommended future work

The purpose of this business plan was to explain in detail how the founding entrepreneurs of Marktune want to start this company. We have thoroughly outlined why we think the business is feasible, how we would begin the business, how the business would operate and the form of capital we wish to raise.

The main conclusion that can be drawn from this Thesis is that market situation is favourable for opening a new consulting company in Russia and that the new venture will feasible during the five years of operations. That confirms our hypothesis about possibility to launch this kind of business.

The main problems that entrepreneurs encounter should be solved with help of introduced business plan.

• Before start business, we develop a comprehensive list of the things we will need to finance and amount of money we will need to invest;

• To be successful on the market entrepreneurs should have solid management team, well planned company structure and established management leadership, vision and mission. As entrepreneurs delegate responsibilities to employees, they begin to rely on them for the company's success;

• The place of dislocation should be chosen and all cost carefully calculated. Entrepreneurs should become creative with their space.

To succeed in competitive environment management team need to establish strong leadership based on organizational values described in the business plan. These values will be diligence, temper, competence, integrity and honesty, special expertise and excellence. At the business start-up, the most imperative matters the firm has to stress are entrepreneurship and marketing.

The management team is willing and very enthusiastic to start this business venture in September 2011 by transforming this opportunity into action and make it successful venture and a force to reckon at. Competition on the market is intensive. More then 300 middle-sized and large consulting companies operates on the market. The major competitors have Head offices and Regional offices (for international companies) in Moscow. The leading consulting companies are IBS, LANIT, KROK, Compulink Group, PricewaterhouseCoopers, KPMG, Systematica Group, BDO, I-TECO, and Energy Consulting. Annual market growth of consulting industry in Russia exceeds 40 % for last ten years, except 2008-2009 crises years. Many positive factors affect consulting market and give the reasons to say that intensive growth is expected in the next years.

Furthermore the business idea has been tested through the prime analysis and findings have shown that the business has a strong potential for success because the management team is strong and experienced, the market has a niche, and the financial analysis show that the business will be profitable by the second quarter of the third year, if company will sell this year 13 000 hours of consulting and serve 13 consulting projects. Financial model of the business plan says that by the third year of operations Return on Sales will be equal 10,38 %, Return on Investments - 129,79 %, Return on Equity - 87,78 % and Return on Assets - 74,99 %. Economic Value Added of the new venture will grow from 119 220 Euro in the third year of operations to 388 820 Euro in the fifth year of operations.

The economic growth rate of Russia is expected to remain on about grow from 3 % to 4 %. Good political situation will bring stability which intend increases the scope of the market for entrepreneurs within CIS facilitating potential to start ups, growth and expansion of business ventures.

There are many aspects to consider when starting up a business. Since this is a business which is focussed on a new concept which has not been practically tested on the market we should further evaluate services offered by Marktune. Market testing and future communications about products with potential clients are necessary. After starting the new venture deviations from this business plan should be studied.

A business plan could have a broader spectrum of usage. Another suggestion for further studies is to investigate the importance of the business plan for the employees of a company. Can a business plan with success be used to motivate people in an organization and make them strive towards the same goals? Maybe it could help strengthen the team spirit and culture in today’s complex companies where it sometimes is unclear what the objectives and purposes of different processes are.

That the business plan is a well studied topic at universities is a fact. Every one of the authors has studied the art of writing a business plan and how to use it.

What author agrees on and what author thinks most students probably also agree on, is the high level of theoretical approach that the universities use. Literature like the one used for this Thesis is studied, and the students learn how to write a theoretically correct business plan. Then what? Do the students learn how to use the business plan in the most successful way, or do the universities create knowledge that has obvious limitations? This Thesis gives us a deeper understanding of the business plan as a tool to create business. Our study gives us an understanding of the business plan in this specific context.

More emphasis should be put on the importance of other aspects of the business plan. We think that the business plan should be used as a tool to enhance the interaction and not as the only link between the entrepreneur and the investor, when it is used as a mean to attract capital.