BACKGROUND FOR STUDENTS: Financial Wizards Ltd and any other names mentioned below are fictitious companies, and all events as well as the names of all persons associated with those companies, as mentioned in this assessment are purely fictitious in nature and any resemblance to real persons, living or dead, or to an actual business entity, is purely coincidental. You are the shareholder and director of Financial Wizards Ltd, a South African based professional services firm, that provides Assurance, Tax and Advisory Services. The firm focusses on assisting SMMEs to comply with the law and grow their businesses. SMMEs have long been cited as the solution to the unemployment challenges in South Africa and your firm plays its role in society by ensuring the sustainable growth of SMMEs. __________________________________________________________________________________ Email from Matthew Sibaya (client) to partner (student). To: partner@financialwizards.co.za From: MatthewSibaya@staywell.co.za CC: Subject: Business plan Attachment: Annexure A_Business plan Pastel generic set of accounts Good day Thank you for meeting up with me yesterday and as discussed I would like to make use of your firms expertise in compiling a business plan for a new venture of mine. I also have questions around setting up the business which I would appreciate your guidance with. I have attached an extract of the business plan (see annexure A) which I drafted based on templates from the internet. Please review the extract and send me your thoughts and comments where requested. AdditionalIy I would like to know the most suitable legal structure for my business considering the benefits and disadvantages of the different options. When evaluating the options available to me, please consider which taxes I would have to pay and would be most advantageous? I admit I am not very familiar with tax legislation and practices. I anticipate that the business will reach R800 000 in turnover in its first year of trading. Looking forward to your response. Let me know if you need more information to answer these questions. Regards, Matthew Sibaya MD Annexure A Extract from the business plan for StayWell Executive Summary StayWell is an innovative online e-commerce portal offering a variety of products or services that promote self-care to consumers throughout the globe. The company is founded by Mr Matthew Sibaya. A physiotherapist, by profession, he has a wealth of knowledge on promoting health and well-being. Mr Sibaya will continue to practice as a physiotherapist to ensure that he is able to keep up with the latest in health care and to build his network with other professionals in the medical field. The timing of market entry is nothing less than exceptional after the recent covid-19 pandemic. Consumers have become health conscious of late and online shopping is at an all-time high. While the market has a great deal of potential and is filled with incredible opportunities, to capitalize on them, a strong infusion of working capital must be acquired. Working capital will be used in a variety of areas including marketing, logistics, insurance, management as well as the financing of the day-to-day operations of a business of this type. Mr Sibayas projects need a working capital sum of R100 000 for his venture with repayment of this sum coming from profits made through the website. Marketing for StayWell will be done primarily through the Internet. Mr Sibaya will develop a strong online presence that is user-friendly, easy to navigate and encourages consumers to engage longer on the website which increases the probability of a purchase. In addition to the home website, plans also call for StayWell to develop a strong social media presence using Facebook.com and Twitter.com; the worlds premier social networks with over 1 billion persons in their combined communities. The social media pages will be updated daily with information that will drive the marketing message and allow it to resonate with the members of the core audience. Overhead costs are low and do not in any way threaten the projected profit position of the organization. There are no large salaries involved in the financial mix as Mr Sibaya does not project to immediately need to hire staff of any type as he can handle most of the business operations alone and would thus be the sole employee. Consultants will be hired where needed. All these factors bode extremely well for StayWell as the organization looks to become one of the online commerces signature brands and a true market leader. Company overview Business structure MS: Please refer to the email. I need advice on the legal structure of the business. Mission Statement The mission of StayWell is to provide a reliable online marketplace for consumers that offer quality products at a reasonable price that drives profits while adding value to our brand constituents. Objectives What follows is a listing of the core objectives for StayWell. 1. Develop a strong customer base. Developing a strong customer base will be priority. To achieve this end, Mr Sibaya will create an effective customer service model that adequately addresses all the unique needs of the online consumer. 2. Create a broad marketplace. Having a broad marketplace with a variety of goods will be another of the core objectives. From products or services that promote self-care, trends around intuitive eating, plant-based eating, mental wellness, supplements and energy healing, the founder is intent on creating a marketplace that is as broad as the consumers taste. 3. Online security. As the online shopping industry has continued to grow, so too has the need for online security. With that being said the founder will look to develop a secure environment that protects the consumer on all levels. 4. Drive profits. Driving profits will be the final objective for StayWell as the founder will look to grow the revenue and profit streams exponentially over the course of the coming years. Company Ownership Matthew Sibaya is the sole owner of StayWell. There are no other parties with the ability to claim an ownership stake in this venture. Business Location StayWell will be in Sandton, Johannesburg with the ability to serve clients throughout the globe. Long- term plans are for this to remain the base of operations due to the familiarity of the founder with the area and the reach that the Internet provides. Products and Services StayWell will offer a security online marketplace for consumers looking to transact purchases from the health, and wellness industry. The organization will have a drop shipping approach which will greatly enhance the appeal and lower the overall overhead costs that are incurred. Market analysis Market size According to the Africa Healthcare Report (Zurcom International, 2021) the African healthcare market is estimated to be worth $259 billion by 2030 of which Africa will present 14% of health and wellbeing business opportunities. The market is growing due to population growth, the changing nature of burden of disease, and the need to decrease the gap between demand for and access to quality healthcare for all. The report further states that South Africa has one of the biggest healthcare markets in Africa. The total South African healthcare market is projected to reach a value of $37 billion by 2022 and $47.1 billion by 2027. Thus, there are opportunities for business and investment in the industry. SWOT Analysis What follows is an analysis of the core strengths and weaknesses of Staywells business model as well as the opportunities and threats that currently exist within the marketplace. MS: I have seen most business plan templates use a SWOT analysis, I am curious about whether there are other models that can achieve the same results as a SWOT analysis please share at least 2 other models so I know what else is out there, and feel free to use one of these in this SWOT analysis section applying information I have provided about my business. I must mention that the drop shipping approach was suggested to me by my brother-in-law (a businessman himself)), and I am unsure if this will be beneficial. Logistics and operations plan Accounting/Retail systems The company intends to use Pastel Partner as its accounting software. The software is an off the counter purchase and sufficient for StayWells purposes. MS: I am currently compiling a forecast set of financial statements. I have yet to consider the taxes involved and have thus not included it in the chart of accounts. Advise o which taxes would be applicable to my business (based on the advised legal structure)? o Consequently, which tax related accounts would have to be created in the chart of accounts. Based on the generic chart of accounts attached, indicate which accounts should be added for TAX ONLY purposes Financial plan Startup summary MS: As previously mentioned that several start-up costs will be required for the business. Indicate, based on your experience, what start-up costs I can expect to incur. You are required to: 1. Respond to Matthew Sibayas email. a. Your response should be in the form of an email reply. b. The email must contain an attachment with a report that outlines the advice requested