Forming a Company and Forming a Company and Starting BusinessStarting Business

JP StefaniJP Stefani

MSIT 573MSIT 573

Dr. C. RebmanDr. C. Rebman

Introduction/BackgroundIntroduction/Background

Entrepreneurial OpportunityEntrepreneurial Opportunity• Niche based on specific expertiseNiche based on specific expertise

Inc. / S-Corp. / LLC / PartnershipInc. / S-Corp. / LLC / Partnership Business = contract / sub-contract with Business = contract / sub-contract with

the Governmentthe Government Get the ducks in a row (Duck Alignment?)Get the ducks in a row (Duck Alignment?) Best case scenarioBest case scenario

• Independent consultant with solid contractIndependent consultant with solid contract Worst case scenarioWorst case scenario

• Request my old job from my former companyRequest my old job from my former company

Business ObjectiveBusiness Objective Explore reasons for starting a businessExplore reasons for starting a business

• Flexible scheduling / TimeFlexible scheduling / Time• Expertise in fieldExpertise in field• Timing is right based on personal issuesTiming is right based on personal issues• FinancialFinancial

How do you start a businessHow do you start a business What is needed to do businessWhat is needed to do business

• ContractingContracting ClearancesClearances Specific Conditions and RestrictionsSpecific Conditions and Restrictions

• ConsultingConsulting• FinancesFinances• Product / Service – Product / Service – THAT IS NEEDED!THAT IS NEEDED!

Current Situation and Problem / Current Situation and Problem / Opportunity StatementOpportunity Statement

New opportunitiesNew opportunities• Specific attributes neededSpecific attributes needed

IntelligenceIntelligence Information OperationsInformation Operations Counter TerrorismCounter Terrorism Security ClearanceSecurity Clearance

• Contacts – who do you knowContacts – who do you know• Contracts – who do you knowContracts – who do you know

Businesses follow the workBusinesses follow the work Top Dog gets fed first (financially Top Dog gets fed first (financially

speaking)speaking)

Analysis of Option / FeasibilityAnalysis of Option / Feasibility

OperationalOperational• Time commitment = 752 hours (split in two)Time commitment = 752 hours (split in two)• Start: Aug 05 End: Oct 06 = >4100 hrsStart: Aug 05 End: Oct 06 = >4100 hrs

TechnicalTechnical• Context of Consulting is ClassifiedContext of Consulting is Classified

If experience measured by time as an Intelligence If experience measured by time as an Intelligence Officer (+30 yrs combined)Officer (+30 yrs combined)

• Both Principles have worked in small businessBoth Principles have worked in small business EconomicalEconomical

• Minimal input cost (Fixed Costs = $1000)Minimal input cost (Fixed Costs = $1000)• Potential increase makes it valuable (double Potential increase makes it valuable (double

current salary)current salary)

Financial Analysis / ROIFinancial Analysis / ROI

Created by: JP Stefani Date: Jul-05Discount rate 10%

Assume the project is completed in Quarter 5 Quarter0 1 2 3 4 5 6 7 Total

Costs 3,100 3,100 3,100 3,100 3,100 0 0 0Discount factor 1.00 0.91 0.83 0.75 0.68 0.62 0.56 0.51Discounted costs 3,100 2,818 2,562 2,329 2,117 - - - 12,927

Benefits 0 0 0 0 0 25000 25000 25000Discount factor 1.00 0.91 0.83 0.75 0.68 0.62 0.56 0.51Discounted benefits 0 - - - - 15,523 14,112 12,829 42,464

Discounted benefits - costs (3,100) (2,818) (2,562) (2,329) (2,117) 15,523 14,112 12,829 29,537 Cumulative benefits - costs (3,100) (5,918) (8,480) (10,809) (12,927) 2,596 16,708 29,537

ROI 229%Payback after quarter 5 NPV

AssumptionsFixed costs are $200. per quarter split in twoTime costs are $40. per hour (750hrs/5 = 150 per quarter) split in twoIn the 5th quarter the income will increase by $25,000 per quarter

Financial Analysis for Starting a Business

Budget EstimateBudget EstimateProfitsAsset Labor Category Fully Burdened

Rate $ per HourHours Worked per Fiscal Year

Total Gross Income

Stakeholder 1 & 2 Principle Engineer 105.00$ 1740 182,700.00$

LossesExpense Cost ValueRetirement 15% of Income 27,405.00$

Medical savingsVariable based on individual $ 5,000.00

Contract Pass through fee 10% of Total Income 18,270.00$ Total cost per person 50,675.00$

Net Income per person 132,025.00$

Fixed CostsMarketing

Logo Design 25.00$ Business Card Design 25.00$ Website Design 200.00$

Business Card Printing 50.00$ Company Incorporation 500.00$ Accounting Software 200.00$ Total Fixed Costs 1,000.00$

Profit and Loss Statement

Measures of SuccessMeasures of Success

Flexible Time SchedulesFlexible Time Schedules Negotiated ContractNegotiated Contract SOW/Quotes vetted through Govt.SOW/Quotes vetted through Govt. Income (>= present)Income (>= present)

In place by In place by Oct 2006Oct 2006

Schedule EstimateSchedule Estimate

Potential RisksPotential Risks

SummarySummary

Plan the businessPlan the business Organize the businessOrganize the business Start the businessStart the business WorkWork

Make more moneyMake more money Take more vacationTake more vacation