Cultural Enterpreneurship

 

  The high rate of unemployment and very small salary for more than 44,4% of the Employees gives an opportunity to get potential employees attracted by the salary and work conditions offered by our company. 

  Politico-legal factors

  Governmental Legislation in case of Cyberspace business offers the same limitations and rules as to the ‘usual’ business. The same taxation level and registration of the business applies to our business as well.

  ___________________________________________________________________________ 

  Business Goals

• Become well-known among cultural and governmental institutions as well as among youth aged 15-24 in particular students and pupils by year 4.
• Win the trust of public as the organization that offers valuable services and get according feedback in Media.
• Get considerable interest on advertising provided by our website from Institutions connected with Education and Culture by 3^rd year.
• Popularize our services by the end of year 2 and open new direction of services (Tutors in Natural Sciences; Dating Service and expand already existing service section by the number of new consultants: 2 of 3 more for each section dependant on the profit from year 2).
• Reduce the fees (up to 100% dependant on the situation) for the consultancy services by the year 5.
• Get profit of no less than 80,000LS by the end of year 4 with the major part earned by advertising services.

 

  Business Strategy:

• Inform the society about the new company creation with the help of media: newspaper articles and publications on websites that allow advertising activity on forums (6 month prior to company opening).
• Define the target consumer group and start active advertising company among this group (6 months prior to company opening).
• Find and Identify potential employees: programmers, consultants, accountant, inform them about the new opportunity and get them involved into our business and sigh the contract with them for at least 9 months (2 month prior to company opening).
• Create the website layout, content; develop the program for the website (CMS), buy a domain and registrate the company SIA (2 weeks before company’s start activities).
• Make advertising on Culture and Education related websites. (1 week before company’s start activities).
• Get PayPal and SMS billing services connected to your business website and set prices for the service (1 week before company’s start activities).
• Fully open the service to customers.

 
 

  Resources needed for company opening: 

  Human Resources:  

  

• 11 consultants;
• 2 programmers;
• 1 accountant;
• 1 manager (owner);

 

  Web-site building and company registration: 

  

• Web-site design;
• Content Management System;
• Domain registration;
• Hosting;
• SEO content;
• Registration of SIA (Society of limited reliability);

                 Equipment:

• Personal Computer;
• Stationary;

 

  

  Analysis

  Financial Statement

 

 

  

 
 

  1^st Year – 12 months Cash flow.

  Income from Sales:

  Clients will be using PayPal (0.75LS per consultation) and SMS billing services (0,95LS for the consultation) to pay for our services.

  PayPal commission for transaction is: 3.4% + €0.35 EUR for monthly sales up to €2,500 EUR and 2.9% + €0.35 EUR for monthly sales from €2,500.01 to €10,000.00 EUR.

  SMS billing service ‘ESTERIA’ offers approx. 43% of income from the fees paid by our clients via SMS.

  We predict that 20% of clients will be using PayPal and 80%- SMS (one.lv statistics).

  First 3 month service is free and the approximate number of consultation for month 4 is 110 that will grow in next 2 month as well and decrease in month 7 because of the off season (student and pupil holidays) and rising again by the end on year 1 (month 12 is December and the time of exams as well as the period of the most severe frost that causes heath problems).

  Income from Other:

  Includes income from advertising provided by the web-site that only appears in month 4 when the web-site has a number of regular visitors that continues to grow.

  Invested Capital:

  Total Budget that is assumed to support the implementation of the business strategy.

  Start Up Costs include web-site development, SIA registration and PC purchase.

  Direct Wages include basic salary of 30LS for 11 Consultants.

  Commissions: 10% of Sales income paid to Consultants (there is no profit tax for year 1 because the NET cash flow is negative).

  Utilities: price for 1 PC electricity usage.

  Advertising: price of the 1^st Advertising company before actual start of the Business and in the first year by months.

  Stationary expenses include basic cost of objects needed for documentation fill-in.

  Hire of Equipments includes 7LS per month hosting and server rental feel that has to be paid 6 month in advance for the 6 months at once.

  Professional Fees include  150LS monthly salary for 2 Programmers’ service (one starts working from the project beginning and another after 6 month of the project beginning) and cheque paid to Accountant for monthly reports- 50LS per months.

  Payroll Expenses cover income tax (26%) and NI (9%) that are paid once a year. Professional staff pays taxes themselves. 

  Income and Expense Statement: 

  Year 2:

  We assumed that in year 2 income from profit will rise in twice and reach 6235LS as well as advertising will rise by 80% at reach 8100LS.

  Product development fee includes further web site elaboration (design, graphics etc.).

  Direct wages will rise by 20% and Professional fees by 10%.

  There is still no rent fee because everybody works from home.

  There is slight rise of utilities price because of the inflation on electricity rate- 5%.

  Hire of equipment includes Hosting and Server fee that will rise dependant on web-site size that is kept on server.

  Commissions  change accordingly to sales income and Payroll expenses change accordingly to direct wages.

  There is the corporate tax sum of 95 LVL (15%) of the gross profit.  

  Year 3:

  Sales rise by 350% comparing to the year 2.

  Advertising income rise by 300% because a new facility is added to the web-site (Tutors in Natural Sciences; Dating Service and expand of already existing service sections by the number of new consultants);

  800LS is spent on new facility installation.

  Direct Wages sum rises because of the new consultants involved.

  Rent: we start renting an office (200 LVL per month) therefore we have the rise in utilities fees stationary and telephone with faster internet.

  There is the depreciation of 600 LVL by the end of the year 3 of the PC bought for 800 LVL in year 1 that is rated for 4 years of exploitation with the coefficient of depreciation 0.25.

  There is no hire of equipment any more except 7 LVL per month for domain.

  Professional fees rise by approx. 36% due to new staff employment.

  By the end of the Year 3 Net Profit sum is 16,197 LVL. 

  Legal Issues Addressed to Company 

  Registration of SIA:

  Ltd - Legal person, which authorized capital, consists of the sum of nominal size of shares. Ltd for the obligations is liable by all its property. Shareholders of company are not responsible for obligations of company (one or more shareholders may be responsible for obligations of company if shareholders are concluded such agreement).

  WE must register it in governmental register (register of enterprises).

  As we are employing some employees only one time per month (accountant and programmers), we must submit report regarding employees.

  We must submit VAT report (period of submission is 1-6 months).

   We have rights to do all economic activities according to legal norms.

  Payments necessary for registration: State duty 50 LVL because the member of board of directors is also a founder of company and payment for publication 24 LVL.

  Equity capital and shares: equity capital must be not less than 2000 Latvian LVL (~ EUR 2800). Before application for registration it is necessary to pay a minimum 50 % from the authorized capital.

  Name of a company: Only letters of Latvian and Latin alphabet are allowed. Should not be identical or confusingly similar on already existing ones. http://abways.lv/en/latvia-company-formation/registration-of-limited-liability-company.php http://www.company-taxes.info/ 

  Employment and Taxation, Health and Safety:

  The Labour Law of Latvia was adopted in 2001. 

  The Labour Dispute Law (adopted on 26 September 2002) has to ensure fair and rapid settlement of labour disputes, determine labour dispute settlement bodies and the procedures for settlement of labour disputes.  

  The Law on Work Safety (adopted on 20 June 2001, came into force of 1 January 2002) sets the work safety requirements. Article 5 of the Law on the Protection of Labour states that the employer's duty is to ensure the safety of the system in the enterprise. The rules define the types of commercial activity in which to create and maintain a system of labour protection to attract a competent institution for its inspection. 
Competent institution - institution, which is authorized for internal supervision of working environment at the enterprise and competence of occupational safety issues assessed in accordance with the procedure established by the Cabinet of Ministers of the Republic of Latvia. http://www.darbadrosiba.lv/paligmateriali/tiesibasunpienakumi.html