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you are an entrepreneur who is starting their own business. Devise a short business plan which describes your product, and your first year of operations.

My business plan is to overhaul company's social media accounts, and teach them how to effectively start / run their accounts so that they can create a social presence that will further grow their company and its popularity. The product itself is me working with companies by learning and then playing to their strengths with the type of online marketing I do. My plan for the first year is for my team to simply run the accounts ourselves to get the company(s) started, and then either offer my team members as freelance workers that are contracted out to said company(s), or charge them again to teach them how to continue running the accounts using the strategies that I did.

Your goal is to break even within your first year, how much of your product and at what cost do you need to sell it in order to achieve your goal?

I will start off with a team of, including myself, 6 employees. I will be making a salary of $60,000 to start off this first year, and my 5 employees will each be paid $18/hr, working 30 hours a week, which equals $140,400 hypothetically. I say hypothetically because there is the possibility that we will contract out some of these employees at $20/hr, therefore having the companies pay their wages and we benefit $2 each hour. Our hypothetical total costs are $200,400, which will come all from payroll, as no real overhead cost will occur, because my apartment will be used as our office. As for what we charge for our services, $15,000 is the price for us to overhaul a company's social media, and this will be the payment until it is time for the second choice to be made, which is either a company has us teach them how to do what we did with their socials, which is another $15,000, or contracting out one of our employees to them.

In our first year, we ended up selling to 7 companies. 4 of those companies chose the $15,000 to be taught, and so we made $120,000 ($15,000 x 8) in revenue off of them. The other 3 companies decided they wanted our employees to be contracted to them and have them run their social accounts in-house, which happened slightly after halfway through the year, and ended up making us $48,780 ($15,000 x 3 + $3,780). Our total revenues were $168,780, and our actual total costs were $60,000(my salary) + $56,160(2 employees that worked with me all year) + $50,220(3 employees that worked with me for 31 weeks and then got contracted out for rest) = $166,380. We celebrated at the end of the year with a company funded staff dinner at a 5 star restaurant, where the bill came to be $2,400, officially having us breakeven as a company our first year operating.

With a decently small client base in our first year, we are quite pleased with how things turned out, and know that big profits are in our future as our name and reputation begins to grow and our results continue to speak for themselves.

Calculations:

Overhaul of Company's Social Media / Teaching Company

Sale Price per unit / job = $15,000

Less: Variable Cost per unit / job = $2,160

Contribution Margin per unit / job = $12,840

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Contribution Margin Ratio: 85.6%

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Contribution Margin (11 jobs x $12,840) = $141,240

Less: Fixed Expenses = $60,000

Operating Income = $81,240

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Sales in Units to breakeven = ($60,000 + 0) / $15,000 = 4 jobs / units

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Sales in Dollars to breakeven = ($60,000 + 0) / 85.6% = $70,093.46

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