STAGE 3: ARE YOU THE BOSS?

 SETTING UP AN OFFICE 

1.VIABILITY 

1.1 Market Sector Research 

Getting to know your market first hand is what will set the quality of your market research apart from your competitors. Often referred to as “field research,” primary research focuses on liaising with potential consumers directly, which you can do via a variety of methods, including:

 

                       Observations，Surveys and questionnaires，In-depth interviews，Focus groups，Test marketing

 

Primary research will give you huge advantages over your competitors, allowing you to tap into market needs and trends, establish communication with customers early on, identify potential pitfalls and minimize risk.

 

In particular, talking to an expert is often a time- and cost-efficient method of qualified research: insights from those with relevant, first-hand experience in your market can provide a deep and nuanced understanding of the current landscape, the challenges faced by businesses entering the sector, and potential opportunities you can capitalize on.

 

1.2 Competitor Research 

Using competitor data to your advantage：Understanding the competitive landscape is market research must that can provide invaluable information to startups. Competitor analysis can provide a great template for business success; doing what has worked well for other companies, and avoiding what has not, is a good place to start. A few questions can help you define your approach to this:

 

Who are the companies you will compete with?

How are they positioned (primary customer base, main products/services, stated USP, pricing)?

How well are they doing (market share, growth)?

What kind of reviews do they have online from customers and employees?

What marketing strategies have they used?

Given all the above, what do their strengths and weaknesses seem to be?

 

If you’re able to answer these questions in detail, you’re likely to gravitate toward where you want to play in the market, and how you might deliver that in terms of your operating model, marketing strategy and brand.

 

1.3 The Business Plan 

A business plan is a formal written document containing business goals, the methods on how these goals can be attained, and the time frame within which these goals need to be achieved. It also describes the nature of the business, background information on the organization, the organization's financial projections, and the strategies it intends to implement to achieve the stated targets. In its entirety, this document serves as a road map that provides direction to the business. Written business plans are often required to obtain a bank loan or other kind of financing.

 

A typical structure for a business plan for a start-up venture: cover page and table of contents, executive summary, mission statement, business description, business environment analysis, SWOT analysis, industry background, competitor analysis, market analysis, marketing plan, operations plan, management summary, financial plan, attachments and milestones,Guidelines for Business Plan Preparation.

 

https://sic.hkfyg.org.hk/wp-content/uploads/sites/82/2017/10/ApplicationBooklet.pdf

 

 

1.4 Professional Advice - Legal / Accountant / Government / Associations 

 

 

2.MANAGEMENT & ORGANISATION

2.1Which type of Business 

The most common type of business entity registered in Hong Kong is a private limited liability company. Limited liability companies have a separate legal personality, limited liability for its owners, strong public perception and an enduring structure; raising capital and transfer of ownership is easier when compared to other business structures such as sole proprietorship and partnership. Foreign business professionals often refer to this type of entity as an offshore company in Hong Kong.

 

2.2 Legal requirements 

Set up a Hong Kong company：This article provides detailed information about registering a private limited liability company in Hong Kong including basic incorporation requirements, procedure and timeline, post-incorporation procedures etc. Irrespective of whether you are a local or foreign entrepreneur, you are strongly advised to engage the services of a professional firm as such firms are well versed with the local Governed by the Companies Ordinance of Hong Kong, any person (foreign or local) above the age of 18 can legislations governing companies and are also experienced in handling ongoing regulatory and compliance requirements.

 

Basic Requirements and Facts for Hong Kong Companies：

Company name – The company name must be approved before you can proceed with the incorporation of a Hong Kong company.

 

Directors – A minimum of one individual director and unlimited maximum number of directors allowed. The director must be a natural person who can be of any nationality and need not be resident in Hong Kong. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractices. There is no requirement for the directors to also be shareholders. Nominee corporate directors can also be appointed in addition to the individual director. Directors Board meetings can be held anywhere in the world.

 

Shareholders – A Hong Kong private limited company can have a minimum of 1 and maximum of 50 shareholders. There is no residency requirement for shareholders. A director and shareholder can be the same or different person. The shareholder must be at least 18 years of age and can belong to any nationality. The shareholder can be a person or a company. 100% local or foreign shareholding is allowed. Appointment of nominee shareholders is permitted. Shareholders meetings can be held anywhere in the world.

 

Company Secretary – Appointing a company secretary is mandatory. The secretary, if an individual, must ordinarily reside in Hong Kong; or if a body corporate must have its registered office or a place of business in Hong Kong. It has to be noted that in the case of a sole director/shareholder, the same person cannot act as the company secretary. The company secretary is responsible for maintaining the statutory books and records of the company and must also ensure the company’s compliance with all statutory requirements. A nominee secretary can be appointed.

 

Share Capital – Although there is no minimum share capital requirement, the general norm for companies incorporated in Hong Kong is to have at least one shareholder with one ordinary share issued on their formation. Share capital can be expressed in any major currency and is not restricted to the Hong Kong Dollar alone. Shares can be freely transferred, subject to a stamp duty fee. Bearer shares are not allowed.

 

 

Registered Address – In order to register a Hong Kong company, you must provide a local Hong Kong address as the registered address of the company. The registered address must be a physical address and cannot be a PO Box.

 

 

Public Information – Information about company officers viz. directors, shareholders and company secretary is public information as per Hong Kong Company Laws. It is mandatory to file details of the company officers with the Hong Kong Registrar of Companies. If you wish to maintain confidentiality you can appoint a corporate shareholder and nominee individual director by utilizing the services of a professional services firm.

 

Taxation – Corporate tax, (or profits tax as it is called), is set at 16.5% of assessable profits for companies setup in Hong Kong. Hong Kong follows a territorial basis of taxation i.e. only profits which arise in or derived from Hong Kong are subject to tax in Hong Kong. There is no capital gains tax, withholding tax on dividends, or GST/VAT in Hong Kong. For more details on corporate taxes, refer to Hong Kong Corporate Tax guide.

 

Ongoing Compliance – It is mandatory for companies to prepare and maintain accounts. Accounts must be audited annually by Certified Public Accountants in Hong Kong. The audited accounts together with tax return must be filed annually with the Inland Revenue Department. Every company is required to file annual returns with the Companies Registry and pay the annual registration fee. The Business Registration Certificate should be renewed, one month before expiry on an annual basis or once every three years, as the case may be. An Annual General Meeting (AGM) should be held annually very calendar year. The AGM should be held within 18 months of the date of incorporation, after which no more than 15 months can elapse between one AGM and the next. A written resolution in lieu of the Annual General Meeting is permissible. For more details, refer to Annual Compliance for Hong Kong Companies guide.

Usually, it takes about 5-7 working days to incorporate a company in Hong Kong.

 

2.3 Insurances 

 

 

3.FINANCE

3.1 How to obtain finance？

A new practice is almost certain to need cash for its establishment costs, including premises, equipment, etc., and ongoing costs, including salaries, lease and other running costs, as income is unlikely to flow for some months. This cash can come from a variety of sources: 

 

• The partners’/directors’ own money. 

• Borrowings, usually from a bank, but potentially from other sources. 

• A bank loan. 

 

It is common for the initial costs of establishing the practice to be secured from a combination of these. Once a loan/overdraft facility has been agreed the new practice will need to open bank account(s), usually with the lending bank.

 

3.2 Forecasting / cash flow / accounting / audit 

You need careful planning and realistic budgeting. The “Budget Analysis Worksheet for Starting up Business” provides a general reference for your budget planning. It is a user-friendly tool for business starters to estimate:

 

•The initial capital required;

•The relation between turnover and profitability;

•Payback period;

•Assets and liabilities; 

•Factors that may affect financial position (e.g. turnover, rent, profit, margin, expenditures, inventory and credit period, etc.)

 

 

4.THE PREMISES & EQUIPMENT

Location / size / cost / sustainability / equipment

 

 

STAYING IN BUSINESS

5.MARKETING MANAGEMENT

5.1 Developing a Marketing Strategy as part of the Business Plan 

Every new practice should formulate a business strategy that’s states clearly its business aims and how it is going to achieve them. It is important to set goals and work to them, both as a means of bench marking achievement and as an expression of leadership that unites all those who work for the practice and focuses them on worthwhile objectives. 

 

A new or an existing practice will need to:

• evaluate the current position of the business to decide where the principals would like the business to be in five years; and 

• devise a marketing plan for moving the business from its current position towards achieving its defined objectives. These should be set out as goals and targets usually over a 12 – 24-month period.

• The marketing strategy forms a vital part of the Business Plan which is a longer-term strategy 

 

5.2 Evaluation 

Business Skills Analysis

• What are your skills?

• What sets you apart from other landscape consultants?

• Why do clients buy your services?

 

Market Sector Research

Understanding your market including:

• Client sectors– who will buy your services? (public / private)

• Market sectors (commercial/ retail/ health /education/ business /residential etc)

 

Competitor Research

Understanding your competitors including

• Competitor research – who is out there, where are they located, what do they do, who are their clients?

 

SWOT Analysis

Review the Business in relation to its Strengths / Opportunities / Weakness / Threats

 

5.3 Developing Client Relationships 

Your existing clients are the mainstay of your business – you must keep them happy. All the hard effort you put into getting those clients in the first place should not be wasted by bad client relationships including poor service and quality of work. They should be at the top of your list always when responding as they are most likely to give you repeat business.

 

A client list and database should be prepared and each director/partner of the practice will be responsible for their own client lists. This may be sector led (eg healthcare/education) or organisation led (public or private) It will be the responsibility of the relevant director or partner to keep these lists up to date, keep these clients happy and find out about the possibility of new project work coming out.

 

Previous clients that have stopped coming back to you for your services should be identified and the relevant partner/director should find out why this has happened. Sometimes there are very obvious reasons beyond the consultants control such as the retirement of the client or moving on to a new position. In which case efforts should be made to keep in contact with them in their new position and the replacement for the retired client should be marketed.

 

New clients you have identified in your strategy will be harder for a practice to obtain as it likely they already have their preferred consultants that they are happy with. Tempting these clients over to you will require a lot of persuasion as for why should they drop their existing consultants who they are happy with for you.

 

 Marketing methods can include:

• Introduction at networking events

• Sending out promotional material

• Following up with a phone call and to assess the opportunity to meet

• Delivering a presentation

• Following up with a thank you letter or phone call

• Keeping in contact through news updates or occasional calls 

 

5.4 Enhancing Existing Markets and Entering New Markets 

Opportunities may exist for you to expand sales of your services to your existing markets. This may require you to see more people in an organisation. Perhaps they have various departments all of whom put work out to consultants and you are currently only dealing with one of them. Your existing contacts are best placed to introduce you to their colleagues in other departments.

 

New Markets may be harder to expand into and require a longer time frame. This may require the consultant to learn new skills and train staff or appoint staff who are already qualified in that area. For example, if your marketing strategy suggests you could work in the growing renewables sector you will most likely need staff qualified in Landscape and Visual Impact Assessment.

 

5.5 Preparing Promotional Material / Branding 

New work can be obtained by marketing and business development, but promotional material will be vital to this and will require time to develop if you are a new practice. One of the first areas to consider is the business brand which should clearly identify the business personality and ethos. 

 

The brand is the first part of the practice that a potential client will notice and in that it is very important and may require an external consultant to design. Once established it should form part of all the practice promotional material. If it is changed it will have significant cost effects so it’s worth choosing a more lasting brand which can be changed to signify main advancements of the practice. Such as a new partner joining the practice or a change in the practice name.

 

Marketing material can include the following from top level down

• The practice website – core values and services, meet the directors, projects, specialisms, news and twitter feed. This must be kept up to date.

• A practice brochure ( digital and hard copy) the practice profile, core values, services and work sectors 

• Practice capability statements in key sectors ( health, education, urban design)

• Individual project sheets – specific project examples

• Presentations in digital format for client pitches 

• Examples of  publications the practice has written

• Staff CVs

• Practice Stationary – business cards and letter headed paper

• Compliments slips in the form of postcards advertising particular projects

• E-newsletters

• Press releases

 

5.6 Advertising / PR Strategy Review 

There are a number of methods of advertising

• Professional Institutes – Becoming a member of your institute means that your information is available for potential clients to review  and consider the best practice for their project based on the information available to them 

• Professional and Client Journals – eg Pacific Rim

• Focused press release – to cover the opening of a new project or office

• Competition entries – even if you don’t win your name or entry may be available for the public and client review.

• Practice events – to celebrate a practice anniversary, a new publication, a new practice name or a new director joining

• Practice networking events – inviting clients onto tables at construction or PR events (HKILA awards etc) 

 

Remember all your practice promotion material and advertising must follow your code of professional conduct (HKILA Object 7 – members may promote and advertise their services provided always that the information presented is factual, relevant and neither misleading nor discreditable to the profession)

 

 

6.0 MONEY MANAGEMENT 

6.1 Financial Management Strategy 

After a practice has secured its initial start-up costs it needs to consider its long term financial strategy and this will series of  financial management components including: 

• The long term business plan budget which includes finance /

marketing / staff / IT

• An annual cash flow which gets updated monthly 

• A monthly bank book system/management accounts recording receipts and payments

• The annual accounts prepared by the practice accountant.

 

6.2 Bank Book System 

Set up using specific accounting software such as Sage and it records:-

Receipts from Invoices Raised:- 

• Fees claimed; 

• Expenses claimed

 

Outgoing Payments

• Monthly Salaries;

• Overheads (insurance’s, rates, rent, stationary, telephone, postage and other general running costs);

• Tax;

• Direct Expenses (materials, consultants, suppliers,  travel)

• Balances the end of the month account with the bank statement.

• Used by the accountant to prepare the annual accounts.

 

This should link into another software system that records time spent on projects by various grades of staff, invoices issued, and fees received, supplier or sub-consultant invoices received and paid.

 

6.3 Invoicing and Payments / Overheads 

Invoices - To help a practice cash flow invoices should be raised promptly in accordance with a schedule agreed with the client or at specific stages of the project. Clients should be advised in advance and invoicing large companies should be timed with their specific payment dates.

 

The Practice standard pro forma invoices should be used which has key information included

• Project name and information

• Client name and address

• Payment claimed ( stage and value)

• Purchase Order Number

• Payment details ( bank branch and sort ode or name cheque is to be paid out to)

• Payment date due

Chasing Payments 

• Remember Cash is King and is the lifeblood of your business. If you don’t receive payment for work completed then you don’t exist as a business – you are not in business to lose money. 

• Good practice management allows for a list of invoices and payment dates to be prepared on a monthly basis and an administration member of staff should be tasked with chasing late payments. Where payments are still delayed the director or partner who is responsible for the project involved should carry out follow up calls at a higher level. The last recourse is through the courts as there always some clients who do not want to pay.

 

6.4 Cash Flow Forecast for Monthly and Long-Term Financial Planning 

This is produced to ensure the stability of the financial. a practice and is essential for negotiating overdraft facilities/ borrowing money and long term financial planning. 

 

The Cashflow forecast should cover:

• monthly forecast of  fee income;

• monthly summary of expenditure;

• annual budget forecast of fee income and expenditure.

• Profit and loss ratio.

 

6.5 Annual Statement of Accounts and Balance Sheet 

Produced (normally by the practice accountant for audit, tax purposes and practice forecasting. )

 

6.6 Financial Monitoring 

Practices should keep records of financial performance and use these to measure improvement/variation over time. This information can be gathered form a variety of sources but principally from the software used to record finance/project management.

 

It is useful to monitor on an annual basis

• Income by partner/director as main fee earners

• Turnover by sector– client, location, project type, project/procurement type, etc. 

• Profit as a percentage of turnover 

• Profit by fee earner as director/partner

• Profit by the group – client, location, sector, project/procurement type, etc. 

• The average creditor and debtor days.

 

6.7 Profits / Sharing and Re-investing 

Profits will be shared in accordance with the rights attached to a shareholder's shares with a company or in accordance with the Partnership Agreement. It may be best for profits to be left in the practice to ensure good cash flow in the early days of practice. If the practice thrives and accrues profits the business and financial management plan should cover re-investment ( IT, furniture, additional staff) or expansion opportunities including mergers and acquisitions of other businesses – if it forms part of the long term Business Plan.