Assignment 2: You Are an Entrepreneur! Due Week 6 and worth 280 points Student life does not generally afford a great deal of free time to pursue your personal interests; however, at one point, you may have considered turning a personal interest or hobby into an official enterprise. Today, you have finally decided to turn that hobby into a business but have realized that you need start-up capital from a lender or investor. To obtain funding, you need to convince a lender / investor that your business is more than a hobby. You need to demonstrate that you have a firm grasp of your business, the accounting practices that impact your business, the controls needed to safeguard assets, and which accounting system will produce accurate and relevant financial information. Write a six to eight (6-8) page business plan in which you: 1. Describe the type of business you have created including: a. The product or service, and general staffing plan. Provide a rationale for your plan. b. The form of your business and the benefits it offers your particular business, c. A chart of accounts specific to your business, including a rationale as to the selection of each account. (Note: The chart of accounts is a blueprint of your business for the lender/investor. It should report the expected resources that you will consume in your business (assets), the sources of those resources (liabilities and equity), the sources of revenue, and expenditures that you expect to incur to earn those revenues. You may build a detailed chart that includes business units, divisions, product lines, etc.) 2. Based on the form of your business, analyze whether or not you will be required to use Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS) accounting methods and how the IFRS / GAAP convergence will impact your business. Suggest how you will incorporate any changes into your books and records. (Note: You need to demonstrate to the lender/investor that you have recognized possible changes to GAAP that may impact the accounting and reporting of your accounting events.) 3. Prepare a pro forma balance sheet and income statement providing the assumptions made and support the valuations assigned. 4. Considering the value of assets (assigned per your balance sheet) used within your business, recommend two (2) specific internal controls that you will implement to protect your company’s assets and resources, justifying how each will provide assurances to management. (NOTE: Safeguarding assets and protecting personal data are paramount to ensuring the viability of a business. Demonstrate to the lender/investor that your assets will be safeguarded and customer information (if applicable) will be protected.) 5. Based on the internal control recommendations that you made, suggest how you will implement each within your business environment, indicating how challenges or resistances will be overcome. 6. Evaluate the impact of the r ...

1. Assignment 2: You Are an Entrepreneur!
Due Week 6 and worth 280 points
Student life does not generally afford a great deal of free time
to pursue your personal interests; however, at one point, you
may have considered turning a personal interest or hobby into
an official enterprise. Today, you have finally decided to turn
that hobby into a business but have realized that you need start-
up capital from a lender or investor.
To obtain funding, you need to convince a lender / investor that
your business is more than a hobby. You need to demonstrate
that you have a firm grasp of your business, the accounting
practices that impact your business, the controls needed to
safeguard assets, and which accounting system will produce
accurate and relevant financial information.
Write a six to eight (6-8) page business plan in which you:
1. Describe the type of business you have created including:
a. The product or service, and general staffing plan. Provide a
rationale for your plan.
b. The form of your business and the benefits it offers your
particular business,
c. A chart of accounts specific to your business, including a
rationale as to the selection of each account. (Note: The chart of
accounts is a blueprint of your business for the lender/investor.
It should report the expected resources that you will consume in
your business (assets), the sources of those resources (liabilities
and equity), the sources of revenue, and expenditures that you
expect to incur to earn those revenues. You may build a detailed
chart that includes business units, divisions, product lines, etc.)
2. Based on the form of your business, analyze whether or not
you will be required to use Generally Accepted Accounting
Principles (GAAP) or International Financial Reporting
Standards (IFRS) accounting methods and how the IFRS /
GAAP convergence will impact your business. Suggest how you
will incorporate any changes into your books and records.

2. (Note: You need to demonstrate to the lender/investor that you
have recognized possible changes to GAAP that may impact the
accounting and reporting of your accounting events.)
3. Prepare a pro forma balance sheet and income statement
providing the assumptions made and support the valuations
assigned.
4. Considering the value of assets (assigned per your balance
sheet) used within your business, recommend two (2) specific
internal controls that you will implement to protect your
company’s assets and resources, justifying how each will
provide assurances to management. (NOTE: Safeguarding assets
and protecting personal data are paramount to ensuring the
viability of a business. Demonstrate to the lender/investor that
your assets will be safeguarded and customer information (if
applicable) will be protected.)
5. Based on the internal control recommendations that you
made, suggest how you will implement each within your
business environment, indicating how challenges or resistances
will be overcome.
6. Evaluate the impact of the regulatory environment, including
the Sarbanes-Oxley Act and other regulatory requirements, on
your business venture, giving considering to how you intend to
comply with the requirements and the general impact to
decision making within your business.
7. Use at least four (4) quality academic resources in this
assignment. Note: Wikipedia and other Websites do not quality
as academic resources.
Your assignment must follow these formatting requirements:
12), with one-inch margins on all sides; citations
PowerPoint presentations
Case study

3. Your presentation should address all of the areas identified in
the instructions. You are welcome to address any additional
issues you feel are relevant to your presentation. Your
presentation will be judged on a number of factors including:
1. Completeness
2. Creativity
3. Alternatives
4. Plausible Recommendations
As you make your presentation, your goal is to help every
audience member see yourvision: what the products are; why
they are important; and most importantly; the steps you propose
taking that will transform your vision into a reality. It is up to
you to paint a picture - one that clearly demonstrates these
thoughts.
There is no minimum or maximum page count, word count, etc.
Use whatever information that you think will completely and
accurately convince a client to accept your proposal. You may
use animation or sound narration at your own discretion. The
bottom line is that your presentation should be compelling and
complete regardless of the format you select.
Some Tips and Tricks for Creating Good Presentations
How you present your information will depend completely on
your personal style. Take some time to organize your thoughts
and materials before you begin your work. Here are some tips
you should follow:
5. Tell them what you want them to know: Start with an
introduction of your goals. Tell your audience what you are
going to do and why you will do it. A brief summary of your
agenda is a great way to let people know exactly where you are
headed.
6. Get the best in first: It is a well accepted (yet anecdotal) fact
that most people will only remember the first 3 to 5 points made
during a presentation. With this in mind, you need to quickly
establish the important points. You should end your

4. presentation by summarizing the same points to ensure that your
audience recognizes their importance.
7. Tell them what is important: If you want to ensure that
people walk away with a good understanding of your proposal,
you should remind them of the most important points as they are
presented and clarify how they relate to the success of the
effort.
8. K.I.S.S. it!: This rule is "as old as the hills," but it is still the
best-kept advice in the world. KISS stands for Keep It Simple
Stupid! And as simple as that expression sounds, you would be
surprised at how many people ignore this advice. These are
usually the presentations that audiences walk away from saying
"I didn't get it." Remember that your audience is not comprised
of multimedia experts. (In fact some may feel multimedia is
only a disguise for a lack of substance.) Chances are that they
don't know or understand very much about the product. Your
goal is to explain it to them in clear and understandable terms.
You will probably have to use a variety of illustrations,
examples, and approaches to cement the ideas in their heads. If
you keep it simple and clear, there is less chance that the
important points will go unrecognized (and ultimately
unsupported).
9. It's solid business concepts - not the graphics! Certainly this
can be a tough one for a creative professional to hear, but it
needs to be said over and over and over again!! Don't fall into
the trap of favoring beautiful graphics and fantastic animations
over presenting concrete facts and documentation. When a
client makes a decision, it is largely based on the facts — and
the most important facts are the Five W's we spoke of earlier.
10. Ask for the sale: As silly as it sounds, the last thing that you
do when finishing is ask the client or the audience what they
think. Are they convinced? If not, what else can you tell them?
A successful presentation ends with everyone saying, "let's start
to work on the development."

5. Case Study: Travelers Club Inc.
A Brief History of the Company
The Traveler's Club began in 1970 as a group of enthusiastic
world travelers who got together each month and discussed the
places that they had visited and seen. Members would bring
slides and photos and do small presentations about the
locations, the customs, unique points of interest, and their
personal experiences. They would then answer questions and act
as resources to their fellow members who might be interested in
going to these places in the future.
John and Alicia Kemper were New York City natives who met
at SUNY College and married a week before graduation. Upon
graduation, they joined the Peace Corps and from 1960-1968
they traveled the world extensively providing services and
manpower for the Peace Corp operations. Both loved traveling
the world. They found that their journeys took them to places
the typical traveler would never think to go for a vacation -- the
Flatbush of Africa, the Nile encampments, Middle Eastern
cities, and Asian tenements. Their travels were mystical and
exciting and they documented their journeys extensively with
photos and diaries.
Upon returning to the States in late 1968, the Kempers returned
to a life of 9 to 5 jobs — Alicia as a writer for a local
newspaper and John, as city planner. Soon after, they found
themselves feeling isolated. They yearned to share their stories
with people who had similar experiences and similar
worldviews.
In the fall of 1969 the couple placed an ad in Alicia's paper for
the "Traveler's Club"-- a potluck supper group where interested
members could come and meet other world travelers and share
their stories and experiences. The club was a hit from the first
night the Kemper's opened the doors of their home to a group of
over 60 people. They soon found themselves hosting the club in
various members' homes once a week and even more often at
times. It was during the first few months that they also noticed

6. an interesting phenomenon amongst their guests — the majority
of the world travelers were not well traveled at all. Rather, they
were people who had an interest in exploring the world and
seeing exotic locations. They came to the dinners to learn more
from those who had actually taken such vacations and trips.
Many commented that they felt the club offered them more
honest and complete information than what they received from
local travel agents.
It was from these early experiences that the Kempers decided to
create a business. The Traveler's Club Corporation was formed
on January 1, 1970 in New York City, with John and Alicia
working full time. Over the next 32 years the company grew
into a world renowned specialty travel club with the majority of
members coming from the United States and Canada. The
company has remained relatively small, with a full-time staff of
23 employees, many who were amongst the original members of
the weekly potluck supper club. The company has a very
specific and focused business model that has not changed very
much since its formation in 1970.
Travelers Club Inc.
The Products & Services
The club is a member's only service that by business definitions
would be considered a subscription service. Members pay a
yearly subscription (or membership) fee of $299 that they must
renew each year. The membership provides them with the
following products and services:
11. Traveler's World Magazine: A monthly publication that
features a variety of articles, tips, and actual member stories
about world destinations and locales. Each issue focuses
exclusively on a specific destination. For example, this month's
issue is dedicated to the former Soviet Union towns surrounding
St. Petersburg. Over the past 32 years the magazine has covered
nearly every location that is considered to be a viable travel
destination. Many of the more popular destinations are revisited
periodically as changing political and social norms affect the

7. traveler's experience. The Kempers see the magazine as an
ongoing source of travel inspiration. Members receive a
monthly issue and can begin thinking about how visiting the
destinations can satisfy their interests. Often, if a member is
considering a trip, they can call members services and purchase
a back issue related to their area of interest. Back issues sell for
$12.50 and are very popular. Unfortunately, it is not always
profitable to re-print an issue. Although requests for past issues
are popular, the fulfillment is often hit or miss and the revenues
from the sales do little more than defray the cost associated
with the warehousing and delivering of the issues.
12. Travel Discounts: Traveler's Club is not a travel agency and
does not want to become one. It has, however, developed a wide
network of partners over the years comprised of an assortment
of airlines, hotels, and shipping services. These partners offer
Traveler's Club members discounts on their services. Traveler's
Club customer service agents do not actually sell any of the
partner's services, although they recommend them quite often.
In the case where a member wishes to take advantage of a
discount, the customer service agent will usually give them a
direct telephone number that the member can call to make a
purchase. All they have to do is say that they are a Traveler's
Club member and the appropriate discount is given. Many of the
company's partners enjoy considerable sales from the Traveler's
Club members. Most agencies give the company a referral fee
(anywhere from $5 to $10) for each sale that is attributed to
their members. While it is estimated that the current
membership of over 600,000 members takes advantage of close
to $1 million in individual offers by the partners, John and
Alicia have never dedicated resources to the development of a
system to track these referrals. Given this, they have not
pressed their partners for referral fees. Members enjoy the
discounts very much — the marketing department reports that
they often list the discounts as one of the biggest advantages of
the membership program. This same study has also shown that
members would appreciate the added convenience of being able

8. to make a single call to take advantage of these discounts.
13. Members Line: One of the most popular features of the
membership is unlimited access to the Members Line. The line
is designed to offer direct access to real "world travelers" with a
wealth of information for fellow traveling members. It was
possible to fill these positions with people who had actually
"been there" when the company was formed. Unfortunately,
those who only have a "real interest" in traveling now fill these
positions. To combat this problem, Traveler's Club created a
comprehensive database of locations, advice, tips, and
resources. Much of the information came from past magazine
articles, as well as from interviews with the better-traveled
staffers. Representatives are able to quickly key in topics and
provide members with related information over the phone. The
phone lines are available from 8 a.m. to 6 p.m. Monday through
Friday. Despite having a "large staff" (3 full-time people), it is
not uncommon for a member to wait in queue 5 to15 minutes
before talking to a live person. The phone lines are seldom free
of a caller, and representatives often find that by the time they
talk to their last caller it is already past 7:30 p.m. The
marketing department has identified the problem of customers
waiting in queue as a major source of customer
dissatisfaction.
14. Made for U Maps: Members can call the service line and
request customized location map packets. Books are put
together by a service representative based on the caller's needs.
The caller may request local maps, restaurant guides,
attractions, and local customs information. Once the map book
is compiled, (it is done weekly by an office worker who reviews
checklists provided by the service reps.) it is mailed out within
10 business days. Because of the manual labor involved,
Traveler's Club suggests that members call well in advance of
their planned departure date. The marketing group did a study
last year and found that members are willing to pay a premium
of up to $25 for overnight fulfillment of the Made for U Maps
product. The management team feels strongly that this would be

9. an excellent service enhancement and would offer customers
more timely information. They have not proceeded with a plan
because of time and staffing constraints.
15. Travel Resources: The member representative can provide
members with the names and phone numbers of just about every
consulate, hotel, airline, and tourism group for any intended
destination. They often joke that they sometimes feel like
directory assistants because members will call and ask for a
variety of names, addresses, and phone numbers.
Representatives are happy to provide the information, but it can
be very time consuming to do so. Although customers can
access this information on-line for themselves, they seem to
prefer having the information read to them. In addition to
the member services, each year the company offers a summit
that is open to the general public at the Four Seasons Hotel in
New York City. The three-day event is, in many ways, like the
old days when members convened for dinner, drinks, and
conversation. The yearly summit includes a variety of guest
speakers, nightly "Member Tips" and lectures by members who
discuss their recent trips or talk about their travel experiences.
Special interest films and two spectacular dinner dances are also
included. The event is very popular, as well as profitable. In
recent years it has drawn crowds of 350 to 400 attendees at a
ticket price of $900. After subtracting costs, each attendee is
actually worth $400 in profits. In recent years the marketing
department analyzed their guest lists and discovered that almost
40% of the attendees were not members of Traveler's Club.
They were people who heard about the event from other
members and advertisements and thought it would be an
excellent way to get ideas for an upcoming trip. They also
found that 25% of the non-members usually joined the Club
after the conference. This year the marketing group conducted a
test -- they direct-mailed 1000 non-member invitations. Fifty
people from this targeted list accepted the offer and attended.
Since the conference is easy to scale up or down, the
management believes that a more diversified effort could be

10. made to attract more non-members to the summit. Their
reasoning is twofold:
1. Each attendee is worth $400 in profits.
2. They can expect 40% of those attendees to become members.
The Competition
Traveler's Club management believes that the company serves a
niche market and are lucky to have few direct competitors. In
addition to believing that there are few competitors, its
managers also believe that there are many related businesses
that compete with them for the same advertising space and that
they offer similar products and services for less and/or for free.
Here are some of the specific competitive forces that are
impacting their membership:
16. Web-Based Travel Agents: Companies like Travelocity and
Expedia offer their visitors a wealth of information about
destinations. While much of the information they provide is
generic in nature, they do overlap the information that is offered
on the Member's Line. Most of the information is free. More
importantly, it is available 24 hours a day.
17. Enthusiast Sites: Many Club members have said that they
have found a lot of great information about travel destinations
on travel enthusiasts' websites. The marketing department has
also found that a simple Web search will reveal a great deal of
useful information.
18. Travel Agents: The traditional travel agent continues to
market against companies like Traveler's Club. They offer free
advice and insight and state that the travel companies rather
than the client pays for their services. John believes that he
looses the "casual customers" to travel agents. Even the "casual
customers," he believes, could benefit from the Traveler's Club
services.
From the Marketing Department
Here is some additional information that the marketing group
thought might be useful to you in understanding their business

11. model and their customers:
19. Current membership: 600,000
20. Subscription history: Members can be expected to renew
their membership on a fairly predictable basis.
1. Each first-year membership results in a 37% non-renewal
status, which means that 37% of their customers disappear after
one year.
2. If a member stays for two years, they expect that only 11% of
those members will opt not to renew for a third year.
3. Three-year and longer members have a less than 2% non-
renewal rate.
4. Each year, their member drive is targeted to produce at least
a 4% increase in new subscriptions.
21. New subscribers: Each year new subscriber costs go up,
with costs now exceeding $1 million a year. The marketing
group primarily uses direct mail and target phone call drives.
New membership is critical to a strong revenue stream, and the
mandate has always been to exceed last year's membership by a
minimum of 2%. Marketing efforts typically return between 2
and 4% increase in the member base. They believe that there are
more potential members out there, but the cost to reach them
using current methods is not achievable based on the present
budget.
22. Total potential marketplace: It is believed to be
approximately 32 million.
23. Member profile: Traveler's Club members tend to be one of
the following (in this order of frequency):
1. Mid to late baby boomers (50-65) with managerial jobs and
income levels above $120,000 per year.
2. Retired couples with substantial disposable income, and
education levels of college and above.
3. Young professionals between 30-45 with a college degree or
higher and an average household income over $170,000
24. Internet Information: A recent member poll revealed that:
1. Nearly 88% of their current members have Internet service in
their home or business.

12. 2. 68% read and send e-mail at least once a day.
3. 18% read and send e-mail at least once a week.
4. 63% use the Web to collect information about traveling
destinations and services.
5. 70% surf the Web at least 3 hours per week.
6. 92% of those with Internet service make purchases for travel
over the Internet.