EXECUTIVE SUMMARY: Executive Professional Cleaning Services (EPCS) is a start-up office cleaning service provider servicing the needs

of offices in Puerto Rico. EPCS will strive to provide clients with professional and first-class quality service. Services will include office cleaning (including removal of trash, dust and cleaning of all surfaces, sweeping and mopping floors and cleaning of doors and walls as needed), furniture cleaning, floor waxing, floor stripping and sealing, carpet cleaning, window cleaning and finally, cleaning of bathrooms and kitchen areas. The Administrator and Supervisor of EPCS are the owners of the company. With the advice from their CPA and attorney, they chose to incorporate EPCS as a Corporation. Potential target customers include small (0-49 employees) and medium offices (50-499 employees) within the metropolitan area, which include the towns of Bayamon, San Juan, Caguas, Trujillo Alto, Carolina and Guaynabo. According to the US Census Bureau, the number of companies in the metropolitan area of Puerto Rico indicates a greater number of small businesses, followed by medium and large businesses. The owners will commence business operations with three (3) full time employees and will increase to six (6) throughout the first year, given that the company achieves the forecasted growth in business. These employees will be dedicated solely to providing quality cleaning services to EPSCs clients. The owners will interview, hire/fire employees, monitor performance, direct sales, bill clients, purchase equipment & supplies, observe daily financial information, and assist with cleaning duties if necessary. They will work along with their employees to assist during the busier months. Employees are vital components of providing a professional, quality cleaning service; therefore, EPCS will provide adequate pay and extensive application processes to extract the highest

quality of customer service from all employees. EPCS will mainly service the offices 5 days per week or the time required. EPCS estimates an initial investment of $41,500, which will be utilized primarily in purchasing cleaning equipment & supplies, lease payments, payroll, and additional working capital needs throughout the first year. Since the owners will each invest $5,000, EPCS will need debt financing of $31,500. EPCS projects a loss of $14,735 in Year 1 with operating expenses of $199,593, while in the following years there is an increase in revenues. Although the projections reflect losses during the first year, the calculations of net present value (NPV) are positive. This means that EPCSs owners would receive a higher return on their investment than if they were to invest elsewhere (based on their expected return on investment for other projects). Consequently, the owners should invest in the company.

INTRODUCTION Executive Professional Cleaning Services (EPCS) seeks to establish itself as a leader in office cleaning in the metropolitan area of Puerto Rico. Specific objectives that EPCS will seek to meet over the next years include: to build a substantial, regular client base; to build operations infrastructure, including professional management, and documented processes for operations and cleaning practices; to build healthy gross margins by establishing itself as a significant buyer and reducing pricing on cleaning supplies; to train low-cost labor to be more productive and efficient in providing cleaning services; and to create a culture of productivity and resourcefulness for all staff by encouraging the best ideas and cleaning procedures in order to rise to the top and be able to properly reward its employees for their contributions. EPCS seeks to ensure that businesses have a spotless office environment to support the work they do and have their company focus completely on providing their services. The company trains and trusts its employees to clean well and clean smart, listen to the needs of its client to do the job they need done, and responds to the demands of the environment. To become successful in the office cleaning business, EPCS must: foster an environment of employees empowerment from day one of operations to make sure cleaning crews clean well (carefully) and clean smart (efficiently), listen attentively to the needs of the client and communicate this information effectively to cleaning crews, research and remain experts on the greenest cleaning practices and products, and remember that the cleaning must meet or exceed clients expectations to be considered done.

INDUSTRY ANALYSIS: The commercial cleaning industry is one of the fastest growing and most productive occupations to invest in. Cleaning offices is not a seasonal business. Offices are running all year round, and cleaning these commercial areas is needed in all 4 seasons. Even if the companies try to cut expenses by laying off workers, they cannot stop providing a clean area for their remaining employees. This industry has an increase in revenues of 16% every year.

SWOT Analysis: Commitment to quality service. Dedication to customer satisfaction. STRENGTHS: Highly trained personnel Owner experience in the cleaning industry New to market WEAKNESSES: Scarce resources base New market with unlimited opportunities. OPPORTUNITIES: Market is showing consistent high growth. Low barriers for entry of competitors. THREATS: High number of competitors makes replacement of services easier.

SERVICES EPCS is a new cleaning service business specializing in office cleaning. The company will operate from a central office and storage facility and use the work of cleaning staff training to serve customers in Puerto Rico. Services to be offered by EPCS will focus on the office space and includes: Office cleaning (including removal of trash, dust and cleaning of all surfaces, sweeping and mopping floors and cleaning of doors and walls as needed). Furniture Cleaning. Floor wax. Floor Stripping and Sealing. Carpet Cleaning. Window Cleaning. Cleaning the bathrooms and kitchen area(s).

EPCS deems it necessary to charge rates to offices based on sq. footage rather than a flat fee due to their varying sizes. This will allow a cost structure affordable to all as well as an operational system used to distinguish cleaning time needs and/or limits for each office. The proposed pricing strategy is $0.30 per sq. foot per week cleaning. Therefore, an office occupying 2,500 sq. ft. will pay $0.30 x 2,500 = $750 per week, $3,000 per month during regular months. The client may opt for additional cleanings during busier months/holidays. EPCS strives to be competitive within the market, but will focus on offering the highest quality service. During the developmental stage, the owner will work alongside employees performing the services, thus providing labor cost savings. This strategy will succeed by keeping operating costs at a minimum and gaining repeat business through quality, contracted work.
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EPCS contracts will have duration of 1 year. The contract will offer a 30-day right to cure clause in their contracts if the client is not satisfied, they can cancel without penalty. The office will be located in the Main Santa Rosa Avenue, Bayamon with a rent of $800, arriving at a total yearly lease expense of $9,600. Although cleaning services do not require traditional office space, the purpose of obtaining an office front is to exude an enhanced professional appearance to current and potential clients. The space will accommodate meetings with clients and employees as well as storage for equipment and supplies.

MARKET The market for office cleaning in Puerto Rico (metro area) includes small offices (1-49 employees), medium offices (50-499 employees) and large offices (500 employees and up). Small offices are targeted as well as large, although it is expected that they will be more likely to use our services after its record of customer service and operational success is established by work with numerous smaller clients. Market Segmentation: 1. Small Offices: Either newly established ventures, or small businesses designed to remain small, few cleaning business seek to serve this market because of the cost in doing so. Therefore, business owners generally require employees to do their own cleaning, assuming they are saving money through this work. EPCS must show these businesses not only that they do not save money by having employees do this work, but also that by having professional cleaners maintain their offices they will increase morale, productivity, and their appearance to customers, if customers/clients visit their office spaces.

2. Medium Offices: This group has a growing acceptance of the need for professional cleaning services and is concerned primarily about price. 3. Large Offices: This group accepts the need to outsource their office cleaning to professionals and is interested in working with vendors who can handle specific requests and take care to protect the information, security, and equipment within their office spaces. Market Analysis: According to data available in the U.S. Census Bureau on the number of companies in the metropolitan area of Puerto Rico indicates a greater number of small businesses, followed by medium and large Businesses. Table 1. The number of offices in the towns that make up the metropolitan area.

Figure 1.

Market Analysis.

Target Market Segment Strategy: EPCS will build its expertise from the ground up, by building a successful base of smalloffice clients, moving on to medium-office clients and then large-office clients. While larger clients will not be turned away as the business starts out, it is expected that they will be more
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likely to use our services after its record of customer service and operational success is established by work with numerous smaller clients. Competition: Direct Competition: Companies localized in the Metropolitan Area in Puerto Rico. Indirect Competition: All the other companies localized outside the Metropolitan Area.

BUSINESS STRATEGY Initially EPCS will provide its services to small and mid-sized offices within the Metropolitan Area, even though a good marketing campaign requires a good marketing strategy, the best way to achieve steady growth in business volume will be providing a high quality service to our client base. EPCS will develop a quality-based service image focused on responsibility, professionalism and competitive prices. To accomplish this; the recruited personnel must have the personality and characteristics that exhibit EPCS vision, effective personnel training will result in an efficient allocation of resources for the company, high productivity and an employee that is able to take leadership roles within the organization by developing and improving EPCS business strategy. By providing excellent services at competitive introductory rates, the clients will get to know the services and will seriously consider becoming repeat customers and making referrals, thus enhancing EPCSs reputation. Working within this framework EPCS will increase its customers base to a tipping point that will enable it to adjust its structural organization and hire/outsource additional employees to maintain a quality service reputation while increasing market share.

The business strategy will consist on three stages: the first stage; near launch operations; this will comprise of on-site one on one client visits, cold calling sales and email offering our services, contacts and other relevant information, as EPCS consolidates its efforts, additional marketing strategies will be employed. The second stage involves newspaper advertisement, a webpage and social networking advertisement; conventional brochures will illustrate variety among our cleaning service packages. The third stage will be engaged when EPCS has become a recognized established company; making brand recognition a strong advantage for EPCS; island wide radio and TV advertisement, along with business conventions and industry gatherings. The sales strategy, as mentioned before, will be based on a standard rate based on sq. footage in order to accommodate varying office sizes and to provide clients with a consistent and fair price. Based on cost of materials and time required, EPSC has decided on a proposed pricing strategy of $0.30 per sq. foot per week of cleaning. This price is below the market average for many cleaning service companies in the industry. Consequently, it would be affordable to all as well as an operational system used to distinguish cleaning time needs and/or limits for each office.

BUSINESS ORGANIZATION We understand that the organizational structure more convenient for us is the private corporation for profit. This decision is based on that this option represents a lower rate of income taxes and protects the shareholders in their personal capacity. Advantages of a Closed Corporation: (less than 75 shareholders) Can operate without a board of directors and can be led by a single shareholder.

Legal protection: In cases of litigation by any corporate management, it would sue the corporation and not to its owners in their personal character.

Contributory benefits: Corporations are entitled to deduct expenses and payments for their administration and depreciation of movable property.

Corporations have borrowing margin wider according to the composition of the shareholders or the number of shares issued.

Disadvantages of a Corporation: A corporation cant claim constitutional rights possessed by individuals (right to defend themselves in court, the right to claim protection on privileges and immunities, rights against self-incrimination). Double taxation, corporations will pay for earnings from operations and the owners will paid in their personal character for the accrued dividends.

ORGANIZATIONAL STRUCTURE:

Shareholder (2) Administrative Personnel (1) Supervisor (1) Employees (3)

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The company will consist in 1 shareholder, 1 administrative personnel, 1 supervisor and 3 employees. The shareholder, also the administrative personnel, will be responsible for all management duties, excluding professional activities performed by his advisory team consisting of his banker, Certified Public Accountant, insurance agent, etc. The shareholder will interview, hire/fire employees, perform payroll duties, practice direct sales, bill clients, purchase equipment & supplies, observe daily financial information, maintain the website, and assist with cleaning when necessary. The owners of the company will assist the cleaning employees during the probable busier months. The supervisor is in charge of monitoring performance and assistance of cleaning. The 3 employees with be paid a competitive salary with the purpose of attracting employees who are efficient and high caliber. Also, additional training will be offered to the employees.

FINANCIAL ANALYSIS: The total project cost of EPCS is $41,428.07. EPCS is seeking $31,500 in loans. The loan has a 4.8% interest for a term of 10 years. This will require a monthly payment of $ 331.04 (See Appendix III-Table Amortization). The 2 owners are contributing $5,000 each from their personal savings. Start-up costs will include cleaning equipment, cleaning supplies, office equipment & supplies, and working capital. A detailed list of start-up expenses is included among the following pages (See Appendix II). All cleaning equipment & supplies quotes are based on current J&M Depot, Inc. wholesale prices.

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Cash Budget:

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Annual pro-forma income statements:

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Annual pro-forma balance sheets:

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NPV analysis:

Sensitivity analysis: Using the calculations of Net Present Value we can determined that if the net cash flows continues increasing in a 4% each year with a cost of capital of 10% the NPV is positive. This positive value implies that we should make the investment. Therefore, if some assumptions are change, for example, the cost of capital, the NPV will be decreasing and eventually be negative (See table 2). If the NPV is negative, we should not invest in the business. This is caused because the cost of capital is a critical value driver that values the cost of the company's funds.

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Table 2.

Different Scenarios of cost of capital and its NPV COST OF CAPITAL 10% 20% . . . 72% NPV $323,793 $197,680 . . . -$106

CONCLUSION: After analyzing all the financial sheets, studying the target market of EPCS in Puerto Rico and developing marketing strategies we can conclude that it is positive and viable to initiate the company of cleaning services to offices. Our establishment will be localized in Bayamon capturing the metropolitan area sector. Using the financial sheets, the net present value maintains positive to an increasing net cash flow of 4% for the next years, with cost of capital from 10%.We could also say that is viable to begin operations with the increasing revenue of 16% in the industry. For the first year we will see a loss due to the initial cost for the opening of the business. Then, for the next years there is revenue increasing among the years. Because our strategy is to served primarily to small and medium offices to help them concentrate in their strategy to increase revenues and not worry about cleaning, we expect that the target market accepts positively the business and uses the services that Executive

Professional Cleaning Services has to offer. We are convinced that we can meet the financial projections that we have established securing the EPCS success.
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REFERENCE http://www.census.gov/econ/cbp/index.html http://www.allbusiness.com/companyindex/Puerto_Rico/Janitorial_Services/3D171E19A AE058530B901E5B535F008E-1.html http://cleaningservicecomparison.com/commercial-cleaning-pricing.jsp?id= http://autos.yahoo.com/ford-truck/e-series-van/2011 http://www.industrias.us/industriales/quimicas/ventajas-y-desventajas-de-unacorporacion/

APPENDIX Appendix I -Feasibility Study: For the selection of the location of the establishment we made a careful analysis of the most important attributes to the success of our business, based on the basic principles of the method "weighted site selection". Based on the analysis, the office location will preferably be in Bayamon. Below is a list of principles and the weight we give to each attribute. Description:
Weight 10 40 5 25 15 5 100 Description Amount of offices nearby in which provided similar Office Density services Proximity from the office to the location were the Proximity to Services services are provided Accesibility Rent Traffic Accumulated Atraction Access to the office Cost of the rent Amount of traffic from the office to the location were the services will be provided Nearby businesses must attract similar customers Category

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Analysis:
San Juan Bayamon Office Density Proximity to Services Accesibility Rent Traffic Accumulated Atraction Total 2 35 3 5 10 5 60 5 30 5 17 9 4 70 Caguas 7 25 5 20 5 4 66 Carolina 7 27 5 15 10 3 67

Appendix II Equipment and Supplies List EQUIPMENT

Quantity 3 3 1 4 1 1 1 2 1 1 1 U/M Description SC890 CHAMBER VACUUM MODEL 20 HEAVY DUTY FLOOR MACHINE SELF-CONTAINED EXTRACTOR MOPPING COMBO PACK PERSONAL COMPUTER 4 DRAWER COMMERCIAL VERTICAL FILE EXECUTIVE DESK DESK CHAIR ALL-IN-1 COPIER, PRINTER, FAX MULTI-LINE TELEPHONE FORD E-150 CARGO VAN Unit Price $366.32 $953.95 $1,601.10 $151.54 $1,380.00 $117.63 $327.99 $89.99 $499.99 $60.00 $24,000.00 Subtotal Amount $1,098.96 $2,861.85 $1,601.10 $606.16 $1,380.00 $117.63 $327.99 $179.98 $499.99 $60.00 $24,000.00 $32,733.66

OFFICE SUPPLIES
Description ACCESSORIES/DECORATION BUISNESS CARDS PENS, ENVELOPES, ETC. Subtotal Amount $368.00 $150.00 $250.00 $768.00

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CLEANING SUPPLIES Quantity 4 4 4 4 4 4 4 1 1 1 4 4 4 1 4 1 1 1 1 4 4 4 1 1 1 1 1 20 2 2 2 2 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 4 4 4 U/M EACH EACH EACH EACH EACH EACH EACH DOZEN DOZEN DOZEN EACH EACH BOX CASE EACH BOX-5 BOX-5 BOX-5 BOX-5 EACH EACH EACH CASE CASE CASE CASE CS-12 GALON Case Case Case Case Box-4 Pail Box-4 Pail Pail Pail Pail Pail Each Galon CS-12 CS-12 CS-12 CS-12 CS-12 CS-12 CS-12 CS-12 Each Each Each Description DUST MOP WHITE 36" DUST MOP BLUE 18" DUST MOP BLUE 24" DUST MOP BLUE 36" D/M FRAME 5 X 18 D/M FRAME 5 X 24 D/M FRAME 5 X 36 URINAL SCREEN N/P W/BLO URINAL SCREEN W/BLOCK BOWL BLOCK (SW) 3.5oz ESCOBA RECORD CON PALO RECOGEDOR PLASTICO LATEX GOLVE MASK 50 CS FIBERGLASS MOP PAD 20" 5100 PAD 20" 7200 PAD 20" 4100 PAD 20" 3600 MAPO RAYON BLUE 16oz MAPO RAYON 24oz MAPO RAYON 20oz 24 X 24 08 MIC BLACK 1000 CS 30 X 37 10 MIC BLACK 500 CS 30 X 37 10 MIC NAT 500 CS 43 X 48 16 MIC BLACK 200 CS GLASS CLEANER 32 OZ HAND SOAP GALON---ELITE Roll Towel 12/600 WHT Roll Towel 12/350 WHT Roll Towel 12/350 NAT Toilet Tissue 12/1000 2 Ply Husky Ultra High Speed Finish Galon Husky Ultra High Speed Finish Pail Husky H/P UHS Premium FL Finish Galon Husky H/P UHS Premium FL Finish Pail Husky Floor & Concrete Sealer Pail Husky Versatile Premium FL Sealer Husky Rinse Free Floor Stripper Pail H/D Stripper Pail Spray Buff- Rejuvenator 12/32 SPRAY BUFF REJUVENATOR GL SPRAY & WIPE CLR DEGRACER 32 OZ N/A BOWL CLEANER 32 OZ BOWL CLEANER 9.5% THICKENED 32 OZ T/C BOWL TILET/PORCELAIN CLR 32OZ BOWL CLEANER 23% 32 OZ FURNITURE POLISH 16 OZ AEROSOL (GLAZE) STAINLESS STEEL WATER BASE 16 OZ (BRITE) STAINLESS STEEL OIL BASE 16 OZ (FLARE) 5152 CHASE** DUST MOP TREATMENT 19 OZ DUST MOP WHITE 18" DUST MOP WHITE 24" Unit Price 13.00 12.95 16.25 19.35 3.80 4.15 5.90 19.5 18.50 9.90 1.65 1.60 4.95 4.50 9.99 23.00 23.00 23.00 26.75 3.95 4.35 5.25 23.30 23.95 23.95 26.95 24.85 4.85 42.00 25.95 22.60 28.50 64.80 80.20 67.60 84.25 71.50 71.50 67.80 46.95 42.00 9.65 32.00 28.20 26.40 30.00 27.00 31.20 27.00 36.25 36.00 6.95 9.95 Subtotal Amount 52.00 51.80 65.00 77.40 15.20 16.60 23.60 19.50 18.50 9.90 6.60 6.40 19.80 4.50 39.96 23.00 23.00 23.00 26.75 15.80 17.40 21.00 23.30 23.95 23.95 26.95 24.85 97.00 84.00 51.90 45.20 57.00 64.80 80.20 67.60 84.25 71.50 71.50 67.80 46.95 84.00 19.30 64.00 56.40 52.80 60.00 54.00 62.40 54.00 72.50 144.00 27.80 39.80 2380.41

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PROJECT COST SUMMARY

Description EQUIPMENT CLEANING SUPPLIES OFFICE SUPPLIES WORKING CAPITAL Subtotal Amount $32,733.66 $2,380.41 $768.00 $5,546 $41,428.07

Appendix III: Amortization Table

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