BE THE MASTER OF YOUR OWN FATE & SUPPORT US IN DEVELOPING AN ECONOMICALLY SUPERIOR PAKISTAN

Consultancy Services:

The center aims to assist potential and existing entrepreneurs in planning and implementation of entrepreneurial ideas and providing best solutions to the problems faced by the business in the desired areas.

• In developing, planning and implementing their innovative business ideas.
• In providing solutions to the problems faced by business in their desired areas.
• To remain updated and informed about new training & development opportunities.

The major areas of consultancy and mentoring include;

A. Business Planning (Basic)

A business plan precisely defines your business, identifies your goals, and serves as your firm's resume. The basic components include a current and pro forma balance sheet, an income statement, and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make good business decisions. A basic business plan provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers, and other people/organizations about your operations and goals.

Summary or Description of the Venture: This is the executive summary of the venture and should be one to three pages in length. The summary should state the purpose of the venture and may include a covering letter. The quality of writing is very important: clarity and preciseness are desirable. It is recommended that the reader clearly understand the content of the plan to decide if she or he wishes to proceed with reading the venture plan.

1. Table of Contents: This is a list of the appropriate titles and sections within the document, formatted in a clear and organized manner.
2. Market Research, Analysis and Plan: This section of the venture plan is perhaps the most important.
   The marketing plan defines the marketing mix and should answer questions such as:
   • What precise service/product will be sold/produced?
   • At what price? What are projected sales (forecasting)?
   • How will the service/product be marketed/advertised?
   • Who will sell the product/provide the service and how?
   • How does the service/product benefit a customer?
   • Is the business/organization expected to grow?
   • In what location(s) will the service/product be marketed (market segment)?

The techniques learned in Foundational Objective 5: "To investigate the types of resources and research that may be used to evaluate and plan an entrepreneurial venture" may be used here. The techniques include the decision-making processes, the checklist or framework formed for conducting research, and the types of techniques described in conducting primary and secondary research.

Remind potential and existing entrepreneurs that each service/product goes through a life cycle. This life cycle includes: introduction, growth, maturity, and decline. An existing service/product may be in any one of the four stages. People must identify the stage their proposed service/product is currently at, and adjust their marketing strategy and perhaps their venture plan, to accommodate the life cycle. An example of an existing product that will require adjustments to the life cycle (if someone is proposing a new use for it) is the computer chip.

3. Resource Analysis: Many resources may have been explored in the Foundational Objective. Items to include in resource analysis may be capital requirements, human resources (internal and external), and financial resources (dealt with in detail in step 6, below). More specific items to be analyzed or considered may include: suppliers, equipment, property and facilities, costs, geographical location, warehousing, machinery and equipment, and others.
4. Operating Schedule: Earlier in the course of study, participants were asked to set goals and keep a journal as to whether those goals have been or will be met. This skill is useful in determining the operating schedule for the venture plan. Goals/strategies may be identified for the following: operations strategy, major events, risks, strategic plan and timetable, immediate objectives, intermediate objectives, and long-term objectives and timelines.
5. Financial Program: The participants/students should be able to address the following issues: reasons for financing; sources of financing; financial package; timing and stages of financing; previous financial information; current financial position; contracts for rent, office equipment, sales agreements, and waste removal; other income; legal restrictions/requirements; present financial position; and, how short-term and long-term income will be used.

Risk factors: Investors should be made aware of risks: How will changes in government policy affect a risk? Technical problems? And others.

The budget. The budget may be prepared by external human resources although the participants/ students should have some knowledge of financial assessment. The participants/students may:

• prepare financial objectives;
• prepare a budget for their venture;
• estimate revenue and expenses;
• describe the key people and their expected remuneration;
• prepare a cash flow forecast;
• calculate startup costs and operating expenses; and,
• prepare a current balance sheet.

Forecasting Costs

Before starting your business, you must know that how much money you will need as a working capital. The startup cost of business depends on a number of factors keeping in view of the nature of the business and there is no universal rule of thumb to estimate that cost. It is vitally important to know that you will have enough money to launch your business venture. At startup you must identify the essential and optional activities necessary to start your business. It is an effective way to start calculating your cost using worksheets in which cost of each category and element of the business are calculated separately.

B. INCORPORATION OF A COMPANY

For the convenience of the general public, promoters and directors of companies, SECP has established its eight CROs at Islamabad, Karachi, Lahore, Peshawar, Faisalabad, Multan, Sukkur and Quetta. Online facilities for incorporation of companies and filing of returns have been made available. Registration of companies and monitoring their workings according to law, functions of CRO’s include providing services and guidance and also to ensure that the companies and their directors comply with the statutory requirements as provided under the Companies Ordinance, 1984 (the Ordinance). The record of companies maintained by the CROs is public record and the investors, shareholders, creditors and general public, may inspect the record of any company whenever they need and they may also obtain a certified copy of any specific document on payment of a nominal fee. Any three or more persons associated for lawful purposes may, by subscribing their names to the Memorandum of Association and complying with the requirements of the Ordinance form a public company and any one or more persons so associated may, in like manner, form a private company. If only one member forms a private company, it is called a single member company and if it is formed by more than one member, it is termed as a private company.

Prior approval of the Ministries/Departments etc. noted against each category of the following companies is required to be obtained before incorporation of companies:-

1. A banking company
   1. Ministry of Finance
   2. State Bank of Pakistan
2. A non-banking finance company (NBFC)
   1. Securities and Exchange Commission of Pakistan
3. A security service providing company
   1. Interior Division
4. A corporate brokerage house
   1. Stock Exchange (for transfer of member ship card in favor of proposed company)
5. A money exchange company
   1. State Bank of Pakistan
6. An Association not for profit u/s 42 of the Companies Ordinance, 1984
   1. License from Securities and Exchange Commission of Pakistan
7. A trade organization u/s 42 of the Companies Ordinance, 1984
   1. License from Ministry of Commerce

Following are the requirements for registration of a new company under the Companies Ordinance, 1984:-

a. Availability of Name

The first step with regard to incorporation of a company is to seek the availability of the proposed name for the company from the registrar. For this purpose, an application is to be made and Rs.200/- for online application and Rs. 500/- for offline application is required to be paid for seeking availability certificates for each name. The promoters wanting to form a company should make sure that the name chosen is not otherwise inappropriate, deceptive or designed to exploit or offend the religious susceptibilities of the people and neither is identical nor closely resembling with the name of an existing company. To facilitate the promoters, a list of prohibited/ sensitive names has also been provided at the link: www.secp.gov.pk.

b. Documents for registration of a limited company

The following documents are required to be filed with the registrar concerned for registration of a private limited company:-

• Copy of national identity card or (passport, in case of foreigners), of each subscriber and witness to the memorandum and articles of association.
• Memorandum and articles of association
  • Four printed copies of Memorandum and Articles of Association in case of offline submission and one copy for online submission, duly signed by each subscriber in the presence of one witness. In order to facilitate the general public, the standardized specimen of a Memorandum of Association of various sectors has been provided on the Commission’s Website.
• Form – 1.
  Declaration of compliance with the pre-requisites for formation of the company.
• Registration/filing fee.
  A copy of the original paid Challan in the any branch of MCB Bank Limited or a Bank Draft/Pay Order drawn in favor of the Securities and Exchange Commission of Pakistan of the prescribed amount. (Table-I).
• Authorization letter by sponsors.
  The authorization of sponsors in favor of a person to make good the deficiencies, if any, in memorandum and articles of association as may be pointed out by the registrar concerned and to collect the certificate of incorporation.

c. Additional Requirements for Incorporation of a Company having objects of providing Security Services. In case of setting up a security object company, nine additional sets of each of the documents at a and b above along with the bio-data, four attested photographs of each subscriber and the financial position/bank statement of the subscribers (Aggregate wealth should not be less than 1.5 million) is required to be provided. Ministry of Interior grants NOC for a security object company.

e. Transfer of membership of Single Member Company to a new member.

If the membership of a single member company is transferred to a new member, the company shall, within fifteen days from such transfer, also file with the registrar, a nomination in the form as set out in Form S1.

f. Change in status of a single member company. - A single member company can be converted into a private company on increase the number of its members to more than one. The company must pass a special resolution for change of status and alter its articles accordingly within thirty days and transfer the shares within seven days. The company must appoint and elect one or more additional directors within fifteen days of passing the special resolution and notify the appointment on Form 29 prescribed under the Companies (General Provisions and Forms) Rules, 1985 (the Rules) within fourteen days. Further, the company is required to file a notice of the fact in writing in the form as set out in Form S2, with the registrar within sixty days from the date of passing of special resolution.

g. Company becoming a single member company. - A private company having two or more members shall convert its status into a single member company by passing a special resolution for change of its status, making necessary alteration in its articles and obtaining the approval of the Commission. An application for seeking the Commission’s approval shall be submitted by the company in the form as set out in Form S4 within thirty days of passing the special resolution for change of status to single member company. The company must transfer shares in the name of the single member status within fifteen days of the approval of the Commission and notify a change in the board of directors on Form 29 within fourteen days from date of transfer of shares. A certified copy of the order containing the approval together with a notice in the form as set out in Form S5 and a nomination of nominee directors in the form as set out in Form S1 must be filed with the registrar concerned within fifteen days.

h. Obtaining Certified Copies of Memorandum & Articles of Association and Certificate of Incorporation In order to obtain certified copies of Memorandum of Association, Articles of Association and Certificate of Incorporation, a challan of the requisite copying fee and Court stamps fee of the requisite value should be submitted along with registration documents.

i. Documents for incorporation of an association not for profit All the documents meant for incorporation of a limited company along with a license issued by the SECP. In case of a trade body, a license issued by Ministry of Commerce must also be submitted to the registrar concerned. The application for obtaining the requisite license from the Commission should be accompanied by a Draft Memorandum and Articles of Association, list of promoters, bio-data of each promoter, declaration, names of companies in which the promoters of the proposed association hold any office, estimates of annual income and expenditure and a brief statement of work already done or to be done. (Section & Rule 6). Detailed guidance is provided on the link:
www.secp.gov.pk.

REQUIREMENTS AFTER INCORPORATION

1. Private companies
   • The number and names of the first directors are required to be determined by the majority of subscribers of memorandum in writing and until so determined all the subscribers of the memorandum who are natural persons shall be deemed to be directors of the company. The appointment of first directors is required to be notified to the registrar concerned on Form '29' within 14 days from the date of incorporation. The first election of directors is required to be held at the first Annual General Meeting of the company and subsequently after every three years. The directors so elected are to hold office for a period of three years. However, casual vacancy occurring on account of death, resignation or removal of any director may be filled up by the other directors for the remainder period of the term.
   • Directors of every company are required to appoint the first chief executive not later than fifteen days from the date of incorporation and thereafter within fourteen days from the date of election.
   • The first auditor is required to be appointed by the directors within sixty days from the date of incorporation and thereafter in each AGM of the company.
   • A single member company is also required to appoint a company secretary within fifteen days of incorporation or of becoming a single member company or of the office of company secretary falling vacant and notify such appointment on Form 29 within fourteen days of the date of such appointment.
   • Any appointment, election or change in the Directors, Chief Executive, Auditors, Chief Accountant, Legal Adviser etc is required to notify the registrar concerned on Form '29' within 14 days of the said election, appointment or change (Section 205).
   • A company is required to notify the registered office of the company on Form-21 within 28 days from the date of its incorporation. This form is normally submitted with the registration documents to facilitate communication. Change of registered office is also to be notified on the same form within the same period. (Section 142)
   • A private company may commence its business immediately after its incorporation.
   • First Annual General Meeting (AGM) of the company is required to be held within eighteen months from the date of incorporation and subsequent Annual General Meetings are required to be held once at least in every calendar year, within a period of four months following the close of its financial year and not more than fifteen months after holding of its last preceding AGM (Section 158).
   • Directors of every company are required to lay before the company in its AGM audited balance sheet and profit and loss accounts in case of first accounts since the incorporation of the company and in any other case since the preceding account, made up to a date not earlier than the date of the meeting by more than four months (Section 233).
   • Annual return on prescribed Form ‘A’ is required to be filed with the registrar concerned once in each year made as on the date of Annual General Meeting, where no such meeting is held, on the last day of the calendar year (Section 156).
   • In case of an increase in paid-up capital, the company is required to offer new shares to the existing shareholders and the offer is required to be accompanied by a circular issued under section 86(3) to all the shareholders strictly in proportion to the shares held by them and, on the allotment of shares, return of allotment on Form '3' is required to be filed with the registrar concerned within 30 days from the date of allotment of shares. Partly paid shares are not allowed to be issued at all. (Sections 73 & 86).
   • The company is required to issue share certificates to its shareholders within 90 days from the date of allotment or within 45 days after the date of filing of application for registration of transfer of shares (Section 74).
   • Particulars of every mortgage or charge created by the company on its property or undertaking and every modification therein or satisfaction thereof are required to be filed and registered with the registrar concerned within 21 days after the date of its creation, modification or satisfaction (Sections 121, 129 & 132).
   • In case of the death of a single member of a Single Member Company, the nominee director of SMC is required to inform the registrar concerned of the death of the single member, provide particulars of the legal heirs and in case of any impediment report the circumstances seeking the directions in the form as set out in Form S3 within seven days of the death of the single member.
   • The decisions taken by the single member or sole director in the meeting of director and member of a Single Member Company are required to be drawn up in writing and recorded in the minute’s book by the company secretary.
2. Public companies
   • All the requirements meant for private companies given at serial Nos. (i) to (xiii) above are also applicable to public companies. However, the listed companies are also required to file a list of members in soft copy form to the Commission and the associations are required to file with the registrar concerned an annual return on Form ‘B’ instead of Form ‘A’.
   • The company is required to file a list of Directors and consent of Directors and Chief Executive within 7 days of the incorporation and thereafter before the election/appointment of Directors and Chief Executive on Forms 27 & 28.
   • The company shall be entitled to commence its business after obtaining the commencement of business certificate from the registrar concerned (Section 146).
   • A statutory meeting is required to be held within a period of not less than three months but not more than six months from the date of which the company is entitled to commence business. A statutory report is required to be circulated to the members and five copies thereof certified in the prescribed manner are required to be filed with the registrar concerned, at least 21 days before the date of Statutory Meeting. A private company which converts itself to a public company after one year of incorporation is not required to hold such statutory meeting and issue such statutory report. (Section 157).
   • Two copies of the audited balance sheet and profit and loss accounts signed in the prescribed manner are required to be filed by public companies with the registrar concerned within 30 days from the date of their AGM (Sections 233 & 242).
   • Every listed company is required to file three copies of their audited balance sheets and profit and loss accounts to the SECP, Stock Exchange and the registrar at the time of sending the notice of AGM to the members as well as within 30 days of holding the
   • Annual General Meeting.
   • Return containing beneficial ownership of listed securities and change therein on Form 31 and Form 32 are required to be filed with the Registrar concerned and the SECP.
   • A listed company is also required to appoint a company secretary.

Sales Tax

Liability to Sales Tax

The following sectors are required to get registration for sales tax and charge sales tax on their supplies/ services:

• Manufacturing
• Import
• Services
• Distribution, Wholesale & Retail stage.

Previously sales tax was being charged to the manufacturing & import stage, and its scope has now been extended now to more sectors. Sales Tax is chargeable on all locally produced and imported goods except computer software, poultry feeds, medicines and unprocessed agricultural produce of Pakistan and other goods specified in the Sixth Schedule to The Sales Tax Act, 1990.

Registration

Every person in the sectors mentioned above, who makes a taxable supply in Pakistan is required to be registered under the Sales Tax Act. However, manufacturers having taxable turnover below five million rupees and also utility bill below Rs. Seven lac during the last twelve months are exempted from registration and payment of sales tax. Similar exemption is also available to retailers having total turnover below Rs. five million in the last twelve months. The rate for sales tax is 16% of value of supplies. However, there are some items which are chargeable to sales tax at 18.5% or 21% of value of supplies.

The Registration Form(s) are submitted to the Central Registration Office, FBR, or Sales Tax Collectorates/ RTOs for the allotment of a Registration Number by the persons liable to be registered under the Sales Tax Act. The taxpayer is then issued a Certificate of Registration.

Returns

As per law each registered person must file a return by the 15th of each month regarding the sales made in the last month. All registered persons are required to file returns electronically and in such cases the payment is to be made by the 15th and return can be submitted on FBR’s e-portal by the 18th.

A detailed procedure in this respect is given in Sales Tax General Order no. 04 of 2007. There are some sectors which are required to file returns on quarterly (tri-monthly) basis e.g. retailers including dealers of specified electric goods and CNG dealers.

Maintenance of Records

All registered persons are required to maintain records at their business premises of the goods purchased and supplies made by them. All the records are required to be kept for a period of 5 years.

Refunds of Sales Tax

In cases where the Input Tax exceeds the Output Tax due from the registered person in respect of a tax period because of exports or other zero-rated supplies, the excess amount of input is refunded back to the taxpayer within 45 days. In all other cases of excess input tax, the Board can specify the procedure for refunds.

Additional Tax

If a registered person does not pay the tax within the specified time or claims a tax credit or refund which is not admissible to him, or incorrectly applies the rate of zero percent to the supplies made by him, he has to pay the additional tax at the following rates:

One and a half percent of tax due or the part thereof per month; However, in case of tax fraud, the rate of additional tax shall be two percent per month.

Arrears

The work regarding Arrears gets initiated in the following cases:

• Late or no submission of the Returns
• Amount paid is less than the tax amount payable
• A demand raised after an audit/ scrutiny is upheld after adjudication

C. Marketing

Marketing Basics

Nowadays marketing has become the most important element that leads to the success of a business. So entrepreneurs must take initiatives to attract and retain customers.

What is marketing?

Marketing is the process of building profitable relationships with customers, so entrepreneurs have to be conscious about maintaining the client base for which they have to focus on marketing their products.

Market Research

It is important for an entrepreneur to be involved in market research so as to collect timely and relevant information. The entrepreneur must define the problem for which he/she is going to conduct research. Further information should be gathered related to that problem through primary or secondary sources and opportunities should be explored in the market to target the customer through a specified strategy.

Step One: Define Marketing Problems and Opportunities

Step Two: Set Objectives, Budget, and Timetables

Step Three: Select Research Types, Methods, and Techniques

Step Four: Design Research Instruments

Step Five: Collect Data

Step Six: Organize and Analyze the Data

Step Seven: Present and Use Market Research Findings

Marketing Strategy

When market research has been conducted, the next step is to develop a marketing strategy which should be based on the target customers, where to place the product, at what price, and with which strategy. This will comprise of the 4 P`s of marketing that are product, price, place and promotion

Target Marketing

Identify you target market with respect to geographic, demographic and psychographics.

Managing the Market Mix

Every marketing program contains four key components:

• Products and Services
• Promotion
• Distribution
• Pricing

These are combined into an overall marketing program. Design marketing strategies with your target market in mind.

Marketing Program Evaluation

The entrepreneur must evaluate the marketing efforts so as to ensure that the marketing strategy is going in accordance with the set objectives and generates a positive impact on the business.

Competitive Analysis

Business takes place in a highly competitive, volatile environment, so it is important to understand the competition.

The following Questions may be useful:

1. Who are your five nearest direct competitors?
2. Who are your indirect competitors?
3. Is their business growing, steady, or declining?
4. What can you learn from their operations or from their advertising?
5. What are their strengths and weaknesses?
6. How does their product or service differ from yours?

What to address in your competitor analysis

1. Names of competitors - List all of your current competitors and research any that might enter the market during the next year.
2. Summary of each competitor's products - This should include location, quality, advertising, staff, distribution methods, promotional strategies, customer service, etc.
3. Competitors' strengths and weaknesses - List their strengths and weaknesses from the customer's viewpoint. State how you will capitalize on their weaknesses and meet the challenges represented by their strengths.
4. Competitors' strategies and objectives - This information might be easily obtained by getting a copy of their annual report. It might take analysis of many information sources to understand competitors' strategies and objectives.
5. Strength of the market - Is the market for your product growing sufficiently so there are enough customers for all market players?

There are many sources through which competitors information can be gathered for example internet, personal visits, customer interaction, competitor ads, their speeches or presentations, through trade show displays and through written sources such as articles and case studies.

How much will it cost?

Analyze and estimate the budget needed to implement the marketing plan of the company as marketing is considered as one of the major areas in which huge investment is required.

The communication mix is used to demonstrate the product or service of yours and it includes

• Advertising
• Direct selling
• Publicity
• Sales promotion
• E- marketing

D. Human Resource Management:

You must have skilled human resource to run your business for which you have to analyze the skills needed. Once you have analyzed the skills you can recruit the human resource through internal and external sources. Internal sources are the sources that are available to the company to recruit employees from within the company and external recruiting refers to recruiting employees from outside the company.

• Advertising, in newspapers
• Employment Agencies, like talent hunters
• School, Colleges and Universities
• Professional Organizations

Employee Retention

The entrepreneur should be keen to retain employees through providing them attractive rewards and motivating them to enhance their personal satisfaction.