Business Plan for Native Speakers Club "Tiempo"

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Table of contents

Introduction

Chapter 1. Business Plan Structure

Chapter 2. Marketing Analysis

2.1 PEST Analysis

2.2 Five forces of Porter

Chapter 3. Analysis of Legal and Juridical Aspects in Russia

3.1 Tax system overview for small businesses in Russia

3.2 The Labour Code

Chapter 4. Financial Aspects

Chapter 5. Risk Management

Chapter 6. Strategic Development of the Firm

6.1 SWOT Analysis

References

Appendix. Business Plan for Native Speakers Club “Tiempo”

Introduction

Background

In general, it is very hard to find a perfect niche to start a business, but there are also many factors that increase the chances of running a successful business even on already existing semi-full niches. The foreign languages market in Russia is a very specific one. Taking into account some historical facts and changes in The Russian Federation in the 90-x years, it can be witnessed a clear line of technological progress, that also brought part of different cultures and trends from western countries.

People are travelling more, spending money on education abroad as well as on buying properties in Europe and America, in comparison to the Soviet Union. The most popular foreign language in Russia, since the year of 2000, has always been English. Learning foreign languages is getting more and more popular. German and Spanish are considered to be the next more popular languages in Russia, meaning the market of foreign languages learning is growing as time goes on. According to various researches, some of the key factors that allowed Spanish to become so popular in Russia are:

1) The crisis of 2007 in Spain that made properties cheaper and attractive for Russian investors and average population.

2) Spanish culture that became more popular as people began travelling around European countries.

3) Relatively cheap tours and air tickets to Spain (before the currency crisis of 2014).

Problem statement

The purpose of this work is to elaborate a business instrument that could reflect the Spanish native speakers club “Tiempo” business model in order to discover a range of possibilities for its future success. It is necessary to take into consideration the restrictions the project holds on existing methodology. The main characteristic of this work is to make a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals.

In order to develop the business plan, it should be focused mainly on the financial goals of the organization, such as profit or creation of wealth. To concretize the work it will have elements that would target goals that are important to external stakeholders, particularly financial stakeholders (investors and costumers). The strategies and tactics described in the plan will be the outputs from a logical and appropriately comprehensive business planning process.

Within this paper project the following environmental business aspects will be analyzed:

1) Business plan structure, that ensures how a business plan should be done and what points should include

2) Marketing analysis with the help of methods stated before

3) Analysis of Legal and juridical aspects based on the law system of the Russian Federation

4) Financial aspects will be assessed using information of the club's work during the last 5 months as well adding and correcting values in accordance to several new factors

5) Risk management in the club will be analyzed in accordance of different characteristics that will be shown in the project

6) Strategic firm's development will be evaluated after several concrete results of the previous aspects.

Professional significance of the study

A detailed business plan of the Spanish club “Tiempo” provides the blueprint for successfully creating and running the new venture. The Spanish club “Tiempo” (OOO “Saint”) is a running start-up from august 2014. “Tiempo” combines both education and recreation, which can be hardly located on an already existing sustainable market.

Chapter 1. Business Plan Structure

In order to increase profit margins of any company, it has to constantly develop projects that involve investment of financial resources in the development of new technologies, the organization of new production facilities, renovation of production payments and equipment for the production of competitive products in the domestic and foreign markets, the construction of branches and departments that are close to sources of raw materials and markets. Each of these projects should be based on the business plan from an idea to calculate the specific amount of profit to be derived from its implementation.

In despite companies differ from each other in terms of profit received, number of workers, regional scales and other parameters, on of the most important factors that allows a company to work is the presence of a cash flow within it.

Business plans are commonly used in the search for investors: new shareholders, creditors, sponsorship investments, etc. It helps entrepreneurs and businesses that are going to expand the business by buying a stake in an existing company, or to organize a new organizational and production structure. As the main goal for the organization OOO “Saint” is to raise funds for further expansion.

A business plan is a program that describes the economic and organizational aspect of the project, which should bring profit to the enterprise-investor.

One of the main issues in the process of drawing up a business plans is the methodology needed to dissolve imperfections related to the rationale for the development prospects of companies and organizations, the possibility of obtaining bank loans, the implementation of the restructuring of production, creation of conditions for a more effective and cost-effective operation. A business plan allows you to outline the range of problems to be faced by the entrepreneur in the implementation of its objectives in a volatile, uncertain, competitive environment, generate and provide solutions to these problems Saari, S. (2014). What do a banker and an investor look for in a business plan?: Case study: Designer PC Cases..

The actual recommended structure of the business plan is the following:

· Executive Summary (1-3 pages) - as the basic information to get acquainted with the business plan of the project.

· Business - plan - for detailed study of the project specialists' investors and experts.

Any business plan has its own characteristics, and there cannot be a "standard" plan that is acceptable in all cases. There is one tried and tested principle of drafting any business plan. The business plan should always be short and concise.

The content may be divided into the following sectors:

a) Company Summary, which includes a Start-up summary for business, that are about to start or have started its work for just several months.

b) Market Analysis Summary includes market segmentation, location and demographics, competitive edge, marketing and sale strategy.

c) Management Summary includes the personnel plan.

d) Financial Plan. It must include the start-up funding expenditures, important assumptions as well as breakeven analysis. Also will be added the projected profit and loss, cash flow and balance sheet.

e) Tables.

As this project paper inquires it will produce a final outcome as a business plan, it should pointed that most of the information on it will be based on the main analysis of this project paper. Nevertheless, as it will be considered separated from the main work, it should meet the requirements asked by investors, business angels, venture capitalist and other individual or organizations willing to support with the analyzed company for personal financial interests.

Chapter 2. Marketing Analysis

According to Wood (2008, 28), a marketing analysis is used to define the potential buyers for certain, specific products on a market. The statement means, that the costumers are considered to be the main focus for any analysis of the market. For it to be done, an analysis of the environment should be carried on. In order to meet those expectations, the analysis provided includes statistics of potential costumers as well as view of the main external factors with the help of a PEST analysis.

In an industry analysis the company will look at the market characteristics, which include the market size, growth rate, among others. This analysis will include as well the market potential, parameters that would allow to assess the industry structure, the level of competition as well as the trends in the market, which include the implementation of new technologies, drivers of change, changes in use of services, and new categories of service users (Biztree, 2010). The official webpage of WorldBank. - access: http://data.worldbank.org/indicator/IT.NET.USER.P3, free

To begin with, we need to take into account that the population of Russia is around 144 Million The official webpage of WorldBank. - access: http://data.worldbank.org/indicator/IT.NET.USER.P2, free. It is the ninth largest country by population and the sixth largest by purchasing power parity. The country has a higher proportion of higher education graduates than any other country in Eurasia. The average GDP per capita is 14,611 rubles The official webpage of WorldBank. - access: http://data.worldbank.org/indicator/NY.GDP.PCAP.CD, free. The Russian Federation is also home to several sizeable minorities. In all, 160 different other ethnic groups and indigenous peoples live within its borders. Russia's 160 ethnic groups speak some 100 languages. As per the website internetlivestats.com Russia has an Internet user base of around 85 million. The Internet penetration is around 60% of the population. It has an average annual user growth of 10% The official webpage of WorldBank .- access: http://data.worldbank.org/indicator/SP.POP.TOTL?page=2, free.

At the end of November 2014, the Russian Public Opinion Research Centre (VCIOM) published the results of a poll about foreign languages. It asked Russians which languages should be studied in school, whether or not children will find foreign languages useful in everyday life, and which benefits can be gained from knowing foreign languages. One thousand six hundred Russian residents from 130 towns and cities answered the poll, which was the first of its kind run by VCIOM.

The vast majority of respondents (92 percent) think children should study foreign languages in school. That statistic rose to 98 percent in Russia's biggest cities - Moscow and St. Petersburg.

Nearly three-quarters of Russians (74 percent) are convinced that their children and grandchildren will benefit from knowing other languages. The majority of those who answered, “yes” to this question were young people (82 percent of respondents in the age 25-34 category answered “yes”) and had a higher education (81 percent). As a possibility to learn foreign languages the vast majority still goes for English, nevertheless Spanish remains in the top 5 category.

Taking into consideration that the current market analysis is based on the foreign language market mainly specialized on providing services; one of its most important straits should be taken upon the classification of the main competitors' line.

As market researches at the area of the foreign languages market are not for public view and require an additional overview, the size of the market as well as the market's dynamics will be assessed using latest technologies that allow an estimated assessment of the market itself.

Within the frame of this project it is also important to narrow down the market analysis to companies whose main focus audience is located using latest online search engine optimization methods as their marketing policy Xing, B., & Lin, Z. (2004). The Impact of Search Engine Optimization on Online Adverting Market..

The main instrument allowing an estimation of real costumers on the Spanish language market will be considered Yandex wordstat system Bobrow, M. Development of techniques to promote social search engine Yandex. that provides statistics on how many people were looking for those services using search engine systems. As result we get the following results, for how many people were looking for “Spanish language” monthly during the period of 01.04.2014 - 31.03.2015:

Table 1. Search Views

Period	Absolute views The official webpage of Yandex. - access: https://wordstat.yandex.ru/#!/history?words=испанский%20язык, free
- 01.04.2014 - 30.04.2014	88865
- 01.05.2014 - 31.05.2014	84266
- 01.06.2014 - 30.06.2014	83762
- 01.07.2014 - 31.07.2014	74003
- 01.08.2014 - 31.08.2014	80772
- 01.09.2014 - 30.09.2014	103323
- 01.10.2014 - 31.10.2014	103532
- 01.11.2014 - 30.11.2014	93473
- 01.12.2014 - 31.12.2014	86051
- 01.01.2015 - 31.01.2015	65779
- 01.02.2015 - 28.02.2015	80279
- 01.03.2015 - 31.03.2015	94281

As a result we can observe an annual number of 1 038 386 of people looking for Spanish language services. Other key words may be also used to find the same services, but as the numbers were drastically lower, those were excluded as estimation, that not everyone looking for the services turned to be an actual consumer The official webpage of Yandex. - access: https://wordstat.yandex.ru/#!/?words=испанский%20язык, free. The views do not exclude the fact, that 1 individual could have been looking for the services more than once. In this case it is important to also add sorting criteria called marketing conversion Surkov, VV assessment methods of marketing online communications. ECONOMICS AND MANAGEMENT IN CONSTRUCTION 158.. Online analytical instruments such as Google analytics Clifton, B. (2012). Advanced web metrics with Google Analytics. John Wiley & Sons. allow a company to assess the conversion level on their websites, showing the sales funnel path an individual goes through before becoming a client of the organization Miller, R. B., Heiman, S. E., Tuleja, T., & Krasny, M. (1988). Strategic selling. Warner Books.. Also it shows the number of times 1 individual visited the same webpage, allowing the statistics to be more precise. As an additional research needs to be arranged in the area of Spanish language learning consumption, in order to gather more precise information on the overall conversion level of costumer, the estimated average conversion level will be used to assess the number of potential clients for this industry within the frames of this project paper. As a statement based on already carried out researches on what is the average conversion level is for most companies, it resulted on a level ranged at 1% till 5% LAVRINENKO, JB, & Tinyakova, VI (2013). Increased conversion of websites as a way to reduce advertising costs of real estate agencies. Bulletin of the Saratov State Socio-Economic University, (2).. As the conversion level is fair for one company's statistics, there also another fact that needs to be taken into consideration. The fact that an individual looking for “Spanish language” services decided to choose a different company to receive the same service also needs to be considered. Statistically, the other 95%-99% of costumers could have either chose another company or could have decided not to go for the services at all.

A restriction, due to the lack of additional researches on the area will imply that a potential costumer looked trough the main 7 companies on the search engine they were looking for. The probability the individual chose one of them will be proportional, meaning it is 14,23% of chances he/she chose a company's service. Uncertainty of whether an individual decided to choose a company's service remain, meaning it can be assessed with a possibility of 50% chance (either a viewer decided to take Spanish language services or not). Adjusting the probabilities for the companies in the sector to have different conversion rates to the parameters of annual views, we may obtain optimistic, neutral and pessimistic calculations that could help us assess the current market size. A neutral calculation (considering the average conversion rate at 3%) will lead to the following results:

· 1 038 386 x 0,03 = 31 151,58 estimated potential costumers that chose 1 company,

· 1 038 386 x 0,97 = 1 007 234,42 estimated viewers that decided to choose another company's services or non at all.

From the estimated viewers that decided to choose another company's services we sort them under a probability of 14,23% of choosing a company, that leads to the following:

1 007 234,42 x 0,1423 = 143 329,458 viewers that may have chosen another company's service.

The rest of the viewers (1 007 234,42 - 143 329,458 = 863 904,962) may have decided either going on with the services of Spanish language or not with a assumed probability of 50%, meaning 431 952,481 persons may be considered as potential costumers and the other 50% may be excluded.

As a result of the assumed calculations we obtain an average of 606 433 potential consumers for the Spanish language sector.

Also it must be taken into account; the following results were attained for people living within the Russian Federation.

From the period of 01.04.2013 - 31.03.2014 - 1 027 311 searches were being carried out.

In order to estimate the medium price an individual pays for the Spanish language services, a certain classification will be made.

As the market is being narrowed down to Spanish language learning 2 different business structures exist. The first one is considered to be part of official institutions that provide language-learning services such as schools, institutes, etc. The second business structure is included in the private sector, thus providing services of personal education by the means of personal tutoring. The second type is considered to be the most frequently encountered via online optimization marketing channels, as the entry market terms for those businesses is lower as well as the business entry expenses (Native speakers club “Tiempo” as an example stated in the current work). That statement is also justified by fast development of the e-commerce sphere Delone, W. H., & Mclean, E. R. (2004). Measuring e-commerce success: Applying the DeLone & McLean information systems success model. International Journal of Electronic Commerce, 9(1), 31-47..

The analysis of standard prices is linked with the number of competitors on the market. But in order to provide an approximation of the prices only the top 7 main competitors providing Spanish learning services will be reviewed.

In order to classify the existing competitors, it is important to set some criteria on how they have been selected. For this paper work, the main criteria of selection are linked with online search engines Krupnik, AB (2006). Web search. Publishing house "Peter".. As stated, the top 7 competitors at the area of Spanish learning services (in order to narrow down the market) on the current market were selected. As the results show, the following main players at this area are:

- Cervantes Institute The official webpage of Cervantes Institute. - access: http://moscu.cervantes.es/, free

- La Espaсola The official webpage of LaEspaсola company. - access: http://www.clasesdeespanol.ru, free

- Native speakers The official webpage of Native speakers company. - access: http://www.nativespeakers.ru/, free

- Repetit-center The official webpage of Repetit center company. - access: http://www.repetit-center.ru/, free

- Latin quarter The official webpage of Latin quartal company. - access: http://www.latinskykvartal.ru/i

- Es palabra The official webpage of Espalabra company. - access: http://www.espalabra.ru

- Repetitors.info The official webpage of Profi group - access: http://profi.ru, free

Going through their main services stated on the webpages respectively, we observe a large number of services and courses they provide for different consumer categories, as well as the prices differentiate whether the academic process is being carried out by a native speaker or non-native speaker. Also the prices differ. Nevertheless, in terms of a standard academic lesson received, the medium price is 1600 rubles (the native speaker factor taken into account). As a usual consumption of 2 lessons a week and 8 a month, an overall medium price of 12800 rubles per month on Spanish learning.

Although yet still there is another criteria of differentiation used on this project paper, which is related on learning by the means of online technologies. Thus, allowing an individual receive a lesson directly from its home using an electronic device or computer Stephenson, J. (2001). Teaching & Learning Online: Pedagogies for New Technologies. Stylus Publishing, Inc., 22883 Quicksilver Dr., Sterling, VA 20166-2012.. Gathered from the same sources stated above, it was calculated an average of 600 rubles per online same academic standard lesson (native speaker factor taken into account), estimated with the same parameters results in 4800 rubles monthly.

An additional research needs to be carried out showing the percentage of people willing to learn at home by the means of computers or electronic devices and those who prefer to receive face-to-face lessons. As a rough approximation of the research the average medium price will be taken. Clients willing to learn Spanish use a final calculation of 8 800 rubles average per month. As the continuity factor of the lessons requires an additional revision as well, as the number of online searches per month using search engines remains stable, it is a fair consideration that a client receives a lesson during at least 1 month.

As it is shown the average consumption price for Spanish language services it is possible to assess the size market by using a method of normative consumption for market size assessment P. Haig, Haig H. Morgan K. Marketing Research in Practice: The basic methods of market research. - Ballance Business Books, 2005..

Market size = 606 433 x 8 800 = 5 336 610 400 rubles

The method used above needs to be threated as positive, as the calculations are higher than with the usage of other methods. From the other hand, the online analytical instrument for the number of costumer's estimation allowed us to consider the seasonal factor the market implies.

As a result we get over 5 billion rubles of market size estimated during the 1 year period from 01.04.2014 till 31.03.2015.

In comparison to the period 2013-2014 were the number of people interested on the market services were slightly lower due to currency crisis in the Russian federation The official webpage of Vedomosti Media group - access: http://www.vedomosti.ru/opinion/articles/2015/01/12/valyutnyj-krizis-20142015-gg, free. As the situation gets better, the possibility of market growth in the future cannot be denied.

Using the information stated, according to the already carried out analysis on the sphere, we can say it is highly possible to settle or continue a business related with Spanish language learning.

Moreover, before the company OOO “Saint” started its work it begun to offer its services, as a single man native speaker using a simple landing page via online platforms with a minimal budget of 5000 rubles during one month for advertisement. This experiment led into 1 interested client willing to pay 2500 rubles per 90 min of Spanish lessons twice a week. What is more is that the individual still remains as a client for the company.

In order to receive a clear view of the external environment, besides real experience based statements, the following table expresses the PEST analysis carried out to identify the primary external factors that act as relevant in this market Shabanova, L. B., Ismagilova, G. N., Salimov, L. N., & Akhmadeev, M. G. (2015). PEST-Analysis and SWOT-Analysis as the Most Important Tools to Strengthen the Competitive Advantages of Commercial Enterprises. Mediterranean Journal of Social Sciences, 6(3), 705..

2.1 PEST Analysis

Table 2. PEST Table

Factors	Factorґs influence	Expert mark	Medium mark	Corrected mark
		1	2	3	4	5
Political
Bureaucracy and corruption	2	4	4	3	3	3	3,4	0,072
Tax Policy	3	3	4	3	3	4	3,4	0,072
Trends in the regulation or deregulation of the industry	1	2	3	3	2	3	2,6	0,055
Degree of protection of intellectual property and copyright law	2	4	3	4	5	3	3,8	0,081
Future and current legislation that controls the rules in the industry	3	3	2	4	3	4	3,2	0,068
Economical
Economic growth pace	2	2	3	3	4	3	3	0,064
Exchange rates	3	5	5	5	4	5	4,8	0,102
Unemployment rate, amount and terms of payment	1	3	4	3	4	2	3,2	0,068
Level of disposable income	2	4	3	3	4	3	3,4	0,072
Degree of globalization and openness of the economy	2	4	4	3	3	3	3,4	0,072
Development level of the banking sector	1	3	3	2	3	2	2,6	0,055
Social
Education level	2	2	3	3	2	3	2,6	0,055
Attitude, career, leisure and retirement	2	3	3	3	2	3	2,8	0,060
Requirements for service level	2	3	2	2	3	3	2,6	0,055
Lifestyle and language learning habits	1	3	3	2	3	2	2,6	0,055
Development of religion and other beliefs	1	1	2	1	1	2	1,4	0,030
Traveling factor	3	3	3	2	2	3	2,6	0,055
Sex-age structure of the population and life expectancy	2	2	3	2	2	3	2,4	0,051
Size and structure of the family	2	2	2	3	2	3	2,4	0,051
Technological
Level of innovation and technological development of the industry (online services)	2	3	2	3	2	3	2,6	0,055
Development and Internet penetration, using of mobile devices	3	5	4	2	3	3	3,4	0,072
Latest teaching technologies	3	3	2	2	2	3	2,4	0,051
Gadget using incentives	2	2	2	3	2	3	2,4	0,051

Using the help of 5 experts to value the level of external factors, it was possible to assess the current image of the situation. As a result it can be seen, that for the political factors most relevant is the degree of protection of intellectual property and copyright law. Since there is great importance on what methods a designated teacher uses in the process of language teaching, greater importance represents the fact whether those methods belong to someone else and how popular and useful they are. This way many companies in the industry can certainly produce their USP. Less important on this sector are the trends in the regulation or deregulation of the industry.

For the economical factors the exchange rates play a very high role. It makes perfect sense considering the link between traveling abroad and even buying goods online with the ability to speak in foreign languages. Less relevant in this topic comes the development level of the banking sector.

Social factors showed a number of relevant ones, which are the level of education, requirements for the service level, lifestyle and foreign language learning habits and also the traveling factor. It is possible to also consider a link between those as they demonstrate great importance for the industry.

Concluding with the technological factors, it doesn't really matter whether an individual uses latest technological machines while in the process of education or not, but it does matter the level of Internet usage and mobile devices overall, since most of the company's marketing policies are been carried out with the help of online platforms.

After getting a wider view of what the external factors are, it is of great importance the need to analyze some of the internal factors. As an instrument of analysis will be used Porter's 5 forces analysis as a framework to interpret the level of competition within the organization Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40..

2.2 Five forces of Porter

1) Threat of new entrants:

In the area of providing foreign languages the threat of new entrants should be considered as intermediate. The lack of strict entering regimes provides certain liberty for any new participant. What should be mentioned is that competitive advantage for new players in the market may vary depending on some legal aspects the firm would like to face, such as acquiring a license or not РУБИН, Ю. Б. (2011). Рынок образовательных услуг: от качества к конкурентоспособным бизнес-моделям (часть 1). Высшее образование в России, (3).. Also e-commerce facilitates the entry of new players. As the market shows relevant stability, its further growth needs to be assessed.

2) Threat of substitute products or services:

Substitute products in the current market are very rare, characterizing this particular threat as low. In despite of technological progress, that allows users to download programs, that allow them to learn languages other than having face-to-face classes with a real teacher, a lot of people prefer learning languages with the help of specialized tutors.

3) Bargaining power of costumers (buyers):

Costumers have a very high bargaining power. Most of the companies utilize different costumer-reaching channels such as Internet advertisement, offline life events and others. Thus, the variety of ways a company may reach its target audience allow the costumers to choose from a number of different parameters, such as service teaching level, native speaker's country, price, well looking web-site and others. It is of highly importance the presence or lack of a native speaker tutor in the organization, but the need on them may vary according to an individual's financial possibilities.

4) Bargaining power of suppliers:

Since the foreign language sector is mainly focused on providing services rather than selling goods, this force is considered as low. Suppliers at the area of language-based services may be considered companies working at the b2b sector that provide its services to corporate clients. In that case their power level needs to be assessed in accordance the sphere variety.

5) Intensity of competitive rivalry:

As the entry market barriers are rather low, it allows competitors to enter the market. The intensity of competitive rivalry remains very high, as not only native speakers compete with each other, but professional institutions providing teaching services as well as company's providing personal tutor services. As it was shown, there is a large number of competitors working under the e-commerce market segment.

According to the internal factor analysis, the company faces high rivalry, which means great effort should be directed into the marketing part of the business. Having a website as a main channel of gathering new target costumers, it implies a right choice for the best marketing channels. A result of the assessment draws a picture of internal micro-economical environment of the sphere. Some factors revealing the intensity of costumer's needs demonstrate some important characteristics of the area. The competitive environment allows the company to establish its USP in accordance to the costumer's needs and allowing it to become a fair competitor.

A logical progression justified by the 5 forces of Porter carried above provides the possibility to formulate some of the main Key Success Factors (KSFs) Benedetto, C. A. (1999). Identifying the key success factors in new product launch. Journal of product innovation management, 16(6), 530-544. that can be applied for the Native speakers club “Tiempo”. The main factors are:

- Native speaker presence

- Price

- Quality service

- Possibility to provide online services

- Possibility to provide additional services

In order to determine the competitiveness of the company, respective scores with subjective traits will be placed to each KSF for the Native speakers club “Tiempo” and top 3 of its competitors Clarke, A. (1999). A practical use of key success factors to improve the effectiveness of project management. International Journal of Project Management, 17(3), 139-145.. The criteria of choosing the following competitors are based on club's “Tiempo” business model that is focused on the e-commerce area, dealing mainly with native speakers personal tutors.

Table 3. KSF

KSF	Weight	Profi.ru	Nativespeakers	Repetit-center	Club «Tiempo»
		Score	*	Score	*	Score	*	Score	*
1. Native speakers presence	0,2	7	1,40	8	1,60	7	1,40	8	1,60
2. Price	0,25	7	1,75	6	1,50	8	2,00	7	1,75
3. Quality service	0,19	7	1,33	6	1,14	7	1,33	8	1,52
4. Possibility to provide online services	0,21	8	1,68	6	1,26	7	1,47	9	1,89
5. Possibility to provide additional services	0,15	9	1,35	8	1,20	7	1,05	7	1,05
Sum	1		7,51		6,70		7,25		7,41

As it can be seen, the leader here remains Profi.ru by providing a large variety of additional tutor services, focusing not only in the sphere of Spanish language, but in the sphere of providing services. This particularity can influence on its advantage even for the reviewed market. Native speakers club “Tiempo” holds a good competitive advantage amongst the other 2 competitors in despite it is still a young organization.

To receive a better classification of the main competitors a map of strategic groups is made. For the following map 2 subjective characteristics are placed on horizontal a vertical allowing settling the companies inside the matrix Marakulin, IV, & Anfert'eva, N. (2013). Application of strategic analysis in justifying the competitive strategy of the organization. Concept (8 (24))..

Graph 1.

As for the Native speaker presence score, it is been taken a scale from 0 till 3,5 where 3,5 represents the higher level of presence of services related with a native speaker and 0 his absence. The level of native speaker presence is characterized by how many of them are willing to provide their services amongst others. As we can see from the matrix, the main competitors are very close in terms of price, although prices for lessons with a non-native speaker are lower and the quality expected may differ. Club “Tiempo” maintains its position competitive stable. Nevertheless other parameters need to be taken into account in order to receive a better characteristic.

An overall conclusion should state the current market is able to collaborate the Spanish club's development, the market size estimated is considerable, although it should be highlighted the fact some additional services provided by the company are considered to be related with the foreign language services market, but not directly related with the sphere of language learning. As a restriction of the current project paper it will be focused mainly on the language learning aspect as the company's main revenue stream.

Chapter 3. Analysis of Legal and juridical aspects in Russia

As the legal and juridical system in Russia is quite complex, it is highly important to take into account what the costs should be on opening a business, but those costs not only should be reflected according to the amount of money and individual wastes, but also how much time it should take in order to prepare to open a company. As the requirements may be worthy or not, the bureaucratic and legal steps that an entrepreneur must complete to incorporate and register a new firm includes a set of specific procedures. Following is a detailed summary of those procedures, along with the associated time and cost.

Table 4. Time, cost and procedures required for starting a PRIVATE LIMITED LIABILITY COMPANY in Russian Federation

Nє	Procedure	Time to complete	Cost to complete
1	The signature made in the registration blank for application should be notarized as well as a standard registration application form. There is a stamp duty of RUB200 per copy. Agency: Notary Public	1 day	RUB 200 per copy
2	Pay registration fee Payments must be made at Sberbank offices throughout Moscow, or at payment terminals at the Moscow Tax Service Office #46, where business registration is done. Business registration fee of RUR 4,000 must be paid and a payment receipt will be issued through this machine, and must be presented for Procedure 4. It is a process that takes only a few minutes, but it must be done physically, and is not available online. Agency: Bank	1 day	no charge
3	Make a seal in a private company in order to open a bank account The company needs to make a company seal before opening a bank account. The cost of acquiring a company seal at the average market price is RUB 350 Agency: Seal-making service	1 day	RUB 350
4	Register with the unified register at the Federal Tax Service on the local level, to obtain the single number of state registration and the number of tax registration (identification number of taxpayer, INN) Agency: Federal Tax Service	7 days	RUB 4,000
5	Open the company bank account; certify and register the owner's signature Banks require business registration and may require documents related to the founder's history and its financial status. c confirmation letter that contains details about the bank account. The entrepreneur needs this information to inform the Federal Tax Service about the opening of a bank account through the required notification The official webpage of Doing Business group - access: http://www.doingbusiness.org/data/exploreeconomies/moscow/starting-a-business, free. Agency: Bank	3 days	free if done at the bank; RUB 200 (signatures and bank card) + RUR 1000 (notary fees) approximately if done with the notary

The table also reflects the real expenses needed for the opening of OOO “Saint”. With the purpose of identifying certain restrictions and possibilities the legal system may offer. As the tax system in the Russian Federation is quite complex, it should be taken into account, that the amount of information and the quality may be assessed subjectively. The main goal of this part of the analysis is to provide a required amount of data that can be helpful for estimating the possibilities making business in Russia may bring, especially in the current market of language learning services. For this to be done, the tax system analysis will mainly include information for small business, according to the factor of recently entrance to the market of OOO “Saint”. Also information about tax regulation and employee legal system hiring procedures will be explained.

Before having an overview of how the tax regulation system works for companies founded on the Russian Federation, it is be important to analyze the current parameters of already existing companies on the industry of foreign language learning as an analogue of what it is meant reach upon the creation of the business plan. As one of the biggest competitors on the market the company EF “Education First” needs to be revised, as it is stated in the New York Times journal to be considered as a huge player owning subsidiaries on over 52 countries, including Russia http://www.nytimes.com/2013/12/09/business/international/bring-in-people-who-are-better-than-you.html?module=Search&mabReward=relbias%3Ar%2C%5B%22RI%3A7%22%2C%22RI%3A13%22%5D&_r=1.

EF “Education First” provides a variety of services related with the English language-learning sector. Not only it provides English courses, but also the possibility to study at international English schools, as well as face-to-face English training services, online services and a variety of courses for a range of different target consumers. Moreover, the possibility to provide academic and degree programs become one of its main competitive advantages The official webpage of EF Education First company - access: http://www.ef-russia.ru/about-us/our-history/, free. Unfortunately, due to secrecy policies from companies working at the foreign language market sectors, the scope of the project will be narrowed down to information obtained by the company native speakers club “Tiempo” time life and respective assumptions.

3.1 Tax system overview for small businesses in Russia

The legislation of the Russian Federation on taxes and fees consists of the Tax Code is adopted in accordance with federal laws on taxes and duties. This, along with federal taxes by the Tax Code can allow regional and local taxes to be installed. The different mix of taxes and fees established by the Tax Code and other federal laws, taxes to be paid by organizations of all forms of property as well as by individuals, should be considered as a general tax regime Tax Code of the Russian Federation (part one) of 31.07.1998 N 146-FZ (adopted 16.07.1998) (Ed. By 02.11.2004, as amended. From 01.07.2005) (rev. And ext., Acceding in force from 01.01.2005) - "Consultant Plus"..

The right use of the general taxation system envisages the payment of federal, state and local taxes that are listed in the Tax Code of the Russian Federation, including: corporate income tax; unified social tax; the tax on property of enterprises; vehicle tax; land tax; Value-Added Tax (VAT) Andreev MV Current tax legislation in time / Ed. SG Pepelyaeva. M .: Statute, 2006. p. 52..

Some other taxes that are paid by organizations in general tax regime are the following:

· Property tax;

Corporate property tax in accordance to the sec. 30 "Property Tax" of part two of the Tax Code is charged in the Russian Federation, which has all the basic elements of taxation (the object of the tax base, the tax rate), mandatory for the entire territory of Russia. In the case of the native speakers club, the main advantage from the business being on its earliest stage of development as well as taking part of the e-commerce sector, demonstrate the possibility to avoid such payments due to the lack of any property by the moment. Nevertheless, the organization's growth may ensure those payments on a long-term future.

Taxpayers for this tax are considered:

· Russian organizations;

· Foreign organizations operating in the Russian Federation through permanent representations and/or owning real estate in the Russian Federation, on the continental shelf of the Russian Federation and in the exclusive economic zone of the Russian Federation.

The objects of taxation for Russian organizations are mainly movable and immovable property (including property transferred for temporary possession, use, disposal or trust management, contributed to joint activities). Those are recorded on the balance sheet as fixed assets in accordance with the established procedure of accounting.

The tax base is defined as the average annual cost of property recognized as the object of taxation.

The tax rates (up 2.2%) can be differentiated according to the category of taxpayers (including sectorial basis, the status of organizations), by type of property The official webpage of Invest RF company. - access: http://invest-rf.com/doing-business/taxation/, free.

Profits tax

Taxpayers of profit tax are all Russian organizations and some foreign organizations.

The profits tax object of taxation is the profit that the organization has received (Art. 247 of the Tax Code).

The tax base for income tax is the monetary value of the taxable profit (Sec. 1, Art. 274 of the Tax Code).

As a general rule, profit is the difference between revenues and expenditures of the organization (Art. 247 of the Tax Code).

Thus, the tax base is the monetary value is determined as the excess of income received by you on the left out for tax purposes costs. If the income is less than expenses (ie you received a loss), the tax base is equal to zero (para. 1 p. 8 Art. 274 of the Tax Code).

Earnings must be determined on an accrual basis from the beginning of the tax period (calendar year) (n. 7, Art. 274, para. 1, Art. 285 of the Tax Code).

The total tax rate is 20%.

Laws of the subjects of the Russian Federation rate may be reduced for certain categories of taxpayers in terms of the amount of tax to be credited to the budgets of the subjects of the Russian Federation. The size of these rates cannot be lower than 13.5% (para. 4 para. 1, Art. 284 of the Tax Code).

For small business with an annual income less the 60 million rubles, there is a possibility to diminish the standard 20% rate profits tax to whether a 6% of the company's income or 15% of the company's profit (income - expenses). The actual choice for OOO “Saint” is paying 6% of the company's income. This allows it to minimize their tax payments, considering the parameter of maximizing its income and minimizing its expenses The official webpage of Litrus group. - access: http://litirus.ru/ekonomika/nalogovaya-politika-v-sfere-malogo-biznesa.html, free.

Value added tax (VAT)

Taxpayers for the value-added tax are the following (Art. 143 of the Tax Code):

1) The organization;

2) Individual entrepreneurs;

3) Persons transporting commodities through the borderline of the Russian

Federation.

The list of operations, which are related to, the VAT, provided in Art. 146 of the Tax Code.

These operations include:

1) Sales of goods (works, services) and the transfer of property rights in Russia (pp. 1 pt 1 Art. 146 of the Tax Code).

2) Transfer of the Russian Federation of goods (works, services) for their own needs (pp 2 para. 1, Art. 146 of the Tax Code).

3) Construction and installation work for own consumption (pp 3 para. 1, Art. 146 of the Tax Code).

4) The import of goods into the territory of the Russian Federation (pp 4 para. 1, Art. 146 of the Tax Code).

OOO “Saint” is allowed to exclude VAT payments in accordance to its current business model. The possibility to exclude working with goods and mainly focusing on the service sphere helps to minimize those additional payments, although an alternative to VAT may be found as certain commissions by the services provided are retained.

The unified social tax (UST)

UST payers are divided into two groups: those who pay taxes on the payments to individuals, and those who pay tax on their income (para. 1, Art. 235 of the Tax Code).

The first group includes (pp. 1 pt 1 Art. 235 of the Tax Code):

· Organizations;

· Individual entrepreneurs;

· Individuals who are not entrepreneurs.

· The second group includes (pp 2 para. 1, Art. 235 of the Tax Code):

· Individual entrepreneurs;

· Lawyers;

· Notaries, engaged in private practice.

The object of taxation for the UST for each of the two groups of taxpayers UST differs. Moreover, even within the same group it may vary depending on who is paying the tax.

The total amount of the UST tax rate is 26%. All the taxpayers who pay money to individuals and are not eligible for special reduced rates use it. This is indicated by n. 1, Art. 241 of the Tax Code.

At the same time, along with the general tax regime provided for by the legislation of the Russian Federation on taxes and fees, there are special, different from the general tax system tax regimes, the use of which exempts taxpayers from paying a number of federal, state and local taxes and fees.

Special tax regimes that are used in cases and order stipulated by the Tax Code and other legislative acts on taxes and duties assume a special procedure for determining the elements of taxation and exemption from the obligation to pay some taxes and fees.

Some of the special tax regimes are:

· tax system for agricultural producers (unified agricultural tax) (Sec. 26.1 of the Tax Code);

· simplified tax system (Ch. 26.2);

· tax system as a single tax on imputed income for certain activities (Ch. 26.3);

· tax system in the performance of production sharing agreements (Ch. 26.4 of the Tax Code).

As the general tax system provides a complex number of taxation parameters, hopefully, not all of them are applied to OOO “Saint” due to its recent nature and appearance into the market. Nevertheless as the number of employees increases in the future, the complexity of its organizational structure may vary. A result of the information provided, allows summarizing the characteristic of the main taxes in the Russian Federation. As the main taxes are the profits tax, VAT, UST, which imply additional calculations, it is necessary for a company working in this country to assess their main revenue stream in accordance to the payments that must be done to governmental regulative organs to ensure future profitability and growth possibility during its existence on the market.

Another important aspect, besides the restrictions according to the tax system lies on the revision of the Russian employment law (labour code) that includes the rights and needs of an employee working for a Russian company.

3.2 The Labour Code

The labour code in the Russian Federation was originally formed on 30 December 2001 and was designated to replace the old Soviet Code of 1971.

One of the most relevant and basic rules the code holds are stated on the article 9. This article reveals the principles an employee has as it works under a certain agreement on an organization and as its position may get worse, the code will ensure certain protection of its rights.

The code also means to ensure stability of working conditions, equal rights to everyone regardless where they work Lushnikov AM, Lushnikova MV The course of labor law: the textbook: in 2 volumes. Volume 1 - 2nd ed., Rev. and add. - M .: Statute, 2009, p. 353.

It must be taken into account some of the main important chara...