Best Financials Case Analysis – Term Paper

Question 1

Threats and opportunities that existed

Opportunities refer to areas that the business can exploit conveniently at the advantage of its competitors as opportunities while threats refer to the areas that affect the performance of the firm negatively such as competitions, change in consumer buying behaviors, unfriendly pricing, adverse government regulations and change in technology. Opportunities and threats are both factors existing in the external environment of a business and a business has no control over them. However, a business can always make internal adjustments to overcome the threats or gain from the opportunities presented in the external environment.  

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Opportunities that help the firm to grow includes its strategy to diversify the business portfolio such as retirement plans, life insurance, income tax returns preparations, financial planning services and mutual funds, which  helped the investors to earn some payments through interest and dividends. Certified Financial Planners also create a unique framework of an opportunity for the firm to have a competitive edge over its peers. The main threat that shook Best financial Inc. was the departure of a top client, Gerald Young, who left and diverged the investment to Scotia bank. Among other threats that can affect the firm is concentration on blue color workers as the main clients. The business needs to diversify its client base to avoid overreliance on one group of customers.  

b) Strength and weaknesses.

Strengths are features that make the business more competitive than its competitors. The main strength making Best Financial Inc highly competitive is the vast knowledge of the financial advisors who are more qualified and trained; they are Certified Financial Planners like Mary Thompson and Jody St. Pierre. Hiring a new financial advisor is also seen a strategy aimed at attaining its growth potential.

Weaknesses are areas within the industry that needs improvement to enhance future growth of the business. Best has identified a need to revisit its business plan to evaluate areas that needs to be improved on daily operations of the firm. She also has a plan to hire a new financial advisor to their team. Increased market share and product diversity is also key in survival of the company, Best.  Integration of blue and white color works is crucial in market improvement.

Question 3

The pros and cons format helps to identify both advantages and disadvantages of a new strategy. Hiring of a new advisor would could create more work output and work load reduction. A young advisor was favorable as productivity could be considered more than an old one. Marketing costs are expected to rise since the departure of Young. It could lead to clients’ awareness and creating a forum for new customers to come into the business. As part of her expansion plans, she intends to increase marketing cost in 2008 to $.13, 000 following the departure of the top client.

Customer awareness: The firm intends to send mails to its clients to inform them on new changes in the office, including introducing them to the new advisor. The mail costs are estimated to be $.300. New office equipment would be purchased for the new advisor, which will additionally cost Best Financial Inc.


Payback period and return on investment for the mutual funds

650000mutual fund 800000plan

Sales 650000 800000

Trailer 3000 4000

Total sales 653000 804000


 Salaries 37000 37000

 Bonus 15000 30000

Marketing cost 13000 13000

Postage 300 300

Equipment &training 4700 4700

Net profit 583000 719000

Total investment 200000 200000

ROI 2.915 3.595


4.Block of accounts option:

Assessing the option of buying a block of accounts

 A buying block is a scheme that is used to increase the revenue of a company. It may either be full or partial purchase of another financial planner’s client list and investment. The pros and cons of the buying block are stated as follows:


· The Buying block of accounts increases the revenue. Since it will sell more than twice the trailers sales.

· It promotes continuity in a business. Buying a block of account ensures both the purchaser’s and the sellers’ business continues

· It increases the client base of the purchaser, thus could translate to higher revenue.


· It is a risky venture since some of the clients’ accounts may not be profitable and the return on the new clients are not certain.

·  It is an expensive method since the purchaser is not assured retention of the major clients.

· Difficulty to instill trust in the newly acquired clients. Some may withdraw from the investment venture while few may remain.

Impacts of the pros and cons

The buying block strategy leads to an increase in number of client base, which in turn leads to increased revenue base. However, the client’s purchaser is not guaranteed a 100% revenue collection from the client since some of them might look for other business alternatives, leading to loss of revenues

b) Differential analysis: client retention level

Total assets $4,022,000. Assuming 70% on prorate will be $2815400.

Asking price =$49900

Trailer revenue =33266.67


Commission 3800 with 70% retention   and 5100 with 90% retention rate


Thompson associate 35000

Receptionist =30*14.1*50=21150

Postage $435

Marketing expense increases from 13000 to 14100

If Best could retain only 70 per cent of the new clients, the additional paper andpostage expense would decrease to $350 and the additional marketing expenses would be $900

One-time legal fee in the amount of $5,000

90% retention revenue trailer =90%





Total revenue



Less commissions



Employees(reception other)



Marketing cost



Legal fees



Interest on loan



Marketing expense



Net profit






Return on investment = net profit / total investment

70% retention ROI =638.7/49900=1.3%

90% retention ROI=4715/49900=9.5%


Payback period is the time taken for the investment to recoup its initial investment amount.

Assuming he purchases the project the time take will be: assuming 100% return

Project retention 70% = 49990/637.8 =78.4yrs

Project 90% =49990/4715=10.6yrs

5. Recommendation

 The best option is the 90% retention level since it has the highest return on investment and a relatively shorter payback period than the 70% retention level