Start-up | |
Requirements | |
Start-up Expenses | |
Legal | P1,400 |
Stationery etc. | P2,000 |
Brochures | P5,000 |
Consultants | P4,500 |
Staff Engagement | P4,000 |
Office Locatioin | P2,600 |
Staff Training | P5,000 |
Expensed equipment | P171,349 |
Other | P11,900 |
Total Start-up Expenses | P207,749 |
Start-up Assets | |
Cash Required | P492,251 |
Start-up Inventory | P0 |
Other Current Assets | P0 |
Long-term Assets | P0 |
Total Assets | P492,251 |
Total Requirements | P700,000 |
I Tech Solutions will provide computer products and services to small, medium, and large businesses. We will also be focused on providing network systems and services to businesses. The systems include both PC-based Land Area Networks (LAN) systems and minicomputer server-based systems. Our services include design and installation of network systems, training, and support.
I Tech Solutions intends to provide the following services:
I Tech Solutions will strive to maintain the latest hardware and software capabilities so as to ensure we are continuously at the forefront in our market arena. The one certainty in our industry is that technology will continue to evolve and develop, changing what we market, as well as how we market it. Our aim is to be aware of the implications of this new technology, and utilize it in our existing framework where possible. Complete presentation facilities for preparation and delivery of multimedia presentations on Macintosh or Windows machines, in formats that include on-disk presentation or video presentation are also possibilities.
Our macro-environment is exciting. We are in the middle of an unprecedented boom in connectivity and communications, as the Internet offers information technology like we never dreamed of. We are concerned with real value, real changes in the way we deal with information.
Meanwhile, all other signs are positive. The current drive by the government towards a more diversified economy presents an opportunity for our business to propel and excel in our intended markets, benefiting from the support of the concerned institutions and trade bodies. In addition to Botswana becoming an increasing economic hub, we foresee the demand for high quality business communication solutions to be on the rise. Through the undertaking of our business activities, we foresee no difficulty, in gaining market acceptance, provided we deliver the final service timeously, of good quality, and at competitive rates.
We must remain on top of any new technology, because this is our bread and butter. For networking, we need to provide better knowledge of cross platform technologies. Also, we will be under pressure to improve our understanding of direct-connect Internet and related communications.
In putting the company together, we have attempted to offer enough services to allow us to always be in demand by our clients. However, technological developments have provided us with a new era of opportunities for the various organizations in which we can only guess at the needs. For example, current rapid innovations/development of Wireless Application Protocol (WAP) technology presents an opportunity to be realized, particularly focusing on WAP-enabled cell phones that allow individuals to access or send email messages on a cell phone. However, the most important factor in developing future services will be market need. Our understanding of the needs of our target market segments will be one of our competitive advantages.
The current drive and emphasis by the government on diversification of the industrial base away from the minerals sector presents an opportunity for I Tech Solutions to make a valuable contribution towards achieving this goal. This will result in the implementation of modern Information Technology (IT) services and techniques, transfer of knowledge, and availability of quality brands.
We will be focusing on proactive, market seeking organizations that want to ensure an efficient and effective IT system that will assist in the realization of their business objectives.
Our target companies are large enough to require the high-quality IT management we offer, but too small to have a separate computer management staff. However, our most important group of potential customers will be business executives in large, medium, and small corporations. These are marketing managers, general managers, sales managers, and other decision makers who often need to access company data and information in their various business decisions. They will not waste their time or money looking for bargain information, questionable expertise, or cheap computers and accessories. Our potential clients will include: (discussion omitted).
Another intention will be to offer an attractive development alternative to the company that is management constrained and unable to address opportunities in new markets and new market segments, due to technological shortfalls.
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
SOHO Executives | 3% | 100 | 103 | 106 | 109 | 112 | 2.87% |
Government Institutions | 12% | 800 | 896 | 1,004 | 1,124 | 1,259 | 12.00% |
Financial Institutions | 17% | 50 | 59 | 69 | 81 | 95 | 17.41% |
Corporations | 22% | 3,000 | 3,660 | 4,465 | 5,447 | 6,645 | 22.00% |
Professional Firms | 3% | 400 | 412 | 424 | 437 | 450 | 2.99% |
Other | 4% | 200 | 208 | 216 | 225 | 234 | 4.00% |
Total | 17.91% | 4,550 | 5,338 | 6,284 | 7,423 | 8,795 | 17.91% |
Our marketing strategy will be based mainly on making the right service(s) available to the right target customer. We will ensure that our products and services’ prices take customers’ budgets into consideration, and that these people appreciate the product/service and know that it exists, including where to find it. One of our intentions will be to target those innovative or proactive companies contemplating transferring a part of their marketing activities on the Internet, in order to benefit from the advantages offered by this unique system of communication. We realize the need to focus our marketing message and our service offerings.
Since our target market is the product and service seeker, the most important market needs are support, service, training, and installation, in that order. One of the key points of our strategy will be the focus on target segments that know and understand these needs and are willing to pay to have them filled. We realize that all personal computer users need support and service. Many of our target customers are going to be those who cannot get good products or services from the major vendors who focus on high volume orders only.
The most obvious trend in the market is the increasing number of IT firms on the market. This has been true for years, but the trend seems to be accelerating. We see the major brand-name manufacturers being established on the market mainly through agents. Secondly, the computer has become a basic necessity in the office environment and business set-up. The vast improvements in computer power and storage, means that owners are mandated to up-grade or buy new and improved systems, with the former often being much cheaper. A third trend is ever-greater connectivity. Everybody wants to be on the Internet, and every office is looking at having a LAN. However, the major stumbling block for the majority of theses companies is the high cost of installing such networks.
The following sections provided discussions on who participates in the computer industry, what the competition provides, and what the customer has been purchasing.
We are part of the computer reselling business, which includes several kinds of businesses:
The vast majority of proactive, market-oriented businesses understand the value of having an efficient computer system, as well as the concept of service and support. They are much more likely to pay for them when the offering and benefits are clearly stated.
There is no doubt that we will compete more against the box pushers than other service providers. We need to effectively compete against the idea that once a computer is out-dated businesses should buy new ones, when with ongoing service and support, they can be upgraded.
The most important element of general competition, by far, is what it takes to keep clients for repeat business. It is worth making huge concessions in any single service to maintain a client relationship that brings the client back for future services.
I Tech Solutions intends to win and maintain customers by providing products and services that add value, safety, and are supported by a well-trained professional team with commercial expertise. This is important to the successful implementation of our overall strategy and the need to ensure that all divisions and functions in the organization are working harmoniously towards attainment of the goals and objectives.
Our marketing strategy emphasizes focus. The target customers will include key decision-makers in business, who often order or recommend on behalf of the whole organization, the aim being to obtain an initial order and fully satisfy the customer from then on.
We intend to achieve growth by creating a more enthusiastic customer culture than that of our competitors. The strategy is to grow the business by nurturing customers, differentiating the product/service offering through service and staff behavior.
Through the implementation of a fair, effective, and competitive remuneration policy we intend to optimize our human resource output and advancement. We need the right people in the right place at the right time if we are to ensure optimum growth. We intend to develop our team so that our people can grow as the company grows–a mutually beneficial relationship.
The SWOT Analysis is a necessity to any start-up, it is an in-depth look at your Strengths, Weaknesses, Opportunities, and Threats. We are in a highly lucrative market in a growing economy. We foresee our strengths as the ability to respond to the market and to provide custom designed technological services. Our key personnel will have a wide and thorough knowledge of the technological services we intend to provide, which will go a long way towards penetrating the market. Below is a summary of the SWOT Analysis.
5.3 marketing strategy.
One core element of our marketing strategy will be that of differentiation from our competitors. In terms of promotion, we intend to sell our company as a strategic ally, not just our products. We intend to offer extremely reasonable prices in comparison to competition, and we need to be able to sustain that. Market penetration through lower prices shall be undertaken where need be, while premium pricing in the case of the upper-end of the market.
We have developed two strategy foci, each based on one main fundamental strategy. The first strategy is about ( discussion omitted ).
Our second strategic focus, that of ( discussion omitted ).
Service provision and consulting will be sold and purchased mainly on a word-of-mouth basis, with relationships and previous experience being, by far, the most important factor. In this regard we intend to provide a service that exceeds customer expectations so as to ensure they refer us to potential clients through word-of-mouth. New business shall be developed through industry associations, business associations, and, in some cases, social associations, such as country clubs.
Advertising
In view of the fact that we are new on the market, we intend to undertake extensive advertising of our name and products and services we offer. This is to instill awareness and knowledge of our existence in the marketplace, which shall convert into market share. We intend to advertise in business and IT magazines that are read by our target market and will ensure we are adequately exposed on the market. A constant lookout will be made of any special editions in these various publications, which may provide an opportunity for us to advertise our services and ourselves. Advertising will also be conducted through television, radio, newspapers/magazines, and the Internet. Sponsoring a technology discussion/call-in talk show is a possibility.
Personal Selling
Word of mouth is critical in this segment. We will have to make sure that once we gain a customer, we never lose him/her. To help accomplish this, we must work to establish and maintain relationships. Personal selling will be a powerful form of promotion due to the fact that its flexibility will enable us to match the customer’s needs to specific attributes of our services, as well as giving concise details of what we are able to offer.
Public Relations
Recognizing that we are relatively new on the market, there will be a need to organize an event introducing ourselves onto the market. To this we will invite potential customers, senior officials, possibly including a government minister and other stakeholders, so as to penetrate the market. In collaboration with this we, also intend to place news stories and features in magazines and newspapers to keep stakeholders updated on the latest developments and to increase awareness.
The number of IT companies on the market dictates that the organization needs to promote itself through participation in trade shows and expositions. Not only will these increase awareness of our products and services, but if a particular product or service were to gain recognition, for example through being chosen No. 1 in innovativeness, the organization will be able to take advantage of this in all its promotional campaigns, adding leverage to its reputation and corporate image. An example of a trade show we intend to participate at is BITEC. These expositions will also be a good opportunity for us to network with various organizations and individuals.
Internet Marketing
The company will sell its services over the Internet as it is cost effective to reach a large number of potential clients, regionally and internationally. We also realize that customer/client research is needed before building an effective website, something which is rarely done by existing companies, in order to find out how customers will want to access information and journey through the site.
I Tech Solutions will position itself as a reliable solutions provider and trusted strategic ally who makes sure systems work, people are comfortable and conversant with the system, and down time is minimal. Unlike the other vendors/retail stores, we intend to know the customer and go to his or her site when needed, offering proactive support, service, training, and installation. In addition, I Tech Solutions is an ally to our clients’ businesses, and offers them a full range of services, from installation to support.
We must charge appropriately for the high-end, high-quality service and support we offer. Our revenue structure has to match our cost structure, so the salaries we pay to assure good service and support must be balanced by the revenue we charge. Therefore, we must make sure that we deliver and charge for service and support. Training, service, installation, and networking support–all of this must be readily available and priced to sell and deliver revenue. We will charge ( discussion omitted ). This will ensure we penetrate the market upon entry.
Our promotion strategy will be based primarily on informing potential customers of our existence and making the right information available to our target customer. I Tech Solutions intends to utilize an aggressive promotional campaign to introduce its products and services to the market. The intention will be to take advantage of several media sources in announcing the products and services and in the process enforcing awareness of our existence.
I Tech Solutions will receive its revenue streams from a combination of licensing agreements, sales commissions, monthly subscriptions, registration fees, network access charges, service fees, transaction charges, training, promotional incentive programs, and sales of hardware and software. The derived value of I Tech Solutions will come from the key partnerships established and developed in order to deliver a product and service provision of transactionally-based activities, providing opportunity to build brand and loyalty, around which relationship marketing will play a key role.
The sales forecast monthly summary is included in the appendix. The annual sales projections are provided in a table below. It should be noted that as we become established and known on the market we project sales to increase at a faster rate than the initial year.
Note : All currency values in the charts and tables are expressed in the Botswana Pula (P).
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
Products/Services | P1,422,225 | P2,528,400 | P3,034,080 |
Other | P0 | P0 | P0 |
Total Sales | P1,422,225 | P2,528,400 | P3,034,080 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
Products/Services | P711,114 | P1,264,200 | P1,517,040 |
Other | P0 | P0 | P0 |
Subtotal Direct Cost of Sales | P711,114 | P1,264,200 | P1,517,040 |
I Tech Solutions intends to go into strategic alliances with several organizations. This will also reassure our customers that they are investing in “winning” products, technology, and service that are maintainable, flexible, and scalable enough to meet future demands.
At this writing, strategic alliances with several companies are possibilities, including X, given the content of existing interest and discussions. By going into strategic partnerships with suitable organizations, we will benefit from being able to concentrate on our core activities in the delivery of our products and services to the end-user, while ensuring that we do not have to compromise on quality of execution or the number of products and services we are able to deliver.
The human resources element shall be an essential component in the delivery of the total service. By having enthusiastic, capable, and empowered people interacting with our clients, we intend to build the competitive advantage of being able to comprehensively meet our clients’ needs. We also intend to give our teams enough leverage in decision-making to ensure that clients are handled promptly and to reduce lead-time in actual delivery of the service. It will be necessary to evaluate jobs and remuneration packages against market benchmarks to employees for their tasks to ensure they are competitive.
Our management philosophy is based on responsibility and mutual respect. We recognize the need to be constantly changing so as to adapt to the prevailing environment. We will have a flexible structure allowing for the above to be undertaken swiftly and smoothly. Please find below the job titles and descriptions we intend to have in place for the key personnel. ( table omitted )
In a highly volatile industry with increasing competition, we recognize the need to be constantly changing to adapt to the prevailing environment. The management team extensive expertise and a broad knowledge of the products/services and markets, which, if well planned, will enable the business to realize its goals and objectives.
( profiles omitted )
The management style will reflect the participation of the shareholders. The company will respect its community and treat all employees well. We will develop and nurture the company as a community. We will not be hierarchical, especially considering the rate of change in our industry, which makes it mandatory for us to be highly flexible. Management’s ongoing initiatives to drive sales, market share and productivity will provide additional impetus.
The detailed monthly personnel plan for the first three years is included in the appendix. The annual personnel estimates are included here. We believe this plan is a fair compromise between fairness and expedience, and meets the commitments of our mission statement. We want the company to stay lean and flexible so that we can respond to our markets’ needs quickly. As we expand and increase in size we do expect to increase our personnel.
We will compensate our personnel well, so as to retain their invaluable expertise and ensure job satisfaction and enrichment through delegation of authority. Our compensation will include health care, generous profit sharing, and a minimum of 3 weeks vacation.
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Directors | P135,000 | P180,000 | P216,000 |
Personal Assistant | P10,800 | P13,200 | P14,520 |
Cleaner | P3,600 | P6,000 | P7,200 |
Total People | 5 | 5 | 5 |
Total Payroll | P149,400 | P199,200 | P237,720 |
In-house training shall be continuous with regular external training being undertaken, particularly following any new developments in the market. This is to ensure that we are continuously able to anticipate our markets needs–a proactive approach, which is so essential if we are to gain and maintain a competitive advantage. External training will also be conducted to ensure we are aware of the latest products and technology. This will also ensure that our personnel are able to set high standards, or benchmark, using these organizations standards.
(a) We will encourage our employees to put forward any suggestions they might have regarding the improvement of any of the company’s functions–an open door philosophy. Such a culture will enhance innovativeness and creativity in turn leading to job satisfaction and enrichment.
(b) We undertake to continuously formalize and measure cross-functional working communication so as to ensure that the various departments work harmoniously towards attainment of corporate objectives
(c) Important notices and developments will be continuously communicated to employees so as to keep them abreast of developments and promoting a sense of belonging and oneness in the organization.
We want to finance growth mainly through cash flow and equity. We recognize that this means we will have to grow more slowly than we might like. The most important factor in our case is collection days. We can’t push our clients hard on collection days, because they are in larger companies and will normally have marketing authority, not financial authority. Therefore we need to develop a permanent system of receivables financing, using one of the established accounting systems. In turn we intend to ensure that our investors are compatible with our growth plan, management style, and vision. Compatibility in this regard means:
Of these, only the last 2 are flexible.
The following table and chart summarizes our Break-even Analysis. We don’t really expect to reach break-even until several months into the business operation, as illustrated in the financials.
Break-even Analysis | |
Monthly Revenue Break-even | P47,662 |
Assumptions: | |
Average Percent Variable Cost | 50% |
Estimated Monthly Fixed Cost | P23,831 |
The financial plan depends on important assumptions. From the beginning, we recognize that collection days are critical, but not a factor we can influence easily. Interest rates, tax rates, and personnel burden are based on conservative assumptions.
Some of the more important underlying assumptions are:
Others include 30-day average collection days, sales entirely on invoice basis, including a favorable deposit policy, expenses mainly on a net 30-day basis, 30 days on average for payment of invoices, and present-day interest rates.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 17.00% | 17.00% | 17.00% |
Long-term Interest Rate | 17.00% | 17.00% | 17.00% |
Tax Rate | 25.42% | 25.00% | 25.42% |
Other | 0 | 0 | 0 |
We foresee major growth in sales and operating expenses, and a bump in our collection days as we spread the business during expansion.
Collection days are very important. We do not want to let our average collection days get above 30 under any circumstances. This could cause a serious problem with cash flow, because our working capital situation is chronically tight. However, we recognize that we cannot control this factor easily, because of the relationship with our clients.
Initial marketing and training expenses will be relatively high as we seek to become known on the market and staff get trained in provision of our services. This will be brought about by the development of sales literature, advertising expenses, and function expenses. As our market share increases and capital is generated, further marketing programs and the expansion of those in existence at the time will be undertaken, to ensure market development. However, with time, these programs will start generating revenue for the business, which we shall reinvest.
Our projected Profit and Loss is shown in the appendix, with sales increasing steadily from the first year through the second, and into the third year. We do expect to more than break-even in the first year of operation. Our cost of sales should be much lower, and gross margin higher, than in this projection.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | P1,422,225 | P2,528,400 | P3,034,080 |
Direct Cost of Sales | P711,114 | P1,264,200 | P1,517,040 |
Other | P0 | P0 | P0 |
Total Cost of Sales | P711,114 | P1,264,200 | P1,517,040 |
Gross Margin | P711,111 | P1,264,200 | P1,517,040 |
Gross Margin % | 50.00% | 50.00% | 50.00% |
Expenses | |||
Payroll | P149,400 | P199,200 | P237,720 |
Sales and Marketing and Other Expenses | P95,772 | P154,140 | P182,196 |
Depreciation | P0 | P0 | P0 |
Utilities | P3,600 | P3,960 | P4,356 |
Telephone | P6,000 | P6,600 | P7,260 |
Insurance | P14,400 | P15,840 | P17,424 |
Rent | P16,800 | P18,480 | P20,328 |
Insurance | P0 | P0 | P0 |
Payroll Taxes | P0 | P0 | P0 |
Other | P0 | P0 | P0 |
Total Operating Expenses | P285,972 | P398,220 | P469,284 |
Profit Before Interest and Taxes | P425,139 | P865,980 | P1,047,756 |
EBITDA | P425,139 | P865,980 | P1,047,756 |
Interest Expense | P92,497 | P75,684 | P58,140 |
Taxes Incurred | P82,612 | P197,574 | P251,527 |
Net Profit | P250,030 | P592,722 | P738,089 |
Net Profit/Sales | 17.58% | 23.44% | 24.33% |
The chart and table below present the cash flow projections for I Tech Solutions.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | P426,668 | P758,520 | P910,224 |
Cash from Receivables | P763,507 | P1,589,396 | P2,041,349 |
Subtotal Cash from Operations | P1,190,174 | P2,347,916 | P2,951,573 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | P0 | P0 | P0 |
New Current Borrowing | P0 | P0 | P0 |
New Other Liabilities (interest-free) | P0 | P0 | P0 |
New Long-term Liabilities | P0 | P0 | P0 |
Sales of Other Current Assets | P0 | P0 | P0 |
Sales of Long-term Assets | P0 | P0 | P0 |
New Investment Received | P0 | P0 | P0 |
Subtotal Cash Received | P1,190,174 | P2,347,916 | P2,951,573 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | P149,400 | P199,200 | P237,720 |
Bill Payments | P1,002,379 | P1,773,057 | P2,068,003 |
Subtotal Spent on Operations | P1,151,779 | P1,972,257 | P2,305,723 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | P0 | P0 | P0 |
Principal Repayment of Current Borrowing | P0 | P0 | P0 |
Other Liabilities Principal Repayment | P0 | P0 | P0 |
Long-term Liabilities Principal Repayment | P103,200 | P103,200 | P103,200 |
Purchase Other Current Assets | P141,200 | P0 | P0 |
Purchase Long-term Assets | P240,000 | P0 | P0 |
Dividends | P0 | P0 | P0 |
Subtotal Cash Spent | P1,636,179 | P2,075,457 | P2,408,923 |
Net Cash Flow | (P446,005) | P272,459 | P542,650 |
Cash Balance | P46,246 | P318,705 | P861,356 |
The balance sheet shows healthy growth of net worth, and strong financial position. The three-year estimates are included in the appendix.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | P46,246 | P318,705 | P861,356 |
Accounts Receivable | P232,051 | P412,535 | P495,042 |
Inventory | P92,708 | P164,814 | P197,777 |
Other Current Assets | P141,200 | P141,200 | P141,200 |
Total Current Assets | P512,205 | P1,037,254 | P1,695,374 |
Long-term Assets | |||
Long-term Assets | P240,000 | P240,000 | P240,000 |
Accumulated Depreciation | P0 | P0 | P0 |
Total Long-term Assets | P240,000 | P240,000 | P240,000 |
Total Assets | P752,205 | P1,277,254 | P1,935,374 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | P113,124 | P148,651 | P171,882 |
Current Borrowing | P0 | P0 | P0 |
Other Current Liabilities | P0 | P0 | P0 |
Subtotal Current Liabilities | P113,124 | P148,651 | P171,882 |
Long-term Liabilities | P496,800 | P393,600 | P290,400 |
Total Liabilities | P609,924 | P542,251 | P462,282 |
Paid-in Capital | P100,000 | P100,000 | P100,000 |
Retained Earnings | (P207,749) | P42,281 | P635,003 |
Earnings | P250,030 | P592,722 | P738,089 |
Total Capital | P142,281 | P735,003 | P1,473,092 |
Total Liabilities and Capital | P752,205 | P1,277,254 | P1,935,374 |
Net Worth | P142,281 | P735,003 | P1,473,092 |
The following table shows important ratios from the computer related services industry, as determined by the Standard Industry Classification (SIC) Index #7379, Computer Related Services.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 77.78% | 20.00% | 7.20% |
Percent of Total Assets | ||||
Accounts Receivable | 30.85% | 32.30% | 25.58% | 21.70% |
Inventory | 12.32% | 12.90% | 10.22% | 3.50% |
Other Current Assets | 18.77% | 11.05% | 7.30% | 46.70% |
Total Current Assets | 68.09% | 81.21% | 87.60% | 71.90% |
Long-term Assets | 31.91% | 18.79% | 12.40% | 28.10% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 15.04% | 11.64% | 8.88% | 51.40% |
Long-term Liabilities | 66.05% | 30.82% | 15.00% | 19.10% |
Total Liabilities | 81.08% | 42.45% | 23.89% | 70.50% |
Net Worth | 18.92% | 57.55% | 76.11% | 29.50% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 50.00% | 50.00% | 50.00% | 0.00% |
Selling, General & Administrative Expenses | 32.96% | 27.34% | 26.62% | 80.70% |
Advertising Expenses | 0.97% | 0.42% | 0.38% | 1.20% |
Profit Before Interest and Taxes | 29.89% | 34.25% | 34.53% | 1.70% |
Main Ratios | ||||
Current | 4.53 | 6.98 | 9.86 | 1.27 |
Quick | 3.71 | 5.87 | 8.71 | 1.01 |
Total Debt to Total Assets | 81.08% | 42.45% | 23.89% | 70.50% |
Pre-tax Return on Net Worth | 233.79% | 107.52% | 67.18% | 3.50% |
Pre-tax Return on Assets | 44.22% | 61.87% | 51.13% | 11.80% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 17.58% | 23.44% | 24.33% | n.a |
Return on Equity | 175.73% | 80.64% | 50.10% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 4.29 | 4.29 | 4.29 | n.a |
Collection Days | 56 | 66 | 78 | n.a |
Inventory Turnover | 10.91 | 9.82 | 8.37 | n.a |
Accounts Payable Turnover | 9.86 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 26 | 28 | n.a |
Total Asset Turnover | 1.89 | 1.98 | 1.57 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 4.29 | 0.74 | 0.31 | n.a |
Current Liab. to Liab. | 0.19 | 0.27 | 0.37 | n.a |
Liquidity Ratios | ||||
Net Working Capital | P399,081 | P888,603 | P1,523,492 | n.a |
Interest Coverage | 4.60 | 11.44 | 18.02 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.53 | 0.51 | 0.64 | n.a |
Current Debt/Total Assets | 15% | 12% | 9% | n.a |
Acid Test | 1.66 | 3.09 | 5.83 | n.a |
Sales/Net Worth | 10.00 | 3.44 | 2.06 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | |||||||||||||
Products/Services | 0% | P31,605 | P31,605 | P31,605 | P105,350 | P105,350 | P105,350 | P168,560 | P168,560 | P168,560 | P168,560 | P168,560 | P168,560 |
Other | 0% | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 |
Total Sales | P31,605 | P31,605 | P31,605 | P105,350 | P105,350 | P105,350 | P168,560 | P168,560 | P168,560 | P168,560 | P168,560 | P168,560 | |
Direct Cost of Sales | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Products/Services | P15,803 | P15,803 | P15,803 | P52,675 | P52,675 | P52,675 | P84,280 | P84,280 | P84,280 | P84,280 | P84,280 | P84,280 | |
Other | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Subtotal Direct Cost of Sales | P15,803 | P15,803 | P15,803 | P52,675 | P52,675 | P52,675 | P84,280 | P84,280 | P84,280 | P84,280 | P84,280 | P84,280 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Directors | 0% | P7,500 | P7,500 | P7,500 | P7,500 | P7,500 | P7,500 | P15,000 | P15,000 | P15,000 | P15,000 | P15,000 | P15,000 |
Personal Assistant | 0% | P900 | P900 | P900 | P900 | P900 | P900 | P900 | P900 | P900 | P900 | P900 | P900 |
Cleaner | 0% | P300 | P300 | P300 | P300 | P300 | P300 | P300 | P300 | P300 | P300 | P300 | P300 |
Total People | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | |
Total Payroll | P8,700 | P8,700 | P8,700 | P8,700 | P8,700 | P8,700 | P16,200 | P16,200 | P16,200 | P16,200 | P16,200 | P16,200 |
General Assumptions | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Current Interest Rate | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | |
Long-term Interest Rate | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | 17.00% | |
Tax Rate | 30.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | |
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | P31,605 | P31,605 | P31,605 | P105,350 | P105,350 | P105,350 | P168,560 | P168,560 | P168,560 | P168,560 | P168,560 | P168,560 | |
Direct Cost of Sales | P15,803 | P15,803 | P15,803 | P52,675 | P52,675 | P52,675 | P84,280 | P84,280 | P84,280 | P84,280 | P84,280 | P84,280 | |
Other | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Total Cost of Sales | P15,803 | P15,803 | P15,803 | P52,675 | P52,675 | P52,675 | P84,280 | P84,280 | P84,280 | P84,280 | P84,280 | P84,280 | |
Gross Margin | P15,802 | P15,802 | P15,802 | P52,675 | P52,675 | P52,675 | P84,280 | P84,280 | P84,280 | P84,280 | P84,280 | P84,280 | |
Gross Margin % | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | |
Expenses | |||||||||||||
Payroll | P8,700 | P8,700 | P8,700 | P8,700 | P8,700 | P8,700 | P16,200 | P16,200 | P16,200 | P16,200 | P16,200 | P16,200 | |
Sales and Marketing and Other Expenses | P6,300 | P2,100 | P2,100 | P7,368 | P7,368 | P7,368 | P10,528 | P10,528 | P10,528 | P10,528 | P10,528 | P10,528 | |
Depreciation | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Utilities | P300 | P300 | P300 | P300 | P300 | P300 | P300 | P300 | P300 | P300 | P300 | P300 | |
Telephone | P500 | P500 | P500 | P500 | P500 | P500 | P500 | P500 | P500 | P500 | P500 | P500 | |
Insurance | P1,200 | P1,200 | P1,200 | P1,200 | P1,200 | P1,200 | P1,200 | P1,200 | P1,200 | P1,200 | P1,200 | P1,200 | |
Rent | P1,400 | P1,400 | P1,400 | P1,400 | P1,400 | P1,400 | P1,400 | P1,400 | P1,400 | P1,400 | P1,400 | P1,400 | |
Insurance | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Payroll Taxes | 0% | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 |
Other | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Total Operating Expenses | P18,400 | P14,200 | P14,200 | P19,468 | P19,468 | P19,468 | P30,128 | P30,128 | P30,128 | P30,128 | P30,128 | P30,128 | |
Profit Before Interest and Taxes | (P2,598) | P1,602 | P1,602 | P33,207 | P33,207 | P33,207 | P54,152 | P54,152 | P54,152 | P54,152 | P54,152 | P54,152 | |
EBITDA | (P2,598) | P1,602 | P1,602 | P33,207 | P33,207 | P33,207 | P54,152 | P54,152 | P54,152 | P54,152 | P54,152 | P54,152 | |
Interest Expense | P8,378 | P8,256 | P8,135 | P8,013 | P7,891 | P7,769 | P7,647 | P7,525 | P7,404 | P7,282 | P7,160 | P7,038 | |
Taxes Incurred | (P3,293) | (P1,664) | (P1,633) | P6,299 | P6,329 | P6,360 | P11,626 | P11,657 | P11,687 | P11,718 | P11,748 | P11,779 | |
Net Profit | (P7,683) | (P4,991) | (P4,899) | P18,896 | P18,987 | P19,079 | P34,879 | P34,970 | P35,061 | P35,153 | P35,244 | P35,336 | |
Net Profit/Sales | -24.31% | -15.79% | -15.50% | 17.94% | 18.02% | 18.11% | 20.69% | 20.75% | 20.80% | 20.85% | 20.91% | 20.96% |
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | P9,482 | P9,482 | P9,482 | P31,605 | P31,605 | P31,605 | P50,568 | P50,568 | P50,568 | P50,568 | P50,568 | P50,568 | |
Cash from Receivables | P0 | P737 | P22,124 | P22,124 | P23,844 | P73,745 | P73,745 | P75,220 | P117,992 | P117,992 | P117,992 | P117,992 | |
Subtotal Cash from Operations | P9,482 | P10,219 | P31,605 | P53,729 | P55,449 | P105,350 | P124,313 | P125,788 | P168,560 | P168,560 | P168,560 | P168,560 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 0.00% | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 |
New Current Borrowing | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
New Other Liabilities (interest-free) | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
New Long-term Liabilities | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Sales of Other Current Assets | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Sales of Long-term Assets | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
New Investment Received | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Subtotal Cash Received | P9,482 | P10,219 | P31,605 | P53,729 | P55,449 | P105,350 | P124,313 | P125,788 | P168,560 | P168,560 | P168,560 | P168,560 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | P8,700 | P8,700 | P8,700 | P8,700 | P8,700 | P8,700 | P16,200 | P16,200 | P16,200 | P16,200 | P16,200 | P16,200 | |
Bill Payments | P1,599 | P47,302 | P27,893 | P30,821 | P116,958 | P77,660 | P80,061 | P151,085 | P117,387 | P117,296 | P117,204 | P117,113 | |
Subtotal Spent on Operations | P10,299 | P56,002 | P36,593 | P39,521 | P125,658 | P86,360 | P96,261 | P167,285 | P133,587 | P133,496 | P133,404 | P133,313 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Principal Repayment of Current Borrowing | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Other Liabilities Principal Repayment | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Long-term Liabilities Principal Repayment | P8,600 | P8,600 | P8,600 | P8,600 | P8,600 | P8,600 | P8,600 | P8,600 | P8,600 | P8,600 | P8,600 | P8,600 | |
Purchase Other Current Assets | P0 | P0 | P141,200 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Purchase Long-term Assets | P20,000 | P20,000 | P20,000 | P20,000 | P20,000 | P20,000 | P20,000 | P20,000 | P20,000 | P20,000 | P20,000 | P20,000 | |
Dividends | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | |
Subtotal Cash Spent | P38,899 | P84,602 | P206,393 | P68,121 | P154,258 | P114,960 | P124,861 | P195,885 | P162,187 | P162,096 | P162,004 | P161,913 | |
Net Cash Flow | (P29,418) | (P74,383) | (P174,788) | (P14,393) | (P98,809) | (P9,610) | (P548) | (P70,097) | P6,373 | P6,464 | P6,556 | P6,647 | |
Cash Balance | P462,833 | P388,450 | P213,662 | P199,269 | P100,460 | P90,850 | P90,303 | P20,206 | P26,579 | P33,043 | P39,599 | P46,246 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | P492,251 | P462,833 | P388,450 | P213,662 | P199,269 | P100,460 | P90,850 | P90,303 | P20,206 | P26,579 | P33,043 | P39,599 | P46,246 |
Accounts Receivable | P0 | P22,124 | P43,510 | P43,510 | P95,131 | P145,032 | P145,032 | P189,279 | P232,051 | P232,051 | P232,051 | P232,051 | P232,051 |
Inventory | P0 | P17,383 | P17,383 | P17,383 | P57,943 | P57,943 | P57,943 | P92,708 | P92,708 | P92,708 | P92,708 | P92,708 | P92,708 |
Other Current Assets | P0 | P0 | P0 | P141,200 | P141,200 | P141,200 | P141,200 | P141,200 | P141,200 | P141,200 | P141,200 | P141,200 | P141,200 |
Total Current Assets | P492,251 | P502,340 | P449,343 | P415,755 | P493,543 | P444,635 | P435,025 | P513,490 | P486,165 | P492,538 | P499,002 | P505,558 | P512,205 |
Long-term Assets | |||||||||||||
Long-term Assets | P0 | P20,000 | P40,000 | P60,000 | P80,000 | P100,000 | P120,000 | P140,000 | P160,000 | P180,000 | P200,000 | P220,000 | P240,000 |
Accumulated Depreciation | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 |
Total Long-term Assets | P0 | P20,000 | P40,000 | P60,000 | P80,000 | P100,000 | P120,000 | P140,000 | P160,000 | P180,000 | P200,000 | P220,000 | P240,000 |
Total Assets | P492,251 | P522,340 | P489,343 | P475,755 | P573,543 | P544,635 | P555,025 | P653,490 | P646,165 | P672,538 | P699,002 | P725,558 | P752,205 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | P0 | P46,373 | P26,966 | P26,878 | P114,370 | P75,074 | P74,986 | P147,172 | P113,477 | P113,389 | P113,300 | P113,212 | P113,124 |
Current Borrowing | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 |
Other Current Liabilities | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 | P0 |
Subtotal Current Liabilities | P0 | P46,373 | P26,966 | P26,878 | P114,370 | P75,074 | P74,986 | P147,172 | P113,477 | P113,389 | P113,300 | P113,212 | P113,124 |
Long-term Liabilities | P600,000 | P591,400 | P582,800 | P574,200 | P565,600 | P557,000 | P548,400 | P539,800 | P531,200 | P522,600 | P514,000 | P505,400 | P496,800 |
Total Liabilities | P600,000 | P637,773 | P609,766 | P601,078 | P679,970 | P632,074 | P623,386 | P686,972 | P644,677 | P635,989 | P627,300 | P618,612 | P609,924 |
Paid-in Capital | P100,000 | P100,000 | P100,000 | P100,000 | P100,000 | P100,000 | P100,000 | P100,000 | P100,000 | P100,000 | P100,000 | P100,000 | P100,000 |
Retained Earnings | (P207,749) | (P207,749) | (P207,749) | (P207,749) | (P207,749) | (P207,749) | (P207,749) | (P207,749) | (P207,749) | (P207,749) | (P207,749) | (P207,749) | (P207,749) |
Earnings | P0 | (P7,683) | (P12,674) | (P17,573) | P1,322 | P20,309 | P39,388 | P74,267 | P109,237 | P144,298 | P179,451 | P214,695 | P250,030 |
Total Capital | (P107,749) | (P115,432) | (P120,423) | (P125,322) | (P106,427) | (P87,440) | (P68,361) | (P33,482) | P1,488 | P36,549 | P71,702 | P106,946 | P142,281 |
Total Liabilities and Capital | P492,251 | P522,340 | P489,343 | P475,755 | P573,543 | P544,635 | P555,025 | P653,490 | P646,165 | P672,538 | P699,002 | P725,558 | P752,205 |
Net Worth | (P107,749) | (P115,432) | (P120,423) | (P125,322) | (P106,427) | (P87,440) | (P68,361) | (P33,482) | P1,488 | P36,549 | P71,702 | P106,946 | P142,281 |
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Last Updated: June 5, 2024 References
This article was co-authored by Luigi Oppido and by wikiHow staff writer, Christopher M. Osborne, PhD . Luigi Oppido is the Owner and Operator of Pleasure Point Computers in Santa Cruz, California. Luigi has over 25 years of experience in general computer repair, data recovery, virus removal, and upgrades. He is also the host of the Computer Man Show! broadcasted on KSQD covering central California for over two years. This article has been viewed 199,969 times.
While your dream may be to start the next Apple or Microsoft out of your garage, it is more likely that your desire to start a computer business involves dealing with existing systems via sales, service, or support. With the rapid changes in technology that have already led some to place us in the “post-PC era,” [1] X Research source the job of a computer repair person , for instance, has changed quite a bit from ten years ago and will surely be quite different ten years from now. Beyond keeping up with changing technology and maintaining your expertise, however, starting a computer business requires many of the same skills required of any other small business field — things like a clear business plan, a smart marketing strategy , and outstanding customer service.
Brandon Phipps
Your core goal is to offer benefits to your customers for a fair price. By providing such a service, you can earn a significant income while doing something you are skilled at and helping others.
To start up a successful computer business, find a way to match your skills with the needs of your local computer market. Assess the training and experience that you have with computers to determine the type of computer business that is best suited to your talents. For example, if you have experience building personal computers, you can use your background to start up a business selling discounted computers that you assemble from parts that you acquire. In addition to your skills and experience, it’s important that you analyze the market around you to see if you can start a successful business. Consider the demographics in your area and think about what type of computer products or services they’re likely to purchase. For example, if you’re selling discounted computer systems, and your area has a large number of older people looking to buy a simple home computer, you may have a market for your business! For tips about how to build your brand identity when you’re starting a computer business, keep reading! Did this summary help you? Yes No
Namgbenda Andrew
Oct 27, 2016
Sophia Tamayo
Jul 5, 2017
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Written by Dave Lavinsky
Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their IT companies.
If you’re unfamiliar with creating an IT business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.
In this article, you will learn some background information on why business planning is important. Then, you will learn how to write an IT business plan step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
A business plan provides a snapshot of your IT business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.
If you’re looking to start an IT business or grow your existing IT company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your IT business to improve your chances of success. Your IT business plan is a living document that should be updated annually as your company grows and changes.
With regards to funding, the main sources of funding for an IT business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for IT companies.
How to write a business plan for an it services business.
If you want to start an IT business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your IT business plan.
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the kind of IT business you are running and the status. For example, are you a startup, do you have an IT business that you would like to grow, or are you operating a chain of IT businesses?
Next, provide an overview of each of the subsequent sections of your plan.
In your company overview, you will detail the type of IT business you are operating.
For example, you might specialize in one of the following types of IT businesses:
In addition to explaining the type of IT business you will operate, the company overview needs to provide background on the business.
Include answers to questions such as:
In your industry or market analysis, you need to provide an overview of the IT industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the IT industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.
The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your IT business plan:
The customer analysis section of your IT business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: individuals, schools, families, and corporations.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of IT business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.
Don’t you wish there was a faster, easier way to finish your business plan?
With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other IT businesses.
Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other types of IT consultants, in-house IT support, or do-it-yourself IT tutorials. You need to mention such competition as well.
For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an IT business plan, your marketing strategy should include the following:
Product : In the product section, you should reiterate the type of IT company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide cloud computing, data center management, or network setup services?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.
Place : Place refers to the site of your IT company. Document where your company is situated and mention how the site will impact your success. For example, is your IT business located in a busy retail district, a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.
Promotions : The final part of your IT marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your IT business, including answering calls, meeting with new clients, billing and collecting payments from clients, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your Xth client, or when you hope to reach $X in revenue. It could also be when you expect to expand your IT business to a new city.
To demonstrate your IT business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing IT businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing an IT business or successfully running a small IT consulting service.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you charge your clients an hourly rate of $250 per hour, and will you work 5 hours per day? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your IT business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing an IT business:
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a list of your IT credentials.
Writing a business plan for your IT business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert on IT business planning. You will understand the IT industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful IT business.
Don’t you wish there was a faster, easier way to finish your IT business plan?
Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success. Click here to see how Growthink’s business plan services can give you a winning business plan.
By: Author Tony Martins Ajaero
Home » Business Plans » Education Sector
Are you about starting a computer training center? If YES, here is a complete sample computer training center business plan template & feasibility report you can use for FREE .
Okay, so we have considered all the requirements for starting a computer training center. We also took it further by analyzing and drafting a sample computer training center marketing plan template backed up by actionable guerrilla marketing ideas for computer training centers. So let’s proceed to the business planning section.
If you are interested in starting a business in the ICT industry, one of the options open to you especially if you are interested in imparting knowledge is to open a computer training center. Just like most businesses in the ICT industry, computer training center business is open to as many people that are interested in the industry as long as they have the required experience and qualifications.
In order to capture a fair share of the available market in your location, you would need a good website that is Search Engine Optimization (SEO) compliant. The truth is that your website ensures that your business remains visible to your customers. You can even ensure that your customers get to book and pay online so as to make it more convenient for them.
Lastly, you would need a good business plan to be able to launch a successful business and below is a workable computer training center business plan template that will help you to draft yours.
1. industry overview.
The computer training services industry is made up of centers that offer vocational and technical courses. They also provide courses in computer programming, which include curriculums for software packages, computerized business systems, computer electronics technology and local area network management.
It is important to state that computer training centers may also train their students via online platforms. The computer training services industry provides vocational and certification training in a range of IT-related skills. The industry provides training in computer programming, software development, computer electronics technology and network administration.
Players in this industry range from small private companies providing certified training in specific IT areas, to larger software companies providing training and certifications in their proprietary software such as SAP, Oracle and IBM. Going forward, the computer training services industry is expected to continue declining as competition from other forms of higher education and online learning platforms continue to reduce enrollment in computer training centers.
The Computer Training Services Industry is indeed a large industry and pretty much active in all the countries of the world.
Statistics have it that in the united states of America alone, there are about 16,195 registered and licensed computer training centers scattered all across the United States responsible for directly employing about 2,329 people and the industry rakes in a whooping sum of $3 billion annually.
The industry is projected to grow at -0.4 percent annual growth within 2012 and 2017. It is important to state that SkillSoft has a largest chunk of the available market in the industry.
Please note that the computer training industry has low barriers to entry. The majority of the businesses in this industry are owner operated, and there are few major players that control significant portions of the industry’s total market. In addition, classroom facilities and equipment can be rented on an as-needed basis, resulting in relatively low initial infrastructure costs.
The main factors that may prevent new players from joining the industry include course development and accreditation costs, as well as a moderate level of regulation. Among computer training schools, rapidly changing technology can be costly. Operators must balance the benefit of offering up-to-date courses with the cost of producing such coursework.
The tough part as it relates to start-up costs most likely is the need to secure a standard and well – positioned facility. Regardless of moderate barriers to entry, the competitive nature of the industry makes it very difficult for new operators to break even within a short period of time in the industry.
Lastly, the computer training school services industry is pretty much open for aspiring entrepreneurs to launch their business in the industry.
One good thing about computer training center business is that the business can be opened in any part of the United States and if proper market survey and feasibility studies are conducted, then you can be rest assured of profitability of the business.
The name of our business is Pinnacle Hub® Computer Training Center, LLC; we are a registered and accredited computer training school that will be located in Atlantic Avenue, – Delray Beach, Florida. We are registered under the United States’ Government. We are well equipped to train people that want to acquire computer or IT related skills.
Pinnacle Hub® Computer Training Center, LLC will offer computer cum IT trainings such as computer programming, computer software package training, computer systems and database training, computer electronics technology training, Local area network (LAN) management training and vocational training.
We are set to service a wide range of clientele in the whole of Atlantic Avenue – Delray Beach, Florida, we will ensure that we regularly update our teaching approach to meet up the trend in the industry.
At Pinnacle Hub® Computer Training Center, LLC we are passionate in the pursuit of excellence with uncompromising services and integrity which is why we have decided to start our own computer training center in Atlantic Avenue – Delray Beach, Florida; we are in the industry to make a positive mark.
We are quite optimistic that our values and quality of service offering will help us drive our computer training center to enviable heights and also help us attract the number of students that will make the business highly profitable. Our company will be dedicated to establishing good business relationship with our students giving them value for their money and reasons why they should continue to recommend their family members and friends to us.
We are in the computer training Industry to favorably compete with other leading brands in the industry both in the United States and in the globe. Our corporate business goal is to be among the top 5 computer training schools in the United States of America.
As a company, we are willing to go the extra mile to invest in some of the finest professionals (computer cum ICT trainers / instructors) we can find and also, we have put processes and structures in place that will ensure that we are always at the top of our game when it comes to impacting knowledge as it relates to our computer training services. We have been able to secure permits from all relevant departments in the State of Florida.
We are quite aware that in order to become the number one choice in our city, we must continue to deliver quality and practical computer training and that is exactly what we will do. We are open to the use of latest technology in our line of business.
Pinnacle Hub® Computer Training Center, LLC is owned and managed by Edgar Jones and his immediate family members.
Edgar Jones has a Degree: B.S. in Electrical Engineering from the Massachusetts Institute of Technology; M.S. degree in Computer Science at the University of Wisconsin-Milwaukee; MBA from the University Of Chicago Booth School Of Business.
Pinnacle Hub® Computer Training Center, LLC is an accredited computer training school that offers a wide range of training services that revolves around the computer training industry. We will be dedicated to establishing good business relationship with our students by giving them value for their money and reasons for why they should continue to recommend their family members and friends to us.
We are in the computer training industry to make profits and we will ensure that we do all that is permitted by the law in the United States to achieve our business aim and objectives. These are the services we will offer as a computer training center;
Our Business Structure
Pinnacle Hub® Computer Training Center, LLC is aware that the success of any business lies in the foundation on which the business is built on, which is why we have decided to build our computer training center on the right business foundation.
As a matter of fact, we will build a computer training center that will be a standard for the computer training school line of business in the United States of America.
We want to build a dedicated workforce that will go all the way to ensure that our students are satisfied and they get value for their money when they enroll in our computer training school.
We aware that it takes a business with the right employees and structure to achieve all what we have set to achieve, which is why we will be putting structures and standard operating processes in place that will help us deliver excellent training to our students.
Pinnacle Hub® Computer Training Center, LLC will employ professionals and skilled people to occupy the following position;
School Administrator
ICT Instructors
Marketing and Sales Executive
Client Service Executive
Head of the School / School Coordinator:
Computer training school is one of the many businesses that can easily generate business deals with little stress as long as they are well positioned and equipped to carry out their trainings. We are building a standard computer training center which is why we have decided to subject our business idea to SWOT Analysis.
Ordinarily we can successfully run a normal computer training center without the stress of going through the required protocol of setting up a new business including writing a detailed business plan, but because of the nature of the kind of computer training center we want to establish, we don’t have any option other than to follow due process.
We hired the services of a Business consultant with bias in startups to help us conduct SWOT analysis for our company and she did a pretty job for us. Here is a of the result we got from the SWOT analysis that was conducted on behalf of Pinnacle Hub® Computer Training Center, LLC;
Pinnacle Hub® Computer Training Center, LLC is centrally located in a densely populated residential estate in the heart of Atlantic Avenue, – Delray Beach, Florida; our location is in fact one of our major strengths because we are in a location with the right demography for the kind of business we run.
Another strength that counts for us is the power of our team. We have a team that are considered experts in the computer training school line of business, a team of hardworking and dedicated individuals.
Pinnacle Hub® Computer Training Center, LLC is a new business which is owned by an individual (family), and we may not have the financial muscle to sustain the kind of publicity we want to give our business.
We are centrally located in one of the busiest areas in Delray Beach – Florida and we are open to all the available opportunities that the city has to offer. Our business concept and staff strength also positioned us to accommodate over 200 students per time.
The truth is that there are no standard computer training centers within the area where ours is going to be located; the closest one to our proposed location is about 6 miles away. In a nutshell, we do not have any direct competition within our target market area.
Some of the threats that are likely going to confront Pinnacle Hub® Computer Training Center, LLC are unfavorable government policies , seasonal fluctuations, demographic / social factors, downturn in the economy which is likely going to affect consumers spending and of course emergence of new competitors within the same location where our computer training center is located.
The key to attracting students is the ease at which students learn different computer skill sets in a training school. Any computer training center that has good records and loads of positive testimonials from students who have passed through the school will always thrive.
Another common trend in the computer training industry is that in the bid to survive global economic meltdown and to ensure steady flow of income to effectively run the business, most players in the industry engage in other related services.
Some of them even go as far as establishing agency services to provide certified ICT professionals for clients and some also offer specialized home training for executive students et al.
Before choosing a location for our computer training center, we conducted thorough feasibility studies and market survey and we were able to identify those who will benefit greatly from our service offerings. Basically, those who will benefit from our service offering are students and workers, people who want to get ICT skills and certifications.
Our Competitive Advantage
Despite the fact that the computer training center business has stiff huddles to scale through does not mean that there are no real competitions in the industry. The truth is that no matter the line of business that you are involved in, as long as it is called business, you will definitely face one form of competition or the other and computer training school is not an exemption.
So, if you are looking towards setting up this type of business, it is advisable to do your due diligence before launching the business if indeed you want to succeed. We are well trained and equipped to compete in the computer training school services industry in the United States of America.
Our competitive edge is that we are a government approved computer training center that is centrally located in a densely populated residential estate in the heart of Delray Beach – Florida; our location is in fact one of our major strengths because we are in a location with the right demography for the kind of business we run. Another strength that counts for us is the power of our team.
Lastly, we have the ability to develop courses for new technology, we have a good reputation and the ability to alter services in favor of market conditions.
Plus, all our employees will be well taken care of, and their welfare package will be among the best within our category in the industry. It will enable them to be more than willing to build the business with us and help deliver our set goals and achieve all our business aims and objectives.
Pinnacle Hub® Computer Training Center, LLC is established with the aim of maximizing profits in the computer training school services industry and we are going to go all the way to ensure that we do all it takes to attract clients on a regular basis. Pinnacle Hub® Computer Training Center, LLC will generate income by offering the following services;
The fact that the ICT industry is gaining prominence in various aspects of our daily business, means that the services of computer training schools will always be needed.
We are well positioned to take on the available market in and around Delray Beach – Florida and we are quite optimistic that we will meet our set target of generating enough profits from our first six months of operation and grow our computer training center and our student base.
We have been able to critically examine the computer training school line of business, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast.
N.B : This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown or any major competitor offering the same services as we do within the same location. Please note that the above projection might be lower and at the same time it might be higher.
The marketing strategy for Pinnacle Hub® Computer Training Center, LLC is going to be driven by excellent customer service and quality training delivery. We want to drive sales via the output of our jobs and via referral from our satisfied students.
We are quite aware of how satisfied students drive business growth especially businesses like computer training schools.
Pinnacle Hub® Computer Training Center, LLC is strategically located and we are going to maximize the opportunities that are available to us, which is why we spent more to locate the business where it will be visible and accessible to our target market.
Our sales and marketing team will be recruited based on their vast experience in the industry and they will be trained on a regular basis so as to be equipped to meet the overall goal of Pinnacle Hub® Computer Training Center, LLC.
Our goal is to grow Pinnacle Hub® Computer Training Center, LLC to become the leading computer training center in Delray Beach – Florida which is why we have mapped out strategies that will help us take advantage of the available market and grow to become a major force to reckon with in our line of business.
Pinnacle Hub® Computer Training Center, LLC is set to make use of the following marketing and sales strategies to attract clients;
Pinnacle Hub® Computer Training Center, LLC is set to create a standard for the computer training school line of business not only in Delray Beach – Florida, but throughout the United States of America which is why we will go all the way to adopt and apply best practices to promote our business.
Good enough there is no hard and fast rule on how to advertise or promote a business like a computer training school. Here are the platforms we intend leveraging on to promote and advertise Pinnacle Hub® Computer Training Center, LLC;
Pinnacle Hub® Computer Training Center, LLC will charge our students flat fees except for few occasions where there will be need for us to charge special students on hourly basis.
At Pinnacle Hub® Computer Training Center, LLC we will keep our fees below the average market rate for all of our students by keeping our overhead low and by collecting payment in advance. In addition, we will also offer special discounted rates to all our students at regular intervals.
We are aware that there are some students that would need special assistance, we will offer flat rate for services that will be tailored to take care of such students’ needs. The prices of our services will be same as what is obtainable in the open market.
The payment policy adopted by Pinnacle Hub® Computer Training Center, LLC is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation in the United States of America. Here are the payment options that Pinnacle Hub® Computer Training Center, LLC will make available to her clients;
In view of the above, we have chosen banking platforms that will enable our clients make payments for our services. Our bank account numbers will be made available on our website and promotional materials.
In setting up any business, the amount or cost will depend on the approach and scale you want to undertake. If you intend to go big by renting a place, then you would need a good amount of capital as you would need to ensure that your employees are well taken care of, and that your facility is conducive enough for your workers to be creative and productive.
This means that the start-up can either be low or high depending on your vision and aspirations for your business. The tools and equipment that will be used are nearly the same cost everywhere, and any difference in prices would be minimal and can be overlooked.
As for the detailed cost analysis for starting a standard computer training school; it might differ in other countries due to the value of their money. We have been able to pull cash that will be enough for us to successfully launch a government approved computer training center in Delray Beach – Florida. These are the key areas where we will spend our startup capital on;
Going by the report from the market research and feasibility studies conducted, we will need about four hundred and fifty thousand ( 450,000 ) U.S. dollars to successfully set up a medium scale but standard computer training center business in the United States of America.
Generating Startup for Pinnacle Hub® Computer Training Center, LLC
Pinnacle Hub® Computer Training Center, LLC is a business that will be owned and managed by Edgar Jones and his immediate family members. They are the sole financiers of the business which is why they decided to restrict the sourcing of the start up capital for the business to just three major sources.
These are the areas we intend generating our startup capital;
N.B: We have been able to generate about $150,000 ( Personal savings $100,000 and soft loan from family members $50,000 ) and we are at the final stages of obtaining a loan facility of $300,000 from our bank. All the papers and documents have been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.
The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and business structure. If all of these factors are missing from a business, then it won’t be too long before the business closes shop.
One of our major goals of starting Pinnacle Hub® Computer Training Center, LLC is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.
We know that one of the ways of gaining approval and winning customers over is to offer our ICT training services a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.
Pinnacle Hub® Computer Training Center, LLC will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.
As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
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Traditionally, a marketing plan includes the four P's: Product, Price, Place, and Promotion. For an IT business plan, your marketing strategy should include the following: Product: In the product section, you should reiterate the type of IT company that you documented in your company overview.
Miscellaneous - $5,000. Going by the report from the market research and feasibility studies conducted, we will need about four hundred and fifty thousand ( 450,000) U.S. dollars to successfully set up a medium scale but standard computer training center business in the United States of America.