1. Executive SummaryPC Repair will provide computer and technical consulting (repairs, training, networking andupgrade service) to local small businesses as well as home PC users. The company will focuson marketing, responsiveness, quality, and creating and retaining customer relations.PC Repair was initially formed as a sole proprietorship, but was reconfigured as an SCorporation in December of 2004. PC Repair will at first be a home office start-up, utilizingone studio room in the owners home and serving customers in the local Ramsford-on-Bitstream area. In the third month of our plan, we will move into a leased office space andhire a second technician. As sales increase, we will hire additional personnel.The MarketThe very nature of the computing industry, with its extraordinary rate of technologicaldevelopment, creates a constant need for businesses skilled in updating and advisingcustomers on computer-related issues. In town, the majority of potential customers aredissatisfied with existing options, creating an attractive niche for an innovative start-up. Smallbusiness PC users will provide the majority of our business revenue. Business Week expectsthe computing industry to grow at a rate of 12% and the processor speeds to continue toexpand for years to come, providing a rich resource for sales.PC Repair has decided to focus mainly on the small business market, as these customerstypically dont have a full-time IT person, but have full-time IT needs. PC Repair will offer anaffordable, on-demand service for these customers. We can also offer maintenanceagreements that generate additional monthly income. For our residential customers, we willoffer a very affordable and helpful service with a very flexible schedule to meet their needs.Our target market will focus on Ramsford-on-Bitstream and the surrounding areas. Marketresearch indicates there is an abundance of business for a small company such as PC Repair.Start-up Funding and FinancialsTo get PC Repair started the owner is providing cash and assets. We are also seeking a short-term loan, to be secured with the owners home equity, and repaid within three years. Ourconservative sales forecasts, based on industry research within the local area, project heftysales in year one, steadily increasing through year three. To reach these goals, we will use anaggressive advertising campaign to exploit our competitors weaknesses. With good costcontrol, we will see a modest, yet comfortable, net profit the first year, even after moving intoa leased space and hiring additional technicians.1.1 Objectives 1. To provide the best service available to the community at an affordable price. 2. To generate substantial market share so that PC Repair is a common name. 3. Constant growth in sales from start up through year three. 4. To generate customer satisfaction so that at least 40% of our customer base is repeat business.
2. Need actual charts?We recommend using LivePlan as the easiest way to create graphs for your own businessplan.Create your own business plan »1.2 MissionOur goal is to set the standard for on-site computer solutions through fast, on-site service andresponse. Our customers will always receive one-on-one personal attention at a veryaffordable price. Our customers will receive the highest quality of customer service available.Our employees will receive extensive training, a great place to work, fair pay and benefits,and incentives to use their own good judgement to solve customers problems.1.3 Keys to Success Establishing a brand identity and generating brand recognition through marketing. Responsiveness: being an on-call computer paramedic with fast response time. Quality: getting the job done right the first time, offering 100% guarantee. Relationships: developing loyal repeat customers--retainers.Read more:http://www.bplans.com/computer_repair_business_plan/executive_summary_fc.php#ixzz1fS6sp5Xf
3. Company SummaryPC Repair is an S Corporation located in Ramsford-on-Bitstream, owned by Jack Hacker.With a small 3-year loan, PC Repair will grow in one year from a one-man, home-officebased repair shop to a profitable, 3-person business in a leased location. We will build thenecessary infrastructure to quickly and efficiently respond to customers computer needs,guaranteeing speedy, friendly, competent, and cost-effective technical support.2.1 Company OwnershipPC Repair was initially envisioned as a sole proprietorship in the owners home. However,recent feedback from our marketing outreach has suggested a much higher sales potential thanoriginally imagined, and PC Repair has been reformed as an S Corporation. This change willprovide additional legal protection for the owner, and will also streamline the financialoperations of the company as we expand the personnel to 5 within the next three years, lease aseparate space for offices, and purchase company vehicles and cell phones.The owner, Jack Hacker, has 10 years of experience in the fields of technical support,networking, and computer training and repair. Jack has also spent the last three years as themanager of a custom computer building and repair store, and understands the computer needsof small businesses.2.2 Start-up SummaryTotal start-up expenses include initial expenses for establishing our website, setting up thebusiness, and doing our pre-opening advertising. Exact allocations are shown in the table.The bulk of our start-up requirements are asset needs: we need diagnostic and repairequipment, half of which will be contributed to the business by the owner from his ownmaterials. We are treating this equipment as assets because we expect it to last at least threeyears, and to have some resale value when we are through with it; we will buy additionalexpensed equipment in years two and three. We also need start-up inventory which includesRAM, spare hard drives, cables, and cases. Although we will keep expenses to a minimum forthe first three months, before we move, we will also need cash at start-up, to see us throughthe next several months with a positive cash balance.We plan to fund our total start-up requirements direct owner investment (including thecontributed assets), and a three-year loan secured with the owners collateral (his homeequity). We should be able to easily repay this loan within three years, even with a muchlower sales revenue than projected. (See the Cash Flow table for projected repayment.)
4. Need actual charts?We recommend using LivePlan as the easiest way to create graphs for your own businessplan.Start-up RequirementsStart-up ExpensesLegal $650Website $350Business Cards $100Insurance $150Uniforms $300CPA $275Advertisement $1,200Total Start-up Expenses $3,025Start-up AssetsCash Required $28,000Start-up Inventory $1,200Other Current Assets $10,000
5. Long-term Assets $0Total Assets $39,200Total Requirements $42,225Need real financials?We recommend using LivePlan as the easiest way to create automatic financials for your ownbusiness plan.Start-up FundingStart-up Expenses to Fund $3,025Start-up Assets to Fund $39,200Total Funding Required $42,225AssetsNon-cash Assets from Start-up $11,200Cash Requirements from Start-up $28,000Additional Cash Raised $0Cash Balance on Starting Date $28,000Total Assets $39,200Liabilities and CapitalLiabilitiesCurrent Borrowing $19,225Long-term Liabilities $0Accounts Payable (Outstanding Bills) $0Other Current Liabilities (interest-free) $0Total Liabilities $19,225CapitalPlanned InvestmentOwner $23,000
6. Investor $0Additional Investment Requirement $0Total Planned Investment $23,000Loss at Start-up (Start-up Expenses) ($3,025)Total Capital $19,975Total Capital and Liabilities $39,200Total Funding $42,225Services
7. PC Repair will offer computer repairs, training, networking and upgrade service to clients intwo major categories: home PC users and small business users. As PC Repair and the clientdemands grow, we will offer software development to our business clients.From the very first day, we will offer on-site repair and consulting services, so that our clientsdont need to take time out of their busy days to haul a computer in to our workshop. This isthe single biggest frustration Jack has seen among small business owners needing computerhelp. Much of our diagnostic equipment is portable, and we will remove a PC to ourworkshop only when the problem requires more detailed diagnosis or repair. We will alsooffer free pick-up and delivery of PCs needing repair. To meet the growing demand for thisservice, we will purchase a company vehicle in the third month.We will also offer extended maintenance contracts, so that business clients can deal withtechnical support and repair needs as a single line-item expense, rather than having to plan forunexpected crashes and problems with a rainy-day fund they may never use. Maintenancecontracts yield a high gross margin for us, and provide peace of mind for the customer.We will offer limited software support (installation and compatibility issues), and focus onhardware and networking support - this is a vital distinction, since software is evolving muchmore rapidly than hardware, and our clients will have such diverse software needs that wecouldnt possibly keep up with all of them. We will encourage clients to register their softwareand use the softwares own support options to their full potential. We will, however, keep upto date with multiple operating systems and networking developments, working with clients tomake sure they have the most appropriate combinations of hardware, OS, networking, backupsystems, and software. Backup and security are becoming higher priorities for all our potentialcustomers, as internet usage (and its pitfalls) becomes more common, and as more and moredaily records are stored electronically.Market Analysis SummaryPC Repair will provide computer support in both a consulting and technical capacity to smallbusiness owners as well as home PC users. Since PC Repair is currently a one man operation,
8. its growth in the first three months will be limited by the owners capacity to complete work.However, these first three months are critical for establishing our credibility and a reputationfor getting the job done quickly and well. We will focus on delivering excellent service, andusing the good word of mouth from this initial period to network with other potential clients.Personal market research by the owner indicates an attractive market niche for our services, ofwhich PC Repair will take full advantage. The very nature of the computing industry, with itsextraordinary rate of technological development, creates a constant need for businesses skilledin updating and advising customers on computer-related issues.National chains, such as "Geeks on Call," and Best Buys "Geek Squad" have seen rapidgrowth in demand for these services in the last few years. Customers are seeking skilled helpwith everything from installation of software and hardware components, to networking, totransferring files from an old computer to a new one. Those who can often enlist their tech-savvy childrens help, but others are not so fortunate, and small-business owners need reliableand quick help with all their computer needs, since every hour down may mean an hour ormore of lost revenue, especially for any business with a website or those doing e-commerce.4.1 Market SegmentationThe existing computer service market is so extensive that categorizing it is rather difficult. Wehave broken our potential market down into two groups, based on their needs: home PC usersand small business clients.Home PC UserOur home PC user market includes non-tech-savvy residents of the local area (15 mile radius),generally between the ages of 30 and 70, with at least one home computer. We are notexpecting income from users below 30, who tend to be more comfortable with technology andwilling to attempt repairs and upgrades on their own, without seeking professional assistance.Such home users generally own a computer to do email, play games, write letters, scan andprint photos, and occasionally to do bookkeeping or taxes. Home PC users with moresophisticated applications generally have enough tech savvy, from tech experience at work, todo their own repairs and upgrades. Their hardware needs will include the computer itself,monitors, keyboards, mouse, printer, and scanner.This group is growing slightly faster than the overall population growth in our area, in partdue to the increasing demand for computers among retired people and young families, about7% a year.Small Business UsersSmall business users will provide the majority of our business revenue. The small businessmarket will be defined as customers within a 15 mile radius, with 2 or more computers or anetwork which they use for business purposes at least 25% of the time. Their business usemay include minor usage, such as updating a business website for a brick-and-mortar store,keeping the books, designing graphics or ad campaigns, and writing copy for press releases. Itmay also be more extensive, incorporating inventory tracking, POS systems, customerdatabases, online product/service delivery, or product development. The more intensive theircomputer usage for business, the more critical it is to them that their technology work welland reliably, and that quality repairs and support are available in a crisis. Their hardware
9. needs will include the same items as home users, plus servers, backup systems, data storage,and wireless networking.The portion of the small business market we are targeting is growing at around 2% a year.Need actual charts?We recommend using LivePlan as the easiest way to create graphs for your own businessplan.Market Analysis Year 1 Year 2 Year 3 Year 4 Year 5Potential Customers Growth CAGRHome PC Users 7% 25,000 26,750 28,623 30,626 32,770 7.00%Small Business Users 2% 10,000 10,100 10,201 10,303 10,406 1.00%Other 0% 0 0 0 0 0 0.00%Total 5.39% 35,000 36,850 38,824 40,929 43,176 5.39%Need real financials?We recommend using LivePlan as the easiest way to create automatic financials for your ownbusiness plan.4.2 Target Market Segment StrategyAlthough there are more potential customers among home PC users, we expect the majority ofour revenue to come from small business clients, since their need for our services is more
10. urgent, and they are willing to invest in technology as part of their business plan. The majorityof our marketing efforts will thus be focused on small business owners. These customerstypically dont have a full-time IT person, but have full-time IT needs. Home PCs are oftenused by multiple people, and serve multiple purposes. Our home PC users need help withmanaging their settings to integrate the different needs of all household members as much asthey need technical assistance.ComputingNet magazine recently reported on the substantial need for timely and cost-effective computer upgrades and repairs in this region; Jack Hacker has seen this market needin person, as frustrated clients waited for days or weeks for their critical components to bereturned to full capacity, with no inexpensive alternative to the existing computer repairshops. All of our clients need technical assistance, but we are also selling peace of mind: ourclients will know that friendly, efficient help is just a phone call away. As more and morecompanies switch their support services to automated call centers or touch-tone menus, thesimple reassurance of hearing another human voice on the phone within a few rings isimmeasurable. Even better is knowing that within a few hours, someone will show up andtake care of their problem.Both the software and hardware side of the computer industry continue to turn out new andrevised computer components at alarming rates. For PC Repair this means job security wellinto the future. As reported by the Wall Street Journal, there seems to be no end to thedevelopment of the computer market. Business Week expects the computing industry to growat a rate of 12% and the processor speeds to continue to expand for years to come.4.3 Service Business AnalysisSecondary market research shows computer service customers tend to be very loyal toproviders that do good work and satisfy their needs. An analysis of PC Repairs maincompetitors shows no overwhelming strengths that would be significant barriers to entry intothe market, as our local competitors have serious weaknesses.The computer maintenance and repair industry is fragmented, with a few large, nationalplayers and hundreds of small, local stores. While most computers are actually repaired in-store, near the customer, parts for the repair come from major manufacturers and distributors;delays in receiving necessary parts can significantly slow down the repair process. Largechains have solved this problem by keeping vast amounts of inventory in stock at all times,while local stores offer customers the trade-off of personal interaction and trust that maymake up for some delay.PC Repair has established a relationship with a local distributor to do rapid special-ordering;although this capability is more expensive than normal channels, it will enable us to quicklyestablish a reputation as efficient and responsive to customer needs, particularly for our smallbusiness users. We will leverage this customer loyalty into great word of mouth marketingand steady growth.4.3.1 Competition and Buying PatternsCustomers choose computer repair and assistance services based on reputation, previousexperience, and price. They may choose to return to a mediocre provider with whom theyrefamiliar, rather than try out a new unknown company about whom theyve heard nothing.
11. Large stores, especially the service departments of national chains, have a great advantagesimply in their affiliation with an established brand. Establishing our brand identity and agreat reputation in the first few months is critical to our success. Once we have broken in tothe local market, our great service will turn new clients into permanent clients.Our services will be second to no one and our prices will be very reasonable for the highquality service we offer. By providing superior service, word of mouth alone will bring inmany new clients. The satisfaction our consumers find will keep them coming back. There aretwo main competitors for the computer upgrade and repair business in this area: 1. Competitor A. They are a well established provider of computer upgrades and services, and do quick work. However, they have a high staff turnover, a young and inexperienced staff, and are more interested in selling new components than in maintaining existing machines or finding custom solutions. They do not offer any kind of pick-up and drop-off service, and do not offer on-site help. They really only offer hardware support. 2. Competitor B. Smaller and less known then A, B provides many services for residents living in east and south parts of town. They are more willing to spend time with a client, figuring out exactly what his or her needs are, and suggesting new options than competitor A. However, they have an inefficient ordering system and an unkempt shop, which deters potential customers and can turn existing customers to the competition. They also do not offer on-site services, although they are considering instituting a trial pick-up/drop-off service. They are in the best position to copy our innovations and steal customers, but their management is complacent and may not respond to competition.Both of these companies charge rates in excess of PC Repair; we will be able to attract theprice-sensitive market without much work.
12. Strategy and Implementation SummaryOur Strategy and Implementation turn on three points: 1. A value proposition of timely and practical solutions, at a reasonable rate, coupled with a 100% guarantee. 2. Exploiting our competitors weaknesses: a competitive edge based on quick, effective, and sympathetic customer service, which meets the customer where his needs are, rather than trying to fit him into an existing box. 3. Quickly establishing a brand identity and developing a great reputation among local customers to generate word of mouth advertising.5.1 Competitive Edge Quick response: PC Repair will provide same day and after hours service. A flat rate policy: This undermines the competition, who charge by the hour. The pricing has been set to reflect the average amount of time it takes to perform the task. With this strategy we can undercut most competitors and gain local market power. On-site and pick-up/drop-off services: This will minimize the time and effort a customer needs to put into dealing with his computer problem. Suprisingly, our small size is an advantage: customers will recognize me (and future employees), and will know they will get the same great service every time they call.5.2 Marketing StrategyOur marketing strategy will aggressively exploit our competitors weaknesses. During thestart-up phase, we will run large ads in the business section of the local newspaper, asking,"Are you fed up with poor customer service for your computer needs?" These ads will focuson our advantages, including on-site service, competitive rates, and quick response and turn-around times. They will announce our opening date, and include a coupon for free diagnosticservice for the first 20 customers.We will follow up on these opening ads with a smaller direct-marketing campaign to smallbusiness owners, with lists drawn from the local Chamber of Commerce. Jack will use his
13. contacts with business customers from his years as a manager to create a "buzz" about thisnew business.We will continue periodic advertisements, including several promotions (discounts, freediagnosis, etc.) throughout the first year. We expect a small but steady response from homePC users who see our ads elsewhere, but will also run monthly ads in sections other than thebusiness one.We will offer a promotion during the first 90 days of business to generate business traffic andword of mouth. Our promo is Spyware removal on any desktop PC for $70 including tax andsoftware. Spyware is a huge problem for a lot of residential and small business customers, andthe offer should draw a lot of interest.5.3 Sales StrategyOur marketing strategy will generate customer inquiries. We will close the deals by offeringan outstanding service and a very reasonable price. Happy customers generate repeat businessand word of mouth. Our toll free number is operational 24 hours a day, seven days a week,and from 8am to 9pm, I will be available to answer calls. At other times, or when I am on thephone, an answering service we have hired will catch callers and give them an estimated waittime for a call-back; this is another step towards delivering a complete solution to ourcustomers.Sales forecast figures are based on industry figures for the typical growth of a start-up andreflect repeat business generated through meeting customer needs.5.3.1 Sales ForecastThe sales strategy is a prediction of controllable growth for the first year. PC Repair willfocus on quality and attention to detail to avoid some potential pitfalls encountered by manynew businesses. The predicted growth is moderate in the home PC market and in the smallbusiness arena. However, with aggressive advertising and word of mouth, this will increase.Our agressive TV advertising will increase our residential and small business customer baseas well as word of mouth within the first year. Within a few months we will have the need foradditional employees to handle the work load. At that time, we will move into a leased spacewith additional square footage, and buy a company vehicle to help with the on-site calls.Our competitors average 75+ calls a month. Given that our advertising will be aggressive, weexpect the same results. The sales forecast is conservative, which gives us a chance to gaugeour experience and adjust the plan accordingly.We will service all of Ramsford-on-Bitstream, and the surrounding area. We expect that themajority of our jobs will be performed in the immediate town area. A service technician canperform an average of 3 jobs per day. Our sales forecast predictions are less than that. Withour agressive advertising campaign we expect nominal growth. We predict it will take a fewweeks for the marketing to settle in with customers. However, we are going to offer a promofor our services which should generate some substantial results.The one element of sales not represented in the table below is direct costs for our maintenancecontracts. We estimate these costs at 12% of sales revenue, but expect a delayed occurrence -
14. that is, we will sell maintenance contracts starting in February, but do not expect to actuallyperform maintenance on computers guaranteed under them for the first few months. We willincur more and more costs from these as time goes on, and the computers age - most of theservice in a maintenance contract is performed within the last quarter of the specified period.Projections for the direct costs for these contracts can be found in the Profit and LossTable, as other costs of sales.Need actual charts?We recommend using LivePlan as the easiest way to create graphs for your own businessplan.Create your own business plan »
15. Need actual charts?We recommend using LivePlan as the easiest way to create graphs for your own businessplan.Create your own business plan »Sales Forecast Year 1 Year 2 Year 3Unit SalesHome PC Unit 166 200 225Small Business Unit 264 300 350Promo 235 0 0Maintenance Contracts 32 60 85Total Unit Sales 697 560 660Unit Prices Year 1 Year 2 Year 3Home PC Unit $280.00 $300.00 $300.00Small Business Unit $500.00 $600.00 $600.00Promo $50.00 $0.00 $0.00Maintenance Contracts $400.00 $600.00 $600.00SalesHome PC Unit $46,480 $60,000 $67,500Small Business Unit $132,000 $180,000 $210,000Promo $11,750 $0 $0Maintenance Contracts $12,800 $36,000 $51,000Total Sales $203,030 $276,000 $328,500Direct Unit Costs Year 1 Year 2 Year 3Home PC Unit $84.00 $90.00 $90.00Small Business Unit $105.00 $126.00 $126.00Promo $4.00 $0.00 $0.00Maintenance Contracts $0.00 $0.00 $0.00Direct Cost of SalesHome PC Unit $13,944 $18,000 $20,250Small Business Unit $27,720 $37,800 $44,100Promo $940 $0 $0Maintenance Contracts $0 $0 $0Subtotal Direct Cost of $42,604 $55,800 $64,350SalesNeed real financials?We recommend using LivePlan as the easiest way to create automatic financials for your ownbusiness plan.Create your own business plan »5.4 MilestonesOur milestones, listed in the table below, outline the major events that will promote, as well asinsure the success of PC Repair and keep it a going concern well into the future. We willmeasure our success in meeting these milestones every month, and adjust the plan to keep up
16. with our objectives. Name recognition, in particular, is very important to breaking into thismarket - we will conduct a survey by calling 200 randomly selected small businesses from theChamber of Commerce listings on the specified dates and asking them whether they haveheard of PC Repair, and if so, what their impression is of our service. If any of therespondents have actually used our services, we will elicit feedback on their experience withus, and suggestions for improvement. We will also ask if they would recommend us to acolleague.Need actual charts?We recommend using LivePlan as the easiest way to create graphs for your own businessplan.Create your own business plan »MilestonesMilestone Start Date End Date Budget Manager DepartmentProcurement of materials for 12/1/2004 2/1/2005 $1,200 JMH DepartmentopeningStart-up Ad Campaign 12/15/2004 2/6/2005 $1,200 JMH DepartmentGet Loan Approved 1/1/2005 1/17/2005 $0 JMH DepartmentOpen Business 2/7/2005 2/8/2005 $0 JMH DepartmentName Recognition by 5% of 2/28/2005 2/28/2005 $0 JMH Departmentpotential marketMeet with Leasing Agent 3/1/2005 3/10/2005 $0 JMH DepartmentInterview potential Techs 3/1/2005 4/25/2005 $0 JMH DepartmentMove into Leased Space 4/1/2005 4/10/2005 $2,000 JMH DepartmentSign on Leased Vehicle 4/15/2005 4/20/2005 $6,000 JMH DepartmentTargeted Ads Begin 4/15/2005 5/15/2005 $4,000 JMH Department1st Tech Starts 5/1/2005 5/1/2005 $0 JMH Department2nd Round Tech Interviews 7/1/2005 7/31/2005 $0 JMH DepartmentDirect marketing to Small 7/1/2005 9/30/2005 $8,000 JMH DepartmentBusinesses
17. Increase Name Recognition to 8/1/2005 8/2/2005 $0 JMH Department20%2nd Tech Starts 8/1/2005 8/7/2005 $0 JMH DepartmentTotals $22,400Management SummaryPC Repair will be owned and managed by Jack Hacker. Jack has 10 years of experience in thefields of technical support, networking, and computer training and repair. Jack has also spentthe last three years as the manager of a custom computer building and repair store, andunderstands the computer needs of small businesses. Jack is adept at managing his time, andat quickly responding to multiple customer calls and needs.For the first three months, Jack will be in charge of all aspects of the business. In the thirdmonth, when another tech is hired, Jack will shift some of his energy from directly respondingto customer needs, to training and managing others to do this work effectively. Jack willmaintain direct control over inventory ordering and bookkeeping, and will try to do as manyof the on-site calls as possible himself. Part of our brand recognition strategy is to identify PCRepair with Jacks efficiency, friendliness, and technical expertise. The easiest way toassociate the two is for Jack to be a major part of many customers experiences with us. Hewill delegate technical repairs later in the year to the techs working in the leased office space,and will also train them in his method of direct phone support.Jack has worked extensively with computer technicians and support staff in the past, andknows that they work best when given free rein within a set of mutually-agreed-uponguidelines. The first week of each techs employment will be dedicated to helping themunderstand PC Repairs guidelines: the customer needs help, and were here to help them; the customer is frustrated, upset, or confused - but that doesnt make the customer a problem; the customer needs reassurance as well as solutions.Within this framework, the techs can solve the customers problem the best way they see fit -Jack is not a micro manager.6.1 Personnel PlanJack Hacker will be the only employee for the first few months; his salary is directly related tothe success of the business, and will never exceed 18% of sales revenue. In the third month,we will move to a leased office space and hire a second employee, with a third hire plannedfor August, if projections are on target. We plan to hire additional part-time employees in thesecond year, to better handle the increasing sales.Our employees will be skilled professionals, with equally strong technical and people skills. Itis very important to Jack that they be paid salaries commensurate with their abilities anddedication- happy tech support people make for happy customers. To that end, our full-timeemployees will receive health benefits (premiums split between the employee and PC Repair),paid holidays, and sick time. Those benefits are included in the payroll totals listed below.
18. Personnel Plan Year 1 Year 2 Year 3Owner $33,000 $38,000 $40,000Tech1 $21,600 $30,000 $30,000Tech2 $14,400 $30,000 $30,000Part Time $0 $12,000 $15,000Total People 3 5 5Total Payroll $69,000 $110,000 $115,000Need real financials?We recommend using LivePlan as the easiest way to create automatic financials for your ownbusiness plan.Financial PlanThe following sections include the annual estimates for the standard set of financial tables.Detailed monthly pro-forma tables are included in the appendix.Our financial plan calls for limited growth in the first three months, followed by much highersales when we move and hire additional employees. These projections are based on soundmarket research and ratios for comparable businesses. As we grow, we will keep ouroperating expenses down, and maintain a positive cash balance as we repay our three-yearloan.7.1 Important AssumptionsPC Repairs customer base would fluctuate if there was a recess in the economy or otherextenuating circumstances that pertain directly to consumer or industry behavior. However,given the steady increase in computer users despite the recent recession, we assume that salesforecasts are unlikely to be dramatically altered by economic events. The table below showssome of our other assumptions.General Assumptions Year 1 Year 2 Year 3Plan Month 1 2 3Current Interest Rate 7.00% 70.00% 70.00%Long-term Interest Rate 10.00% 10.00% 10.00%Tax Rate 30.00% 30.00% 30.00%Other 0 0 0
19. Need real financials?We recommend using LivePlan as the easiest way to create automatic financials for your ownbusiness plan.Create your own business plan »7.2 Break-even AnalysisFixed costs are projected at a monthly average for the first year. This includes payroll, movingexpenses and rent, purchase of a company vehicle, and other necessities like cell phones andthe answering service. Variable costs (inventory used in repairing or servicing computers) areprojected as well. At these levels, what we need to bring in per month to break even is shownin the table and chart below. We will reach our break-even point mid-year, although weexpect sales in November and December to dip below this level because of holidays.Need actual charts?We recommend using LivePlan as the easiest way to create graphs for your own businessplan.Create your own business plan »Break-even AnalysisMonthly Units Break-even 52Monthly Revenue Break-even $15,110
20. Assumptions:Average Per-Unit Revenue $291.29Average Per-Unit Variable Cost $70.00Estimated Monthly Fixed Cost $11,4797.3 Projected Profit and LossThe table below shows our projected profit and loss. There are two lines for direct cost ofsales - the second line shows projected inventory costs of fulfilling our maintenance contracts.The marketing/promotion line shows our planned advertising program expenses. Althoughthese are aggressive, we must spend heavily in the first year in order to establish the brandrecognition that will help us break in to the local market.This table also shows our projected expense increases as we hire more employees and moveinto a larger rented space. Before the move, the owner will absorb expenses related to utilities.In years two and three, we have budgeted for additional expensed equipment to expand ourdiagnostic and repair capabilities to keep up with orders.We are seeking a modest net profit in the first year. As our reputation grows, we will seehigher revenues and net profit over the next three years.Need actual charts?We recommend using LivePlan as the easiest way to create graphs for your own businessplan.Create your own business plan »
21. Need actual charts?We recommend using LivePlan as the easiest way to create graphs for your own businessplan.Create your own business plan »Need actual charts?We recommend using LivePlan as the easiest way to create graphs for your own businessplan.
22. Create your own business plan »Need actual charts?We recommend using LivePlan as the easiest way to create graphs for your own businessplan.Create your own business plan »Pro Forma Profit and Loss Year 1 Year 2 Year 3Sales $203,030 $276,000 $328,500Direct Cost of Sales $42,604 $55,800 $64,350Costs of Fulfilling Maintenance Contracts $1,488 $4,320 $6,120Total Cost of Sales $44,092 $60,120 $70,470Gross Margin $158,938 $215,880 $258,030Gross Margin % 78.28% 78.22% 78.55%ExpensesPayroll $69,000 $110,000 $115,000Marketing/Promotion $28,000 $6,000 $12,000
23. Depreciation $0 $0 $0Lease $10,000 $12,000 $12,000Expensed Equipment $0 $10,000 $12,000Insurance $3,150 $1,200 $1,200Website $2,080 $480 $480Answering Service $200 $2,400 $2,400Mileage $2,660 $5,400 $5,400Vehicles $13,200 $15,000 $17,000Cell Phones $1,260 $1,260 $1,260Utilities $5,000 $6,000 $7,000Internet $1,200 $1,200 $1,200Moving Expenses $2,000 $0 $0Total Operating Expenses $137,750 $170,940 $186,940Profit Before Interest and Taxes $21,188 $44,940 $71,090EBITDA $21,188 $44,940 $71,090Interest Expense $1,097 $6,570 $2,139Taxes Incurred $6,027 $11,511 $20,685Net Profit $14,064 $26,859 $48,266Net Profit/Sales 6.93% 9.73% 14.69%7.4 Projected Cash FlowThe Cash Flow chart, below, shows our projected cash position for the first year; the tablefollowing it shows highlights for the first three years. With the requested start-up funding, wewill maintain a positive cash balance throughout, and repay the loan within three years.
24. Need actual charts?We recommend using LivePlan as the easiest way to create graphs for your own businessplan.Create your own business plan »Pro Forma Cash Flow Year 1 Year 2 Year 3Cash ReceivedCash from OperationsCash Sales $203,030 $276,000 $328,500Subtotal Cash from Operations $203,030 $276,000 $328,500Additional Cash ReceivedSales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0
25. New Investment Received $0 $0 $0Subtotal Cash Received $203,030 $276,000 $328,500Expenditures Year 1 Year 2 Year 3Expenditures from OperationsCash Spending $69,000 $110,000 $115,000Bill Payments $110,873 $141,877 $164,115Subtotal Spent on Operations $179,873 $251,877 $279,115Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $6,564 $6,550 $6,111Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0Purchase Other Current Assets $0 $0 $0Purchase Long-term Assets $0 $0 $0Dividends $0 $0 $0Subtotal Cash Spent $186,437 $258,427 $285,226Net Cash Flow $16,593 $17,573 $43,274Cash Balance $44,593 $62,165 $105,4407.5 Business RatiosBusiness ratios for the years of this plan are shown below. Industry profile ratios based on theStandard Industrial Classification (SIC) code 7379, Computer Related Services, (NAICS811212) are shown for comparison.Our projected growth is much higher than the industry average; in part, this is because we area start-up, growing sales steadily in these first three years. We are sure that our sales forecastis conservative, given the dissatisfaction among local computer users with existing options,and our planned aggressive marketing campaign.Ratio Analysis Year 1 Year 2 Year 3 Industry Profile
26. Sales Growth 0.00% 35.94% 19.02% 5.23%Percent of Total AssetsInventory 8.22% 8.15% 6.01% 2.79%Other Current Assets 16.81% 12.73% 8.14% 51.19%Total Current Assets 100.00% 100.00% 100.00% 75.09%Long-term Assets 0.00% 0.00% 0.00% 24.91%Total Assets 100.00% 100.00% 100.00% 100.00%Current Liabilities 42.77% 22.49% 11.12% 31.75%Long-term Liabilities 0.00% 0.00% 0.00% 18.48%Total Liabilities 42.77% 22.49% 11.12% 50.23%Net Worth 57.23% 77.51% 88.88% 49.77%Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 78.28% 78.22% 78.55% 100.00%Selling, General & Administrative 38.70% 65.72% 64.96% 80.06%ExpensesAdvertising Expenses 0.00% 0.00% 0.00% 1.23%Profit Before Interest and Taxes 10.44% 16.28% 21.64% 1.95%Main RatiosCurrent 2.34 4.45 8.99 1.53Quick 2.15 4.08 8.45 1.24Total Debt to Total Assets 42.77% 22.49% 11.12% 57.27%Pre-tax Return on Net Worth 59.02% 63.01% 63.16% 2.73%Pre-tax Return on Assets 33.78% 48.84% 56.14% 6.39%Additional Ratios Year 1 Year 2 Year 3Net Profit Margin 6.93% 9.73% 14.69% n.aReturn on Equity 41.32% 44.10% 44.21% n.aActivity Ratios
27. Inventory Turnover 10.25 9.88 9.33 n.aAccounts Payable Turnover 9.67 12.17 12.17 n.aPayment Days 27 32 28 n.aTotal Asset Turnover 3.41 3.51 2.67 n.aDebt RatiosDebt to Net Worth 0.75 0.29 0.13 n.aCurrent Liab. to Liab. 1.00 1.00 1.00 n.aLiquidity RatiosNet Working Capital $34,039 $60,898 $109,163 n.aInterest Coverage 19.32 6.84 33.24 n.aAdditional RatiosAssets to Sales 0.29 0.28 0.37 n.aCurrent Debt/Total Assets 43% 22% 11% n.aAcid Test 2.15 4.08 8.45 n.aSales/Net Worth 5.96 4.53 3.01 n.aDividend Payout 0.00 0.00 0.00 n.aNeed real financials?We recommend using LivePlan as the easiest way to create automatic financials for your ownbusiness plan.Create your own business plan »7.6 Projected Balance SheetThe Balance Sheet shows a steadily increasing net worth over the next three years. Since weare planning to rent, and because computer technology changes so rapidly, we will have onlyshort-term assets, such as computer equipment and furniture. This will make our net worthmuch more liquid than many similar businesses.Pro Forma Balance Sheet Year 1 Year 2 Year 3
28. AssetsCurrent AssetsCash $44,593 $62,165 $105,440Inventory $4,890 $6,404 $7,385Other Current Assets $10,000 $10,000 $10,000Total Current Assets $59,482 $78,569 $122,825Long-term AssetsLong-term Assets $0 $0 $0Accumulated Depreciation $0 $0 $0Total Long-term Assets $0 $0 $0Total Assets $59,482 $78,569 $122,825Liabilities and Capital Year 1 Year 2 Year 3Current LiabilitiesAccounts Payable $12,783 $11,561 $13,662Current Borrowing $12,661 $6,111 $0Other Current Liabilities $0 $0 $0Subtotal Current Liabilities $25,444 $17,672 $13,662Long-term Liabilities $0 $0 $0Total Liabilities $25,444 $17,672 $13,662Paid-in Capital $23,000 $23,000 $23,000Retained Earnings ($3,025) $11,039 $37,898Earnings $14,064 $26,859 $48,266Total Capital $34,039 $60,898 $109,163Total Liabilities and Capital $59,482 $78,569 $122,825Net Worth $34,039 $60,898 $109,163