Computer Systems Inc - Business Plan

Computer Systems Inc - Business Plan

Preliminary Details

  • Contact information: ABC Computer system Inc is the company managed by two friends named John Mark and Alex. ABC Computer system is emerging as the computer seller through the face to face as well as web selling process. John Mark is an MBA from Oxford University and has lot of experience into online computer selling at his previous workplace. Mark has good command over web selling issues and face to face sales management as well. While Alex who is partner of Mark also have done his MBA from Oxford and lot of experience as sales manager of another computer giant. Company is headquartered in London and following contact details are there for the company:

ABC Computers System Inc.

Tartan House

194, New Bond St

London

  • Document control: There would be various shareholders in ABC Computer system Inc and the control of each shareholder has been given as follows:

Founders-51%

Venture Capatalist-29%

Other 100 Shareholders-20%

With 51% of stake in the company founders will have the full control over the company. The venture capitalist and other shareholders would be having the minor control in the company.

  • Professional advisor: Company has hired some professional advisor for the advising purpose these advisors are in the area of law, web strategies and general business strategy.

Introduction

  • Purpose: The Business plan is written by the owners of the ABC Computer system Inc for the purpose of getting the funds from the venture capitalist in England. The Venture capitalist named Angles Venture capitalist have shown their interest into the business plan hence the business plan is written in order to persuade them to funds the project.
  • Audience: The Target audience for the business plan are of two kinds. One if the primary target audience which is the Angle Venture capitalist and the secondary audience for the project is other venture capitalist firms. [Read about Capital Strucutre]

Current situation

  • Basic corporate information: The ABC Computer system Inc is the company into the area of selling of computer systems for the corporate finance as well as for the individual sales purpose. Company offers its computer system through the various channels which includes one to one or face to face selling and the online selling system as well.
  • Vision, mission and values:

The Vision of the company is:

“To make the world more technically sound and to introduce computer system so as to make the work simple and hassle free”.

Mission of the company is:

“To gain the maximum profitability in order to make the business viable”

Values of the company:

“To understand customer needs and provide them customer delight by serving them in best possible way”

  • History: The ABC Computer system Inc. is the business idea of the two friends who were working for some big multinational companies in computer sales area and though of opening their own company in order to sale computers.
  • Business organisation: The Business of the ABC Computer system Inc has been organised around the two owners of the company who have given birth to the idea of the selling computer system face to face. They are the major share holders while venture capitalist and other shareholders of the company are the minority shareholders into the business.
  • Product and service: The Basic product sold by the company is the computer system through the face to face selling process as well as the online selling process. Company also provides the after sales services to its client.
  • Core competency: The Core competency of the company is its capability to sell the computer face to face. The Human resource developed by the company is highly skilled in selling the computer system face to face to individual as well as corporate clients.

Market Segmentation and target market

As identified by the research data there are the following major segments in the computer market:

  1. Large business: These customers are the big corporate having the employee base of more than 100 and require about 40 workstations for their company.
  2. Small business: These set of customers have the employee base of about 50-100 employee base. And these companies have the requirement of about 15-20 workstations for working.
  3. Government: Government is also one of the major buyers in the computer industry and forms a big part of the overall sales. The Government buys in bulk for their various administrative purposes and other functions as well.
  4. Consumers: These are the individual customers which require single or multiple units of the computer system. These customers are the profitable customers as cost of serving these customers is not much and not much bargaining happens in such customers. But these customers do not provide the benefit of volume buying.
  5. Others: Some other consumers also exist in the computer market e.g. educational institutes and other such places where there is demand of the computers.
  6. Also our company have more focus on the corporate selling system. In the corporate selling system company have focused on the bigger corporate which have requirement for the high quality systems but too small to manage a separate a MIS department.

Our target companies would be having 10-50 employees in the organisation and the company would be in need of about 5-20 computer system. Company will not only focus on a single segment of the customer but will also look at the various segments like the individual customers, business customers and government as well.

The Following pie chart shows market segmentation for the whole computer market:

[caption id="attachment_4566" align="aligncenter" width="550"]Market segmentation for computer systems Inc business plan assignmentShowing market segmentation for the computer industry[/caption]

As shown in the chart that the major part of the customer comes from the large business and government segment while small business and other individual customers forms the rest part of the computer market segment in computer market.

5.0 Financial Planning

5.1 Monthly Sales projections

[caption id="attachment_4567" align="aligncenter" width="548"]sales projections for the first six monthsShowing the sales projections for the first six months[/caption]

The Sales data for the company in millions has been given in the chart. In the initial month company will start of the business with the sales of around £5 million. The Reason for good initial sales is that since both the partners of the business were into the same field from so many years so they must be having the good contacts into the corporate from where they can drive their initial sales.

The Sales data after the first year is increasing as company will try to expand itself into new customer territory and will enjoy good customer acquisition skills.

5.2 Monthly Gross margin and net profit projections

[caption id="attachment_4568" align="aligncenter" width="546"]gross margin and net profit dataShowing the projections for the gross margin and net profit data[/caption]
SalesAmount (Millions)Gross MarginAmount (Millions)Net ProfitAmount (Millions)
M15M12M11.3
M26M22.3M21.6
M38M32.7M32.2
M410M43.2M42.7
M512M53.8M53.0
M615M64.3M63.5

            Table 5.1: Showing the sales, gross margin and net profit data

The Chart above shows the gross margin data and the net profit data for the company for initial six months. The Blue line shows the gross margin of the company while the green line shows the net profit margin of the company.

5.3 Cash flow management

Company need to improve on the following business areas in order to maintain a study cash flow in the business:

  1. Better inventory management system in order to stop slide in inventory turnover
  2. Gross margin should be at least 30% which is desired in the computer sales kind of business
  3. Company should always maintain a big cash availability as the computer sales market is very competitive and it will need to expand its horizon in future
Understand about Enterprise Resource planning here

5.4 Important assumptions

The Financial plans of the company are based on the following assumptions:

  1. Economy is assumed to be slow growing without any recession
  2. Since technology is a threat to the business so we assume there is no big technological change in the near future in the computer market

General financial calculation assumptions

Short term Interest rate-8%

Long term interest rate-8.5%

Tax rate-20%

5.5 Breakeven Analysis

For breakeven analysis we will find out the quantity at which company is at no loss and no profit condition. For finding out the breakeven analysis we will take running cost as our full cost of factors like payroll, rent and utility cost. The Following chart shows the monthly break even analysis for the company. The Breakeven data for the company is as follows:

[caption id="attachment_4565" align="aligncenter" width="550"]breakeven analysisThe breakeven analysis[/caption]

Hence according to the breakeven data company need to sell about 642 units of computers per month. As shown in the breakeven graph that there would be zero profit or loss at the point of 642 units.

Breakeven point units 642

Monthly breakeven revenue $302979

Average per unit revenue $471.65

Average per unit variable cost $336.91

Estimated monthly fixed cost $86555