A Sample Business Plan For A Computer And Networking Service Company – Nerd Patrol

Venture Description

Entrepreneurship is considered to be one of the most success-critical aspects of the business studies as well as in practice business context. The success of failure of a business primarily depends on its entrepreneurship. An efficient entrepreneurship helps the business to grow and vice-versa. However, it may also be conceived that an entrepreneur may require certain guidance while opening a new business (Barringer, 2015). Since the owner of a new business is not experienced with the operational as well as the financial viability of the business, a planning manual becomes the need of the hour for the budding entrepreneur. A business plan helps them to jot down do’s and don’ts for a new business (Getz. and Fairley, 2004).

A business plan may be defined to be the business idea documented considering all the aspects of business ranging from preparation to marketing, finance to risk mitigation and also the market competition to the management team (Jones, 2017). In short, the business plan acts as a checklist document for the owner to proceed with the execution of the business operation. Based on the initial feasibility study, the business plan is prepared which helps the entrepreneurs to undertake the strategic and operational decision. The current business plan is of opening a computer and networking service providing company (Timpka, Ekstrand and Svanström, 2006).

The intended business plan is divided into several sections and sub-sections. At the outset of the plan, the researcher provides a brief description of the venture, products and also the corporate mission and objectives for the short-term and long-term. The researcher also presents the proposed organizational structure and the stakeholders mapping in terms of suppliers, employees and management team. The researcher also proposes the legal form of the business in the section. The next section deals with the marketing part of the business. Market analysis is conducted in this section and competitive landscape is measured in the backdrop of Porters’ Five Forces Model. In addition, the overview of marketing strategies is also described through the 4Ps framework. The next part talks about the operational strategy of the business and lays down the plan as to the acquisition of premises for the business and also the details like business hours, special offering and operational process. The latter part of the plan is one of the most crucial aspects of the venture. Financial planning has been provided herein with projections, assumptions and financial feasibility analysis. In addition, the plan describes the legal issues of the business, resource planning and risk mitigation strategies and also the limitations of the plan. As a matter of caution, an exit plan has also been established. Finally, the planned landmark achievement is mapped with the corresponding time limit and milestones have been developed. Based on the overall findings, the researcher provides an overall recommendation as to the acceptability of the project. In the last, the researcher wraps up the plan by way of concluding note.

The name of the business is “Nerd Patrol”. The business will be engaged in providing computer and networking service. The offering will include hardware repairing and software upgrading and also annual maintenance contracts, for servicing, parts and supplies. Besides, the company will sell pen drives, spare parts like RAM, Motherboard, Circuit and all the related accessories.  

Organizational Overview

Corporate vision of the company is to provide superior quality service at a competitive cost. The objective of the business is to become one of the toppers in the given segment in local directory’s listing. The short-term goal of the company is to achieve break-even as soon as possible and start accumulating profit and retain the same or future growth and development. On the other hand, the long-term goal will consist of tapping another regional market, expanding and opening a new branch and achieving superior customer satisfaction through brand building and value creation and hence achieve sustainability (Van der Wagen and White, 2018).

The business will be formed in the form of LLC and John Robbins, Mary Singh, and Nabil Quresh will be promoters and directors.

AD stated earlier, John, Mary and Nabil will be the owners and they will share profit and loss equally. Moreover, each month, they will be taking salary of $5,000 each.   

John will be looking after the operations. Mary will look into customer relationship. Nabil will be responsible for maintaining books of accounts and corporate reporting.

There will be 2 employees initially who will be taking calls and visiting clients and servicing and helping the management in their activities.

The vendors will be the ones who will be providing supplies like desktops, laptops and accessories. Vendors will be selected after comparative evaluation of 3 to 5 vendors.

Overview

The servicing and PC repairing market is one of the most growing markets not only in USA but also throughout the world, especially amidst the technological boom that has been continuing for last several years on a consistent basis. A research shows that the shipment of PC has witnessed a whopping increase for past few decades; from around 2,00 in 1960 to 15 million in 2003 and then 65 million per quarter in 2015 (Sena, 2018). In the year 2010, almost 550,000 people were employed in the computer servicing industries in USA with most of them engaged in Original Equipment Manufacturers (OEMs). As per IBIS World report, total revenue from computer servicing industry in the country is approximately $18 billion from almost 57,035 businesses (Ibisworld.com, 2018).  

Figure 1: US PC Repairing Market Volume:

(Statista, 2018)

The figure shows that the growth, though has been stagnant, has the potential to maintain its high volume level and hence, there remain ample opportunities for the start-ups to penetrate and succeed in terms of profit earning and growing with the market by way of competitive advantage.

Market SWOT Analysis

Strength:

• One of the most advanced IT service market across the world
• IT service industry in the US accounts for more than a quarter of $3.8 trillion of global IT market (Selectusa.gov, 2018). Therefore, the market is stable and saturated and hence,  steadily growth-oriented (Cronin, 1994).

Weakness:

• The market does not foresee further scope for growth unless there is market disruption
• Number of OEMs is less and hence all the SMEs service providers need to rely on these big brands which are the external sources. As a result, the business becomes entirely dependent on external parties on account of supplies.

Opportunity:

• A job opportunity has increased by 14.6% since 2014 (Selectusa.gov, 2018)
• Prioritization by Trump Administration towards AI research and hence more scope for servicing business (Selectusa.gov, 2018)
• Development and adoption of IT services in SMEs has opened up lots of avenues for the service providers to reach out to a new bunch of customers

Threat:

• There are more than 100,000 IT service firms in the USA out of which more than 99% are SMEs (having less than 500 employees). Hence strict competition exists (Selectusa.gov, 2018).
• Growth in mobile technology has adversely affected PC servicing industry.

The market is extremely competitive and hence the newcomers may find it extremely difficult to reach a successful operation by way of traditional offering. However, the market size f huge and hence, the offering may be suited for the varying degree of consumers with strategic positioning of the offering. Porters’ Five Force Model explains the competitive landscape in brief.

Bargaining Power of Buyers

High – Since the market is extremely competitive, the buyers have lots of options to switch to other competitors. The low switching cost of the buyers makes them strong in terms of bargaining power and hence, the same is risky for the business.

Mission and Vision and Corporate Objectives

Bargaining Power of Suppliers

Low – The competition among the suppliers makes them weak in bargaining with the business. The client has a number of options to decide upon the supply chain and hence, the lower switching cost of the clients makes the suppliers a weak force in the market.

The threat of New Entry

Low – The market has a number of players with the majority being small and medium (SMEs) business. Therefore, already the horizon is aggressive in terms of rivalry and hence, separately there is no threat posed by the new entrants.  

Threat of Substitution

Moderate– The market players trying to get the competitive advantage by tweaking the service offering are making the situation tougher for the new entrants to cope with the ever-changing technology market. Additionally, the advent of mobile technology has paved the way for product differentiation by way of change in service delivery.  

Competitive Rivalry

High – Because of the above-mentioned reasons, the overall market is conceived to be extremely competitive. The players are vying with each other to attain the premium position in the small segment by way of product differentiation as well as cost leadership (Pratap, 2018).

The company will have to formulate its marketing strategies efficiently because the market is extremely competitive and the business has just been conceived to be started soon with limited financial resource and human capital. Some of the key considerations while framing the marketing strategies are listed herein:

• Online vs. offline channel
• Cost consideration for each channel
• The effectiveness of each channel
• Marketing budget
• Salesforce and manpower planning
• The need for research & development (R&D)

Based on these considerations, the company will plan to market its product primarily through online channels like social, media platforms and own website and blog. Facebook, with more than 2 billion users worldwide, is an effective platform to advertise own offering and paid promotion will be conducted to advertise services and products (Koch and Dikmen, 2015). Moreover, the website and blog embedded therein will get visitors from social media platforms routed therefrom and place orders. Besides, there will be low-cost approaches f physical marketing by way of distributing leaflets, handouts, leaflets in nearby localities. The company will participate yearly business fair organized by the national PC industry circle and showcase their offering. Newspaper advertisement is comparatively expensive but effective, but the same may also resort later on (Felix, Rauschnabel and Hinsch, 2017).   

The elements of marketing strategies of the company are described through 4Ps framework as below:

Product

• The business will deal with computer servicing and networking services.
• The service offering will include hardware and software upgrades, hardware repairs, debugging software problems and also the dealing with network problems
• The company will have annual maintenance contracts (AMC) as well for providing additional and add-on services to the customers (Tao, Cheng, Zhang and Nee, 2017)
• Unique Selling Proposition (USP) – superior quality at a competitive cost

Price

• The pricing will be moderate across all categories of services.
• Since the market is competitive, the approach will, therefore, be the keeping the price range at a minimum level (Aydalot and Keeble, 2018)

Promotion

• As stated above, both online and offline channels will be used to promote the services.
• The promotional budget will be fixed after considering the proposed projected profitability.
• Inauguration day will be celebrated through ribbon cutting ceremony by inviting Mayor and arrangement will be made for snacks, sweets and distribution of manuals, handouts and rate charts for the service offerings

Place

• Since the business will be based in the US and the market is full of competitors, the business should use the locational benefit to leverage the customers
• Localized marketing like physical distribution of handouts and manuals, business cards etc. should focus on the nearby school, colleges, offices and other places where the potential of conversion is high  

The business will be situated at one of the owners, John’s uncle’s premises in New York City. The property will be taken at a nominal rent of $100 just as a token as the uncle has confirmed that he will not be requiring money unless the business reaches to break-even. However, as a matter of good gesture, rent of $100 per month has been decided and mutually agreed upon.

Figure 2: Proposed Business Location

(Google Maps)

The map shows the exact location of the business premises in the NY City and this is near East Orange city in Essex Country, New Jersey. The office premises will be on the ground floor of a two-storied building where the uncle stays on the first floor. The ground floor covers a carpet area of 1,050 square feet which is pretty sufficient for setting up the office for the business. The office will be furnished with computers, desktops, laptops, CCTV, billing machine, landline, water filter, furniture including chairs, tables, office desks, electrical wearing, and installation etc.  

The business will be started in the year 209. The inauguration date has been finalized on 1^st January 2019 and the fiscal year will be April to March every year. First years accounts will be audited after completion of 15 months. The normal office hours will be 9.30 am to 5.30 pm every day excluding weekends. The timing for Saturday will be from 10.30 am to 4.30 pm. Sunday will be off. The business name will be displayed through hoarding and banner at the outside of the room. The service orders will be placed through phone or by way of a physical visit to the office. If the call is pertaining to a service of repairing, the service personnel will reach to client’s place (home or office, as the case may be). If the servicing requires the desktop or laptop to be taken out from client’s premises to the office for a detailed check-up, the same should be taken accordingly. Therefore, the office space should accommodate a separate space for assembling and de-assemble a PC set-up. Once the servicing is done and the issue is resolved, the management should raise a bill, unless it is under AMC where the servicing is pre-binding under a contract. The bill should be realized after follow-up and the service call will be closed accordingly (Baily and Bosworth, 2014).

	Initial Capital Requirement
	Particulars	USD
	Fixed Assets (Note-1)	15,000
	Inventory (Dry Stores)	7,500
	Salaries (Note-2)	35,000
	Utilities (Note-3)	2,000
	Initial Promotion and Marketing (Note -4)	15,000
	Legal – Incorporation & Preliminary	250
	Contingency & Overhead	250
	Total	75,000

 Source of Finding: Initially the business will require $75,000 which will be financed by three owners equally at $25,000 each out of own fund.

Note-1 (Fixed Assets)
Particulars	USD
Computers, Desktops, Laptops	12,000
Air Conditioners	1,000
Billing Machines	400
CCTV Camera	200
Electrical Fittings	200
Sign Board & Hoarding	800
Other Fixed Assets	400
Total	15,000
Note-2 (Salaries)
Particulars	USD pm
3 Owners	15,000
2 Employees	20,000
Total	35,000
Note-3 (Utilities)
Particulars	USD pm
Rent	100
Advertising & Publicity	1,000
Electricity Charges	100
Repairs & Maintenance	100
Printing & Stationeries	200
Travel & Conveyance	300
Telephone	100
Overhead	100
Total	2,000
Note -4 (Initial Promotion and Marketing )
Particulars	USD
Facebook Promotion (Online)	1,000
YouTube, Instagram, Google+ (Online)	1,000
App Development, Promotion & Marketing	2,000
Leaflet, Handout Distribution	2,000
Inauguration	4,000
Total	10,000

The business will need monthly expenses of $37,000 comprising of salary, advertisement and other utilities like rent, maintenance, stationery, and traveling etc.

	Operational Expenses
	Particulars	USD
	Salary	35,000
	Rent	100
	Advertising & Publicity	1,000
	Electricity Charges	100
	Repairs & Maintenance	100
	Printing & Stationeries	200
	Travel & Conveyance	300
	Telephone	100
	Overhead	100
	Total	37,000

While framing purchase and sales budget, it has been assumed that the business will achieve 5 clients on a daily basis and the same will grow at the rate of 10% on monthly basis. Also, for the sake of simplicity and ease on calculation, it has been assumed that there is no inventory and all the sales and purchases are on cash and no credit. Also, it has been assumed that the average of all service acquisition cost is $50 per customer and average selling price per customer for each service is averaged at $200. Based on the same, total purchase and sales are computed to be $ 160,382 and $ 641,529 respectively.

Purchase Budget
Month	No. of Customers pm	Cost USD	Total USD
January’19	150	50.00	7,500
February	165	50.00	8,250
March	182	50.00	9,075
April	200	50.00	9,983
May	220	50.00	10,981
June	242	50.00	12,079
July	266	50.00	13,287
August	292	50.00	14,615
September	322	50.00	16,077
October	354	50.00	17,685
November	389	50.00	19,453
December	428	50.00	21,398
Total	3,208		160,382

Sales Forecast
Month	No. of Customers pm	Price USD	Total USD
January’19	150	200.00	30,000
February	165	200.00	33,000
March	182	200.00	36,300
April	200	200.00	39,930
May	220	200.00	43,923
June	242	200.00	48,315
July	266	200.00	53,147
August	292	200.00	58,462
September	322	200.00	64,308
October	354	200.00	70,738
November	389	200.00	77,812
December	428	200.00	85,594
Total	3,208		641,529

The fixed assets of the business are subjected to depreciation and hence the same is depreciated assuming the depreciation rate of 20% on straight-line method for five years.

Depreciation Schedule
Year	Opening Balance USD	Depreciation @ 20% USD	Closing Balance USD
1	15,000	3,000	12,000
2	12,000	3,000	9,000
3	9,000	3,000	6,000
4	6,000	3,000	3,000
5	3,000	3,000	0
Total		15,000

Based on the assumptions made previously, the projected P/L shows an after-tax profit of $ 13,227 at the end of year one which increases to $ 35,970 after the end of the fifth year.

	Projected Profit & Loss Account
	Particulars	Year 1	Year 2	Year 3	Year 4	Year 5
	USD	USD	USD	USD	USD
	Revenue (A)	641,529	705,681	776,250	853,874	939,262
	Cost of Sales (B)	160,382	176,420	194,062	213,469	234,815
	Gross Profit (C=A-B)	481,146	529,261	582,187	640,406	704,446
	Salary	420,000	462,000	508,200	559,020	614,922
	Rent	1,200	1,320	1,452	1,597	1,757
	Advertising & Publicity	12,000	13,200	14,520	15,972	17,569
	Electricity Charges	1,200	1,320	1,452	1,597	1,757
	Repairs & Maintenance	1,200	1,320	1,452	1,597	1,757
	Printing & Stationeries	2,400	2,640	2,904	3,194	3,514
	Travel & Conveyance	3,600	3,960	4,356	4,792	5,271
	Telephone	1,200	1,320	1,452	1,597	1,757
	Overhead	1,200	1,320	1,452	1,597	1,757
	Initial Marketing	15,000	0	0	0	0
	Legal – Incorporation	250	0	0	0	0
	Depreciation	3,000	3,000	3,000	3,000	3,000
	Total (D)	462,250	491,400	540,240	593,964	653,060
	Net Profit before Tax (E=C-D)	18,896	37,861	41,947	46,442	51,386
	Tax @ 30%	5,669	11,358	12,584	13,933	15,416
	Retained Earnings	13,227	26,503	29,363	32,509	35,970

The projected balance sheet shows total asset position of $88,227 after Year 1 and $212,573 after Year 5. Such a significant increase is primarily attributable to the sufficient accumulation of cash by the business.

	Projected Balance Sheet
	Particulars	Year 1	Year 2	Year 3	Year 4	Year 5
	USD	USD	USD	USD	USD
	Assets
	Fixed Assets	12,000	9,000	6,000	3,000	0
	Cash	76,227	105,730	138,093	173,602	212,573
	Total	88,227	114,730	144,093	176,602	212,573
	Liabilities
	Capital	75,000	88,227	114,730	144,093	176,602
	Retained Earnings	13,227	26,503	29,363	32,509	35,970
	Total	88,227	114,730	144,093	176,602	212,573

The GP ratio is calculated to be 75% throughout and net margin steadily increased from 3% to 5% in a span of five years. Asset utilization has been exceptionally well as the asset turnover ratio has increased from 53 to 284.

Legal Structure

The calculation shows that the company is going to achieve break-even within two years.

	Break Even Point
	Particulars	Amount
	USD
	Revenue per unit (A)	200.00
	Monthly Operational Expenses	37,000
	Total Products sold pa	3,208
	Average Products sold pm	267
	Average Operational Expenses per unit	138.42
	Cost of Sales per unit	50.00
	Total Variable Cost per unit (B)	188.42
	Contribution per unit (A-B)	11.58
	Fixed Cost	75,000
	Break Even Point (in units)	6,476
	BEP may be achieved in less than 2 years assuming 10% growth p.m. in sales.

The business will be formed in the form of “company” or “LLC” (limited liability company). accordingly, necessary registration and licensing will be done. Moreover, the tax-related licensing (like GST) should also be performed. After incorporation, the trade license will also be required for carrying out the business.

Once the business starts running, yearly renewal of the licenses will have to be made. Besides, the company will have to file its annual tax return by paying the required tax liability to the Government. Such compliance is necessary on annual basis. Besides, the books of accounts should be prepared and financial statements should be audited compulsorily by an external statutory auditor on a yearly basis (Leon, 2014).

Mary has a friend who happens to be CPA and he will do all the needful starting from the incorporation of the company to GST registration and trade licensing and also the year-end compliance. Also, Nabil’s cousin is a lawyer and hence, necessary devices may be taken from him as well.   

The business will require different types of resources all of which carries a separate risk element in them. The management should, therefore, have a concise resource planning as to how to acquire and use them in the business and also how the risks embedded may be mitigated and managed.   

Financial Resources – The business, as stated earlier, will require a substantial amount of initial capital for start-up and working capital for subsequent operations and routine activities. However, there remains a financial risk of profit level, not being achieved as expected. If the profit is not sufficient or planned, the same may significantly hamper the owner group’s requirement of return on their investment (Ward, 2016). However, since the business is not financed through debt, the chance of insolvency risk arising out of interest payment obligations may be nullified.

Human Resources – The business will employ resources for the purpose of business activities. Though there will be direct supervision of the owner groups, the execution will be performed by the employees. However, there remains the risk of attrition and employees leaving the organization and hampering the workflow. It may so happen that the staffs have left the organization just after receiving a big AMC offer for a bulk number of computers in an office. The risk, therefore, in this case, will be related to non-flexibility in terms of operations. However, since the owner group consists of three persons, it may not be hampering the workflow because owners may get physically involved and get the job done (Burns, 2016).

Technological Resources – The business will require several technological resources like computers, desktops, laptops, CCTV, billing machine, landline, water filter, furniture including chairs, tables, office desks, electrical wearing, and installation etc. These computers and related assets will be subjected to technological risks and hence all the data should be backed up on a regular basis. Similarly, the business will secure its data through the installation of anti-virus programs within all systems of the office (Bryson, 2018).  

Owners

Implementation of a business plan is certainly a challenging task. Since this is a new business, there will be certain challenges which may not be captured in the plan at the very first place. Therefore, it becomes on the owners as to how they handle the unforeseen circumstances and unwanted situations in the business (McKenzie, 2015). In addition, the owners’ lack of business acumen may not be substituted by way of designing an effective business plan. Furthermore, change in the market and any regulations brought up by the Government impacting the business operations may affect the business plan. Moreover, the financial assumptions made while making the projections may not hold true in reality (McKeever, 2016). Therefore, it may be noted that the business plan should not be relied upon as an authentic document for the owners. The owner should refer the plan n his strategic decision making and plan should be treated just as an aid to the decision-making process (Argenti, 2018).

It may so happen that the business does not run and the owners have to shut down the operation after saying one or two or even five years. In such case, it is important to have an exit plan in place so that all the assets and liabilities of the then business may accordingly be disposed of and liquidated and proceeds, if any, may be shared among the owners at the pre-agreed ratio. However, the same will be documented in the memorandum of the association and article of association of the company and other related documents (McDonald and Wilson, 2016). But, if the business cannot perform well and the owners’ money gets lost because of non-profit of the organization for past 6 months or one year in such a case, the exit plan should be built accordingly so that the amount invested may be recouped at least. John’s uncle has given him a total of $50,000 for his future, under a will, which may be kept aside in the bank, in the form of investment and the same has been mutually decided to be utilized in case of an unexpected shutdown. The investment, to date, will fetch interest in the bank and accumulate gradually.

The table below shows some of the key milestones that the owner groups have planned to achieve within the given deadline.

Date	Target
1st January 2019	Inauguration
1st January 2020	First 100 customers + Break-even
1st January 2020	First 200 customers + Accumulated profit of $1,000
1st January 2021	Accumulated profit of $5,000 + Additional recruitment (2)
1st January 2022	Accumulated profit of $15,000 + Additional recruitment (5)
1st January 2023	Opening a branch and expansion

The table may not be exhaustive but gives an overall growth idea and planning components for the management in terms of their attitude towards the future of the business. The milestone and timetable may be developed afterwards based on subsequent findings.  

Based on the discussion and analysis performed in the preceding sections of the report, it may be noted that the business has been expected to run well in forthcoming years. Once the business is started, the customers will start coming if the product USP holds true in the market. Since the PC servicing and repairing business is predominantly based on customer’s choice and preferences of servicing perception, the business should adopt the changing landscape of customer’s demand and preferences quickly in order to be at the top of change adoption and market disruption with innovative thinking (Trevino and Nelson, 2016). Also, the financial study shows strong profitability and liquidity. Therefore, it is recommended to start the business.

Management Team

Conclusion

A business plan provides a conceptual framework regarding opening a new business. The way an owner of a new business may not be replaced by an efficiently prepared business plan, similarly, the well-designed business plan may not substitute the entrepreneur. Both the entrepreneur and business are important and plan should be viewed as decision-making aid to support the entrepreneurship (McKenzie, 2015). Finally, it may be concluded that an exhaustive and detailed business plan may significantly contribute towards the corporate goal of achievement of sustainability in the long-run in most time and cost efficient manner (Green, 2001).

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