Logo

Powered by iPlanner.NET
Business Planning Software

 

Sample IT Business Plan

IT ADVISERS
(EXAMPLE BUSINESS PLAN)

 

2012 - 2014

22/05/2013 04:01:09(UTC)


Executive Summary

IT-Advisers will be formed as a consulting company specializing in marketing of information technology and hi-tech products in international markets. Its founders are former marketers of consulting services, cloud-based software and market research, all in international markets. They are founding IT-Advisers to formalize the consulting services they offer.

Mission
IT Advisers (ITA) offers high-tech manufacturers and IT-companies a reliable, high quality alternative to in-house resources for business development, market research and channel development on an international scale.

A true alternative to in house resources offers a very high level of practical experience, know how, contacts and confidentiality. Clients must know that working with ITA is a more professional, less risky way to develop new areas even than working completely in house with their own people. ITA must also be able to maintain financial balance, charging a high value for its services and delivering an even higher value to its clients. Initial focus will be development in the European and Latin American markets, or for European clients in the United States market.

Keys to Success

  1. Excellence in fulfilling the promise completely confidential, reliable, trustworthy expertise and information.
  2. Developing visibility to generate new business leads.
  3. Leveraging from a single pool of expertise into multiple revenue generation opportunities: retainer consulting, project consulting, market research, and market research published reports.
This is a sample business plan created with iPlanner.NET business planning software application.

 

Main financial measures
 201220132014
Cash3,42252,939114,404
Sales revenue1,175,0001,800,0002,450,000
Net profit for financial year-112,50976,547210,178
Operating margin-9.58%4.25%8.58%
Owners' equity22,491159,038349,216
Return on equity (per year)-500%48.1%60.2%

 

Current year profit (USD)

 

Return on equity (%)

 

Cash balance (USD)

Company Overview

IT Advisers (ITA) is a new company providing high-level expertise in international high-tech business development, channel development, distribution strategies and marketing of high tech products. It will focus initially on providing two kinds of international triangles:
  1. Providing United States clients with development for European and Latin American markets.
  2. Providing United Kingdom and European clients with development for the US and Latin American markets.
As it grows it will take on people and consulting work in related markets, such as the rest of Latin America and the Far East, also similar markets. As it grows it will look for additional leverage by taking brokerage positions and representation positions to create percentage holdings in product results.

ITA will be created as a California C corporation based in San Jose, owned by its principal investors and principal operators. As of this writing it has not been chartered yet and is still considering alternatives of legal formation. The initial office will be established in a quality office space in the "Silicon Valley" area of California, the heart of the U.S. high tech and software industry.

ITA offers expertise in channel distribution, channel development, software and market development, sold and packaged in various ways that allow clients to choose their preferred relationship: these include small business consulting relationships, project based consulting, relationship and alliance brokering, sales representation and market representation, project-based market research, published market research and information forum events.

 

Pic 1. HTA Headquarters

Pic 1. HTA Headquarters

Products and Services

ITA offers the expertise a IT-company needs to develop new product distribution and new market segments in new markets. This can be taken as high-level retainer consulting, market research reports, software applications and/or project-based consulting.

Retainer consulting - we represent a client company as an extension of its business development and market development functions. This begins with complete understanding of the client company's situation, objectives, business plan, and constraints. We then represent the client company quietly and confidentially, sifting through new market developments and new opportunities as is appropriate to the client, representing the client in initial talks with possible allies, vendors and channels.

Project consulting - Proposed and billed on a per-project and per- milestone basis, project consulting offers a client company a way to harness our specific qualities and use our expertise to solve specific problems, develop and write business plans, develop specific information, software.

Market research - group studies available to selected clients at $5,000 per unit. A group study is packaged and published, a complete study of a specific market, channel, or topic. Examples might be studies of developing consumer channels in Brazil or Mexico, or implications of changing margins in software.

In the future ITA will broaden the coverage by expanding into coverage of additional markets (e.g. all of Latin America, Far East, Western Europe) and additional product areas (e.g. telecommunications, web-based software and technology integration). We are also studying the possibility of newsletter or electronic newsletter services, or perhaps special on- topic reports.

Pricing and Sales

ITA (IT-Advisers) will be priced at the upper edge of what the market will bear, competing with the name brand consultants.

Consulting should be based on $5,000 per day for project consulting, $2,000 per day for market research, and $10,000 per month and up for retainer consulting. Market research reports should be priced at $5,000 per report, which will of course require that reports be very well planned, focused on very important topics very well presented.

The annual sales projections, gross margins and cost of sales are included here in the following tables.

 

Sales revenue (USD)
Products and services201220132014
Retainer Consulting400,000650,0001,000,000
Project Consulting500,000750,000900,000
Market Research200,000300,000400,000
Strategic Reports and Software75,000100,000150,000
 1,175,0001,800,0002,450,000

 

Gross margin (%)
Products and services201220132014
Retainer Consulting858585
Project Consulting858585
Market Research303030
Strategic Reports and Software707070

 

Cost of sales (USD)
Products and services201220132014
Retainer Consulting60,00097,500150,000
Project Consulting75,000112,500135,000
Market Research140,000210,000280,000
Strategic Reports and Software22,50030,00045,000
 297,500450,000610,000

 

Break-even analysis (USD)
 201220132014
Sales revenue1,175,0001,800,0002,450,000
Cost of sales297,500450,000610,000
Variable expenses, total297,500450,000610,000
Labour cost727,260897,0001,110,900
Other operating expenses265,000322,500455,000
Depreciation of fixed assets5,00015,00015,000
Financial expenses5,25030,44825,569
Fixed expenses, total1,002,5101,264,9481,606,469
Gross margin74.7%75%75.1%
Break-even sales revenue1,342,3911,686,5972,139,049
Sales revenue above break-even0113,403310,951

 

Sales revenue (USD)

Marketing Strategy

ITA will be focusing on information technology manufacturers of computer hardware and software, services, networking, who want to sell into markets in the United States, United Kingdom, Europe, and Latin America. These are mostly larger companies, and occasionally medium-sized companies.

Our most important group of potential customers are executives in larger corporations. These are marketing managers, general managers, sales managers, sometimes charged with international focus and sometimes charged with market or even specific channel focus. They do not want to waste their time or risk their money looking for bargain information or questionable expertise. As they go into markets looking at new opportunities, they are very sensitive to risking their company's name and reputation.

The consulting industry is pulverized and disorganized, thousands of smaller consulting organizations and individual consultants for every one of the few dozen well-known companies.Consulting is a disorganized industry, with participants ranging from major international name brand consultants to tens of thousands of individuals. One of ITA's challenges will be establishing itself as a "real" consulting company, positioned as a relatively risk free corporate purchase.

At the highest level are the few well established major names in management consulting. Most of these are organized as partnerships established in major markets around the world, linked together by interconnecting directors and sharing the name and corporate wisdom. Some evolved from accounting companies and some from management consulting. These companies charge very high rates for consulting and maintain relatively high overhead structures and fulfillment structures based on partners selling and junior associates fulfilling. At the intermediate level are some function specific or market specific consultants, such as the market research firms or channel development firms.

Market segmentation

  • Large manufacturer corporations - our most important market segment is the large manufacturer of high-technology products, such as Apple, Hewlett-Packard, IBM, Microsoft. These companies will be calling on ITA for development functions that are better spun off than managed in-house, and for market research, and for market forums.
  • Medium sized growth companies: particularly in software, multimedia, and some related high growth fields, ITA will be able 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.

Competition

The competition comes in several forms:
  1. The most significant competition is no consulting at all, companies choosing to do business development, planning and channel development and market research in-house. Their own managers do this on their own, as part of their regular business functions. Our key advantage in competition with in-house development is that managers are already overloaded with responsibilities, they don't have time for additional responsibilities in new market development or new channel development. Also, ITA can approach alliances, vendors, and channels on a confidential basis, gathering information and making initial contacts in ways that the corporate managers can't.
  2. The high-level prestige management consulting: McKinsey, Boston Consulting Group, etc. These are essentially generalists who take their name-brand management consulting into specialty areas. Their other very important weakness is the management structure that has the partners selling new jobs, and inexperienced associates delivering the work. We compete against them as experts in our specific fields, and with the guarantee that our clients will have the top-level people doing the actual work.
  3. The third general kind of competitor is the international market research company: Dataquest, Stanford Research Institute, etc. These companies are formidable competitors for published market research and market forums, but cannot provide the kind of high-level consulting that ITA will provide.
  4. The fourth kind of competition is the market-specific smaller house. For example: Nomura Research in Japan.
  5. Sales representation, brokering and deal catalysts are an ad-hoc business form that will be defined in detail by the specific nature of each individual case.

Management and Staffing

The initial management team depends on the founders themselves, with little back-up. As we grow we will take on additional consulting help, plus graphic/editorial, sales, and marketing. ITA should be mainly managed by working partners. In the beginning we assume 3-5 partners. We will invite one international partner from Europe. The organization has to be very flat in the beginning, with each of the founders responsible for his or her own work and management.

The ITA business requires a very high level of international experience and expertise, which means that it will not be easily leveraged in the common consulting company mode in which partners run the business and make sales, while associates fulfill. Partners will necessarily be involved in the fulfillment of the core business proposition, providing the expertise to the clients.

The initial personnel plan is still tentative. It should involve 3-5 partners, 1-3 consultants, 1 strong marketing person, an office manager. Later we add more partners, consultants and and sales staff.

The annual personal estimates are included in the tables presented below.

 

Headcount
Personnel201220132014
Partners457
Consultants444
Marketing manager011
Sales reps222
Office manager111
 111315

 

Average monthly salary (USD)
Personnel201220132014
Partners5,2005,5006,000
Consultants5,1005,2005,300
Marketing manager4,6004,7004,800
Sales reps4,2004,4004,600
Office manager3,1003,2003,300

 

Labour cost (USD)
 201220132014
Wages and salaries632,400780,000966,000
Social security costs94,860117,000144,900
Labour cost727,260897,0001,110,900
REVENUES1,175,0001,800,0002,450,000
Labour cost to revenues61.9%49.8%45.3%

 

Labour cost (USD)

Implementation

Total start-up expense (including legal costs, branding, stationery, other one time expenses) come to $30,000. The annual overhead expense estimates are presented in the table below.
Start-up assets required include $50,000 in fixed assets like office furniture, computers, software and other equipment and tools.

 

Other operating expenses (USD)
Other operating expenses201220132014
Startup expenses30,00000
Marketing50,00060,00070,000
Travel100,000150,000250,000
Office expenses and software costs75,000100,000120,000
Insurance5,0005,0005,000
Other fixed expenses5,0007,50010,000
 265,000322,500455,000

 

Assets purchase value (USD)
Fixed assets201220132014
Startup fixed assets (equipment)50,00000
New office0500,0000
 50,000500,0000

Financial Projections

The paid-in capital from partners and other investors will be $135,000.
An annuity loan will be taken from a bank in amount of $500,000 for 60 months.
The performance measures, business plan financial projections and break-even analysis are presented below.

 

Performance measures (USD)
 201220132014
Sales revenue1,175,0001,800,0002,450,000
Cost of sales297,500450,000610,000
Gross profit877,5001,350,0001,840,000
Other operating expenses265,000322,500455,000
Labour cost727,260897,0001,110,900
Depreciation of fixed assets5,00015,00015,000
Operating profit-119,760115,500259,100
EBITDA-114,760130,500274,100
Financial income and expenses-5,250-30,448-25,569
Profit before income tax-125,01085,052233,531
Income tax expense-12,5018,50523,353
Profit-112,50976,547210,178
    
Operating margin-9.58%4.25%8.58%
Gross margin74.7%75%75.1%
Sales per employee106,818138,462163,333
Value added612,5001,027,5001,385,000
Value added per employee55,68279,03892,333
    
Return on equity (per year)-500%48.1%60.2%
Quick ratio1.040.908.52
Current ratio1.040.908.52
ISCR-21.94.2910.7
DSCR01.081.79
Debt to equity ratio3.333.041.02
Debt to capital ratio76.9%75.3%50.5%
    
Receivables collection period, days15.015.015.0
Payable period, days15.015.015.0

 

Income statements (USD)
 201220132014
Sales revenue1,175,0001,800,0002,450,000
Cost of sales297,500450,000610,000
Other operating expenses265,000322,500455,000
Labour cost   
Wages and salaries632,400780,000966,000
Social security costs94,860117,000144,900
Total labour cost727,260897,0001,110,900
Depreciation of fixed assets5,00015,00015,000
Operating profit-119,760115,500259,100
Financial expenses   
Interest expense5,25030,44825,569
Total financial expenses5,25030,44825,569
Profit before income tax-125,01085,052233,531
Income tax expense-12,5018,50523,353
Net profit for financial year-112,50976,547210,178

 

Balance sheets (USD)
 201220132014
ASSETS   
Current assets   
Cash3,42252,939114,404
Receivables and prepayments   
Trade receivables48,96875,006102,087
Prepaid and deferred taxes12,5013,9960.00
Inventories   
Inventories000
Total current assets64,890131,940216,491
Fixed assets   
Tangible assets   
Machineny and equipment50,000550,000550,000
Less: Accumulated depreciation-5,000-20,000-35,000
Total45,000530,000515,000
Total fixed assets45,000530,000515,000
Total assets109,890661,940731,491
LIABILITIES and OWNERS' EQUITY   
Liabilities   
Current liabilities   
Loan liabilities   
Short-term loans and notes000
Current portion of long-term loan liabilities50,000127,2950
Total50,000127,2950
Debts and prepayments   
Trade creditors, goods12,39918,75125,418
Trade creditors, other000
Employee-related liabilities000
Total12,39918,75125,418
Total current liabilities62,399146,04625,418
Long-term liabilities   
Long-term loan liabilities   
Loans, notes and financial lease payables25,000356,857356,857
Total long-term liabilities25,000356,857356,857
Total liabilities87,399502,902382,275
Owners' equity   
Share capital in nominal value135,000195,000195,000
Share premium000
Retained profit/loss0-112,509-55,962
Current year profit-112,50976,547210,178
Total owners' equity22,491159,038349,216
Total liabilities and owners' equity109,890661,940731,491

 

Cash flow statement (1-6 month) (USD)
 Jan-2012Feb-2012Mar-2012Apr-2012May-2012Jun-2012
CASH FLOWS FROM OPERATING ACTIVITIES      
Inflows      
Payments from customers48,95897,91597,91597,91597,91597,915
Total48,95897,91597,91597,91597,91597,915
Outflows      
Payments to vendors (goods)12,39624,79124,79124,79124,79124,791
Payment of salaries and wages52,70052,70052,70052,70052,70052,700
Social security costs7,9057,9057,9057,9057,9057,905
Payments to vendors (operating expenses)29,58129,58129,58119,58119,58119,581
Total102,582114,977114,977104,977104,977104,977
Net cash flow from operating activities-53,624-17,062-17,062-7,062-7,062-7,062
       
CASH FLOWS FROM INVESTING ACTIVITIES      
Inflows      
Outflows      
Payments to vendors (assets)50,00000000
Total50,00000000
Net cash flow from investing activities-50,00000000
       
CASH FLOWS FROM FINANCING ACTIVITIES      
Inflows      
Payments from shareholders135,00000000
Loan amounts received75,00000000
Total210,00000000
Outflows      
Principal repayments000000
Interest expense438438438438438438
Dividends (net to shareholders)000000
Payment of corporate income tax000000
Corporate income tax on dividends000000
Total438438438438438438
Net cash flow from financing activities209,563-438-438-438-438-438
       
Net change in cash105,938-17,500-17,500-7,500-7,500-7,500
Cash at the beginning0105,93888,43970,93963,44055,940
Cash at the end105,93888,43970,93963,44055,94048,441

 

Cash flow statement (3-6 quarter) (USD)
 Q3-2012Q4-2012Q1-2013Q2-2013
CASH FLOWS FROM OPERATING ACTIVITIES    
Inflows    
Payments from customers293,745293,755423,965449,997
Total293,745293,755423,965449,997
Outflows    
Payments to vendors (goods)74,37374,377106,149112,499
Payment of salaries and wages158,100158,100195,000195,000
Social security costs23,71523,71529,25029,250
Payments to vendors (operating expenses)58,74358,77180,62280,622
Total314,931314,963411,021417,371
Net cash flow from operating activities-21,186-21,20812,94432,626
     
CASH FLOWS FROM INVESTING ACTIVITIES    
Inflows    
Outflows    
Payments to vendors (assets)00500,0000
Total00500,0000
Net cash flow from investing activities00-500,0000
     
CASH FLOWS FROM FINANCING ACTIVITIES    
Inflows    
Payments from shareholders0060,0000
Loan amounts received00500,0000
Total00560,0000
Outflows    
Principal repayments0012,49812,498
Interest expense1,3131,3136,1678,448
Dividends (net to shareholders)0000
Payment of corporate income tax0000
Corporate income tax on dividends0000
Total1,3131,31318,66520,946
Net cash flow from financing activities-1,313-1,313541,335-20,946
     
Net change in cash-22,499-22,52054,28011,680
Cash at the beginning48,44125,9423,42257,701
Cash at the end25,9423,42257,70169,381

 

Cash flow statement (1-4 year) (USD)
 201220132014
CASH FLOWS FROM OPERATING ACTIVITIES   
Inflows   
Payments from customers1,126,0331,773,9622,422,919
Total1,126,0331,773,9622,422,919
Outflows   
Payments to vendors (goods)285,101443,648603,333
Payment of salaries and wages632,400780,000966,000
Social security costs94,860117,000144,900
Payments to vendors (operating expenses)265,000322,500455,000
Total1,277,3611,663,1482,169,233
Net cash flow from operating activities-151,328110,814253,686
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Inflows   
Outflows   
Payments to vendors (assets)50,000500,0000
Total50,000500,0000
Net cash flow from investing activities-50,000-500,0000
    
CASH FLOWS FROM FINANCING ACTIVITIES   
Inflows   
Payments from shareholders135,00060,0000
Loan amounts received75,000500,0000
Total210,000560,0000
Outflows   
Principal repayments090,849127,295
Interest expense5,25030,44825,569
Dividends (net to shareholders)0020,000
Payment of corporate income tax0019,357
Corporate income tax on dividends000
Total5,250121,297192,221
Net cash flow from financing activities204,750438,703-192,221
    
Net change in cash3,42249,51761,465
Cash at the beginning03,42252,939
Cash at the end3,42252,939114,404

 

Capital structure (USD)
 201220132014
Current assets64,890131,940216,491
Fixed assets45,000530,000515,000
Current liabilities62,399146,04625,418
Long-term liabilities25,000356,857356,857
Owners' equity22,491159,038349,216

 

Funding needs analysis (USD)
 201220132014
CASH FLOWS FROM OPERATING ACTIVITIES   
Inflows   
Payments from customers1,126,0331,773,9622,422,919
Total1,126,0331,773,9622,422,919
Outflows   
Payments to vendors (goods)285,101443,648603,333
Payment of salaries and wages632,400780,000966,000
Social security costs94,860117,000144,900
Payments to vendors (operating expenses)265,000322,500455,000
Total1,277,3611,663,1482,169,233
Net cash flow from operating activities-151,328110,814253,686
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Inflows   
Outflows   
Payments to vendors (assets)50,000500,0000
Total50,000500,0000
Net cash flow from investing activities-50,000-500,0000
    
Net change in cash-201,328-389,186253,686
Cash at the beginning0-201,328-590,514
Cash at the end-201,328-590,514-336,829
Amount of funding needed (max)590,514  

This document was created with iPlanner.NET online business plan software
supported by Business Plan Samples

Document version: 22/05/2013 04:01:10 (UTC)



Close