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Sample IT Business Plan
IT ADVISERS
(EXAMPLE BUSINESS PLAN)
| 2012 - 2014 |
22/05/2013 04:01:09(UTC)
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
| Main financial measures |
| 2012 | 2013 | 2014 | |
| Cash | 3,422 | 52,939 | 114,404 |
| Sales revenue | 1,175,000 | 1,800,000 | 2,450,000 |
| Net profit for financial year | -112,509 | 76,547 | 210,178 |
| Operating margin | -9.58% | 4.25% | 8.58% |
| Owners' equity | 22,491 | 159,038 | 349,216 |
| Return on equity (per year) | -500% | 48.1% | 60.2% |
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 |
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.
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 services | 2012 | 2013 | 2014 |
| Retainer Consulting | 400,000 | 650,000 | 1,000,000 |
| Project Consulting | 500,000 | 750,000 | 900,000 |
| Market Research | 200,000 | 300,000 | 400,000 |
| Strategic Reports and Software | 75,000 | 100,000 | 150,000 |
| 1,175,000 | 1,800,000 | 2,450,000 |
| Gross margin (%) |
| Products and services | 2012 | 2013 | 2014 |
| Retainer Consulting | 85 | 85 | 85 |
| Project Consulting | 85 | 85 | 85 |
| Market Research | 30 | 30 | 30 |
| Strategic Reports and Software | 70 | 70 | 70 |
| Cost of sales (USD) |
| Products and services | 2012 | 2013 | 2014 |
| Retainer Consulting | 60,000 | 97,500 | 150,000 |
| Project Consulting | 75,000 | 112,500 | 135,000 |
| Market Research | 140,000 | 210,000 | 280,000 |
| Strategic Reports and Software | 22,500 | 30,000 | 45,000 |
| 297,500 | 450,000 | 610,000 |
| Break-even analysis (USD) |
| 2012 | 2013 | 2014 | |
| Sales revenue | 1,175,000 | 1,800,000 | 2,450,000 |
| Cost of sales | 297,500 | 450,000 | 610,000 |
| Variable expenses, total | 297,500 | 450,000 | 610,000 |
| Labour cost | 727,260 | 897,000 | 1,110,900 |
| Other operating expenses | 265,000 | 322,500 | 455,000 |
| Depreciation of fixed assets | 5,000 | 15,000 | 15,000 |
| Financial expenses | 5,250 | 30,448 | 25,569 |
| Fixed expenses, total | 1,002,510 | 1,264,948 | 1,606,469 |
| Gross margin | 74.7% | 75% | 75.1% |
| Break-even sales revenue | 1,342,391 | 1,686,597 | 2,139,049 |
| Sales revenue above break-even | 0 | 113,403 | 310,951 |
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
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 |
| Personnel | 2012 | 2013 | 2014 |
| Partners | 4 | 5 | 7 |
| Consultants | 4 | 4 | 4 |
| Marketing manager | 0 | 1 | 1 |
| Sales reps | 2 | 2 | 2 |
| Office manager | 1 | 1 | 1 |
| 11 | 13 | 15 |
| Average monthly salary (USD) |
| Personnel | 2012 | 2013 | 2014 |
| Partners | 5,200 | 5,500 | 6,000 |
| Consultants | 5,100 | 5,200 | 5,300 |
| Marketing manager | 4,600 | 4,700 | 4,800 |
| Sales reps | 4,200 | 4,400 | 4,600 |
| Office manager | 3,100 | 3,200 | 3,300 |
| Labour cost (USD) |
| 2012 | 2013 | 2014 | |
| Wages and salaries | 632,400 | 780,000 | 966,000 |
| Social security costs | 94,860 | 117,000 | 144,900 |
| Labour cost | 727,260 | 897,000 | 1,110,900 |
| REVENUES | 1,175,000 | 1,800,000 | 2,450,000 |
| Labour cost to revenues | 61.9% | 49.8% | 45.3% |
| Other operating expenses (USD) |
| Other operating expenses | 2012 | 2013 | 2014 |
| Startup expenses | 30,000 | 0 | 0 |
| Marketing | 50,000 | 60,000 | 70,000 |
| Travel | 100,000 | 150,000 | 250,000 |
| Office expenses and software costs | 75,000 | 100,000 | 120,000 |
| Insurance | 5,000 | 5,000 | 5,000 |
| Other fixed expenses | 5,000 | 7,500 | 10,000 |
| 265,000 | 322,500 | 455,000 |
| Assets purchase value (USD) |
| Fixed assets | 2012 | 2013 | 2014 |
| Startup fixed assets (equipment) | 50,000 | 0 | 0 |
| New office | 0 | 500,000 | 0 |
| 50,000 | 500,000 | 0 |
| Performance measures (USD) |
| 2012 | 2013 | 2014 | |
| Sales revenue | 1,175,000 | 1,800,000 | 2,450,000 |
| Cost of sales | 297,500 | 450,000 | 610,000 |
| Gross profit | 877,500 | 1,350,000 | 1,840,000 |
| Other operating expenses | 265,000 | 322,500 | 455,000 |
| Labour cost | 727,260 | 897,000 | 1,110,900 |
| Depreciation of fixed assets | 5,000 | 15,000 | 15,000 |
| Operating profit | -119,760 | 115,500 | 259,100 |
| EBITDA | -114,760 | 130,500 | 274,100 |
| Financial income and expenses | -5,250 | -30,448 | -25,569 |
| Profit before income tax | -125,010 | 85,052 | 233,531 |
| Income tax expense | -12,501 | 8,505 | 23,353 |
| Profit | -112,509 | 76,547 | 210,178 |
| Operating margin | -9.58% | 4.25% | 8.58% |
| Gross margin | 74.7% | 75% | 75.1% |
| Sales per employee | 106,818 | 138,462 | 163,333 |
| Value added | 612,500 | 1,027,500 | 1,385,000 |
| Value added per employee | 55,682 | 79,038 | 92,333 |
| Return on equity (per year) | -500% | 48.1% | 60.2% |
| Quick ratio | 1.04 | 0.90 | 8.52 |
| Current ratio | 1.04 | 0.90 | 8.52 |
| ISCR | -21.9 | 4.29 | 10.7 |
| DSCR | 0 | 1.08 | 1.79 |
| Debt to equity ratio | 3.33 | 3.04 | 1.02 |
| Debt to capital ratio | 76.9% | 75.3% | 50.5% |
| Receivables collection period, days | 15.0 | 15.0 | 15.0 |
| Payable period, days | 15.0 | 15.0 | 15.0 |
| Income statements (USD) |
| 2012 | 2013 | 2014 | |
| Sales revenue | 1,175,000 | 1,800,000 | 2,450,000 |
| Cost of sales | 297,500 | 450,000 | 610,000 |
| Other operating expenses | 265,000 | 322,500 | 455,000 |
| Labour cost | |||
| Wages and salaries | 632,400 | 780,000 | 966,000 |
| Social security costs | 94,860 | 117,000 | 144,900 |
| Total labour cost | 727,260 | 897,000 | 1,110,900 |
| Depreciation of fixed assets | 5,000 | 15,000 | 15,000 |
| Operating profit | -119,760 | 115,500 | 259,100 |
| Financial expenses | |||
| Interest expense | 5,250 | 30,448 | 25,569 |
| Total financial expenses | 5,250 | 30,448 | 25,569 |
| Profit before income tax | -125,010 | 85,052 | 233,531 |
| Income tax expense | -12,501 | 8,505 | 23,353 |
| Net profit for financial year | -112,509 | 76,547 | 210,178 |
| Balance sheets (USD) |
| 2012 | 2013 | 2014 | |
| ASSETS | |||
| Current assets | |||
| Cash | 3,422 | 52,939 | 114,404 |
| Receivables and prepayments | |||
| Trade receivables | 48,968 | 75,006 | 102,087 |
| Prepaid and deferred taxes | 12,501 | 3,996 | 0.00 |
| Inventories | |||
| Inventories | 0 | 0 | 0 |
| Total current assets | 64,890 | 131,940 | 216,491 |
| Fixed assets | |||
| Tangible assets | |||
| Machineny and equipment | 50,000 | 550,000 | 550,000 |
| Less: Accumulated depreciation | -5,000 | -20,000 | -35,000 |
| Total | 45,000 | 530,000 | 515,000 |
| Total fixed assets | 45,000 | 530,000 | 515,000 |
| Total assets | 109,890 | 661,940 | 731,491 |
| LIABILITIES and OWNERS' EQUITY | |||
| Liabilities | |||
| Current liabilities | |||
| Loan liabilities | |||
| Short-term loans and notes | 0 | 0 | 0 |
| Current portion of long-term loan liabilities | 50,000 | 127,295 | 0 |
| Total | 50,000 | 127,295 | 0 |
| Debts and prepayments | |||
| Trade creditors, goods | 12,399 | 18,751 | 25,418 |
| Trade creditors, other | 0 | 0 | 0 |
| Employee-related liabilities | 0 | 0 | 0 |
| Total | 12,399 | 18,751 | 25,418 |
| Total current liabilities | 62,399 | 146,046 | 25,418 |
| Long-term liabilities | |||
| Long-term loan liabilities | |||
| Loans, notes and financial lease payables | 25,000 | 356,857 | 356,857 |
| Total long-term liabilities | 25,000 | 356,857 | 356,857 |
| Total liabilities | 87,399 | 502,902 | 382,275 |
| Owners' equity | |||
| Share capital in nominal value | 135,000 | 195,000 | 195,000 |
| Share premium | 0 | 0 | 0 |
| Retained profit/loss | 0 | -112,509 | -55,962 |
| Current year profit | -112,509 | 76,547 | 210,178 |
| Total owners' equity | 22,491 | 159,038 | 349,216 |
| Total liabilities and owners' equity | 109,890 | 661,940 | 731,491 |
| Cash flow statement (1-6 month) (USD) |
| Jan-2012 | Feb-2012 | Mar-2012 | Apr-2012 | May-2012 | Jun-2012 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
| Inflows | ||||||
| Payments from customers | 48,958 | 97,915 | 97,915 | 97,915 | 97,915 | 97,915 |
| Total | 48,958 | 97,915 | 97,915 | 97,915 | 97,915 | 97,915 |
| Outflows | ||||||
| Payments to vendors (goods) | 12,396 | 24,791 | 24,791 | 24,791 | 24,791 | 24,791 |
| Payment of salaries and wages | 52,700 | 52,700 | 52,700 | 52,700 | 52,700 | 52,700 |
| Social security costs | 7,905 | 7,905 | 7,905 | 7,905 | 7,905 | 7,905 |
| Payments to vendors (operating expenses) | 29,581 | 29,581 | 29,581 | 19,581 | 19,581 | 19,581 |
| Total | 102,582 | 114,977 | 114,977 | 104,977 | 104,977 | 104,977 |
| 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) | 50,000 | 0 | 0 | 0 | 0 | 0 |
| Total | 50,000 | 0 | 0 | 0 | 0 | 0 |
| Net cash flow from investing activities | -50,000 | 0 | 0 | 0 | 0 | 0 |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
| Inflows | ||||||
| Payments from shareholders | 135,000 | 0 | 0 | 0 | 0 | 0 |
| Loan amounts received | 75,000 | 0 | 0 | 0 | 0 | 0 |
| Total | 210,000 | 0 | 0 | 0 | 0 | 0 |
| Outflows | ||||||
| Principal repayments | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest expense | 438 | 438 | 438 | 438 | 438 | 438 |
| Dividends (net to shareholders) | 0 | 0 | 0 | 0 | 0 | 0 |
| Payment of corporate income tax | 0 | 0 | 0 | 0 | 0 | 0 |
| Corporate income tax on dividends | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | 438 | 438 | 438 | 438 | 438 | 438 |
| Net cash flow from financing activities | 209,563 | -438 | -438 | -438 | -438 | -438 |
| Net change in cash | 105,938 | -17,500 | -17,500 | -7,500 | -7,500 | -7,500 |
| Cash at the beginning | 0 | 105,938 | 88,439 | 70,939 | 63,440 | 55,940 |
| Cash at the end | 105,938 | 88,439 | 70,939 | 63,440 | 55,940 | 48,441 |
| Cash flow statement (3-6 quarter) (USD) |
| Q3-2012 | Q4-2012 | Q1-2013 | Q2-2013 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Inflows | ||||
| Payments from customers | 293,745 | 293,755 | 423,965 | 449,997 |
| Total | 293,745 | 293,755 | 423,965 | 449,997 |
| Outflows | ||||
| Payments to vendors (goods) | 74,373 | 74,377 | 106,149 | 112,499 |
| Payment of salaries and wages | 158,100 | 158,100 | 195,000 | 195,000 |
| Social security costs | 23,715 | 23,715 | 29,250 | 29,250 |
| Payments to vendors (operating expenses) | 58,743 | 58,771 | 80,622 | 80,622 |
| Total | 314,931 | 314,963 | 411,021 | 417,371 |
| Net cash flow from operating activities | -21,186 | -21,208 | 12,944 | 32,626 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| Inflows | ||||
| Outflows | ||||
| Payments to vendors (assets) | 0 | 0 | 500,000 | 0 |
| Total | 0 | 0 | 500,000 | 0 |
| Net cash flow from investing activities | 0 | 0 | -500,000 | 0 |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Inflows | ||||
| Payments from shareholders | 0 | 0 | 60,000 | 0 |
| Loan amounts received | 0 | 0 | 500,000 | 0 |
| Total | 0 | 0 | 560,000 | 0 |
| Outflows | ||||
| Principal repayments | 0 | 0 | 12,498 | 12,498 |
| Interest expense | 1,313 | 1,313 | 6,167 | 8,448 |
| Dividends (net to shareholders) | 0 | 0 | 0 | 0 |
| Payment of corporate income tax | 0 | 0 | 0 | 0 |
| Corporate income tax on dividends | 0 | 0 | 0 | 0 |
| Total | 1,313 | 1,313 | 18,665 | 20,946 |
| Net cash flow from financing activities | -1,313 | -1,313 | 541,335 | -20,946 |
| Net change in cash | -22,499 | -22,520 | 54,280 | 11,680 |
| Cash at the beginning | 48,441 | 25,942 | 3,422 | 57,701 |
| Cash at the end | 25,942 | 3,422 | 57,701 | 69,381 |
| Cash flow statement (1-4 year) (USD) |
| 2012 | 2013 | 2014 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Inflows | |||
| Payments from customers | 1,126,033 | 1,773,962 | 2,422,919 |
| Total | 1,126,033 | 1,773,962 | 2,422,919 |
| Outflows | |||
| Payments to vendors (goods) | 285,101 | 443,648 | 603,333 |
| Payment of salaries and wages | 632,400 | 780,000 | 966,000 |
| Social security costs | 94,860 | 117,000 | 144,900 |
| Payments to vendors (operating expenses) | 265,000 | 322,500 | 455,000 |
| Total | 1,277,361 | 1,663,148 | 2,169,233 |
| Net cash flow from operating activities | -151,328 | 110,814 | 253,686 |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Inflows | |||
| Outflows | |||
| Payments to vendors (assets) | 50,000 | 500,000 | 0 |
| Total | 50,000 | 500,000 | 0 |
| Net cash flow from investing activities | -50,000 | -500,000 | 0 |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Inflows | |||
| Payments from shareholders | 135,000 | 60,000 | 0 |
| Loan amounts received | 75,000 | 500,000 | 0 |
| Total | 210,000 | 560,000 | 0 |
| Outflows | |||
| Principal repayments | 0 | 90,849 | 127,295 |
| Interest expense | 5,250 | 30,448 | 25,569 |
| Dividends (net to shareholders) | 0 | 0 | 20,000 |
| Payment of corporate income tax | 0 | 0 | 19,357 |
| Corporate income tax on dividends | 0 | 0 | 0 |
| Total | 5,250 | 121,297 | 192,221 |
| Net cash flow from financing activities | 204,750 | 438,703 | -192,221 |
| Net change in cash | 3,422 | 49,517 | 61,465 |
| Cash at the beginning | 0 | 3,422 | 52,939 |
| Cash at the end | 3,422 | 52,939 | 114,404 |
| Capital structure (USD) |
| 2012 | 2013 | 2014 | |
| Current assets | 64,890 | 131,940 | 216,491 |
| Fixed assets | 45,000 | 530,000 | 515,000 |
| Current liabilities | 62,399 | 146,046 | 25,418 |
| Long-term liabilities | 25,000 | 356,857 | 356,857 |
| Owners' equity | 22,491 | 159,038 | 349,216 |
| Funding needs analysis (USD) |
| 2012 | 2013 | 2014 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Inflows | |||
| Payments from customers | 1,126,033 | 1,773,962 | 2,422,919 |
| Total | 1,126,033 | 1,773,962 | 2,422,919 |
| Outflows | |||
| Payments to vendors (goods) | 285,101 | 443,648 | 603,333 |
| Payment of salaries and wages | 632,400 | 780,000 | 966,000 |
| Social security costs | 94,860 | 117,000 | 144,900 |
| Payments to vendors (operating expenses) | 265,000 | 322,500 | 455,000 |
| Total | 1,277,361 | 1,663,148 | 2,169,233 |
| Net cash flow from operating activities | -151,328 | 110,814 | 253,686 |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Inflows | |||
| Outflows | |||
| Payments to vendors (assets) | 50,000 | 500,000 | 0 |
| Total | 50,000 | 500,000 | 0 |
| Net cash flow from investing activities | -50,000 | -500,000 | 0 |
| Net change in cash | -201,328 | -389,186 | 253,686 |
| Cash at the beginning | 0 | -201,328 | -590,514 |
| Cash at the end | -201,328 | -590,514 | -336,829 |
| Amount of funding needed (max) | 590,514 |
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Document version: 22/05/2013 04:01:10 (UTC)