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Acknowledgement

Words are indeed inadequate to convey my deep sense of gratitude to all those who have
helped me in completing this business plan to the best of my ability. Being a part of this
project has certainly been a unique and a very productive experience on my part.
I am really thankful to xxxxxxxxxxxxxx for guiding and helping me to solve all kinds of
quarries regarding the project work. His systematic way of working and incomparable
guidance has inspired the pace of the project to a great extent
I would like to thanks to all the colleague who have directly or indirectly helped me with
their moral support for the completion of my business plan.

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Decleration

This is to certify that this business plan of Tops Bit Web Solutions
embodies the original work done by xxxxxx during this business plan
submission as a partial fulfillment of the requirement of Master of Business
Administration IV Semester, Department of Business Administration,
University of Lucknow, Lucknow.

xxxxxxx
MBA IV Semester
Finance

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Table of Contents
Serial
No.
01
1.0
1.2
1.3

02

Tittles

Page No.

Executive Summery

04

Objectives
Keys of Success
Mission

Company Summery
2.1
2.2
2.3

03

04
05

06

07

13
13
14

16
16
16
18
20

21

Organizational Structure
Management Team Gaps
Personnel Plan

Financial Plan
7.1
7.2
7.3
7.4
7.5
7.6

09
10
11
11
11

Competitive Edge
Market Strategy
Sales Strategy

Management Summery
6.1
6.2
6.3

09

Target Market Segment Strategy


Service Business Analysis

Strategy and Implementation Summery


5.1
5.2
5.3
5.4

06
06
08

Service Description
Sales Literature
Fulfillment
Technology
Future Services

Market Analysis Summery


4.1
4.2

06

Company Ownership
Start-up Summery
Company Location and Facilities

Services
3.1
3.2
3.3
3.4
3.5

04
05
05

Important Assumptions
Key Financial Indicators
Break-even Analysis
Projected Profit and Loss
Projected Cash Flow
Projected Balance Sheet

21
21
22

23
23
23
24
25
26
28
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Executive Summary
Tops Bit Web Solutions is a small start-up firm located in Hazaratganj, the district of
Lucknow, Uttar Pradesh. We offer Internet and Web-related services to small businesses
in the North-East reason of the country. The services we offer include website
development and design, hosting, maintenance, marketing, and analysis.
Given our experience and expertise in both commercial Web development and businessto-business sales, we believe we can offer a unique and superior service to small business
owners, in comparison to what is currently available.
The demand and growth rate for Web development and marketing services in the small
business market is at an all time high and shows no sign of slowing anytime soon. Even
more astonishing is the fact that very few Web development companies have taken
advantage of the opportunity, as there are no dominating participants in this huge market.
We believe the reason for this virtually untapped market is due to expensive project costs,
the highest profit margins in Web development today are in servicing large- and mediumsized corporations. We have developed a system that dramatically reduces steep project
costs and henceforth will allow us to offer the same high-end Web development services
as larger companies receive at a much lower cost to the client.
This business plan will highlight many aspects of our system and our business. It will
detail market growth and demand, and it will outline our projected cash flow and profit
margins over the next three years. All numbers regarding our projected company growth
are based on previous information gathered by activity in the company over the last few
months of operation.

1.1 Objectives
1.
Revenues of Rs.900,000 by month 10.
2.
Net Profit of 20% in year one and 35% in year two.
3.
60% Gross margin by month 10.
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1.2 Keys to Success


1.
Offering high-end Web services to small businesses in a way that they can
understand and afford.
2.
Build a strong residual income through secondary subscription-based
services tailored for small business (website hosting, marketing, maintenance,
consulting).
3.
Establishing strategic partnerships with area Internet service providers and
computer consulting companies to refer small business website projects to us in
exchange for high payoffs.

1.3 Mission
Our mission is to provide affordable, accessible, and streamlined Internet and Web
services to small businesses. We have developed a system for offering many different
types of Web services (site development, hosting, marketing, and maintenance) that are
exclusively tailored to fit the needs and resources of small companies.

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Company Summary
Tops Bit Web Solutions is a start-up company that will provide high-end, affordable
Internet related services to small businesses that are looking to expand their existing
marketing efforts to reach the Web. We have a system established that will allow us to
offer website development, hosting, marketing, and maintenance of the same caliber that
large companies take advantage of, at a very affordable rate.
The logo for Tops Bit Web Solutions have been designed by us like:

2.1 Company Ownership


Tops Bit Web Solutions has been stablished in Hazaratganj, Lucknow as of April 2016.
The corporation is privately owned by Girijesh Kumar, chief operations officer and
Dharmendra Kumar, chief technology officer.
2.2 Start-up Summary
Our start-up plan is a well thought out base to propel us forward with the proper
equipment, marketing tools, and personnel to start our venture. An initial cash investment
by the owners in the amount of rupees 200,000 to purchase office furniture, computer

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equipment, and software has been made. Both owners have also invested a combined
time of rupees 100,000 working hours toward the start-up of Tops Bit Web Solutions.
The cash requirement of rupees 350,000 are funds that we need to provide the capital to
run our business for the first few months. This capital will fund two employees payroll
and equipment/supplies to get them started. It will cover business expenses for a few
months until our cash flow takes over.
The four-year rupees 500,000 loan has been secured from the ICICI bank interest rate @
15 % to supply the needed capital explained above.

Start-up

(in Rupees)

Requirements
Start-up Expenses
Phone Line Install
Computer Monitor
Office Rent (lease)
Office Equipment
& Rent
Dedicated Server
Setup Fee
Company
Registration Fees
Total Start-up
Expenses

Start-up Assets
Cash Required
Other Current
Assets
Long-term Assets
Total Assets
Total Requirements

2,000
60,000
40,000
60,000

4,900
11,000
177,900

350,000
200,000
0
550,000
727,900
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Start-up Funding
Start-up Expenses to
Fund
Start-up Assets to Fund
Total Funding Required
Assets
Cash Requirements from
Start-up
Non- Cash Asset on Start
Cash Balance on Starting
Date
Total Assets

177,900
550,000
727,900

350,000
200,000
350,000
550,000

2.3 Company Locations and Facilities


We have an established commercial office space in Hazaratganj, Lucknow under a one
year lease on the rent of Rs. 10,000 per month that will expire in may of 2017 with an
option to renew every 30 days thereafter. There is approximately 1,100 sq. ft. capable of
housing workstations for up to 5 workers. This company has been registered by the
website as mycompanyregistration.com at the rate of Rs.11,000.

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Services
Tops Bit Web Solutions. is a full-service Internet solutions provider for small businesses.
We focus mainly on the Web, offering the following as our key 'Bread & Butter' website
services:

Design and development.


Marketing and analysis.
Hosting and maintenance.

We currently offer the following secondary services:

E-commerce development.
Website renovations and upgrades.
Application development (i.e. chat rooms, message boards, online polling, livefeed audio/video, etc.).

Website maintenance training.

Internet/website education seminars.

Database construction.
We have plans to offer the following services within the next year:

Internet access service for small businesses.


Local Area Network (LAN) installation.
Intranet setup and installation.
Result-based website marketing.

3.1 Service Description

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Website Design and Development:


The service that we offer to small businesses is modeled after the service that larger Web
development firms offer Fortune 1000 companies in the sense that it is completely
customized and unique to each individual client.

Website Marketing and Analysis:


After we build the website for our client, or a new client introduces us to their preexisting site, we offer this service. As experts of the Web, we can analyze and test a
website based on an established set of standards that account for the website's aesthetic
value, scalability, functionality, ease-of-use, and main customer base. After an analysis
has been made, we then explore and present to the client a detailed list of the most
efficient Internet marketing tools and methods available to them within the constraints of
their budget. This type of service is pertinent to our company given the fact that a very
large percentage of our clients are on a tight budget and can only afford to take advantage
of marketing efforts that are targeted directly at their desired demographic.
Website Hosting and Maintenance:
This service is offered for two reasons. The first reason is because they are both ongoing,
continual services that we can use to establish and maintain a strong residual income. The
second reason for offering these services is to allow for packaging together with other
services either Tops Bit Web Solutions. offers, or services an outside company can
provide, hence allowing us to expand our range of small business Internet services.
3.2 Sales Literature
Tops Bit Web Solutions. currently distributes a sales folder with all the pertinent
information about our company and services. This folder includes our strong points,
history, portfolio examples, and pricing packages info. It also contains facts based on the
growth and popularity of the Internet for small businesses.
Tops Bit Web Solutions. currently operates and maintains a fully-functioning website that
provides information about the company, plus a variety of helpful resources for small
business owners which we will be constantly updating.

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In the next six months, we plan to produce and distribute bulk mail and fax flyers
promoting our Web development and hosting services to small businesses .We have plans
to offer a more compact version of our main sales folder in a brochure format. This
brochure will be available both as a mailer to interested parties and as a sales solicitation
in area businesses.
3.3 Fulfillment
For the website design, development, marketing, analysis, and maintenance we will
employ industry professionals to handle our clients' needs. Working for the company
presently is Dharmendra Kumar, a professional website development engineer and
strategist with two years of experience in the commercial Web development industry. To
keep employee costs low, we have designed a "team" development system that will
consist of one full-time sales person and two full-time Web developers. Of the Web
developers, one position will be filled by a highly-qualified senior Web professional and
one lesser-qualified, lower paid developers. All two will work full-time on separate
projects provided to them by the sales person. However, the senior developer will have
the duty of maintaining the same high quality level of work in the junior developers'
projects, that our clients have learned to expect from us now.
For the website hosting services we offer, Tops Bit Web Solutions. has formed several
alliances with industry leaders to provide top-rate, reliable hosting solutions. Forming the
alliances has allowed us much flexibility in important hosting features, customizability,
and it has drove costs down dramatically. All these benefits are crucial to preserving the
integrity of our company as being a 'fully-rounded Internet solutions provider' for small
businesses.
3.4 Technology
It is a given that technology and keeping up with new innovations strongly influence our
business. We operate a Windows based Local Area Network (LAN) in the office that is
equipped with the most current software and hardware tools available to meet our project
requirements. Within the next year, we will be investing in additional tools that will
extend our capabilities in handling various types of program files. We also have plans to
purchase licensing agreements with our major software vendors to allow for automatic
upgrades in new software tools.
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3.5 Future Services


Local Area Network Installation:
These days, a quickly increasing number of small businesses are using computers as a
necessary tool in the everyday operations of the company. We would like to be able to
expand our current services to meet this new demand. We will handle every aspect of
setting up a small business with an internal network of computers from purchasing,
installing, and configuring the machines to software integration and educating the
employees on proper usage and operating functions.
Intranet Setup Installation:
In our plan, after developing an Internet website for outside marketing purposes, we
would like to offer the service of implementing the website into the network for use in all
the business day-to-day operations. This would include extensive product/service
cataloging, vital employee and management information, sharing of accounting and
inventory details, etc., all intended for strictly company uses.
Internet Access for Small Business:
This feature would act as another residual, packageable service. We would target small
businesses exclusively allowing us to provide more flexibility and affordability to our
clients through discounted high volume rates, value added service packages, and much
more aggressive technical support services.
Result-based Marketing:
This is a service that no small business can turn down. We have plans to offer aggressive,
intensified marketing services with the fees based solely on results. To achieve this, we
are in the process of forming multiple partnerships and alliances with industry specific
Internet websites and various other software and service-oriented companies that provide
specific marketing services and tools based on results achieved. We feel as though
offering this rare service will dramatically increase our portfolio of clients.

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Market Analysis Summary


Tops Bit Web Solutions will initially focus almost exclusively on small companies
looking to develop an Internet presence for the first time. We will market our services to
small business owners as a "step-by-step" process, initially starting out with a small,
simple website, then gradually improving and adding to the site and their entire online
marketing efforts.
Although we plan to bring on many clients who simply will need an online presence and
nothing more, our most important and sought after clients will be those business owners
who are ready to implement a larger percentage of their company onto the Internet. This
type of client will traditionally need one of the following services:

E-commerce/shopping cart.
Database driven websites.
Dynamic content and website features.
Aggressive online website marketing.

4.1 Target Market Segment Strategy


Tops Bit Web Solutions. will focus the majority of sales and marketing efforts toward
attracting small businesses. The reason for this decision is simply the low amount of
services available for a market with such a high demand. In addition to the very
promising supply and demand ratio, it is also technically easier and less expensive to
market to and attract small website projects than larger projects.
4.1.1 Market Needs
The need for small business Internet services has existed for several years. Small
businesses and start-up businesses alike are migrating onto the Web at an astonishing
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rate and making their online presence a higher priority than in earlier years. We have
noticed an enormous hole however in the small business services that are currently
available.
Without a doubt, there is a need for custom, high-end, dynamic services designed
exclusively for small businesses. At this point, the majority of our competitors are
offering services tailored around big business, to small business owners, or they are
offering the exact opposite and one-dimensional.
While every small business has now recognized the need for having a presence on the
Internet, many do not know where to start, how much it will cost, or even how it will
benefit their company. It has been our experience by talking to small business owners that
the decision to take advantage of the Web is not a matter of 'if' but a matter of 'when.'
4.1.2 Market Trends
An important market trend right now is the one toward aggressive online and website
marketing. Although many small businesses are still waiting to gain an Internet presence,
those who already have are beginning to look for more options along the lines of
improving their existing efforts. We believe that in the upcoming years, small companies
especially, will start to look for more ways to increase the traffic to their websites.
Another important trend is the overall merging of daily business operations with the
Internet and World Wide Web. Just as the majority of large companies have already
started to use the Web to handle inter office tasks, we believe that many smaller
companies will begin to realize the time and money saving advantages to this strategy.
4.2 Service Business Analysis
Web services and development companies vary greatly in the type of service they offer
and the type of client they attract. Tops Bit Web Solutions. will be relatively unique in the
fact that we are marketing exclusively to small businesses.
This industry consists of many small Web development firms usually less than 10 years
old that generally start out offering services to smaller companies but with long-term
goals of catering to large, corporate Web accounts.

4.2.1 Main Competitors


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1.ZIDDI, Vidhan Sabha Marg: Located approximately 4 Kms from our


office, they offer Web development and graphic services.

Strengths: To provide good services as per international quality standards, company


have employed a team of talented, qualified and experienced professionals. They are in
touch with our customers through quality, performance, service and assistance.
Weaknesses: ZIDDI Graphics requires all clients who operate an e-commerce website
to pay his company a commission on the revenue generated by the site, this is paid on
top of the development fee that ZIDDI charges.

2. Prosolvis Technologies Pvt. Ltd., Hazaratganj: Located approximately


3 Kms from our office, they offer Web development services to small
businesses in the Lucknow.

Strengths: It invite to learn more about their services Software Development, Web
Development, IT Consultancy, Database Migration, Data Warehousing, Office
Automation System, Hardware & Network, Full Flash Website/Flash Animation and
CMS Blog Website. IT follow Industry Certified Process to deliver quality services to our
offshore clients from the U.S., Europe, Australia, New Zealand, Japan and Dubai.
Weaknesses: Prosolvis Technologies Pv.Ltd. is a young company with very high
overhead. Their very high prices do not in any way reflect the needs of small business
owners. It is also our opinion, after reviewing Prosolvis Technologies' portfolio that they
lack a certain level of technical and aesthetic design knowledge that so many small
businesses are beginning to demand.
4.2.2 Business Participants

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The Web services and development industry consists mainly of three different types of
firms.
The first type are the very large, high revenue companies who service larger Fortune
1000 corporations and well-funded Internet based start-ups exclusively. In this category
are only a few worldwide participants that dominate.
The second type of firm offers pre-fabricated, all-in-one, proprietary type Web services to
any size company at a very low cost or without any cost. The participants in this category
consist of a few dominating companies that mainly all have additional sources of revenue
and only offer Web services as a value-added service or additional attraction.
The third type of firm is our classification, that is the smaller, usually very young
companies that market to small- and medium-sized businesses in their local area.
Currently there are a large number of participants in this category, but no dominating
forces.

Strategy and Implementation Summary


Tops Bit Web Solutions will initially focus all marketing and sales efforts toward the
North-East area in the country.
We will market ourselves as an Internet and Web services organization devoted to
offering high-end services to small businesses exclusively. Our target customer will be
the owners of any small or home-based company who are looking to implement their
business into the Web.
5.1 Competitive Edge
We have a valuable competitive edge over our local competitors based on the fact that we
have streamlined all our services into the small business market. Through setting up
several strategic partnerships with various Internet and Web-related companies, we are
able to offer our clients an affordable and efficient proprietary Web package that will
meet all their related needs.
Tops Bit Web Solutions. also has as its lead development manager, Dharmendra Kumar, a
main principal in the company. Dharmendra Kumar has two years of commercial Web
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development experience and has been recognized as a leader and innovator in the graphic
design and layout areas of website development.
5.2 Marketing Strategy
Successful marketing of Web services to small business owners depends on how you
approach and follow-up every potential client. It is very important to deliver our
marketing pitch in a clear, no non-sense method. Details of the Internet and Web are still
relatively unknown by many small business owners, giving it the tendency to confuse and
intimidate easily.
5.2.1 Marketing Programs
We plan on doing a large scale marketing project during this month including (May 5 June 5, 2016):

Ad in newspapers
Radio advertising (FM).
Ad placement in local trade publications.
Billboard Ads to promote wide-spread name recognition.

5.2.2 Pricing Strategy


For most small business owners, cost, both residual and one-time are huge influences on
the decisions they make regarding everyday operations of their company. Even though
we offer 100% customized services and our pricing is based on an hourly fee, to make it
easier and less confusing for the clients, Webgrow has established a packaged pricing
system.

Budget Domain Website Package (Rs.5000): For simple, information based


websites. Popular with companies who just need to gain an Internet presence.

Mid-Level Website Package (Rs.12000): Information based websites with a large


amount of content. Popular with companies that have a large services/products list
and/or want to implement more of their business into the Web.

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Catalog Website Package (Rs.65000): Usually reserved for product-oriented


websites that are e-commerce enabled. Popular with companies that have a desire
to market heavily on the Internet or sell their products/services directly from the Web.

Website Hosting (from Rs.200 to Rs.300 per month): Depending on the type and
size of the website, the price for hosting can vary greatly. The average cost of hosting
for most clients is Rs.250 per month.

Website Maintenance (Rs.300 per hour): We charge a set fee of Rs.300 per hour
billed in 10 minute increments. If a client feels as though they will need their website
updated or maintained on a regular basis, packages are available at a discount rate.

5.2.3 Promotion Strategy


Our target client is part of a very specific demographic, for this reason, we market and
promote our services in a direct and specifically targeted manner.
Print Ads:

Currently we advertise in eight separate area yellow page directories. All our ads
appear under either the Internet Services or Website Design headings.

Tops Bit Web Solutions. also has an ad listing in a national business directory
under the heading of Web Developers.

Newspaper advertisement will be purchased during the first three months of


business until a clientele is built.
Direct Mail and Fax:

We have sent out targeted bulk mail flyers promoting special offerings by our
company.

We have participated in targeted broadcast fax promotions to small businesses in


our area.

In the near future we will begin a new aggressive, ongoing bulk mail campaign to
promote our Web development and hosting services.
Mass Media Ads:
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We will begin advertising on a broader scale within the next six months. Radio
spots will be continuously played during local area talk shows and news programs,
this placement is intended to reach the highest percentage of our target client possible.

Billboard ad placement will be the second mass media marketing campaign we


will implement into our marketing efforts. Billboard ads will be intended as 'name
recognition' advertising.

5.3 Sales Strategy


Our clients are small business owners, most are very protective of their company, and
almost all of them are salesmen themselves. We sell value, service, and quality when we
talk to business owners. We need to convince them that they can look past all of the hype
surrounding the Internet and still see why having a website is worth the money spent.
We currently utilize a database system specifically targeted toward our desired
demographic to establish our first contact with every potential client. It has proven a
successful method for soliciting new business directly due to the method in which we
approach the first call. The salesman always requests to speak to the business owner,
asking for him by his first name only, and when asked who is calling, responds by
providing simply his first name as well. Once on the phone with the business owner, there
is absolutely no script and the salesman clearly identifies himself and asks the business
owner if he has ever considered having a website developed for his company, no matter
what the response, a brief conversation will always pursue, sometimes leading to an
appointment, and sometimes to a follow-up call.
Because we have full confidence in our services, and recognize that business owners are
generally open to the idea of utilizing the Internet and most even consider it a necessity,
we take a very low-pressure, non-abrasive approach to direct selling. We will normally
present the information about our company, portfolio, strengths, and pricing to the client
and let them make the decision on their own. This method has proven successful
provided that we keep our follow-up calls consistent and regular until we receive either a
yes or no answer.
5.3.1 Sales Forecast

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The following table and chart summarize our forecast sales. We expect the first month of
operations (May) to be spent training the new developer and new salesman. June will be
our first month of operation and we expect to grow steadily in the following months.
Website development sales will be the largest portion of our revenue with result-based
marketing following. Maintenance and hosting revenue will be built up slowly but are the
residual base we will stand on in the future.
Sales Forecast (In Rupees)
Sales
Website
Development
Result-based
Marketing
Maintenance
Hosting
Total Sales
Direct Cost of Sales
Website
Development
Result-based
Marketing
Maintenance
Hosting
Subtotal Direct Cost

Year 1

Year 2

Year 3

650,500

1100,650

1560,550

160,200

198,200

310050

96,300
93,000
10,00000

130,600
120,550
1550,000

221,300
208,100
23,00000

Year 1

Year 2

Year 3

64,650

106,050

121,200

0
35,900
100,550

0
43,950
150,000

0
59,320
180,520

5.3.2 Sales Programs


The following is a summary of the our sales programs from the Milestones table:
June 9-16: Hiring first salesman. We will be training this employee this month to make
telephone calls to business owners in the area and set appointments to meet with them
and show them what we have to offer. Starting in mid-June he/she will begin meeting
with clients alone.
June 23 July 2: We will be updating our sales literature including creating brochures,
and printing leaflets to be placed in our presentation folders.
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5.4 Strategic Alliances


Currently, we do not participate in any co-marketing or co-development efforts with
outside companies. However, we have specific plans to establish several strategic
partnership programs with area ISPs (Internet Service Providers) and computer
consulting companies. These partnerships are intended to attract more sub-contracting
work from potential competitors, in exchange for a commission to be paid for each lead
and resulting new client.

Management Summary
Tops Bit Web Solutions. is owned and operated by two partners with equal equity in the
company, and both directors in the corporation.
Girijesh Kumar has completed Master of Business Administration with specialization of
Finance from Departmrnt of Business Administration, University of Lucknow, Lucknow
Uttar Pradesh. He has also an experience in Internet and Web-related languages.
Dharmendra Kumar is an experienced website developer and strategist with over two
years of commercial Web and Internet services experience, plus numerous attendance to
various related seminars and educational classes.
6.1 Organizational Structure
Tops Bit Web Solutions. will depend on the two main principals, Girijesh Kumar and
Dharmendra Kumar, for all management responsibilities. This will include office
management, accounts receivable and payable, marketing, and talent recruitment.
Girijesh Kumar will serve as chief operations officer and finance manager. He will
supervise all salesmen and all sales promotions, financial position and projects. He will

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also be holding the office of the treasurer therefore will be responsible for all financial
related matters.
Dharmendra Kumar will serve as chief technology officer and lead Web developer. He
will be directly supervising all Web development (employee and sub-contracting
projects), and will also be responsible for any necessary training in the same department.
6.2 Management Team Gaps
The current management team will require support in both the business development and
administrative departments. Both managers have had prior experience in these fields, but
feel as though their experience is limited given the fact that prior working environments
rarely required this type of support. Our finance and accounting firm, to provide expert
advised and counseling in both the business development and administrative support
departments. This strategy will allow the partners of Tops Bit Web Solutions. to lend the
majority of their time to their respective areas of the company.
6.3 Personnel Plan
We visualize implementing a "team" development system that will consist of two fulltime sales person and two full-time Web developers. Of the Web developers, one position
will be filled by a highly-qualified senior Web professional and one lesser-qualified,
lower paid developers. All two will work full-time on separate projects provided to them
by the sales person. However, the senior developer will have the duty of maintaining the
same high quality level of work in the junior developers' projects, that our clients have
learned to expect from us now.
The following table shows how we plan on making the above a reality.
Personnel Plan

(In Rupees)

Production Personnel
Dharmendra / Web
Developer
Developer #1/Hired in
Oct
Developer #2/Hired in
Dec
Other

Year 1

Year 2

Year 3

80,500

100,000

120,200

120,000

180,000

216,000

96,000

180,000

216,000

0
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Subtotal

Finance and Marketing


Personnel
Girijesh
Sales Position #1/Hired
in June
Other
Subtotal

296,000

460,000

552,200

80,500

100,000

120,200

160,000

192,000

240,000

0
240500

0
292,000

0
240,000

536,500

752,000

912,400

Total People
Total Payroll

Financial Plan
Tops bit IT Solution's financials summarize the following areas:

Important Assumptions.
Key Financial Indicators.
Break-even Analysis.
Projected Profit and Loss.
Projected Cash Flow.
Projected Balance Sheet.

7.1 Important Assumptions


Our financial assumptions are based on a steady economy and standard numbers for a
business in our industry.
General Assumptions
Plan Month

Year 1
1

Year 2
2

Year 3
3
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Current Interest
Rate
Long-term
Interest Rate
Tax Rate
Other

10.00%

10.00%

10.00%

15.00%

15.00%

15.00%

25%
0

25%
0

25%
0

7.2 Key Financial Indicators


The following chart indicates our key financial indicators over the next three years.

7.3 Break-even Analysis


The following table and chart summarize our break-even analysis. With two developers
and two salesmen we plan on developing eight sites in June and once the two new hires
are fully trained doubling the number to 16 sites a month.
The average variable cost is an aggregate measure for all the types of services which will
be offered.

Page | 24

Break-even Analysis
Monthly Revenue
Break-even
Assumptions:
Average Percent
Variable Cost
Estimated
Monthly Fixed
Cost

4,649

9%
4,210

7.4 Projected Profit and Loss


Our projected profit and loss is shown on the following table. Some highlights are the
Gross Margin at 60% for our first year and steadily increasing. Our Net Profit/Sales
starting at 20% and increasing by approximately 8% the following two years to reach
35% by our third year.
Pro Forma Profit and Loss (In rupees)

Sales
Direct Cost of Sales
Production Payroll
Other

Year 1
1000,000
100,550
296,000
0

Year 2
1550,000
150,000
460,000
0

Year 3
2300,000
180,520
552,200
0
Page | 25

Total Cost of Sales

396,550

610,000

732,720

Gross Margin
Gross Margin %

603,450
60.34%

940,000
61.77%

1567,280
68.14%

240,500

292,000

360,200

12,000
5,000
0

13,500
6,000
0

14,500
7,500
0

257,500

311,500

382,200

10,000
5,000
5,000
28,650

13,000
7,000
6,000
50,200

16,000
10,000
10,000
132,480

48,650

76,200

168,480

702,700

997,700

12,83,400

297,300

552,300

10,16,600

75,000
22,230

60,000
49,230

30,000
197,320

Operating Expenses
Sales and Marketing
Expenses
Sales and Marketing
Payroll
Advertising/Promotion
Travel
Miscellaneous
Total Sales and
Marketing Expenses
General and
AdministrativeExpenses
General and
Administrative Payroll
Rent
Utilities
Insurance
Payroll Taxes
Other General and
Administrative Expenses
Total General and
Administrative Expenses
Total Expenses
Profit Before Interest and
Taxes
Interest Expense @15%
Taxes Incurred

Page | 26

Net Profit
Net Profit/Sales

200,070
20.01%

443,070
28.58%

789,280
34.32%

7.5 Projected Cash Flow


Cash flow projections for the first half of the year are slightly declining and in October
they begin to raise sufficiently. We may need to borrow against our accounts receivables
but are projecting that the initial capital raised should cover us until our cash becomes
fluid.

Pro Forma Cash Flow


Year 1

Year 2

Year 3

280,650
560,500

475,200
920,800

650,500
1190,500

841,150

13,96,000

18,41,000

841,150

12,96,000

18,41,000

Year 1

Year 2

Year 3

536,500

752,000

912,400

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from
Operations
Additional Cash
Received
Sales of Long-term
Assets
New Investment
Received
Subtotal Cash Received

Expenditures
Expenditures from
Operations
Cash Spending

Page | 27

Bill Payments
Subtotal Spent on
Operations

182,200

50,700

310,920

718,700

802,700

12,23,320

Additional Cash Spent


Long-term Liabilities
Principal Repayment
Purchase Other Current
Assets
Purchase Long-term
Assets
Subtotal Cash Spent

500,000

500,000

718,700

132,700

17,23,320

Net Cash Flow


Cash Balance

122,450
472,450

93,300
565,750

117,680
683,430

7.6 Projected Balance Sheet


The balance sheet in the following table shows managed but sufficient growth of net
worth, and a sufficiently healthy financial position. The monthly estimates are included in
the appendix.
Pro Forma Balance Sheet
Year 1

Year 2

Year 3

472,450

565,750

683,430

132,770

410,200

650,550

200,000

200,000

200,000

805,220

11,75,950

15,33,980

Assets
Current Assets
Cash
Accounts
Receivable
Other Current
Assets
Total Current
Assets
Long-term
Page | 28

Assets
Long-term
Assets
Accumulated
Depreciation
Total Longterm Assets
Total Assets

Liabilities and
Capital
Current
Liabilities
Accounts
Payable
Current
Borrowing
Other Current
Liabilities
Subtotal
Current
Liabilities
Long-term
Liabilities
Total
Liabilities
Paid-in Capital
Retained
Earnings
Earnings
Total Capital
Total

120,000

190,000

420,000

6,000

15,000

63,000

112,000

175,000

357,000

925,220

12,83,950

18,90,980

Year 1

Year 2

Year 3

53,050

68,710

130,800

53,050

68,710

130,800

500,000

400,000

200,000

553,050

565,710

630,800

350,000

350,000

350,000

(177,900)

22,170

420,900

200,070
372,170
925,220

443,070
815,240
12,83,950

789,280
15,60,180
18,90,980
Page | 29

Liabilities and
Capital
Net Worth

372,170

815,240

15,60,180

Page | 30