Adama Science and Technology

University
School of Engineering
Department of Mechanical, Chemical and Material
Engineering
Project title: compute Repair Business Plan

Name: ID

Date

Executive Summary...............................................................................................................................3

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 1.1 Objectives.....................................................................................................................................3
1.2 Mission..........................................................................................................................................4
1.3 Keys to Success.............................................................................................................................4
Company Summary...............................................................................................................................4
2.1 Company Ownership...................................................................................................................4
2.2 Start-up Summary.......................................................................................................................4
Services...................................................................................................................................................5
Market Analysis Summary......................................................................................................................6
4.1 Market Segmentation...................................................................................................................7
4.2 Target Market Segment Strategy...............................................................................................7
4.3 Service Business Analysis............................................................................................................8
4.3.1 Competition and Buying Patterns...........................................................................................8
Strategy and Implementation Summary..............................................................................................9
5.1 Competitive Edge.........................................................................................................................9
5.2 Marketing Strategy....................................................................................................................10
5.3 Sales Strategy.............................................................................................................................10
5.3.1 Sales Forecast..........................................................................................................................11
Management Summary.......................................................................................................................11
6.1 Personnel Plan............................................................................................................................12
Financial Plan........................................................................................................................................12
7.1 Important Assumptions.............................................................................................................13
7.2 Break-even Analysis..................................................................................................................13
7.3 Projected Profit and Loss..........................................................................................................13
7.4 Projected Cash Flow....................................................................................................................13
7.5 Business Ratios...........................................................................................................................14
7.6 Projected Balance Sheet.............................................................................14 7.7 Appendix

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Executive Summary
PC Repair will provide computer and technical consulting (repairs, training, networking and
upgrade service) to local small businesses as well as home PC users. The company will focus on
marketing, responsiveness, quality, and creating and retaining customer relations.

PC Repair was initially formed as a sole proprietorship. PC Repair will at first be a home office
start-up, utilizing one studio room in the owner's home and serving customers in the local Adama
area. In the third month of our plan, we will move into a leased office space and hire a second
technician. As sales increase, we will hire additional personnel.

The Market

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The very nature of the computing industry, with its extraordinary rate of technological
development, creates a constant need for businesses skilled in updating and advising customers
on computer-related issues. In town, the majority of potential customers are dissatisfied with
existing options, creating an attractive niche for an innovative start-up. Small business PC users
will provide the majority of our business revenue. Business Week expects the computing industry
to grow at a rate of 12% and the processor speeds to continue to expand for years to come,
providing a rich resource for sales.

PC Repair has decided to focus mainly on the small business market, as these customers
typically don't have a full-time IT person, but have full-time IT needs. PC Repair will offer an
affordable, on-demand service for these customers. We can also offer maintenance agreements
that generate additional monthly income. For our residential customers, we will offer a very
affordable and helpful service with a very flexible schedule to meet their needs. Our target
market will focus on hawassa and the surrounding areas. Market research indicates there is an
abundance of business for a small company such as PC Repair.

Start-up Funding and Financials

To get PC Repair started the owner is providing cash and assets. We are also seeking a short-
term loan, to be secured with the owner's home equity, and repaid within three years. Our
conservative sales forecasts, based on industry research within the local area, project hefty sales
in year one, steadily increasing through year three. To reach these goals, we will use an
aggressive advertising campaign to exploit our competitors' weaknesses. With good cost control,
we will see a modest, yet comfortable, net profit the first year, even after moving into a leased
space and hiring additional technicians.

1.1 Objectives

1. To provide the best service available to the community at an affordable price.

2. To generate substantial market share so that PC Repair is a common name.
3. Constant growth in sales from start up through year three.
4. To generate customer satisfaction so that at least 40% of our customer base is repeat
business.

1.2 Mission

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Our goal is to set the standard for on-site computer solutions through fast, on-site service and
response. Our customers will always receive one-on-one personal attention at a very affordable
price. Our customers will receive the highest quality of customer service available. Our
employees will receive extensive training, a great place to work, fair pay and benefits, and
incentives to use their own good judgment to solve customers' problems.

1.3 Keys to Success

 Establishing a brand identity and generating brand recognition through marketing. 

 Responsiveness: being an on-call computer paramedic with fast response time.
 Quality: getting the job done right the first time, offering 100% guarantee.
 Relationships: developing loyal repeat customers--retainers.

Company Summary
PC Repair is an S Corporation located in hawassa, owned by me. With a small 3-year loan, PC
Repair will grow in one year from a one-man, home-office based repair shop to a profitable, 3-
person business in a leased location. We will build the necessary infrastructure to quickly and
efficiently respond to customers' computer needs, guaranteeing speedy, friendly, competent, and
cost-effective technical support.

2.1 Company Ownership

PC Repair was initially envisioned as a sole proprietorship in the owner's home. However, recent
feedback from our marketing outreach has suggested a much higher sales potential than
originally imagined, and PC Repair has been reformed as an S Corporation. This change will
provide additional legal protection for the owner, and will also streamline the financial
operations of the company as we expand the personnel to 5 within the next three years, lease a
separate space for offices, and purchase company vehicles and cell phones.

The owner has experience in the fields of technical support, networking, and computer training
and repair. I am also spent the last month on computer maintenance and repair , and understand
the computer needs of small businesses.

2.2 Start-up Summary

Total start-up expenses include initial expenses for establishing our website, setting up the
business, and doing our pre-opening advertising.

The bulk of our start-up requirements are asset needs: we need diagnostic and repair equipment,
half of which will be contributed to the business by the owner from his own materials. We are
treating this equipment as assets because we expect it to last at least three years, and to have

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some resale value when we are through with it; we will buy additional expensed equipment in
years two and three. We also need start-up inventory which includes RAM, spare hard drives,
cables, and cases. Although we will keep expenses to a minimum for the first three months,
before we move, we will also need cash at start-up, to see us through the next several months
with a positive cash balance.

We plan to fund our total start-up requirements direct owner investment (including the
contributed assets), and a three-year loan secured with the owner's collateral (his home equity).
We should be able to easily repay this loan within three years, even with a much lower sales
revenue than projected. (See the Cash Flow table for projected repayment.)

Start-up Requirements

Start-up Expenses

Legal $650

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Website $350

Business Cards $100

Insurance $150

Uniforms $300

CPA $275

Advertisement $1,200

Total Start-up Expenses $3,025

Start-up Assets

Cash Required $28,000

Start-up Inventory $1,200

Other Current Assets $10,000

Long-term Assets $0

Total Assets $39,200

Total Requirements $42,225

Services
PC Repair will offer computer repairs, training, and networking and upgrade service to clients in
two major categories: home PC users and small business users. As PC Repair and the client
demands grow, we will offer software development to our business clients. 

From the very first day, we will offer on-site repair and consulting services, so that our clients
don't need to take time out of their busy days to haul a computer in to our workshop. This is the
single biggest frustration Jack has seen among small business owners needing computer help.
Much of our diagnostic equipment is portable, and we will remove a PC to our workshop only
when the problem requires more detailed diagnosis or repair. We will also offer free pick-up
and delivery of PCs needing repair. To meet the growing demand for this service, we will
purchase a company vehicle in the third month.

We will also offer extended maintenance contracts, so that business clients can deal with
technical support and repair needs as a single line-item expense, rather than having to plan for

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unexpected crashes and problems with a rainy-day fund they may never use. Maintenance
contracts yield a high gross margin for us, and provide peace of mind for the customer.

We will offer limited software support (installation and compatibility issues), and focus on
hardware and networking support - this is a vital distinction, since software is evolving much
more rapidly than hardware, and our clients will have such diverse software needs that we
couldn't possibly keep up with all of them. We will encourage clients to register their software
and use the software's own support options to their full potential. We will, however, keep up to
date with multiple operating systems and networking developments, working with clients to
make sure they have the most appropriate combinations of hardware, OS, networking, backup
systems, and software. Backup and security are becoming higher priorities for all our potential
customers, as internet usage (and its pitfalls) becomes more common, and as more and more
daily records are stored electronically.

Market Analysis Summary

PC Repair will provide computer support in both a consulting and technical capacity to small
business owners as well as home PC users. Since PC Repair is currently a one man operation, its
growth in the first three months will be limited by the owner's capacity to complete work.
However, these first three months are critical for establishing our credibility and a reputation for
getting the job done quickly and well. We will focus on delivering excellent service, and using
the good word of mouth from this initial period to network with other potential clients. 

Personal market research by the owner indicates an attractive market niche for our services, of
which PC Repair will take full advantage. The very nature of the computing industry, with its
extraordinary rate of technological development, creates a constant need for businesses skilled in
updating and advising customers on computer-related issues. 

National chains, such as "Geeks on Call," and Best Buy's "Geek Squad" have seen rapid growth
in demand for these services in the last few years. Customers are seeking skilled help with
everything from installation of software and hardware components, to networking, to transferring
files from an old computer to a new one. Those who can often enlist their tech-savvy children's
help, but others are not so fortunate, and small-business owners need reliable and quick help with
all their computer needs, since every hour down may mean an hour or more of lost revenue,
especially for any business with a website or those doing e-commerce.

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4.1 Market Segmentation

The existing computer service market is so extensive that categorizing it is rather difficult. We
have broken our potential market down into two groups, based on their needs: home PC users
and small business clients.

Home PC User

Our home PC user market includes non-tech-savvy residents of the local area (15 mile radius),
generally between the ages of 30 and 70, with at least one home computer. We are not expecting
income from users below 30, who tend to be more comfortable with technology and willing to
attempt repairs and upgrades on their own, without seeking professional assistance. Such home
users generally own a computer to do email, play games, write letters, scan and print photos, and
occasionally to do bookkeeping or taxes. Home PC users with more sophisticated applications
generally have enough tech savvy, from tech experience at work, to do their own repairs and
upgrades. Their hardware needs will include the computer itself, monitors, keyboards, mouse,
printer, and scanner.

This group is growing slightly faster than the overall population growth in our area, in part due to
the increasing demand for computers among retired people and young families, about 7% a year.

Small Business Users

Small business users will provide the majority of our business revenue. The small business
market will be defined as customers within a 15 mile radius, with 2 or more computers or a
network which they use for business purposes at least 25% of the time. Their business use may
include minor usage, such as updating a business website for a brick-and-mortar store, keeping
the books, designing graphics or ad campaigns, and writing copy for press releases. It may also
be more extensive, incorporating inventory tracking, POS systems, customer databases, online
product/service delivery, or product development. The more intensive their computer usage for
business, the more critical it is to them that their technology work well and reliably, and that
quality repairs and support are available in a crisis. Their hardware needs will include the same
items as home users, plus servers, backup systems, data storage, and wireless networking.

4.2 Target Market Segment Strategy

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Although there are more potential customers among home PC users, we expect the majority of
our revenue to come from small business clients, since their need for our services is more urgent,
and they are willing to invest in technology as part of their business plan. The majority of our
marketing efforts will thus be focused on small business owners. These customers typically don't
have a full-time IT person, but have full-time IT needs. Home PCs are often used by multiple
people, and serve multiple purposes. Our home PC users need help with managing their settings
to integrate the different needs of all household members as much as they need technical
assistance.

Computing Net magazine recently reported on the substantial need for timely and cost-effective
computer upgrades and repairs in this region; Jack Hacker has seen this market need in person,
as frustrated clients waited for days or weeks for their critical components to be returned to full
capacity, with no inexpensive alternative to the existing computer repair shops. All of our clients
need technical assistance, but we are also selling peace of mind: our clients will know that
friendly, efficient help is just a phone call away. As more and more companies switch their
support services to automated call centers or touch-tone menus, the simple reassurance of
hearing another human voice on the phone within a few rings is immeasurable. Even better
knows that within a few hours, someone will show up and take care of their problem.

Both the software and hardware side of the computer industry continue to turn out new and
revised computer components at alarming rates. For PC Repair this means job security well into
the future. As reported by the Wall Street Journal, there seems to be no end to the development
of the computer market. Business Week expects the computing industry to grow at a rate of 12%
and the processor speeds to continue to expand for years to come.

4.3 Service Business Analysis

Secondary market research shows computer service customers tend to be very loyal to providers
that do good work and satisfy their needs. An analysis of PC Repair's main competitors shows no
overwhelming strengths that would be significant barriers to entry into the market, as our local
competitors have serious weaknesses.

The computer maintenance and repair industry is fragmented, with a few large, national players
and hundreds of small, local stores. While most computers are actually repaired in-store, near the
customer, parts for the repair come from major manufacturers and distributors; delays in
receiving necessary parts can significantly slow down the repair process. Large chains have
solved this problem by keeping vast amounts of inventory in stock at all times, while local stores
offer customers the trade-off of personal interaction and trust that may make up for some delay.

PC Repair has established a relationship with a local distributor to do rapid special-ordering;

although this capability is more expensive than normal channels, it will enable us to quickly
establish a reputation as efficient and responsive to customer needs, particularly for our small
business users. We will leverage this customer loyalty into great word of mouth marketing and
steady growth.

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4.3.1 Competition and Buying Patterns

Customers choose computer repair and assistance services based on reputation, previous
experience, and price. They may choose to return to a mediocre provider with whom they're
familiar, rather than try out a new unknown company about whom they've heard nothing. Large
stores, especially the service departments of national chains, have a great advantage simply in
their affiliation with an established brand. Establishing our brand identity and a great reputation
in the first few months is critical to our success. Once we have broken in to the local market, our
great service will turn new clients into permanent clients.

Our services will be second to no one and our prices will be very reasonable for the high quality
service we offer. By providing superior service, word of mouth alone will bring in many new
clients. The satisfaction our consumers find will keep them coming back. There are two main
competitors for the computer upgrade and repair business in this area:

1. Competitor A. They are a well established provider of computer upgrades and services,
and do quick work. However, they have a high staff turnover, a young and inexperienced
staff, and are more interested in selling new components than in maintaining existing
machines or finding custom solutions. They do not offer any kind of pick-up and drop-off
service, and do not offer on-site help. They really only offer hardware support.

2. Competitor B. Smaller and less known then A, B provides many services for residents
living in east and south parts of town. They are more willing to spend time with a client,
figuring out exactly what his or her needs are, and suggesting new options than
competitor A. However, they have an inefficient ordering system and an unkempt shop,
which deters potential customers and can turn existing customers to the competition.
They also do not offer on-site services, although they are considering instituting a trial
pick-up/drop-off service. They are in the best position to copy our innovations and steal
customers, but their management is complacent and may not respond to competition.

Strategy and Implementation Summary

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Our Strategy and Implementation turn on three points:

1. A value proposition of timely and practical solutions, at a reasonable rate, coupled with a
100% guarantee.

2. Exploiting our competitors weaknesses: a competitive edge based on quick, effective, and
sympathetic customer service, which meets the customer where his needs are, rather than
trying to fit him into an existing box. 

3. Quickly establishing a brand identity and developing a great reputation among local
customers to generate word of mouth advertising.

5.1 Competitive Edge

 Quick response: PC Repair will provide same day and after hours service. 

 A flat rate policy: This undermines the competition, who charge by the hour. The pricing
has been set to reflect the average amount of time it takes to perform the task. With this
strategy we can undercut most competitors and gain local market power.

 On-site and pick-up/drop-off services: This will minimize the time and effort a
customer needs to put into dealing with his computer problem.

 Surprisingly, our small size is an advantage: customers will recognize me (and future
employees), and will know they will get the same great service every time they call.

5.2 Marketing Strategy

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Our marketing strategy will aggressively exploit our competitors' weaknesses. During the start-
up phase, we will run large ads in the business section of the local newspaper, asking, "Are you
fed up with poor customer service for your computer needs?" These ads will focus on
our advantages, including on-site service, competitive rates, and quick response and turn-around
times. They will announce our opening date, and include a coupon for free diagnostic service for
the first 20 customers.

We will follow up on these opening ads with a smaller direct-marketing campaign to small
business owners, with lists drawn from the local Chamber of Commerce. Jack will use his
contacts with business customers from his years as a manager to create a "buzz" about this new
business.

We will continue periodic advertisements, including several promotions (discounts, free

diagnosis, etc.) throughout the first year. We expect a small but steady response from home PC
users who see our ads elsewhere, but will also run monthly ads in sections other than the
business one.

We will offer a promotion during the first 90 days of business to generate business traffic and
word of mouth. Our promo is Spyware removal on any desktop PC for $70 including tax and
software. Spyware is a huge problem for a lot of residential and small business customers, and
the offer should draw a lot of interest.

5.3 Sales Strategy

Our marketing strategy will generate customer inquiries. We will close the deals by offering an
outstanding service and a very reasonable price. Happy customers generate repeat business and
word of mouth. Our toll free number is operational 24 hours a day, seven days a week, and from
8am to 9pm, I will be available to answer calls. At other times, or when I am on the phone, an
answering service we have hired will catch callers and give them an estimated wait time for a
call-back; this is another step towards delivering a complete solution to our customers.

Sales forecast figures are based on industry figures for the typical growth of a start-up and reflect
repeat business generated through meeting customer needs.

5.3.1 Sales Forecast

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The sales strategy is a prediction of controllable growth for the first year. PC Repair will focus
on quality and attention to detail to avoid some potential pitfalls encountered by many new
businesses. The predicted growth is moderate in the home PC market and in the small business
arena. However, with aggressive advertising and word of mouth, this will increase. Our
aggressive TV advertising will increase our residential and small business customer base as well
as word of mouth within the first year. Within a few months we will have the need for additional
employees to handle the work load. At that time, we will move into a leased space with
additional square footage, and buy a company vehicle to help with the on-site calls. 

Our competitors average 75+ calls a month. Given that our advertising will be aggressive, we
expect the same results. The sales forecast is conservative, which gives us a chance to gauge our
experience and adjust the plan accordingly.

We will service all of hawassa, and the surrounding area. We expect that the majority of our jobs
will be performed in the immediate town area. A service technician can perform an average of 3
jobs per day. Our sales forecast predictions are less than that. With our aggressive advertising
campaign we expect nominal growth. We predict it will take a few weeks for the marketing to
settle in with customers. However, we are going to offer a promo for our services which should
generate some substantial results.

Our milestones, listed in the table below, outline the major events that will promote, as well as
insure the success of PC Repair and keep it a going concern well into the future. We will
measure our success in meeting these milestones every month, and adjust the plan to keep up
with our objectives. Name recognition, in particular, is very important to breaking into this
market - we will conduct a survey by calling 200 randomly selected small businesses from the
Chamber of Commerce listings on the specified dates and asking them whether they have heard
of PC Repair, and if so, what their impression is of our service. If any of the respondents have
actually used our services, we will elicit feedback on their experience with us, and suggestions
for improvement. We will also ask if they would recommend us to a colleague.

Management Summary
PC Repair will be owned and managed by Jack Hacker. Jack has 10 years of experience in the
fields of technical support, networking, and computer training and repair. Jack has also spent the
last three years as the manager of a custom computer building and repair store, and understands
the computer needs of small businesses. Jack is adept at managing his time, and at quickly
responding to multiple customer calls and needs.

For the first three months, Jack will be in charge of all aspects of the business. In the third
month, when another tech is hired, Jack will shift some of his energy from directly responding to
customer needs, to training and managing others to does this work effectively. Jack will maintain
direct control over inventory ordering and bookkeeping, and will try to do as many of the on-site
calls as possible himself. Part of our brand recognition strategy is to identify PC Repair with
Jack's efficiency, friendliness, and technical expertise. The easiest way to associate the two is for

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Jack to be a major part of many customers' experiences with us. He will delegate technical
repairs later in the year to the techs working in the leased office space, and will also train them in
his method of direct phone support.

Jack has worked extensively with computer technicians and support staff in the past, and knows
that they work best when given free rein within a set of mutually-agreed-upon guidelines. The
first week of each tech's employment will be dedicated to helping them understand PC Repair's
guidelines:

 the customer needs help, and we're here to help them;

 the customer is frustrated, upset, or confused - but that doesn't make the customer a
problem;
 The customer needs reassurance as well as solutions.

Within this framework, the techs can solve the customer's problem the best way they see fit -
Jack is not a micro manager.

6.1 Personnel Plan

Jack Hacker will be the only employee for the first few months; his salary is directly related to
the success of the business, and will never exceed 18% of sales revenue. In the third month, we
will move to a leased office space and hire a second employee, with a third hire planned for
August, if projections are on target. We plan to hire additional part-time employees in the second
year, to better handle the increasing sales.

Our employees will be skilled professionals, with equally strong technical and people skills. It is
very important to Jack that they be paid salaries commensurate with their abilities and
dedication- happy tech support people make for happy customers. To that end, our full-time
employees will receive health benefits (premiums split between the employee and PC Repair),
paid holidays, and sick time. Those benefits are included in the payroll totals listed below.

Financial Plan
The following sections include the annual estimates for the standard set of financial tables.
Detailed monthly pro-forma tables are included in the appendix.

Our financial plan calls for limited growth in the first three months, followed by much higher
sales when we move and hire additional employees. These projections are based on sound
market research and ratios for comparable businesses. As we grow, we will keep our operating
expenses down, and maintain a positive cash balance as we repay our three-year loan.

7.1 Important Assumptions

PC Repair's customer base would fluctuate if there was a recess in the economy or other
extenuating circumstances that pertain directly to consumer or industry behavior. However,
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given the steady increase in computer users despite the recent recession, we assume that sales
forecasts are unlikely to be dramatically altered by economic events. The table below shows
some of our other assumptions.

7.2 Break-even Analysis

Fixed costs are projected at a monthly average for the first year. This includes payroll, moving
expenses and rent, purchase of a company vehicle, and other necessities like cell phones and the
answering service. Variable costs (inventory used in repairing or servicing computers) are
projected as well. At these levels, what we need to bring in per month to break even is shown in
the table and chart below. We will reach our break-even point mid-year, although we expect
sales in November and December to dip below this level because of holidays.

7.3 Projected Profit and Loss

The table below shows our projected profit and loss. There are two lines for direct cost of sales -
the second line shows projected inventory costs of fulfilling our maintenance contracts. The
marketing/promotion line shows our planned advertising program expenses. Although these are
aggressive, we must spend heavily in the first year in order to establish the brand recognition that
will help us break in to the local market.

This table also shows our projected expense increases as we hire more employees and move into
a larger rented space. Before the move, the owner will absorb expenses related to utilities. In
years two and three, we have budgeted for additional expensed equipment to expand our
diagnostic and repair capabilities to keep up with orders.

7.4 Projected Cash Flow

The Cash Flow chart, below, shows our projected cash position for the first year; the table
following it shows highlights for the first three years. With the requested start-up funding, we
will maintain a positive cash balance throughout, and repay the loan within three years.

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification, Computer Related Services are shown for comparison.

Our projected growth is much higher than the industry average; in part, this is because we are a
start-up, growing sales steadily in these first three years. We are sure that our sales forecast is
conservative, given the dissatisfaction among local computer users with existing options, and our
planned aggressive marketing campaign.

7.6 Projected Balance Sheet

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The Balance Sheet shows a steadily increasing net worth over the next three years. Since we are
planning to rent, and because computer technology changes so rapidly, we will have only short-
term assets, such as computer equipment and furniture. This will make our net worth much more
liquid than many similar businesses. 

7.7 Appendix

Different books and internet site

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