Bahir Dar University

Bahir dar institute of technology

Faculty of Computing
Department of Software Engineering
Entrepreneurship for engineers Group Assignment
Business idea title: Computer repair and Maintenance

Group Members Name ID

1. AnimawYitayal..............................1010723
2. Getachew Zemene............................1010737
3. Fasil Getie.........................................1010712
4. Leul Sewale....................................1010877
5. Natnael Tadesse............................0902955UR
6. Solomon Maru................................0902863UR

Submitted to Mr. Zelalem

Acknowledgment
First we would like to express our deepest gratitude for our
instructor Mr. Zelalem, who gives us this assignment. The assignment
helps us to improve our view about entrepreneurship. Now, we are
understood what things should be fulfilled, what things should be studied
and what methods should we follow to start a business.

I
 List of Tables

Table 1 : Repair per System...................................................................................9

Table 2 : Maintenance per System.........................................................................9
Table 3 : Yearly sales forecast.............................................................................10
Table 4 : Monthly Sales Forecast.........................................................................11
Table 5 : Work Time Schedule.............................................................................15
Table 6 : List of machinery and equipment..........................................................16
Table 7 : Computer application software required and prices..............................17
Table 8 : Furniture................................................................................................17
Table 9 : Raw Material and other input................................................................18
Table 10 : Labor requirements.............................................................................18
Table 11 : Startup expenses..................................................................................19
Table 12 : Project cost.........................................................................................21
Table 13 : Production cost....................................................................................21
Table 14 : General Assumptions..........................................................................22
Table 15 : Variable cost.......................................................................................22
Table 16 : General assumption.............................................................................22
Table 17 : Income statement................................................................................23
Table 18 : Cash Flow............................................................................................24
Table 19 : Balance Sheet......................................................................................26
Table 20 : General assumption.............................................................................27

List of Figures
Figure 1 : Computer Repair and Maintenance Image............................................1
Figure 2 : Milestones..............................................................................................4
Figure 3 : Highlights...............................................................................................4
Figure 4 : Sales by Year.......................................................................................11
Figure 5 : Sales by Year.......................................................................................12
Figure 6 : Market Analysis by Pie Chart..............................................................14
Figure 7 : Manufacturing Process........................................................................15
Figure 8 : Equipment's and Machinery................................................................17
Figure 9 : Start-up.................................................................................................20

Table of Contents
Acknowledgment............................................................................................................I
List of Tables.................................................................................................................II
List of Figures................................................................................................................II
Background....................................................................................................................1
1. Executive summary................................................................................1
1.1. Objectives........................................................................................................2
1.2. Mission............................................................................................................2
1.3. Keys to Success...............................................................................................2

II
2. Market Potential.........................................................................................................3
2.1. Milestone.........................................................................................................3
2.2. Company Summary.........................................................................................4
2.3. Competition and Buying Patterns...................................................................4
2.4. Strategy and Implementation Summary..........................................................5
2.5. Competitive Edge............................................................................................6
2.6. Marketing Strategy..........................................................................................6
2.7. Target Market Segment Strategy.....................................................................7
2.8. Service Business Analysis...............................................................................7
2.9. Sales Projection...............................................................................................8
2.10. Sales Strategy................................................................................................9
2.11. Sales Forecast................................................................................................9
2.12. Market Analysis Summary..........................................................................12
2.13. Market Segmentation..................................................................................12
2.13.1. Home PC User..................................................................................13
2.13.2. Small Business Users.......................................................................13
3. Technical feasibility.................................................................................................14
3.2. Production Schedule......................................................................................15
3.2.1. Time Schedule....................................................................................15
3.3. Machinery and Equipment............................................................................16
3.4. Computer application Software.....................................................................17
3.5. Furniture and Fixtures...................................................................................17
3.6. Raw material and Other Input.......................................................................18
3.7. Labor requirements.......................................................................................18
3.8. Start-up Funding and Financial.....................................................................19
3.8.1. Start-up Summary..............................................................................19
3.8.2. Start up expense.................................................................................19
4. Financial Feasibility................................................................................................20
4.1. Project cost....................................................................................................20
4.2. Production Cost.............................................................................................21
4.3. Factor costs and assumptions........................................................................21
4.3.1.Important Assumptions.......................................................................21
4.4. Fixed and variable cost..................................................................................22
4.5. Break-even Analysis.....................................................................................23
4.6. Projected Cash Flow......................................................................................24
5. Organizational /Managerial Feasibility....................................................................27
5.1. Organization structure...................................................................................27
6. Conclusion................................................................................................................28

III
Background
The story of the modern personal computer begins in the late 1970s
when several companies produced computers for home and business use.
Most computers, early on, went to individuals with the knowledge and
patience to fix problems. But almost as soon as computers began to be
mass produced for regular consumers, the need for experts to repair
broken parts and to diagnose software glitches became apparent.
Computer repair businesses began to spring up to fill the need and they
remain a vibrant part of the economy.

Figure 1: Computer Repair and Maintenance Image

1. Executive summary
Computer repair is the process of identifying, troubleshooting and
resolving problems and issues in a faulty computer. It is a broad field
encompassing many tools, techniques and procedures used to repair
computer hardware, software or network/Internet problems. Operating a
computer repair business combines the knowledge of electronics and
computer software with the dexterity to work with specialized tools on
small, complex components. The demand for computer repair businesses
has grown due to the proliferation of computer equipment and the
complexity of their operation, according to Entrepreneur website.
Operating a computer repair business requires specialized knowledge and
training. These can be gained through university or technical college
training, from apprentice training with other professionals, through
specialized online classes, from manuals, or a combination of any of
these. The training must be kept current as computers and their software
evolve constantly.

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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
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.

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2. Market Potential
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. Our business 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. We 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 Bahir Dar and the surrounding areas. Market
research indicates there is an abundance of business for a small company
such as Computer Repair and Maintenance.
Our milestones, listed in the table below, outline the major events
that will promote, as well as insure the success of our business 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.

2.1. Milestone
Our milestones, listed in the table below, outline the major events that
will promote, as well as insure the success of our business 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.

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Chart:
Milestones

Figure 2: Milestones

Figure 3: Highlights

2.2. Company Summary

Our company is a Corporation located in Bahir Dar. With a
small 3-year loan, it will grow in one year from a home-office based
repair shop to a profitable, 6-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.

2.3. 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

4
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 really only offer
hardware support.

2. Competitor B. Smaller and less known then A. 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 are in the best position to copy
our innovations and steal customers, but their management is
complacent and may not respond to competition.

Both of these companies charge rates in excess of our business; we will

be able to attract the price-sensitive market without much work. loyalty
into great word of mouth marketing and steady growth.

2.4. Strategy and Implementation Summary

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 competitor’s 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.

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

2.5. Competitive Edge

 Quick response: PC Repair will provide same day and after
hours service.
 A flat rate policy: This undermines the competition, who charges
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.
 Surprisingly, our small size is an advantage: customers will
recognize us (and future employees), and will know they will get
the same great service every time they call.

2.6. Marketing Strategy

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.

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 birr 2500 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.

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2.7. Target Market Segment Strategy
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.

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

2.8. 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.

Our company has established a relationship with a local distributor

to do rapid special-ordering; although this capability is more expensive

7
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.

2.9. Sales Projection

Services
Our company will offer computer repairs, training, and
networking and upgrade service to clients in two major categories:
home PC users and small business users. As computer 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. 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 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 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.

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 Table 1: Repair per System

Systems Amount(Birr)
Installation 200
Formatting 400
Formatting and Installation 800
Hardware replacement Depends on the problem and the
part
Printers Depends on the problem and the
part
Table 2: Maintenance per System

Systems Amount(Birr)
Software installation CD 100
DVD 200
Upgrade 450
General maintenance 1000
Networking depends on the number of 1000 per computer
computers

2.10. 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, we will be available to answer
calls. At other times, or when we are 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.

2.11. Sales Forecast

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

9
leased space with additional square footage, and buy a company vehicle
to help with the on-site calls.

We will service all of Bahir Dar, 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.

The one element of sales not represented in the table below is

direct costs for our maintenance contracts. We estimate these costs at
12% of sales revenue, but expect a delayed occurrence - that is, we will
sell maintenance contracts starting in September, but do not expect to
actually perform maintenance on computers guaranteed under them for
the first few months. We will incur more and more costs from these as
time goes on, and the computers age - most of the service in a
maintenance contract is performed within the last quarter of the specified
period. Projections for the direct costs for these contracts can be found in
the Profit and Loss Table, as other costs of sales.

Table 3: Yearly sales forecast

Sales Forecast
Unite sales Year 1 Year 2 Year 3
Home PC Unit 1560 2000 2000
Small business unite 180 200 200
Promo 235 0 0
Maintenance Contracts 30 60 60
Total sales 1945 2260 2260
Unite Price
Home PC Unit 200.00 birr 300.00 birr 300.00 birr
Small business unite 5000.00 birr 6000.00 birr 600.00 birr
Promo 200.00 birr 0.00 birr 0.00 birr
Maintenance Contracts 6000.00 birr 6000.00 birr 600.00 birr
Sales
Home PC Unit 312,000 birr 600,000 birr 600,000 birr
Small business unite 900,000 birr 1,200,000 birr 1,200,000 birr
Promo 47,000 birr 0 birr 0 birr
Maintenance Contracts 180000 birr 360,000 birr 360,000 birr
Total sales 1,439,000 birr 2,160,000 birr 2,160,000 birr

1
 Figure 4: Sales by Year

Table 4: Monthly Sales Forecast

Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
Forecast 10 11 12
Unit
Sales
Home 13 0 13 0 13 0 13 0 13 0 13 0 13 0 13 0 13 0 13 0 13 0 13 0
PC Unit
Small 15 15 15 15 15 15 15 15 15 15 15 15
Busines
s Unit
Promo 0 0 0 0 0 0 5 35 75 75 35 35
Mainten 0 0 0 0 0 0 0 0 0 15 15 15
ance
Contract
s
Total 145 145 145 145 145 145 150 180 220 235 195 195
Unit
Sales
Unit
Prices
Home Br.200.0 Br.200.0 Br.200.00 Br.200.00 Br.200.00 Br.200.00 Br.200.00 Br.200.0 Br.200.0 Br.200.0 Br.200. Br.200
PC Unit 0 0 0 0 0 00 .00
Small Br.5000. Br.5000. Br.5000.00 Br.5000.0 Br.5000.0 Br.5000.0 Br.5000.0 Br.5000. Br.5000. Br.5000. Br.500 Br.500
Busines 00 00 0 0 0 0 00 00 00 0.00 0.00
s Unit
Promo Br.200.0 Br.200.0 Br.200.00 Br.200.00 Br.200.00 Br.200.00 Br.200.00 Br.200.0 Br.200.0 Br.200.0 Br.200. Br.200
0 0 0 0 0 00 .00
Mainten Br. Br. Br. Br. Br. Br. Br. Br. Br. Br. Br. Br.
ance 6000.00 6000.00 6000.00 6000.00 6000.00 6000.00 6000.00 6000.00 6000.00 6000.00 6000.0 6000.0
Contract 0 0
s
Sales
Home Br. Br. Br. 26,000 Br. 26,000 Br. 26,000 Br. 26,000 Br. 26,000 Br. Br. Br. Br. Br.
PC Unit 26,000 26,000 26,000 26,000 26,000 26,000 26,000
Small Br. Br. Br. 75,000 Br. 75,000 Br. 75,000 Br. 75,000 Br. 75,000 Br. Br. Br. Br. Br.
Busines 75,000 75,000 75,000 75,000 75,000 75,000 75,000
s Unit
Promo Br,0 Br,0 Br,0 Br,0 Br,0 Br,0 Br.1,000 Br.7,000 $2,000 $0 $0 $0
Mainten Br.0 Br.0 Br.0 Br.0 Br.0 Br.0 Br.0 0 $1,600 Br.3,000 Br.3,00 Br.3,0
ance 0 00
Contract
s
Total Br. Br. Br. Br. Br. Br. Br. Br. Br. Br. Br. Br.
Sales 101,000 101,000 101,000 101,000 101,000 101,000 102,000 109,000 109,000 109,000 109,00 109,00
0 0

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 Figure 5: Sales by Year

2.12. Market Analysis Summary

Our company will provide computer support in both a
consulting and technical capacity to small business owners as well as
home PC users. 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.

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.

2.13. Market Segmentation

The existing computer service market is so extensive that categorizing
it is rather difficult. We have broken our potential market down into

1
 two groups, based on their needs: home PC users and small business
clients.

2.13.1. 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 18 and 70, with
at least one home computer. We are not expecting income from users
below 18, 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.
2.13.2. 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.

1
Chart: Market Analysis (Pie)

Figure 6: Market Analysis by Pie Chart

3. Technical feasibility
In this phase we will discuss the product, manufacturing process of
our business including the plant size and production schedule. We will
also discuss the machinery and equipments and also the other computer
application that we will use in the business. In order for us to lessen our
expenses. We purchase equipment in package, we focus much in then
hardware and software . We research on how much the hardware and
software will cost us.
The Services
The following are services of our company
 Installation
 computer repair
 Formatting
 hardware replacement
 upgrade
 computer maintenance
 network
 DVD/CD burning
 sell accessories

1
3.1. Manufacturing process

Product and
Our Business
Service

Profit or
Customers
Income
Figure 7: Manufacturing Process
Our company will provide the product and services to the customer
and then the customer will give income or profit to our company in return.
The income or profit that the customer gave in return will used to provide
the product and services.

3.2. Production Schedule

The company will operate seven days a week. It opens at 1:00 am
ahead to the other competitors. This will lead our company of being
known. Our goal is to give the needs of the customers in early manner of
time.

3.2.1. Time Schedule

Table 5: Work Time Schedule

Week days Opening(am) Closing (pm) Operating hours

Monday 1:00 2:00 14
Tuesday 1:00 2:00 14
Wednesday 1:00 2:00 14
Thursday 1:00 2:00 14
Friday 1:00 2:00 14
Saturday 1:00 2:00 14
Sunday 1:00 2:00 14
Total operating hours per week 98

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3.3. Machinery and Equipment
Equipments and machinery used in our business are listed below
Table 6: List of machinery and equipment
List of Brand number Descriptio Unit Total
hardware name n price(Birr) Amount
(Birr)
Package Pentium 4 6 Computers 8,000 48,000
PC’s with
complete
accessories
CD - 10 Compact 20 200
disk for
office use
Flash disk Sandisk, T- 5 Flash disk 300 1500
Max,T-plus for office
use and file
sharing
32GB
Meltimeter - 2 Meltimeter 1500 3000
used to
check
hardware
issue
welder(ka - 2 Used to 300 600
wya) melt lead
and cables
Lead - Depend on Lead used 20 1000
length e.g. in melting
50 meter cables
Router - Huawi G 1 Used for 4000 4000
model internett
access
USB - 20 For 500 10000
network maintenanc
adapter e
Total amount 49,700

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Maintenance toolkit Wired mouse

RAM Router RJ-45

Figure 8: Equipment's and Machinery

3.4. Computer application Software

Table 7: Computer application software required and prices

Software Prices
MS windows OS 0
Ubuntu OS 0
MS office 0
Antivirus and Anti Spyware 0

3.5. Furniture and Fixtures

Table 8: Furniture

Description Quantity Unit price (birr) Total price (birr)

Computer 6 3000 18000
cabinet
Air conditioner 1 4000 4000
Total 22,000

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3.6. Raw material and Other Input
Table 9: Raw Material and other input

Description Monthly cost(birr) Total amount(year in

birr)
Electricity 300 3600
Water 80 960
Internet 1500 18000
Total utility cost 22560

3.7. Labor requirements

Estimated annual cost for salaries and wages
Table 10: Labor requirements

Personnel Skill Level salary/mont No of Annual

h birr employees Salary in birr
Computer Medium 6,700 1 80, 400
Hardware
Engineer
Computer Moderate 8,200 1 98, 400
Network
Architect
Computer Medium 5,500 1 66,000
operator
Computer Medium 6, 500 1 78, 000
technician
accountant medium 6,000 1 72,000
Manager High 8,000 1 96,000
total 40, 900 490, 800

Requirement on Hiring an Applicant

 Applicant must be 20 years old. And have
 Resume
 Valid ID
 Computer technician certificate
 Hardworking

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3.8. Start-up Funding and Financial
To get Our business 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.

3.8.1. Start-up Summary

Total start-up expenses include initial expenses for establishing our

website, setting up the business, and doing our pre-opening advertising.
Exact allocations are shown in the table.

The bulk of our start-up requirements are asset needs: we need diagnostic
and repair equipment. We are treating this equipment as assets because
we expect it to last at least three years, and to have 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). We should be able to easily repay this
loan within three years, even with much lower sales revenue than
projected. (See the Cash Flow table for projected repayment.)

3.8.2. Start up expense

Table 11: Startup expenses

Start-up Expenses Price in birr

Legal 2500 birr
Website 2500birr
Business cards 1000birr
Uniforms 3000 birr

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 Advertisement 3000 birr
House rent 8000 birr
Maintenance toolkit 100,000 birr
Total Start-up Expenses 120, 000 birr

Figure 9: Start-up

4. Financial Feasibility
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.

4.1. Project cost

Project cost is the cost that would be incurred for doing the entire
implementation of project right from the scratch up to the stage of
commercial production.

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Table 12: Project cost
Parameter Cost in birr % of share
House rent 30,000 2.27
Maintenance toolkits 20,000 1.51
Computer and 70,000 5.3
furniture cost
Working capital 600,000 45.5
Pre-operating expenses 120,000 9.09
Contingency 480, 000 36.36
Total cost of project 1, 320,000 100.0

4.2. Production Cost

Production cost are those costs which are necessary for the entire
production process including cost of raw materials, overhead expenses
like electricity bill, maintenance, repair, store items & spares,
depreciation as well as packing materials cost.

Table 13: Production cost

Parameter COST birr per annum % of share
Labor cost 490, 800 81.89
Overheads expenses 0 0
Office supplies 22, 000 3.9
Communication cost 24,000 4.3
Electric, Internet and 22, 560 4.08
water
Total 559, 300 100.0

4.3. Factor costs and assumptions:-

The first & topmost factors of a new project are the investment plan & the
sources of finance.

4.3.1.Important Assumptions

Computer 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, 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.

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 Table 14: General Assumptions

General
Assumptions
Plan Month 1 2 3
Current Interest Rate 7.00% 70.00% 70.00%
Long-term Interest 10.00% 10.00% 10.00%
Rate
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

4.4. Fixed and variable cost:-

The cost which changes with the volume of output is called variable cost.
The cost items that are considered under fixed & variable costs are given
in the table below.

Table 15: Variable cost

Variable cost Amount/Annu Fixed cost Amount(birr)

m(birr)
Salaries and 490, 800 Maintenance 90,0000
wages tool kit and
computer
Electric and 20,000 Pre-operating 120,000
water cost expenses
Internet cost 12,000 Office furniture 22, 000
and equipment
House rent 120, 000
General Month Month Month Month Month Month Month Month Month Month Month Month
Assumptio 1 2 3 4 5 6 7 8 9 10 11 12
n
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12

Current 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%
Interest
Rate
Long-term 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
Interest % % % % % % % % % % % %
Rate
Tax Rate 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00
% % % % % % % % % % % %
Other 0 0 0 0 0 0 0 0 0 0 0 0

Table 16: General assumption

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 Income Statement
A company’s income statement records a company’s performance over a
period of time, usually three months.

Table 17: Income statement

particulars Years
1 2 3
Total 1,623,000 1,785,300 2,053,093
Income
Sales 1,439,000 1,582,900 1,820,335
revenue
COGS 580,000 638,000 778,700
Gross 1,043, 000 1,147, 300 1,274,395
profit

4.5. Break-even Analysis

 A break-even analysis is a financial calculation that weighs the costs of a

new business, service or product against the unit sell price to determine
the point at which you will break even. In other words, it reveals the point
at which you will have sold enough units to cover all of your costs.A
break-even analysis is a financial calculation used to determine a
company’s break-even point (BEP). In general, lower fixed costs lead to a
lower break-even point.

Break-even Point = Fixed costs / (Sales price per unit – Variable cost per
unit)
Fixed costs are projected at a monthly average for the first year. This
includes payroll, moving expenses and rent, and other necessities like cell
phones and the answering service. Variable costs (inventory used in
repairing or servicing computers) are projected as well. It is a specific
way of presenting & studying the inter relation-ship between the costs,
volume & profits. This mean at a particular point in the level of activity at
which a company just breaks even without getting any profit or incurring
any loss, This is estimated as given under.

1) Break-even point utilization % = Fixed cost (Birr) / Contribution

(Birr) x Spindle utilization%.

2) Cash break-even point utilization % = Fixed cost (Birr) –

Depreciation (Birr)/ Contribution (Birr) x Spindle utilization%. Where
Contribution = Sales turn over – Variable cost.

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BEP Utilization% = fixed cost*97%/annual sale – annual variable cost=
28.26%

Where: Annual fixed cost = 232,000 birr

Annual Sales = 1,439,000 birr

Annual Variable cost = 642,800 birr

Therefore the company has to produce 28.26% of its full capacity to be in

BEP.

BEP (Sale) = Annual sale*annual fixed cost = 3,848,000 birr. Therefore

the company has to get a sale value of % of 3,848,000 birr not to be in
loss

4.6. 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.

Table 18: Cash Flow

Cash Flow Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales 203,030 birr 276,000 birr 328,500
birr
Subtotal Cash from 203,030 birr 276,000 birr 328,500
Operations birr
Additional Cash
Received
Sales Tax, VAT, 0 0 0
HST/GST Received
New Current Borrowing 0 0 0
New Other Liabilities 0 0 0
(interest-free)
New Long-term 0 0 0
Liabilities
Sales of Other Current 0 0 0
Assets
Sales of Long-term 0 0 0

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Assets
New Investment 0 0 0
Received
Subtotal Cash Received 203,030 birr 276,000 birr 328,500
birr
Expenditures from
Operations
Cash Spending 69,000 birr 110,000 birr 115,000
birr
Bill Payments 110,873 birr 142,543 birr 163,375
birr
Subtotal Spent on 179,873 birr 252,543 birr 278,375
Operations birr
Additional Cash Spent
Sales Tax, VAT, 0 0 0
HST/GST Paid Out
Principal Repayment of 6,564 birr 6,550 birr 6,111 birr
Current Borrowing
Other Liabilities 0 0 0
Principal Repayment
Long-term Liabilities 0 0 0
Principal Repayment
Purchase Other Current 0 0 0
Assets
Purchase Long-term 0 0 0
Assets
Dividends 0 0 0
Subtotal Cash Spent 186,437 birr 259,093 birr 284,486
birr
Net Cash Flow 16,593 birr 16,907 birr 44,014
birr
Cash Balance 44,593 birr 61,500 birr 105,514
birr

Projected Balance Sheet

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.

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Table 19: Balance Sheet
Balance Sheet
Assets Year 1 Year 2 Year 3
Current Assets
Cash 44,593 birr 61,500 105,514
birr
Inventory 4,890 birr 7,129 7,239 birr
Other Current Assets 10,000 birr 10,000 10,000 birr
Total Current Assets 59,482 birr 78,629 122,753
birr
Long-term Assets
Long-term Assets 0 0 0
Accumulated Depreciation 0 0 0
Total Long-term Assets 0 0 0
Total Assets 59,482 birr 78,629 birr 122,753
birr
Liabilities and Capital
Current Liabilities
Accounts Payable 12,783 birr 11,620 birr 13,590 birr

Current Borrowing 12,661 birr 6,111 birr 0

Other Current Liabilities 0 0 0

Subtotal Current Liabilities 25,444 birr 17,731 birr 13,590 birr
Long-term Liabilities 0 0 0
Total Liabilities 25,444 birr 17,731 birr 13,590 birr
Paid-in Capital 23,000 birr 23,000 birr 23,000 birr
Retained Earnings 3,025 birr 11,039 birr 37,898 birr
Earnings 14,064 birr 26,859 birr 48,266 birr
Total Capital 34,039 birr 60,898 birr 109,163
birr
Total Liabilities and Capital 59,482 birr 78,629 birr 122,753
birr
Net Worth 34,039 birr 60,898 birr 109,163
birr

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5. Organizational /Managerial Feasibility
5.1. Organization structure
The organization structure is a structure or a frame work of manpower
Management right from the top management level up to the level of
workers for balancing the performance, responsible to whom & hierarchy.
Without a proper Organization chart an industry cannot be run effectively.
Our company has managed by A manager and at second level there are
technicians and finance personnel. It does not have complex hierarchy.
Man power requirement on their category
Any business organization or a manufacturing process needs manpower
from the top most to the down ward level of category to run the company
efficiently & effectively. The minimum requirements of managing
category level of officers, staff & employees and their salary are shown in
the table considering the market value and their required qualification and
suitable experiences.

Table 20: General assumption

Job Qualification Salary(birr)
Manager qualified 8,000
Accountant qualified 6,000
Computer hardware qualified 6,700
engineer
Computer network qualified 8,200
architect
Computer operator qualified 5,500
Computer technician qualified 6,500

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6. Conclusion
We depend on our computers. Finding reliable expertise is a
problem for anybody who doesn’t have a direct channel via a company,
employer, friend, or relative. We solve that problem. Computer repair and
maintenance 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.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.
Our business 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. Market research indicates there is an
abundance of business for a small company such as computer repair and
maintenance. It is very much expected that the momentum will come very
soon as the Economy of World &our country are improving gradually.
Due to the development of world economy more and more investors will
come forward for the new start-up as well as the expansion of existing
start-up with state of art technology. The scope of computer repair and
maintenance will be bright due to the exponential growth of science and
technology; due to this reason home and office works are carried out
through the help of computers then usage of computers are increased.