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 extentI 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.
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
Table of Contents
Serial No.TittlesPage No.
011.01.21.3Executive Summery Objectives Keys of Success
Mission04040505
022.12.22.3Company Summery Company Ownership Start-up Summery
Company Location and Facilities06060608
033.13.23.33.43.5Services Service Description Sales Literature
Fulfillment Technology Future Services090910111111
044.14.2Market Analysis Summery Target Market Segment Strategy
Service Business Analysis131314
055.15.25.35.4Strategy and Implementation Summery Competitive
Edge Market Strategy Sales Strategy 1616161820
066.16.26.3Management Summery Organizational Structure
Management Team Gaps Personnel Plan21212122
077.17.27.37.47.57.6Financial Plan Important Assumptions Key
Financial Indicators Break-even Analysis Projected Profit and Loss
Projected Cash Flow Projected Balance Sheet23232324252628
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 business-to-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 marketis due to expensive
project costs, the highest profit margins in Web development today
are in servicing large- and medium-sized 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 Objectives1. Revenues of Rs.900,000 by month 10.2. Net
Profit of 20%inyear oneand 35% in year two.3. 60% Gross margin
bymonth 10.
1.2 Keys to Success1. 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
servicestailored 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 MissionOur 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.
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 OwnershipTops 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 SummaryOur start-up plan is a well thought out base
to propel us forward with the proper equipment, marketing tools,
and personnel to startour venture. An initial cash investment by
the owners in the amount of rupees 200,000 to purchase office
furniture, computer 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
willfund 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 hasbeen
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 2,000
Computer Monitor60,000
Office Rent (lease)40,000
Office Equipment & Rent60,000
Dedicated Server Setup Fee4,900
Company Registration Fees11,000
Total Start-up Expenses177,900
Start-up Assets
Cash Required 350,000
Other Current Assets200,000
Long-term Assets0
Total Assets550,000
Total Requirements727,900
Start-up Funding
Start-up Expenses to Fund177,900
Start-up Assets to Fund550,000
Total Funding Required727,900
Assets
Cash Requirements from Start-up350,000
Non- Cash Asset on Start 200,000
Cash Balance on Starting Date350,000
Total Assets550,000
2.3 Company Locations and FacilitiesWe 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.
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, live-feed 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
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 pre-existing
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 LiteratureTops 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.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 tooffer 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 FulfillmentFor 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 hasallowed us much flexibility in important
hosting features, customizability, and it has drovecosts 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 TechnologyIt is a given that technology and keeping up with
new innovations strongly influence our business. We operate a
Windows basedLocal 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.
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 exclusivelyallowing 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.
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 graduallyimproving 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 alarger 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 StrategyTops 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 NeedsThe
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 rateand making their online presence
ahigher 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 TrendsAn 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 AnalysisWeb 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 ofcatering to large, corporate Web accounts.
4.2.1 Main Competitors
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 pricesdo 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 ParticipantsThe 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 whoare looking to implement their business into
the Web.
5.1 Competitive EdgeWe 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
development experience and has been recognized as a leader and
innovator in the graphic design and layout areas of website
development.
5.2 Marketing StrategySuccessful 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 ProgramsWe 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 StrategyFor 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.
Catalog Website Package(Rs.65000): Usually reserved for
product-oriented websites that are e-commerce enabled. Popular with
companies that have a desire tomarket 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 clientsis 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 StrategyOur 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 theInternet
ServicesorWebsite Designheadings. Tops Bit Web Solutions. also has
an ad listing in a national business directory under the heading
ofWeb 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: 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 StrategyOur 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 ForecastThe 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 hostingrevenuewill be built upslowly but are the
residual base we will stand on in the future.
Sales Forecast (In Rupees)
Year 1Year 2Year 3
Sales
Website Development650,5001100,6501560,550
Result-based Marketing160,200198,200310050
Maintenance96,300130,600221,300
Hosting93,000120,550208,100
Total Sales10,000001550,00023,00000
Direct Cost of SalesYear 1Year 2Year 3
Website Development000
Result-based Marketing64,650106,050121,200
Maintenance000
Hosting35,90043,95059,320
Subtotal Direct Cost 100,550150,000180,520
5.3.2 Sales ProgramsThe 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.
5.4 Strategic AlliancesCurrently, 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
withequal 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 StructureTops
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 also be holding the office of the treasurer
therefore will be responsible for all financial related
matters.Dharmendra Kumar willserve 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 GapsThe 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 PlanWe visualize
implementing a "team" development system that will consist of two
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.The followingtable shows how we plan
on making the above a reality.Personnel Plan (In Rupees)
Year 1Year 2Year 3
Production Personnel
Dharmendra / Web Developer80,500100,000120,200
Developer #1/Hired in Oct120,000180,000216,000
Developer #2/Hired in Dec96,000180,000216,000
Other000
Subtotal296,000460,000552,200
Finance and Marketing Personnel
Girijesh80,500100,000120,200
Sales Position #1/Hired in June160,000192,000240,000
Other000
Subtotal240500292,000240,000
Total People555
Total Payroll536,500752,000912,400
Financial PlanTops 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 AssumptionsOur financial assumptions are based on
a steady economy and standard numbers for a business in our
industry.
General Assumptions
Year 1Year 2Year 3
Plan Month123
Current Interest Rate10.00%10.00%10.00%
Long-term Interest Rate15.00%15.00%15.00%
Tax Rate25%25%25%
Other000
7.2 Key Financial IndicatorsThe following chart indicates our
key financial indicators over the next three years.
7.3 Break-even AnalysisThe 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
averagevariable cost is an aggregate measure for all the types of
services which will be offered.
Break-even Analysis
Monthly Revenue Break-even4,649
Assumptions:
Average Percent Variable Cost9%
Estimated Monthly Fixed Cost4,210
7.4 Projected Profit and LossOur 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)
Year 1Year 2Year 3
Sales1000,0001550,0002300,000
Direct Cost of Sales100,550150,000180,520
Production Payroll296,000460,000552,200
Other000
Total Cost of Sales396,550610,000732,720
Gross Margin603,450940,0001567,280
Gross Margin %60.34%61.77%68.14%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll240,500292,000360,200
Advertising/Promotion12,00013,50014,500
Travel5,0006,0007,500
Miscellaneous000
Total Sales and Marketing Expenses257,500311,500382,200
General and AdministrativeExpenses
General and Administrative Payroll000
Rent10,00013,00016,000
Utilities5,0007,00010,000
Insurance5,0006,00010,000
Payroll Taxes28,65050,200132,480
Other General and Administrative Expenses000
Total General and Administrative Expenses48,65076,200168,480
Total Expenses702,700997,70012,83,400
Profit Before Interest and Taxes297,300552,30010,16,600
Interest Expense @15%75,00060,00030,000
Taxes Incurred22,23049,230197,320
Net Profit200,070443,070789,280
Net Profit/Sales20.01%28.58%34.32%
7.5 Projected Cash FlowCash 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 1Year 2Year 3
Cash Received
Cash from Operations
Cash Sales280,650475,200650,500
Cash from Receivables560,500920,8001190,500
Subtotal Cash from Operations841,15013,96,00018,41,000
Additional Cash Received
Sales of Long-term Assets000
New Investment Received000
Subtotal Cash Received841,15012,96,00018,41,000
ExpendituresYear 1Year 2Year 3
Expenditures from Operations
Cash Spending536,500752,000912,400
Bill Payments182,20050,700310,920
Subtotal Spent on Operations718,700802,70012,23,320
Additional Cash Spent
Long-term Liabilities Principal Repayment000
Purchase Other Current Assets000
Purchase Long-term Assets0500,000500,000
Subtotal Cash Spent718,700132,70017,23,320
Net Cash Flow122,45093,300117,680
Cash Balance472,450565,750683,430
7.6 Projected Balance SheetThe 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 1Year 2Year 3
Assets
Current Assets
Cash472,450565,750683,430
Accounts Receivable132,770410,200650,550
Other Current Assets200,000200,000200,000
Total Current Assets805,22011,75,95015,33,980
Long-term Assets
Long-term Assets120,000190,000420,000
Accumulated Depreciation6,00015,00063,000
Total Long-term Assets112,000175,000357,000
Total Assets925,22012,83,95018,90,980
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable53,05068,710130,800
Current Borrowing000
Other Current Liabilities000
Subtotal Current Liabilities53,05068,710130,800
Long-term Liabilities500,000400,000200,000
Total Liabilities553,050565,710630,800
Paid-in Capital350,000350,000350,000
Retained Earnings(177,900)22,170420,900
Earnings200,070443,070789,280
Total Capital372,170815,24015,60,180
Total Liabilities and Capital925,22012,83,95018,90,980
Net Worth372,170815,24015,60,180
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