project report for college

8/12/2019 Project Report for college

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Executive Summary

PC Repair will provide computer and technical consulting (repairs, training, networking and upgrade service) tolocal small businesses as well as home PC users. The company will focus on marketing, responsiveness, quality, andcreating 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 area. In the third month of our plan, we willmove into a leased office space and hire a second technician. As sales increase, we will hire additional personnel.

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

Introduction

Includes Following Points :Market ScopePromotersRequirements

The very nature of the computing industry, with its extraordinary rate of technological development, creates aconstant need for businesses skilled in updating and advising customers on computer-related issues. In town, themajority of potential customers are dissatisfied with existing options, creating an attractive niche for an innovativestart-up. Small business PC users will provide the majority of our business revenue. Business Weekexpects thecomputing 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 thesecustomers. We can also offer maintenance agreements that generate additional monthly income. For our residentialcustomers, we will offer a very affordable and helpful service with a very flexible schedule to meet their needs. Ourtarget market will focus on shop and the surrounding areas. Market research indicates there is an abundance ofbusiness for a small company such as PC Repair.

Project Concept

PC Repair will offer computer repairs, training, 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 softwaredevelopment 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 taketime out of their busy days to haul a computer in to our workshop. This is the single biggest frustration Jack has seenamong small business owners needing computer help. Much of our diagnostic equipment is portable, and we willremove a PC to our workshop only when the problem requires more detailed diagnosis or repair. We will also offerfree pick-up and delivery of PCs needing repair. To meet the growing demand for this service, we will purchase acompany vehicle in the third month.We will also offer extended maintenance contracts, so that business clients can deal with technical support andrepair 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 ofmind for the customer.We will offer limited software support (installation and compatibility issues), and focus on hardware and networkingsupport - this is a vital distinction, since software is evolving much more rapidly than hardware, and our clients willhave such diverse software needs that we couldn't possibly keep up with all of them. We will encourage clients toregister their software and use the software's own support options to their full potential. We will, however, keep upto date with multiple operating systems and networking developments, working with clients to make sure they havethe most appropriate combinations of hardware, OS, networking, backup systems, and software.


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

Start-up Funding and FinancialsTo 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 onindustry research within the local area, project hefty sales in year one, steadily increasing through year three. Toreach these goals, we will use an aggressive advertising campaign to exploit our competitors' weaknesses. Withgood cost control, we will see a modest, yet comfortable, net profit the first year, even after moving into a leasedspace and hiring additional technicians.

Objectives1. 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.

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

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 Ownership


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PC Repair was initially envisioned as a sole proprietorship in the owner's home. However, recent feedback from ourmarketing outreach has suggested a much higher sales potential than originally imagined, and PC Repair has beenreformed as an S Corporation. This change will provide additional legal protection for the owner, and will alsostreamline the financial operations of the company as we expand the personnel to 5 within the next three years, leasea separate space for offices, and purchase company vehicles and cell phones.The owner has 10 years of experience in the fields of technical support, networking, and computer training andrepair. Jack has also spent the last three years as the manager of a custom computer building and repair store, andunderstands the computer needs of small businesses.

Start-up SummaryTotal start-up expenses include initial expenses for establishing our website, setting up the business, and doing ourpre-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, half of which willbe contributed to the business by the owner from his own materials. We are treating this equipment as assets becausewe expect it to last at least three years, and to have some resale value when we are through with it; we will buyadditional expensed equipment in years two and three. We also need start-up inventory which includes RAM, sparehard drives, cables, and cases. Although we will keep expenses to a minimum for the first three months, before wemove, 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 athree-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 much lower sales revenue than projected. (See the Cash Flow table for projectedrepayment.)

ServicesPC Repair will offer computer repairs, training, 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 softwaredevelopment 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 taketime out of their busy days to haul a computer in to our workshop. This is the single biggest frustration Jack has seenamong small business owners needing computer help. Much of our diagnostic equipment is portable, and we willremove a PC to our workshop only when the problem requires more detailed diagnosis or repair. We will also offerfree pick-up and delivery of PCs needing repair. To meet the growing demand for this service, we will purchase acompany vehicle in the third month.

We will also offer extended maintenance contracts, so that business clients can deal with technical support andrepair needs as a single line-item expense, rather than having to plan for unexpected crashes and problems with arainy-day fund they may never use. Maintenance contracts yield a high gross margin for us, and provide peace ofmind for the customer.We will offer limited software support (installation and compatibility issues), and focus on hardware and networkingsupport - this is a vital distinction, since software is evolving much more rapidly than hardware, and our clients willhave such diverse software needs that we couldn't possibly keep up with all of them. We will encourage clients toregister their software and use the software's own support options to their full potential. We will, however, keep upto date with multiple operating systems and networking developments, working with clients to make sure they have


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the most appropriate combinations of hardware, OS, networking, backup systems, and software. Backup andsecurity are becoming higher priorities for all our potential customers, as internet usage (and its pitfalls) becomesmore common, and as more and more daily records are stored electronically.

Market Analysis SummaryPC 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 belimited by the owner's capacity to complete work. However, these first three months are critical for establishing ourcredibility 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 willtake full advantage. The very nature of the computing industry, with its extraordinary rate of technologicaldevelopment, creates a constant need for businesses skilled in updating and advising customers on computer-relatedissues.National chains, such as "Geeks on Call," and Best Buy's "Geek Squad" have seen rapid growth in demand for theseservices in the last few years. Customers are seeking skilled help with everything from installation of software andhardware components, to networking, to transferring files from an old computer to a new one. Those who can oftenenlist their tech-savvy children's help, but others are not so fortunate, and small -business owners need reliable andquick 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.

Market SegmentationThe existing computer service market is so extensive that categorizing it is rather difficult. We have broken ourpotential 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 betweenthe ages of 30 and 70, with at least one home computer. We are not expecting income from users below 30, whotend to be more comfortable with technology and willing to attempt repairs and upgrades on their own, withoutseeking 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 sophisticatedapplications 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 ascustomers within a 15 mile radius, with 2 or more computers or a network which they use for business purposes atleast 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 mayalso be more extensive, incorporating inventory tracking, POS systems, customer databases, online product/servicedelivery, or product development. The more intensive their computer usage for business, the more critical it is tothem that their technology work well and reliably, and that quality repairs and support are available in a crisis. Theirhardware needs will include the same items as home users, plus servers, backup systems, data storage, and wirelessnetworking.The portion of the small business market we are targeting is growing at around 2% a year.


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Market AnalysisYear 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Home PC Users 7% 25,000 26,750 28,623 30,626 32,770 7.00%

Small Business Users 2% 10,000 10,100 10,201 10,303 10,406 1.00%

Other 0% 0 0 0 0 0 0.00%

Total 5.39% 35,000 36,850 38,824 40,929 43,176 5.39%

Target Market Segment StrategyAlthough there are more potential customers among home PC users, we expect the majority of our revenue to comefrom small business clients, since their need for our services is more urgent, and they are willing to invest intechnology as part of their business plan. The majority of our marketing efforts will thus be focused on smallbusiness owners. These customers typically don't have a full-time IT person, but have full-time IT needs. Home PCsare often used by multiple people, and serve multiple purposes. Our home PC users need help with managing theirsettings to integrate the different needs of all household members as much as they need technical assistance.Computing Netmagazine recently reported on the substantial need for timely and cost-effective computer upgradesand repairs in this region; Jack Hacker has seen this market need in person, as frustrated clients waited for days orweeks for their critical components to be returned to full capacity, with no inexpensive alternative to the existingcomputer repair shops. All of our clients need technical assistance, but we are also selling peace of mind: our clientswill know that friendly, efficient help is just a phone call away. As more and more companies switch their supportservices to automated call centers or touch-tone menus, the simple reassurance of hearing another human voice onthe phone within a few rings is immeasurable. Even better is knowing that within a few hours, someone will showup and take care of their problem.Both the software and hardware side of the computer industry continue to turn out new and revised computercomponents at alarming rates. For PC Repair this means job security well into the future. As reported by the WallStreet Journal, there seems to be no end to the development of the computer market.Business Weekexpects thecomputing industry to grow at a rate of 12% and the processor speeds to continue to expand for years to come.

Service Business AnalysisSecondary market research shows computer service customers tend to be very loyal to providers that do good workand satisfy their needs. An analysis of PC Repair's main competitors shows no overwhelming strengths that wouldbe 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 ofsmall, local stores. While most computers are actually repaired in-store, near the customer, parts for the repair comefrom major manufacturers and distributors; delays in receiving necessary parts can significantly slow down therepair 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.


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PC Repair has established a relationship with a local distributor to do rapid special-ordering; although this capabilityis more expensive than normal channels, it will enable us to quickly establish a reputation as efficient and responsiveto customer needs, particularly for our small business users. We will leverage this customer loyalty into great wordof mouth marketing and steady growth.

Competition and Buying PatternsCustomers choose computer repair and assistance services based on reputation, previous experience, and price. Theymay choose to return to a mediocre provider with whom they're familiar, rather than try out a new unknowncompany 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 agreat reputation in the first few months is critical to our success. Once we have broken in to the local market, ourgreat 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. Byproviding superior service, word of mouth alone will bring in many new clients. The satisfaction our consumers findwill keep them coming back. There are two main competitors for the computer upgrade and repair business in thisarea:

1. Competitor A. They are a well established provider of computer upgrades and services, and do quick work. However, they have ahigh staff turnover, a young and inexperienced staff, and are more interested in selling new components than in maintaining existingmachines or finding custom solutions. They do not offer any kind of pick-up and drop-off service, and do not offer on-site help. Theyreally 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 thancompetitor A. However, they have an inefficient ordering system and an unkempt shop, which deters potential customers and canturn existing customers to the competition. They also do not offer on-site services, although they are considering instituting a trialpick-up/drop-off service. They are in the best position to copy our innovations and steal customers, but their management iscomplacent and may not respond to competition.Both of these companies charge rates in excess of PC Repair; we will be able to attract the price-sensitive market without muchwork.

Strategy and Implementation Summary

Our Strategy and Implementation turn onthreepoints: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.4.

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 theaverage amount of time it takes to perform the task. With this strategy we can undercut most competitors and gainlocal 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 sizeis an advantage: customers will recognize me (and future employees), and will know they will get the

same great service every time they call.

Marketing StrategyOur marketing strategy will aggressively exploit our competitors' weaknesses. During the start-up phase, we will runlarge ads in the business section of the local newspaper, asking, "Are you fed up with poor customer service for yourcomputer needs?" These ads will focus on our advantages, including on-site service, competitive rates, and quick


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response and turn-around times. They will announce our opening date, and include a coupon for free diagnosticservice for the first 20 customers.We will follow up on these opening ads with a smaller direct-marketing campaign to small business owners, withlists drawn from the local Chamber of Commerce. Jack will use his contacts with business customers from his yearsas a manager to create a "buzz" about this new business.We will continue periodic advertisements, including several promotions (discounts, free diagnosis, etc.) throughoutthe first year. We expect a small but steady response from home PC users who see our ads elsewhere, but will alsorun 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. Ourpromo is Spyware removal on any desktop PC for $70 including tax and software. Spyware is a huge problem for alot of residential and small business customers, and the offer should draw a lot of interest.

Sales StrategyOur marketing strategy will generate customer inquiries. We will close the deals by offering an outstanding serviceand a very reasonable price. Happy customers generate repeat business and word of mouth. Our toll free number isoperational 24 hours a day, seven days a week, and from 8am to 9pm, I will be available to answer calls. At othertimes, or when I am on the phone, an answering service we have hired will catch callers and give them an estimatedwait 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 businessgenerated through meeting customer needs.

Sales ForecastThe sales strategy is a prediction of controllable growth for the first year. PC Repair will focus on quality andattention to detail to avoid some potential pitfalls encountered by many new businesses. The predicted growth ismoderate in the home PC market and in the small business arena. However, with aggressive advertising and word ofmouth, this will increase. Our agressive TV advertising will increase our residential and small business customerbase as well as word of mouth within the first year. Within a few months we will have the need for additionalemployees 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 sameresults. The sales forecast is conservative, which gives us a chance to gauge our experience and adjust the planaccordingly.We will service all of local area, 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 forecastpredictions are less than that. With our aggressive advertising campaign we expect nominal growth. We predict itwill take a few weeks for the marketing to settle in with customers. However, we are going to offer a promo for ourservices which should generate some substantial results.The one element of sales not represented in the table below is direct costs for our maintenance contracts. Weestimate these costs at 12% of sales revenue, but expect a delayed occurrence - that is, we will sell maintenancecontracts starting in February, but do not expect to actually perform maintenance on computers guaranteed underthem 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.


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

Management Summary


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PC Repair will be owned and managed by Jack Hacker. Jack has 10 years of experience in the fields of technicalsupport, networking, and computer training and repair. Jack has also spent the last three years as the manager of acustom computer building and repair store, and understands the computer needs of small businesses. Jack is adept atmanaging 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 techis hired, Jack will shift some of his energy from directly responding to customer needs, to training and managingothers to do this work effectively. Jack will maintain direct control over inventory ordering and bookkeeping, andwill try to do as many of the on-site calls as possible himself. Part of our brand recognition strategy is to identify PCRepair with Jack's efficiency, friendliness, and technical expertise. The easiest way to associate the two is for Jack tobe a major part of many customers' experiences with us. He will delegate technical repairs later in the year to thetechs 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 bestwhen given free rein within a set of mutually-agreed-upon guidelines. The first week of each tech's employment willbe 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 micromanager.

Personnel PlanOur Firm Owner is the only employee for the first few months; his salary is directly related to the success of thebusiness, and will never exceed 18% of sales revenue. In the third month, we will move to a leased office space andhire a second employee, with a third hire planned for August, if projections are on target. We plan to hire additionalpart-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 toJack that they be paid salaries commensurate with their abilities and dedication- happy tech support people make forhappy customers. To that end, our full-time employees will receive health benefits (premiums split between theemployee and PC Repair), paid holidays, and sick time. Those benefits are included in the payroll totals listedbelow.

Personnel PlanYear 1 Year 2 Year 3

Owner $33,000 $38,000 $40,000

Tech1 $21,600 $30,000 $30,000

Tech2 $14,400 $30,000 $30,000

Part Time $0 $12,000 $15,000

Total People 3 5 5

Total Payroll $69,000 $110,000 $115,000

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 moveand hire additional employees. These projections are based on sound market research and ratios for comparablebusinesses. As we grow, we will keep our operating expenses down, and maintain a positive cash balance as werepay our three-year loan.

Important AssumptionsPC Repair's customer base would fluctuate if there was a recess in the economy or other extenuating circumstancesthat pertain directly to consumer or industry behavior. However, given the steady increase in computer users despitethe recent recession, we assume that sales forecasts are unlikely to be dramatically altered by economic events.


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Break-even AnalysisFixed 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 inper 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.

Break-even AnalysisMonthly Units Break-even 52

Monthly Revenue Break-even $15,110

Assumptions:

Average Per-Unit Revenue $291.29

Average Per-Unit Variable Cost $70.00

Estimated Monthly Fixed Cost $11,479

Projected Profit and Loss

The table below shows our projected profit and loss. There are two lines for direct cost of sales - the second lineshows projected inventory costs of fulfilling our maintenance contracts. The marketing/promotion line shows ourplanned advertising program expenses. Although these are aggressive, we must spend heavily in the first year inorder 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 rentedspace. Before the move, the owner will absorb expenses related to utilities. In years two and three, we have budgetedfor additional expensed equipment to expand our diagnostic and repair capabilities to keep up with orders.We are seeking a modest net profit in the first year. As our reputation grows, we will see higher revenues and netprofit over the next three years.


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

Business Ratios


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Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard IndustrialClassification (SIC) code 7379, Computer Related Services, (NAICS 811212) are shown for comparison.Our projected growth is much higher than the industry average; in part, this is because we are a start-up, growingsales steadily in these first three years. We are sure that our sales forecast is conservative, given the dissatisfactionamong local computer users with existing options, and our planned aggressive marketing campaign.

Projected Balance SheetThe 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 computerequipment and furniture. This will make our net worth much more liquid than many similar businesses.

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