Our Services - Business Plan

SAMPLE BUSINESS PLAN
FOR: XYZ COMPANY
ALPHABET, NEBRASKA

Jack I. Beanstalk
1234 Main Street
PO Box 123
Alphabet, Nebraska 68000
(402) 555-1234

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EXECUTIVE SUMMARY
The Company (1)
The Market (1)
Operations (1)
Management (1)
Financial Assumptions and Information (1)

The Company (2)
The Market (2)
The Competition (2)
Marketing Plan (2)
Operations (2)
Management (2)
Financial Assumptions and Information (2)

Exhibit A- 1990 Census of Population and Housing
Exhibit B - Potential Market and Market Share
Exhibit C - Amortization Schedule
Exhibit D - Repair Equipment Purchase
Exhibit E - Personal Financial Statements
Exhibit F - Financial Projections
F-1 Cash Flow Assumptions
F-2 Monthly Cash Flow Projections Year 1(3 needed)
F-3 Income Statement Assumptions
F-4 Pro Forma Income Statement
F-5 Balance Sheet Assumptions
F-6 Pro Forma Balance Sheet
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EXECUTIVE SUMMARY

COMPANY
XYZ Company will begin as a sole proprietorship in 199x by Jack I. Beanstalk in Alphabet, Nebraska. This business has perceived a need in the community for an electronics repair service that provides fast, courteous, reliable service at a competitive price.

MARKETING
The market for the services of an electronic repair shop will be a 25 mile area from Alphabet, Nebraska. They feel that their initial share of the target market should include 689 households. Their competition includes two (2) service stores in Alphabet, one (1) in Numbers, and one (1) in Nowhere, located 46 miles from Alphabet, Nebraska.

XYZ Company plans to use a pricing structure that is equal to or below their competition. Their competitive edge will be their fast and courteous service.

OPERATIONS

The geographic location of XYZ Company will be in a garage located at 1234 Main Street in Alphabet, Nebraska. The facility covers 300 square feet of space. Alterations to be made to this building to make it suitable for service repair are: build work benches, weatherize all doors and windows, and install a gas heater.

MANAGEMENT
Jack I. Beanstalk will serve as the manager of the business. He will also perform technician duties. He has received experience in management and business from the US Navy. He also has an Associate of Applied Science in Electronics from Northrop Community College in Notown, Nebraska. He has plans to hire three part-time technicians who also have experience in electronic repair. He will utilize an accounting instructor to help in setting up the bookkeeping system for this business.

FINANCIAL
Jack I. Beanstalk is applying for a loan in the amount of $10,000 for 7 years at 9.00% interest. These funds will be used to purchase repair equipment, cover initial start-up costs, and provide working capital. Jack I. Beanstalk will also contribute a AST computer and a Dodge van to the business (valued at $8,300).

Financial projections are based on conservative estimates during the first year, with a 5% increase in sales and expenses projected in years 2 and 3. A summary of the projected sales and net income is as follows:

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THE COMPANY
XYZ Company will commence business the summer of 199x to address one of the major concerns of Alphabet, Nebraska and the surrounding communities: Where can electronic equipment be repaired quickly, with reliable service, at a competitive price?

As there is little or no competition in the electronic repair market in the Alphabet area, XYZ Company has been formed to provide fast, courteous, reliable, service at a very competitive price.

During its first two years, XYZ Company will focus on the repair of electronic equipment. Beginning in year three, the company will evaluate and possibly pursue the retail avenue of electronic equipment sales.

XYZ Company will be formed as a sole proprietorship with Jack I. Beanstalk as the owner.

The business philosophy of XYZ Company will encompass quality, unparalleled service, and competitive prices.

THE MARKET
The customers that XYZ Company hopes to service are the residents of the City of Alphabet and Allover County. They will also service customers residing in the counties of Upthere, Downaround, and Overthehill, as well as from Aboveit county in South Dakota. In addition to serving the local community, the company is being considered for warranty work by the local Sears catalog outlet.

According to the 1990 Census of Population and Housing, there is a total of 35,981 households residing in Allover, Upthere, Downaround, and Overthehill counties in Nebraska and Aboveit county in South Dakota (see Exhibit A). The potential market, based on the total number of households within a 25 mile area, is 3,286 household units. It is assumed that each of these units would own a TV set, VCR, and radio. Based upon the competition in the area , XYZ Company feels that they should be able to service approximately 689 household units as their market share (see Exhibit B). It is expected that each household could easily spend a minimum of $35 per household per year. Based on this data, XYZ Company is conservatively projecting that year one sales estimates will be $25,200. They plan to increase their sales income by a minimum of 5% for the next four years.

THE COMPETITION
Within a 40 mile radius of the target area, there are four shops that offer services and repair for electronic equipment. The names and addresses of the competition are as follows:

Strengths and weaknesses of the competition are as follows:

NBDC Repair is a small service repair shop located in Alphabet, NE.
    PRO + located in Alphabet
              + quality workmanship
    CON - owner is only open two days per month
               - owner has other interests

Electronic Rehab is also located in Alphabet, NE
    PRO + quality workmanship
    CON - retired, works only when feels like it
               - poor service

King Tronics is located 20 miles to the east of Alphabet, NE in Numbers, NE.
    PRO + short distance from Alphabet
    CON - poor service, sends most repair referrals to Suesville
               - does not have quality workmanship

Fix-It Shop is located 40 miles from Alphabet in Nowhere, NE.
    PRO + lack of competition in the area
    CON - complaints about the quality of workmanship
               - poor service, long wait on parts

MARKETING PLAN
XYZ Company’s overall marketing strategy is to offer fast. Reliable, and courteous service at a competitive price. To be competitive in the projected market, XYZ Company will have utilize a pricing structure which is the same or slightly lower than the local competition. The following is a proposed pricing structure for the company:

LABOR - a flat $40 per hour or any part thereof.

ESTIMATES - a flat $10 fee. There will be no charge if the company repairs the equipment.

PARTS - a 30% markup over cost.

SERVICE CALL - a $20 fee to go into a customer’s home of place of business.

SERVICE/WARRANTY POLICY - 30 day guarantee on all parts and labor.

To promote the company, advertising will be done in the following manner:

1. Locally produced advertising flyers to be placed in local businesses and on car windows within the target area,
   
2. Ads run in local weekly paper and in papers of the surrounding communities and,
   
3. Ads run on the local and surrounding communities radio stations.

OPERATIONS
The geographic location of XYZ Company will be in a garage located at 1234 Main Street in Alphabet, Nebraska. The facility covers 300 square feet of space.

lterations to made to this building to make it suitable for service repair area: build work benches, weatherize all doors and windows, and install a gas heater.

MANAGEMENT
The operation of XYZ Company will consist of four people: Jack I Beanstalk - owner, Alice N. Wonderland, Grumpy Dwarf, and Liona King. The managerial and educational experience of each is as follows:

Jack I. Beanstalk - Will serve as a technician, manager, supervisor, and sales person. He retired from the US Navy where he supervised from 2 to 7 personnel. He also managed a yearly budget ranging from $400,000 to $6,000,000. He has attended several Navy schools on budgeting and leadership. He graduated from Northrop Community College with an Associate of Applied Science in Electronics. Jack I. Beanstalk’s resume can be found on the following page.

Alice N. Wonderland - Will serve as a part-time technician for XYZ Company. She has managed a household of five children and did baby-sitting for up to 14 children. She graduated from Knowledge College with a diploma in secretarial skills. She has also graduated from Northrop Community College with an Associate of Applied Science in Electronics.

Grumpy Dwarf - Will serve as a technical consultant. He has owned and operated his own television repair shop in Don’tellme, South Dakota for approximately three years and has worked in a Sears store. He graduated from Northrop Community College with an Associate of Applied Arts in television repair and currently working on an Associate of Applied Science in Avionics.

Liona King - Will help establish the financial accounting system of the company and offer assistance as needed. Liona is a former school teacher in accounting and is currently substitute teaching in the public school system. She is also a bookkeeper for a local firm.

Jack I. Beanstalk
123 Green Giant Lane
Alphabet, Nebraska 68000

EDUCATION
1991 A.A.S. Electronics, Northrop Community College, Nowhere, Nebraska.
1980 Navy Purchasing/Budgeting Course (8 weeks), Somewhere, California
1973 Navy Management Course (6 weeks), Anywhere, California
1971 Navy Purchasing Management Course (6 weeks), Somewhere, California
1971 Navy Leadership Course (4 weeks), Notthere, Florida

PROFESSIONAL EXPERIENCE
1992- Present Manager/Technician, XYZ Company, Alphabet, Nebraska

Presently serving as technician, manager, supervisor, and sales person.

1990-1991 Apprentice Electronic Technician, Notown Electronics, Notown, NE

Served as assistant to the owner/operator of Notown Electronics. Learned electrical skills through first-hand experience while going to school, as well as some small office management techniques.

1970-1990 Manager, Purchasing Department, US Navy

Managed the purchasing department on one of the US Navy’s bases. This included supervising between two and seven personnel and operating a budget ranging from $400,000 to $6,000,000. Participated in several management courses while serving in this position.

FINANCIAL
With any new product or service on the market, there are going to be many assumptions and risks. XYZ Company is assuming that the demand for an additional electronics repair shop in the Alphabet area will be supported by the local residents. The company is also assuming that it will draw business from the surrounding communities.

Jack I. Beanstalk is applying for a loan in the amount of $10,000 for 7 years at 9.00% interest (see Exhibit C). This money will be utilized as follows:

$ 6,891 repair equipment (see Exhibit D)
$ 500 repairs and adjustments to garage
$ 160 insurance coverage for the business
$ 200 utility deposits and legal advice
$ 2,249 working capital
$ 10,000 Total loan

Jack I. Beanstalk plans to contribute equity in the form of fixed assets for the business (see Exhibit E). This includes an AST computer valued at $2,300 and a 1986 Dodge van valued at $6,000. Exhibit F outlines the projections and their assumptions for the next three years.

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EXHIBIT A

1990 CENSUS OF POPULATION AND HOUSING
Total ________# of Households_________
State County Population Family Non-Family Total

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SD Aboveit 73,142 19,816 8,276 28,092
NE Allover 852 262 43 305
NE Upthere 9,494 2,660 1,191 3,851
NE Downaround 4,108 1,170 480 1,650
NE Overthehill 5,423 1,507 576 2,083

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TOTALS 93,019 25,415 10,566 35,981

EXHIBIT B

POTENTIAL MARKET (25 MILE RADIUS)
(Based on total number of households)

• 1æ2 of Allover County 305/2 152
  
• All of Downaround County 1,650 1,650
  
• 1æ4 of Overthehill County 1,083/4 521
  
• 1æ4 of Upthere County 3,851/4 963
  
• Total # of Households 3,286

ASSUMPTION: That each household would have a minimum of one radio, TV, or VCR.

MARKET SHARE

• Allover County 30% x 152 = 46
  
• Downaround County 30% x 1,650 = 495
  
• Overthehill County 10% x 521 = 52
  
• Upthere County 10% x 963 = 96
  
• Total # of Households 689

LOAN AMORTIZATION

EXHIBIT C

EXHIBIT D

REPAIR EQUIPMENT PURCHASE

$ 1,595 Oscilloscope
$ 235 Soldering Station
$ 459 Isolation Transformer
$ 90 Oscilloscope Probes
$ 114 Hand-Held Parts Checker
$ 1,349 Picture Tube Checker
$ 1,349 Color-bar Generator - adjust color
$ 800 Vacuum Tube Checker
$ 800 Assorted small tubes
$ 6,891 Total Equipment Purchase

EXHIBIT E

PERSONAL FINANCIAL STATEMENTS

This is where you insert a copy of your personal financial statements.

EXHIBIT F

F-1 Cash Flow Projections
F-2 Annual Cash Flow Projections (3 years)
F-3 Monthly Cash Flow Projections Year 1
F-4 Income Statement Assumptions
F-5 Pro Forma Income Statement
F-6 Balance Sheet Assumptions
F-7 Pro Forma Balance Sheet

EXHIBIT F-1

CASH FLOW ASSUMPTIONS

CASH IN:
Income: Based on projections for surrounding counties
Loan: Will be used to purchase equipment, remodel, and working capital

CASH OUT:
Inventory: Will be replaced as used. Replacements will be at 73% of retail parts sales

Payroll: Based on 30 hours per week.

Payroll Tax: Average of 7.65% FICA and 4.2% unemployment tax on first $7,000 paid

Expenses: Per Income Statement

Principle Payment: From Amortization Schedule

Interest Payment: From Amortization Schedule

Owner Draw: $3,600 in year 1
   $6,000 in year 2
   $8,400 in year 3

START-UP COSTS

• Utility Deposits
  
• Repairs
  
• Equipment Purchases
  
• Accounting/Legal/Insurance
  
• Renovation Costs

EXHIBIT F-2

EXHIBIT F-3

INCOME STATEMENT ASSUMPTIONS

INCOME:

• Sale of Labor will equal 70% of total sales
  
• Sale of Parts will equal 30% of total sales
  
• Year 2 will increase by 5% over previous year
  
• Year 3 will increase by 5% over pervious year

COST OF GOODS SOLD
Markup is 30% over cost. This equals 77% of the total retail sale of the parts
Markup will remain at 77% during year 2 and year 3

EXPENSES
Expenses will increase by 5% each year
Payroll - Year 1 - 30 hours per week x $4.25
Year 2 - 30 hours per week x $4.80
Year 3 - 30 hours per week x $5.00
Payroll Tax - Will equal gross wages x 10%
Interest - From Amortization Schedule
Depreciation - Auto and computer will use 3-year life
Equipment will use a 5-year life
All fixed assets will assume straight-line, half year, and no salvage value

EXHIBIT F-4

EXHIBIT F-5

BALANCE SHEET ASSUMPTIONS

ASSETS:
CASH - From cash flow statement

INVENTORY - Will be purchased as needed

DEPRECIATION - Computer 3 year life
                                   Auto 3 year life
                                   Equipment 5 year life

All fixed assets will assume straight-line, half-year, and no salvage value

LIABILITIES:
   Loan - $10,000 note at 9.00% for 7 years
   Amortization schedule for principle and interest attached

OWNER EQUITY:
Equity - Initial investment of computer and auto

Owner Draw - $3,600 year 1
$6,000 year 2
$8,400 year 3
Profit/(Loss) - From Income Statement Projections

EXHIBIT F-6