DanComp Solutions is a start-up organization that offers a complete domestic and institutional computer care repair and maintenance service and a full-featured retail parts store. In addition, danComp Solutions will serve the market with door-to-door and workshop-based services conveniently tailored to suit the customer’s satisfaction. DanComp Solutions will grow into a business with USD 50,500 in sales by year three. The company is planned to start its operations in July 2017 and shall be located in Kingdom Sacco Building, New York City. The main aim of this business is to maximize profit and provide employment for the youth.
DanComp Solutions will be headed by a general manager who will be the proprietor of the business and will ensure that the organizational goals and objectives are facilitated through proper initiation of the business growth and development strategies. The technicians and sales attendants will be assigned duties by the manager, who will also be responsible for the business’s marketing. Appointments and remuneration of staff will be based on the experience and qualifications of the individuals. The legal requirements will be acquired from the government ministries and other relevant authorities.
The business will be operational six days a week; however, an active mobile line will be maintained twenty-four hours, seven days a week, by the manager to provide a rapid off-shop response to customers’ problems at any time. Machinery, tools, and equipment are some of the essential factors to good quality products and services. The operational and production plan will ensure that these factors are considered and quality, being the business’s marketing strategy, is adhered to.
A financial plan gives a clear guideline on the financial transactions of the business. It entails the amount invested in the company and how the company spends the cash. The proposed amount to be financed is. USD7,501.20 and will be used for pre-operational costs, costs of machines, tools and equipment, furniture and fittings, and licensing. The plan moreover aids in the preparation of financial statements such as projected cash flows, Pro-forma balance sheet, and calculations of break-even analysis and profitability ratios. The estimated profit for the firm for the first year is USD 3,008.04, the second year is USD 6,740.16, and the third year is USD 9,897.72.
DanComp solutions is a start-up organization that offers complete domestic and institutional computer care repair and maintenance services and a full-featured retail computer parts store. DanComp solutions will serve the market with door-to-door and workshop-based services conveniently tailored to suit customers’ satisfaction.
The sponsor of the business is the owner. After the owner attained his ‘O’ level education, he worked in an electronic shop to sell computer parts and accessories. He worked there for about a year; he then got an idea of running the same kind of business afterward. The idea then was seconded by all the family members who were ready to support him financially.
The owner has experience managing and running a sole proprietorship kind of business as he also ran a company offering cyber services during the holidays where he has been the manager. Also, he gained knowledge of entrepreneurship during his Degree course, which endowed him with skills on managing a sole proprietorship business success how to take a risk when owning a business.
As a mobilizer to his business, he has an organizing desire, and he plans to design a structure that reflects how devoted he will be to his business. As a director, he intends to develop new ideas that he may add to the ones used in the electronic shop he worked in so that it may be a more improved and more standardized one. Friends and relatives are ready to help because they are aware of the profitability of the business and its benefits to society. The company needs around USD.7501.20 for a start.
Type of Business
DanComp Solutions is a start-up business that is set to commence its business operations in January 2017. The business will be a sole proprietorship where the owner will have complete control of the business operations. The owner will control all the running activities of the company and be responsible for all the decision-making, and will ensure that they are implemented to trade competitively in the market and maximize profit. DanComp solution will start as the only one, but sister firms will be opened as it grows. Registration of the business is already in the process whereby the name search has already gone through.
Products and Services
- Computer parts
- Computer accessories
- Computer repair and maintenance
- Network support configuration and implementation.
- New product installation.
- Computer upgrading.
- General consultancy.
- Assembling of computers
- Business Goals and Objectives
These are the objectives set as business standards that the employees of DanComp solutions will embark on to better and expand the business.
Short Term Objectives
- To make good returns on investment
- Creation of employment
Long Term Objectives
- To improve Information Technology services in the region.
- Entry strategy
The business will begin with significant advertisements to reach all its prospective clients sharing the news of the creation of the company on television and in the newspaper for at least two weeks. The advertisements will be through billboards, online promotions, using newspapers, directories, magazines, and catalogs and leaflets, which will contain the business name, business number, mobile number, e-mail address, and the opening date.
Moreover, the business will also send representatives to advertise the business to various customers such as learning and government institutions. The business, in addition, will use brochures for marketing itself to the relevant clients.
Marketing plan/ Customers
Market research was carried out to determine the following aspects of the business: Products and services, whether they match the products offered in the market, size of the market, whether it is large enough to accommodate another company, pricing strategy of the competitors to-be, practicalities to determine whether the location, premises, staff, stock levels, and production capacity are right.
There are two types of potential customers. Namely, enterprises and individual customers discussed below.
These will form the lion’s share of DanComp customers. In addition, the region is well endowed with many different types that require computerization and other services such as networking and support services. These customers include private or public institutions, supermarkets, and business enterprises, among others.
These include business people with personal offices installed with or willing to install computers and individuals who own home PCs.
The business will succeed because of its proposed location, which makes it accessible to many customers. Moreover, the capital required to start the company is in place, making it very possible to commence the business. The management has the technical skills needed to run the business and enough experience in a business venture. A survey carried out revealed that the market is monopolized by two existing enterprises as follows:
JumboCom Enterprises controls 65% of the market, while freelance technicians take up 25% of the market share. By capitalizing on the weaknesses of JumboCom and improving on our strength, DanComp solutions have room to capture at least 10% of the market. The enterprise expects a growth rate of about 8% annually. This will be achieved through hard work and discipline to achieve stipulated business goals and objectives. The analysis gives the results represented using the pie chart below.
- DanComp Solutions (10%) = 10÷100×360˚ = 36˚
- JumboCom Enterprise(65%) = 65÷100×360˚ = 234˚
- Freelance Technicians(25%) = 25÷100×360˚ = 90˚
1st competitor: Jumbo Comp
JumboCom is well established with established computer solutions, but with products that are below quality standards, they lack entrepreneurial skills, transport services, and inferior advertising methods.
2nd competitor: freelance technicians
The freelance technicians are not more established in the market and show signs of insufficient capital to run the business, like lack of critical products in their shop. Therefore, their stepping stone is only qualified personnel and a strong background from which they started.
Plan to Capitalize on Competitors’ Weakness
In his efforts to capitalize on the competitor’s weaknesses, the entrepreneur intends to employ disciplined qualified young personnel who are easy to deal with. The enterprise also wants to offer a wide range of goods and services and attractive and realistic prices for its products and services. Attractive terms of sales and provision of quality goods and services, maintaining a good friendly relationship with customers, updating customers on new technology through calls, e-mails, and offering free demonstrations are also vital considerations.
Advertising and Promotion
DanComp solutions will employ strategies of sales promotion such as: giving gifts to customers, giving cash and quantity discount off with the purchase of goods at certain times of the year, for example, during the festive season, free inspection to regular customers on selected days and also performing a free demonstration of new products in the market due to new technology.
Parts and accessories are generally keystone priced. However, some small items cost more in handling and sales than buying from a supplier. These can be double and triple-key stoned because customers won’t buy them if they don’t have a minimum perceived value.
Price is a factor that highly influences the purchasing power of customers. Therefore, danComp solutions will offer fair prices that will be worked out in terms of the following elements:
The buying price is the most fundamental factor in price determination; goods are sold at prices above the buying price to profit. This will be the case with DanComp solutions. However, the costs will be well balanced to be fair to the customers.
Operation /Production Plan
For efficient and well-facilitated operations, certain critical facilities need to be acquired. These ensure that business activities run as planned that no bottlenecks hinder its activities. Listed in the table below are the facilities that DanComp Solutions will need to carry out its activities.
Production Facilities and Capacity
These are the facilities that enable the business process products and services. These are as shown in the table below;
|Description||Quantity||Cost per unit||Total Cost|
|Machine tools and equipment|
|Software (OS, anti-virus, application and development software )||All the necessary software||250.00|
|Computer electronic tool kit||4||20.00||80.00|
|Networking tool kit||2||10.00||20.00|
|Power supply Unit||1||15.00||15.00|
|Soldering gun and brushes||2||15.00||30.00|
|Furniture and Fittings|
DanComp Solutions is both a service and an assembly enterprise. Its products are mainly assembled clown computers tailored to suit all types and levels of customers, some of which might escape the direct manufacturers’ proper classification. Two groups of assembly will be used. Namely, the customer wishes list assembly. A customer will give specifications of the components he wishes to be included in the computer and allow the company to assemble or shop for the details. This is ideal for customers who want a particular combination of components for special purposes. The other level is the general assembly, where the enterprise technical team will analyze the market trend and develop the most suitable combinations for various types of customers. These will then be assembled, tagged, and displayed at the shop, ready for customers who wish to shop for prepared products.
DanComp Solutions services include workshop-based repair services where customers bring their malfunctioning computer for a check-up and repair. DanComp Solutions also provides off-shop repair and maintenance whereby repair and maintenance services are done at the customers’ premises. An analysis was done initially revealed that the existing computer consultants are reluctant to take a monthly-based system of customer subscription whereby a fixed amount is charged monthly. DanComp Solutions wishes to capitalize on this to capture more customers by introducing a customer-tailored flexible subscription system for the customers who are willing to make their payments once a month. Charges will be based on the average hours monthly and any replaced or upgraded component every month.
Apart from the above, DanComp Solutions will run a fully stocked computer parts shop, where finished products and demonstration of new technology will also be displayed. This is intended to make DanComp Solutions a one-stop-shop where a customer will get all his computer needs, including consultancy services.
An outline for the various items of monthly production costs is as shown below.
Cost of Material Per Month
Cost of Labour Per Month
Overhead Costs Per Month
|Repair and maintenance||10.00|
Total Production Costs Per Month
|Cost of material||1567|
|Cost of labour||1253.50|
Rent + rent deposit
Electricity and water installation
Furniture and fittings
Machine tools and equipment
Estimation of Working Capital:
Working capital = current assets + current liabilities
WC = CA + CL
Table 5.2: Working capital
Electricity and water
Pro-Forma Income Statements (Profit and Loss Account)
Pro-forma Income Statement for the First 3 Years
|Items||31st Dec 2017||31st Dec 2018||31st Dec 2019|
|Electricity and Water||120.00||125.00||140.00|
|Net Profit Before Tax||3581.00||8024.00||1178.300|
|Net Profit After Tax||3008.04||6740.16||9897.72|
Pro-Forma Balance Sheet
DanComp Solution’s Balance sheet
|At start (1st Jan 2017)||End of Yr 1(31st Dec 2017)||End of Yr 2(31st Dec 2018)|
|Total Current Assets||5617.00||22827.00||23785.00|
|Tools and Equipment||1466.20||1466.20||1466.20|
|Furniture and Fittings||418.00||418.00||418.00|
|Total Fixed Assets||1884.20||1884.20||1884.20|
|Total Current Liabilities||0||530.00||150.00|
|Long Term Liabilities|
|Total Long term Liabilities||7501.20||24181.20||25519.20|
Break Even Analysis
For the 1st year, the sales amounted to USD 40,370.00
Break even analysis
Total Contribution margin = total sales – total variable cost
= 40370.00 – 19593.00
Contribution margin % = contribution margin X 100%
= 20777.00X 100
Break-even level = total fixed costs
Contribution margin %
Profitability ratio expected are as shown below
Gross profit % = gross profit X 100%
Return on equity = net profit after tax X 100 %
Return on investment = net profit after tax X 100 %
Net profit ratio = Net profit before tax X 100%
|Profitability ratio||1st year||2nd year||3rd year|
|1||Gross profit ratio||(21118.00×100/40370.00) = 52.311%||(25620.00×100/45600.00) = 56.184%||29450.00×100/50500.00) = 58.317%|
|2||Net profit ratio||(3581.00×100/40370.00) = 8.871%||(8024.00×100/45600.00) = 17.596%||(11783.00×100/5050.000) = 23.332%|
|3||Return on Equity||(3008.04×100/4501.20) = 66.828%||(6740.16×100/17681.20) = 38.120%||(9897.72×100/18019.20) = 54.929%|
|4||Return on investment||(3008.04×100/7501.20) = 40.101%||(6740.16×100/24181.20) = 27.874%||(9897.72×100/25519.20) = 38.785%|
Firm’s desired financing
|Total desired financing||22369.20|
|Loan from bank
Friends and Relatives