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Computer Repair Shop Business Plan

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Executive Summary

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.

Computer Repair Shop Business Plan

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.

Business Description

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 sponsors

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 

Products:

  • Computer parts
  • Computer accessories

Services

  • 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.

Potential Customers

There are two types of potential customers. Namely, enterprises and individual customers discussed below.

Enterprise customers

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.

Individual Customers

These include business people with personal offices installed with or willing to install computers and individuals who own home PCs.

Market Share

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˚

Competition

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.

Pricing Strategy

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
Blowers 3 2.00 6.00
Cleaning brushes 4 0.30 1.20
Dust coats 4 5.00 20.00
Protective gloves 4 5.00 20.00
Multimeter 2 12.00 24.00
Soldering gun and brushes 2 15.00 30.00
Computer 5 200.00 1000
Sub-total 1466.20
Furniture and Fittings
Work bench 2 30.00 60.00
Waiting bench 1 28.00 28.00
Tables 3 45.00 135.00
Seats 10 19.50 195.00
Sub-total 418.00
TOTAL 1884.20

Operation strategy

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

ITEM Amount (USD)
Pens 3.00
Receipt book 5.00
Invoice book 4.00
Processors 300.00
Motherboard 200.00
RAM 80.00
Hard disks 200.00
CD drive 170.00
Monitors 200.00
BNC cables 20.00
NIC cards 70.00
System chasses 75.00
Rj-45 5.00
SCSII buses 10.00
Sound cards 75.00
Video cards 150.00
Total 1567.00

Cost of Labour Per Month

Item Amount (USD)
Manager 245.50
Head technician 190.00
Accountant 175.00
Technicians 350.00
Sales executive 160.00
Cleaner 133.00
Total 1253.50

 Overhead Costs Per Month

Item Amount (USD)
Rent 60.00
Insurance 10.00
Postal services 5.00
Electricity 10.00
Local travel 10.00
Garbage collection 2.00
Repair and maintenance 10.00
Total 107.00

Total Production Costs Per Month

Item Amount (USD)
Cost of material 1567
Cost of labour 1253.50
Overhead costs 107
Total 2927.50

 Preoperational Cost:

ITEM USD
Business Registration

Rent + rent deposit

Electricity and water installation

Telephone installation

Insurance

Furniture and fittings

Internet installation

Stock

Business permit

Machine tools and equipment

         8

     120

       40

       10

       10         

     418

       15

   1567

       50

    1466.20

Total     3704.20

Estimation of Working Capital:

Working capital = current assets + current liabilities

      WC = CA + CL

Table 5.2: Working capital

ITEM USD
Raw materials 1567.00
Rent

Electricity and water

Telephone

Stationery

Transport

Garbage collection

Permit

Postage

Remuneration

Insurance

Advertising

Maintenance

720.00

120.00

90.00

10.00

125.00

24.00

600.00

40.00

15042.00

120.00

100.00

107.00

Total 18665.00

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
Sales 40370.00 45600.00 50500.00
Purchases 19252.00 19980.00 21050.00
Gross Profit 21118.00 25620.00 29450.00
Expenses
Wages 15042.00 15042.00 15042.00
Rent 720.00 720.00 720.00
Electricity  and Water 120.00 125.00 140.00
Telephone 90.00 85.00 91.00
Advertising 100.00 110.00 120.00
Transport 125.00 150.00 180.00
Garbage Collection 24.00 24.00 24.00
Postage 40.00 45.00 40.00
Loan Repayment 1000.00 1000.00 1000.00
Interest (15%) 150.00 150.00 150.00
Repairs 126.00 145.00 160.00
Total Expenses 17537.00 17596.00 17667.00
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)
Assets
Current Assets
Cash 3900.00 3500.00 3700.00
Debtors 150.00 75.00 105.00
Stock 1567.00 19252.00 19980.00
Total Current Assets 5617.00 22827.00 23785.00
Fixed Assets
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 Assets 7501.20 24711.20 25669.20
Liabilities
Current Liabilities
Creditors 530.00 150.00
Total Current Liabilities 0 530.00 150.00
Long Term Liabilities
Bank loan 3000.00 6500.00 7500.00
Owner’s Equity 4501.20 1768.120 18019.20
Total Long term Liabilities 7501.20 24181.20 25519.20
Total Liabilities 7501.20 24711.20 25669.20

Break Even Analysis

For the 1st year, the sales amounted to USD 40,370.00

Break even analysis

Fixed Costs Amount(USD)
Rent 720.00
Postage 40.00
Salaries 15042.00
Garbage Collection 24.00
Advertising 100.00
Total 15926.00
Variable Costs Amount(USD)
Transport 125.00
Telephone 90.00
Repairs 126.00
Materials 19252.00
Total 19593.00

 Contribution Margin

Total Contribution margin   = total sales – total variable cost

                                            = 40370.00 – 19593.00

                                            =   20777.00

Contribution margin %       =   contribution margin X 100%

                                                                  Sales

                                            =              20777.00X 100

                                                                40370.00

                                            =     51.466%

Break-even level                 =              total fixed costs  

                                                        Contribution margin %

                                           =          15926.00

                                                        51.466%

                                            =    309.44

Performance/Profitability Ratios

Profitability ratio expected are as shown below

Gross profit %                     =    gross profit X 100% 

                                                           Sales

Return on equity                 =   net profit after tax X 100 %

                                                        Owner’s equity

Return on investment          =   net profit after tax X 100 %

                                                         Total Investment

Net profit ratio                                 = Net profit before tax X 100%

                                                            Sales

Profitability Ratio

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%

Desired Financing

Firm’s desired financing

Item              Amount (USD)
Pre-Operational costs

Working capital

              3704.20

              18665.00

Total desired financing               22369.20

Proposed Capitalization

Proposed capitalisation

Source              Amount (USD)
Loan from bank

Personal Saving

Friends and Relatives

              3000.00

              2501.20

              2000.00

Total investment               7501.20

 

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