Computer Consulting Business Plan

Calico Computer Consulting is being formed as a sole proprietorship owned and operated by Doug Burham. This plan is a guide for starting and managing the business and will also serve as the basis for a separate marketing plan. Here is a summary of the main points:

– The objectives of CCC are to generate a profit, grow at a manageable rate, and be a good citizen.

– The mission of CCC is to provide fast and reliable technical assistance to small office computer users.

– The keys to success for CCC are marketing, networking, responsiveness, quality, and generating repeat customers.

– The primary service offered initially will be hourly technical aid, with consideration for retainer contracts and projects in the future.

– The local market for this business is wide open for new and expanding consulting firms.

– An initial financial analysis shows outstanding promise for this venture. The computer consulting business is easy to start, requires little upfront capital, and has the potential to be lucrative in today’s high tech world.

In summary, this plan projects rapid growth and high net profits over the next three years. Implementing this plan, along with a comprehensive marketing plan, will ensure that Calico Computer Consulting becomes a profitable venture for the owner.

Computer Consulting Business Plan Example

1.1 Objectives

The objectives of this business plan are:

1. To provide a guide for starting and managing this computer consulting business; a framework for developing a marketing plan.

2. The intended audience is the owner of this business only; this plan is not intended to obtain financing.

3. The scope of this plan is to provide monthly projections for the current year and yearly summaries for the following two years.

The objectives of Calico Computer Consulting are:

1. Profit – To generate sufficient profit to finance future growth and achieve other company objectives. (Net profit of at least 45% of sales in the first year).

2. Growth – To grow the business at a challenging yet manageable rate, leading the market with innovation. (Grow from 24 billable hours/week at end of Year 1 to 35 hours/week in Year 3).

3. Citizenship – To be an intellectual and social asset to the community and environment. (Contribute 5 hours per week as a volunteer, contribute 5% of pretax profits to charity).

1.2 Mission

Calico Computer Consulting’s mission is:

– Purpose – To provide fast, reliable technical assistance to local business/small office/home office computer users. CCC sells solutions & results!

– Vision – By providing fast response, informed expertise, and high-quality solutions, CCC generates enough satisfied repeat customers to provide a stable retainer base. This generates sufficient profit to provide a comfortable living for the owner.

– Mission – The short-term objective is to start this company quickly and inexpensively, with minimal debt. The long-term objective is to grow the company into a stable and profitable entity that the owner can easily and comfortably manage.

– Marketing Slogan – “Calico Computer Consulting is your computer paramedic…”

1.3 Keys to Success

The keys to success for Calico Computer Consulting are:

– Marketing and Networking (getting the name out there).

– Responsiveness (being an on-call computer paramedic with fast response time).

– Quality (getting the job done right the first time, offering a 100% guarantee).

– Relationships (developing loyal repeat customers – retainers).

Company Summary

Calico Computer Consulting will be a start-up venture with the following characteristics:

– CCC will initially be a sole proprietorship.

– The goal will be to start the venture as inexpensively as possible, with no debt financing.

– CCC will be a home office start-up, utilizing one studio room in the owner’s home.

2.1 Start-up Summary

In line with the company philosophy of avoiding debt, the goal is to start-up as inexpensively as possible. This is in line with industry figures that show that computer consulting start-ups have very low start-up costs. Total start-up expenses for CCC come to $2,050, all financed through owner investment.

– Most expenses are typical start-up paperwork fees (legal, accounting, etc.).

– Cash requirements consist of one month’s rent as a reserve.

– $500 for expensed equipment will be used to purchase a new All-In-One printer, fax, and answering machine to replace an aging inkjet printer.

Computer Consulting Business Plan Example

Start-up Requirements

Legal – $250

Stationery etc. – $100

Brochures – $125

Accountant – $75

Insurance – $150

Rent – $425

Expensed Equipment – $500

Total Start-up Expenses – $1,625

Start-up Assets

Cash Required – $0

Other Current Assets – $0

Long-term Assets – $0

Total Assets – $0

Total Requirements – $1,625

Start-up Funding

Start-up Expenses to Fund – $1,625

Start-up Assets to Fund – $0

Total Funding Required – $1,625

Assets

Non-cash Assets from Start-up – $0

Cash Requirements from Start-up – $0

Additional Cash Raised – $425

Cash Balance on Starting Date – $425

Total Assets – $425

Liabilities and Capital

Liabilities

Current Borrowing – $0

Long-term Liabilities – $0

Accounts Payable (Outstanding Bills) – $0

Other Current Liabilities (interest-free) – $0

Total Liabilities – $0

Capital

Planned Investment – $2,050

Owner Investment – $2,050

Other – $0

Additional Investment Requirement – $0

Total Planned Investment – $2,050

Loss at Start-up (Start-up Expenses) – ($1,625)

Total Capital – $425

Total Capital and Liabilities – $425

Total Funding – $2,050

2.2 Company Locations and Facilities

This is a home office venture, located in one studio of the owner’s home.

Computer facilities will initially consist of the owner’s existing system.

Telephone – one line currently serves the location. A second line for data use should be added soon.

Utilities are already provided, included in the space rent of $425.

2.3 Company Ownership

Calico Computer Consulting will be created initially as a sole proprietorship, owned and operated by Doug Burham. Incorporation, probably as a LLC, will be explored as a later option.

Services

Calico Computer Consulting will offer small office/home office business owners a quick-response, reliable source of technical help for their computers.

CCC will offer three main services – Hourly Technical Aid, Retainer contracts for specific skills or systems, and Project consulting.

There appear to be four main classes of competition, the largest of which consists of individual proprietors and smaller consulting firms such as CCC. The competitive edge for CCC will be to expand on already existing relationships.

CCC will start with some basic sales literature, including logo and stationary, a brochure, and a basic web page. These will be self-designed and computer generated, of course.

Fulfillment of services will be provided exclusively by CCC’s owner.

Technology is obviously a critical component of this business: It will be important to stay up to date on both equipment and knowledge to remain competitive in the future.

Detailed descriptions of these points are found in the sections below.

3.1 Service Description

Calico Computer Consulting will offer three main services, corresponding to what industry experts have identified as the primary opportunities in computer consulting:

1. Hourly (Temporary Technical Aid) – The less traditional sort of short term assignment helping a company solve a software or hardware related problem. Includes both emergency and non-emergency technical assistance.

2. Retainer (Specific Skill) – The more traditional form of consulting, including regular system maintenance, software and hardware upgrades, and network administration. The owner’s particular area of expertise is in management consulting with regard to MIS.

3. Project (Bail-out or Specific Skill) – This will include such things as consulting on major purchases, system/network installation and testing, and major disaster recovery.

3.2 Sales Literature

Calico Computer Consulting will start with some basic self-generated literature to establish initial positioning:

– Logo and theme – A national catalog sales paper goods company has a wonderful line of blank papers with a computer theme that will serve as the “look” for CCC. A graphic artist friend of the owner has already commenced work on a matching logo.

– Stationery – The theme paper is available in various formats for use as company stationery.

– Brochure – Likewise, pre-printed paper is available, along with software templates for generating brochures

– Web Presence – Eventually a website will be developed as an “electronic brochure” as well as a resource site for the owner’s established client base.

– Response Templates – As common problems/solutions are encountered and solved, a set of standardized templates for initial responses will be developed. This will shorten response time and eliminate confusion in providing quick solutions to routine issues.

3.3 Fulfillment

The fulfillment of services for CCC is provided by the owner. The ultimate deliverable is the owner’s expertise and problem solving ability, coupled with an open mind and ease of communication that will result in the customer’s complete confidence in immediate and lasting results.

3.4 Competitive Comparison

There seems to be four major classes of competition in the local computer consulting industry:

– In-house MIS consultants – Usually employed by larger companies that can afford the fixed cost of a salaried or hourly employee.

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– Individual proprietors & smaller consulting firms – As noted elsewhere in this plan, the bulk of Yellow Page advertisements are comprised of this group.

– Larger network and telecommunications consulting firms – Large, known-name companies such as Network One that specialize in providing total MIS services to larger companies that choose to outsource.

– Computer and electronics stores offering consulting services.

Of course, Calico Computer Consulting fits into the largest group as a sole proprietorship. The primary reason that customers would buy from CCC rather than competitors is the existing relationships that exist. Customer loyalty and satisfaction are the way to success for small service businesses such as this.

3.5 Technology

Technology is, of course, vital to the success of Calico Computer Consulting. It is imperative that the owner stay up-to-date on the latest technological developments in the computer industry. In addition, it will be important to devote a reasonable portion of each year’s revenues toward upgrading the equipment and software used by CCC in its normal operations.

Market Analysis Summary

Calico Computer Consulting will adopt a fairly intently focused market strategy.

A logical segmentation breaks the market down into the following: Home Office Businesses, Small Businesses, Medium Businesses, and Large Businesses. Descriptions are provided below.

The largest and most logical target markets for CCC are the Home Office and Small Businesses. These businesses mostly have a need for temporary technical aid, usually billed at an hourly rate. Some opportunity does exist, however, for retainer and/or specific project contracts.

While there are a fair number of competitors in the local area, they seem to be widely specialized and widely sized, leaving ample opportunity for CCC to create and expand a niche in the chosen market segments.

Finally worth noting is the growth trend for this market, estimated at around 9 to 10 percent annually through the beginning of the next century.

4.1 Market Segmentation

The following chart and table reflect the market segmentation for this business. The size and growth numbers are based on US Census data for the local region.

– Home Office Businesses – The largest and fastest-growing segment, this segment is obviously defined as small businesses that are based primarily out of the owner’s home. This is not the same as simple home computer users, which sources warn are NOT a viable market segment for computer consulting.

– Small Businesses – Defined by the government as businesses with 1 to 99 employees, this is the second largest and fastest growing segment in Eugene and Lane County.

– Medium Businesses – 100 to 499 employees.

– Large Businesses – 500 or more employees.

As is obvious in the pie chart, the first two segments comprise the bulk of opportunity for Calico Computer Consulting.

Computer Consulting Business Plan Example

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Home Office Businesses 10% 4,259 4,685 5,154 5,669 6,236 10.00%

Small Businesses 9% 3,931 4,285 4,671 5,091 5,549 9.00%

Medium Businesses 9% 159 173 189 206 225 9.07%

Large Businesses 9% 192 209 228 249 271 9.00%

Total 9.50% 8,541 9,352 10,242 11,215 12,281 9.50%

4.2 Target Market Segment Strategy

Entrepreneur Magazine suggests six market segments as a starting point:

– Businesses not using computers

– Small entrepreneurial businesses using one or more computers

– Small to medium-sized corps using computers on networks

– Large corps seeking problem-solving assistance (troubleshooting) with specific projects

– Government agencies, corporations, and other organizations in search of computer training

– Businesses in search of custom computer programming services

Calico Computer Consulting will focus on the top market segments only – an intently focused marketing strategy.

4.2.1 Market Trends

Three primary market trends seem to be important in this industry:

– Trend #1 – rapid growth in technology, need for continuous upgrades in both hardware and software.

– Trend #2 – predicted continued growth in consulting/outsourcing – companies being unwilling to pay fixed costs of salaries, choosing instead to treat computer upgrades and repair as variable costs.

– Trend #3 – rapid growth in the ratio of SOHO businesses to traditional medium-sized businesses.

These trends are predicted to continue well into the next century.

4.2.2 Market Growth

As noted in the previous section, several factors are predicted to continue well into the next decades, including the growth rates for this market:

– Growth rate citation – Entrepreneur Magazine says that the consulting industry in general will continue to grow at an annual rate of 9.1%

– Growth rate citation – Census data for each identified segment in the Lane County area roughly parallel this growth rate.

– Growth rate citation – Eugene Chamber of Commerce published data supports the Federal Census data, predicting continued and rapid growth, particularly in the small office/home office market segment.

4.2.3 Market Needs

According to Entrepreneur Magazine, experts in the consulting industry have identified three different opportunities that exist for computer consultants:

– Temporary Technical Aid: Short-term assignments finding solutions for businesses – noted as the largest market

– Specific Skill: Software specialty, system setup & purchasing guidance, systems reengineering/optimization, network admin, training, repair, database/application development, data storage, disaster recovery, security/data protection, telecommunications

– Bail-Out (Troubleshooting)

According to Entrepreneur Magazine, private home computer users are NOT a viable market for computer consultants.

4.3 Service Business Analysis

The computer consulting business for the local area is already well established, yet still allows ample opportunity for entry and growth for new participants. This is supported by the following points:

– There is a wide range of sizes and specialties among the existing consultants.

– Customers in this industry tend to be loyal, relying on the same consultant for future needs.

– An analysis of CCC’s main competitors shows no overwhelming strengths that would be significant barriers to CCC’s success. Likewise, identifying competitors’ weaknesses has illuminated several areas that CCC can target as marketing strategies.

In short, the business arena, while no longer brand new, is far from exhausted as an opportunity for a new and aggressive company or sole proprietor. By utilizing a logical and comprehensive marketing approach, CCC should easily find success in the computer consulting business.

4.3.1 Business Participants

A search of the local Yellow Pages revealed the following:

– Under the heading "Consultants – Computer & Data Processing," there were a total of four listings.

– Under "Computers – Service & Repair," there were 51 total listings, the majority of which seemed to be stores or companies.

– Under "Computers – Software & Services," there were 88 total listings. Thirteen of those were large companies such as [name omitted], [name omitted], and [name omitted] (a Portland firm). Sixteen were specialists in accounting software.

– Under "Computers – System Designers & Consultants," there were 45 total listings. About half had larger listings and/or company names that implied a larger size. Throughout all the listings, only four were clearly listed as individual practitioners. The most unique name amongst all listings was “[name omitted].”

The conclusion is that while there are a fair number of competitors in the geographic area, they are widely specialized and sized. Many of the larger participants appear to cater to larger clients, leaving plenty of opportunity for Calico Computer Consulting to focus on its chosen market segments.

4.3.2 Main Competitors

Below are examples of a brief analysis of CCC’s main competitors.

1. Competitor 1 [name omitted]

– Top strength – A very memorable name.

– Primary weakness – Focus primarily on one operating system (not used by businesses).

2. Competitor 2 [name omitted]

– Top strength – Longevity and experience.

– Primary weakness – Slow response and an unwillingness to take on new customers.

A more comprehensive discussion of these strategies is presented in the CCC Marketing Plan.

4.3.3 Competition and Buying Patterns

The local computer consulting industry is fragmented, with a wide variety of sizes and specialties. Two general factors of competition show up in the analysis:

– Larger competitors provide network expertise to large companies or provide “consulting” service to products they sell.

– Smaller-sized companies favor larger businesses as their clients.

Customer buying patterns highlight the opportunity for Calico Computer Consulting. Home business/small business owners tend to favor the personal relationship that can develop with the smaller consulting firm. Several small business owners interviewed for this research admitted being intimidated and overwhelmed by the prospect of calling a larger firm for help.

Another important buying pattern is that customers who have established a relationship with a computer consultant tend to stay loyal as long as the service and results remain acceptable. This will be critical to the success of CCC.

Strategy and Implementation Summary

Calico Computer Consulting will focus on the following to establish and grow the business:

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– Four main promotion strategies: networking and referrals, web-based promotion, traditional media advertising, and some non-traditional promotion methods.

– A value proposition of timely and practical solutions at a reasonable rate, coupled with a 100% guarantee.

– A competitive edge based on cultivating existing customer relationships.

– A comprehensive and detailed marketing and sales strategy, covered in depth in a separate marketing plan.

5.1 Strategy Pyramid

The following four marketing strategies are suited for a modern high-tech business like computer consulting:

– Strategy 1 – Networking & Referrals – Using existing contacts and clients to build a larger network of potential clients.

– Strategy 2 – Web Promotion – Using a web page to showcase the owner’s skills and knowledge, providing an “electronic brochure” as well as useful technical information free of charge.

– Strategy 3 – Advertising – Traditional methods such as Yellow Page ads, newspaper classified and display ads, local television cable access advertisements.

– Strategy 4 – Non-traditional – Creative and unique advertising such as door hangers, bumper stickers, etc.

A more comprehensive discussion of these strategies is presented in the CCC Marketing Plan.

5.2 Value Proposition

The value proposition offered by Calico Computer Consulting is quite simple: timely and practical solutions for clients’ computer problems and upgrades, at a reasonable and competitive rate. Most importantly, CCC offers a 100% satisfaction guarantee, building and retaining the client’s confidence.

5.3 Competitive Edge

CCC’s competitive edge is that the owner already has significant high-quality relationships with current and potential clients. In essence, CCC has already overcome the barriers to entry in the consulting field and is in the process of formalizing the business.

5.4 Marketing Strategy

The topics below briefly outline the marketing strategy for Calico Computer Consulting. A more comprehensive discussion of these strategies is presented in the CCC Marketing Plan.

5.4.1 Marketing Programs

The most important marketing program for CCC is to get the word out through a combination of the following:

– Sending a letter of announcement and brochure to all existing contacts and customers.

– Following the steps of a public relations campaign (press releases, announcements, etc.).

– Developing and purchasing "grand opening" announcements in the local news media.

A more comprehensive discussion of these programs is presented in the CCC Marketing Plan.

5.4.2 Positioning Statement

For the home business/small business owner who needs technical help with their business computers, Calico Computer Consulting provides fast and effective response that gets the business back up and running. Unlike [key competition], CCC offers a 100% satisfaction guarantee.

5.4.3 Pricing Strategy

Calico Computer Consulting will adopt a price matching strategy rather than entry pricing. A survey of local consulting businesses revealed the following:

– Hourly Rate Pricing – The average price charged was $75.00 per hour.

– Retainer Pricing – Based on the expected minimum number of hours per month, the average was $150.

– Project Pricing – Based on a daily rate (8 hours x $75.00/hour)

5.4.4 Promotion Strategy

The primary promotion strategy for CCC will focus on cultivating existing relationships, using known networking techniques to develop referrals and new customer leads. Additionally, a blend of web-based marketing and traditional public relations and media marketing will be utilized. Ultimately, customer satisfaction will be the key to generating repeat and new business.

5.5 Sales Strategy

The sales strategy for Calico Computer Consulting is simple and straightforward: customer satisfaction. Happy customers will be repeat customers and provide referrals to new customers.

Sales forecast figures are based on industry growth projections for a consulting startup and reflect repeat business generated through meeting customer needs. While some business can be generated by soliciting customers to upgrade their systems and software, the bulk of the business will be emergency technical aid.

A more comprehensive discussion of the sales strategy is presented in the CCC Marketing Plan.

5.5.1 Sales Forecast

The sales figures shown below include projections based solely on hourly rate consulting during the first year of business. Yearly figures for subsequent years include the growth of retainer and project consulting income as business grows.

Cost of sales for consulting services is the hourly payments earned by the owner.

Computer Consulting Business Plan Example

Computer Consulting Business Plan Example

Sales Forecast

Year 1 Year 2 Year 3

Unit Sales

Hourly Rate Consulting 660 1,152 1,152

Retainer Consulting 0 5 10

Project Consulting 0 6 12

Total Unit Sales 660 1,163 1,174

Unit Prices Year 1 Year 2 Year 3

Hourly Rate Consulting $75.00 $75.00 $75.00

Retainer Consulting $0.00 $150.00 $150.00

Project Consulting $0.00 $600.00 $600.00

Sales

Hourly Rate Consulting $49,500 $86,400 $86,400

Retainer Consulting $0 $750 $1,500

Project Consulting $0 $3,600 $7,200

Total Sales $49,500 $90,750 $95,100

Direct Unit Costs Year 1 Year 2 Year 3

Hourly Rate Consulting $10.00 $10.00 $10.00

Retainer Consulting $0.00 $20.00 $20.00

Project Consulting $0.00 $79.98 $79.98

Direct Cost of Sales

Hourly Rate Consulting $6,598 $11,517 $11,517

Retainer Consulting $0 $100 $200

Project Consulting $0 $480 $960

Subtotal Direct Cost of Sales $6,598 $12,097 $12,677

5.6 Strategic Alliances

Calico Computer Consulting needs to network with local computer stores and local business organizations, such as the Chamber of Commerce and local SBDC, to develop valuable strategic alliances. These organizations may not be customers themselves, but they can provide leads to new customers.

5.7 Milestones

The milestones listed below primarily outline the tasks required to develop this business plan and get the startup business up and running. The milestones table in the marketing plan will provide a more comprehensive listing of the tasks involved in promoting and sustaining CCC’s business.

Computer Consulting Business Plan Example

Milestones

Milestone Start Date End Date Budget Manager Department

Research the right business 10/1/1998 5/1/1999 $0 Owner N/A

Test assumptions 10/1/1998 5/1/1999 $0 Owner N/A

Improve business mgmt. skills 10/1/1998 10/1/1999 $0 Owner N/A

Determine the right business 5/1/1999 6/1/1999 $0 Owner N/A

Prepare personal financials 5/1/1999 7/1/1999 $0 Owner N/A

Decide on target customers 5/1/1999 6/1/1999 $0 Owner N/A

Know the industry 5/1/1999 8/1/1999 $0 Owner N/A

Decide on location 5/1/1999 6/1/1999 $0 Owner N/A

Select business name 7/1/1999 8/1/1999 $0 Owner N/A

Secure location 7/1/1999 8/1/1999 $0 Owner N/A

Establish business contacts 7/1/1999 9/1/1999 $0 Owner N/A

Expand information base 7/1/1999 9/1/1999 $0 Owner N/A

Choose business form 7/1/1999 8/1/1999 $0 Owner N/A

Establish good information flow 7/1/1999 8/1/1999 $0 Owner N/A

Research demographic info 7/1/1999 7/15/1999 $0 Owner N/A

Establish financial objectives 8/1/1999 8/15/1999 $0 Owner N/A

Establish pricing strategy 8/1/1999 9/1/1999 $0 Owner N/A

Establish sales forecast 8/1/1999 8/15/1999 $0 Owner N/A

Determine capital needs 8/1/1999 9/1/1999 $0 Owner N/A

Prepare marketing plan 9/1/1999 9/15/1999 $0 Owner N/A

Prepare balance sheet 9/1/1999 10/1/1999 $0 Owner N/A

Establish bank relationship 9/1/1999 9/15/1999 $0 Owner N/A

Prepare for opening 9/1/1999 9/15/1999 $0 Owner N/A

Check all systems 9/15/1999 10/1/1999 $0 Owner N/A

Opening final prep 9/15/1999 10/1/1999 $0 Owner N/A

Totals $0

Management Summary

Since Calico Computer Consulting is a sole proprietorship and this is an internal plan, this topic is moot.

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.

7.1 Important Assumptions

This information is presented in the table below.

General Assumptions

Year 1 Year 2 Year 3

Plan Month 1 2 3

Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00%

Other 0 0 0

7.2 Key Financial Indicators

This information is presented in the chart below.

Computer Consulting Business Plan Example

The table and chart below summarize the break-even analysis for Calico Computer Consulting. Fixed costs are minimal and include only rent and utilities for the home office. Variable costs are assumed to be 13% of sales, an average figure from consulting sources.

Computer Consulting Business Plan Example

Break-even Analysis:

Monthly Units Break-even: 14

Monthly Revenue Break-even: $1,046

Assumptions:

– Average Per-Unit Revenue: $75.00

– Average Per-Unit Variable Cost: $10.00

– Estimated Monthly Fixed Cost: $906

7.4 Projected Profit and Loss

This table presents the information. The owner’s salary is included in the Sales Forecast table as Direct Unit Cost and appears here as Direct Cost of Sales. Payroll Tax is calculated based on that figure.

Computer Consulting Business Plan Example

Computer Consulting Business Plan Example

Computer Consulting Business Plan Example

Computer Consulting Business Plan Example

Pro Forma Profit and Loss:

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $49,500 $90,750 $95,100
Direct Cost of Sales $6,598 $12,097 $12,677
Other Costs of Sales $0 $0 $0
Total Cost of Sales $6,598 $12,097 $12,677
Gross Margin $42,902 $78,653 $82,423
Gross Margin % 86.67% 86.67% 86.67%
Expenses
Payroll $0 $0 $0
Marketing/Promotion $2,477 $4,500 $4,680
Depreciation $0 $0 $0
Rent $5,100 $5,100 $5,100
Utilities $1,500 $1,500 $1,500
Insurance $1,800 $2,000 $2,200
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $10,877 $13,100 $13,480
Profit Before Interest and Taxes $32,025 $65,553 $68,943
EBITDA $32,025 $65,553 $68,943
Interest Expense $0 $0 $0
Taxes Incurred $9,607 $19,666 $20,683
Net Profit $22,417 $45,887 $48,260
Net Profit/Sales 45.29% 50.56% 50.75%

Projected Cash Flow:

7.5 Projected Cash Flow

The following chart and table present the projected cash flow information.

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Computer Consulting Business Plan Example

Pro Forma Cash Flow

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $12,375 $22,688 $23,775
Cash from Receivables $26,168 $58,931 $70,362
Subtotal Cash from Operations $38,543 $81,619 $94,137
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $38,543 $81,619 $94,137
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $0 $0 $0
Bill Payments $23,441 $44,817 $46,677
Subtotal Spent on Operations $23,441 $44,817 $46,677
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $23,441 $44,817 $46,677
Net Cash Flow $15,101 $36,802 $47,460
Cash Balance $15,526 $52,328 $99,788

7.6 Projected Balance Sheet

This information is presented in the table below.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $15,526 $52,328 $99,788
Accounts Receivable $10,958 $20,089 $21,052
Other Current Assets $0 $0 $0
Total Current Assets $26,484 $72,417 $120,839
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $26,484 $72,417 $120,839
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $3,641 $3,687 $3,850
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $3,641 $3,687 $3,850
Long-term Liabilities $0 $0 $0
Total Liabilities $3,641 $3,687 $3,850
Paid-in Capital $2,050 $2,050 $2,050
Retained Earnings ($1,625) $20,792 $66,679
Earnings $22,417 $45,887 $48,260
Total Capital $22,842 $68,729 $116,990
Total Liabilities and Capital $26,484 $72,417 $120,839
Net Worth $22,842 $68,729 $116,990

7.7 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7379, Computer Related Services, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 83.33% 4.79% 7.20%
Percent of Total Assets
Accounts Receivable 41.37% 27.74% 17.42% 21.70%
Other Current Assets 0.00% 0.00% 0.00% 50.20%
Total Current Assets

Sales Forecast

Unit Sales

Hourly Rate Consulting: 0% 12 24 30 36 42 48 54 60 72 84 96 102

Retainer Consulting: 0% 0 0 0 0 0 0 0 0 0 0 0 0

Project Consulting: 0% 0 0 0 0 0 0 0 0 0 0 0 0

Total Unit Sales: 12 24 30 36 42 48 54 60 72 84 96 102

Unit Prices

Hourly Rate Consulting: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

$75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00 $75.00

Retainer Consulting: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

$150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00

Project Consulting: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

$600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00 $600.00

Sales

Hourly Rate Consulting: $900 $1,800 $2,250 $2,700 $3,150 $3,600 $4,050 $4,500 $5,400 $6,300 $7,200 $7,650

Retainer Consulting: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Project Consulting: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Sales: $900 $1,800 $2,250 $2,700 $3,150 $3,600 $4,050 $4,500 $5,400 $6,300 $7,200 $7,650

Direct Unit Costs

Hourly Rate Consulting: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

13.33% $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00

Retainer Consulting: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

13.33% $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00

Project Consulting: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

13.33% $10.00 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98 $79.98

Direct Cost of Sales

Hourly Rate Consulting: $120 $240 $300 $360 $420 $480 $540 $600 $720 $840 $960 $1,020

Retainer Consulting: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Project Consulting: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Direct Cost of Sales: $120 $240 $300 $360 $420 $480 $540 $600 $720 $840 $960 $1,020

Personnel Plan

Name or Title or Group: 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Name or Title or Group: 0% $0 $0 $0 $0

Pro Forma Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Sales $225 $450 $563 $675 $788 $900 $1,013 $1,125 $1,350 $1,575 $1,800 $1,913
Cash from Receivables $0 $23 $698 $1,361 $1,699 $2,036 $2,374 $2,711 $3,049 $3,398 $4,073 $4,748
Subtotal Cash from Operations $225 $473 $1,260 $2,036 $2,486 $2,936 $3,386 $3,836 $4,399 $4,973 $5,873 $6,660
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $225 $473 $1,260 $2,036 $2,486 $2,936 $3,386 $3,836 $4,399 $4,973 $5,873 $6,660
Expenditures
Expenditures from Operations
Cash Spending $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Bill Payments $29 $888 $1,267 $1,460 $1,653 $1,846 $2,038 $2,231 $2,430 $2,816 $3,201 $3,580
Subtotal Spent on Operations $29 $888 $1,267 $1,460 $1,653 $1,846 $2,038 $2,231 $2,430 $2,816 $3,201 $3,580
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $29 $888 $1,267 $1,460 $1,653 $1,846 $2,038 $2,231 $2,430 $2,816 $3,201 $3,580
Net Cash Flow $196 ($416) ($7) $576 $833 $1,090 $1,348 $1,605 $1,969 $2,157 $2,671 $3,080
Cash Balance $621 $205 $198 $773 $1,607 $2,697 $4,045 $5,650 $7,618 $9,775 $12,446 $15,526

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Starting Balances
Current Assets
Cash $425 $621 $205 $198 $773 $1,607 $2,697 $4,045 $5,650 $7,618 $9,775 $12,446 $15,526
Accounts Receivable $0 $675 $2,003 $2,993 $3,656 $4,320 $4,984 $5,648 $6,311 $7,313 $8,640 $9,968 $10,958
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $425 $1,296 $2,207 $3,190 $4,430 $5,927 $7,681 $9,692 $11,961 $14,931 $18,415 $22,414 $26,484
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $

Computer Consulting Business Plan Example

Business Plan Outline

  • Executive Summary
  • Company Summary
  • Services
  • Market Analysis Summary
  • Strategy and Implementation Summary
  • Management Summary
  • Financial Plan
  • Appendix

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