Business plan for an it company

Business plan of Software Resellers Incorporated


Technology


The software package runs on Windows 2000, 2003, 2007, 2010, Vista and Macintosh platforms.

Market Analysis Summary


The market that we operate in, are the business-to-business segment of e-commerce. This segment is estimated to generate transactions of over R200 billion (www.e-commerceguide.com).
This market can again be segmented into companies with sales forces greater than 100 people and companies with more than 100 branches or divisions.


Market Segmentation


Our market segment is the upper segment of companies that have a large sales force and a number of company subunits. Specifically, we will focus our marketing efforts on customers with sales operations with more than 100 direct sales representatives or more than 100 organisational subdivisions. For the first two years of operation, we will focus on South African companies that operate in South Africa, thereafter we want to expand to include all Southern African companies in SA, Namibia, Botswana, Zimbabwe, Zambia, Mozambique, Kenya and Tanzania. Larger companies will ultimately be our main stream of income, since they will benefit the most from the efficiencies that our software product offers. It is rather difficult to determine the exact number of businesses that this segment will entail, but we envisioned a profitable income if we are able to maintain a selling margin of 20 new clients per year.


Target Market Segment Strategy


Our market strategy is to focus on the following target markets:

  • Large organisations that will benefit from using database systems.
  • Smaller organisations that seek a cost effective solution to improve their current database system.
  • Large organisations that have a number of subunits

 

Market Needs


Software solutions that offer after-sales support:

  • We will include an after-sales support service in all our sales packages and have a dedicated support staff for this purpose.
  • We will design different product templates for each customer according to the scale of their databases.

 

Speed, efficiency and information:

 

  • Our product will enable the client to offer a more efficient service to their customers.
  • Managers will have more control over their data stores and will be able to make more accurate projections.
  • Stock levels will be more accurate, and this will help to improve the value chain.

 

Market Trends


The most significant trend affecting our company is the growth of business-to-business e- commerce. More and more firms recognize the need to streamline their operations and produce more efficient service and more accurate figures.

 

Market Growth


The Business-to-Business sector is the fastest growing segment of the e-commerce industry. This segment has had a persistent upward curve on the on its sales graph for the last 7 years. The e-commerce industry in South Africa is predicted to grow by 49% in the next two years, and is predicted to reach sales of well over 400 million by 2014.

 

Competition and Buying Patterns


The business-to-business sector's customers focus far more on the gathering of information phase in the decision making process. This is because there is not only one decision maker in the corporate buyer, but usually a whole chain of decision makers. Thus, we will focus on giving exact possible outcomes of using our database software, and will provide trade references to prove our reliability. Customers tend to seek information about performance deliverance of the new software product, price and after sales support.

 

Main Competitors


Although there are several resellers of this product in the area, we couldn't find one reseller that combines the product with an after sales service and support package for a competitive price. There are two competitors who offer these services, but they charge exorbitant prices for it, and we feel that we have a cost advantage over them.

 

  • Global Enterprises – Their main strength is the fact that they provide excellent database software, but their main weakness is that they charge R500 an hour for after sales support. We feel that they would not be a threat to our services, as we offer the most competitive prices in the industry for after sales support (R180 an hour).
  • Sennox Software Sales - This company is the sales leg of Sennox Software Manufacturers, and although they offer the software at a competitive price, they have to outsource after sales support, which makes their package a costly one as well.

 

Strategy and Implementation Summary


SRI's main strategy is to focus on direct marketing, as we have extremely knowlegeable sales representatives. They will be our best asset in the market strategy. Each sales representative will have a certain group of companies assigned to him, with incentives and bonuses awarded with each increasing percentage of sales.

 

Competitive Edge


The reputation of success with this database software, will be our competitive edge. This product is currently the market leader in sales, because of its efficiency and user friendliness. We will rely heavily on our experience in dealing with decision makers at the corporate level and we will continue to build on that strength by establishing long term customer relationships.


Marketing Strategy


In order to get the business off to a good start, we will focus heavily on the larger companies in the business-to-business sector, and our target will be to secure 40 long term support contracts with these clients. This will enable us to start with a steady income of cash, after which we will expand our marketing efforts to all the players in our target market.

Our marketing strategy consists mainly of direct marketing, but we will also rely on the brand recognition of the software that we promote, to play a role in our marketing strategy. The database software is well known amongst consumers and has a good reputation as a user friendly package with customizable functionality to suit every business' requirements.


Pricing Strategy


Our pricing strategy is to be highly competitive on the after sales support price. Set-up costs to the client will include a once off installation fee of R10 000.00 and the software license is a fixed price of R7000 a year. Thereafter, we will offer an after sales support service at R180 an hour.


Sales Forecast


As our sales will consist of a once-off fee for the installation and software, the sales generated from call out fees will provide a more steady income and thus we will aim to sign support contracts for at least one year in advance.


Sales of the software product are expected to increase by 20% for the first 5 years, after which it is expected to settle at 7% a year (figures obtained from an industry analysis conducted by BBU Research consultants.) Sales of our support service are expected to grow similarly, because the package that we offer includes both these products. Costs associated with these sales are estimated at 10% for the support service, and 70% for the software product. Cost of the software product can decrease to 55% after we reach an annual sales turnover of more than 5 million, as we will qualify for more discounts from the manufacturer if we become a premium reseller.


Management Team


Greg Smith and Joe Holland founded the company in July of 2011, to take advantage of their software sales experience while they worked for a distribution software company. Greg has a B.com Marketing degree obtained from UNISA, while Joe has no formal education but has a natural charisma which made him the number one sales agent at their previous company.

The company will be a partnership and will be jointly managed by Greg and Joe. Joe will head the sales team, while Greg will focus on strategy and administration.

 

Personnel Plan


SRI will employ 4 sales representatives in Gauteng, and 2 in Cape Town. As the business grows, they will employ more representatives in other provinces as well.

 

Financial Plan

Please refer to our Financial Plan page for more information on what the Financial Plan entails.

Break-even Analysis

Please refer to our Financial Plan page for a formula to calculate the Break-even point.

 

Projected Cash Flow

Click here to download a Cash Flow template.

Projected Income Statement (Profit and Loss)

Click here to download an Income Statement template.

Projected Balance Sheet

Click here to download a Balance Sheet template.

 

 

 

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