Business Plan
Specimen Business Plan
I T MANAGEMENT SERVICES
I T MANAGEMENT SERVICES
SPECIMEN BUSINESS PLAN
CONTENTS
INTRODUCTION
THE BUSINESS
MARKET INFORMATION
LOCATION
PEOPLE
CAPITAL EXPENDITURE
FINANCE
FINANCIAL APPENDICES
PROJECTED PROFIT & LOSS ACCOUNT
MONTHLY CASH FLOW PROJECTION
PROJECTED BALANCE SHEET
GENERAL APPENDICES
NOT INCLUDED GIVEN THEIR SPECIFIC NATURE
IT MANAGEMENT SERVICES
BUSINESS PLAN
1
INTRODUCTION
My name is Jane Williamson, I am 32 years of age and I have been employed for the past 8 years as
IT Manager with the Anytown District Council. In the drive for cost reduction, the Council have
decided to outsource the IT support function to a national company against my advice and the result
is that my position has recently become redundant. With the experience that I have gained and my
desire not to commit myself to any organisation where loyalty is a one way affair, I believe that this
is the right time for me to set up my own IT Management Services business.
I will operate the business from my home and will target the SME (small and medium sized
enterprise) marketplace offering a wide range of IT related services. In addition to my practical IT
and management experience gained in commerce and latterly in local government, I have an HND in
Computer Network Support & Administration. A copy of my curriculum vitae is attached as General
Appendix 1.
My key objectives will be to offer my clients a quality service to retain their loyalty, and to build a
successful business that will give me financial security in the future and enable me to work flexibly
around my family.
2
THE BUSINESS
The business will be formed as a sole trader in the first instance and I will trade under the name
Anytown IT Management Services.
My plan is to focus on the SME market, specifically companies which do not have their own in house
IT Department. My services will include providing advice to clients on IT strategy, preparing
invitations to tender, project managing the agreed IT development plans, and providing ongoing
advice on IT development. It is not my intention to become involved in the highly competitive
computer sale and installation market but rather to assist my clients in selecting the most appropriate
tender.
Initially I will work in the business on my own, but if successful I will consider employing a young
assistant, who is willing to undergo appropriate training for the post.
There are advantages and disadvantages in forming a business as a sole trader, partnership or private
limited company. Since the choice can be dependent on individual circumstances, you should contact
your business adviser to discuss the issue.
3
MARKET INFORMATION
3.1
Products and Services
I will offer the following range of services to my clients:-
-
Assistance with developing an IT strategy
Preparation of invitations to tender
Advice on selecting appropriate suppliers
Project management of the agreed IT development plan
Training of staff in new systems
Ongoing advice on IT development.
It is my intention to operate as a consultant to senior management rather than to respond to
staff queries about the systems in operation on a direct contact basis.
3.2
Market
My target market will be the small and medium sized enterprise sector (SME). The Business
Opportunities Profile that is included in the General Appendices points out that whilst
increasing levels of computer networks and intranets have boosted the IT sector, the boom is
now probably over. The sector however continues to benefit from the trend towards more
outsourcing. From my previous experience working with Anytown District Council, I am
confident that I can gain work in my target market, since most SMEs are not large enough to
employ their own dedicated IT maintenance staff.
3.3
Competition
While there are likely to be consultancy firms offering the type of service I propose, there are
none that I was able to identify in the Anytown and surrounding area. There will be IT
companies which offer strategy development and project management as part of a
comprehensive IT support service. However, I believe that the experience that I can offer my
clients of managing major IT development schemes and my ability to secure the best deals for
hardware and software will convince potential customers to use my services.
The other competition I will occasionally face will be for the larger projects from the large IT
and accountancy firms but this is unlikely to be a common occurrence.
3.4
Marketing Activities
My aim will be to establish a regular clientele and benefit from word of mouth
recommendations. I will also introduce the following promotional activities to market my
services:- Mailshots to SMEs outlining my services
- Networking through the Anytown Chamber of Commerce
- Internet web site.
Through my contacts with computer supply companies, I anticipate receiving referrals from
them. Indeed, my first commission has emanated from this source.
3.5
Prices and Margins
I have carried out extensive checks on the hourly rates being charged by my main
competitors, which are the large consultancy firms. I can operate profitably at significantly
lower day rates and have decided to set my rate at £400 per day. The attached Financial
Appendices show that this pricing structure will allow me to make sufficient profit to build a
viable business.
Since I will only be advising my clients who will be responsible for buying the IT equipment
direct there are no direct costs associated with my sales.
3.6
Sales Plan
First year sales assume a steady growth in the customer base, which is anticipated to continue
during years two and three as illustrated:
Consultancy Fees
YEAR 1
£
50,800
50,800
YEAR 2
£
72,000
72,000
YEAR 3
£
90,000
90,000
My first confirmed commission will yield £1,200 in the first month of operation.
4
LOCATION
Initially, I will work from my home at 1 Main Street, Anytown in order to keep overheads as low as
possible and to allow me to get my business established. If successful I may consider leasing small
office premises at some time in the future to accommodate an IT consultant and admin support.
5
PEOPLE
Initially I will operate the business on my own but if sales go according to plan I will employ a young
IT consultant, in second year. I will look after the administration and record keeping of the business
on a day to day basis in the medium term, but will engage an accountant to prepare my year-end
accounts and tax return.
6
CAPITAL EXPENDITURE
The estimated capital expenditure required to establish the business is £17,000 - full details are listed
in the following table: -
Computer System
Motor Vehicle
Office Furniture
7
£
1,000 Second Hand
15,000 Second Hand
1,000 New
17,000
Dep%
Principals Assets
Principals Assets
Principals Funds
33.3%
25.0%
15.0%
FINANCE
7.1
Viability
The Projected Profit and Loss Accounts for the first three years of trading are shown in
summary form in the undernoted table and provided in detail as Financial Appendix 1.
PROJECTED PROFIT AND LOSS ACCOUNT
YEAR 1
YEAR 2
£
£
50,800
72,000
Sales
Less: Direct Costs
0
0
50,800
72,000
Gross Profit
Less: Overheads
12,283
33,240
Net Profit/Loss
38,517
38,760
YEAR 3
£
90,000
0
90,000
42,320
47,680
7.2
Direct Costs
There are no direct costs associated with the business.
7.3
Overheads
As the business will be registered with Customs and Excise for the purposes of Value Added
Tax (VAT) during the first month of trading, Input VAT which is recoverable is not included
in the following sections:Insurance
Anticipated annual insurance premiums payable for professional indemnity will amount to
£1,800.
Repairs and Maintenance
To ensure that the business operates effectively and is not hindered by inappropriate levels of
computer downtime, an annual allowance of £360 has been included in the financial
projections.
Postage and Stationery
Annual postage which will generally apply to correspondence is anticipated to cost £240.
Office stationery costs have been budgeted at an annual cost of £580 in the first year.
Advertising & Promotion
An advertising and promotion budget of £600 has been allowed covering the costs of
mailshots.
The web site has been designed and installed by me since I have gained some experience in
this area over recent years.
Telephones
- Telephones
The cost of maintaining a business telephone number including line rental and call charges
is estimated to incur £590 annually.
- Mobile Telephones
To ensure effective communication, an allowance of £480 has been provided to cover the
cost of operating mobile telephone/s.
- Internet Access
To provide Internet access, £240 has been budgeted in the first year.
Motor Expenses
A budget of £1,960 has been provided for motor expenses in the first year as follows:-
Road Tax – annual premium payable £160.
Fuel - £480 per annum.
Vehicle maintenance £600 per annum.
Vehicle Insurance - £720; providing fully comprehensive cover.
Professional Fees
Annual accountant’s fee in preparation of annual return - £600.
Other Expenditure
A contingency of £600 per annum is included to cover the cost of sundry and unexpected
expenditure.
Depreciation
The amount attributed to depreciation in the Projected Profit and Loss Account is £4,233.
Full details relating to capital expenditure including condition and rate of depreciation are
articulated in Section – Capital Expenditure.
7.4
Cash Flow
The business will be registered with Customs and Excise for the purposes of Value Added
Tax (VAT). The Monthly Cash Flow Forecast attached as Financial Appendix 2, is based on
the following key assumptions:Customer Credit
The business will grant its customers 30 day credit terms but in the interests of caution I have
allowed 45 days credit.
Supplier Credit
It has been assumed that the business will not be granted credit from its suppliers which will
be mainly stationery.
Personal Drawings
In the first year, I will take total personal drawings of £36,107, including Class 2 NI
contributions.
7.5
Funding
The initial funding requirement to establish the business including a contingency is £30,000
and will be raised as follows: £
Principal's Investment
25,000
Overdraft
5,000
30,000
The following sub-headings provide a detailed overview of the anticipated funding sources:Principals Investment
I will invest a total of £25,000 in the start up phase of the business from assets (£16,000) and
cash (£9,000) from savings raised for this purpose.
Overdraft Facility
I will request an overdraft facility of £5,000 from Anytown Bank to provide cover for
contingencies.
“It is possible that this business may qualify for start-up funding from local or national sources. These
sources of funds are often at the discretion of the various funding bodies, and have not therefore been
included in this Specimen Business Plan. You should consult your business adviser about how to
apply for relevant funds”.
-----000------
PROJECTED PROFIT & LOSS ACCOUNT
IT MANAGEMENT SERVICES
YEAR 1
£
£
50800
100.0%
50800
SALES
GROSS PROFIT
OVERHEADS
Indirect Employment Costs
Insurance
Repairs & Maintenance
Postage & Stationery
Advertising & Promotion
Telephones
Motor Expenses
Professional Fees
Other Expenditure
Depreciation - Fixed Assets
Total Overheads
NET PROFIT/(LOSS) BEFORE DRAWINGS & TAX
Personal Drawings
0
1800
360
820
600
1310
1960
600
600
4233
YEAR 2
£
100.0%
£
72000
72000
18000
2000
360
750
600
1510
3020
700
700
5600
YEAR 3
£
100.0%
£
90000
90000
26000
2150
360
860
600
1630
3320
800
800
5800
12283
38517
33240
38760
42320
47680
(36107)
(36107)
(36107)
MONTHLY CASH FLOW PROJECTION
IT MANAGEMENT SERVICES
INCOME
Sales Income (Turnover)
VAT (Output)
Owners Investment
TOTAL INCOME
EXPENDITURE
Insurance
Repairs & Maintenance
Postage & Stationery
Advertising & Promotion
Telephones
Motor Expenses
Other Expenditure
Capital Expenditure
Drawings
Class 2 NIC
TOTAL EXPENDITURE
VAT PAYMENTS/(RECEIPTS
OPENING BANK BALANCE
SURPLUS/DEFICIT FOR MONTH
CLOSING BANK BALANCE
PreStrt
0
0
25000
25000
Mth 1
0
0
0
0
Mth 2
1200
210
0
1410
Mth 3
2800
490
0
3290
Mth 4
3600
630
0
4230
Mth 5
4200
735
0
4935
Mth 6
4800
840
0
5640
Mth 7
3800
665
0
4465
Mth 8
2800
490
0
3290
Mth 9
4000
700
0
4700
Mth 10
5000
875
0
5875
Mth 11
5600
980
0
6580
Mth 12
5400
945
0
6345
TOTAL
43200
7560
25000
75760
0
0
0
0
0
0
0
17175
150
35
317
59
247
107
59
0
3000
8
3982
0
7825
(3982)
3843
150
35
59
59
118
107
59
0
3000
8
3594
0
3843
(2184)
1659
150
35
59
59
118
283
59
0
3000
10
3773
0
1659
(483)
1176
150
35
59
59
118
107
59
0
3000
8
3594
1253
1176
(617)
559
150
35
59
59
118
107
59
0
3000
8
3594
0
559
1341
1900
150
35
59
59
118
443
59
0
3000
10
3933
0
1900
1708
3608
150
35
59
59
118
107
59
0
3000
8
3594
1906
3608
(1035)
2573
150
35
59
59
118
107
59
0
3000
8
3594
0
2573
(304)
2269
150
35
59
59
118
283
59
0
3000
10
3773
0
2269
928
3197
150
35
59
59
118
107
59
0
3000
8
3594
2116
3197
165
3362
150
35
59
59
118
107
59
0
3000
8
3594
0
3362
2986
6348
150
35
59
59
118
283
59
0
3000
10
3773
0
6348
2573
8921
1800
423
964
705
1539
2149
705
17175
36000
107
61566
5275
17175
0
7825
7825
8921
8921
PROJECTED BALANCE SHEET
COMPUTER MAINTENANCE
FIXED ASSETS
Cost
Cumulative Depreciation
NET FIXED ASSETS
CURRENT ASSETS
Stock & Work in Progress
Trade Debtors
Prepayments
Cash on Hand/In Bank
£
£
£
17000
4233
12767
0
8930
0
8920
17850
CURRENT LIABILITIES
Trade Creditors
Accruals
Taxation
VAT
PAYE/NI
Bank Overdraft
0
600
10269
2606
0
0
13475
4375
NET CURRENT ASSETS/LIABILITIES
LOANS
Bank
Other
0
0
0
TOTAL NET ASSETS
17141
CAPITAL ACCOUNT
Owners Investment
Profit for Period
Personal Drawings
Taxation
£
25000
38517
(36107)
(10269)
17141