Computer Hardware Reseller Business Plan Leave a comment

By focusing on its strengths, its key customers, and the underlying values they need, American Management Technology will increase sales to more than $9 million in three years, while improving the gross margin on sales and cash management and working capital.

This business plan is the best. This business plan renews our vision, strategic focus, and adds value to our target markets, small businesses and high-end home offices users in our local market. It provides a step-by-step guideline for increasing our sales, gross margins, and profitability. In order to implement these changes and improve profitability, we plan to borrow another $100,000 long-term this year. This amount is in line with our balance sheet capabilities.

AMT is based on the idea that information technology management for business is similar to legal advice, accounting, and graphic arts. It is not a do it yourself job. Smart business people who aren’t computer hobbyists need to find quality vendors of reliable hardware, software, service, and support. They need to use these quality vendors as they use their other professional service suppliers, as trusted allies. AMT strives to satisfy these needs, and become the premier provider of business information technology in its region.

AMT offers both services and products to help small businesses. We focus on small and medium-sized business and offer services and networks. These systems can be either PC-based LAN systems or minicomputer-server-based systems. We offer support and training as well as design and installation services for network systems.

The following are our keys to success over three years to help us achieve our objectives:

• By offering support and service, and charging for it, you can distinguish yourself from price-oriented and box-pushing businesses.
• Increase gross margin to more than 30%.
• Our non-hardware revenue will be 20% of total sales in the third year.

AMT was originally founded to be a value-oriented, consulting-oriented reseller (VAR), and became a reseller in order to fulfill the market demand for personal computer products. AMT is focusing on service and support to stand out from other price-oriented competitors.

One location has a 7,000 sq. ft. store located in a suburban mall, close to the downtown. It features a training area as well as a service area, offices, and a showroom.

AMT is a privately-held C Corporation that is owned in majority by Ralph Jones, the founder and president. Six people are part owners of AMT, which includes four investors and two employees. The president, along with four other managers, manage 21 employees. Our major management divisions are service, sales, marketing, and administration. The service department handles service requests, support, training, and development. We are currently weakest in technical capabilities to manage databases marketing programs and upgraded service support, especially cross-platform. Also, we need to find a training coordinator.

Recent changes in the computer reseller marketplace have negatively impacted AMT. These include margin squeezes and longer collection periods. All of these concerns are part of the general trend affecting computer resellers. All across the computer industry, there is a margin squeeze.

Only by defining the company’s vision to be an information technology partner to our clients can we hope to distinguish ourselves well. We cannot compete in a meaningful way with those who use boxes or other products as appliances. We must offer an alliance that is based on trust, reliability, and the assurance that someone will be there to help you in times of need.

We will be offering support services that help us capture market share, such as installation services, training, upgrades, service plans, and network configuration. The company will be aggressively seeking out new opportunities.

AMT focuses on local markets, small business and home office, with special focus on the high-end home office and the 5-20 unit small business office.

According to the last study, retail sales were growing at 5% per annum while direct sales are growing at 25% and 30% respectively.

There are several types of computer retail outlets in the industry.

1. Computer dealers tend to be focused on one or two main brands of hardware. They offer a limited number of software and varying amounts of support.

Their service is usually not great and their prices are typically higher than larger stores.

We are the only company that can offer the personalized service and customization small businesses like ours require.

Small business buyers have a tendency to buy from vendors who come to their offices. They expect copy machine vendors, office product vendors, and office furnishings vendors to visit their offices in order to make sales. Many small businesses immediately go to superstores (office supplies, electronics, and office equipment) to get the best price. They don’t realize there is an even better option at a fraction more.

We need to effectively compete against the idea that businesses should buy computers as plug-in appliances that don’t need ongoing service, support, and training. Focus group sessions revealed that home office customers are not concerned about price. They would rather pay for quality service, if presented properly. They are conditioned to think about the price of everything they see. It is clear that many would rather spend 10-20% more to establish a long-term relationship, providing quality support and back-up. Unfortunately, they are not aware of other options.

Today, we rely heavily on newspaper advertising for new buyers. Changes in strategies will require us to change how we promote ourselves. We will be focusing our efforts on our core message of service via radio, cable TV and sales brochures. The company is what we need to sell, not the product. We sell AMT, not Apple, IBM, Hewlett-Packard, or Compaq, or any of our software brand names.

The Yearly Total Revenue chart summarizes our ambitious sales goals. We expect sales to increase from $5.3 million last year to more than $6 million next year and to more than $9 million in the last year of this plan.

1.1 Objectives

1. Three years later, sales increased to more that $9 million
2. Maintain a gross margin of at least 30%.
3. Selling $1.5 million worth of support, service, and training services by 1998
4. In 1998, improve inventory turnover to 6 Turns

1.2 Keys to Success

1. Differentiate from box-pushing, price-oriented businesses by offering and delivering service and support — and charging for it.
2. Gross margins to over 30%
3. Our non-hardware sales should be 20% or more of the total sales by the 3rd year.

1.3 Mission

AMT is based upon the assumption that management of information technology in business is similar in nature to accounting and legal advice. Smart business people who aren’t computer hobbyists need to find quality vendors of reliable hardware, software, service, and support. They must trust these vendors as much as their other professional service providers.

AMT is such a vendor. It serves its clients as a trusted ally, providing them with the loyalty of a business partner and the economics of an outside vendor. We ensure our clients have all the information they need in order to run their businesses with maximum efficiency, reliability, and effectiveness. Because many of our information apps are vital, we offer our clients the guarantee that we will be there for them when they need us.