05 Mar Computer Hardware Reseller Business Plan

American Management Technology will increase sales by more that $9 million in three year’s time by focusing on the strengths of its key customers and the core values they need.

This business plan shows the way. It renews and focuses our vision and strategic focus on adding value to the target market segments (small business owners and high-end users of home offices) in our local area. It provides a step-by-step guideline for increasing our sales, gross margins, and profitability. This year, we plan on borrowing another $100,000 to make these changes happen and improve our profitability. This amount is in line with our balance sheet capabilities.

AMT is built on the assumption that the management of information technology for business is like legal advice, accounting, graphic arts, and other bodies of knowledge, in that it is not inherently a do-it-yourself prospect. Business people need to look for reliable vendors that can provide quality support, hardware, software, and service. They need to use these quality vendors as they use their other professional service suppliers, as trusted allies. AMT seeks to fulfill these needs and become the leader in business information technology for its region.

AMT provides small business with both computer products as well as services. We focus on small and medium-sized business and offer services and networks. Systems can be PC-based or minicomputer server-based. Our services include design and installation of network systems, training, and support.

In order to accomplish our objectives, our keys to success over the next three years are:

• In order to distinguish yourself from other box-pushing or price-oriented businesses, offer and deliver support services and then charge for them.
• Increase gross margin to more than 30%.
• Our non-hardware revenue will be 20% of total sales in the third year.

AMT was founded as a consulting-oriented value added reseller (VAR), became a reseller to fill the market need for personal computers, and is emphasizing service and support to differentiate itself from price-oriented competitors.

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

AMT is a privately held C corporation that is majority owned by Ralph Jones, its founder and president. There are six part owners, including four investors and two past employees. The firm includes 21 employees, under the president and four managers. Our main management divisions are sales, marketing, service, and administration. Service handles all service requests, support and training. Currently, our weakest area is in the technical capability to manage the database marketing program and upgraded support and service, particularly cross-platform networks. We need to hire a trainer manager.

Recent changes to the computer reseller market have adversely impacted AMT. Margin squeezes as well as longer collection periods and lower inventory turnovers have all affected AMT. These concerns are all part of a general trend that affects computer resellers. The margin squeeze is happening throughout the computer industry worldwide.

Only way to stand out is to make the company an information technology ally for our clients. We will not be able competition with the chain that uses boxes or appliances. We need to offer a real alliance that includes such intangibles as confidence, reliability, and knowing that somebody will be there to answer questions and help at the important times.

We plan to increase market share by offering support services such as training, upgrade opportunities, installation services, and network configuration services. Company will continue to pursue new opportunities.

AMT’s focus is on local markets and small businesses. A particular focus is placed on high-end homes and the 5–20 unit small business office.

The most recent study published retail sales increasing by 5% per year while web sales grow at 25% or 30 percent, respectively.

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

1. Computer dealers: often focused on a few main brands of hardware, usually offering only a minimum of software, and variable amounts of service and support.

Their service and support is not usually very good and their prices are usually higher than the larger stores.

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

Small business buyers are more comfortable buying from vendors who visit their offices. They expect office equipment vendors, copy machine vendors, and office furniture sellers to come to their offices to do business. 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.

Businesses shouldn’t buy computers as “plug-in” appliances. They should be able to afford ongoing support, training, and service. Focus group sessions revealed that home office customers are not concerned about price. They would rather pay for quality service, if presented properly. They only ever see the price. Our data shows that many people would prefer to spend 10-20% more on a long-term relationship with a vendor that provides support, back-up, and quality service. This is why they end up in the “box-pusher” channels.

Newspaper advertising is our primary way of reaching new buyers. As we change strategies, however, we need to change the way we promote ourselves. We will be focusing our efforts on our core message of service via radio, cable TV and sales brochures. We must sell our company, not the products. AMT is what we sell, not Apple, IBM Hewlett-Packard, Compaq, Compaq, Compaq or any of our software brands.

Our ambitious sales forecast is summarized in the Yearly Total Sales Chart. Sales are expected to rise from $5.3 million lastyear to more than $6million next year, and to more $9 million in this last year.

1.1 Objectives

1. Three years later, sales increased to more that $9 million
2. Maintain a gross margin of at least 30%.
3. By 1998, you can sell $1.5 million in service, support, or training.
4. Increase inventory turnover by 6 turns by 1998

Success Keys 1.2

1. Offer and deliver service and support to differentiate your business from price-oriented and box-pushing companies and charge for it.
2. Gross margins to over 30%
3. By the third year, we plan to increase our non-hardware revenue to 20% of total sales.

1.3 Mission

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. People who work in business need to be able to identify reliable vendors of quality hardware, software and support. They must trust these vendors as much as their other professional service providers.

AMT is an example of such a vendor. AMT serves its clients as an ally and trusted friend. It provides them the benefits of both a business partner, and the economics of an external vendor. Our clients are provided with the best possible tools and resources to help them run their business efficiently and reliably. Many of our information applications have mission-critical requirements, so we provide our clients with the assurance that they will get us there when they need.