Computer Hardware Reseller Business Plan

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. This year, we plan on borrowing another $100,000 to make these changes happen and improve our profitability. The amount appears to be comparable with the balance sheet.

AMT is based around the assumption that managing information technology for business is similar as legal advice, accounting and graphic arts. AMT does not assume that you can do everything yourself. People who work in business need to be able to identify reliable vendors for quality hardware, software, support, and maintenance. They should use these vendors as they do their other professional service suppliers. AMT seeks to fulfill these needs and become the leader in business information technology for its region.

AMT provides computer products and services that are useful for 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. Our services include training, support, design and installation of network system, as well as training.

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

• 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%.
• By the third-year, we plan to increase our non-hardware revenues to 20% of total sales.

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, a 7,000 square-foot store in a suburb shopping center is located near the downtown. It contains a training room, service department, offices, as well as a showroom.

AMT, a privately owned C corporation, is majority owned by Ralph Jones (founder and president). Six people are part owners of AMT, which includes four investors and two employees. The firm includes 21 employees, under the president and four managers. The main management areas are sales, marketing and service. The service department deals with service requests, support, development, training, as well as technical assistance. At present, we are weakest in the area of technical capabilities to manage the database marketing programs and upgraded service and support, particularly with cross-platform networks. Also, we need to find a training coordinator.

Recent changes in the computer reseller marketplace have negatively impacted AMT. Margin squeezes as well as longer collection periods and lower inventory turnovers have all affected AMT. These are just a few of the many concerns that computer resellers face. The margin squeeze is occurring in every sector of the computer industry.

The only way we can hope to differentiate well is to define the vision of the company to be an information technology ally to our clients. We will not be able competition with the chain that uses boxes or 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.

Our support services will help us to grab market share. They include services like training, upgrade, installation, network configuration, and other services. Company will continue to pursue new opportunities.

AMT is focused on local markets, small businesses, and home offices, with a special focus on high-end home offices and small business offices of 5-20 units.

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

There are many types of computer retailers in the industry, including:

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 support and service are not always very good, and their prices tend to be higher than those of larger stores.

No one of these competitors offers the kind of personalized and personal service small businesses like our clients really want.

Vendors who visit small businesses are an expected option for buyers. They expect copy machine vendors, office product vendors, and office furnishings vendors to visit their offices in order to make sales. Many small businesses look to the superstores (office products, office supplies and electronic) or mail order for the best prices, but they may be missing out on a better deal at a lower price.

We have to be effective in our competition against the idea that computers should be bought as plug-in devices that do not require support or ongoing maintenance. Our focus group sessions indicated that our target home office markets think about price but would buy based on quality service if the offering were properly presented. Because they only see price, they think about it. 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.

Today, we rely heavily on newspaper advertising for new buyers. However, as we shift strategies, we must also change the way that we market ourselves. We will refocus on our core message, which is service, through radio, cable TV sales brochures and newspaper ads. We need to sell the company, not the product. We sell AMT, not Apple, IBM, Hewlett-Packard, or Compaq, or any of our software brand names.

The Yearly Total sales chart summarises our ambitious sales forecast. 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. Increased sales to more than $9million in the third fiscal year
2. Restore gross margin to over 30%, and keep it there.
3. Service, support, training and sales up to $1.5million by 1998
4. Increase inventory turnover to 6 turnings by 1998

Success: 1.2 Keys

1. Offering service and support is a way to distinguish yourself from the box-pushing, price-oriented business models.
2. Increase gross margin to more than 30%.
3. Our non-hardware sales will increase to 20% by the end of the third year.

1.3 Mission

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. Smart business people who aren’t computer hobbyists need to find quality vendors of reliable hardware, software, service, and support. They should use quality vendors just like they use professional service suppliers as trusted friends.

AMT is an example of such a vendor. It is a trusted ally for its clients and provides the loyalty of a partner as well as the economics associated with outside vendors. Our clients are provided with the best possible tools and resources to help them run their business efficiently and reliably. Our clients can trust that we will always be available to help them with their information applications.