computers company business plan

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Table of Contents

Page 1

1.0 Executive Summary .................................................................................................................................1

1.1 Objectives......................................................................................................................................2

1.2 Mission ..........................................................................................................................................3

1.3 Keys to Success ............................................................................................................................3

2.0 Company Summary .................................................................................................................................4

2.1 Company Ownership .....................................................................................................................4

2.2 Start-up Summary..........................................................................................................................4

3.0 Services ..................................................................................................................................................5

4.0 Market Analysis Summary .......................................................................................................................6

4.1 Market Segmentation.....................................................................................................................7

4.2 Target Market Segment Strategy...................................................................................................8

4.3 Service Business Analysis .............................................................................................................8

4.3.1 Competition and Buying Patterns ......................................................................................8

5.0 Web Plan Summary.................................................................................................................................9

5.1 Website Marketing Strategy...........................................................................................................9

5.2 Development Requirements ..........................................................................................................9

6.0 Strategy and Implementation Summary ...................................................................................................9

6.1 SWOT Analysis..............................................................................................................................9

6.1.1 Strengths ........................................................................................................................10

6.1.2 Weaknesses ...................................................................................................................10

6.1.3 Opportunities ..................................................................................................................10

6.1.4 Threats ...........................................................................................................................10

6.2 Competitive Edge.........................................................................................................................11

6.3 Marketing Strategy.......................................................................................................................11

6.4 Sales Strategy .............................................................................................................................11

6.4.1 Sales Forecast ................................................................................................................11

6.5 Milestones ...................................................................................................................................13

7.0 Management Summary .........................................................................................................................14

7.1 Personnel Plan ............................................................................................................................14

8.0 Financial Plan .......................................................................................................................................15

8.1 Start-up Funding .........................................................................................................................15

8.2 Important Assumptions ................................................................................................................16

8.3 Break-even Analysis ....................................................................................................................16

8.4 Projected Profit and Loss ............................................................................................................17

8.5 Projected Cash Flow....................................................................................................................20

8.6 Projected Balance Sheet .............................................................................................................22

8.7 Business Ratios ...........................................................................................................................23

JNT Computers Business Plan

Page 1

1.0 Executive Summary

JNT COMPUTERSis a new start-up IT Company. Owner and director, Jimmy Jordaan has over

fifteen years of experience in connectivity and network engineering. The country's economic

growth over the last two years has resulted in increased opportunity for Network Engineers.

JNT COMPUTERS is positioned to capitalize on the growing need of companies to better manage

their systems.

From 1996 to 2014, Jimmy Jordaan was a IT specialised for the Nedbank, GKD Computers,

Bytes Technology and Cell C. His primary responsibility was to travel to the customer's sites

and perform different related IT functions.

Ashraf Mohammed has been in the IT industry since 2001 which he travelled to various African

counties and has also been part of a huge project to launch Vodacom in Mozambique.

Ashraf has continued to pursue his career in the IT industry which he spent the last six years

as a senior technician for Vodacom Business. Responsibilities included custom wired and wireless

installations and support at customer premises, installations and maintenance of Cisco

products.Software and hardware support

JNT COMPUTERS is currently outsourcing their IT Skills to clients providing custom network

installation services to customers. and there is alsoSupport Contracts at R550 per Monthin

place that will cover the following:

Standard PC Service per month.

1 Critical Remote Service

Support of all core server functions, including email and file serving.

Telephone and remote support for end users with regards to Operating system

software and email.

Network connectivity onsite support.

Weekly Backup logging and verification.

24/7 Monitoring.

Backup Services.


Page 2

1.1 Objectives

Our business strategy will revolve around the need to provide quality servcies to our various

target customers. This shall be undertaken through the establishment of a professional team and

the provision of quality, custom-designed services, catering to the client's particular needs.

We need to attain the following objectives:

Development of a follow-up strategy to gauge performance with all our clients.

To instill a culture of continuous improvement in beating standards of customer

satisfaction and efficiency.

Increase revenue from new clientele from the current 20% to more than 40% after

the first year of operations.

Increase the company's growth margins by 15% by the second year of operation.

Our fundamental objective is to realize how we impact the community we do business in,

knowing that this will be our test in time if our current clientele approve of our services, thus

opening up opportunities for referrals which will be the key to our business growth over the

next few months of the first year.


Page 3

1.2 Mission

JNT Computers is committed to offering its clients a reliable, high quality alternative to in-house

resources for business development in network and support services. These shall be done

through the implementation of the following company values:

Provide services of uncompromising quality.

Become responsible corporate citizens fulfilling our obligagations as integral members of

society. Our business decisions will be given the appropriate weight and and

consideration to social and environmental impacts.

We intend to seek mutually beneficial and enduring relationships in the commitments

that we make, ensuring that they are straight-forward and honest. Our

communication will be open and accurate, both internally and externally.

We intend to promote the above company values, while encouraging our employees

to do likewise.

Through the implementation of the company values, we believe that we will be able to attain our

goals and objectives for the benefit of all concerned, and in particular the communities in

which we operate in.

1.3 Keys to Success

The keys to the business' success will undoubtedly be effective market segmentation through

the identification of several niche markets and implementation strategies. The key success

factors will be:

Excellence in fulfilling promise: Completely confidential, reliable, trustworthy expertise

and service(s) through the provision of uncompromising service. This dictates that

we have the latest technology, hardware, software and well trained personnel to

delivert his promise.

Timeous response to client's orders: we cannot afford to delay our clients for whatever

reason as this will give a negative bearing on our image, reputation and future

business. We need to continuously communicate with the client ensuring we provide

need-based solutions.

Skill and depth knowledge: Considering the nature of our services and the market, the

skill and depth of knowledge of our personnel is of utmost importance in provision of

service(s) to the end users. This is where the 15 year experience in the industry of our

directors will be an added advantage.

Clear services and marketing positioning: Not wanting to be associated with the

numerous vendors in the market, we intend to aggressively market our business and

the services we provide, so as to be at the top of our clients minds.


Page 4

2.0 Company Summary

JNT Computers is a new start-up limited IT company located in Durban, South Africa and

founded in March 2014 by owner and director, Jimmy Jordaan.

JNT Computers has been formed by an individual with exceptional experience in the IT areas of

expertise. The company provides a wide variety of services, specifically in the fields of

networking and support. JNT Computers works hand-in-hand with all its clients to provide

excellent services, as is required by its clientele.

2.1 Company Ownership

The company, JNT Computers is a (PTY) Ltd company incorporated by Mr. Jimmy Jordaan who

is currently the owner and director. Though the company is relatively new, the director realizes

the company's vast potential market and the opportunity for growth.

2.2 Start-up Summary

The company founder, Mr. Jimmy Jordaan will handle the day-to-day operations of the

business and will be assisted by Mr. Ashraf Mohammed who is an engineer, to ensure that this

business venture is a success.

It is estimated that the start-up costs will be R120,000 (including legal costs, signage and

related expenses). The bulk of this money (R90,000) will be used for salaries over the next 3

months. The company is looking to borrow a start-up loan to cater for these costs. The

company already has long-term assets funded by the director, Mr. Jimmy Jordaan totalling to

approximately R,350,000.

Table: Start-up

Start-up

Requirements

Start-up Expenses

Legal R2,000

Stationery etc. R500

Insurance R1,000

Rent R16,500

Total Start-up Expenses R20,000

Start-up Assets

Cash Required R90,000

Other Current Assets R5,000

Long-term Assets R5,000

Total Assets R100,000

Total Requirements R120,000


Page 5

3.0 Services

JNT Computers will provide networking and support services to small, medium and large

businesses. the network systems and support services will include both PC-based Local Area

Network (LAN) systems and minicomputer server-based systems. Our services include design and

installation of network systems, training and support. The services on offer will include:

Administration - General Network Admin

Internet - Firewall security, firewall support, email delivery router support and more.

Wide Area Networks (WAN) - Data and Voice support and more.

Local Area Networks (LAN) - Design & Installation, backup servcies and more.

Co-located Managed Services - Web, email servers and application servers.


Page 6

4.0 Market Analysis Summary

What are some of the key outsourcing trends?

Service providers are finding themselves under increasing revenue pressure and are looking for

ways to maximize earnings under existing contracts. As a result, they now are less

accommodating when interpreting whether a new service falls within the scope of services set

forth in an existing agreement. Customers need to confirm that the statement of services fully

defines the service provider's responsibilities. Service providers also are pushing hard for clients

to accept standardized offerings, as opposed to customized packages where the margins can

be lower for the vendor. Companies need to determine whether a standardized offer meets

their business needs, or if the cost savings of adopting such a package will be outweighed by

the internal changes required to fit into service providers' models.

In addition, outsourcing types will continue to expand, especially as vendors move up the

value chain of services they offer. However, companies are increasingly circumspect about the

risks of outsourcing broad areas of business. As a result, we are seeing engagements that are

shorter in duration and more limited in scope. The 15-year "all-IT-services" outsourcing

agreements are far less commonplace. We also see more clients relying on captive entities or

entering into hybrid arrangements with vendors.

So Outsourcing IT services is a big industry. The services are used in numerous companies and

Approximately, 30% of the market is in a demand for the services and it is growing. It is

estimated that IT outsourcing will dominate the market.

Typically, with IT outsourcing, there is less costs for IT Staff. Most companies in the industry

offer these services to their customers or outsource the service to engineering firms with

expertise in their product line.

JNT COMPUTERS has extensive experience when it comes to Outsourcing IT skills.

The company's focus is to first meet the demands of getting referred customers. JNT

COMPUTERS will establish relationships with these clients and will work to receive referral

business from them over time. The company estimates that 80% of revenues will come from

outsourced clientele and 20% from new business. Over the next three years, JNT COMPUTERS

estimates that new business will constitute 40% of revenue.


Page 7

4.1 Market Segmentation

We will be focusing on proactive, market seeking organizations that want to ensure an efficient

and effective IT system that will assist in the realization of their business objectives.

At the onset, JNT Computers will rely on its vast network of already existing clientele for new

jobs and referrals. This will mostly inlcude companies that are large enough to require the high-

quality IT Networking and Support solutions we offer, but too small to have a separate computer

management staff.

We shall then target new business opportunities, 3 months into the runing of the business.

These new business opportunities will be targeted at business executives in large, medium and

small businesses who are in charge of various business decisions. These are the general

managers and other decision makers within the companies.

The main intention here will be to offer an attractive development alternative to the company

that is constrained and unable to address opportunities in new market segments due to

technological shortfalls.

Table: Market Analysis

Market Analysis

2014 2015 2016 2017 2018

Potential Customers Growth CAGR

Ourtsourced Clientele 15% 40 46 53 61 70 15.02%

New Business Clientele 25% 10 13 16 20 25 25.74%

Total 17.41% 50 59 69 81 95 17.41%


Page 8

4.2 Target Market Segment Strategy

Currently, JNT Computers serves pre-existing clients brought through by the directors current

networks. However, the company has recognized that its skills and quality capability, together

with its small size, allow it to compete in the higher end networking and support segments.

Targeting new business opportunities will improve profitability levels, especially with the strategy

of establishing a reputation among new clients which will stregthen the existing word of mouth

marketing strategy.

In essence, the marketing strategy will be based mainly on making the right service(s) available

to the right target customer. We will ensure that our services' prices take into consideration

the clients' budgets and that these people appreciate the service and know that it exists,

including where to find it. This is where our internet marketing campaign will come in as well as

web plan strategy.

4.3 Service Business Analysis

The Networks and Support services "industry" is pulverized and disoganized, with thousands of

smaller consulting organizations and indivisual netwroking consultants for every one of the well-

known companies.

Networking and Systems support participants range from major international name-brand

consultants to tens of thousands of individuals. One of JNT Computers challenges will be to

establish itself as a real networking and systems support company and position itself in the

relatively risk-free corporate channel segment.

Some of these computer consultant companies mainly specialize in the installation of new

systems and they charge very exorbitant consultation fees which are deemed rather high,

especially for the small and medium enterprises.

4.3.1 Competition and Buying Patterns

The vast majority of proactive, market-oriented businesses understand the value of having an

efficient computer system, as well as the concept of service and support. They are much more

likely to pay for them when the offering and benefits are clearly stated.

There is no doubt that we will compete more against the box pushers than other service

providers. We need to effectively compete against the idea that once a system is out-dated,

the business should buy new systems, when, with the ongoing service and support, they can

be upgraded.

The most important element of general competition, by far, is what it takes to keep clients for

repeat business. It is worth making huge concessions in any single service to maintain a client

relationship that brings the client back for future services.


Page 9

5.0 Web Plan Summary

JNT Computers intends to use the internet as one of the channels for selling its services as this

is a cost effective way of reaching a large number of clients, both regionally and

internationally. We also realize that customer/client research is needed before building an

effective website. This is something many companies rarely do, but JNT Computers wants to find

out how customers want to access information and journey through their website.

5.1 Website Marketing Strategy

We intend to promote our website on all our stationery as well as in all our communications.

After the launch of the website, JNT Computers will carry out an intensive Search Engine

Optimization campaign as well as a social media campaign targeting new clientele and positioning

the company's website at the top of the major search engine portals.

5.2 Development Requirements

JNT Computers intends to maintain a simple, classy, tey internet focused website. The

servcies of a web designer will be outsourced and they will work with the management team to

come up with an impressive and effective website. The management will manage the website

once it has been rolled out.

6.0 Strategy and Implementation Summary

Emphasize Service - We will differentiate ourselves with Service! We will establish our

business offering as a clear and viable alternative for our target market, from the scores of

networking and support service providers.

Build a relationship-oriented business - Build long-term relationships with customers, not just

single-visit deals. We shall become their service provider of choice by making them understand

the value of the relationship.

6.1 SWOT Analysis

Below we take an in-depth look at our strengths, weaknesses, opportunities and strengths. We

are in a highly lucrative market in a growing economy. We foresee our strengths as the ability

to respond to the market and provide custom designed technological services. Our key personnel

already have thorough knowledge of the technical services we intend to provide which will go a

long way towards penetrating the market. Below is a summary of the SWOT Analysis.


Page 10

6.1.1 Strengths

Knowledge - Our greatest stregnth is the knowledge that our competitors are retailers

pushing boxes; i.e, trying to sell the client a new product while we on the other hand

know systems,networks, connectivity and data management.

Relationship Selling - We intend to know our customers one by one. Our direct

sales efforts will seek to maintain and sustain a relationship with our customers.

Diversified market segments - The diversity of the services we intend to provide will

ensure lack of dependency on one service.

Combination of Skills and Implementation - In the long run the management intends

to build business strategy and long-term plans with strategic allies, having wide

experience in their respective markets as well as strong technical skills and business

know-how.

6.1.2 Weaknesses

A limited financial base compared to the current major players in the IT Industry.

A dependence on quickly changing technology which results in a cost factor due to the

need to keep up with state of the art hardware.

6.1.3 Opportunities

The Internet - The increasing opportunities on the internet offer us another

strength when compared to other service offerings. Our potential customer want

more help with the internet and we intend to position ourselves to offer this help.

Emerging Technologies - The rate of new products and services introduction in the

IT Sector presents unimaginable opportunities to be explored.

6.1.4 Threats

Innovation shortens life cycles and hence the need to act timeously on the market.

This will recoup new service introductions in a shorter time frame.

The slow adotion rate of technologies and products, especially in some organizatiosn

where the management is comfortable with what they currently have does not sit

well with our intended service offering.


Page 11

6.2 Competitive Edge

JNT COMPUTERS will sustain its competitive advantages to steadily gain market share. The

first advantage is based on extensive knowledge of Network and Support services. The second

advantage is an established network of contacts among numerous companies that utilize

Network Support.

JNT COMPUTERS' competitive edge is the fact that Jimmy and Ashraf have previously spent a lot

of time assisting clients with system related issues. Both have excellent reputations with

customers for quality work and effective communication skills. These established relationships

create a trust bond that is significant when it comes to generating new referrals.

By building a business based on long-standing relationships with satisfied clients, we will

simultaneously build defenses against competition. The longer the relationship stands, the

more we help our clients understand what we offer them and why they need it.

6.3 Marketing Strategy

The core element of our marketing strategy will be differentiating ourselves from our competitors.

In terms of promoting our services, we intend to sell ourselves as a strategic ally. We intend to

offer extremely reasonable prices in comparison to the competition and we need to be able to

sustain that. Market penetration through lower prices shall be undertaken where need be,

while premium pricing in the case of the upper-end of the market.

6.4 Sales Strategy

The sales forecast is based in the existing client base of the two principal officers of the

company and their ability to generate new sales based on their contacts. By bringing together

Mr. Jordaan's IT expertise and vast experience as well as Mr. Mohammed's engineering and

networking experience, the company will generate sales in both areas. Furthermore, the

company's growing marketing program will generate the growth the company needs to excel. It is

important to note that as we become establshed and known in the market, we project sales to

increase at a higher rate than the initial year.

6.4.1 Sales Forecast

As the following table shows, JNT Computers plans to deliver sales of approximately R690,000

in the first year with an additional 10% growth per annum. This is a conservative look at the

sales and will definitely be higher than this.


Page 12

Table: Sales Forecast

Sales Forecast

FY 2015 FY 2016 FY 2017

Sales

Products & Services R690,000 R759,000 R834,900

Other R0 R0 R0

Total Sales R690,000 R759,000 R834,900

Direct Cost of Sales FY 2015 FY 2016 FY 2017

Products & Services R111,000 R116,550 R122,377

Other R0 R0 R0

Subtotal Direct Cost of Sales R111,000 R116,550 R122,377


Page 13

6.5 Milestones

Our detailes milestones are shown in the following table and chart. The related budgets are

included with the expenses shown in the projected profit and loss statement, which is in the

financial analysis in Chapter 7 of this plan.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Creation of Company Website 7/1/2014 7/31/2014 R500 TBA Sales &

Marketing

SEO Campaign 7/31/2014 12/31/2014 R500 TBA Sales &

Marketing

Online visibil ity campaign 9/1/2014 30/11/2014 R1,000 ABC Department

TBA 7/1/2014 7/31/2014 R0 ABC Department







Totals R2,000


Page 14

7.0 Management Summary

The human resource element shall be an essential component in the delivery of the total service.

By having enthusiastic, capable and empowered people interacting with our clients, we intend to

build a competitive advantage of being able to comprehensively meet our clients' needs. Those

dealing with the clients will have enough leverage in decision-making to ensure that clients are

handled promptly and to reduce the lead time in service delivery.

It will be necessary to evaluate jobs and remuneration packages against market benchmarks

though at the onset, the management will pay themselves a small stipend as they wait for the

company to expand.

7.1 Personnel Plan

As the personnel plan shows, the company expects to make gradual investments in JNT

personnel over the next three years. After year three, a full review of the staff salaries will be

reviewed based on the growth of the company.


Page 15

Table: Personnel

Personnel Plan

FY 2015 FY 2016 FY 2017

Jimmy Jordaan - Director "Network Engineer R90,000 R94,500 R103,950

Ashraf Mohammed - Engineer R90,000 R94,500 R103,950

Kevin Golden - Marketing & Sales R90,000 R94,500 R103,950

Less Naidoo - Accountant R90,000 R94,500 R103,950

Total People 0 0 0

Total Payroll R360,000 R378,000 R415,800

8.0 Financial Plan

The business of JNT Computers does not require substantial outlays for inventory and virtually

75% of all sales are on cash basis, so increases in sales will not be accompanied by initial cash

flow deficits.

JNT Computers expects to borrow R120,000 as a 5-year loan to cater for salaries and other

basic expenses during the initial months of the business.

Our financial plan is based on conservative estimates and assumptions.

8.1 Start-up Funding

The start-up costs will consist primarily of salaries to help sustain the company over the next

three months as the company sets a footing into the market. The director has already

invested approximately R350,000 in assets, most of this computer equipment and a company

vehicle, which the company will use for a period of time.

This, and the company's current monthly income will be used to secure a loan facility totalling

R120,000 which will be repaid in a period of 5 years.


Page 16

Table: Start-up Funding

Start-up Funding

Start-up Expenses to Fund R20,000

Start-up Assets to Fund R100,000

Total Funding Required R120,000

Assets

Non-cash Assets from Start-up R10,000

Cash Requirements from Start-up R90,000

Additional Cash Raised R0

Cash Balance on Starting Date R90,000

Total Assets R100,000

Liabil ities and Capital

Liabil ities

Current Borrowing R0

Long-term Liabil ities R120,000

Accounts Payable (Outstanding Bills) R0

Other Current Liabil ities (interest-free) R0

Total Liabil ities R120,000

Capital

Planned Investment

Owner R0

Investor R0

Additional Investment Requirement R0

Total Planned Investment R0

Loss at Start-up (Start-up Expenses) (R20,000)

Total Capital (R20,000)

Total Capital and Liabil ities R100,000

Total Funding R120,000

8.2 Important Assumptions

Table 7.1 summarizes key financial assumptions including 30-day average collection days, sales

entirely on invoice basis, expenses mainly on net 30 basis, 35 days on average for payment of

invoices, and present-day interest rates.

8.3 Break-even Analysis

The Break-even analysis is based on the average of the first-year figures for total sales of

services and by operating expenses. These conservative assumptions make for a more

accurate estimate of real risk.


Page 17

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even R43,805

Assumptions:

Average Percent Variable Cost 16%

Estimated Monthly Fixed Cost R36,758

8.4 Projected Profit and Loss

As the Profit and Loss table shows, the company expects to continue its steady growth in

profitability over the next three years of operations.


Page 18

Table: Profit and Loss

Pro Forma Profit and Loss

FY 2015 FY 2016 FY 2017

Sales R690,000 R759,000 R834,900

Direct Cost of Sales R111,000 R116,550 R122,377

Other Costs of Sales R34,500 R36,225 R38,036

Total Cost of Sales R145,500 R152,775 R160,413

Gross Margin R544,500 R606,225 R674,487

Gross Margin % 78.91% 79.87% 80.79%

Expenses

Payroll R360,000 R378,000 R415,800

Marketing/Promotion R5,500 R5,500 R5,500

Depreciation R0 R0 R0

Rent R66,000 R66,000 R66,000

Util ities R6,000 R6,000 R6,000

Insurance R3,600 R3,600 R3,600

Total Operating Expenses R441,100 R459,100 R496,900

Profit Before Interest and Taxes R103,400 R147,125 R177,587

EBITDA R103,400 R147,125 R177,587

Interest Expense R10,375 R7,000 R2,500

Taxes Incurred R27,908 R42,038 R52,526

Net Profit R65,118 R98,088 R122,561

Net Profit/Sales 9.44% 12.92% 14.68%


Page 19


Page 20

8.5 Projected Cash Flow

The cash flow projection shows that provisions for ongoing expenses are adequate to meet the

needs of the company as the business generates sufficient cash flow to support operations.


Page 21

Table: Cash Flow

Pro Forma Cash Flow

FY 2015 FY 2016 FY 2017

Cash Received

Cash from Operations

Cash Sales R517,500 R569,250 R626,175

Cash from Receivables R156,792 R188,179 R206,997

Subtotal Cash from Operations R674,292 R757,429 R833,172

Additional Cash Received

Sales Tax, VAT, HST/GST Received R0 R0 R0

New Current Borrowing R0 R0 R0

New Other Liabil ities (interest-free) R0 R0 R0

New Long-term Liabil ities R0 R0 R0

Sales of Other Current Assets R0 R0 R0

Sales of Long-term Assets R0 R0 R0

New Investment Received R0 R0 R0

Subtotal Cash Received R674,292 R757,429 R833,172

Expenditures FY 2015 FY 2016 FY 2017

Expenditures from Operations

Cash Spending R360,000 R378,000 R415,800

Bill Payments R240,489 R284,053 R295,419

Subtotal Spent on Operations R600,489 R662,053 R711,219

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out R0 R0 R0

Principal Repayment of Current Borrowing R0 R0 R0

Other Liabil ities Principal Repayment R0 R0 R0

Long-term Liabil ities Principal Repayment R30,000 R40,000 R50,000

Purchase Other Current Assets R0 R0 R0

Purchase Long-term Assets R0 R0 R0

Dividends R0 R0 R0

Subtotal Cash Spent R630,489 R702,053 R761,219

Net Cash Flow R43,803 R55,376 R71,953

Cash Balance R133,803 R189,179 R261,132


Page 22

8.6 Projected Balance Sheet

The balance sheet shows healthy growth of net worth and strong financial position. The monthly

estimates are included in the appendix.


Page 23

Table: Balance Sheet

Pro Forma Balance Sheet

FY 2015 FY 2016 FY 2017

Assets

Current Assets

Cash R133,803 R189,179 R261,132

Accounts Receivable R15,708 R17,279 R19,007

Other Current Assets R5,000 R5,000 R5,000

Total Current Assets R154,511 R211,458 R285,139

Long-term Assets

Long-term Assets R5,000 R5,000 R5,000

Accumulated Depreciation R0 R0 R0

Total Long-term Assets R5,000 R5,000 R5,000

Total Assets R159,511 R216,458 R290,139

Liabil ities and Capital FY 2015 FY 2016 FY 2017

Current Liabil ities

Accounts Payable R24,394 R23,253 R24,373

Current Borrowing R0 R0 R0

Other Current Liabil ities R0 R0 R0

Subtotal Current Liabil ities R24,394 R23,253 R24,373

Long-term Liabil ities R90,000 R50,000 R0

Total Liabil ities R114,394 R73,253 R24,373

Paid-in Capital R0 R0 R0

Retained Earnings (R20,000) R45,118 R143,205

Earnings R65,118 R98,088 R122,561

Total Capital R45,118 R143,205 R265,766

Total Liabil ities and Capital R159,511 R216,458 R290,139

Net Worth R45,118 R143,205 R265,766

8.7 Business Ratios

Business ratios for the years of this plan are shown below. We expect to maintain healthy

ratios for profitability, risk and return.


Page 24

Table: Ratios

Ratio Analysis

FY 2015 FY 2016 FY 2017 Industry Profile

Sales Growth 0.00% 10.00% 10.00% 7.44%

Percent of Total Assets

Accounts Receivable 9.85% 7.98% 6.55% 26.43%

Other Current Assets 3.13% 2.31% 1.72% 59.95%

Total Current Assets 96.87% 97.69% 98.28% 89.67%

Long-term Assets 3.13% 2.31% 1.72% 10.33%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabil ities 15.29% 10.74% 8.40% 30.47%

Long-term Liabil ities 56.42% 23.10% 0.00% 20.98%

Total Liabil ities 71.72% 33.84% 8.40% 51.45%

Net Worth 28.28% 66.16% 91.60% 48.55%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 78.91% 79.87% 80.79% 100.00%

Selling, General & Administrative Expenses 69.48% 66.95% 66.11% 75.92%

Advertising Expenses 0.80% 0.72% 0.66% 1.53%

Profit Before Interest and Taxes 14.99% 19.38% 21.27% 0.63%

Main Ratios

Current 6.33 9.09 11.70 2.00

Quick 6.33 9.09 11.70 1.58

Total Debt to Total Assets 71.72% 33.84% 8.40% 58.02%

Pre-tax Return on Net Worth 206.18% 97.85% 65.88% 3.88%

Pre-tax Return on Assets 58.32% 64.74% 60.35% 1.63%

Additional Ratios FY 2015 FY 2016 FY 2017

Net Profit Margin 9.44% 12.92% 14.68% n.a

Return on Equity 144.33% 68.49% 46.12% n.a

Activity Ratios

Accounts Receivable Turnover 10.98 10.98 10.98 n.a

Collection Days 29 32 32 n.a

Accounts Payable Turnover 10.86 12.17 12.17 n.a

Payment Days 27 31 29 n.a

Total Asset Turnover 4.33 3.51 2.88 n.a

Debt Ratios

Debt to Net Worth 2.54 0.51 0.09 n.a

Current Liab. to Liab. 0.21 0.32 1.00 n.a

Liquidity Ratios

Net Working Capital R130,118 R188,205 R260,766 n.a

Interest Coverage 9.97 21.02 71.03 n.a

Additional Ratios

Assets to Sales 0.23 0.29 0.35 n.a

Current Debt/Total Assets 15% 11% 8% n.a

Acid Test 5.69 8.35 10.92 n.a

Sales/Net Worth 15.29 5.30 3.14 n.a

Dividend Payout 0.00 0.00 0.00 n.a

Appendix

Page 1

Table: Sales Forecast

Sales Forecast

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Sales

Products & Services R50,000 R50,000 R50,000 R55,000 R55,000 R55,000 R60,000 R60,000 R60,000 R65,000 R65,000 R65,000

Other R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Total Sales R50,000 R50,000 R50,000 R55,000 R55,000 R55,000 R60,000 R60,000 R60,000 R65,000 R65,000 R65,000

Direct Cost of Sales Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Products & Services R8,500 R8,500 R8,500 R9,000 R9,000 R9,000 R9,500 R9,500 R9,500 R10,000 R10,000 R10,000

Other R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Subtotal Direct Cost of Sales R8,500 R8,500 R8,500 R9,000 R9,000 R9,000 R9,500 R9,500 R9,500 R10,000 R10,000 R10,000

Appendix

Page 2

Table: Personnel

Personnel Plan


Jimmy Jordaan - Director "Network Engineer R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500

Ashraf Mohammed - Engineer R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500

Kevin Golden - Marketing & Sales R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500

Less Naidoo - Accountant R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500 R7,500

Total People 0 0 0 0 0 0 0 0 0 0 0 0

Total Payroll R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000

Appendix

Page 3

Table: Profit and Loss

Pro Forma Profit and Loss


Sales R50,000 R50,000 R50,000 R55,000 R55,000 R55,000 R60,000 R60,000 R60,000 R65,000 R65,000 R65,000

Direct Cost of Sales R8,500 R8,500 R8,500 R9,000 R9,000 R9,000 R9,500 R9,500 R9,500 R10,000 R10,000 R10,000

Other Costs of Sales R3,000 R3,000 R3,000 R3,000 R3,000 R1,500 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000

Total Cost of Sales R11,500 R11,500 R11,500 R12,000 R12,000 R10,500 R12,500 R12,500 R12,500 R13,000 R13,000 R13,000

Gross Margin R38,500 R38,500 R38,500 R43,000 R43,000 R44,500 R47,500 R47,500 R47,500 R52,000 R52,000 R52,000

Gross Margin % 77.00% 77.00% 77.00% 78.18% 78.18% 80.91% 79.17% 79.17% 79.17% 80.00% 80.00% 80.00%

Expenses

Payroll R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000

Marketing/Promotion R1,000 R500 R0 R1,000 R0 R0 R1,000 R500 R0 R500 R0 R1,000

Depreciation R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Rent R5,500 R5,500 R5,500 R5,500 R5,500 R5,500 R5,500 R5,500 R5,500 R5,500 R5,500 R5,500

Utilities 15% R500 R500 R500 R500 R500 R500 R500 R500 R500 R500 R500 R500

Insurance R300 R300 R300 R300 R300 R300 R300 R300 R300 R300 R300 R300

Total Operating Expenses R37,300 R36,800 R36,300 R37,300 R36,300 R36,300 R37,300 R36,800 R36,300 R36,800 R36,300 R37,300

Profit Before Interest and Taxes R1,200 R1,700 R2,200 R5,700 R6,700 R8,200 R10,200 R10,700 R11,200 R15,200 R15,700 R14,700

EBITDA R1,200 R1,700 R2,200 R5,700 R6,700 R8,200 R10,200 R10,700 R11,200 R15,200 R15,700 R14,700

Interest Expense R979 R958 R938 R917 R896 R875 R854 R833 R813 R792 R771 R750

Taxes Incurred R66 R222 R379 R1,435 R1,741 R2,198 R2,804 R2,960 R3,116 R4,323 R4,479 R4,185

Net Profit R155 R519 R884 R3,348 R4,063 R5,128 R6,542 R6,907 R7,271 R10,086 R10,450 R9,765

Net Profit/Sales 0.31% 1.04% 1.77% 6.09% 7.39% 9.32% 10.90% 11.51% 12.12% 15.52% 16.08% 15.02%

Appendix

Page 4

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales R37,500 R37,500 R37,500 R41,250 R41,250 R41,250 R45,000 R45,000 R45,000 R48,750 R48,750 R48,750

Cash from Receivables R417 R12,500 R12,500 R12,542 R13,750 R13,750 R13,792 R15,000 R15,000 R15,042 R16,250 R16,250

Subtotal Cash from Operations R37,917 R50,000 R50,000 R53,792 R55,000 R55,000 R58,792 R60,000 R60,000 R63,792 R65,000 R65,000

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

New Current Borrowing R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

New Other Liabilities (interest-free) R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

New Long-term Liabilities R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Sales of Other Current Assets R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Sales of Long-term Assets R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

New Investment Received R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Subtotal Cash Received R37,917 R50,000 R50,000 R53,792 R55,000 R55,000 R58,792 R60,000 R60,000 R63,792 R65,000 R65,000

Expenditures Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Expenditures from Operations

Cash Spending R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000 R30,000

Bill Payments R662 R19,833 R19,469 R19,201 R21,628 R20,902 R19,992 R23,446 R23,081 R22,802 R24,902 R24,572

Subtotal Spent on Operations R30,662 R49,833 R49,469 R49,201 R51,628 R50,902 R49,992 R53,446 R53,081 R52,802 R54,902 R54,572

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Principal Repayment of Current Borrowing R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Other Liabilities Principal Repayment R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Long-term Liabilities Principal Repayment R2,500 R2,500 R2,500 R2,500 R2,500 R2,500 R2,500 R2,500 R2,500 R2,500 R2,500 R2,500

Purchase Other Current Assets R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Purchase Long-term Assets R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Dividends R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Subtotal Cash Spent R33,162 R52,333 R51,969 R51,701 R54,128 R53,402 R52,492 R55,946 R55,581 R55,302 R57,402 R57,072

Net Cash Flow R4,755 (R2,333) (R1,969) R2,091 R872 R1,598 R6,300 R4,054 R4,419 R8,490 R7,598 R7,928

Cash Balance R94,755 R92,422 R90,453 R92,544 R93,416 R95,015 R101,314 R105,369 R109,787 R118,277 R125,875 R133,803

Appendix

Page 5

Table: Balance Sheet

Pro Forma Balance Sheet


Assets Starting Balances

Current Assets

Cash R90,000 R94,755 R92,422 R90,453 R92,544 R93,416 R95,015 R101,314 R105,369 R109,787 R118,277 R125,875 R133,803

Accounts Receivable R0 R12,083 R12,083 R12,083 R13,292 R13,292 R13,292 R14,500 R14,500 R14,500 R15,708 R15,708 R15,708

Other Current Assets R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000

Total Current Assets R95,000 R111,838 R109,505 R107,537 R110,836 R111,708 R113,306 R120,814 R124,869 R129,287 R138,986 R146,584 R154,511

Long-term Assets

Long-term Assets R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000

Accumulated Depreciation R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Total Long-term Assets R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000

Total Assets R100,000 R116,838 R114,505 R112,537 R115,836 R116,708 R118,306 R125,814 R129,869 R134,287 R143,986 R151,584 R159,511

Liabilities and Capital Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Current Liabilities

Accounts Payable R0 R19,184 R18,831 R18,479 R20,930 R20,239 R19,210 R22,676 R22,324 R21,971 R24,084 R23,731 R24,394

Current Borrowing R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Other Current Liabilities R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Subtotal Current Liabilities R0 R19,184 R18,831 R18,479 R20,930 R20,239 R19,210 R22,676 R22,324 R21,971 R24,084 R23,731 R24,394

Long-term Liabilities R120,000 R117,500 R115,000 R112,500 R110,000 R107,500 R105,000 R102,500 R100,000 R97,500 R95,000 R92,500 R90,000

Total Liabilities R120,000 R136,684 R133,831 R130,979 R130,930 R127,739 R124,210 R125,176 R122,324 R119,471 R119,084 R116,231 R114,394

Paid-in Capital R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0

Retained Earnings (R20,000) (R20,000) (R20,000) (R20,000) (R20,000) (R20,000) (R20,000) (R20,000) (R20,000) (R20,000) (R20,000) (R20,000) (R20,000)

Earnings R0 R155 R674 R1,558 R4,906 R8,969 R14,096 R20,638 R27,545 R34,816 R44,902 R55,353 R65,118

Total Capital (R20,000) (R19,845) (R19,326) (R18,443) (R15,094) (R11,031) (R5,904) R638 R7,545 R14,816 R24,902 R35,353 R45,118

Total Liabilities and Capital R100,000 R116,838 R114,505 R112,537 R115,836 R116,708 R118,306 R125,814 R129,869 R134,287 R143,986 R151,584 R159,511

Net Worth (R20,000) (R19,845) (R19,326) (R18,443) (R15,094) (R11,031) (R5,904) R638 R7,545 R14,816 R24,902 R35,352 R45,118

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