PC Repair is an S Corporation located in Ramsford-on-Bitstream, owned by Jack Hacker. With a small 3-year loan, PC Repair will grow in one year from a one-man, home-office based repair shop to a profitable, 3-person business in a leased location. We will build the necessary infrastructure to quickly and efficiently respond to customers' computer needs, guaranteeing speedy, friendly, competent, and cost-effective technical support.
PC Repair was initially envisioned as a sole proprietorship in the owner's home. However, recent feedback from our marketing outreach has suggested a much higher sales potential than originally imagined, and PC Repair has been reformed as an S Corporation. This change will provide additional legal protection for the owner, and will also streamline the financial operations of the company as we expand the personnel to 5 within the next three years, lease a separate space for offices, and purchase company vehicles and cell phones.
The owner, Jack Hacker, has 10 years of experience in the fields of technical support, networking, and computer training and repair. Jack has also spent the last three years as the manager of a custom computer building and repair store, and understands the computer needs of small businesses.
Total start-up expenses include initial expenses for establishing our website, setting up the business, and doing our pre-opening advertising. Exact allocations are shown in the table.
The bulk of our start-up requirements are asset needs: we need diagnostic and repair equipment, half of which will be contributed to the business by the owner from his own materials. We are treating this equipment as assets because we expect it to last at least three years, and to have some resale value when we are through with it; we will buy additional expensed equipment in years two and three. We also need start-up inventory which includes RAM, spare hard drives, cables, and cases. Although we will keep expenses to a minimum for the first three months, before we move, we will also need cash at start-up, to see us through the next several months with a positive cash balance.
We plan to fund our total start-up requirements direct owner investment (including the contributed assets), and a three-year loan secured with the owner's collateral (his home equity). We should be able to easily repay this loan within three years, even with a much lower sales revenue than projected. (See the Cash Flow table for projected repayment.)