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PC Repair

Executive Summary

Opportunity

Problem

We depend on our computers. Finding reliable expertise is a problem for anybody who doesn’t have a direct channel via a company, employer, friend, or relative. We solve that problem.

Solution

PC Repair will provide computer and technical consulting (repairs, training, networking and upgrade service) to local small businesses as well as home PC users. The company will focus on marketing, responsiveness, quality, and creating and retaining customer relations.

Market

The very nature of the computing industry, with its extraordinary rate of technological development, creates a constant need for businesses skilled in updating and advising customers on computer-related issues. In town, the majority of potential customers are dissatisfied with existing options, creating an attractive niche for an innovative start-up. Small business PC users will provide the majority of our business revenue. Business Week expects the computing industry to grow at a rate of 12% and the processor speeds to continue to expand for years to come, providing a rich resource for sales.

PC Repair has decided to focus mainly on the small business market, as these customers typically don’t have a full-time IT person, but have full-time IT needs. PC Repair will offer an affordable, on-demand service for these customers. We can also offer maintenance agreements that generate additional monthly income. For our residential customers, we will offer a very affordable and helpful service with a very flexible schedule to meet their needs. Our target market will focus on Ramsford-on-Bitstream and the surrounding areas. Market research indicates there is an abundance of business for a small company such as PC Repair.

Competition

Secondary market research shows computer service customers tend to be very loyal to providers that do good work and satisfy their needs. An analysis of PC Repair’s main competitors shows no overwhelming strengths that would be significant barriers to entry into the market, as our local competitors have serious weaknesses.

The computer maintenance and repair industry is fragmented, with a few large, national players and hundreds of small, local stores. While most computers are actually repaired in-store, near the customer, parts for the repair come from major manufacturers and distributors; delays in receiving necessary parts can significantly slow down the repair process. Large chains have solved this problem by keeping vast amounts of inventory in stock at all times, while local stores offer customers the trade-off of personal interaction and trust that may make up for some delay.

PC Repair has established a relationship with a local distributor to do rapid special-ordering; although this capability is more expensive than normal channels, it will enable us to quickly establish a reputation as efficient and responsive to customer needs, particularly for our small business users. We will leverage this customer loyalty into great word of mouth marketing and steady growth.

Why Us?

PC repair will set the standard for on-site computer solutions through fast, on-site service and response. Our customers will always receive one-on-one personal attention at a very affordable price. Our customers will receive the highest quality of customer service available. Our employees will receive extensive training, a great place to work, fair pay and benefits, and incentives to use their own good judgement to solve customers’ problems.

Expectations

Forecast

With our good cost control, we will see a modest, yet comfortable, net profit the first year, even after moving into a leased space and hiring additional technicians. We lose money slightly in the second and third year, but we are paying the owner’s salaries and the loss is covered in cash flow. And there will be tax benefits. We do expect to be profitable for the long term.

Financial Highlights by Year

Chart visualizing the data for Financial Highlights by Year

Financing Needed

We will be getting $43,000 to start. That will be a $20,000 loan and $23,000 from the owner.

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Opportunity

Problem & Solution

Problem Worth Solving

We depend on our computers. Finding reliable expertise is a problem for anybody who doesn’t have a direct channel via a company, employer, friend, or relative. We solve that problem.

Our solution

Pc Repair will set the standard for on-site computer solutions through fast, on-site service and response. Our customers will always receive one-on-one personal attention at a very affordable price. Our customers will receive the highest quality of customer service available. Our employees will receive extensive training, a great place to work, fair pay and benefits, and incentives to use their own good judgement to solve customers’ problems.

Target Market

Market Size & Segments

Market Segmentation

The existing computer service market is so extensive that categorizing it is rather difficult. We have broken our potential market down into two groups, based on their needs: home PC users and small business clients.

Home PC User
Our home PC user market includes non-tech-savvy residents of the local area (15 mile radius), generally between the ages of 30 and 70, with at least one home computer. We are not expecting income from users below 30, who tend to be more comfortable with technology and willing to attempt repairs and upgrades on their own, without seeking professional assistance. Such home users generally own a computer to do email, play games, write letters, scan and print photos, and occasionally to do bookkeeping or taxes. Home PC users with more sophisticated applications generally have enough tech savvy, from tech experience at work, to do their own repairs and upgrades. Their hardware needs will include the computer itself, monitors, keyboards, mouse, printer, and scanner.

This group is growing slightly faster than the overall population growth in our area, in part due to the increasing demand for computers among retired people and young families, about 7% a year.

Small Business Users
Small business users will provide the majority of our business revenue. The small business market will be defined as customers within a 15 mile radius, with 2 or more computers or a network which they use for business purposes at least 25% of the time. Their business use may include minor usage, such as updating a business website for a brick-and-mortar store, keeping the books, designing graphics or ad campaigns, and writing copy for press releases. It may also be more extensive, incorporating inventory tracking, POS systems, customer databases, online product/service delivery, or product development. The more intensive their computer usage for business, the more critical it is to them that their technology work well and reliably, and that quality repairs and support are available in a crisis. Their hardware needs will include the same items as home users, plus servers, backup systems, data storage, and wireless networking.

The portion of the small business market we are targeting is growing at around 2% a year.

Although there are more potential customers among home PC users, we expect the majority of our revenue to come from small business clients, since their need for our services is more urgent, and they are willing to invest in technology as part of their business plan. The majority of our marketing efforts will thus be focused on small business owners. These customers typically don’t have a full-time IT person, but have full-time IT needs. Home PCs are often used by multiple people, and serve multiple purposes. Our home PC users need help with managing their settings to integrate the different needs of all household members as much as they need technical assistance.

ComputingNet magazine recently reported on the substantial need for timely and cost-effective computer upgrades and repairs in this region; Jack Hacker has seen this market need in person, as frustrated clients waited for days or weeks for their critical components to be returned to full capacity, with no inexpensive alternative to the existing computer repair shops. All of our clients need technical assistance, but we are also selling peace of mind: our clients will know that friendly, efficient help is just a phone call away. As more and more companies switch their support services to automated call centers or touch-tone menus, the simple reassurance of hearing another human voice on the phone within a few rings is immeasurable. Even better is knowing that within a few hours, someone will show up and take care of their problem.

Both the software and hardware side of the computer industry continue to turn out new and revised computer components at alarming rates. For PC Repair this means job security well into the future. As reported by the Wall Street Journal, there seems to be no end to the development of the computer market. Business Week expects the computing industry to grow at a rate of 12% and the processor speeds to continue to expand for years to come.

 

Competition

Current alternatives

Customers choose computer repair and assistance services based on reputation, previous experience, and price. They may choose to return to a mediocre provider with whom they’re familiar, rather than try out a new unknown company about whom they’ve heard nothing. Large stores, especially the service departments of national chains, have a great advantage simply in their affiliation with an established brand. Establishing our brand identity and a great reputation in the first few months is critical to our success. Once we have broken in to the local market, our great service will turn new clients into permanent clients.

Our services will be second to no one and our prices will be very reasonable for the high quality service we offer. By providing superior service, word of mouth alone will bring in many new clients. The satisfaction our consumers find will keep them coming back. There are two main competitors for the computer upgrade and repair business in this area:

  1. Competitor A. They are a well established provider of computer upgrades and services, and do quick work. However, they have a high staff turnover, a young and inexperienced staff, and are more interested in selling new components than in maintaining existing machines or finding custom solutions. They do not offer any kind of pick-up and drop-off service, and do not offer on-site help. They really only offer hardware support.
  2. Competitor B. Smaller and less known then A, B provides many services for residents living in east and south parts of town. They are more willing to spend time with a client, figuring out exactly what his or her needs are, and suggesting new options than competitor A. However, they have an inefficient ordering system and an unkempt shop, which deters potential customers and can turn existing customers to the competition. They also do not offer on-site services, although they are considering instituting a trial pick-up/drop-off service. They are in the best position to copy our innovations and steal customers, but their management is complacent and may not respond to competition.

Both of these companies charge rates in excess of PC Repair; we will be able to attract the price-sensitive market without much work. 

Our advantages

Our advantages are: 

  • Quick response: PC Repair will provide same day and after hours service. 
  • A flat rate policy: This undermines the competition, who charge by the hour. The pricing has been set to reflect the average amount of time it takes to perform the task. With this strategy we can undercut most competitors and gain local market power.
  • On-site and pick-up/drop-off services: This will minimize the time and effort a customer needs to put into dealing with his computer problem.
  • Suprisingly, our small size is an advantage: customers will recognize me (and future employees), and will know they will get the same great service every time they call.

Keys to Success

Keys to Success

Our keys to success are: 

  • Establishing a brand identity and generating brand recognition through marketing. 
  • Responsiveness: being an on-call computer paramedic with fast response time.
  • Quality: getting the job done right the first time, offering 100% guarantee.
  • Relationships: developing loyal repeat customers–retainers.
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Execution

Marketing & Sales

Marketing Plan

Our marketing strategy will aggressively exploit our competitors’ weaknesses. During the start-up phase, we will run large ads in the business section of the local newspaper, asking, "Are you fed up with poor customer service for your computer needs?" These ads will focus on our advantages, including on-site service, competitive rates, and quick response and turn-around times. They will announce our opening date, and include a coupon for free diagnostic service for the first 20 customers.

We will follow up on these opening ads with a smaller direct-marketing campaign to small business owners, with lists drawn from the local Chamber of Commerce. Jack will use his contacts with business customers from his years as a manager to create a "buzz" about this new business.

We will continue periodic advertisements, including several promotions (discounts, free diagnosis, etc.) throughout the first year. We expect a small but steady response from home PC users who see our ads elsewhere, but will also run monthly ads in sections other than the business one.

We will offer a promotion during the first 90 days of business to generate business traffic and word of mouth. Our promo is Spyware removal on any desktop PC for $70 including tax and software. Spyware is a huge problem for a lot of residential and small business customers, and the offer should draw a lot of interest.

Sales Plan

Our marketing strategy will generate customer inquiries. We will close the deals by offering an outstanding service and a very reasonable price. Happy customers generate repeat business and word of mouth. Our toll free number is operational 24 hours a day, seven days a week, and from 8am to 9pm, I will be available to answer calls. At other times, or when I am on the phone, an answering service we have hired will catch callers and give them an estimated wait time for a call-back; this is another step towards delivering a complete solution to our customers.

Sales forecast figures are based on industry figures for the typical growth of a start-up and reflect repeat business generated through meeting customer needs.

Milestones & Metrics

Milestones Table

Milestone Due Date
Q1 Review
Mar 06, 2018
Q2 Review
June 13, 2018
Q3 Review
Sept 10, 2018
Q4 Review
Dec 05, 2018

Key metrics

Our key metrics are: 

  • engagements taken
  • fixes
  • incidents addressed
  • repeat business
  • # of tweets and retweets 
  • # of facebook likes and views 
  • # of website views 
  • training 
  • customer reviews 
  • appt time tracking and locations
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Company

Overview

Ownership & Structure

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.

Team

Management team

PC Repair will be owned and managed by Jack Hacker. Jack 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. Jack is adept at managing his time, and at quickly responding to multiple customer calls and needs.

For the first three months, Jack will be in charge of all aspects of the business. In the third month, when another tech is hired, Jack will shift some of his energy from directly responding to customer needs, to training and managing others to do this work effectively. Jack will maintain direct control over inventory ordering and bookkeeping, and will try to do as many of the on-site calls as possible himself. Part of our brand recognition strategy is to identify PC Repair with Jack’s efficiency, friendliness, and technical expertise. The easiest way to associate the two is for Jack to be a major part of many customers’ experiences with us. He will delegate technical repairs later in the year to the techs working in the leased office space, and will also train them in his method of direct phone support.

Jack has worked extensively with computer technicians and support staff in the past, and knows that they work best when given free rein within a set of mutually-agreed-upon guidelines. The first week of each tech’s employment will be dedicated to helping them understand PC Repair’s guidelines:

  • the customer needs help, and we’re here to help them;
  • the customer is frustrated, upset, or confused – but that doesn’t make the customer a problem;
  • the customer needs reassurance as well as solutions.

Within this framework, the techs can solve the customer’s problem the best way they see fit – Jack is not a micro manager

Personnel Table

2018 2019 2020
Owner $50,400 $51,408 $52,436
Tech 1 $45,600 $46,512 $47,442
Tech 2 $43,200 $44,064 $44,945
Part Time (0.67) $30,000 $30,600
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Financial Plan

Forecast

Key assumptions

PC Repair’s customer base would fluctuate if there was a recess in the economy or other extenuating circumstances that pertain directly to consumer or industry behavior. However, given the steady increase in computer users despite the recent recession, we assume that sales forecasts are unlikely to be dramatically altered by economic events. The table below shows some of our other assumptions

Revenue by Month

Chart visualizing the data for Revenue by Month

Expenses by Month

Chart visualizing the data for Expenses by Month

Net Profit (or Loss) by Year

Chart visualizing the data for Net Profit (or Loss) by Year

Financing

Use of funds

Our Startup Funds are: 

  • Legal $650
  • Website $350
  • Business Cards $100
  • Insurance $150
  • Uniforms $300
  • CPA $250
  • Advertisement $1,000

TOTAL START-UP EXPENSES $3,000

 

Sources of Funds

Jack Hacker will put in $23,000 to start; and will take out a $20,000 loan.

Statements

Projected Profit and Loss

2018 2019 2020
Gross Margin $240,534 $249,676 $263,326
Operating Expenses
Salaries & Wages $139,200 $171,984 $175,423
Employee Related Expenses $27,840 $34,397 $35,084
Rent $38,400 $38,400 $38,400
Marketing $8,820 $9,156 $9,660
Insurance $2,400 $2,400 $2,400
Utilities $3,000 $3,000 $3,000
Amortization of Other Current Assets $0 $0 $0
Interest Incurred $701 $100
Depreciation and Amortization
Gain or Loss from Sale of Assets
Income Taxes $3,026 ($1,464) ($96)
Total Expenses $423,853 $466,097 $483,545
Net Profit $17,147 ($8,297) ($545)

Projected Balance Sheet

Starting Balances 2018 2019 2020
Cash $29,000 $67,322 $47,076 $49,377
Accounts Receivable $0 $0 $0
Inventory $1,000 $1,000 $1,000 $1,000
Other Current Assets $10,000 $10,000 $10,000 $10,000
Total Current Assets $40,000 $78,322 $58,076 $60,377
Long-Term Assets
Accumulated Depreciation
Total Long-Term Assets
Accounts Payable $24,490 $23,822 $24,923
Income Taxes Payable $2,170 ($1,464) ($96)
Sales Taxes Payable $7,686 $6,867 $7,245
Short-Term Debt $13,171 $6,829
Prepaid Revenue
Total Current Liabilities $13,171 $41,175 $29,225 $32,072
Long-Term Debt $6,829 $0 $0 $0
Long-Term Liabilities $6,829 $0 $0 $0
Paid-In Capital $23,000 $23,000 $23,000 $23,000
Retained Earnings ($3,000) ($3,000) $14,147 $5,850
Earnings $17,147 ($8,297) ($546)

Projected Cash Flow Statement

2018 2019 2020
Net Cash Flow from Operations
Net Profit $17,147 ($8,297) ($545)
Depreciation & Amortization $0 $0 $0
Change in Accounts Receivable $0 $0 $0
Change in Inventory $0 $0 $0
Change in Accounts Payable $24,490 ($668) $1,101
Change in Income Tax Payable $2,170 ($3,634) $1,368
Change in Sales Tax Payable $7,686 ($819) $378
Change in Prepaid Revenue
Investing & Financing
Assets Purchased or Sold
Investments Received
Dividends & Distributions
Change in Short-Term Debt ($6,342) ($6,829)
Change in Long-Term Debt ($6,829) $0 $0
Cash at Beginning of Period $29,000 $67,322 $47,076
Net Change in Cash $38,322 ($20,247) $2,302
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