Computer Consulting Business Plan
Calico Computer Consulting is in the process of being formed as a sole proprietorship owned and operated by Doug Burham. This plan is written as a guide for starting and managing this new business and will also serve as the basis for a separate, detailed marketing plan. Following is a summary of the main points of this plan.
- The objectives of CCC are to generate a profit, grow at a challenging and manageable rate, and to be a good citizen.
- The mission of CCC is to provide fast and reliable technical assistance to small office computer users.
- The keys to success for CCC are marketing and networking, responsiveness and quality, and generating repeat customers.
- The initial primary service offered will be hourly technical aid, although retainer contracts and projects will be considered in the future growth.
- The local market for this business, while not new, is wide open for new and expanding consulting firms.
- An initial financial analysis of the viability of this venture shows outstanding promise and results. Several sources note that the computer consulting business is easy to start, requires little up-front capital, and has the potential to be quite lucrative in today’s high tech world.
The objectives of this business plan are:
- To provide a written guide for starting and managing this computer consulting business; a strategic framework for developing a comprehensive tactical marketing plan.
- The intended audience is the owner of this business only; this plan is not intended to obtain financing from outside sources.
- The scope of this plan is to provide detailed monthly projections for the current plan year, and yearly summaries for the following two years.
The objectives of Calico Computer Consulting are:
- Profit – To generate sufficient profit to finance future growth and to provide the resources needed to achieve the other objectives of the company and its owner. (Net profit of at least 45% of sales in first year).
- Growth – To grow the business at a rate that is both challenging and manageable, leading the market with innovation and adaptability. (Grow from 24 billable hours/week at end of Year 1 to 35 hours/week in Year 3).
- Citizenship – To be an intellectual and social asset to the community and environment. (Contribute 5 hours per week as volunteer, contribute 5% of pretax profits to charity).
Calico Computer Consulting’s mission is simple and straightforward:
- Purpose – CCC exists to provide fast, reliable technical assistance to local business/small office/home office computer users. CCC sells solutions & results!
- Vision – By providing fast response, informed expertise, and consistently high quality solutions, CCC generates enough satisfied repeat customers to provide a stable retainer base. This generates sufficient profit to provide a comfortable living for the owner.
- Mission – The short term objective is to start this company quickly and inexpensively, with a minimum of debt. The long term objective is to grow the company into a stable and profitable entity that the owner can easily and comfortably manage.
- Marketing Slogan – “Calico Computer Consulting is your computer paramedic…”
1.3 Keys to Success
The keys to success for Calico Computer Consulting are:
- Marketing and Networking (getting the name out there -TOMA).
- 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).
Calico Computer Consulting will be a start-up venture with the following characteristics:
- CCC will initially be a sole proprietorship.
- The goal will be to start the venture as inexpensively as possible, with no debt financing.
- CCC will be a home office start-up, utilizing one studio room in the owner’s home.
2.1 Start-up Summary
In keeping with the company philosophy of avoiding the use of debt, the goal is to start-up as inexpensively as possible. This is in line with industry figures that show that computer consulting start-ups are ideal entrepreneurial opportunities with very low start-up costs. Total start-up expenses for CCC come to $2,050, all of which will be financed through owner investment.
- Most expenses are typical start-up paperwork fees (legal, accounting, etc.).
- Cash requirements consist of one month’s rent as a reserve.
- $500 for expensed equipment will be used to purchase a new All-In-One printer, fax, answering machine to replace an aging inkjet printer.
2.2 Company Locations and Facilities
This is a home office venture, located in one studio of the owner’s home.
- Computer facilities will initially consist of the owner’s existing system.
- Telephone – one line currently serves the location. A second line for data use should be added soon.
- Utilities are already provided, included in the space rent of $425.
2.3 Company Ownership
Calico Computer Consulting will be created initially as a sole proprietorship, owned and operated by Doug Burham. Incorporation, probably as a LLC, will be explored as a later option.
Calico Computer Consulting will offer small office/home office business owners a quick-response, reliable source of technical help for their computers.
- CCC will offer three main services – Hourly Technical Aid, Retainer contracts for specific skills or systems, and Project consulting.
- There appear to be four main classes of competition, the largest of which consists of individual proprietors and smaller consulting firms such as CCC. The competitive edge for CCC will be to expand on already existing relationships.
- CCC will start with some basic sales literature, including logo and stationary, a brochure, and a basic web page. These will be self-designed and computer generated, of course.
- Fulfillment of services will be provided exclusively by CCC’s owner.
- Technology is obviously a critical component of this business: It will be important to stay up to date on both equipment and knowledge to remain competitive in the future.
3.1 Service Description
Calico Computer Consulting will offer three main services, corresponding to what industry experts have identified as the primary opportunities in computer consulting:
- Hourly (Temporary Technical Aid) – The less traditional sort of short term assignment helping a company solve a software or hardware related problem. Includes both emergency and non-emergency technical assistance.
- Retainer (Specific Skill) – The more traditional form of consulting, including regular system maintenance, software and hardware upgrades, and network administration. The owner’s particular area of expertise is in management consulting with regard to MIS.
- Project (Bail-out or Specific Skill) – This will include such things as consulting on major purchases, system/network installation and testing, and major disaster recovery.
3.2 Sales Literature
Calico Computer Consulting will start with some basic self-generated literature to establish initial positioning:
- Logo and theme – A national catalog sales paper goods company has a wonderful line of blank papers with a computer theme that will serve as the “look” for CCC. A graphic artist friend of the owner has already commenced work on a matching logo.
- Stationery – The theme paper is available in various formats for use as company stationery.
- Brochure – Likewise, pre-printed paper is available, along with software templates for generating brochures
- Web Presence – Eventually a website will be developed as an “electronic brochure” as well as a resource site for the owner’s established client base.
- Response Templates – As common problems/solutions are encountered and solved, a set of standardized templates for initial responses will be developed. This will shorten response time and eliminate confusion in providing quick solutions to routine issues.
The fulfillment of services for CCC is provided by the owner. The ultimate deliverable is the owner’s expertise and problem solving ability, coupled with an open mind and ease of communication that will result in the customer’s complete confidence in immediate and lasting results.
3.4 Competitive Comparison
There seems to be four major classes of competition in the local computer consulting industry:
- In-house MIS consultants – Usually employed by larger companies that can afford the fixed cost of a salaried or hourly employee.
- Individual proprietors & smaller consulting firms – As noted elsewhere in this plan, the bulk of Yellow Page advertisements are comprised of this group.
- Larger network and telecommunications consulting firms – Large, known-name companies such as Network One that specialize in providing total MIS services to larger companies that choose to outsource.
- Computer and electronics stores offering consulting services.
Of course, Calico Computer Consulting fits into the largest group as a sole proprietorship. The primary reason that customers would buy from CCC rather than competitors is the existing relationships that exist. Customer loyalty and satisfaction are the way to success for small service businesses such as this.
Technology is, of course, vital to the success of Calico Computer Consulting. It is imperative that the owner stay up-to-date on the latest technological developments in the computer industry. In addition, it will be important to devote a reasonable portion of each year’s revenues toward upgrading the equipment and software used by CCC in its normal operations.
Market Analysis Summary
Calico Computer Consulting will adopt a fairly intently focused market strategy.
- A logical segmentation breaks the market down into the following: Home Office Businesses, Small Businesses, Medium Businesses and Large Businesses. Descriptions are provided below.
- The largest and most logical target markets for CCC are the Home Office and Small Businesses. These businesses mostly have a need for temporary technical aid, usually billed at an hourly rate. Some opportunity does exist, however, for retainer and/or specific project contracts.
- While there are a fair number of competitors in the local area, they seem to be widely specialized and widely sized, leaving ample opportunity for CCC to create and expand a niche in the chosen market segments.
- Finally worth noting is the growth trend for this market, estimated at around 9 to 10 percent annually through the beginning of the next century.
4.1 Target Market Segment Strategy
Entrepreneur Magazine suggests six market segments as a starting point:
- Businesses not using computers
- Small entrepreneurial businesses using one or more computers
- Small to medium sized corps using computers on networks
- Large corps seeking problem-solving assistance (trouble-shooting) with specific projects
- Government agencies, corporations, and other organizations in search of computer training
- Businesses in search of custom computer programming services
Calico Computer Consulting will focus on the top market segments only – an intently focused marketing strategy.
4.1.1 Market Trends
Three primary market trends seem to be most important in this industry:
Trend #1 – most important -rapid growth in technology, need for continuous upgrades in both hardware and software.
Trend #2 – moderately important -predicted continued growth in consulting/outsourcing – companies being unwilling to pay fixed costs of salaries, choosing instead to treat computer upgrades and repair as variable costs.
Trend #3 – least important – rapid growth in ratio of SOHO businesses to traditional medium sized businesses.
These trends are predicted by industry experts to continue well into the next century.
4.1.2 Market Growth
As noted in the previous section, several factors are predicted to continue well into the next decades, not the least of which are the growth rates for this market:
- Growth rate citation – Entrepreneur Magazine says that the consulting industry in general will continue to grow at an annual rate of 9.1%
- Growth rate citation – Census data for each identified segment in the Lane County area roughly parallel this growth rate.
- Growth rate citation – Eugene Chamber of Commerce published data supports the Federal Census data, predicting continued and rapid growth particularly in the small office/home office market segment.
4.1.3 Market Needs
According to Entrepreneur Magazine, experts in the consulting industry have identified three different opportunities that exist for computer consultants:
1. Temporary Technical Aid-Short term assignments finding solutions for businesses – this is noted as the largest market
2. Specific Skill – the largest area is software specialty, the second largest area
- System setup & purchasing guidance
- Systems reengineering/optimization
- Network Admin
- Database/Application development
- Data Storage
- Disaster Recovery
- Security/Data Protection
3. Bail-Out (Trouble shooting)-According to Entrepreneur Magazine, private home computer users are NOT a viable market for computer consultants.
4.2 Service Business Analysis
The computer consulting business for the local area is already well established, yet still allows ample opportunity for entry and growth for new participants. This is supported by the following points:
- While there already exists a large number of consultants, there is also a wide range of sizes and specialties. This leaves plenty of opportunity for CCC to find and develop a particular niche.
- Customers in this industry tend to be loyal, relying on the same consultant for future needs once a relationship has been established.
- An analysis of CCC’s main competitors shows no overwhelming strengths that would be significant barriers to CCC’s success. Likewise, identifying competitor’s weaknesses has illuminated several areas that CCC can target as marketing strategies.
In short, this business arena, while no longer brand new, is far from exhausted as an opportunity for a new and aggressive company or sole proprietor. By utilizing a logical and comprehensive marketing approach, CCC should easily find success in the computer consulting business.
4.2.1 Business Participants
A search of the local Yellow Pages revealed the following:
- Under the heading Consultants – Computer & Data Processing there were a total of four listings
- Under Computers – Service & Repair there were 51 total listings, the majority of which seemed to be stores or companies
- Under Computers – Software & Services there were 88 total listings. Thirteen of those were large companies such as [name omitted], [name omitted], and [name omitted] (a Portland firm). Sixteen were specialists in accounting software that listed CPA’s on their staff.
- Under Computers – System Designers & Consultants there were 45 total listings. About half had larger listings and/or company names that implied larger size. Throughout all the listings, only four were clearly listed as individual practitioners. The most unique (and catching) name amongst all listings was “[name omitted].”
The conclusion is that while there a fair number of competitors in the geographic area, they are widely specialized and widely sized. Many of the larger participants appear to cater to larger clients, thus leaving plenty of opportunity for Calico Computer Consulting to focus on its chosen market segments.
4.2.2 Main Competitors
Below are examples of a brief analysis of CCC’s main competitors.
1. Competitor 1 [name omitted]
Top strength – A very memorable name that will stick in customer’s minds.
Primary weakness – a focus primarily on one operating system (not used by businesses).
2. Competitor 2 [name omitted]
Top strength – Longevity and experience, someone who has been in the business locally a long time.
Primary weakness – Slow response and an unwillingness to take on new customers.
A much more comprehensive discussion of these strategies is presented in the CCC Marketing Plan (written in Marketing Plan Pro).
4.2.3 Competition and Buying Patterns
As noted above, the local computer consulting industry is fragmented, with a wide variety of sizes and specialties. Two general factors of competition immediatly show up in the analysis:
The larger competitors seem to be grouped into two main categories: those who provide network expertise to large companies, and those who provide “consulting” service to products they sell.
Of the smaller sized companies, about half still seemed to favor larger businesses as their clients.
Customer buying patterns also highlight the opportunity for Calico Computer Consulting. While larger companies tend to hire larger consulting firms, the home business/small business owner tends to favor the personal relationship that can develop with the smaller consulting firm. Several small business owners interviewed for this research admitted being intimidated and overwhelmed by the prospect of calling a larger firm to come “rescue them.” They much preferred calling a person they already knew for help.
This leads to another very important buying pattern. Customers who have established a relationship with a computer consultant tend to stay very loyal as long as the service and results remain acceptable. This will be critical to the success of a new company like CCC.