Electronics Repair Store Business Plan
Tucson is a start-up business located in the West end of Tucson Arizona. The company specializes in the repair and sales of home electronics, specifically home entertainment electronics, including TV, DVDs VCRs and CD players.
We will target people who place great importance in their entertainment equipment and own higher-end electronics, where repairing them would be more cost effective than replacing them. Many low end VCRs for example, are priced so low, people find it more cost effective and convenient to purchase a new product than to get the existing one repaired.
The company is owned and managed by James Munroe, a retired Navy Commander with a degree in electrical engineering from the University of Texas-Austin. He is a certified electronics technician with various brand companies. He will also employ his son to help with running and growing the business.
Tucson Electronics (TE) is a growth-oriented business. Its ten year goal is to become a regional leader in TV/VCR/home stereo repair, with shops in the Tucson and Phoenix area. With this in mind, the objectives over the next three years for Tucson Electronics are the following:
- Achieve steady growth in sales revenues by year three.
- Achieve local market share (in the Tucson area) of approximately 20% by year five.
- Expand product line to include authorized satellite service installation and new home entertainment electronics sales.
The mission of Tucson Electronics is to provide high quality, convenient and comprehensive TV/DVD/VCR and home electronics repair at a low cost. The most important aspect of our business is trust. It is the goal of our firm to have 100% customer satisfaction in regards to quality, friendliness and time to completion, and discover new ways to exceed the expectations of our customers while doing so at the lowest possible cost.
1.3 Keys to Success
In the TV/VCR repair industry a company builds its client base one customer at a time and mostly through established marketing practices (ads, billboards, etc.). With this in mind, the keys to success for Tucson Electronics are:
- High-quality work.
- Attention to professional appearances at all times.
- Knowledgeable technicians that are friendly, customer oriented, and will take the time to explain to customers the intricate nature of our business and our work.
- Maintaining a highly aggressive managerial oversight on costs to provide our services at the lowest price.
Tucson Electronics is envisioned to be the low cost leader in TV/DVD/VCR and home stereo repair for the Tucson area that will also be able to eventually provide satellite TV installation/servicing and new electronics sales, making it the local leader in comprehensive electronic sales/services.
The company will be a sole proprietorship registered in the state of Arizona and owned by Mr. James Munroe. The firm will have facilities on 530 W. Prince Ave. The initial facilities will contain a sales area, repair room in the back of the shop, office space and storage for parts and equipment. The company is seeking a loan in order to finance the start of operations for the company. The owners will be putting up additional capital of their own as equity.
2.1 Start-up Summary
The data obtained for the start-up table comes from research done in the Tucson area with other small electronics shops who have started their own business, in addition to Mr. Munroe’s previous experience within the industry. Inflation has been taken into account between the estimates of these fellow business owners (and when they started) and the current prices for expensed items. Much of the equipment to go into the facilities such as tools, are currently owned by Mr. Munroe.
Products and Services
Tucson Electronics offers a wide range of services as outlined in the detailed sections below. It is ultimately the goal of the company to offer a one-stop facility for all home entertainment needs, including both sales and servicing. In this way the company can offer greater perceived value for the customer than many other shops which only offer sales or services.
The industry is highly competitive with suppliers having a great deal of power in setting and negotiating the prices of their products and services to repair shops. In addition, because the customers see the service as undifferentiated and a “commodity” with little value separation between competitors, buyer power is also very high. Finally, the barriers to entry are moderately low, and the large number of competitors in this field, including substitutes (such as do-it-yourself work) mean that the pricing for such services is very competitive. The only way to have an advantage in this industry is a low cost leadership principal applied aggressively or to create higher switching costs through the building of strong business-to-customer ties. It is the aim of Tucson Electronics to create a competitive advantage through both the low cost strategy and by offering greater value through its broader product and service line.
Tucson Electronics will initially have only one factory trained and certified technician in the person of Mr. Munroe. As the company grows and expands, Mr. Munroe will hire trained and certified technicians who are able to prove they have superior customer awareness and interaction. It is the company’s professional people who will fulfill the firm’s contracts and goals. The largest part of the company’s expenses will be in labor costs.
3.1 Product and Service Description
Tucson Electronics provides a wide range of home entertainment repair services. These include:
- Repair and cleaning of home and car stereos and CB radios.
- Repair and cleaning of TVs.
- Repair and cleaning of VCRs and DVDs.
- Sale of used TVs, stereos, VCRs and DVDs.
- Free estimates on repair jobs.
- Authorized warranty servicing on all major brands of home entertainment systems.
- House calls and free pickup and delivery.
Future products and services that Tucson Electronics will prepare to institute include TV/VCR/DVD rental, satellite TV installation and servicing, sales of new TVs, DVDs, VCRs and stereos, and repair/sale of microwave ovens. Mr. Munroe is also investigating the possibility of offering a new product line of home entertainment cabinets at some future date.
Tucson Electronics will be obtaining most of its parts through established dealers and directly through the manufacturers of the relevant electronics. As part of the company’s low cost strategy, the company will seek to purchase parts in large quantities whenever possible to take advantage of volume discounts. In addition, the company will aggressively seek to procure its parts from local suppliers in order to start forming close relations with such companies. It is the ultimate aim of Tucson Electronics to form strategic partnerships with such companies in order to lower overall costs of parts.
A large part of Tucson Electronics enhanced services will be free pickup and delivery of electronics to a person’s home. Mr. Munroe’s cousin, Mr. Thomas Porter, owns Caesar Courier Services, a local company providing pickup and delivery services. Mr. Porter has agreed to provide these services to Tucson Electronics’ clients at discounted prices to Mr. Munroe.
The technological revolution in computers has enhanced our abilities to diagnose and repair our clients home electronics. Tucson Electronics will remain on the cutting edge by instituting the use of computer diagnostic equipment in its shop. The company will continue to seek new ways to provide a better service through technology.
3.4 Competitive Comparison
The electronics repair industry is highly competitive. Each company within this field has high labor costs, low margins, and a high intensity of competition.
Suppliers have a great deal of power in setting and negotiating the prices of their products and services to repair shops. This is due to the fact that the suppliers who absorb the greatest amounts of cash from repair shops are large electronic manufacturing companies such as Panasonic, Emerson, Toshiba, etc. These companies are more consolidated than the repair industry, have deeper pockets, an almost limitless number of substitute customers, and finally they are the single most important supplier to the electronic repair industry. Therefore, these companies can set whatever price they wish to. Furthermore, labor is the single most important expense in this industry, and salaries for such individuals are well known and not very flexible.
In addition, because the customers see the service as undifferentiated and a “commodity” with little value separation between competitors (if they offer a suitable level of quality) buyer power is also very high. Additionally, the costs of our services are not cheap, and buyers are willing to search for the most favorable combination of price and acceptable service.
The barriers to entry and exit are moderately low in this industry. Switching costs are virtually non-existent and the costs to entry and exist the market are low. The large number of competitors in this field including substitutes mean that pricing for such services are very competitive. The only way to have an advantage in this industry is a low cost leadership principal applied aggressively to all aspects of the business or to build up customer relations to a point where the switching costs are raised.
Based on this analysis, Tucson Electronics will pursue a low cost leadership strategy as its primary competitive advantage. Furthermore, the company will simultaneously build up its product and service line to take advantage of the limited opportunity to create higher switching costs through enhanced value creation and to spread out costs.
3.5 Future Products and Services
Future products and services that Tucson Electronics will prepare to institute include TV/VCR/DVD rental, satellite TV installation and servicing, sales of new TVs, DVDs VCRs and stereos, and repair/sale of microwave ovens. Mr. Munroe is also investigating the possibility of offering a new product line of home entertainment cabinets at some future date.
Tucson Electronics will start implementing these new products or services in the following time periods:
- Repair/sale of microwave ovens (3rd Qtr 2004).
- Satellite TV installation and servicing (3rd Qtr 2005).
- TV/VCR/DVD rental (2nd Qtr 2006).
- Sales of new TVs/DVDs/VCRs (4th Qtr 2006).
The capital investment needed for such expansion will primarily come from the company’s accumulated operating cash account. It is anticipated that some of these product/service expansions that require significant inventory, such as new sales, may require additional cash inflow such as loans. The company will be preparing proposals for various lending institutions in anticipation of this need.
Presently the product that is really driving the electronics repair market is computers. While Tucson Electronics is not currently positioned to take advantage of this situation, it is the long-term goal of Tucson electronics to incorporate computer repair services within the company. Once the firm is able to generate enough cash to retain the services of a computer repair technician, the company will evaluate the viability of such a move. It is anticipated that this service will be offered sometime after 1st Qtr 2007.
Market Analysis Summary
There are approximately 332,500 households in the greater Tucson area, which includes suburbs such as Green Valley, Ina, and South Tucson. Virtually all of these households have TVs, VCRs, etc. Tucson Electronics segments its market into product categories that reflect the estimated number of each electronic device currently being used in the greater Tucson area, since each of these devices may fail at any time and require our services. In addition the growth rate of each product emplaced in the home is based on the current sales growth of each product. Presently, the fastest growing product, in terms of sales, is the DVD player. It is anticipated that the DVD will replace the VCR within the next three to five years as movie rental stores replace their existing VHS movies with DVD. The largest segment is the home and car stereo segment, since usually a household has more than one of these systems. The company will be focusing on servicing all of these systems, and not focusing on one over the other.
4.1 Market Segmentation
Tucson Electronics has segmented the households in the Tucson area as follows:
- Couples with children.
- Couples without children (including Baby Boomers).
- Retired people.
- Students living in multi-unit housing.
- Single people living alone.
- Single people living with roommates.
Tucson will target the following segments.
- Middle class couples without children. This group will tend to have a higher disposable income since they have two incomes but do not have the expense of children. They prioritize socializing and spend a fair amount of time entertaining in their home and in the homes of their friends. For this reason they will spend more on their electronic equipment.
- Single men living alone or with roommates. This group is not the largest segment for us, but potentially one of the most profitable, since single men tend to prioritize their home entertainment equipment. They will spend a greater percentage of their income on high-quality TV and stereo equipment.
- Baby boomers. Baby boomers are reaching the age where their children have left home and they have more disposable income than when their children were young and living at home. They are more tech savvy than the generation before them and appreciate the good things in life. They like to spend time in their homes, now that the children are out of the house.
4.1.1 Market Trends
The market demand for electronics repair has been relatively stable over the past decade. With the advent of DVD players, the market is seeing more highly trained technicians needed. As technology progresses, long-term planners within this market expect to see new opportunities for electronics repair quickly arise. Such devices as cellular telephones, PDAs and other new electronics may have a role to play in the people who have a broad vision in this field.
4.2 Service Business Analysis
Much of the electronics repair industry analysis is contained in the competitive comparison section. However, the key points are that the industry is highly competitive and that most firms have little power to affect the forces that influence them or to affect the price levels that the market determines. In essence, Tucson Electronics operates in a purely competitive environment where the demand curve is horizontal. In other words the company is free to service electronics at maximum capacity without effecting the price or demand for its services. With this type of environment, and with customers seeing such services as a “commodity” the only strategy open to companies in this field is the low cost leadership approach.
Tucson Electronics is fortunate in that Janet Munroe, Mr. Munroe’s wife works in cost analysis for Wal-Mart, one of the country’s best low cost companies. Mrs. Munroe has agreed to furnish cost analysis services to Tucson Electronics for free.
The low cost leadership strategy will not be simple to achieve. Realistically speaking, because of the fragmented nature of the industry, Tucson Electronics will only seek a low cost leadership in the Tucson region for the first seven to ten years of operations. In order to capture this position and achieve its benefits of high market share and profitability, the company is expected to have higher start-up costs and lower profits within the first few years as the company invests in better and more efficient facilities and equipment than most competitors and engages in aggressive pricing to capture market share. The company will rigorously evaluate every aspect of the company to improve efficiency and lower costs. Mrs. Munroe is preparing an analysis of the company’s value chain and cost drivers to identify where costs can be lowered and which aspects of the business Mr. Munroe must focus on. It is expected that management will expend a great deal of energy in cost management and the reduction of things such as marginal customer accounts and marketing expenses. Once in operation, management will concentrate on developing established procedures that will create the most effective service experience. Finally, as part of this low cost leadership strategy, the company plans to vertically integrate to include original sales and broad services that will spread costs and serve all major customer types so as to build volume.
4.2.1 Competition and Buying Patterns
Customers traditionally purchase services in this industry because of effective advertising and reputation. The customers wish to be reassured that they will receive prompt and reliable service and have an understanding service representative will listen to their problems and seek to solve them in a fast and professional manner. Therefore image during the entire service experience is crucial to maintain word-of-mouth marketing and keep a low curn rate. Currently the largest problem that faces small firms is product/service awareness. By the use of effective and widespread advertising, Tucson Electronics expects to be able to capitalize on the weakness of the the “mom and pop” outfits style of passive promotion (such as Yellow Page ads) and to leverage greater product awareness into higher market share. There is no seasonality to this industry although there is some slight increase in servicing sales during the Christmas season.
4.2.2 Business Participants
As stated before, the electronic repair industry is highly fragmented. In fact, there are so many small providers that any company in this industry is facing a purely competitive environment. Approximately 23,700 electronic repair firms exist in the country today. Firms within this field range in sizes from the “mom and pop” outfits such as Dave’s Electronics and Kachina Repair in downtown Tucson to regional companies like Magnolia Hi-Fi and the national chains such as Circuit City. Not all of these firms are purely repair outfits. In fact all of the larger firms make the majority of their revenue in original sales. It is these companies that have the largest market share and have the opportunity to compete by differentiating on customer service or product/service range.
As stated before, Tucson Electronics will seek a low cost leadership approach in the local Tucson region first. Its goals are not to directly compete with the larger companies who could effectively out compete Tucson Electronics. Instead, the company will seek to outprice the local “mom and pop” outfits and acquire their market share in order to then compete with the regional firms. There are eight such “mom & pop” firms that will be Tucson Electronics’ main competitors in its first few years of operation. They are:
- Dave’s Electronics.
- Kachina Repair.
- Cactus Repair and Appliance.
- Miller TV.
- Robb’s Repair.
- Sam the TV Man.
- Teletron Service Co.
- Ferndale TV Shoppe.
E-commerce Internet Sample Business Plan
With a business plan similar to this your E-commerce and Internet company will be off to a good start.
E-commerce Internet Business Plan
Popular culture is no longer regional. The advent of cable television, syndicated radio programs, and the Internet has created a world where a fashion statement in New York will be on the streets in a small midwestern town in a matter days. The speed of our telecommunication system has increased young customers’ expectations and demands for products that represent their own cultural statement.
FireStarters will offer young customers, in small towns and communities around United States, the youth-oriented products and clothing that are popular nationwide but not available locally.
The difference between FireStarters and other youth-oriented e-commerce websites is that FireStarters is focused only on its small-town America customers. The target customer is a young person, age 11-18, who listens to alternative music and participates in youth sports like skateboarding and snowboarding. Our target customer will look toward alternative clothing trends in large urban areas as their inspiration. FireStarters will exclusively advertise in small communities with populations between 100,000 and 150,000 residents. Communities of this size already have small youth-oriented businesses, like skateboard shops and alternative CD stores, that FireStarters can utilize to promote its product line.
The mission of FireStarters is to offer distinctive youth-oriented fashion and products to small-town America.
1.2 Keys to Success
- Accessible website that is entertaining to surf. Like a trip to your favorite store where you always find something new that you want.
- Excellent vendor relationship that will facilitate quick shipment of orders.
- Establish an effective strategy for advertising in the communities’ youth-oriented businesses.
- Create a store image that our target customers sees as both attractive and trendy.
FireStarters will offer youth-oriented products and clothing, online, that are popular nationwide but not available locally. Jill Stranton and Bobbi Hanson, co-owners of FireStarters, will create a cost-effective operation that will quickly ship clothing and product purchases to the customer.
FireStarters will focus on marketing products to its target customers in small cities with populations between 100,000 and 150,000 residents. The key to marketing strategy will be staging events that will increase the visibility of the online store with the target customer base. We will use existing local businesses that serve the same target customer base to co-sponsor these events.
2.1 Company Ownership
Jill Stranton and Bobbi Hanson are the co-owners of FireStarters.
2.2 Start-up Summary
The start-up costs of FireStarters consists of product inventory, creating a promotion campaign and establishing its website. FireStarters is funding start up with owner investments and a long-term business loan.
FireStarters will offer young customers the following youth-oriented products and clothing:
- Dresses and skirts.
- Time pieces.
Market Analysis Summary
According to the U.S. Census Bureau the population of teens (age 12-17), in 1999 was 23.4 million, which represents 8.6% of the total U.S. population. Teenagers influence $324 billion in spending annually, have $151 billion in disposable income, spend $24 billion annually, and will spend $1.2 billion online by 2002. Teens spend an average of $82 per week on entertainment, fashion, food, and technology. These young people dubbed “Generation Y” dominate almost all facets of popular culture and are the fastest-growing demographic under age 65.
Specialty youth clothing and products has grown into a billion dollar niche in the clothing industry. The popularity of the Internet with young people has been well documented and has generated the launching of a number of online stores by companies selling to that market segment. Most of these stores have retail outlets in large urban areas that serve as the promotional vehicles for online shopping.
The Internet is an accessible shopping tool for our target population. 64% of teens nationwide use the Net at home. The majority of teens, 55%, consider using the Internet better than watching TV. Families with teens are more likely to have Internet access than other households.
Online shopping by teenagers between 13 to 18 years in age is expected to total about $300 million this year (2000) and is accelerating at about twice the rate of online shopping by adults. By 2003, teenagers are expected to spend $2 billion annually online. By 2004, a clear majority of young consumers will shop online. The top five purchases made by teens [online], based on sales volume, are CDs/cassette tapes, clothing, books, computer software, toys and clothing.
4.1 Market Segmentation
Over the past ten years, there has been a profound change in population dynamics in the U.S. The non-metropolitan population has been growing at almost the same rate as the urban population. The West Coast, Midwest, and the Northeast have the largest growth rate. Today, there are millions of young people who don’t live near a large urban center that offers the diversity in clothing products that the youth culture demands. This has created a small market niche for businesses to sell clothing and products to young people who live outside the urban areas. This is particularly true in communities with a major college located in the community.
Currently, only regional malls offer access to the fashion and styles that young people want. Unfortunately, the focus of these mall stores is only on the mainstream of the youth market. Alternative clothing and products are rarely available outside the urban area. This is true because the companies that create the clothing and products are small and sell primarily through urban specialty shops.
FireStarters will capitalize on the following characteristics of Generation Y:
- Subculture Affiliation: Though rebellious, teens also want to blend in and be accepted by peers. They seek a community of peers to welcome them in, as well as help them stand out.
- Attitude: Teenagers wear attitude like a uniform to give definition to their identity. This extends to clothing, hair style and the type of music listened to in public. They also react to humor, silliness, and irreverence more easily than to other styles.
It is FireStarters’ plan to bring alternative fashion and products to small-town America via the Internet. We will create a business identity that will capitalize on the subculture affiliation and attitude of our target customers.
FireStarters will focus marketing on two type of non-metropolitan communities:
- Non-metropolitan communities with populations between 100,000 and 150,000 residents.
- Non-metropolitan communities with a major college and population of at least 80,000.
Computer Repair Business Plan
This sample business plan will guide you with regards to successfully starting your own computer repair business.
Computer Repair Business Plan
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.
PC Repair was initially formed as a sole proprietorship, but was reconfigured as an S Corporation in December of 2004. PC Repair will at first be a home office start-up, utilizing one studio room in the owner’s home and serving customers in the local Ramsford-on-Bitstream area.
In the third month of our plan, we will move into a leased office space and hire a second technician. As sales increase, we will hire additional personnel.
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.
Start-up Funding and Financials
To get PC Repair started the owner is providing cash and assets. We are also seeking a short-term loan, to be secured with the owner’s home equity, and repaid within three years.
Our conservative sales forecasts, based on industry research within the local area, project hefty sales in year one, steadily increasing through year three. To reach these goals, we will use an aggressive advertising campaign to exploit our competitors’ weaknesses.
With 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.
- To provide the best service available to the community at an affordable price.
- To generate substantial market share so that PC Repair is a common name.
- Constant growth in sales from start up through year three.
- To generate customer satisfaction so that at least 40% of our customer base is repeat business.
Our goal is to 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.
1.3 Keys to Success
- 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.
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.
2.1 Company Ownership
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.
2.2 Start-up Summary
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.
Related: 21 Steps To Start-Up
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.
PC Repair will offer computer repairs, training, networking and upgrade service to clients in two major categories: home PC users and small business users. As PC Repair and the client demands grow, we will offer software development to our business clients.
From the very first day, we will offer on-site repair and consulting services, so that our clients don’t need to take time out of their busy days to haul a computer in to our workshop. This is the single biggest frustration Jack has seen among small business owners needing computer help.
Much of our diagnostic equipment is portable, and we will remove a PC to our workshop only when the problem requires more detailed diagnosis or repair. We will also offer free pick-up and delivery of PCs needing repair. To meet the growing demand for this service, we will purchase a company vehicle in the third month.
We will also offer extended maintenance contracts, so that business clients can deal with technical support and repair needs as a single line-item expense, rather than having to plan for unexpected crashes and problems with a rainy-day fund they may never use. Maintenance contracts yield a high gross margin for us, and provide peace of mind for the customer.
We will offer limited software support (installation and compatibility issues), and focus on hardware and networking support – this is a vital distinction, since software is evolving much more rapidly than hardware, and our clients will have such diverse software needs that we couldn’t possibly keep up with all of them.
We will encourage clients to register their software and use the software’s own support options to their full potential. We will, however, keep up to date with multiple operating systems and networking developments, working with clients to make sure they have the most appropriate combinations of hardware, OS, networking, backup systems, and software.
Backup and security are becoming higher priorities for all our potential customers, as internet usage (and its pitfalls) becomes more common, and as more and more daily records are stored electronically.
Market Analysis Summary
PC Repair will provide computer support in both a consulting and technical capacity to small business owners as well as home PC users. Since PC Repair is currently a one man operation, its growth in the first three months will be limited by the owner’s capacity to complete work.
However, these first three months are critical for establishing our credibility and a reputation for getting the job done quickly and well. We will focus on delivering excellent service, and using the good word of mouth from this initial period to network with other potential clients.
Personal market research by the owner indicates an attractive market niche for our services, of which PC Repair will take full advantage.
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.
National chains, such as “Geeks on Call,” and Best Buy’s “Geek Squad” have seen rapid growth in demand for these services in the last few years. Customers are seeking skilled help with everything from installation of software and hardware components, to networking, to transferring files from an old computer to a new one.
Those who can often enlist their tech-savvy children’s help, but others are not so fortunate, and small-business owners need reliable and quick help with all their computer needs, since every hour down may mean an hour or more of lost revenue, especially for any business with a website or those doing e-commerce.
4.1 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.
4.2 Target Market Segment Strategy
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.
4.3 Service Business Analysis
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.
4.3.1 Competition and Buying Patterns
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:
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.
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.
Internet Cafe Business Plan
By using this sample business plan you can see what goes into starting an internet cafe.
Internet Cafe Business Plan
JavaNet, unlike a typical cafe, will provide a unique forum for communication and entertainment through the medium of the Internet. JavaNet is the answer to an increasing demand. The public wants: (1) access to the methods of communication and volumes of information now available on the Internet, and (2) access at a cost they can afford and in such a way that they aren’t socially, economically, or politically isolated. JavaNet’s goal is to provide the community with a social, educational, entertaining, atmosphere for worldwide communication.
This business plan is prepared to obtain financing in the amount of $24,000. The supplemental financing is required to begin work on site preparation and modifications, equipment purchases, and to cover expenses in the first year of operations. Additional financing has already been secured in the form of: (1) $24,000 from the Oregon Economic Development Fund (2) $19,000 of personal savings from owner Cale Bruckner (3) $36,000 from three investors (4) and $9,290 in the form of short-term loans.
JavaNet will be incorporated as an LLC corporation. This will shield the owner Cale Bruckner, and the three outside investors, Luke Walsh, Doug Wilson, and John Underwood, from issues of personal liability and double taxation. The investors will be treated as shareholders and therefore will not be liable for more than their individual personal investment of $12,000 each.
The financing, in addition to the capital contributions from the owner, shareholders and the Oregon Economic Development Fund, will allow JavaNet to successfully open and maintain operations through year one. The large initial capital investment will allow JavaNet to provide its customers with a full featured Internet cafe.
A unique, upscale, and innovative environment is required to provide the customers with an atmosphere that will spawn socialization. Successful operation in year one will provide JavaNet with a customer base that will allow it to be self sufficient in year two.
JavaNet’s objectives for the first three years of operation include:
- The creation of a unique, upscale, innovative environment that will differentiate JavaNet from local coffee houses.
- Educating the community on what the Internet has to offer.
- The formation of an environment that will bring people with diverse interests and backgrounds together in a common forum.
- Good coffee and bakery items at a reasonable price.
- Affordable access to the resources of the Internet and other online services.
1.2 Keys to Success
The keys to the success for JavaNet are:
- The creation of a unique, innovative, upscale atmosphere that will differentiate JavaNet from other local coffee shops and future Internet cafes.
- The establishment of JavaNet as a community hub for socialization and entertainment.
- The creation of an environment that won’t intimidate the novice user. JavaNet will position itself as an educational resource for individuals wishing to learn about the benefits the Internet has to offer.
- Great coffee and bakery items.
As the popularity of the Internet continues to grow at an exponential rate, easy and affordable access is quickly becoming a necessity of life.
JavaNet provides communities with the ability to access the Internet, enjoy a cup of coffee, and share Internet experiences in a comfortable environment. People of all ages and backgrounds will come to enjoy the unique, upscale, educational, and innovative environment that JavaNet provides.
The risks involved with starting JavaNet are:
- Will there be a demand for the services offered by JavaNet in Eugene?
- Will the popularity of the Internet continue to grow, or is the Internet a fad?
- Will individuals be willing to pay for the service JavaNet offers?
- Will the cost of accessing the Internet from home drop so significantly that there will not be a market for Internet Cafes such as JavaNet?
JavaNet, soon to be located in downtown Eugene on 10th and Oak, will offer the community easy and affordable access to the Internet. JavaNet will provide full access to email, WWW, FTP, Usenet and other Internet applications such as Telnet and Gopher. JavaNet will also provide customers with a unique and innovative environment for enjoying great coffee, specialty beverages, and bakery items.
JavaNet will appeal to individuals of all ages and backgrounds. The instructional Internet classes, and the helpful staff that JavaNet provides, will appeal to the audience that does not associate themselves with the computer age.
This educational aspect will attract younger and elderly members of the community who are rapidly gaining interest in the unique resources that online communications have to offer. The downtown location will provide business people with convenient access to their morning coffee and online needs.
2.1 Company Ownership
JavaNet is a privately held Oregon Limited Liability Corporation. Cale Bruckner, the founder of JavaNet, is the majority owner. Luke Walsh, Doug Wilson, and John Underwood, all hold minority stock positions as private investors.
2.2 Start-up Summary
JavaNet’s start-up costs will cover coffee making equipment, site renovation and modification, capital to cover losses in the first year, and the communications equipment necessary to get its customers online.
Related: 21 Steps To Start-Up
The communications equipment necessary to provide JavaNet’s customers with a high-speed connection to the Internet and the services it has to offer make up a large portion of the start-up costs. These costs will include the computer terminals and all costs associated with their set-up.
Costs will also be designated for the purchase of two laser printers and a scanner. In addition, costs will be allocated for the purchase of coffee making equipment. One espresso machine, an automatic coffee grinder, and minor additional equipment will be purchased from Allann Brothers.
The site at 10th and Oak will require funds for renovation and modification. A single estimated figure will be allocated for this purpose. The renovation/modification cost estimate will include the costs associated with preparing the site for opening business.
2.3 Company Locations and Facilities
A site has been chosen at 10th and Oak in downtown Eugene.
Related: Budgeting for Start-up Success
This site was chosen for various reasons, including:
- Proximity to the downtown business community.
- Proximity to trendy, upscale restaurants such as West Brothers.
- Proximity to LTD’s Eugene Station. Parking availability.
- Low cost rent – $.85 per square foot for 1700 square feet.
- High visibility.
All of these qualities are consistent with JavaNet’s goal of providing a central hub of communication and socialization for the Eugene community.
JavaNet will provide full access to email, WWW, FTP, Usenet and other Internet applications such as Telnet and Gopher. Printing, scanning, and introductory courses to the Internet will also be available to the customer. JavaNet will also provide customers with a unique and innovative environment for enjoying great coffee, specialty beverages, and bakery items.
3.1 Competitive Comparison
JavaNet will be the first Internet cafe in Eugene. JavaNet will differentiate itself from the strictly-coffee cafes in Eugene by providing its customers with Internet and computing services.
3.2 Service Description
JavaNet will provide its customers with full access to the Internet and common computer software and hardware. Some of the Internet and computing services available to JavaNet customers are listed below:
- Access to external POP3 email accounts.
- Customers can sign up for a JavaNet email account. This account will be managed by JavaNet servers and accessible from computer systems outside the JavaNet network.
- FTP, Telnet, Gopher, and other popular Internet utilities will be available.
- Access to Netscape or Internet Explorer browser.
- Access to laser and color printing.
- Access to popular software applications like Adobe PhotoShop and Microsoft Word.
JavaNet will also provide its customers with access to introductory Internet and email classes. These classes will be held in the afternoon and late in the evening. By providing these classes, JavaNet will build a client base familiar with its services.
The computers, Internet access, and classes wouldn’t mean half as much if taken out of the environment JavaNet will provide. Good coffee, specialty drinks, bakery goods, and a comfortable environment will provide JavaNet customers with a home away from home.
A place to enjoy the benefits of computing in a comfortable and well-kept environment.
JavaNet will obtain computer support and Internet access from Bellevue Computers located in Eugene. Bellevue will provide the Internet connections, network consulting, and the hardware required to run the JavaNetwork.
Allann Brothers will provide JavaNet with coffee equipment, bulk coffee, and paper supplies. At this time, a contract for the bakery items has not been completed. JavaNet is currently negotiating with Humble Bagel and the French Horn to fulfill the requirement.
JavaNet will invest in high-speed computers to provide its customers with a fast and efficient connection to the Internet.
The computers will be reliable and fun to work with. JavaNet will continue to upgrade and modify the systems to stay current with communications technology. One of the main attractions associated with Internet cafes, is the state of the art equipment available for use.
Not everyone has a Pentium PC in their home or office.
3.5 Future Services
As JavaNet grows, more communications systems will be added. The possibility of additional units has been accounted for in the current floor plan. As the demand for Internet connectivity increases, along with the increase in competition, JavaNet will continue to add new services to keep its customer base coming back for more.
Market Analysis Summary
JavaNet is faced with the exciting opportunity of being the first-mover in the Eugene cyber-cafe market. The consistent popularity of coffee, combined with the growing interest in the Internet, has been proven to be a winning concept in other markets and will produce the same results in Eugene.
4.1 Target Market Segment Strategy
JavaNet intends to cater to people who want a guided tour on their first spin around the Internet and to experienced users eager to indulge their passion for computers in a social setting. Furthermore, JavaNet will be a magnet for local and traveling professionals who desire to work or check their email messages in a friendly atmosphere.
These professionals will either use JavaNet’s PCs, or plug their notebooks into Internet connections. JavaNet’s target market covers a wide range of ages: from members of Generation X who grew up surrounded by computers, to Baby Boomers who have come to the realization that people today cannot afford to ignore computers.
4.1.1 Market Trends
A market survey was conducted in the Fall of 1996. Key questions were asked of fifty potential customers. Some key findings include:
- 35 subjects said they would be willing to pay for access to the Internet.
- Five dollars an hour was the most popular hourly Internet fee.
- 24 subjects use the Internet to communicate with others on a regular basis.
4.1.2 Market Needs
Factors such as current trends, addiction, and historical sales data ensure that the high demand for coffee will remain constant over the next five years. The rapid growth of the Internet and online services, that has been witnessed worldwide, is only the tip of the iceberg.
The potential growth of the Internet is enormous, to the point where one day, a computer terminal with an online connection will be as common and necessary as a telephone. This may be 10 or 20 years down the road, but for the next five years, the online service provider market is sure to experience tremendous growth.
Being the first cyber-cafe in Eugene, JavaNet will enjoy the first-mover advantages of name recognition and customer loyalty. Initially, JavaNet will hold a 100 percent share of the cyber-cafe market in Eugene. In the next five years, competitors will enter the market. JavaNet has set a goal to maintain greater than a 50 percent market share.
4.2 Market Segmentation
JavaNet’s customers can be divided into two groups. The first group is familiar with the Internet and desires a progressive and inviting atmosphere where they can get out of their offices or bedrooms and enjoy a great cup of coffee.
The second group is not familiar with the Internet, yet, and is just waiting for the right opportunity to enter the online community. JavaNet’s target market falls anywhere between the ages of 18 and 50. This extremely wide range of ages is due to the fact that both coffee and the Internet appeal to a variety of people.
In addition to these two broad categories, JavaNet’s target market can be divided into more specific market segments. The majority of these individuals are students and business people.
4.3 Service Business Analysis
The retail coffee industry in Eugene experienced rapid growth at the beginning of the decade and is now moving into the mature stage of its life cycle. Many factors contribute to the large demand for good coffee in Eugene.
The University is a main source of demand for coffee retailers. The climate in Eugene is extremely conducive to coffee consumption. Current trends in the Northwest reflect the popularity of fresh, strong, quality coffee and specialty drinks. Eugene is a haven for coffee lovers.
The popularity of the Internet is growing exponentially. Those who are familiar with the Internet are well aware of how fun and addictive surfing the Net can be.
Those who have not yet experienced the Internet, need a convenient, relaxed atmosphere where they can feel comfortable learning about and utilizing the current technologies. JavaNet seeks to provide its customers with affordable Internet access in an innovative and supportive environment.
Due to intense competition, cafe owners must look for ways to differentiate their place of business from others in order to achieve and maintain a competitive advantage.
The founder of JavaNet realizes the need for differentiation and strongly believes that combining a cafe with complete Internet service is the key to success. The fact that no cyber-cafes are established in Eugene, presents JavaNet with a chance to enter the window of opportunity and enter into a profitable niche in the market.
4.3.1 Competition and Buying Patterns
The main competitors in the retail coffee segment are Cafe Paradisio, Full City, Coffee Corner and Allann Bros. These businesses are located in or near the downtown area, and target a similar segment to JavaNet’s (i.e. educated, upwardly-mobile students and business people).
Competition from online service providers comes from locally-owned businesses as well as national firms. There are approximately eight, local, online service providers in Eugene. This number is expected to grow with the increasing demand for Internet access. Larger, online service providers, such as AOL and CompuServe are also a competitive threat to JavaNet. Due to the nature of the Internet, there are no geographical boundaries restricting competition.
4.3.2 Business Participants
There are approximately 16 coffee wholesalers in Lane County. These wholesalers distribute coffee and espresso beans to over 20 retailers in the Eugene area. Competition in both channels creates an even amount of bargaining power between buyers and suppliers resulting in extremely competitive pricing. Some of these major players in the industry (i.e. Allann Brothers Coffee Co., Inc. and Coffee Corner Ltd.) distribute and retail coffee products.
The number of online service providers in Eugene is approximately eight and counting. These small, regional service providers use a number of different pricing strategies. Some charge a monthly fee, while others charge hourly and/or phone fees. Regardless of the pricing method used, obtaining Internet access through one of these firms can be expensive.
Larger Internet servers such as America Online (AOL), Prodigy, and CompuServe, are also fighting for market share in this rapidly growing industry. These service providers are also rather costly for the average consumer. Consumers who are not convinced they would frequently and consistently travel the Internet, will not be willing to pay these prices.
4.3.3 Distributing a Service
The dual product/service nature of JavaNet’s business faces competition on two levels. JavaNet competes not only with coffee retailers, but also with Internet service providers.
The good news is that JavaNet does not currently face any direct competition from other cyber-cafes in the Eugene market. There are a total of three cyber-cafes in the state of Oregon: one located in Portland and two in Ashland.
Heavy competition between coffee retailers in Eugene creates an industry where all firms face the same costs. There is a positive relationship between price and quality of coffee. Some coffees retail at $8/pound while other, more exotic beans may sell for as high as $16/pound.
Wholesalers sell beans to retailers at an average of a 50 percent discount. For example, a pound of Sumatran beans wholesales for $6.95 and retails for $13.95. And as in most industries, price decreases as volume increases.
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