Computers Reseller Business Plan

Crest Systems is a new Value Added Reseller (VAR). The company is focused on marketing speciality inventory software products to over 1,200 VARs that sell in vertical markets. Each market is distinct and serves a particular speciality industry. In addition to the software, Crest will sell the inventory data collection hardware that will operate the software. Traditionally, VARs who sell to these vertical markets focus solely on the industry’s unique product line or service. Though their customers have inventory controls needs, these VARs have not had a product they could offer until now.

Critical to the product’s success is the ability to sell the customer an inventory management solution that costs less than $5,000. Crest Systems has signed a strategic alliance agreement with Promerit Engineering to sell its software products through these VARs. The first product is Promerit Inventory Basic and will be released in May. Crest Systems projects sales of 20,000 units in 36 months. The product will sell for $850.

The VAR will receive $400 from the sale. Crest Systems will receive $250 on the sale of each unit. Crest Systems will also sell hardware that will use the software. Crest Systems will sell portable data collection units from Symbol and PSC. The cost of the hardware will be between $2,000 to $3,200 per unit. Crest Systems receives between $600 – $900 on each unit. The total package of software and hardware will be less than $5,000.

Though the company is focused on the vertical markets, VARs who sell warehouse are also interested in a low-end data collection solution. Crest Systems will assemble 1,000 plus warehouse management VARs to sell Promerit Inventory Basic.

Crest Systems will also develop specialty software modules that can be integrated with Promerit Inventory Basic software. These modules will sell for $800 to $1,000. Crest Systems plans to solidify a strong business relationship with its VARs customers that will lead to providing additional software and hardware products.

Richard Torres, owner of Crest System, has over twelve years of experience selling to vertical markets. Last year, he was Cycon Systems top salesperson with over $3 million in sales.

1.1 Objectives

The objectives of Crest Systems are to:

• Sell 8,000 units during the first year.
• Establish strong relationships with the VARs critical to sales.
• Build the software module business by 15% each year.
• Maintain effective communication with Promerit Systems in order to improve product quality and customer satisfaction.

1.2 Keys to Success

The keys to success in Crest Systems are:

1. Offering inexpensive inventory control solutions that cost less than $5,000 to implement.
2. Reliable and timely response to VARs’ questions and requests.
3. A reliable administration that is ready to serve VARs, prepare accurate billing, follow-up on orders and other documentation, and maintain a close watch on expenses and collection of accounts receivable.

Crest Systems is a Value Added Reseller (VAR) that is focused on selling low-end inventory software and hardware products. The company markets Promerit Engineering software products to over 1,200 VARs that sell products in vertical markets. In addition, Crest Systems will market the software product to warehouse systems VARs who are looking for a low-end inventory software product.

2.1 Company Ownership

Richard Torres is the owner of Crest Systems. The company will be set up as a C Corporation. It is expected that this form of incorporation will allow room for growth and be an effective vehicle for acquiring additional capital in five to seven years.

2.2 Start-up Summary

The start-up cost of Crest Systems will consist primarily establishing an account receivable system and communication system for salespeople. Richard Torres will invest $50,000. He will also secure a $100,000 loan.

Crest Systems’ products are as follows:

• Promerit Inventory Basic.
• Software modules that integrate Promerit Inventory Basic.
• Data Collection Hardware.

We have a team of experienced and proven salespeople in marketing a company’s products to VARs that serve vertical markets.

There are thousands of small businesses that are dissatisfied with the choice of inventory control products that are available to them. Most of these businesses exist below the water line for software companies. Selling to a market that can only spend $5,000 on an inventory control solution is considered too small a return for the sales activity.

If a salesperson can spend a day winning a $50,000 contract rather than a $5,000 contact, she will disregard the smaller opportunity. Many sales organizations have overlooked this opportunity. If a cost effective method can be established to attack this market, the sales can be enormous.

It is Crest Systems plan to sell to the VARs that serve the vertical markets as well as the VARs that sell warehouse products and services. Crest Systems will sell the hardware directly to customers when the software is purchased by the vertical VARs’ customer. The company will use this opportunity to build purchasing relationships with businesses with growing inventories.

4.1 Market Segmentation

Crest Systems will focus on two customer groups:

• Warehouse Products and Services VARs: These VARs offer warehouse management hardware and software. Though their primary focus is on larger contracts, an inexpensive product focused on the low end of the market will be attractive if the payoff is large enough. The VARs retain $500 on each product sold. There is no other software product that is focused on our target customers that rewards better for the sale.
• Vertical Market VARs: These VARs traditional don’t sell inventory management products to their customers. Inventory control products are not their focus, rather it is whatever item or product particular to that industry that is used in manufacturing or assembly of their final product. Yet they have thousands of customers. If the payoff is large enough, their access to the market would lead to enormous sales. Like the warehouse product VARs, the vertical market VARs would retain $500 on each product sold.

Crest Systems will aggressively market Promerit Inventory Basic to VARs. It is our belief that the payoff to the VARs on each sale will make the product attractive. We will train their salespeople so that they will be successful in demonstrating the products to customers. This will be especially important with vertical market VARs that will not normally offer software products to their customers.

5.1 Competitive Edge

Richard Torres is the competitive edge of Crest Systems. Richard has worked for Cycon Systems for the past ten years. He served as the company’s manager of sales to vertical market VARs.

During the past five years Richard was responsible for over $15 million dollars worth of sales to vertical market VARs. His strength is his customer relation skills and he has been successful in expanding the number of vertical market VARs that bought Cycon System products.

Another competitive edge for Crest Systems is the ability to create specialized software modules for customers that will customize the software. he company believes that one fourth of all software customers will request a customized module to be added to the software after purchase.

5.2 Sales Strategy

Crest Systems’ sales strategy is to take the first 60 days of operation to train VARs and put the resources in place to facilitate sales. We anticipate that sales will begin during our third month of operation.

5.2.1 Sales Forecast

The following is the sales forecast for the next three years.

Richard Torres will manage the day to day operations of Crest Systems.

6.1 Personnel Plan

The personnel plan for Crest Systems is as follows:

• Manager;
• Accounts Manager;
• Sales Staff (3);
• Software Engineer (1).

Crest Systems anticipates that another software engineer will be hired in September of this year.

The following is the financial plan for Crest Systems.

7.1 Break-even Analysis

The monthly break-even point is shown below.

7.2 Projected Profit and Loss

The following table and charts will highlight projected profit and loss for the next three years.

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5045, Computers, peripherals and software, are shown for comparison.