Office Equipment Rental Business Plan

House of Projectors (HOP) is an Ohio based Limited Liability Corporation (L.L.C.) start-up business that provides Liquid Crystal Display (LCD) computer projectors for rent. The company has been formed and will be run by John Laaklytte, a veteran of the computer rental industry. HOP has identified three distinct market segments that they will target. The first segment is entrepreneurs. Entrepreneurs are often in need of projectors when they are making presentations to angel and venture capital investors. These days a projector is a standard for professional presentations, generally PowerPoint based presentations. This customer segment has a 9% growth rate with 33,243 potential customers. The second segment is small size companies which can be defined as companies with less than 15 employees. These companies have the need for a projector, but do not use it frequently enough to justify the high capital expense. The group has a 7% growth rate with 5,423 potential customers. The last group is medium size companies with 15-50 employees who share similar motivation for projector rentals. This group has a 6% growth rate and 3,433 possible customers.

The Industry
The computer based office equipment rental industry is a $745 million industry. Most players in the industry rent a wide variety of equipment, not specializing on a specific type of equipment. While this creates a larger customer base for them, it reduces their ability to offer a high level of service for every type of technology because of the unique technical nature of all of the different hardware types. Because the industry is organized primarily as comprehensive service providers, House of Projectors will be able to excel within their niche of just offering projector rentals. They will be able to obtain and provide a level of service (both customer and technical) that is difficult and conceivably impossible to provide by the comprehensive service providers. This is House of Projectors’ niche competitive edge – industry benchmarked customer service. House of Projectors believes it can achieve and maintain this competitive edge for two reasons:

1. The concentration on projectors allows HOP to excel in their chosen niche.
2. Organization wide expectations, actually requirements, that HOP’s business model for all employees will provide this ambitious level of customer support.

Management
John Laaklytte will be leading House of Projectors through their early stages of market penetration. John received a Bachelor of Science, Business major from Case Western Reserve University. While in school, John received practical experience as an Assistance Manager of a local CompUSA retail store. This was where John began to build his business skill set that will ultimately be used in the growth of his own business. John also worked at the University in the position of computer lab manager. Lastly, John worked for (name omitted), a large, national computer rental company. At this corporation, John quickly ascended to the Regional Manager position.

John will leverage his knowledge and experience to take House of Projectors from a start-up business to an established player in the computer office hardware industry. By executing a well thought out business plan and proven business model, John will generate exemplary revenues in year two, increasing in year three. HOP will achieve profitability by the end of year two.

1.1 Objectives

• To become the premier source for rentals of LCD computer projectors.
• To develop a significant base of long-term customers.
• To reach profitability by the end of year two.

1.2 Keys to Success

1. Design and employ strict financial controls. This will be pursued as a means to analyze all aspects of the business.
2. Treat every customer as the most important customer HOP has.
3. Constantly evaluate the market and the needs of the customers, never taking presuming that HOP always knows what the customer wants. An interactive feedback mechanism will be just one method used to gain insight into the customers’ preferences.

1.3 Mission

It is House of Projectors’ mission to become the premier source of computer projectors for the Cleveland business community. By offering fair prices and ground breaking service, House of Projectors will quickly establish the reputation as the finest store in its niche.

House of Projectors is an Ohio based company that participates in the office equipment rental industry. More specifically the company, founded by John Laaklytte, rents computer projectors.

2.1 Company Ownership

HOP was founded and is owned by John Laaklytte. The company has been formed as a Limited Liability Corporation as a means of enjoying personal liability protection while avoiding the double taxation effect found with the business formation arrangement of corporations.

2.2 Start-up Summary

HOP has identified the following equipment and services that will be needed as start-up service provider.

• Attorney fees: An attorney will be used for the business formation and registration as well as review of contracts (such as equipment vendors, and the office lease).
• Business consultant: Because of the pricey hourly rates, a business consultant while quite useful, will be used sparingly.
• Four computers, including two laser printers. QuickBooks Pro will be used for accounting software as well as for customer invoicing. ACT! will be used for customer database management as well as for the reservation system.
• Four desks, chairs, and assorted office/desk supplies.
• Fax, paper shredder, phone system with five terminals, and hardware based voice mail.
• Lighting units, shelving units.
• Website development, brochures, and stationery.
• Rental stock. Initially twenty-five projector units will be purchased, divided somewhat equally between three different models. Two laptop computers will also be available.

House of Projectors rents LCD projectors to a variety of different customers. The projectors are computer based, projecting the computer display onto a wall or screen. LCD projectors are quite expensive pieces of equipment, prohibitively expensive for many companies. Only companies that use the projectors all the time find it cost effective to purchase the equipment for themselves.

While there are two other local businesses that rent projectors, HOP’s services are differentiated as they offer unbeatable support for the units. Projectors can be somewhat difficult to configure to individual computers. It typically becomes plug and pray. HOP has developed a database for configuration for many different laptop computers. Through HOP’s comprehensive research and outstanding support, HOP can assist the customer in configuring the unit to the individual laptop, typically within five minutes. This is quite unlike the competitors’ service that just provides the customer with necessary cables and instructions and lets them figure out configuration issues for themselves. So in effect HOP does not just rent projectors but rather, provides a comprehensive computer support service specific to their projectors. For those computers that HOP has difficulty configuring, they offer a complimentary laptop to facilitate a smooth rental.

HOP only rents top-of-the line InFocus projectors. All of the projectors can be attached via a USB or FireWire port. Three different models are offered to customers. The units differ by the strength of their projection units, i.e. depends on the size of the room and the distance from the screen to the projector. The stronger the projector unit, the larger and heavier the actual unit is and the more it costs to rent. In order to always offer customers state-of-art machines, HOP will, after a year or two sell the used machines (either from the store front or over eBay) and purchase new machines. This is part of their attractiveness, the ability to always offer the best machines.

Through a partnership with InFocus, a U.S. based projector manufacturer, HOP is able to purchase the projectors direct, avoiding the typical wholesale distribution layer. This special deal was clinched through the leveraging of a personal relationship with one of the VP’s at InFocus. While InFocus generally does not sell to anyone but wholesalers, they are willing to sell to HOP, in part because of the personal relationship, in part because HOP agrees to buy a reasonable number of units, replacing them every few years, and lastly, because HOP is willing to provide InFocus with customer feedback. This will be quite valuable to InFocus because of the large number of customers that will be using the machines and HOP’s willingness to collect the information.

HOP has identified two distinct customer segments, with one of the two being further divided into two subgroups. Each customer group will be addressed individually. HOP’s competitors operate in the larger office equipment rental marketplace. HOP will be the first company that will be concentrating specifically and exclusively on projector rentals.

4.1 Market Segmentation

House of Projectors has identified three fairly distinct market segments. The first segment is entrepreneurs, the second and third are small and medium size companies.

Entrepreneurs
This segment contains people who have an idea and are attempting to create a business around their new idea. People in this market segment typically use projectors for presentations seeking funding (both angel as well as venture capital). Less often the entrepreneurs will be using the projectors for building sales. Projectors are very useful for presentations. Generally the presentations are done in PowerPoint or Excel. The entrepreneurs that use projectors are fairly sophisticated. They recognize the need for a projector for both the appearance of professionalism as well as the need to communicate information, typically in a graphical format.

Small size companies
For small size companies, with less than 15 employees, projectors are typically used as a sales tool. The projectors are not used all that often, and therefore are not cost effective to purchase. If the presentation is a one on one presentation a projector would not be needed as the presenter can just let the other person see the screen themselves. But for presentations where the audience is two or more people, then a projector is an effective communication tool.

Medium size companies
This customer segment is similar to the small sized business, just differentiated by the size of the company, between 15-50 employees. The medium size businesses use projectors for sales presentations as well as for other internal events such as board meetings, HR presentations, training seminars, and other company events. Although the medium size companies would not have difficulty springing for the expense of a projector, they would really need to use it quite often to make the purchase cost effective. By saving the capital expenditure up front, they are able to hold onto the cash, and not have the expense of maintenance. Additionally, every time they use the equipment, they are getting a relatively new, top-of-the-line unit.

4.2 Target Market Segment Strategy

HOP has targeted the previously named market segments for two interdependent reasons. The first reason is the need for the services. The three targeted customer segments all use projectors. As computers and laptops have increasingly become more and more commonplace and indispensable in modern business transactions, projectors have become a useful communication tool. While the projectors are not yet ubiquitous, they are quite useful. Price however, has kept purchase rates a function of cost efficiency relative to how often the projector is used.

Price then is the second reason why the chosen target markets are so attractive. The projectors are quite useful to the customers, but they don’t use the equipment often enough to justify the expense. Rentals therefore are an attractive alternative, providing a service that is highly valued and not likely to decrease significantly anytime soon.

4.3 Service Business Analysis

HOP is operating within the larger industry of office equipment rentals, which includes copier machines, computers, and other assorted office technological equipment. Companies that operate in this industry offer rentals as a service. The rentals can be as short as a day or for a long term of weeks or months. The type of businesses that participate in this industry are both franchises such as IKON Office Systems and individual companies.

Most rental companies do not rent projectors. This can be explained by the fact that the cost of the projectors and their technological support needs are high. This is not to say that there is not a huge market in need of projector rentals, it more accurately reflects the needed dedication of technical expertise in support of the equipment investment. For this reason there are not a lot of companies that rent projectors. For companies that offer a wide range of rentals, there is a higher return on investment if the equipment does not require too much time or energy in support or maintenance. This logic only applies to companies that have full service rental facilities. For a company such as HOP that only rents projectors, the cost of serving a customer is drastically reduced when there is only one type of hardware rented out.

4.3.1 Competition and Buying Patterns

House of Projectors faces three different local competitors that rent out projectors.

• IKON Office Systems: This a franchised company that offers a wide range of business equipment rentals. While IKON rents the units, they are not all that helpful in terms of hardware support, it becomes a bit of a struggle for the customer to deal with configuration issues specific to their type of computer.
• Reliant Office Rentals: This competitor offers a range of different equipment rentals. They offer a total of three projectors. Customers do not have a choice of the unit that they rent, it is first-come/first-served.
• AA Office Equipment: This is a retail sales operation that also offers rentals. Their rental options are not comprehensive. The rental department appears to be run as a source of supplemental income to their retail sales. Support is quite limited. Because the rental business unit appears not to be an independent unit, but just supportive of the sales, it gets little attention.

Buying habits of customers are generally based on convenience. Customers are unable to significantly shop by price because the three competitors (excluding HOP) charge about the same rate. Customers make the rental choice based on availability and convenience.

HOP strategy will involve a marketing and sales effort that seeks to develop awareness of their superior service and product offerings and to build a large foundation of long-term customers. This strategy will be key because it recognizes the fact that it is far more costly to attract new customers than it is to maintain current ones. Additionally, happy customers as cheerleaders for the organization are an extremely effective, vocal, and cost effective sales tool. Lastly, HOP will leverage their competitive edge of benchmarked service to quickly gain market penetration.

5.1 Competitive Edge

HOP’s competitive edge is their benchmarked service provided to all customers. The typical level of service that customers expect from the competing rental companies is that the store will determine compatibility of the rental unit and the customer’s computer and then rent the unit. The rental agent will give a few bits of information regarding configuration issues, but the customer is typically left to their own labor to get it to work. This is the expectation that has been developed by the industry and instilled in the minds of the customers. This basic level of service is all that is typically offered because of the great and sometimes overwhelming amount of knowledge that is required for projector support. Companies that offer a wide range of rentals, just do not have the time to compile and offer the needed level of knowledge.

House of Projectors rents only projectors so it is far easier for them to be projector experts. With this high level of knowledge, it is easy for HOP to offer a standard level of service that is super deluxe. If a customer had at any point rented from a competitor and then from HOP, the huge difference in the level of service would be quite obvious. HOP asks the customer to bring in their specific laptop so that HOP experts can configure the projector for them. HOP finds it problematic and therefore unacceptable if the customer has to spend any of their own time wrestling with the unit. HOP therefore offers true plug and play capability, not plug and pray that the competition offers.

HOP offers 24 hour support for their rentals as well. Customers will find this quite useful, particularly the customers that are traveling as they are able to get product support any time that they need to where ever they may be.

5.2 Marketing Strategy

House of Projectors’ marketing strategy will be an effort to gain visibility of HOP within the business community as the premier LCD computer projector rental facility. House of Projectors will undertake a marketing campaign that will in part use traditional media sources such as the Cleveland Business Journal, a well read business and Cleveland specific journal. In addition to the advertising, HOP will launch a networking campaign. The networking campaign, based on guerrilla marketing principles will seek to gain visibility for the company by establishing business and personal relationships with many people in the Cleveland business community.

One specific alliance that House of Projectors will build and emphasize is a relationship with the Cleveland Entrepreneurs Forum. This organization is run through the Cleveland Chamber of Commerce and is a support organization for budding entrepreneurs. In effect it is an organization that attempts to foster an environment that is conducive to start-up organizations. One aspect of this process, as many of us know all too well is the process of raising money. House of Projectors will be able to offer value for this process because projector presentations are almost a standard element of a presentation to sophisticated angel or venture capital investors. By forming an alliance with this organization and supporting it with its main activities, House of Projectors will be generating visibility of itself specifically to one of their key customer segments.

Additional networking will be accomplished by participating in various other business associations. This will be quite effective as many people have the empirical experience that much business is conducted among networking contacts.

5.3 Sales Strategy

The sales strategy will be a system of goals and processes that stress the delivery of the industry’s finest service to every customer. The entire sales system is based on the idea that House of Projectors must do its best to satisfy every customer so that after their first experience with House of Projectors they have no desire whatsoever to use a different service provider. By providing the finest service, the customer will have no reason to seek out a different company. Ideally the customer will praise the outstanding service to their friends. It is this “friends referral” that can be effective because the praise for the service provider comes from a friend who has already established a trust relationship with the “audience.”

This strategy of providing the finest service as a means for developing a large and loyal customer base accepts implicitly that projectors are computer hardware and can be difficult and frustrating for many people to operate. By providing the best support, House of Projectors is able to remove the element of fear that many people have when they are forced to interact with technology.

There are two main elements in HOP’s delivery of customer support. The first is the task for making the customer’s interaction with the company and the technology as painless as possible. Each customer should feel like they were treated special and that all of their needs were looked after by HOP. The second element is crisis management. This involves a situation where the customer is unhappy or did not receive the best service. All employees will be trained to be able to survey a situation and correct any issues themselves. While some issues will have to be elevated to the manager level, the employees are trained to be able to effectively handle most things themselves.

5.3.1 Sales Forecast

House of Projectors has taken a conservative approach to the sales forecast. This was done so that it would be more difficult to disappoint and easier to succeed. The sales forecast displayed in the following table and charts shows that the first few months of business will be relatively slow. This is a reasonable assumption as the organization is in start-up mode and very little goodwill among customers and the community has been developed.

House of Projectors believes that sales for the first year will grow incrementally month to month. HOP will be encouraged if there is a steady increase of sales. With profitability forecasted to be reached during the second year, HOP will not have the unrealistic expectation that they will be making a profit immediately, even for that matter within the first year. HOP recognizes that building a sustainable organization is a slow incremental process. HOP also recognizes that the sales forecast is just that, an educated guess of the sales patterns and level of the organization. A lot of time has been invested in the forecast to make it an accurate prediction based on all available information.

5.4 Milestones

House of Projectors has developed a set of milestones which are ambitious yet achievable goals for the entire organization. The following table enumerates the milestones, the expected completion timeline and the individuals responsible for the the specific milestones.

The website will be used as an informational tool, providing information about House of Projectors, the company and the services and equipment offered. The site will not have an e-commerce function at this time. The functionality that will allow customers to make reservations or place an order online will be reconsidered in the future.

6.1 Website Marketing Strategy

The website will be marketing using two specific activities. The first is the inclusion of the URL of House of Projectors in all printed literature that is distributed. The second activity is the submission of the site to several search engines including but not limited to Google and Yahoo! This will help the people that recognize their need for a projector rental find HOP.

6.2 Development Requirements

The website will be developed by leveraging below market programming skills from graduate students from the many different nearby universities.

John Laaklytte graduated from Case Western Reserve University with a Business Degree. While in school, John worked as an assistant manager at a CompUSA retail store. After for two years with CompUSA John took the position of computer lab manager at the University during his last year of schooling. This position provided John with the opportunity to experience constant interaction with the student lab patrons and develop his customer service skills.

Upon graduation John went to work for (name omitted) a national company that rents laptop computers to different sized businesses. Here he improved his business skill set through performance of his job duties and participation in the company’s manager training program. John spent four years here, beginning as an account manager, moving up to a regional manager. During the fourth year John began to get a bit restless, wishing that he had more autonomy in his work.

John recognized that in order to be truly challenged and enjoy the autonomy that he craved, he would need to be his own boss, that he would need to start his own business. At this time that John came up with the idea of House of Projectors, recognizing the need for a projector rental company.

7.1 Personnel Plan

• John: His responsibilities include operations, marketing, sales, and any other functions that are needed. Basically John will be doing a little of everything, learning all of the responsibilities of every position within the company.
• Bookkeeper: This will be a part-time position with the person responsible for both accounts payable and receivable.
• Sales: HOP will utilize two part-time sales staff. These will be account managers responsible for the maintenance and support of the customers and their accounts.
• Customer support: There will be four part-time people responsible for the support of the technology as it relates to the customers. At least one of the people will be on call 24 hours a day as a resource for customers that encounter difficulty.

The following section will outline important financial information.

8.1 Important Assumptions

The following table details important Financial Assumptions.

8.2 Break-even Analysis

The Break-even Analysis indicates what monthly revenue will be needed to reach the break-even point.

8.3 Projected Profit and Loss

This projected table and these charts show the Projected Profit and Loss.

8.4 Projected Cash Flow

The following chart and table present the Projected Cash Flow.

8.5 Projected Balance Sheet

The following table displays the Projected Balance Sheet.

8.6 Business Ratios

Business Ratios for HOP. SIC class/code: Office machine rental, except computers – 7359.0505