Table of Contents

Executive Summary .......................................................................................................................... 1

1. The Market ................................................................................................................................. 1
1.1 Start-up Funding and Financials ..................................................................................... 1
1.2 Objectives ....................................................................................................................... 1
2. Company Summary ................................................................................................................... 2
2.1 Company Ownership ...................................................................................................... 2
2.2 Start-up Summary ........................................................................................................... 2
3. Services ...................................................................................................................................... 4
4. Market Analysis Summary ........................................................................................................ 5
4.1 Market Segmentation ...................................................................................................... 5
4.1.1 Home PC User............................................................................................................. 5
4.1.2 Small Business Users .................................................................................................. 5
4.2 Service Business Analysis .............................................................................................. 6
4.3 Competition and Buying Patterns ................................................................................... 6
4.4 Competitor A .................................................................................................................. 7
4.5 Competitor B ................................................................................................................... 7
4.6 Strategy and Implementation Summary.......................................................................... 7
4.7 Competitive Edge............................................................................................................ 7
5. Marketing Strategy..................................................................................................................... 8
6. Sales Strategy ............................................................................................................................. 8
6.1 Sales Forecast.................................................................................................................. 8
7. Management Summary ............................................................................................................ 10
8. Personnel Plan .......................................................................................................................... 10
9. Financial Plan........................................................................................................................... 10
9.1 Break-even Analysis ..................................................................................................... 11
9.2 Projected Profit and Loss .............................................................................................. 13
10. Business Ratios ........................................................................................................................ 13
10.1 Projected Balance Sheet ................................................................................................ 15
 Executive Summary

Faraday Partnership Ltd. will offer local small businesses and household PC user’s
computer and technical consultancy (repairs, training, networking, and upgrade service).
The business will prioritize marketing, responsiveness, quality, and developing and
maintaining relationships with customers. Faraday partnership Ltd. Dreams to grow into a
corporation after three years of profitable service and high customer demand.

In the beginning, Faraday Partnership Ltd. will operate from the owner's home in a studio
room, serving clients in the Addis Ababa neighborhood. We will relocate to a rented
office space and recruit a second technician in the third month of our strategy. We will
add more employees as our revenues rise.

1. The Market
Due to the amazing rate of technical advancement in the computing industry, there is a
continuing need for companies that can inform and advise clients on computer-related
difficulties. The majority of potential clients in the city are unhappy with the available
options, which creates a desirable niche for an inventive start-up. Most of our company's
revenue will come from PC users in small businesses. According to Business Week, the
computing sector will expand at a rate of 12 percent and processor speeds will keep rising
for years to come, offering a strong source for sales.

Since small businesses frequently lack a full-time CS employee but yet have full-time CS
demands, Faraday Partnership Ltd. has chosen to concentrate primarily on this sector. For
these clients, it will supply a reasonably priced, on-demand solution. Additionally, we can
provide maintenance contracts that bring in extra monthly revenue. To satisfy the needs
of our home clients, we will provide a very reasonable, beneficial service with a very
accommodating schedule. Addis Ababa and the neighboring surroundings will be our
primary target market. According to market research, there is a sizable market for a small
business-like Faraday Partnership Ltd.

1.1 Start-up Funding and Financials

The owner contributes money and other resources to get Faraday Partnership Ltd. going.
Additionally, we are looking for a short-term loan that will only be due in three years and will
be secured by the owner's home equity. Our conservative sales projections, based on local
industry research, call for sizable revenues in year one and steady growth through year three.
Our aggressive advertising effort will target the flaws of our five competitors in order to
accomplish these goals. Even after relocating into a rented location and recruiting more
technicians, with solid cost control, we will see a tiny but comfortable net profit the first year.

1.2 Objectives
1. To provide the best service available to the community at an affordable price.

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2. To generate substantial market share so that Faraday Partnership Ltd. is a common
name.
3. Constant growth in sales from start up through year three.
4. To generate customer satisfaction so that at least 40% of our customer base is repeat
business.
Mission
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 judgment to solve customers' problems.
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 customer’s retainers.

2. Company Summary
Faraday Partnership Ltd. is located in Addis Ababa on-in front of Kilinto, owned by some
member. With a small 3-year loan, Faraday Partnership Ltd. will grow in one year from a
one-man, home-office based repair shop to a profitable, 8-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

Faraday Partnership Ltd. is initially intended to be a one-man operation run out of the
owner's residence. It is now reorganized as a partnership, yet recent response from our
marketing effort has shown a far bigger sales potential than initially anticipated. This
modification will increase the business’s legal protection and expedite the its financial
operations as we plan to hire one hundred new employees within the next three years, lease
a new office space, and buy corporate cars and cell phones. The partnership hopes to be a
profitable tech mogul in ten years.

2.2 Start-up Summary

Our website's development, business setup, and pre-opening marketing are all included in
the total start-up costs. The table displays precise allocations.

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The majority of our startup costs are asset-related: we need diagnostic and repair
equipment, and the owner will contribute half of that cost from his own resources. Since
we anticipate using this equipment for at least three years and expecting to sell it at some
point, we are classifying it as an asset. In years two and three, we will purchase further
expensive equipment. Additionally, we require startup supplies like RAM, extra hard
drives, connectors, and cases. We will keep costs down for the first three months before
moving, but we'll also need cash up front so that we may have a positive cash balance for
the next few months.
We plan to fund our total start-up requirements direct partnership investment (including the
contributed assets), and a three-year loan secured with the partnership's collateral (home
equity). We should be able to easily repay this loan within three years, even with much
lower sales revenue than projected.
See the Cash Flow table for projected repayment.

Start-up Requirements:
Start-up Expenses:
Legal 650

Website 350

Business Cards 100

Insurance 150

Uniforms 300

CPA 275

Advertisement 1200

Total Start-up Expenses 3025

Start-up Assets:
Cash Required 2,800

Start-up Inventory 1,200

Other Current Assets 10,000

Long-term Assets 0

Total Assets 39,200

Total Requirements 42,225

Start-up Funding:

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 Start-up Expenses to Fund 3,025

Start-up Assets to Fund 29,200

Total Funding Required 42,225

Assets:
Non-cash Assets from Start-up 11,200

Cash Requirements from Start-up 2,800

Additional Cash Raised 0

Cash Balance on Starting Date 2,800

Total Assets 39,200

Liabilities and Capital:

Liabilities

Current Borrowing 19,225

Long-term Liabilities 0

Accounts Payable (Outstanding Bills) 0

Other Current Liabilities (interest-free) 0

Total Liabilities 19,225

Capital Planned Investment:

Owner 2,300

Investor 0

Additional Investment Requirement 0

Total Planned Investment 23,000

Loss at Start-up (Start-up Expenses) 3,025

Total Capital 19,975

Total Capital and Liabilities 39,200

Total Funding 42,225

3. Services
Faraday Partnership Ltd. will offer computer repairs, training, and networking and upgrade
service to clients in two major categories: home PC users and small business users. As
Faraday Partnership Ltd. and the client demands grow, we will offer software development
to our business clients.

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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.

4. Market Analysis Summary

Faraday Partnership Ltd. will provide computer support in both a consulting and technical
capacity to small business owners as well as home PC users. Since Faraday Partnership
Ltd. is currently a partnership, its growth in the first three months will be limited by the
business’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.
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. 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.

4.1.1 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.

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.

4.1.2 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

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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.
Market Analysis:
Potential Customers Growth Year 1 Year 2 Year 3

Home PC Users 7% 25,000 26,750 28,623

Small Business Users 2% 10,000 10,201

Other 0% 0 0 0

Total 5.39% 35,000 36,850 38,824

4.2 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 Faraday Partnership
Ltd.’s main competitors shows no overwhelming strengths that would be significant
barriers to entry into the market, as our local competitors have serious weaknesses. It 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 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 11 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. There are
two main competitors for the computer upgrade and repair business in this area:

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4.4 Competitor A
They are a well-established provider of computer upgrades and services, and do quick
work. However, they have a high staff turnover, a young and inexperienced staff, and are
more interested in selling new components than in maintaining existing machines or finding
custom solutions. They do not offer any kind of pick-up and drop-off service, and do not
offer on-site help. They really only offer hardware support.

4.5 Competitor B
Smaller and less known then A, B provides many services for residents living in east and
south parts of town. They are more willing to spend time with a client, figuring out exactly
what his or her needs are, and suggesting new options than competitor A. However, they
have an inefficient ordering system and an unkempt shop, which deters potential customers
and can turn existing customers to the competition. They also do not offer on-site services,
although they are considering instituting a trial pick-up/drop-off service. They are in the
best position to copy our innovations and steal customers, but their management is
complacent and may not respond to competition. Both of these companies charge rates in
excess of Faraday Partnership Ltd.; we will be able to attract the price-sensitive market
without much work.

4.6 Strategy and Implementation Summary

Our Strategy and Implementation turn on three points:
1. A value proposition of timely and practical solutions, at a reasonable rate, coupled with
a 100% guarantee.
2. Exploiting our competitor’s weaknesses: a competitive edge based on quick, effective,
and sympathetic customer service, which meets the customer where his needs are,
rather than trying to fit him into an existing box.
3. Quickly establishing a brand identity and developing a great reputation among local
customers to generate word of mouth advertising.

4.7 Competitive Edge

 Quick response: Faraday Partnership Ltd. will provide same day and after hours service.
 A flat rate policy: This undermines the competition, who charges by the hour. The
pricing has been set to reflect the average amount of time it takes to perform the task.
With this strategy we can undercut most competitors and gain local market power.

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 On-site and pick-up/drop-off services: This will minimize the time and effort a
customer needs to put into dealing with his computer problem.
 Surprisingly, our small size is an advantage: customers will recognize me (and future
employees), and will know they will get the same great service every time they call

5. Marketing Strategy
Our marketing strategy will aggressively exploit our competitors' weaknesses. During the
start-up phase, we will run large ads in the business section of the local newspaper, asking,
"Are you fed up with poor customer service for your computer needs?" These ads will focus
on our advantages, including on-site service, competitive rates, and quick response and
turn-around times. They will announce our opening date, and include a coupon for free
diagnostic service for the first 20 customers.
We will offer a promotion during the first 90 days of business to generate business traffic
and word of mouth. Our promo is Spyware removal on any desktop PC for Birr 1500
including tax and software. Spyware is a huge problem for a lot of residential and small
business customers, and the offer should draw a lot of interest.

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

6.1 Sales Forecast

The sales strategy is a prediction of controllable growth for the first year. Faraday
Partnership Ltd. will focus on quality and attention to detail to avoid some potential pitfalls
encountered by many new businesses. The predicted growth is moderate in the home PC
market and in the small business arena. However, with aggressive advertising and word of
mouth, this will increase. Our aggressive TV advertising will increase our residential and
small business customer base as well as word of mouth within the first year. Within a 13
few months we will have the need for additional employees to handle the work load. At

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that time, we will move into a leased space with additional square footage, and buy a
company vehicle to help with the onsite calls.
Our competitor’s average 75+ calls a month. Given that our advertising will be aggressive,
we expect the same results. The sales forecast is conservative, which gives us a chance to
gauge our experience and adjust the plan accordingly.
We will service all of Addis Ababa, and the surrounding area. We expect that the majority
of our jobs will be performed in the immediate town area. A service technician can perform
an average of 3 jobs per day. Our sales forecast predictions are less than that. With our
aggressive advertising campaign we expect nominal growth. We predict it will take a few
weeks for the marketing to settle in with customers. However, we are going to offer a promo
for our services which should generate some substantial results.
Sales Forecast:
Sales Forecast: Year 1 Year 2 Year 3

Home PC Unit 166 200 225

Small Business Unit 264 300 350

Promo 235 0 0

Maintenance Contracts 32 60 85

Total Unit Sales 697 560 660

Unit Prices Year 1 Year 2 Year 3

Home PC Unit 280.00 300.00 300.00

Small Business Unit 500.00 600.00 600.00

Promo 50.00 0.00 0.00

Maintenance Contracts 400.00 600.00 600.00

Sales

Home PC Unit 46,480 60,000 67,500

Small Business Unit 132,000 180,000 210,000

Promo 11,750 0 0

Maintenance Contracts 12,800 36,000 51,000

Total Sales 203,030 276,000 328,500

Direct Cost of Sales

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 Home PC Unit 13,944 18,000 20,250

Small Business Unit 27,720 37,800 44,000

Promo 940 0 0

Maintenance Contracts 0 0 0

Subtotal Direct Cost of Sales 42,604 55,800 64,350

7. Management Summary
For the first three months, Abner will be in charge of all aspects of the business. In the third
month, when another tech is hired, he will shift some of his energy from directly responding
to customer needs, to training and managing others to does this work effectively.
Abner has worked extensively with computer technicians and support staff in the past, and
knows that they work best when given free rein within a set of mutually-agreed-upon
guidelines. The first week of each tech's employment will be dedicated to helping them
understand Faraday Partnership Ltd.’s guidelines:
 The customer needs help, and we're here to help them;
 The customer is frustrated, upset, or confused - but that doesn't make the customer
a problem;
 The customer needs reassurance as well as solutions.

8. Personnel Plan
We will be the only employee for the first few months; his salary is directly related to the
success of the business, and will never exceed 18% of sales revenue. In the third month,
we will move to a leased office space and hire a second employee, with a third hire planned
for August, if projections are on target. We plan to hire additional part-time employees in
the second year, to better handle the increasing sales.
Our employees will be skilled professionals, with equally strong technical and people skills.
It is very important to Abner that they be paid salaries commensurate with their abilities
and dedication- happy tech support people make for happy customers. To that end, our full-
time employees will receive health benefits (premiums split between the employee and PC
Repair), paid holidays, and sick time.

9. Financial Plan
The following sections include the annual estimates for the standard set of financial tables.
Detailed monthly pro-forma tables are included in the appendix.

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Our financial plan calls for limited growth in the first three months, followed by much
higher sales when we move and hire additional employees. These projections are based on
sound market research and ratios for comparable businesses. As we grow, we will keep our
operating expenses down, and maintain a positive cash balance as we repay our three-year
loan.
Important Assumptions
Faraday Partnership Ltd.’s customer base would fluctuate if there was a recess in the
economy or other extenuating circumstances that pertain directly to consumer or industry
behavior. However, given the steady increase in computer users despite the recent
recession, we assume that sales forecasts are unlikely to be dramatically altered by
economic events. The table below shows some of our other assumptions.
General Assumptions
Year 1 Year 2 Year3

Plan Month 1 2 3

Current Interest Rate 7.00% 70.00% 70.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00%

Other 0 0 0

9.1 Projected Profit and Loss

The table below shows our projected profit and loss. There are two lines for direct cost of
sales - the second line shows projected inventory costs of fulfilling our maintenance
contracts. The marketing/promotion line shows our planned advertising program expenses.
Although these are aggressive, we must spend heavily in the first year in order to establish
the brand recognition that will help us break in to the local market.
This table also shows our projected expense increases as we hire more employees and move
into a larger rented space. Before the move, the owner will absorb expenses related to
utilities. In years two and three, we have budgeted for additional expensed equipment to
expand our diagnostic and repair capabilities to keep up with orders.

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We are seeking a modest net profit in the first year. As our reputation grows, we will see
higher revenues and net profit over the next three years.
Pro Forma Profit and Loss:
Year 1 Year2 Year 3

Sales 203,030 276,000 328,500

Direct Cost of Sales 42,604 55,800 64,350

Costs of Fulfilling 1,488 4,320 6,120

Maintenance Contracts

Total Cost of Sales 44,092 60,120 70,470

Gross Margin 158,938 215,880 258,030

Gross Margin% 78.28% 78.22% 78.55%

Expenses
Payroll 69,000 110,000 115,000

Marketing/Promotion 28,000 6,000 12,000

Depreciation 0 0 0

Lease 10,000 12,000 12,000

Expensed Equipment 0 10,000 12,000

Insurance 0 10,000 12,000

Website 3,150 1,200 1,200

Answering Service 2, 080 480 480

Mileage 200 2,400 2,400

Vehicles 2,660 5,400 5,400

Cell Phones 1,260 1,260 17,000

Utilities 5,000 6,000 1,260

Internet 1,200 1,200 1,200

Moving Expenses 2,000 0 0

Total Operating 137,750 170,940 186,940

Expenses

Profit Before Interest and 21,188 44,940 71,090

Taxes

Interest Expense 1,097 6,570 2,139

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 Taxes Incurred 6,027 11,511 20,685

Net Profit 14,064 26,859 48,266

Net Profit/Sales 6.93% 9.73% 14.69%

9.2 Projected Cash Flow

The Cash Flow chart, below, shows our projected cash position for the first year; the table
following it shows highlights for the first three years. With the requested start-up funding,
we will maintain a positive cash balance throughout, and repay the loan within three years.
Cash from Operations Year 1 Year 2 Year 3

Cash Sales 203,030 276,000 328,500

Subtotal Cash from 203,030 276,000 328,500

Operation

Expenditures:
Expenditures from Year 1 Year 2 Year 3
Operations

Cash Spending 69,000 110,000 115,000

Bill Payments 110,873 141,877 164,115

Subtotal Spent on 179,873 251,877 279,115

Operations

Additional Cash Spent:

Principal Repayment of 6,564 6,550 6,111
Current Borrowing

Subtotal Cash Spent 186, 43 285,226 258,427

Net Cash Flow 16,593 17,573 43,274

Cash Balance 44,593 62,165 105,440

10. Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on
the Standard Industrial Classification (SIC), Computer Related Services, are shown for
comparison. Our projected growth is much higher than the industry average; in part, this is
because we are a start-up, growing sales steadily in these first three years. We are sure that

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our sales forecast is conservative, given the dissatisfaction among local computer users
with existing options, and our planned aggressive marketing campaign.
Ratio Analysis:
Industry Profile Year 1 Year 2 Year 3

Sales Growth 0.00% 35.94% 19.02%

Percent of Total Assets 8.22% 8.15% 6.01%

Inventory

Other Current Assets 16.81% 12.73% 8.14%

Total Current Assets 100.00% 100.00% 100.00%

Long-term Assets 0.00% 0.00% 0.00%

Total Assets 100.00% 100.00% 100.00%

Current Liabilities 42.77% 22.49% 11.12%

Long-term Liabilities 0.00% 0.00% 0.00%

Total Liabilities 42.77% 22.49% 11.12%

Net Worth 57.23% 77.51% 88.88%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 78.28% 78.22% 78.55% 100.00%

Selling, General & 38.70% 65.72% 64.96% 80.06%

Administrative
Expenses

Advertising 0.00% 0.00% 0.00% 1.23%

Expenses

Profit before 10.44% 16.28% 21.64% 21.64%

Interest and Taxes

Main Ratios
Current 2.34 4.45 8.99 1.53

Quick 2.15 4.08 8.45 1.24

Pre-tax Return on Net Worth 59.02% 63.01% 63.16% 2.73%

Pre-tax Return on Assets 33.78% 48.84% 56.14% 6.39%

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 Additional Ratios:
Year 1 Year 2 Year 3

Net Profit Margin 6.93% 9.73% 14.69%

Return on Equity 41.32% 44.10% 44.21%

10.1 Projected Balance Sheet

The Balance Sheet shows a steadily increasing net worth over the next three years. Since
we are planning to rent, and because computer technology changes so rapidly, we will
have only short-term assets, such as computer equipment and furniture. This will make
our net worth much more liquid than many similar businesses.
Pro Forma Balance Year 1 Year 2 Year 3
Sheet Assets

Current Assets Cash 44,593 62,165 105,440

Inventory 4,890 6,404 7,385

Other Current Assets 10,000 10,000 10,000

Total Assets 59,482 78,569 122,825

Liabilities and Capital

Year 1 Year 2 Year

Accounts Payable 12,783 11,561 13,662

Current Borrowing 12,661 6,111 0

Other Current Liabilities 0 0 0

Subtotal Current Liabilities 25,444 17,672 13,662

Long-term Liabilities 0 0 0

Total Liabilities 25,444 17,672 13,662

Paid-in Capital 23,000 23,000 23,000

Retained Earnings 3,025 11,039 37,898

Earnings 14,064 26,859 48,266

Total Capital 34,039 60,898 109,163

Total Liabilities and Capital 59,482 78,569 122,825

Net Worth 34,039 60,898 109,163

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