Business plan for Nerd Patrol software company

¶ … business plan for a software company, Nerd Patrol. It contains an analysis of the company's ownership, business operations, and organizational structure, projects its revenues and costs of operations for the short run, and presents some important marketing strategies for the success of its business in the IT industry.

Introduction and Brief Description of the Venture

This paper presents a business plan for a new software company, Nerd Patrol that provides a number of software and hardware products, technical services, and web solutions to individual and business customers. The plan constitutes all the major operational, personnel, financial, and marketing strategies which Nerd Patrol will pursue during its initial phase of business set up. The opening section introduces the business in brief and proceeds by explaining the organizational and key business players. The "Financial Analysis" section presents projected revenues and costs of operations for the company by highlighting the major investments and expenditures which it will have to make in the introductory phase. The next section, 'Marketing Strategies' explains the product, pricing, promotion, and placement/location strategies for Nerd Patrol and gives a brief snapshot of its competitive environment in the IT industry. The final sections explain the legal and environmental challenges which Nerd patrol may face in the long run and the actions which it can take to encounter these challenges.

Nature, Description, and Aspirations of the Business:

Nerd patrol is a software company that is specialized in developing business and utility software, providing technical solutions and training services, resolving hardware debugging issues, providing software and hardware troubleshooting services, and various other services. Nerd Patrol is being established as a private limited company by three experienced business professionals. The mission of the company is to provide innovative and cost effective software and hardware solutions to individuals and business customers from all over the country. The company aims to ensure regular business growth and superior financial performance over the years

Organization of the Business and Key Players

Ownership:

i. Technical Supervision:

The ownership of Nerd Patrol will be in the hands of three experienced and qualified business professionals; John Robbins, Mary Singh, and Nabil Quresh. These owners will operate the company as a partnership business in the initial phase; but transform it into a private limited company by inviting their friends, family, and relatives to make investment and contribute their professional skills for the growth of its business. Being fully certified professionals on Microsoft and Oracle software products, John Robbins and Mary Singh will head the technical operations of the company. For example, the Research and Development, technical services, training and workshops for employees, and procedural support to the individual and corporate clients will be supervised by both these certified professionals.

ii. Business Management Team:

On the other hand, Nabil Quresh will look after the business plans and strategies of the company for its competitive and sustainable future in the industry. He will be responsible to design the marketing and promotional plan of the company by focusing on its product, pricing, promotion, and placement strategies on individual basis. Nabil Quresh is a business graduate having vast exposure in the business world. He is capable of handling the business complexities and dealing with the environmental issues in an effective and efficient way. The supervision by John Robbins and Mary Singh along with the strategic direction by Nabil Quresh will greatly help Nerd Patrol in becoming a successful and competitive software company in the country.

Employees:

Nerd Patrol will need to hire individuals for different technical and non-technical positions at its office. The technical staff will be responsible to assist the clients in implementing and learning the new software systems developed by Nerd Patrol for them. They will physically visit the clients' premises to look over the performance of their software and train their staff to run it effectively (Attaran, 2004). In contrast to the technical staff, the company will also need to recruit sales and marketing staff which will develop its business in the potential target markets. The sales and marketing staff will perform under the supervision of Marketing Manager. The Marketing Manager will make every effort to achieve the sales targets for the company through its sales and marketing team. He will use different techniques and monetary and non-monetary rewards to motivate his team and achieve the assigned targets effectively and efficiently.

Contractors and Vendors:

The contractors and vendors for Nerd Patrol business will be the small scale industry participants that produce raw material for manufacturing hardware products. The company will have to build strong relationships with these vendors in order to get the raw material at discounted prices and ensure its continuous supply at its production unit (O'Brien & Marakas, 2007).

Financial Analysis

The major costs of revenues of the new business will include software licenses, maintenance and control, professional services, and amortization costs of acquired technology. In addition to these major costs of revenues, the company will also have to bear heavy operational costs. These costs include sales and marketing expenses; research and development expenses; general, administrative, payroll, and training expenses; amortization costs for intangible assets, restructuring, acquisition and other charges; goodwill impairment; etc. The interest expenses and loss on early extinguishment of debt will also put burden on the company's profitability.

The major investments required to start Nerd Patrol business will include furnishing facilities, inventory purchases, technological equipments, and employee training and development costs for the initial six to twelve month period (O'Brien & Marakas, 2007). The projected return on investment for Ned Patrol is $1,308,000. The anticipated revenues for Nerd Patrol for its first twelve months are as follows:

Projected Income Statement for Nerd Patrol

$ in '000

Months

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Revenues

Software Licenses

Maintenance and Control

Professional Services

43

25

28

30

35

39

43

48

50

53

55

50

Total Revenues

Costs of Revenues

Software Licenses

24

25

23

25

30

32

31

36

38

41

45

50

Maintenance and Control

60

58

70

70

75

78

78

78

80

85

80

82

Professional Services

89

75

66

64

63

67

65

63

65

70

75

76

Amortization of acquired Technology

0

0

20

22

23

25

26

28

30

35

36

40

Total Costs of Revenues

Gross profit

Operating Expenses

Sales and Marketing Expenses

76

78

83

70

73

78

81

83

83

84

87

89

Research and Development Expenses

36

32

36

30

32

36

36

38

37

37

36

40

General, Administrative, Payroll, and Training Expenses

24

30

35

36

36

43

45

47

48

50

53

53

Amortization of Intangible Assets

26

23

25

25

23

21

23

25

26

28

30

35

Restructuring, Acquisition and other charges

8

11

13

11

12

21

21

23

21

26

31

36

Goodwill impairment

12

9

12

11

13

11

13

13

14

16

18

20

Total Operating Expenses

Operating Income/(Loss)

64

92

46

76

81

79

86

90

93

85

79

74

Other income/(expense):

Interest Income

34

34

34

34

36

40

43

45

47

49

53

56

Gain/(loss) on early extinguishment of debt

12

15

18

20

26

28

29

31

32

36

36

40

Interest expenses

(65)

(63)

(61)

(58)

(64)

(65)

(68)

(71)

(73)

(76)

(70)

(75)

Change in fair value of derivative instruments

0

0

0

5

0

0

3

0

0

0

0

0

Amortization and write off of debt issuance costs

0

0

0

3

0

1

1

0

0

1

3

1

Amend and extend transaction fees

0

0

0

2

2

1

0

0

2

1

0

1

Total other income (expense)

(19)

(14)

(9)

6

0

5

8

5

8

11

22

23

Income/(Loss) before income taxes

45

78

37

82

81

84

94

95

96

97

Income tax (benefit) provision

(21)

(15)

(17)

(18)

(21)

(23)

(25)

(26)

(28)

(36)

(40)

(47)

Net Income/(Loss)

66

93

54

Marketing Strategies

1. Product/Service Strategies:

Nerd Patrol is going to operate in the Information Technology industry with a wide array of computers software and hardware products, networking, technical, and web-related services. The main services offered by the company include hardware and software upgrades, hardware repairs, debugging software problems, networking problems, technical solutions, maintenance and control, enterprise resource planners, etc. In its initial phase, Nerd Patrol will serve the individuals and businesses with technical solutions and upgrades; but with the passage of time, it will also develop its own software and hardware products and sell to a larger customer base.

2. Pricing Strategies:

The pricing of Nerd Patrol products and services will depend upon various factors; including licensing and registration fee, version of the software, upgrading costs, maintenance costs, and others. In order to attract customers from individuals and businesses segments, Nerd Patrol will keep the prices of its products and services lower as compared to other software companies in the country. This low pricing strategy will keep the company's profit margins low in the introductory stage; but at the same time, they will largely help in attracting the customers.

3. Promotional Strategies:

Nerd Patrol is a purely service oriented company in the Information Technology industry. In addition to a large number of potential individual customers, the significant portion of Nerd Patrol's target market constitutes high profile businesses from almost every type of industry. Therefore, it will have to promote its services in all the major promotional and advertising mediums to attract the largest number of customers from all over the country. First of all, Nerd Patrol should develop a comprehensive website as an introductory marketing medium for its business. This website will serve as the information agent for its customers as well as potential investors and other primary stakeholders from the country (Stair & Reynolds, 2010).

Nerd Patrol should ensure that its website contains all types of information which a customer, investor, employee, or a supply chain member may need from it. For example, it should provide information like: services offered by the company, buying and maintenance charges, discounts, technical solutions and training, and company profile, including location, ownership, investment opportunities, etc. The website must have different sections for every stakeholder of the company. For example, the customers can find all kinds of information in the 'customers' section and contact the company for their required product or services. Similarly, the investors can look over the financials of the company and make their investment decisions accordingly.

Another marketing strategy would be to promote the Nerd Patrol business on the social media networking sites. These sites will provide the cheapest and the most innovative marketing platform to the company. The owners can develop their business presence on the social media network in order to connect with other industry participants, potential business partners, and customers at large. In addition to these modern marketing mediums, Nerd Patrol business can also be promoted on newspapers and web or internet related publications (Havaldar, 2010).

4. Place/Location Strategies:

Nerd Patrol will set up its physical as well as online business presence. The technical team and managers will work for the company at its headquarters and take orders from individuals and business customers through website, emails, and telephones. In order to establish its presence with a rapid pace, Nerd Patrol will have to serve a larger target market. It can be done by taking software development, upgrades, maintenance, and other orders from a wider geographical region.

Competitive Analysis:

Nerd Patrol will operate in the IT industry which is highly concentrated with large IT giants like Microsoft, Adobe, Oracle, Google, Yahoo; and numerous small scale software and hardware manufacturers. In order to compete with these industry rivals, Nerd Patrol will have to focus on each and every aspect of its marketing efforts and business activities. On its operational setup, Nerd Patrol will have to develop reliable and effective software solutions and provide efficient technical services at the most competitive rates. At the same time, it will have to expend a large amount on the promotional and advertising efforts in a view to develop its brand image in the minds of potential target customers (Stefan, 2003). Nerd Patrol can take the advantage of low pricing as compared to large IT companies. It can provide software and hardware upgrades and maintenance services at cheaper rates and keep its profit margins low. This strategy can also help it in beating the small scale software companies in the industry (Havaldar, 2010).

Legal and Sundry Issues

In addition to the competitive forces and environmental challenges, Nerd Patrol will have to adhere to the local laws and regulations in order to operate in a lawful way. First of all, it will have to register itself as a software development and web-related services provider with the local Ministry of Information Technology. Secondly, it will have to get its intellectual property secured. For example, it will have to register its trademark, logo, slogan, and other properties which are its sole identity in the entire IT industry (Kurtz & Boone, 2011).

Commercial Law:

The commercial law of the country will also put legal pressures on the company. Nerd Patrol will have to operate within the legal boundaries and structural framework defined by the local government for the local IT and specifically the software companies. Nerd Patrol will have to follow this framework in order to keep itself on the safest end and avoid any legal issues and criticism by the government and stakeholders respectively. In case the company faces some legal issue, it can get it resolved through its in-house attorney or by taking legal services from outside parties.

Major Challenges

The major challenges which Nerd Patrol may have to face in its industry include economic challenges, political and governmental response, technological innovations, business ethics, and environmental protection. The owners will start Nerd Patrol from a quite small scale. However, the business is being established in the IT industry which needs huge investments and business start-up costs.

Economic Challenges:

For Nerd Patrol, the biggest economic challenge would be to recover its initial investment in the shortest possible time. In the light of projected income statement for the initial 12 months of Nerd Patrol's business, it can be said that it will earn attractive revenues throughout the year. Reason being, there is a huge target market of both individual and corporate clients that are going to upgrade their business software in the coming years. By making effective marketing and promotional efforts, Nerd Patrol can attract these customers and ensure superior financial performance in its initial years. The major economic challenges which can put hurdles in the way of its success include high technological and software development costs, raw material costs, maintenance costs, and employee training and development costs (Kurtz & Boone, 2011).

Other Challenges:

In addition to these challenges, the company will also have to ensure that it complies with the trade regulations, Companies' Ordinance, and Business ethics and principles in order to avoid legal and social criticism. Its business activities, dealings, customer services, and marketing advertisements should be designed and practiced within the ethical boundaries. Finally, Nerd Patrol will have to focus on its Research and Development section in order to keep itself innovative and competitive in its industry. It will have to investment a huge amount on purchasing software licenses and implementing advanced technological systems for its business expansion projects (Sanders, 2007).