computer software business plan

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Computer Software Business Plan Sample

Mar.03, 2021

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Table of Content

Computer software business plan for starting your own company

Do you want to start a computer software business? Well, the business has immense demand these days. Firstly, because of the introduction of software that enhance business efficiency and productivity. And second, due to the coronavirus that has made people work from home.

Starting this business doesn’t require you to occupy a large space. However, the startup costs are still high. Mainly because of the costs of software and the salaries of software experts.

To make sure that your business is started and run efficiently, you must create a business plan computer software. To help you in making an accurate business continuity plan computer software company for your business, we’re providing here a business plan for software product . This sample business plan software for mac and pc is written for a computer software startup, Tech Solutions.

Computer Software Business Plan Summary

2.1 the business.

Tech Solutions will be a registered and insured computer software business. The business will provide all sorts of management, business, engineering, analytics, and computer repair software. The company will also offer software that allows integration with hardware devices. Moreover, some hardware accessories will also be sold by the company.

In this business plan sample of an online computer repair and sales of hardware and software, we’ll be providing all details of Tech Solutions for your guidance.

2.2 Management of Computer Software Company

To ensure the smooth and successful running of your business, it is essential to first create a business plan template for computer software. In your computer software reseller business plan, you should mention all details of how you will establish your business, hire the staff, purchase the inventory, and software for reselling. Moreover, it should explain a proper management structure that will allow you to cater to unexpected orders, staff problems, and financial issues.

2.3 Customers of Computer Software Company

Tech Solutions identified the following groups of people as its target customers:

• Companies & Businesses
• Engineering Schools
• Others (Retail Stores & General Public)

2.4 Business Target

We aim to earn and maintain a CSAT score above 90% within a year of our launch. Financially, we aim at earning a profit margin of $32.3k per month by the end of the three years of our launch.

Company Summary

3.1 company owner.

Tech Solutions will be owned by Dustin Grant. Dustin is a software engineer who has also acquired a master’s degree in business administration after his graduation. He has worked in a software firm for two years but eventually decided to start his own business plan for software product .

3.2 Why the computer software business is being started

Dustin started the computer software business to be an entrepreneur and earn huge profits. Throughout his academic and service years, he remained associated with software businesses. Therefore, at the time of starting his own business plan for software product , he believed the computer software business to be the best choice for him.

3.3 How the pc software business will be started

Step1: Develop computer hardware and software business plan

The first step to start this business would be to create a computer software and technology business plan. Dustin had adequate knowledge to develop the business continuity plan for computer software company, therefore he did the task himself. If you think that you don’t possess the required skillset to develop a business plan software for apple computers or any other relevant service, you must hire a professional for doing so.

Step2: Define your brand

After planning everything about your business plan for software product , you should step into the execution phase. This is the time to acquire licenses, registrations, inventory, and required software and hardware. Meanwhile, you should define your business values and services so that people can know about you.

Step3: Start the recruitment

The next step is to recruit the most component and skillful employees for your business plan for software product . A good approach is to also give them a few months of training so that they can learn to collaborate with each other.

Step4: Promote & market

After establishing your workplace and workforce, the next step is to promote your competitive advantages.

Step5: Establish a web presence

A strong web presence is inevitable for a software company. Since software services can be provided online, your customers are more likely to search about you on Google. Therefore, to offer your services on a wider scale, it is a must to establish a strong online presence.

Products of Computer Software Company

In your computer software retail business plan, you should also include the services you want to offer. To decide your services, you should study some guide to writing a computer software business plan examples. This will give you a broader idea of what other people are offering in the domain.

The products offered by Tech Solutions are provided below:

• Billing Software
• Asset Management software
• Clear Analytics
• Metric Insights
• SAP BusinessObjects
• StudioCloud
• Autodesk Revit
• JavaScript and more.
• Network Interface Cards
• Expansion cards
• Power supply unit
• Motherboard
• Optical disc drive
• Microprocessor
• Hard disk drive and more.

Marketing Analysis of Computer Software Business

Your business plan for computer software is incomplete unless you have done a detailed marketing analysis in it. Since purchasing software and hiring the persons who can run those software is a costly operation. Therefore, it is a must for you to purchase only the software that are demanded by your target customers. Knowing your target market will help you in understanding which type of software you should acquire. Moreover, by analyzing customers’ buying patterns you can figure out whether or not you should purchase a certain software.

In this computer programs business plan we’re providing the market analysis done for Tech Solutions. Dustin carried out a detailed marketing analysis before developing business plan software for mac computers and other devices. His special focus was to offer software products that weren’t offered by his market competitors.

5.1 Market Trends

The market stats for computer software-related companies are extremely good. According to IBISWorld, market size of $564bn is held just by online computer software sellers in the United States. The trends for business analytics software businesses are also highly encouraging. According to the same source, more than 4.5k such businesses are running in the United States successfully. The business has grown by 22.8% in the past five years, from 2016 to 2021. And is expected to grow more by 13.3% in 2021 alone.

5.2 Marketing Segmentation

The groups of target customers identified by Tech Solutions are provided in this computer software business plan sample.

5.2.1 Companies/ Businesses & Organizations

The first group of our target customers will comprise organizations and enterprises that need management and cloud-based intelligent software to manage their business plan for software product . They are expected to be our potential customers as they will need the latest software support to enhance their productivity.

5.2.2 Engineering Schools & Firms

The second group of our target customers will be the universities and firms that make use of engineering software. They may include design engineering firms, software firms, and manufacturing firms.

5.2.3 Others

The third category includes all other people and businesses who may need software and hardware. For example, retail stores are expected to get billing software from us. High school students are believed to purchase hardware accessories from us etc.

5.3 Business Target

Our business targets are

• To achieve a Net Promoter Score above 50 by the end of the two years of our launch.
• To earn and maintain a CSAT score above 90% within a year of our launch.
• To earn a net profit margin of $32.3k per month by the end of the third year
• To achieve and maintain an average ranking above 4.75 throughout our service years.

5.4 Product Pricing

Our prices are a little higher as compared to our market competitors. It is because of the continuous software support and training we’ll be providing free of cost.

Marketing Strategy of Computer Software Business

In your business plan computer software company you should also include the ways, you will adopt to outperform your competitors. Ideally, you should analyze your competitive benefits, sales business strategy , and forecasted sales in this part of computer software training business plan.

6.1 Competitive Analysis

• Our biggest competitive benefit is that we’re providing free training to our customers. People who will purchase software from us will be given 10-12 days of training so that they can use all the features of the software.
• We are highly customer-oriented. Our collaborative staff will remain in touch with you to provide you expert advice whenever you face any technical issues with the provided software.
• Our software offerings are more than all of our competitors. Therefore, we expect to get more customers than them.

6.2 Sales Strategy

• We’ll establish a strong web and social media presence to reach out to a wider audience.
• To advertise our services, we’ll make use of Google Local ads service, and local newspaper.
• We’ll send our sales executive to several companies and organizations to let them know about us.
• We’ll provide a 20% discount on all of our software for the first month of our launch.
• We’ll provide a 30% discount on all of our hardware products for the first two months of our launch.

6.3 Sales Monthly

6.4 sales yearly, 6.5 sales forecast, personnel plan.

The skills and performance of your employees are the things that will impact your business impression in the long run. To make your startup a success, it is essential to hire your employees with great care. And develop a human resource management plan to help them improve over time.

In this computer hardware software business plan, we’re providing the personnel plan of Tech Solutions.

7.1 Company Staff

Dustin will hire the following employees for his business:

• 1 Co-Manager to manage the company’s operations
• 4 Software Engineers to develop software and train people
• 2 IT Experts to maintain IT systems
• 2 Computer Technicians to help maintain the machinery
• 2 Sales Executives to discover new ventures for the company
• 1 Accountant to maintain financial records
• 1 Store Manager to manage hardware sales

7.2 Average Salary of Employees

Financial plan.

Though opening a computer software business doesn’t require you to rent a large space or procure huge inventory, still, the costs of starting and running this business are high. It is because many business software are very expensive especially those which are cloud-based and agile. And secondly, the salaries of highly expert software engineers are also high. Therefore, the finances of this business plan for software product need to be managed.

The best way for managing your finances, investments, profits, and losses is to develop a financial plan. In this computer software business plan sample we’re providing the financial plan that Dustin developed for Tech Solutions.

8.1 Important Assumptions

8.2 break-even analysis, 8.3 projected profit and loss, 8.3.1 profit monthly, 8.3.2 profit yearly, 8.3.3 gross margin monthly, 8.3.4 gross margin yearly, 8.4 projected cash flow, 8.5 projected balance sheet, 8.6 business ratios.

Download Computer Software Business Plan Sample in pdf

Professional OGS capital writers specialized also in themes such as smartphone business plan , computer store business plan, iPhone repair business plan , solid semiconductor business plan , best biotech business plans and many others.

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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Software Company Business Plan

High margins, low startup costs, global reach, and a recurring revenue model make starting a software company a lucrative and rewarding profession.

Need help writing a business plan for your software company? You’re at the right place. Our software company business plan template will help you get started.

Free Business Plan Template

Download our free business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!

• Fill in the blanks – Outline
• Financial Tables

How to Write A Software Company Business Plan?

Writing a software company business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready and summarizes each section of your plan.

Here are a few key components to include in your executive summary:

Introduce your Business:

Start your executive summary by briefly introducing your business to your readers.

Market Opportunity:

Products and services:.

Highlight the software company services you offer your clients. The USPs and differentiators you offer are always a plus.

Marketing & Sales Strategies:

Financial highlights:, call to action:.

Ensure your executive summary is clear, concise, easy to understand, and jargon-free.

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2. Business Overview

The business overview section of your business plan offers detailed information about your company. The details you add will depend on how important they are to your business. Yet, business name, location, business history, and future goals are some of the foundational elements you must consider adding to this section:

Business Description:

Describe your business in this section by providing all the basic information:

Describe what kind of software company you run and the name of it. You may specialize in one of the following software company businesses:

• Enterprise software companies
• SaaS companies
• Mobile app development companies
• Web development companies
• Cybersecurity companies
• HealthTech companies
• Describe the legal structure of your software company, whether it is a sole proprietorship, LLC, partnership, or others.
• Explain where your business is located and why you selected the place.

Mission Statement:

Business history:.

If you’re an established software company, briefly describe your business history, like—when it was founded, how it evolved over time, etc.

Future Goals

This section should provide a thorough understanding of your business, its history, and its future plans. Keep this section engaging, precise, and to the point.

3. Market Analysis

The market analysis section of your business plan should offer a thorough understanding of the industry with the target market, competitors, and growth opportunities. You should include the following components in this section.

Target market:

Start this section by describing your target market. Define your ideal customer and explain what types of services they prefer. Creating a buyer persona will help you easily define your target market to your readers.

Market size and growth potential:

Describe your market size and growth potential and whether you will target a niche or a much broader market.

Competitive Analysis:

Market trends:.

Analyze emerging trends in the industry, such as technology disruptions, changes in customer behavior or preferences, etc. Explain how your business will cope with all the trends.

Regulatory Environment:

Here are a few tips for writing the market analysis section of your internet software company business plan:

• Conduct market research, industry reports, and surveys to gather data.
• Provide specific and detailed information whenever possible.
• Illustrate your points with charts and graphs.
• Write your business plan keeping your target audience in mind.

4. Products And Services

The product and services section should describe the specific services and products that will be offered to customers. To write this section should include the following:

Describe your products & services:

Mention the software company products or services your business will offer. This list may include:

• Custom Software Development
• Commercial Off-the-Shelf (COTS) Software
• Software as a Service (SaaS)
• Software Development Tools
• Software Consulting
• Software Maintenance and Support
• Software Testing and Quality Assurance
• Training and Documentation

Industry focus:

Quality measures, additional services.

In short, this section of your software company plan must be informative, precise, and client-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

Unique Selling Proposition (USP):

Define your business’s USPs depending on the market you serve, the equipment you use, and the unique services you provide. Identifying USPs will help you plan your marketing strategies.

Pricing Strategy:

Marketing strategies:, sales strategies:, customer retention:.

Overall, this section of your software company business plan should focus on customer acquisition and retention.

Have a specific, realistic, and data-driven approach while planning sales and marketing strategies for your software company, and be prepared to adapt or make strategic changes in your strategies based on feedback and results.

6. Operations Plan

The operations plan section of your business plan should outline the processes and procedures involved in your business operations, such as staffing requirements and operational processes. Here are a few components to add to your operations plan:

Staffing & Training:

Operational process:, software & tools:.

Include the list of software & tools required for a software company, such as cloud services & infrastructure, project management tools, Version Control Systems, collaboration & communication tools, etc.

Adding these components to your operations plan will help you lay out your business operations, which will eventually help you manage your business effectively.

7. Management Team

The management team section provides an overview of your software company’s management team. This section should provide a detailed description of each manager’s experience and qualifications, as well as their responsibilities and roles.

Founders/CEO:

Key managers:.

Introduce your management and key members of your team, and explain their roles and responsibilities.

Organizational structure:

Compensation plan:, advisors/consultants:.

Mentioning advisors or consultants in your business plans adds credibility to your business idea.

This section should describe the key personnel for your software company services, highlighting how you have the perfect team to succeed.

8. Financial Plan

Your financial plan section should provide a summary of your business’s financial projections for the first few years. Here are some key elements to include in your financial plan:

Profit & loss statement:

Cash flow statement:, balance sheet:, break-even point:.

Determine and mention your business’s break-even point—the point at which your business costs and revenue will be equal.

Financing Needs:

Be realistic with your financial projections, and make sure you offer relevant information and evidence to support your estimates.

9. Appendix

The appendix section of your plan should include any additional information supporting your business plan’s main content, such as market research, legal documentation, financial statements, and other relevant information.

• Add a table of contents for the appendix section to help readers easily find specific information or sections.
• In addition to your financial statements, provide additional financial documents like tax returns, a list of assets within the business, credit history, and more. These statements must be the latest and offer financial projections for at least the first three or five years of business operations.
• Provide data derived from market research, including stats about the industry, user demographics, and industry trends.
• Include any legal documents such as permits, licenses, and contracts.
• Include any additional documentation related to your business plan, such as product brochures, marketing materials, operational procedures, etc.

Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your software company business plan should only include relevant and important information supporting your plan’s main content.

This sample software company business plan will provide an idea for writing a successful software company plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready business plan to impress your audience, download our software company business plan pdf .

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Frequently asked questions, why do you need a software company business plan.

A business plan is an essential tool for anyone looking to start or run a successful software company business. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your software company.

How to get funding for your software company?

There are several ways to get funding for your software company, but self-funding is one of the most efficient and speedy funding options. Other options for funding are

• Bank loan – You may apply for a loan in government or private banks.
• Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
• Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your business, usually online.
• Angel investors – Getting funds from angel investors is one of the most sought startup options.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your software company?

There are many business plan writers available, but no one knows your business and ideas better than you, so we recommend you write your software company business plan and outline your vision as you have in your mind.

What is the easiest way to write your software company business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any software company business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software .

How do I write a good market analysis in a software company business plan?

Market analysis is one of the key components of your business plan that requires deep research and a thorough understanding of your industry. We can categorize the process of writing a good market analysis section into the following steps:

• Stating the objective of your market analysis—e.g., investor funding.
• Industry study—market size, growth potential, market trends, etc.
• Identifying target market—based on user behavior and demographics.
• Analyzing direct and indirect competitors.
• Calculating market share—understanding TAM, SAM, and SOM.
• Knowing regulations and restrictions
• Organizing data and writing the first draft.

Writing a marketing analysis section can be overwhelming, but using ChatGPT for market research can make things easier.

How detailed should the financial projections be in my software company business plan?

The level of detail of the financial projections of your software company may vary considering various business aspects like direct and indirect competition, pricing, and operational efficiency. However, your financial projections must be comprehensive enough to demonstrate a complete view of your financial performance.

Generally, the statements included in a business plan offer financial projections for at least the first three or five years of business operations.

What key components should a software company business plan include?

The following are the key components your software company business plan must include:

• Executive summary
• Business Overview
• Market Analysis
• Products and services
• Sales and marketing strategies
• Operations plan
• Management team
• Financial plan

Can a good software company business plan help me secure funding?

Indeed. A well-crafted software company will help your investors better understand your business domain, market trends, strategies, business financials, and growth potential—helping them make better financial decisions.

So, if you have a profitable and investable business, a comprehensive business plan can certainly help you secure your business funding.

What's the importance of a marketing strategy in a software company business plan?

Marketing strategy is a key component of your software company business plan. Whether it is about achieving certain business goals or helping your investors understand your plan to maximize their return on investment—an impactful marketing strategy is the way to do it!

Here are a few pointers to help you understand the importance of having an impactful marketing strategy:

• It provides your business an edge over your competitors.
• It helps investors better understand your business and growth potential.
• It helps you develop products with the best profit potential.
• It helps you set accurate pricing for your products or services.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Software Business Plan Template

Written by Dave Lavinsky

Software Company Business Plan

You’ve come to the right place to create your Software Company business plan.

We have helped over 1,000 entrepreneurs and business owners create software business plans and many have used them to start or grow their software companies.

Below is a software business plan template to help you create each section of your own Software Company business plan.

Executive Summary

Business overview.

SimpleBooks Inc. is a new accounting software company located in Seattle, Washington. We produce an accounting product that helps small and medium-sized businesses with all of their accounting tasks. Some of these features we provide in our software include bookkeeping, tracking cash flow, reconciling bank accounts, and creating/managing financial reports.

SimpleBooks Inc. is founded by Edward Jameson, who has been a developer for 20 years. He created this software based on the complaints that his wife had of the accounting software she was using. He initially created the software to help his wife’s business but decided to expand the product and sell it to other local small and medium-sized businesses with similar accounting needs.

Product Offering

SimpleBooks Inc. produces accounting software that helps small and medium-sized businesses with all their accounting needs. We offer an extensive list of features, including the following:

• Bookkeeping
• Reconciling bank accounts
• Cash flow tracking and management
• Accounts receivable
• Income and expenses tracking
• Invoice and payment processing
• Mileage tracking
• Receipt capture
• Bill management
• Tax deductions
• Inventory management
• Employee expenses tracking
• Business analytics
• Project profitability
• Time tracking
• Financial report generation

Customer Focus

SimpleBooks Inc. will primarily target businesses in the Seattle, Washington area. The software is designed for smaller businesses, so most of our clientele will include businesses with less than 500 employees.

Management Team

SimpleBooks Inc. is founded by Edward Jameson, who has been a developer for 20 years. He has substantial experience creating software for large companies and has been very successful in his career. He initially built the company’s accounting software to help his wife’s business, but decided to expand the product and sell it to other small businesses in the area.

Success Factors

SimpleBooks Inc. will be able to achieve success by offering the following competitive advantages:

• Edward Jameson has been extremely successful working in the software industry and will be able to use experience to create the best products for our target market.
• Edward knows many of the local leaders, business managers, and other influencers within Seattle, Washington and will use those connections to establish an initial clientbase.
• SimpleBooks Inc.’s products are designed with small businesses in mind and will be curated to help the particular accounting needs of this target demographic.

Financial Highlights

SimpleBooks Inc. is seeking a total funding of $500,000 of debt capital to launch. The breakout of the funding is below:

• Office design/build: $100,000
• Software development: $150,000
• Three months of overhead expenses (payroll, rent, utilities): $150,000
• Marketing costs: $50,000
• Working capital: $50,000

The following graph below outlines the pro forma financial projections for SimpleBooks Inc.:

Company Overview

Who is simplebooks inc..

SimpleBooks Inc. is a new accounting software company located in Seattle, Washington. We produce an accounting software product that helps small and medium-sized businesses with all of their accounting tasks. We offer three tiers of features. Our basic tier only offers basic accounting functions while our advanced tier offers an extensive list of features for larger and more complex businesses. Some of these features include bookkeeping, tracking cash flow, reconciling bank accounts, and creating/managing financial reports.

  SimpleBooks Inc. is founded by Edward Jameson, who has been a developer for 20 years. His wife is an accountant who was very unhappy with other accounting software products. Other accounting software can be overwhelming to use, unintuitive, and are geared toward large organizations and enterprises. Edward knew of her complaints and developed an accounting software geared towards her small business. Edward’s wife has been successfully using the software for nearly a year, so Edward is confident that this product can help other small and medium-sized businesses with similar accounting needs.

SimpleBooks Inc.’s History

After developing the software for his wife’s company, Edward Jameson did a thorough market analysis to see how well his software would do if he sold it to other local small businesses. Once his market analysis was complete, Edward incorporated SimpleBooks Inc. as an S corporation.

Since incorporation, the company has achieved the following milestones:

• Located a potential office space and signed a Letter of Intent to lease it
• Developed the company’s name, logo, and website
• Determined equipment and necessary supplies
• Began recruiting key employees

SimpleBooks Inc.’s Services

SimpleBooks Inc. produces accounting software that helps small and medium-sized businesses with all their accounting needs. Clients interested in our software can purchase one of three plans: basic, intermediate, or advanced. Our most basic plan will offer just the essential bookkeeping and accounting functions that most businesses need and only allow up to three users per account. Our intermediate plan will offer more features and allow up to seven users per account. Our most advanced plan will offer an extensive suite of accounting features and allow up to twenty users per account. All plans are charged on a monthly basis, with our basic plan being the cheapest option and advanced option being the most expensive.

Some of the functions and features included in our software products include:

Industry Analysis

According to market research, the global software industry is expected to grow substantially over the next five years. Nearly every business uses some form of software to automate its processes and increase efficiency and accuracy. Therefore, demand remains high and the industry continues to grow and expand.

Business software includes project management software, communication software, customer relationship management software, and accounting software. Accounting software is particularly popular as it significantly improves accuracy and efficiency when handling all things related to accounting. Good accounting software can help a business keep detailed tracking of all its finances, and prevent a business from bleeding money or losing track of funds.

Business software companies can succeed by providing competitive features, multiple plans and products, and keeping their products affordable. They will also succeed if they can make products that work for both small businesses and large enterprises. A company that can provide this type of software will remain competitive in the global market and see rising demand from its clientele.

Customer Analysis

Demographic profile of target market.

SimpleBooks Inc. will primarily target businesses in the Seattle, Washington area. The software is designed for smaller businesses, so most of our clientele will include solopreneurs, small businesses, and medium businesses with less than 500 employees. We hope to eventually branch out and serve clients located beyond the Seattle area.

Customer Segmentation

SimpleBooks Inc. will primarily target the following customer profiles:

• Solopreneurs
• Small businesses
• Medium-sized businesses

Competitive Analysis

Direct and indirect competitors.

SimpleBooks Inc. will face competition from other companies with similar business profiles. A description of each competitor company is below.

QuickBooks is one of the most popular accounting programs out there. It provides businesses with everything a business needs for its accounting department, including tracking income and expenses, managing cash flow, and helping with taxes. Clients can choose one of four monthly plans depending on the features they need and how large their accounting department is. Plans are charged on a monthly basis and include quick and helpful support and app integration.

Xero is a powerful accounting software for companies of all sizes. Clients who have Xero can pay bills, manage payroll, claim expenses, send invoices, and track inventory. They offer three tiers to choose from, including a very affordable basic plan and other plans that offer extensive features. They also provide specialized features for small businesses and for businesses in particular industries.

Freshbooks is a popular accounting software with businesses of all sizes in mind. They offer numerous features that vary depending on if you are a freelancer, a business with contractors, or a business with employees. Some of these features include managing expenses and receipts, tracking mileage and time, invoicing, and generating financial reports. They offer three tiers of plans but also create custom plans for businesses with complex and unique accounting needs.

Competitive Advantage

SimpleBooks Inc. will be able to offer the following advantages over the competition:

• Management: Edward Jameson has been extremely successful working in the software industry and will be able to use his previous experience to create the best products and experience for his clients. His unique qualifications will serve customers in a much more sophisticated manner than SimpleBooks Inc.’s competitors.
• Relationships: Edward knows many of the local leaders, business managers, and other influencers within Seattle, Washington. With his 10 years of experience and good relationships with business leaders in the area, he will be able to develop an initial client base.
• Small business focus: While our competitors do offer features for small and medium sized businesses, their products are designed with large enterprises in mind. This can make their products feel overwhelming and unintuitive. SimpleBooks Inc.’s products are designed specifically for small and medium businesses with fewer than 500 employees.

Marketing Plan

Brand & value proposition.

SimpleBooks Inc. will offer a unique value proposition to its clientele:

• Service built on long-term relationships
• A focus on helping small businesses succeed
• Affordable pricing
• Excellent customer service

Promotions Strategy

The marketing strategy for SimpleBooks Inc. is as follows:

Referral Marketing

SimpleBooks Inc. will invest heavily in a social media advertising campaign. Edward will create the company’s social media accounts and invest in ads on all social media platforms. He will use targeted marketing to appeal to the target demographics.

Social Media SimpleBooks Inc. will invest heavily in a social media advertising campaign. Edward will create the company’s social media accounts and invest in ads on all social media platforms. He will use targeted marketing to appeal to the target demographics.

Website/SEO

SimpleBooks Inc. will invest in developing a professional website that displays all of the features of our accounting software. It will also invest heavily in SEO so that the brand’s website will appear at the top of search engine results.

Direct Mail

SimpleBooks Inc. will blanket businesses with direct mail pieces. These pieces will provide general information on SimpleBooks Inc., offer discounts, and/or provide other incentives for companies to try out our accounting software.

SimpleBooks Inc.’s pricing will be on par with competitors so clients feel they receive great value when purchasing our software.

Operations Plan

The following will be the operations plan for SimpleBooks Inc.: Operation Functions:

• Edward Jameson will be the Owner and CEO of the company. He will oversee all the operations and executive functions of the company. In the beginning, he will also provide customer support and development support until he hires several other developers and customer support professionals.
• Edward will employ an experienced assistant to help with various administrative duties around the office.
• Edward will also hire several developers to develop, improve, and maintain the company’s software products.
• Edward will also hire a solid sales team to sell our products to potential clients. As the company grows, he will also hire a team that is solely dedicated to customer service.

Milestones:

SimpleBooks Inc. will have the following milestones completed in the next six months.

• 5/2023 – Finalize lease agreement
• 6/2023 – Design and build out SimpleBooks Inc.
• 7/2023 – Hire and train initial staff
• 8/2023 – Kickoff of promotional campaign
• 9/2023 – Launch SimpleBooks Inc.
• 10/2023 – Reach break-even

SimpleBooks Inc. is founded by Edward Jameson, who has been a developer for 20 years. His wife is an accountant who was very unhappy with other accounting software products. Other accounting software can be overwhelming to use, unintuitive, and are geared toward large organizations and enterprises. Edward knew of her complaints and developed an accounting software geared towards her small business. Edward’s wife has been successfully using the software for nearly a year, so Edward is confident that this product can help other small and medium-sized businesses with similar accounting needs.

Financial Plan

Key revenue & costs.

The key revenues for SimpleBooks Inc. will come from the monthly fees that are charged to clients for using the software. There are three tiers that clients can choose from. The option that each client chooses will determine how much revenue the company makes.

The major cost drivers for the company include the lease, salaries, overhead, development costs, and marketing expenses.

Funding Requirements and Use of Funds

SimpleBooks Inc. is seeking a total funding of $500,000 of debt capital to launch. The funding will be dedicated to office design, software development, marketing, and working capital. Specifically, these funds will be used as follows:

Key Assumptions

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.

• Number of clients:
• Annual rent: $30,000

Financial Projections

Income statement, balance sheet, cash flow statement, software company business plan faqs, what is a software company business plan.

A software company business plan is a plan to start and/or grow your software company business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Software Company business plan using our Software Company Business Plan Template here .

What are the Main Types of Software Company Businesses?

There are a number of different kinds of software company businesses , some examples include: Open source, Client-specific, Programming services, and System services.

How Do You Get Funding for Your Software Company Business Plan?

Software Company businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Software Company Business?

Starting a software company business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Software Company Business Plan - The first step in starting a business is to create a detailed software company business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your software company business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your software company business is in compliance with local laws.

3. Register Your Software Company Business - Once you have chosen a legal structure, the next step is to register your software company business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your software company business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Software Company Equipment & Supplies - In order to start your software company business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your software company business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful software company business:

• How to Start a Software Company Business

How to Write a Winning Software Company Business Plan + Template

Creating a business plan is essential for any business, but it can be especially helpful for software businesses who want to improve their strategy and raise funding.

A well-crafted business plan not only outlines the vision for your company but also documents a step-by-step roadmap of how you will accomplish it. To create an effective business plan, you must first understand the components that are essential to its success.

This article provides an overview of the key elements that every software business owner should include in their business plan.

Download the Ultimate Business Plan Template

What is a Software Business Plan?

A software business plan is a formal written document that describes your company’s business strategy and its feasibility. It documents the reasons you will be successful, your areas of competitive advantage, and it includes information about your team members. Your business plan is a key document that will convince investors and lenders (if needed) that you are positioned to become a successful venture.

Why Write a Software Business Plan?

A software business plan is required for banks and investors. The document is a clear and concise guide of your business idea and the steps you will take to make it profitable.

Entrepreneurs can also use this as a roadmap when starting their new company or venture, especially if they are inexperienced in starting a business.

Writing an Effective Software Business Plan

The following are the key components of a successful software business plan:

Executive Summary

The executive summary of a software business plan is a one- to two-page overview of your entire business plan. It should summarize the main points, which will be presented in full in the rest of your business plan.

• Start with a one-line description of your software company
• Provide a short summary of the key points in each section of your business plan, which includes information about your company’s management team, industry analysis, competitive analysis, and financial forecast among others.

Company Description

This section should include a brief history of your company. Include a short description of how your company started, and provide a timeline of milestones your company has achieved.

If you are just starting your software business, you may not have a long company history. Instead, you can include information about your professional experience in this industry and how and why you conceived your new venture. If you have worked for a similar company before or have been involved in an entrepreneurial venture before starting your software firm, mention this.

You will also include information about your chosen software business model and how, if applicable, it is different from other companies in your industry.

Industry Analysis

The industry or market analysis is an important component of a software business plan. Conduct thorough market research to determine industry trends and document the size of your market. 

Questions to answer include:

• What part of the software industry are you targeting?
• How big is the market?
• What trends are happening in the industry right now (and if applicable, how do these trends support the success of your company)?

You should also include sources for the information you provide, such as published research reports and expert opinions.

Customer Analysis

This section should include a list of your target audience(s) with demographic and psychographic profiles (e.g., age, gender, income level, profession, job titles, interests). You will need to provide a profile of each customer segment separately, including their needs and wants.

For example, a software business’s customers may include small, medium, and enterprise businesses. Each of these customer segments will have different needs and wants.

You can include information about how your customers make the decision to buy from you as well as what keeps them buying from you.

Develop a strategy for targeting those customers who are most likely to buy from you, as well as those that might be influenced to buy your products or software services with the right marketing.

Competitive Analysis

The competitive analysis helps you determine how your product or service will be different from competitors, and what your unique selling proposition (USP) might be that will set you apart in this industry.

For each competitor, list their strengths and weaknesses. Next, determine your areas of competitive differentiation and/or advantage; that is, in what ways are you different from and ideally better than your competitors.

Below are sample competitive advantages your software business may have:

• Superior customer service
• Strong brand recognition
• Proven track record of success
• Robust product feature set
• Well-funded and experienced management team
• Innovative technology
• Scalable business model
• Strategic partnerships or alliances
• Favorable locations
• Access to important resources, like talent or capital

Keep in mind that your competitive advantages will change over time as your business grows and as new competitors enter the market. It is important to regularly review and update.

Marketing Plan

This part of the business plan is where you determine and document your marketing plan. . Your plan should be clearly laid out, including the following 4 Ps.

• Product/Service : Detail your product/service offerings here. Document their features and benefits.
• Price : Document your pricing strategy here. In addition to stating the prices for your products/services, mention how your pricing compares to your competition.
• Place : Where will your customers find you? What channels of distribution (e.g., partnerships) will you use to reach them if applicable?
• Promotion : How will you reach your target customers? For example, you may use social media, write blog posts, create an email marketing campaign, use pay-per-click advertising, or launch a direct mail campaign. Or you may promote your software business via a mix of these channels.

Operations Plan

This part of your software business plan should include the following information:

• How will you deliver your product/service to customers? For example, will you do it in person or over the phone only?
• What infrastructure, equipment, and resources are needed to operate successfully? How can you meet those requirements within budget constraints?

The operations plan is where you also need to include your company’s business policies. You will want to establish policies related to everything from customer service to pricing, to the overall brand image you are trying to present.

Finally, and most importantly, your Operations Plan will outline the milestones your company hopes to achieve within the next five years. Create a chart that shows the key milestone(s) you hope to achieve each quarter for the next four quarters, and then each year for the following four years. Examples of milestones for a software business include reaching $X in sales. Other examples include acquiring X number of customers or launching a new product line.

Management Team

List your team members here including their names and titles, as well as their expertise and experience relevant to your specific software industry. Include brief biography sketches for each team member.

Particularly if you are seeking funding, the goal of this section is to convince investors and lenders that your team has the expertise and experience to execute on your plan. If you are missing key team members, document the roles and responsibilities you plan to hire for in the future.

Financial Plan

Here you will include a summary of your complete and detailed financial plan (your full financial projections go in the Appendix). 

This includes the following three financial statements:

Income Statement

Your income statement should include:

• Revenue : how much revenue you generate.
• Cost of Goods Sold : These are your direct costs associated with generating revenue. This includes labor costs, as well as the cost of any equipment and supplies used to deliver the product/service offering.
• Net Income (or loss) : Once expenses and revenue are totaled and deducted from each other, this is the net income or loss.

Sample Income Statement for a Startup Software Business

Balance sheet.

Include a balance sheet that shows your assets, liabilities, and equity. Your balance sheet should include:

• Assets : All of the things you own (including cash).
• Liabilities : This is what you owe against your company’s assets, such as accounts payable or loans.
• Equity : The worth of your business after all liabilities and assets are totaled and deducted from each other.

Sample Balance Sheet for a Startup Software Business

Cash flow statement.

Include a cash flow statement showing how much cash comes in, how much cash goes out and a net cash flow for each year. The cash flow statement should include cash flow from:

• Investments

Below is a sample of a projected cash flow statement for a startup software company.

Sample Cash Flow Statement for a Startup Software Business

You will also want to include an appendix section which will include:

• Your complete financial projections
• A complete list of your company’s business policies and procedures related to the rest of the business plan (marketing, operations, etc.)
• Any other documentation which supports what you included in the body of your business plan.

Write a Winning Business Plan for Your Software Company

Writing a good business plan gives you the advantage of being fully prepared to launch and/or grow your software company. It not only outlines your business vision but also provides a step-by-step process of how you are going to accomplish it.

A business plan is a critical document for any new software company. If you are seeking funding, your business plan will be a key component of your pitch to investors .   

Finish Your Business Plan in 1 Day!

Wish there was a faster, easier way to finish your business plan?

With our Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

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How to Write a Winning Tech Company Business Plan (+ Template)

How to Start a Software Company

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How To Start a Software Company

How to start a software company faqs, additional resources in the software publishing industry.

Starting a software company can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful software company.

Importantly, a crucial step in starting a software company is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.

Download our Ultimate Business Plan Template here

15 Steps To Start a Software Company

• Choose the Name for Your Software Company
• Develop Your Software Company Business Plan
• Choose the Legal Structure for Your Software Company
• Secure Startup Funding for Your Software Company (If Needed)
• Secure a Location for Your Business
• Register Your Software Company With the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Software Company
• Buy or Lease the Right Software Company Business Equipment
• Develop Your Software Company Marketing Materials
• Purchase and Setup the Software Needed to Run Your Software Company
• Start Building Your Team
• Open for Business

1. Choose the Name for Your Software Company

The first step to starting your own software company is to choose your business’ name.

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your software company:

• Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
• Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
• Think about marketing. Come up with a name that reflects the desired brand and/or focus of your software company.

2. Develop Your Software Company Business Plan

One of the most important steps in starting a software company is to develop your business plan. The purpose of a business plan is to ensure that you fully understand your market and your software business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your software publishing business plan should include the following sections:

• Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your software company.
• Company Overview – this section tells the reader about the history of your software company and what type of software company you operate. For example, are you an enterprise software company or a software as a service company?
• Industry Analysis – here you will document key information about the software industry. Conduct market research and document how big the industry is and what trends are affecting it.
• Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, do they have a specific job title or work in a particular industry?
• Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
• Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
• Product : Determine and document what products/services you will offer
• Prices : Document the prices of your products/services
• Place : Where will your business be located and how will that location help you increase sales?
• Promotions : What promotional methods will you use to attract customers to your software company? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
• Operations Plan – here you will determine the key processes you will need to run your business operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
• Management Team – this section details the background of your company’s management team.
• Financial Plan – finally, the financial plan answers questions including the following:
• What startup costs will you incur?
• How will your software company make money?
• What are your projected sales and expenses for the next five years?
• Do you need to raise funding to launch your business?

Finish Your Business Plan Today!

3. choose the legal structure for your software company.

Next you need to choose a legal structure for your software company and register it and your business name with the Secretary of State in each state where you operate your software business. Below are the five most common legal structures:

1) Sole Proprietorship

A sole proprietorship is a business entity in which the owner of the software company and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a software company together. The partners share in the profits and losses of the business.

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a software company include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a software company is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your software company, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

4. Secure Startup Funding for Your Software Company (If Needed)

In developing your software company business plan, you might have determined that you need to raise funding to launch your business. If so, the main sources of funding for a software business to consider are venture capital funds, personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a software company that they believe has high potential for growth.

5. Secure a Location for Your Business

You have some flexibility in deciding whether you want to secure an office space for your software company, build a remote team, or a combination of the two.

If you choose to buy or rent a physical location, consider:

• Driving around to find the right areas while looking for “for lease” signs
• Contacting a commercial real estate agent
• Doing commercial real estate searches online
• Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space

6. Register Your Software Company With the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your plan and financial model in hours.

7. Open a Business Bank Account

It is important to establish a bank account in your software company’s name. This process is fairly simple and involves the following steps:

• Identify and contact the bank you want to use
• Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
• Complete the bank’s application form and provide all relevant information
• Meet with a banker to discuss your business needs and establish a relationship with them

8. Get a Business Credit Card

You should get a business credit card for your software company to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.

9. Get the Required Business Licenses and Permits

Every state, county and city has different business license and permit requirements.

Nearly all states, counties and/or cities have license requirements including:

• General Business License – A business license is typically required to operate a business in a particular state. The requirements and fees for a business license vary by state, so it is important to research the requirements in your state. Some common requirements for a business license include having a registered name for your company and filing articles of incorporation.
• Sales Tax License – A sales tax license is typically required to collect and remit sales tax in a particular state. The requirements and fees for a sales tax license vary by state, so it is important to research the requirements in your state. Some common requirements for a sales tax license include registering with the state department of revenue and applying for a seller’s permit.

Depending on where you launch your software company, you will have to obtain the necessary state, county and/or city licenses.

10. Get Business Insurance for Your Software Company

Some common types of insurance to consider include:

• General Liability Insurance – General liability insurance is a type of insurance that provides coverage for a business in the event that it is sued for negligence or other wrongful acts. This type of insurance can help protect a software company from lawsuits related to product liability, property damage, or personal injury.
• Errors and Omissions Insurance – Errors and omissions insurance, also known as professional liability insurance, is a type of insurance that provides coverage for a business in the event that it is sued for negligence or other wrongful acts. This type of insurance can help protect a software company from lawsuits related to software development, consulting, or other professional services.
• Product Liability Insurance – Product liability insurance is a type of insurance that provides coverage for a business in the event that its products cause harm to consumers. This type of insurance can help protect a software company from lawsuits related to product defects, design flaws, or improper instructions.
• Workers’ Compensation Insurance – Workers’ compensation insurance is a type of insurance that provides coverage for a business in the event that an employee is injured while working. This type of insurance can help protect a software company from lawsuits related to workplace accidents.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.

11. Buy or Lease the Right Software Company Business Equipment

To start, a software company really only needs reliable computers and basic office supplies. If you are opening a physical location for your software company, you might also need desks and other office furniture for your team, as well as reception furniture. If you plan to do many virtual meetings, be sure to invest in a decent webcam.

12. Develop Your Software Company Marketing Materials

Marketing materials will be required to attract and retain customers to your software company.

The key marketing materials you will need are as follows:

• Logo – Spend some time developing a good logo for your software company. Your logo will be printed on company stationery, business cards, marketing materials, and may even be seen when users load your products. The right logo can increase customer trust and awareness of your brand.
• Website – Likewise, a professional software company website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how your target market perceives you.
• Social Media Accounts – Establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your software company.

13. Purchase and Setup the Software Needed to Run Your Software Company

Your team will need a good software development platform. This can be something like Microsoft Visual Studio, Eclipse, or Xcode. The company also needs a good source code control system, like Git or Subversion. Finally, the company will need some good software development tools, like a compiler, an editor, and a debugger.

Slack is another popular tool among software development teams that allows members to keep in touch and help to build workplace morale among virtual workers. You should also explore bookkeeping and payroll software.

14. Start Building Your Team

Your team should be composed of individuals with the necessary skills and experience to help you build your product and grow your company. When assembling your team, it’s important to find people who share your vision and are passionate about your product.

It is a good idea to hire at least one product manager who can be responsible for creating and managing your product roadmap, defining product features, and coordinating development efforts

Any software development business relies on having a strong development team. You will need software engineers to actually design, build, and maintain the products you create. Likewise, your should plan on hiring sales and marketing team members to spread awareness about your products and make sales.

15. Open for Business

You are now ready to open your software company. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.

How to Finish Your Software Company Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your business plan?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Click here to finish your business plan today.

Is It Hard To Start a Software Company?

Yes, it can be hard to start a software company. One of the biggest hurdles will be coming up with a great idea for software that people will want to use. Attempting to raise money needed to start a software development company can also be difficult. Owning a software company can also be a lot of fun and a rewarding experience, however, and the steps we have outlined above will help put you on the path to success. Just be sure to understand the needs of your particular business before you begin.

How Can I Start a Software Company With No Experience?

One of the most important things you can do to start a new software company with no experience is research. Look into the software industry as a whole, as well as how much it typically costs and the time needed to develop software. You might also consider connecting with experienced software development business owners who can give you their insights into the dos and don't of opening and running a successful software company.

What Type of Software Company Is Most Profitable?

There is no easy answer to this question, as the profitability of a software company depends on a variety of factors, including the type of software it produces, the size and location of the market it targets, and the level of competition it faces. However, some types of software companies are more likely to be profitable than others.

Generally speaking, an enterprise software development business can charge more for its products as the target market is often large organizations. Companies that make custom software may also charge more since they create tailor-made solutions for their customers, which often requires more resources and time than selling a premade software product. 

How Much Does It Cost To Start a Software Company?

The amount you will need to spend to start a software development business will depend on the type of company you want to create, the services you offer, and the location where you plan to operate. 

You will need to pay for office space, computers, software, and marketing materials. You may also need to hire employees or contractors. It is important to remember that you will also need to pay taxes on your income, so make sure you have enough money set aside to cover your expenses.

Startup costs for  software companies range from $30,000 to $150,000 depending on the business scale.

What Are the Ongoing Expenses for a Software Company?

One of the biggest expenses for any software company is employee salaries. You'll need to pay your employees a livable wage in order to keep them happy and productive. In addition, you'll also need to budget for things like office supplies, marketing, and of course, taxes. Key expenses include:

• Wages – Over a third of revenue is comprised of wages.
• Purchases, Research and Development – Over 10% of software publishing revenue is spent for purchases, research and development.
• Other – The other costs in the software publishing industry comprise marketing costs, depreciation, rent, office supplies, furniture, etc.

How Does a Software Company Make Money?

There are a few ways that a software company can make money. The most common way is to sell licenses to the software that they create. This can be a one-time purchase or a fee charged on a subscription basis. In the case of SaaS, customers often pay a regular fee to access software over the internet instead of installing it on a local device. Another way to make money is to create add-on products or services that complement the software. These could be additional features or support plans.

Is Owning a Software Company Profitable?

The answer to this question largely depends on the specific industry and market conditions. However, in general, companies that produce and sell software can be quite profitable. The key is to have a unique and valuable product that meets the needs of your customers.

How Much Do Software Publishing Operators Make?

A software publisher earns an average of $61,000.

Why Do Software Companies Fail?

One of the main reasons software companies fail is that they do not have a clear vision and strategy. A company without a clear vision will lack focus and direction, which can lead to missed opportunities and failure. Additionally, a lack of strategy can doom a company to failure because it means they are not taking the necessary steps to succeed. Other reasons software companies fail include poor marketing, inadequate funding, and no customer base.

How Big Is the Software Publishing Industry?

There are 7,737 software companies in the U.S. and they generated $192.7 billion in revenue last year. This shows an annual growth rate of 3.6% in the past 5 years.

What Are the Key Segments of the Software Publishing Industry?

The main segments of the industry are Application software publishing and System software publishing. Other product segments include re-sale of computer hardware and software, Information technology technical consulting services, custom application design and development, and information technology-related training services.

What External Factors Affect the Software Publishing Industry?

A number of factors affect the performance of the software publishing industry. These drivers include:

• Private Investment in Computers and Software - When the demand for computers increases, the software publishing industry is positively affected. This year, investment in computers and software is expected to rise.
• Number of Mobile Internet Connections - An increase in the use of mobile internet connections make mobile devices more vulnerable to viruses, thus also increasing the need for security software and improving industry revenue. The number of mobile internet connections continues to increase.
• Corporate Profit - When the profit of companies rises, they tend to upgrade IT systems which involves purchases of new software.
• Demand From Video Games - An increase in sales from video games benefits the software publishers. This year, demand for video games will increase.
• Government Consumption and Investment - Government spending benefits the software publishing industry and it is increasing this year.
• Percentage of Households With at Least One Computer - An increase in the number of PC owners means there’s also higher demand for software. The percentage of households with at least one computer is increasing today.
• Per Capita Disposable Income - An increase in consumers’ per capita disposable income indicates that there is a high chance that they will purchase new software for personal use or entertainment.

Who Are the Key Competitors in the Software Publishing Industry?

Oracle Corp.

Microsoft Corporation

International Business Machines Corp.

What Are the Key Customer Segments in the Software Publishing Industry?

The largest customer segment in the software publishing industry is businesses. Households then make up about a third of all customers and government entities make up a small portion.

For additional information on the software publishing market, consider these industry resources:

• The Software & Information Industry Association: www.siia.net
• US Census Bureau: www.census.gov
• The Entertainment Software Association:  www.theesa.com
• US Bureau of Labor Statistics: www.bls.gov
• Software Mavericks: www.softwaremavericks.com

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Other Helpful Business Plan Articles & Templates

• Business planning and strategy

Computer/Software Application Business: Example Business Plan

Have an idea for a new software program? Looking to sell to businesses not consumers? We’ve created an example business plan to help you get started.

Have you spent your weekends and nights coding; developing a software application that you think could make you millions? Great, sounds like you’re ready to build out your business plan. Although lean and agile development may be what you use, most organizations thinking about lending you money will require a more fully thought out business plan.

To help you get started we’ve created a business plan example for the computer/software application industry. Our example focuses on a company selling a software program to other businesses, but it will work as a framework if you’re selling a product/service directly to consumers. Click the ‘Download Tool’ button to gain access to the word document.

You can also find the same example in the Business Plan Writer , our free online tool that guides you through the process of starting your business. Just select “computer/software application” as your industry when you register.

Good luck and happy writing!

Related resources

• Entrepreneurship

Computer Business Plan Template & Guidebook

If you're looking for a comprehensive, easy-to-follow template to help you create the perfect business plan for your computer business, then look no further than the #1 Computer Business Plan Template & Guidebook. This handy template and guidebook provide an effective, comprehensive and convenient approach to building the perfect plan, leading you step-by-step through all the necessary elements of the process. Ready to get started? Let's dive in!

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• How to Start a Profitable Computer Business [11 Steps]
• 10+ Best & Profitable Computer Business Ideas [2023]
• 25 Catchy Computer Business Names:
• List of the Best Marketing Ideas For Your Computer Store:

How to Write a Computer Business Plan in 7 Steps:

1. describe the purpose of your computer business..

The first step to writing your business plan is to describe the purpose of your computer business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.

It also helps to include a vision statement so that readers can understand what type of company you want to build.

Here is an example of a purpose mission statement for a computer business:

Our mission at XYZ Computer is to provide our customers with high-quality, affordable computers, software solutions and services that meet or exceed their expectations. We strive to deliver innovative products and services while maintaining our commitment to excellence and customer satisfaction.

2. Products & Services Offered by Your Computer Business.

The next step is to outline your products and services for your computer business. 

When you think about the products and services that you offer, it's helpful to ask yourself the following questions:

• What is my business?
• What are the products and/or services that I offer?
• Why am I offering these particular products and/or services?
• How do I differentiate myself from competitors with similar offerings?
• How will I market my products and services?

You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.

3. Build a Creative Marketing Stratgey.

If you don't have a marketing plan for your computer business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals. 

A good marketing plan for your computer business includes the following elements:

Target market

• Who is your target market?
• What do these customers have in common?
• How many of them are there?
• How can you best reach them with your message or product?

Customer base 

• Who are your current customers? 
• Where did they come from (i.e., referrals)?
• How can their experience with your computer business help make them repeat customers, consumers, visitors, subscribers, or advocates for other people in their network or industry who might also benefit from using this service, product, or brand?

Product or service description

• How does it work, what features does it have, and what are its benefits?
• Can anyone use this product or service regardless of age or gender?
• Can anyone visually see themselves using this product or service?
• How will they feel when they do so? If so, how long will the feeling last after purchasing (or trying) the product/service for the first time?

Competitive analysis

• Which companies are competing with yours today (and why)? 
• Which ones may enter into competition with yours tomorrow if they find out about it now through word-of-mouth advertising; social media networks; friends' recommendations; etc.)
• What specific advantages does each competitor offer over yours currently?

Marketing channels

• Which marketing channel do you intend to leverage to attract new customers?
• What is your estimated marketing budget needed?
• What is the projected cost to acquire a new customer?
• How many of your customers do you instead will return?

Form an LLC in your state!

4. Write Your Operational Plan.

Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations. 

In it, you should list:

• The equipment and facilities needed
• Who will be involved in the business (employees, contractors)
• Financial requirements for each step
• Milestones & KPIs
• Location of your business
• Zoning & permits required for the business

What equipment, supplies, or permits are needed to run a computer business?

In order to run a Computer business, you will need the following:

• Computer hardware and software
• An Internet connection
• A business license
• Appropriate insurance coverage for the business
• Office supplies such as paper, pens, etc.
• Computer accessories such as printers, scanners, etc.

5. Management & Organization of Your Computer Business.

The second part of your computer business plan is to develop a management and organization section.

This section will cover all of the following:

• How many employees you need in order to run your computer business. This should include the roles they will play (for example, one person may be responsible for managing administrative duties while another might be in charge of customer service).
• The structure of your management team. The higher-ups like yourself should be able to delegate tasks through lower-level managers who are directly responsible for their given department (inventory and sales, etc.).
• How you’re going to make sure that everyone on board is doing their job well. You’ll want check-ins with employees regularly so they have time to ask questions or voice concerns if needed; this also gives you time to offer support where necessary while staying informed on how things are going within individual departments too!

6. Computer Business Startup Expenses & Captial Needed.

This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.

Typically, expenses for your business can be broken into a few basic categories:

Startup Costs

Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a computer business varies based on many different variables, but below are a few different types of startup costs for a computer business.

Running & Operating Costs

Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.

Marketing & Sales Expenses

You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your computer business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.

7. Financial Plan & Projections

A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your computer business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses. 

Here are some steps you can follow to devise a financial plan for your computer business plan:

• Determine your start-up costs: This will include the cost of purchasing or leasing the space where you will operate your business, as well as the cost of buying or leasing any equipment or supplies that you need to start the business.
• Estimate your operating costs: Operating costs will include utilities, such as electricity, gas, and water, as well as labor costs for employees, if any, and the cost of purchasing any materials or supplies that you will need to run your business.
• Project your revenue: To project your revenue, you will need to consider the number of customers you expect to have and the average amount they will spend on each visit. You can use this information to estimate how much money you will make from selling your products or services.
• Estimate your expenses: In addition to your operating costs, you will need to consider other expenses, such as insurance, marketing, and maintenance. You will also need to set aside money for taxes and other fees.
• Create a budget: Once you have estimated your start-up costs, operating costs, revenue, and expenses, you can use this information to create a budget for your business. This will help you to see how much money you will need to start the business, and how much profit you can expect to make.
• Develop a plan for using your profit: Finally, you will need to decide how you will use your profit to grow and sustain your business. This might include investing in new equipment, expanding the business, or saving for a rainy day.

Frequently Asked Questions About Computer Business Plans:

Why do you need a business plan for a computer business.

A business plan for a computer business is important because it allows entrepreneurs to clearly define and evaluate the potential of their business idea. It also serves as a roadmap for setting goals, managing resources, and making decisions to move the business forward. Additionally, lenders may require potential business owners to submit a business plan when applying for financing. A well-written and comprehensive business plan can help demonstrate the viability of the venture and should include a competitive analysis, industry trends, operational procedures, market analysis, management team evaluation and financial projections.

Who should you ask for help with your computer business plan?

The best person to ask for help with your computer business plan would be a professional business consultant who specializes in the computer industry. An experienced consultant can offer insights, ideas, and advice about how to develop and implement a successful computer business plan.

Can you write a computer business plan yourself?

Yes, it is possible to write a computer business plan yourself. However, it is recommended to seek professional help from a consultant or an expert in the field, as business plans require extensive research and knowledge in order to be accurate and effective. Additionally, an experienced consultant can offer valuable advice and insights based on their own experience that can help make the plan more successful.

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I'm Nick, co-founder of newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality.

Through meticulous research and firsthand experience, I uncover the essential steps, software, tools, and costs associated with launching and maintaining a successful business. By demystifying the complexities of entrepreneurship, I provide the guidance and support needed for others to embark on their journey with confidence.

From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.

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How to Start a Computer Business

Last Updated: May 3, 2024 References

This article was co-authored by Luigi Oppido and by wikiHow staff writer, Christopher M. Osborne, PhD . Luigi Oppido is the Owner and Operator of Pleasure Point Computers in Santa Cruz, California. Luigi has over 25 years of experience in general computer repair, data recovery, virus removal, and upgrades. He is also the host of the Computer Man Show! broadcasted on KSQD covering central California for over two years. This article has been viewed 192,587 times.

While your dream may be to start the next Apple or Microsoft out of your garage, it is more likely that your desire to start a computer business involves dealing with existing systems via sales, service, or support. With the rapid changes in technology that have already led some to place us in the “post-PC era,” [1] X Research source the job of a computer repair person , for instance, has changed quite a bit from ten years ago and will surely be quite different ten years from now. Beyond keeping up with changing technology and maintaining your expertise, however, starting a computer business requires many of the same skills required of any other small business field — things like a clear business plan, a smart marketing strategy , and outstanding customer service.

Aligning Your Skills and Goals With the Market

• Have you ever dissected, reassembled, or repaired a computer? Are you familiar with all major operating systems? Have you worked in the computer field before? Honestly assess your readiness to start a computer business, or ask someone else with industry knowledge help you make the assessment.
• Completing a degree in the computer field will certainly help you in starting a business, but it is unlikely that most customers will ask to see your diploma. More important is your ongoing gathering of experience, whether through education, training, or employment.
• Certification is a good way to indicate expertise, though. You may want to seek A+ certification from the Computer Technology Industry Association (CompTIA), or the related N+ network certification, or become a Microsoft Certified System Engineer (MCSE). [2] X Research source These can help give your business card an air of legitimacy.

• In this so-called “post-PC era,” you may find demand for traditional computer sales, service, and/or support to be much reduced, especially among a younger, tech-savvy population. However, especially in areas with older populations and/or small-town and rural areas, you may find a greater percentage of people in need of PC repairs and support. Remember, you need to keep up with the latest technology; many of your potential customers do not (and will not). [3] X Research source [4] X Research source

• New technology is meant to make life easier, but many consumers find it to be just another layer of confusion. General set-up and troubleshooting tasks, like setting up printers and wireless networks, data recovery and wiping, and media archiving or editing, may remain a viable component of your business, even if PC repair requests decrease.
• If you can prove yourself to be an expert on computers and related technology, and can build a positive reputation, you should be able to find a niche for your computer business.

• If you’re looking to keep your computer business as a part-time job, then keeping your focus on repairs and troubleshooting may suffice.
• Building your business into a full-time occupation, however, may require further diversification of the products and services you offer, perhaps by selling parts, accessories, or entire systems. You’ll need to draw in a loyal client base and build a positive reputation in the community.

Brandon Phipps

Your core goal is to offer benefits to your customers for a fair price. By providing such a service, you can earn a significant income while doing something you are skilled at and helping others.

Succeeding in the Computer Business

• Even if computers are your focus, expect people to seek help and guidance with all sorts of mobile technology, from phones to tablets to watches. You may or may not want to get into the mobile tech sales and/or service business — consider the increased inventory demands, for instance — but being able to provide general troubleshooting, training, and support on the latest devices may prove quite useful. [6] X Research source
• If home service calls are part of your business, the essential toolkit you take with you will continue to shift along with technology. However, you can find a good list of basic equipment you’ll need (for the time being) at https://www.technibble.com/categories/starting-computer-repair-business/ .

• You’ll deal with panicked customers who think they’ve just lost all their important files, irate customers who want immediate help at 10 p.m., and hovering customers who want to supervise (and ask about) every move you make. You need to be able to remain calm , courteous, and patient. As a small business, you’re not likely to be able to match the prices of your larger competitors — the personalized service you offer needs to offset this disadvantage.

• Put some thought to your business name, logos , signage, marketing, etc. Create a professional look that presents your business as legitimate and lasting.
• Referrals will be essential to your business. Always hand out professional-looking business cards to existing customers, and consider offering referral discounts or rewards. Throwing in some free service or equipment is a small price to pay in order to build up your customer base. [8] X Research source
• Especially if you don’t have a storefront, make your business website and/or social media presence appear professional and interconnected to your overall brand.

• Working from home, for instance, offers more flexibility and less overhead costs, but also offers less visibility and possibly more distractions. A well-placed storefront adds to your visibility and helps legitimize your business in the public’s mind, but it comes at a cost and tends to lock you into a more rigid schedule.
• If you focus on computer repairs, working in your own shop may limit distractions and save you time and travel money, but customers may be more comfortable with you working on the equipment in their homes. (Your potential liability is also likely to be reduced when you don’t take the equipment with you.)

Starting a Small Business: Some Basics

• See How to Write a Business Plan for a good primer on the process of creating this important document.

• You may want to save on taxes by having customers pay cash “under the table” and not reporting the income, but this gives your business an air of illegitimacy (as well it should) for your customers. You are better off paying the taxes and appearing (and being) legitimate. [9] X Research source
• How to Open a Small Business offers some nice information on the legal requirements of establishing a business. The U.S. Small Business Administration website is also a great resource; see, for instance, https://www.sba.gov/content/follow-these-steps-starting-business .

• Volunteer some of your time and expertise. Be a supporting sponsor at community events (with the requisite public recognition, of course). Use your advertising and branding to develop a sense of stability and permanence for your business, even in a field that changes as rapidly as computers.
• No matter the nature of your small business, you need to be visible, you need to be reliable, and you need to provide a personalized experience that builds customer loyalty.

Expert Q&A

You Might Also Like

• ↑ https://www.technibble.com/moving-wearable-mobile-repair-post-pc-era/
• ↑ http://www.computerhope.com/issues/ch001553.htm
• ↑ https://www.technibble.com/categories/starting-computer-repair-business/
• ↑ http://www.mytopbusinessideas.com/computer/
• ↑ http://www.tomshardware.com/answers/id-1813630/starting-computer-repair-setup-consulting-business-tips.html

About This Article

To start up a successful computer business, find a way to match your skills with the needs of your local computer market. Assess the training and experience that you have with computers to determine the type of computer business that is best suited to your talents. For example, if you have experience building personal computers, you can use your background to start up a business selling discounted computers that you assemble from parts that you acquire. In addition to your skills and experience, it’s important that you analyze the market around you to see if you can start a successful business. Consider the demographics in your area and think about what type of computer products or services they’re likely to purchase. For example, if you’re selling discounted computer systems, and your area has a large number of older people looking to buy a simple home computer, you may have a market for your business! For tips about how to build your brand identity when you’re starting a computer business, keep reading! Did this summary help you? Yes No

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Computer Hardware Reseller Business Plan

Start your own computer hardware reseller business plan

AMT Computers

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

By focusing on its strengths, its key customers, and the underlying values they need, American Management Technology will increase sales to more than $9 million in three years, while improving the gross margin on sales and cash management and working capital.

This business plan leads the way. It renews our vision and strategic focus: adding value to our target market segments, the small business and high-end home office users, in our local market. It also provides the step-by-step plan for improving our sales, gross margin, and profitability. In order to implement these changes and improve profitability, we plan to borrow another $100,000 long-term this year. The amount seems in-line with the balance sheet capabilities.

AMT is built on the assumption that the management of information technology for business is like legal advice, accounting, graphic arts, and other bodies of knowledge, in that it is not inherently a do-it-yourself prospect. Smart business people who aren’t computer hobbyists need to find quality vendors of reliable hardware, software, service, and support. They need to use these quality vendors as they use their other professional service suppliers, as trusted allies. AMT seeks to fulfill these needs and become the leader in business information technology for its region.

AMT provides both computer products and services to make them useful to small businesses. We are especially focused on providing network systems and services to small and medium business. The systems include both PC-based LAN systems and minicomputer server-based systems. Our services include design and installation of network systems, training, and support.

In order to accomplish our objectives, our keys to success over the next three years are:

• Differentiate from box-pushing, price-oriented businesses by offering and delivering service and support–and charging for it.
• Increase gross margin to more than 30%.
• Increase our non-hardware sales to 20% of the total sales by the third year.

AMT was founded as a consulting-oriented value added reseller (VAR), became a reseller to fill the market need for personal computers, and is emphasizing service and support to differentiate itself from price-oriented competitors.

We have one location–a 7,000 square foot store in a suburban shopping center located conveniently close to the downtown area. It includes a training area, service department, offices, and showroom area.

AMT is a privately-held C corporation owned in majority by its founder and president, Ralph Jones. There are six part owners, including four investors and two past employees. The firm includes 21 employees, under the president and four managers. Our main management divisions are sales, marketing, service, and administration. The service department handles service requests, support, training, and development. At present, we are weakest in the area of technical capabilities to manage the database marketing programs and upgraded service and support, particularly with cross-platform networks. We also need to find a training manager.

Recent changes in the computer reseller market have adversely affected AMT. These include margin squeezes, longer collection periods, and lower inventory turnovers. All of these concerns are part of the general trend affecting computer resellers. The margin squeeze is happening throughout the computer industry worldwide.

The only way we can hope to differentiate well is to define the vision of the company to be an information technology ally to our clients. We will not be able to compete in any effective way with the chains using boxes or products as appliances. We need to offer a real alliance that includes such intangibles as confidence, reliability, and knowing that somebody will be there to answer questions and help at the important times.

Our support services, with which we hope to capture market share will include such services as; training, upgrade offers, installation services, network configuration services, etc. The company will seek to aggressively pursue new opportunities.

AMT focuses on local markets, small business and home office, with special focus on the high-end home office and the 5-20 unit small business office.

The last study we saw published has retail sales growing at 5% per year, while Web sales and direct sales are growing at 25% or 30%.

There are several different kinds of computer retailers within the industry including:

• Computer dealers: often focused on a few main brands of hardware, usually offering only a minimum of software, and variable amounts of service and support. Their service and support is not usually very good and their prices are usually higher than the larger stores.
• Chain stores and computer superstores: usually offer decent walk-in service, with very aggressive pricing, and little support.
• Mail order: offer aggressive pricing of boxed product. For the purely price-driven buyer, who buys boxes and expects no service, these are very good options.

None of these direct competitors provides the customization and service that small businesses such as our clients truly need.

Small business buyers are accustomed to buying from vendors who visit their offices. They expect the copy machine vendors, office products vendors, and office furniture vendors, as well as the local graphic artists, freelance writers, or whomever, to visit their office to make their sales. Many small companies turn immediately to the superstores (office equipment, office supplies, and electronics) and mail order to look for the best price, without realizing that there is a better option for them at only a little bit more.

We need to effectively compete against the idea that businesses should buy computers as plug-in appliances that don’t need ongoing service, support, and training. Our focus group sessions indicated that our target home office markets think about price but would buy based on quality service if the offering were properly presented. They think about price because that’s all they ever see. We have very good indications that many would rather pay 10-20% more for a relationship with a long-term vendor providing back-up and quality service and support; they end up in the box-pusher channels because they aren’t aware of the alternatives.

We currently depend on newspaper advertising as our main way to reach new buyers. As we change strategies, however, we need to change the way we promote ourselves. We will be refocusing on our core message of service through radio, cable TV, sales brochures, direct mailers and newspapers. We need to sell the company, not the product. We sell AMT, not Apple, IBM, Hewlett-Packard, or Compaq, or any of our software brand names.

• The Yearly Total Sales chart summarizes our ambitious sales forecast. We expect sales to increase from $5.3 million last year to more than $6 million next year and to more than $9 million in the last year of this plan.

1.1 Objectives

• Sales increasing to more than $9 million by the third year.
• Bring gross margin back up to above 30%, and maintain that level.
• Sell $1.5 million of service, support, and training by 1998.
• Improve inventory turnover to 6 turns by 1998.

1.2 Keys to Success

• Differentiate from box-pushing, price-oriented businesses by offering and delivering service and support — and charging for it.

1.3 Mission

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AMT is such a vendor. It serves its clients as a trusted ally, providing them with the loyalty of a business partner and the economics of an outside vendor. We make sure that our clients have what they need to run their businesses as well as possible, with maximum efficiency and reliability. Many of our information applications are mission critical, so we give our clients the assurance that we will be there when they need us.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

AMT is a computer reseller based in the Uptown area. It was founded as a consulting-oriented VAR, became a reseller to fill the market need for personal computers, and is emphasizing service and support to differentiate itself from more price oriented national chains.

2.1 Company History

AMT has been caught in the vise grip of margin squeezes that have affected computer resellers worldwide. Although the chart titled Past Financial Performance shows that we have had healthy growth in sales, it also shows declining gross margin and declining profits.

The more detailed numbers in the Past Performance table include other indicators of some concern:

The gross margin % has been declining steadily, as we see in the chart.

Both collection days and inventory turnover are getting steadily worse.

All of these concerns are part of the general trend affecting computer resellers. The margin squeeze is happening throughout the computer industry worldwide.

2.2 Company Ownership

AMT is a privately-held C corporation owned in majority by its founder and president, Ralph Jones. There are six part owners, including four investors and two past employees. The largest of these (in percent of ownership) are Frank Dudley, our attorney, and Paul Karots, our public relations consultant. Neither owns more than 15%, but both are active participants in management decisions.

2.3 Company Locations and Facilities

Products and services.

AMT provides both computer products and services to make them useful to small business. We are especially focused on providing network systems and services to small and medium business. The systems include both PC-based LAN systems and minicomputer server-based systems. Our services include design and installation of network systems, training, and support.

3.1 Product and Service Description

In personal computers, we support three main lines:

The Super Home is our smallest and least expensive line, initially positioned by its manufacturer as a home computer. We use it mainly as a cheap workstation for small business installations. Its specifications include …[additional specifics omitted]

The Power User is our main up-scale line. It is our most important system for high-end home and small business main workstations, because of …. Its key strengths are …. Its specifications include ….[additional specifics omitted]

The Business Special is an intermediate system, used to fill the gap in the positioning. Its specifications include … [additional specifics omitted]

In peripherals, accessories and other hardware, we carry a complete line of necessary items from cables to forms to mousepads … [additional specifics omitted]

In service and support, we offer a range of walk-in or depot service, maintenance contracts and on-site guarantees. We have not had much success selling service contracts. Our networking capabilities …[additional specifics omitted]

In software and training, we offer … [additional specifics omitted]

3.2 Competitive Comparison

The only way we can hope to differentiate well is to define the vision of the company to be an information technology ally to our clients. We will not be able to compete in any effective way with the chains using boxes or products as appliances. We need to offer a real alliance.

The benefits we sell include many intangibles: confidence, reliability, knowing that somebody will be there to answer questions and help at the important times.

These are complex products, products that require serious knowledge and experience to use, and our competitors sell only the products themselves.

Unfortunately, we cannot sell the products at a higher price just because we offer services; the market has shown that it will not support that concept. We have to also sell the service and charge for it separately.

3.3 Sales Literature

Copies of our brochure and advertisements are attached as appendices. Of course, one of our first tasks will be to change the message of our literature to make sure we are selling the company, rather than the product.

3.4 Fulfillment

Our costs are part of the margin squeeze. As competition on price increases, the squeeze between manufacturers’ price into channels and end-users’ ultimate buying price continues.

With the hardware lines, our margins are declining steadily. We generally buy at … Our margins are thus being squeezed from the 25% of five years ago to more like 13-15% at present. In the main-line peripherals a similar trend shows, with prices for printers and monitors declining steadily. We are also starting to see that same trend with software ….

In order to hold costs down as much as possible, we concentrate our purchasing with Hauser, which offers 30-day net terms and overnight shipping from the warehouse in Dayton. We need to concentrate on making sure our volume gives us negotiating strength.

In accessories and add-ons we can still get decent margins, 25% to 40%.

3.5 Technology

We have for years supported both Windows and Macintosh technology for CPUs, although we’ve switched vendors many times for the Windows (and previously DOS) lines. We are also supporting Novell, Banyon, and Microsoft networking, Xbase database software, and Claris application products.

3.6 Future Products and Services

We must remain on top of the new technologies, because this is our bread and butter. For networking, we need to provide better knowledge of cross platform technologies. Also, we are under pressure to improve our understanding of direct-connect internet and related communications. Finally, although we have a good command of desktop publishing, we are concerned about getting better at the integration of technologies that creates fax, copier, printer, and voice mail as part of the computer system.

3.7 Service and Support

Our strategy hinges on providing excellent service and support. This is critical. We need to differentiate on service and support, and to therefore deliver as well.

• Training: details would be essential in a real business plan, but not in this sample plan.
• Upgrade offers: details would be essential in a real business plan, but not in this sample plan.
• Our own internal training: details would be essential in a real business plan, but not in this sample plan.
• Installation services: details would be essential in a real business plan, but not in this sample plan.
• Custom software services: details would be essential in a real business plan, but not in this sample plan.
• Network configuration services: details would be essential in a real business plan, but not in this sample plan.

Market Analysis Summary how to do a market analysis for your business plan.">

4.1 market segmentation.

The segmentation allows some room for estimates and nonspecific definitions. We focus on a small-medium level of small business, and it is hard to find information to make an exact classification. Our target companies are large enough to need the high-quality information technology management we offer, but too small to have a separate computer management staff such as an MIS department. We say that our target market has 10-50 employees, and needs 5-20 workstations tied together in a local area network; the definition is flexible.

Defining the high-end home office is even more difficult. We generally know the characteristics of our target market, but we can’t find easy classifications that fit into available demographics. The high-end home office business is a business, not a hobby. It generates enough money to merit the owner’s paying real attention to the quality of information technology management, meaning that there is both budget and concerns that warrant working with our level of quality service and support. We can assume that we aren’t talking about home offices used only part-time by people who work elsewhere during the day, and that our target market home office wants to have powerful technology and a lot of links between computing, telecommunications, and video.

4.2 Service Business Analysis

We are part of the computer reselling business, which includes several kinds of businesses:

• Computer dealers: storefront computer resellers, usually less than 5,000 square feet, often focused on a few main brands of hardware, usually offering only a minimum of software, and variable amounts of service and support. These are usually old-fashioned (1980s-style) computer stores and they usually offer relatively few reasons for buyers to shop with them. Their service and support is not usually very good and their prices are usually higher than the larger stores.
• Chain stores and computer superstores: these include major chains such as CompUSA, Computer City, Future Shop, etc. They are almost always more than 10,000 square feet of space, usually offer decent walk-in service, and are often warehouse-like locations where people go to find products in boxes with very aggressive pricing, and little support.
• Mail order: the market is served increasingly by mail order businesses that offer aggressive pricing of boxed product. For the purely price-driven buyer, who buys boxes and expects no service, these are very good options.
• Others: there are many other channels through which people buy their computers, usually variations of the main three types above.

4.2.1 Competition and Buying Patterns

The small business buyers understand the concept of service and support, and are much more likely to pay for it when the offering is clearly stated.

There is no doubt that we compete much more against all the box pushers than against other service providers. We need to effectively compete against the idea that businesses should buy computers as plug-in appliances that don’t need ongoing service, support, and training.

Our focus group sessions indicated that our target Home Offices think about price but would buy based on quality service if the offering were properly presented. They think about price because that’s all they ever see. We have very good indications that many would rather pay 10-20% more for a relationship with a long-term vendor providing back-up and quality service and support; they end up in the box-pusher channels because they aren’t aware of the alternatives.

Availability is also very important. The Home Office buyers tend to want immediate, local solutions to problems.

4.2.2 Main Competitors

Chain stores: We have Store 1 and Store 2 already within the valley, and Store 3 is expected by the end of next year. If our strategy works, we will have differentiated ourselves sufficiently to not have to compete against these stores.

Strengths: national image, high volume, aggressive pricing, economies of scale.

Weaknesses: lack of product, service and support knowledge, lack of personal attention.

Other local computer stores: Store 4 and Store 5 are both in the downtown area. They are both competing against the chains in an attempt to match prices. When asked, the owners will complain that margins are squeezed by the chains and customers buy on price only. They say they tried offering services and that buyers didn’t care, instead preferring lower prices. We think the problem is also that they didn’t really offer good service, and also that they didn’t differentiate from the chains.

4.2.3 Business Participants

• The national chains are a growing presence. CompUSA, Computer City, Incredible Universe, Babbages, Egghead, and others. They benefit from national advertising, economies of scale, volume buying, and a general trend toward name-brand loyalty for buying in the channels as well as for products.
• Local computer stores are threatened. These tend to be small businesses, owned by people who started them because they liked computers. They are under-capitalized and under-managed. Margins are squeezed as they compete against the chains, in a competition based on price more than on service and support.

4.2.4 Distributing a Service

Small Business buyers are accustomed to buying from vendors who visit their offices. They expect the copy machine vendors, office products vendors, and office furniture vendors, as well as the local graphic artists, freelance writers, or whomever, to visit their office to make their sales.

There is usually a lot of leakage in ad-hoc purchasing through local chain stores and mail order. Often the administrators try to discourage this, but are only partially successful.

Unfortunately our Home Office target buyers may not expect to buy from us. Many of them turn immediately to the superstores (office equipment, office supplies, and electronics) and mail order to look for the best price, without realizing that there is a better option for them at only a little bit more.

4.3 Target Market Segment Strategy

4.3.1 market needs.

All personal computer users need support and service. The self reliant ones, however, supply those needs themselves. In home offices, these are the knowledgeable computer users who like to do it themselves. Among the businesses, these are businesses that have people on staff.

4.3.2 Market Trends

The most obvious and important trend in the market is declining prices. This has been true for years, but the trend seems to be accelerating. We see the major brand-name manufacturers putting systems together with amazing specs–more power, more speed, more memory, more disk storage–at amazing prices. The major chain shops are selling brand-name powerful computers for less than $1,000.

This may be related to a second trend, which is the computer as throw-away appliance. By the time a system needs upgrading, it is cheaper to buy completely new. The increasing power and storage of a sub-$1000 system means buyers are asking for less service.

A third trend is ever greater connectivity. Everybody wants onto the internet, and every small office wants a LAN. A lot of small offices want their LAN connected to the internet.

4.3.3 Market Growth

As prices fall, unit sales increase. The published market research on sales of personal computers is astounding, as the United States market alone is absorbing more than 30 million units per year, and sales are growing at more than 20 percent per year. We could quote Dataquest, Infocorp, IDC, or others; it doesn’t matter, they all agree on high growth of CPU sales.

Where growth is not as obvious is the retail market. A report in CRW says Dell is now selling $5 million monthly over the web, and we assume Gateway and Micron are both close to that. Direct mail has given way to the web, but catalogs are still powerful, and the non-retail sale is more accepted every day. The last study we saw published has retail sales growing at 5% per year, while web sales and direct sales are growing at 25% or 30%.

Strategy and Implementation Summary

The home offices in Tintown are an important growing market segment. Nationally, there are approximately 30 million home offices, and the number is growing at 10% per year. Our estimate in this plan for the home offices in our market service area is based on an analysis published four months ago in the local newspaper.

Home offices include several types. The most important, for our plan’s focus, are the home offices that are the only offices of real businesses, from which people make their primary living. These are likely to be professional services such as graphic artists, writers, and consultants, some accountants and the occasional lawyer, doctor, or dentist. There are also part-time home offices with people who are employed during the day but work at home at night, people who work at home to provide themselves with a part-time income, or people who maintain home offices relating to their hobbies; we will not be focusing on this segment.

Small business within our market includes virtually any business with a retail, office, professional, or industrial location outside of someone’s home, and fewer than 30 employees. We estimate 45,000 such businesses in our market area.

The 30-employee cutoff is arbitrary. We find that the larger companies turn to other vendors, but we can sell to departments of larger companies, and we shouldn’t be giving up leads when we get them.

5.1 Strategy Pyramid

For placing emphasis on service and support, our main tactics are networking expertise, excellent training, and developing our own proprietary software/network administrative system. Our specific programs for networking include mailers and internal training. Specific programs for training include direct mail promotion, and train-the-trainers programs. For developing our own proprietary systems, our programs are company direct mail marketing, and working with VARs.

Our second strategy is emphasizing relationships. The tactics are marketing the company (instead of the products), more regular contacts with the customer, and increasing sales per customer. Programs for marketing the company include new sales literature, revised ad strategy, and direct mail. Programs for more regular contacts include call-backs after installation, direct mail, and sales management. Programs for increasing sales per customer include upgrade mailings and sales training.

5.2 Value Proposition

Our value proposition has to be different from the standard box-oriented retail chain. We offer our target customer, who is service seeking and not self reliant, a vendor who acts as a strategic ally, at a premium price that reflects the value of reassurance that systems will work.

5.3 Competitive Edge

Our competitive edge is our positioning as strategic ally with our clients, who are clients more than customers. By building a business based on long-standing relationships with satisfied clients, we simultaneously build defenses against competition. The longer the relationship stands, the more we help our clients understand what we offer them and why they need it.

5.4 Sales Strategy

• We need to sell the company, not the product. We sell AMT, not Apple, IBM, Hewlett-Packard, or Compaq, or any of our software brand names.
• We have to sell our service and support. The hardware is like the razor, and the support, service, software services, training, and seminars are the razor blades. We need to serve our customers with what they really need.

5.4.1 Sales Forecast

The important elements of the sales forecast are shown in the Total Sales by Month in Year 1 table. The non-hardware sales increase to over $2 million total in the third year.

5.4.2 Sales Programs

• Direct mail: Use great detail to describe your company’s programs here.
• Seminars: Use great detail to describe your company’s programs here.

5.4.3 Distribution Strategy

Our most important marketing program is [specifics omitted]. Leslie Doe will be responsible, with budget of $XX,XXX and milestone date of the 15th of May. This program is intended to [objectives omitted]. Achievement should be measured by [specific concrete measurement].

Another key marketing program is [specifics omitted]. [Name] will be responsible, with budget of $XX,XXX and milestone date of [date]. This program is intended to [objectives omitted]. Achievement should be measured by [specific concrete measurement].

5.5 Marketing Strategy

The marketing strategy is the core of the main strategy:

• Emphasize service and support.
• Build a relationship business.
• Focus on small business and high-end home office as key target markets.

5.5.1 Promotion Strategy

We depend on newspaper advertising as our main way to reach new buyers. As we change strategies, however, we need to change the way we promote ourselves:

Advertising We’ll be developing our core positioning message: “24 Hour On-Site Service – 365 Days a Year With No Extra Charges” to differentiate our service from the competition. We will be using local newspaper advertising, radio, and cable TV to launch the initial campaign.

Sales Brochure Our collaterals have to sell the store, and visiting the store, not the specific book or discount pricing.

Direct Mail We must radically improve our direct mail efforts, reaching our established customers with training, support services, upgrades, and seminars.

Local Media It’s time to work more closely with the local media. We could offer the local radio a regular talk show on technology for small business, as one example.

5.5.2 Pricing Strategy

We must charge appropriately for the high-end, high-quality service and support we offer. Our revenue structure has to match our cost structure, so the salaries we pay to assure good service and support must be balanced by the revenue we charge.

We cannot build the service and support revenue into the price of products. The market can’t bear the higher prices and the buyer feels ill-used when they see the same product priced lower at the chains. Despite the logic behind this, the market doesn’t support this concept.

Therefore, we must make sure that we deliver and charge for service and support. Training, service, installation, networking support–all of this must be readily available and priced to sell and deliver revenue.

5.5.3 Positioning Statement

For businesspeople who want to be sure their computer systems are always working reliably, AMT is a vendor and trusted strategic ally who makes sure their systems work, their people are trained, and their down time is minimal. Unlike the chain retail stores, it knows the customer and goes to his or her site when needed, and offers proactive support, service, training, and installation.

5.6 Milestones

Our important milestones are shown on the following table. Row by row, they track the need to follow up on strategy with specific activities. Most of the activities on the list can be easily tied to our strategic goals of selling more service and enhancing the relationship with the customer.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

Our management philosophy is based on responsibility and mutual respect. People who work at AMT want to work at AMT because we have an environment that encourages creativity and achievement.

6.1 Organizational Structure

• The team includes 21 employees, under a president and four managers.
• Our main management divisions are sales, marketing, service, and administration. Service handles service, support, training, and development.

6.2 Management Team

Ralph Jones, President: 46 years old, founded AMT in 1984 to focus on reselling high-powered personal computers to small business. Degree in computer science, 15 years with Large Computer Company, Inc. in positions ending with project manager. Ralph has been attending courses at the local Small Business Development Center for more than six years now, steadily adding business skills and business training to his technical background.

Sabrina Benson, VP Marketing: 36 years old, joined us last year following a very successful career with Continental Computers. Her hiring was the culmination of a long recruiting search. With Continental she managed the VAR marketing division. She is committed to re-engineering AMT to be a service and support business that sells computers, not vice-versa. MBA, undergraduate degree in history.

Gary Andrews, VP Service and Support: 48 years old, 18 years with Large Computers, Inc. in programming and service-related positions, 7 years with AMT. MS in computer science and BS in electrical engineering.

Laura Dannis, VP Sales: 32, former teacher, joined AMT part-time in 1991 and went full-time in 1992. Very high people skills, BA in elementary education. She has taken several sales management courses at the local SBDC.

John Peters, Director of Administration: 43, started with AMT as a part-time bookkeeper in 1987, and has become full-time administrative and financial backbone of the company.

6.3 Management Team Gaps

At present we believe we have a good team for covering the main points of the business plan. The addition of Sabrina Benson was important as a way to cement our fundamental re-positioning and re-engineering.

At present, we are weakest in the area of technical capabilities to manage the database marketing programs and upgraded service and support, particularly with cross-platform networks. We also need to find a training manager.

6.4 Personnel Plan

The Personnel Plan reflects the need to bolster our capabilities to match our positioning. Our total headcount should increase to 26 this first year, and to 31 by the third year. Detailed monthly projections are included in the appendix.

6.5 Other Management Considerations

Our attorney, Frank Dudley, is also a co-founder. He invested significantly in the company over a period of time during the 1980’s. He remains a good friend of Ralph and has been a steady source of excellent legal and business advice.

Paul Karots, public relations consultant, is also a co-founder and co-owner. Like Dudley, he invested in the early stages and remains a trusted confidant and vendor of public relations and advertising services.

Financial Plan investor-ready personnel plan .">

The most important element in the financial plan is the critical need for improving several of the key factors that impact cash flow:

• We must at any cost stop the slide in inventory turnover and develop better inventory management to bring the turnover back up to 6 turns by the third year. This should also be a function of the shift in focus towards service revenues to add to the hardware revenues.
• We must also bring the gross margin back up to 30%. This too is related to improving the mix between hardware and service revenues, because the service revenues offer much better margins.
• We plan to borrow another $100,000 long-term this year. The amount seems in line with the balance sheet capabilities.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in Table 7.1. The key underlying assumptions are:

• We assume a slow-growth economy, without major recession.
• We assume of course that there are no unforeseen changes in technology to make products immediately obsolete.

7.2 Key Financial Indicators

The Benchmark Comparison chart highlights our ambitious plans to correct declining gross margin and inventory turnover. The chart illustrates why we think the ambitious sales increases we plan are reasonable. We have had similar increases in the recent past.

7.3 Break-even Analysis

For our break-even analysis, we assume running costs which include our full payroll, rent, and utilities, and an estimation of other running costs. Payroll alone, at our present run rate, is only about $55,000. Margins are harder to assume. Our overall average is based on projections for the coming year. We hope to attain a margin that high in the future.

The chart shows how much we need to sell per month to break even, according to these assumptions.

7.4 Projected Profit and Loss

The most important assumption in the Projected Profit and Loss statement is the gross margin, which is supposed to increase. This is up from barely 21% in the last year. The increase in gross margin is based on changing our sales mix, and it is critical. Month-by-month assumptions for profit and loss are included in the appendix.

7.5 Projected Cash Flow

The cash flow depends on assumptions for inventory turnover, payment days, and accounts receivable management. Our projected 60-day collection days is not ideal, but it is realistic in this market, and hard for us to effectively change.  We’re better off planning for it than ignoring it. We need significant new financing in March to get through a cash flow dip as we build up for mid-year sales.

7.6 Projected Balance Sheet

The Projected Balance Sheet is quite solid. We do not project any real trouble meeting our debt obligations–as long as we can achieve our specific objectives.

7.7 Business Ratios

The table follows with our main business ratios. We do intend to improve gross margin, collection days, and inventory turnover. The industry standards are taken for industry classification 5734 in the SIC code.  We assume that the difference between our results and the standards is that the standards include

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