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Technology business plan for starting your own business
If there is one field that cannot go out of business within the foreseeable future, that is the technology business. This business has been growing vastly since the start of this century. There are more technology businesses out there than you can count, yet there is a capacity for new entrants in this field. We have made this business plan for technology company to tell you in sheer detail how to start a information technology company.
This business plan is based on the real-life example of MacArthur Tech Services. Let’s see how this business plan for investors can help you make money.
Executive Summary
2.1 The Business
MacArthur Tech Services will be a licensed and register tech services provider in Detroit. It will be owned by Maximilien MacArthur who is a former executive from Silicon Valley and has worked for many tech startups. This business plan for tech startup will help you learn from MacArthur’s experience.
2.2 Management of Technology Company
While explaining how to start a business solutions company, the first important thing to learn is the management of the company. You need to know the managemental hierarchy of the company for technology business setting up. This can also be used as a business plan for bank to get debt financing for your startup.
The management of MacArthur Tech Services will mainly be handled by MacArthur himself. He will hire experts of the field to help him with the operations.
2.3 Customers of Technology Company
As a semiconductor business plan is a vast field, we need to determine what customers would we be dealing. This includes the following:
- Domestic Customers
These customers will include the people who:
- Want to get their personal computers fixed.
- Want home-based tech and connectivity solutions.
- Want consultancy for domestic tech setups.
- Business Clients
These will be slightly bigger than the domestic customers and will include:
- Businesses looking for automation.
- Small businesses looking for digital bookkeeping and inventory management.
- Businesses looking for better connectivity solutions.
- Schools
These customers will need:
- Campus management solutions.
- Labs and Library computer setups.
- Corporate Clients
These will be the biggest clients needing corporate-grade computing and tech solutions.
2.4 Business Target
The target will be to become the leading provider of tech services in all of North America.
Company Summary
3.1 Company Owner
The owner of MacArthur Tech Services, Maximilien MacArthur is an expert of the field. He started his career with a repair shop and that makes and excellent computer repair business plan today. He then moved to the Silicon Valley where he made a information technology business plan example by starting a number of companies and making them successful.
3.2 Why the Technology Company is being started
MacArthur has an extensive knowledge of the field and has set many information technology business continuity plan example. He has helped a number of tech companies successful and is now planning to make a company of his own. He is passionate about it and knows where there is a gap in this business and how he can make a name in this field.
3.3 How the Technology Company will be started
Step1: Planning
The next thing we need to cover in this technology business plan sample is the planning to start the business. No business plan for tech company can be complete without that.
We need to plan everything from the number of employees and starting costs for the business to the perspective customers.
Step2: Branding
People trust the companies that have established brand names. In order to make it successful, our tech company will also establish a strong brand name. An impressive brand logo, moto, and color scheme will be chosen to make this happen.
Step3: Establish Your Office
MacArthur Tech Services will have an office in downtown Detroit from where all the services of the company will be extended to the customers.
Step4: Establish a Web Presence
No successful technology business plan can be complete without web presence. An extensive website will be launched for customers to interact with MacArthur Tech services.
Step5: Promote and Market
All possible ways of communication will be used to make sure that MacArthur Tech Services is known in all of Detroit and Michigan.
| Start-up Expenses | |
| Legal | $246,000 |
| Consultants | $0 |
| Insurance | $28,000 |
| Rent | $25,000 |
| Research and Development | $34,000 |
| Expensed Equipment | $59,000 |
| Signs | $4,200 |
| TOTAL START-UP EXPENSES | $396,200 |
| Start-up Assets | $380,000 |
| Cash Required | $400,000 |
| Start-up Inventory | $59,000 |
| Other Current Assets | $220,000 |
| Long-term Assets | $280,000 |
| TOTAL ASSETS | $1,339,000 |
| Total Requirements | $1,735,200 |
| START-UP FUNDING | |
| Start-up Expenses to Fund | $396,200 |
| Start-up Assets to Fund | $1,339,000 |
| TOTAL FUNDING REQUIRED | $1,735,200 |
| Assets | |
| Non-cash Assets from Start-up | $1,778,000 |
| Cash Requirements from Start-up | $398,000 |
| Additional Cash Raised | $60,000 |
| Cash Balance on Starting Date | $38,000 |
| TOTAL ASSETS | $2,274,000 |
| Liabilities and Capital | |
| Liabilities | $30,000 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $43,000 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $73,000 |
| Capital | |
| Planned Investment | $1,735,200 |
| Investor 1 | $0 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $1,735,200 |
| Loss at Start-up (Start-up Expenses) | $465,800 |
| TOTAL CAPITAL | $2,201,000 |
| TOTAL CAPITAL AND LIABILITIES | $2,274,000 |
| Total Funding | $1,735,200 |
Business plan for investors
Services
The next thing we need to address in this technology business plan template are the services we will be providing. As Technology is a vast field and no single company can reasonably cover all aspects of the industry, we’ll offer limited services in this information technology startup business plan and will try to be the best at them.
The main services provided by MacArthur Tech Services will include:
- Connectivity Solutions
This area of the services provided by MacArthur will include:
- Connectivity solutions for domestic clients.
- Connectivity solutions for offices and businesses.
- Connectivity solutions for corporate clients.
- Tech Equipment Supply
This segment of MacArthur’s services will include the supply of:
- Computers.
- Routers.
- Projectors.
- Printers.
- Tech Support Services
MacArthur Tech Services will offer support services for clients. These will include support for:
- Any major fault in tech setups.
- Break down of network or mainframes in offices.
- Personal and domestic tech support.
MacArthur Tech Services will maintain a 247 support helpline to provide support to people facing any tech problems.
- Tech Consultancy
For the clients that do not know where to start with tech, we’ll be giving tech consultancy services.
Marketing Analysis of Technology Business
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If you want to know how to write a business plan for a tech startup, the most important thing for that is the marketing analysis of the technical business plan sample. We are performing the marketing analysis of thebusiness plan technology description to make things easier for you. It is paramount to have an extensive knowledge of thetechnology business solutions if we want the business to be successful.
5.1 Market Trends
The tech market is one of the most fast-growing ones all over the globe. Most of the top companies and richest people in the world right now are associated with this field. We have seen a lot of tech companies come forth and be successful in this field.
The field is a bit saturated but there is always place for companies that come with the intention of providing exalted services in this industry.
5.2 Marketing Segmentation
The customers of our Tech business will be divided in the following market segments. Each segment will need its own specialized set of services.
5.2.1 Domestic Individual Customers
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These will be the lowest paying customers but with the largest values. Anyone who needs an advice on what laptop to buy to anyone looking for someone to setup their workstation will fall into this category. We will provide all the services from the installation of Windows to replacing broken displays. Our focus will be to make repeat customers here.
5.2.2 Small Large Businesses
The businesses needing services for their tech setup will also be our customers. We will provide them with the services including automation, bookkeeping, inventory management, connectivity, and all other services that they might need.
5.2.3 Corporate Clients
This will be the market segment for us that will make the bulk of our income. They will be in a lesser number but will pay the premium prices. We will offer all the services from cloud computing to blockchain services and all other tech-related services a corporation might need.
5.2.4 Nonprofits
Lastly, we will offer discounted services to the nonprofit segment of the business to play our role in community development.
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Domestic Individual Customers | 31% | 45,000 | 47,000 | 49,000 | 51,000 | 53,000 | 10.00% |
| Small Large Businesses | 29% | 40,000 | 41,000 | 43,000 | 45,000 | 47,000 | 10.00% |
| Corporate Clients | 26% | 32,000 | 33,000 | 35,000 | 37,000 | 39,000 | 10.00% |
| Nonprofits | 14% | 11,000 | 12,000 | 13,000 | 14,000 | 15,000 | 11.00% |
| Total | 100% | 128,000 | 133,000 | 140,000 | 147,000 | 154,000 | 10% |
5.3 Business Target
- To become the leader in tech services in all of North America within 5 years.
- To provide impeccable tech services to our clients.
- To expand to at least 3 more states by the end of year 1.
- To start making an annual $368,000 in profit by the end of year 3.
5.4 Product Pricing
We will keep the product prices lower than the market average at the start. This will be done to attract the customers and once we have enough of them, we will move on to increase the prices.
Marketing Strategy
Now that we know the market we are going to enter, the next thing we need is a business plan in marketing to make sure we get our business objectives. As the Tech market is a saturated one, marketing is one of the decisive factors that can make any information technology business proposal template a success.
We need to be objective here and use any competitive leverage that we have in order for us to be successful and we’ll spare no expense in making sure that our technology startup company is successful.
6.1 Competitive Analysis
- The thing that will give us an edge on the competitors will be the extensive experience of the owner Mr. MacArthur.
- We will provide top-notch service and only the best of the best equipment to earn permanent recurring clients.
- We will provide a 247 support helpline, something that can make a huge difference and something not much of the competitors have.
6.2 Sales Strategy
- We’ll target the domestic, business, and corporate market at once to ensure that we get the best sales margin.
- We’ll provide a one-year warranty on all our products and services to make people rely on us and buy from us.
- Like all the best biotech business plans, we will offer huge discounts for the first two months.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Connectivity Solutions | 46,000 | 48,760 | 51,686 |
| Tech Equipment Supply | 40,000 | 42,400 | 44,944 |
| Tech Support Services | 44,000 | 46,640 | 49,438 |
| Tech Consultancy | 41,000 | 43,460 | 46,068 |
| TOTAL UNIT SALES | 171,000 | 181,260 | 192,136 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Connectivity Solutions | $45.00 | $52.20 | $60.55 |
| Tech Equipment Supply | $60.00 | $69.60 | $80.74 |
| Tech Support Services | $42.00 | $48.72 | $56.52 |
| Tech Consultancy | $35.00 | $40.60 | $47.10 |
| Sales | |||
| Connectivity Solutions | $2,070,000.00 | $2,545,272.00 | $3,129,666.45 |
| Tech Equipment Supply | $2,400,000.00 | $2,951,040.00 | $3,628,598.78 |
| Tech Support Services | $1,848,000.00 | $2,272,300.80 | $2,794,021.06 |
| Tech Consultancy | $1,435,000.00 | $1,764,476.00 | $2,169,599.69 |
| TOTAL SALES | $7,753,000.00 | $9,533,088.80 | $11,721,885.99 |
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Connectivity Solutions | $43.00 | $49.00 | $56.00 |
| Tech Equipment Supply | $58.00 | $66.00 | $76.00 |
| Tech Support Services | $40.00 | $45.00 | $52.00 |
| Tech Consultancy | $33.00 | $37.00 | $43.00 |
| Direct Cost of Sales | |||
| Connectivity Solutions | $1,978,000.00 | $2,389,240.00 | $2,894,393.60 |
| Tech Equipment Supply | $2,320,000.00 | $2,798,400.00 | $3,415,744.00 |
| Tech Support Services | $1,760,000.00 | $2,098,800.00 | $2,570,796.80 |
| Tech Consultancy | $1,353,000.00 | $1,608,020.00 | $1,980,906.80 |
| Subtotal Direct Cost of Sales | $7,411,000.00 | $8,894,460.00 | $10,861,841.20 |
Personnel plan
The next thing needed for writing a business plan for a tech startup is the planning of the staff needed to efficiently run the company. This business plan for a web hosting and other tech services needs a number of skilled people to help it run properly. As the main focus of this business is to provide technical support and services, these employees will be the most valuable asset of the business.
7.1 Company Staff
- Maximilien MacArthur will be the owner and the CEO.
- 1 General Manager.
- 1 Operations Manager.
- 1 Liaison Manager.
- 5 Technicians.
- 2 Engineers.
- 5 Support Agents.
- 2 Drivers for the support Team.
- 2 Office Boys.
- 1 Receptionist.
- 1 Accountant.
7.2 Average Salary of Employees
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| General Manager | $13,000 | $14,300 | $15,730 |
| Operations Manager | $13,000 | $14,300 | $15,730 |
| Liaison Manager | $12,000 | $13,200 | $14,520 |
| Technicians | $40,000 | $44,000 | $48,400 |
| Engineers | $24,000 | $26,400 | $29,040 |
| Support Agents | $45,000 | $49,500 | $54,450 |
| Drivers | $17,000 | $18,700 | $20,570 |
| Office Boys | $16,000 | $17,600 | $19,360 |
| Receptionist | $6,000 | $6,600 | $7,260 |
| Accountant | $9,000 | $9,900 | $10,890 |
| Total Salaries | $195,000 | $214,500 | $235,950 |
Financial Plan
This last part of this business plan information technology company is the financial planning of the business. The recipe for a successful business is to decrease the expenses and increase the income of the setup. To make this happen, we have to have a clear idea of the expenses for starting and running the business. Let’s see a tentative budget planning for a technology business.
Here is a list of the expenditure for starting the business and running it until it starts generating enough revenue to fund itself and return profit.
- The cost of setting up the office.
- The cost of setting up an online presence.
- The cost of advertisement of the business.
- The salaries of the staff for the starting year.
- The cost of overheads included in running the business.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 8.16% | 8.18% | 8.25% |
| Long-term Interest Rate | 8.34% | 8.38% | 8.42% |
| Tax Rate | 23.40% | 23.70% | 24.10% |
| Other | 0 | 0 | 0 |
8.2 Break-even Analysis
| Break-Even Analysis | |
| Monthly Units Break-even | 5339 |
| Monthly Revenue Break-even | $131,820 |
| Assumptions: | |
| Average Per-Unit Revenue | $234.00 |
| Average Per-Unit Variable Cost | $0.66 |
| Estimated Monthly Fixed Cost | $162,600 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $7,753,000 | $9,533,089 | $11,721,886 |
| Direct Cost of Sales | $7,411,000 | $8,894,460 | $10,861,841 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $7,411,000 | $8,894,460 | $10,861,841 |
| Gross Margin | $342,000 | $638,629 | $860,045 |
| Gross Margin % | 4.41% | 6.70% | 7.34% |
| Expenses | |||
| Payroll | $195,000 | $214,500 | $235,950 |
| Sales and Marketing and Other Expenses | $119,000 | $120,000 | $121,000 |
| Depreciation | $2,210 | $2,340 | $2,450 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $2,800 | $2,900 | $3,100 |
| Insurance | $1,900 | $2,000 | $2,100 |
| Rent | $2,700 | $2,800 | $2,900 |
| Payroll Taxes | $30,000 | $31,000 | $32,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $353,610 | $375,540 | $399,500 |
| Profit Before Interest and Taxes | ($11,610) | $263,089 | $460,545 |
| EBITDA | ($11,610) | $263,089 | $460,545 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | ($2,322) | $52,618 | $92,109 |
| Net Profit | ($9,288) | $210,471 | $368,436 |
| Net ProfitSales | -0.12% | 2.21% | 3.14% |
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
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $52,000 | $56,160 | $60,653 |
| Cash from Receivables | $18,000 | $19,440 | $20,995 |
| SUBTOTAL CASH FROM OPERATIONS | $70,000 | $76,300 | $82,404 |
| Additional Cash Received | |||
| Sales Tax, VAT, HSTGST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $71,000 | $77,000 | $83,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $32,000 | $33,000 | $34,000 |
| Bill Payments | $18,000 | $19,000 | $20,000 |
| SUBTOTAL SPENT ON OPERATIONS | $50,000 | $52,000 | $54,000 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HSTGST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $51,000 | $55,080 | $59,486 |
| Net Cash Flow | $14,300 | $15,000 | $17,000 |
| Cash Balance | $23,000 | $24,000 | $25,000 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $269,000 | $301,280 | $331,408 |
| Accounts Receivable | $23,000 | $25,760 | $28,954 |
| Inventory | $4,100 | $4,592 | $4,900 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $277,000 | $310,240 | $348,710 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $17,800 | $19,936 | $22,428 |
| TOTAL LONG-TERM ASSETS | $21,500 | $24,080 | $27,090 |
| TOTAL ASSETS | $294,000 | $329,280 | $370,440 |
| Liabilities and Capital | Year 4 | Year 5 | Year 6 |
| Current Liabilities | |||
| Accounts Payable | $18,800 | $21,056 | $23,667 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $15,300 | $17,136 | $19,261 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $15,000 | $16,800 | $18,883 |
| Paid-in Capital | $29,000 | $30,000 | $30,950 |
| Retained Earnings | $55,000 | $59,950 | $65,945 |
| Earnings | $192,000 | $209,280 | $230,208 |
| TOTAL CAPITAL | $279,000 | $304,110 | $334,521 |
| TOTAL LIABILITIES AND CAPITAL | $294,000 | $329,280 | $370,440 |
| Net Worth | $285,000 | $310,650 | $341,715 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 7.25% | 8.03% | 8.90% | 3.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 9.21% | 10.20% | 11.31% | 9.80% |
| Inventory | 5.44% | 6.03% | 6.68% | 9.90% |
| Other Current Assets | 2.13% | 2.36% | 2.61% | 2.40% |
| Total Current Assets | 150.01% | 152.00% | 153.00% | 158.00% |
| Long-term Assets | 11.38% | 11.40% | 11.50% | 12.00% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.84% | 4.88% | 4.92% | 4.34% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% |
| Total Liabilities | 7.60% | 7.66% | 7.73% | 7.38% |
| NET WORTH | 100.20% | 101.00% | 101.93% | 110.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 96.00% | 98.59% | 101.35% | 99.00% |
| Selling, General & Administrative Expenses | 93.00% | 95.51% | 98.19% | 97.80% |
| Advertising Expenses | 1.90% | 1.95% | 2.01% | 1.40% |
| Profit Before Interest and Taxes | 42.00% | 43.13% | 44.34% | 33.90% |
| Main Ratios | ||||
| Current | 32 | 33 | 34 | 32 |
| Quick | 33 | 33.2 | 34.03 | 33 |
| Total Debt to Total Assets | 0.19% | 0.18% | 0.17% | 0.40% |
| Pre-tax Return on Net Worth | 73.09% | 74.00% | 76.00% | 75.00% |
| Pre-tax Return on Assets | 95.01% | 99.76% | 104.75% | 111.30% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 3.80% | 3.92% | 4.04% | N.A. |
| Return on Equity | 55.01% | 56.72% | 58.47% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 7.7 | 7.8 | 7.9 | N.A. |
| Collection Days | 100 | 100 | 100 | N.A. |
| Inventory Turnover | 31.6 | 33.18 | 34 | N.A. |
| Accounts Payable Turnover | 15.4 | 16 | 16.6 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 2.4 | 2.5 | 2.6 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | -0.04 | -0.03 | -0.03 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $250,000 | $264,000 | $278,784 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.87 | 0.88 | 0.89 | N.A. |
| Current DebtTotal Assets | 1% | 0% | 0% | N.A. |
| Acid Test | 28.03 | 28.06 | 28.09 | N.A. |
| SalesNet Worth | 2.1 | 2.1 | 2.2 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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