1. business plan for a new software development company 28 may 2000 the information provided in this...
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Business Plan for a New Software Development Company
28 May 2000
The information provided in this business plan is confidential. Please do not disclose it without checking with me first. Thanks.
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Personal Goal
To build an effective and lasting software development organization
The foundation of this organization will be formed on a set of professional and social values
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Values
Make and meet commitments Recognize accomplishment Teach and learn from each
other
Keep a balance in your life Require quality beyond
customer expectations Act with a sense of urgency
Improve continuously Communicate without fear of
retribution Play to win-win
Think and act like an owner Go the extra mile to take care
of the customer Have fun Give back to the community
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Overview
Executive Summary Company Summary Services Market Analysis Strategy & Implementation Management Financial Info
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Innofy: Innovative eBiz Solutions
A developer of custom software
Focused on eBiz enablement
An international organization, having offices in Washington, Chicago, Singapore, Dubai, Islamabad, Karachi, and Lahore
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Mission (1)
Planned and sustained growth in:
Number of professionals
Revenue per professional
Profits per professional
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Mission (2)
Build lasting relationships with our clients by consistently exceeding their expectations
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Key Objectives
1st Year 5th Year
No. of Professionals 50 800
Revenue US$420,000 US$45,900,000
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Strategy
Sales Partnerships with established players
Domain Focus on up to two business domains
Design Innovative solutions
Development Speed; Craftsmanship
HR Retention Focus on prof. growth; Profit sharing
HR Growth Own training institute; Dubai office
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Main Risks
Short Term Sales
Long Term Growth in the number of professionals
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Overview
Executive Summary Company Summary Services Market Analysis Strategy & Implementation Management Financial Info
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Functional Structure
Washington
Singapore
Chicago Islamabad Karachi
Lahore
Dubai
Corporate
Institute
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Growth in the No. of Professionals
1st Year 2nd Year 3rd Year 4th Year 5th Year
Corporate 3 4 6 8 10Design &
DevelopmentLahore 42 96 169 317 490
Sales & Support Singapore 2 3 4 5 5Sales & Support Washington 3 10 20 30 40
Design & Developmen
tDubai - 15 35 45 50
Sales & Support Chicago - 2 3 4 5
Design & Developmen
tIslamabad - - 25 60 100
Design & Developmen
tKarachi - - - 45 100
Total 50 130 262 513 800
Institute 5 8 11 14 17
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Legal Structure
The Innofy family will consist of five sister companies: Two registered in Pakistan; One each in Singapore, the United States, and Dubai
Initially, all five will have the same Board of Directors
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Start-Up Expenses
Total start-up expenses (for the Corporate, Lahore, Singapore, and Washington offices) for the 1st year, including:
Short-term assets (computers, UPSes, generators, furniture, etc.)
Cash required to handle the operations
US$1,044,000
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Overview
Executive Summary Company Summary Services Market Analysis Strategy & Implementation Management Financial Info
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Service Description
We will develop custom software
Our key strength will be in business-to-business eBiz enablement
(contd.)
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Service Description (contd.)
1. To start with, we will sit down with our client and will carefully review the business process that she will be wanting to put on the Web
2. Based on our experience, we will suggest a minimal number of necessary modifications that will be required for an effective ePresence
(contd.)
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Service Description (contd.)
3. After compiling the requirements and specifications, we will help the client in devising a deployment plan and an effective training, operation, and maintenance strategy
4. We will develop the software and deliver it to the client after ensuring its quality according to the specifications
(contd.)
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Service Description (contd.)
4. We will help the client train her staff and will provide assistance during deployment
5. We will offer post-deployment support in maintaining as well as enhancing the software
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Competitive Comparison (1)
The competition comes in several forms:
No competition at all:
– In-house development
– Most significant
– Disadvantages: Inefficiency; High employee turn-over
– Our advantages: Speed; Cost; Long-term support
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Competitive Comparison (2)
Big-time management consultants:
– Disadvantages: Generalists; They drive their clients; Cost; Lack of innovation
– Our advantages: Specialists; Innovative solutions; Speed; Fixed-cost
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Competitive Comparison (3)
Specialist eBiz consultants:
– Focused– Fast– Disadvantages: None, but they are turning down work
due to the lack of human resources– Our advantages: None, but demand exceeds the supply
by quite a distance
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Competitive Comparison (4)
Off-shore Software Houses:
– Not many
– Low cost
– Disadvantages: Inefficient; Unfocused; Lack of domain knowledge; Weak marketing
– Our advantages: Focused on eBiz; Professional service; On-site presence; Methodology fine-tuned for speed; Partnerships with established players
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Sales Supplements
The business will begin with a corporate Website establishing the positioning, followed by a multimedia CD-ROM and a printed brochure
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Overview
Executive Summary Company Summary Services Market Analysis Strategy & Implementation Management Financial Info
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Summary
We will be focusing on small to medium sized businesses wanting to sell into businesses in the US
We will be targeting businesses who are in a hurry (2-5 months turnaround time) to get on to the Web
Initially we will be flexible about the business-domain that we are going to work in. After the first 2-3 projects, we will be focusing on 1-2 domains only.
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Market Segmentation
Medium-Sized Cos.
Established players, who want to take their existing business process on to the Web
Standard Rates
Small Companies
Startups, bringing innovative and freshbusiness modelsto the Web
Subsidized Rates + Equity
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Distributing Our Service
Consulting is sold and purchased mainly on a word-of-mouth basis, with relationships and previous experience being, by far, the most important factor
The key to the purchase decisions made by our initial clients and partners will be the trust in the academic qualifications, international experience, and professional reputation of our top management
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Overview
Executive Summary Company Summary Services Market Analysis Strategy & Implementation Management Financial Info
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Strategy & Implementation
Innofy will start its sales effort first in Singapore, then, two months later, in Washington
The focus in Singapore will be on getting eBiz enablement projects through established international players. The emphasis in the US will be on leveraging those initial partnerships.
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Pricing Strategy
One of the advantages of working in partnership with established players is that our rates will be the same as thosefor their in-houseconsultants
The goal is togradually increasethe overall perdeveloper revenue
0
10
20
30
40
50
60
1 2 3 4 5
Year of Operation
Targets for Annual Revenue perPakistan-Based Developer (Thousand US$)
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Sales Forecast
0
10
20
30
40
50
Mill
ion
US
$
1 2 3 4 5Year of Operation
Details, along with assumptions, in a few minutes
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Overview
Executive Summary Company Summary Services Market Analysis Strategy & Implementation Management Financial Info
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Organizational Structure
The company will start with 3 key executives:
CEO VP Sales VP Engineering
All three will have a high level of international experience and expertise in the development of cutting-edge software
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Overview
Executive Summary Company Summary Services Market Analysis Strategy & Implementation Management Financial Info
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Sales & Profits Forecasts
(1.0
44)
0.42
0
(1.6
56)
0.33
3
(0.9
59)
9.91
0
3.57
523
.575
12.9
7545
.900
(5)
5
15
25
35
45
Sal
es &
Pro
fits
(Mill
ion
US
$)
1 2 3 4 5
Year of Operation
Details, along with assumptions, in a minute!
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Investments
NPV @ a discount rate of 17% US$5,125,000
IRR 68%
1st Year 2nd Year 3rd Year
US$1,044,000 US$1,656,000 US$959,000
Returns Over Five Years
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All currency figures are in thousands of US Dollars
Billing ScheduleLahore 20x42x0.5 420 30x96 2,880 40x169 6,760 50x317 15,850 60x490 29,400Dubai 60x15x0.5 450 70x35 2,450 80x45 3,600 90x50 4,500Islamabad 40x25x0.5 700 50x60 3,000 60x100 6,000Karachi 50x45x0.5 1,125 60x100 6,000TotalCosts for the Development WorkforceLahore 15x42x0.8 504 17x96 1,632 20x169 3,380 24x315 7,608 28x490 13,720Dubai 48x15x0.8 576 57x35 1,995 66x45 2,970 78x50 3,900Islamabad 20x35x0.8 560 24x60 1,440 28x100 2,800Karachi 24x45x0.8 864 28x100 2,800TotalCosts for the Sales and Support WorkforceSingapore 120x2 240 110x3 390 110x4 440 110x5 550 125x5 625Washington 200x3 600 180x10 1,800 180x20 3,600 180x30 5,400 190x40 7,600Chicago 210x2 420 200x3 630 200x4 800 200x5 1,000TotalCosts for the Corporate OfficeCorporate 40x3 120 42x4 168 44x6 264 46x8 368 48x10 480TotalProfitP/ SNPV Discount RateNPV @ that Discount RateIRR
17%5,125
68%
28%
420 3,330
12,882 23,220
9,910 23,575 45,900
264 368 480120 168
-249% -50% -10% 15%
5th Year
(1,044) (1,656) (959) 3,575 12,975
1st Year
840
2nd Year 3rd Year 4th Year
2,610 4,670 6,750 9,225
504 2,208 5,935
Financial Worksheet
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Appendix: The Institute
A for-profit organization, registered as a separate private limited company
Requires an initial investment of PKR20,000,000
Instructors hired on the basis of profit/equity sharing
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Institute's Output
Programs 1st Year 2nd Year 3rd Year 4th Year 5th Year
Short Courses
(1-10 days)100 200 400 700 1000
BCS (30 mo) - 10+10 50+50 100+100 100+100
Post-BSEE
Diploma (6 mo)25+25 25+25 25+25 25+25 25+25
MSCS (12 mo) 25 25 25 25 25