American Management Technology will increase its sales by over $9 million within three years by focusing its strengths, key customers, and the fundamental values they require. This will allow American Management Technology to improve its gross margins on sales, cash management, working capital, and overall profitability.
This business plan shows 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 provides a step-by-step guideline for increasing our sales, gross margins, and profitability. We plan to borrow $100,000 more long-term to help us implement these changes and increase profitability. This amount seems to be in-line with the capabilities of our balance sheets.
AMT is based on the idea that information technology management for business is similar to legal advice, accounting, and graphic arts. It is not a do it yourself job. Business people need to look for reliable vendors that can provide quality support, hardware, software, and service. These vendors must be trusted as well as their professional service providers. AMT seeks these requirements and is striving to be the leading regional provider of business information technology.
AMT provides small business with both computer products as well as services. We are especially focused on providing network systems and services to small and medium business. The systems are available in both minicomputer-server-based and PC-based networks. Our services include training, support, design and installation of network system, as well as training.
Our keys to success for the next three year to achieve our objectives are:
- By offering support and service, and charging for it, you can distinguish yourself from price-oriented and box-pushing businesses.
- Increase gross margin to greater than 30%
- Our non-hardware revenue will be 20% of total sales in the third year.
AMT was established as a value-oriented reseller (VAR) in consulting. It became a reseller to meet the demand for personal computers on the market. AMT emphasizes service and support to distinguish itself from its price-oriented rivals.
One location, a 7,000 square-foot store in a suburb shopping center is located near the downtown. It has a training area and a service department. There are also offices, offices, and a showroom.
AMT is a privately held C corporation that is majority owned by Ralph Jones, its founder and president. Six people are part owners of AMT, which includes four investors and two employees. Under the leadership of the president and four others, there are 21 employees. Our major management divisions are service, sales, marketing, and administration. The service division handles support requests, training, development, and training. 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 to the computer reseller market have adversely impacted AMT. Margin squeezes, longer collection periods and lower inventory turnovers are just a few of the factors that have adversely affected AMT. All of these concerns are part of the general trend affecting computer resellers. The margin squeeze is happening throughout the computer industry worldwide.
Only way to stand out is to make the company an information technology ally for 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.
We last saw a study that showed retail sales increasing at 5% per yr, while web sales are increasing at 25% to 30%.
There are several different kinds of computer retailers within the industry including:
- Computer dealers often focus on a handful of major brands of hardware. They usually offer minimal software and variable levels of support.
Their service and support are generally not very good. Also, their prices are often higher than those at larger stores.
No one of these competitors offers the kind of personalized and personal service small businesses like our clients really want.
Small business buyers are more comfortable buying from vendors who visit their offices. They expect copy machine vendors, office product vendors, and office furnishings vendors to visit their offices in order to make sales. Many small businesses immediately go to superstores (office supplies, electronics, and office equipment) to get the best price. They don’t realize there is an even better option at a fraction 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. Focus groups showed that the home office market is not focused on price. However, they would consider quality service if the offer was properly presented. Because they only see price, they think about it. 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 rely on newspaper advertising to reach new customers. However, as we shift strategies, we must also change the way that we market ourselves. We will be focusing our efforts on our core message of service via radio, cable TV and sales brochures. We must sell our company, not the products. We sell AMT, not Apple or IBM, Hewlett-Packard and Compaq.
Our ambitious sales forecast is summarized in the Yearly Total Sales Chart. Sales are expected to rise from $5.3 million lastyear to more than $6million next year, and to more $9 million in this last year.
1.1 Objectives
- Sales increasing to more than $9 million by the third year.
- Keep the gross margin at 30%.
- Selling $1.5 million worth of support, service, and training services by 1998
- By 1998, increase inventory turnover to six turns
Success: 1.2 Keys
- By offering service and support, and charging for it, you can distinguish yourself from box-pushing and price-oriented businesses.
- Gross margin to 30%
- Our non-hardware revenues will reach 20% of our total sales in the third fiscal year.
1.3 Mission
AMT is based on the idea that information technology management for business is similar to legal advice, accounting, and graphic arts. It is not a do it yourself job. Business people need to look for reliable vendors that can provide quality support, hardware, software, and service. They should use quality vendors just like they use professional service suppliers as trusted friends.
AMT is an example of such a vendor. AMT serves its clients as an ally and trusted friend. It provides them the benefits of both a business partner, and the economics of an external vendor. We ensure that our clients have the tools they need to operate their businesses efficiently and with reliability. We give our clients peace of mind because many of our information applications are critical.