1.0 Executive Summary
The purpose of this business plan is to showcase the continued development of an IT consulting firm while securing $150,000 via a revolving credit facility. Deutsch IT Group LLC (“the Company”) was founded by Matthew Deutsch, a certified IT professional across a number of technology disciplines. Full scale revenue generating operations will commence in the second quarter of this year. The Company is based in Seattle, Washington.
Operations
Through its operations, Deutsch IT Group will provide end-to-end solutions specific for the needs of small and medium sized businesses as it relates to their information technology infrastructures. The Company will provide internally-focused services as a relates to connectivity of computers within an office setting while currently providing a wide range of cloud computing solutions. The Company will generate substantial recurring revenue from these operations.
To complement this primary revenue center, the business will also be able to source IT components when necessary. The business will work with a number manufacturers in order to receive preferential pricing as savings will be passed along to clients in order to retain a competitive advantage. This will be a significant secondary revenue center for the business.
The third section of this IT consulting business plan will further document the operations of the Company.
The Financing
As noted above, Management is seeking a $150,000 revolving line of credit. The business is seeking this revolving credit facility rather than a business loan as the business will principally use these funds for onboarding IT professionals over the course of the next five years. This IT consulting business plan assumes that the business will receive a 10-year commitment. Matthew Deutsch will contribute $25,000 towards the venture. Given the highly recurring shoes revenue that are produced from IT consulting services, the Company will be able to secure additional capital on an as-needed basis in order to further its objectives.
The Future
Through the substantial population density of Seattle and the number of small businesses that operate within this market, the Company will be able to easily scale it operations over the next five years. The Company will continue to hire highly qualified IT professionals that have a wide range of expertise across a number of technology disciplines. Management may also expand operations to include cyber security related services while potentially entering other markets of Washington State.
Market Overview
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The $150,000 of revolving credit and $25,000 capital injection by the owner will be used as follows:
2.2 Management and Investor Equity
Matthew Deutsch owns 100% of the Company.
2.3 Exit Strategies
IT consulting firms and companies that provide specialized technology services are highly valuable enterprises. Given that these businesses produce recurring streams of revenue, there is always a demand among larger entities used to acquire existing and profitable businesses in this industry. Based on the anticipated profitability of Deutsch IT Group, the Company could have valuation in excess of $1.4 million by the fifth year of operation. The sale of this business is not expected to occur for a significant period of time.
3.0 Operations
Deutsch IT Group will provide end to end solutions as a relates to the information technology infrastructure of small and medium sized businesses throughout the greater Seattle metropolitan area. The scope of these services will primarily focus on cloud solutions for a wide range of industries. The Company will also have the ability to provide point of sales system integration for the needs of retail customers as well as food service businesses. Through these operations, the Company will typically produce income of $1,000 to $3,000 per month depending on the scope in scale of the client’s IT needs.
The ability to provide technology selection and installation will also be a major component of the Company’s success and will be a substantial secondary profit center. The Company will be able to select servers, point of sales systems, laptops, desktops, and related technology peripherals they are used to in the course of business. Management will be able to directly order these components on behalf of clients while installing them at their facilities.
In order to provide exceptional service on an ongoing basis, the Company will implement numerous continuing education programs for staff. This will ensure that they are aware of the latest best practices as well as all matters related to ensuring secure technology environments for clients.
4.0 Overview of the Organization
4.1 Registered Name
Deutsch IT Group LLC. The business is registered as a limited liability company in the State of Washington.
4.2 Commencement of Operations
Deutsch IT Group will start its operations in the second quarter of this year.
4.3 Mission Statement
To provide comprehensive and end to end IT solutions for clients on a cost-effective basis.
4.4 Vision Statement
To become a widely recognized IT solutions provider in the Seattle market.
4.5 Organizational Objectives
• Properly onboard highly qualified IT professionals that can render services on behalf of Deutsch IT Group.
• Conduct extensive direct outreach with small medium sized businesses across a wide range of industries within Seattle.
• Maintain relationships with third-party IT consulting firms in order to receive ongoing referrals.
• Implement ongoing training and continuing education programs so the business remains at the forefront of information technology.
• Adhere to all regulatory frameworks among clients that have to securely store information in cloud-based environments.
• Potentially expand the scope of operations to include at markets outside of Seattle.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of the IT consulting business plan will document the current economic climate, the industry, the demographic profile, and the ongoing competition of the business will face moving forward.
At this time, the economic climate within the United States is moderate. As a result, changing trade policies, there may be upward pricing pressure on specialized technology components especially those that have a require amount of memory (RAM). It should be noted that the federal government is taking the appropriate measures in order to ensure reduction the prevailing inflation rate.
As IT consulting is imperative for any business, only a severe sustained economic recession would impact Deutsch IT Group’s ability to remain profitable. As noted in this document, the Company is producing highly recurring options are revenue from all facets of its operations.
5.2 Industry Analysis
There are 500,000 companies that are actively involved in providing information technology and specialized technology consulting. These businesses aggregately produce $760 billion of revenue while providing jobs for 2.1 million people.
The growth profile for this industry is highly positive. As technology continues become integrated into every aspect of how a business operates, the demand for comprehensive IT consulting will remain strong. The industry is expected to have a 6% compounded annual growth rate over the next five years.
5.3 Customer Profile
Among small and mediums sized enterprises, the following profile will be used:
• Annual revenues ranging from $500,000 to $10,000,000+
• Has a monthly budget of $1,000 to $3,000 for outsourced IT services and consulting
• Operates within 50 miles of the Deutsch IT Group location
5.4 Competitive Analysis
The business will face significant competition as establishes its operations within the greater Seattle area. This industry has a number of enterprises that are actively involved in providing IT services. The Company will maintain a significant differentiating factor by being able to not only provide comprehensive IT services but also the integration of hardware into all aspects of the client’s operations.
6.0 Key Strategic Issues
6.1 Sustainable Operations
Deutsch IT Group will have sustainable operations as a result of the following:
• A highly experienced Founder, Matthew Deutsch, who has extensive experience in the field of IT consulting.
• The Company will be able to easily scale it operations by hiring additional IT consultants that render specialized services for clients.
• The Company can easily expanded service architecture to encompass related technology disciplines such as cyber security.
• The business will source inventories among numerous globally recognized manufacturers on a cost-effective basis.
6.2 Basis of Growth
The Company will expand via the following methods:
• Continued expansion in the company’s direct outreach campaigns with small medium size enterprises within Seattle.
• Expansion of cloud hosting capabilities as it produces recurring stream of revenue.
• Potential acquisition of companies that operate in a similar capacity.
• Expansion of a scope of managed IT services that can be sourced through Deutsch IT Group.
7.0 Marketing Plan
7.1 Marketing Objectives
• Implement marketing campaigns that showcase the cost-effective and end-to-end nature of the IT services offered by the business.
• Maintain expansive online presence that showcases the technological capabilities of the business.
• Potentially bid on federal and state contracts, which would be a highly lucrative source of new business for Deutsch IT Group.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• The Company will launch its operations in Seattle.
• Revenue will reach $835,000.
Year 2
• The business will onboard an additional IT consultant/technician.
• Revenue will reach $1.01 million.
Years 3-5
• The Company will continue to expand its marketing operations throughout King County and Seattle.
• Revenue will reach $1.8 million by the fifth year of operation.
7.4 Marketing Strategies
The Company will use numerous marketing strategies in order to create a brand name for Deutsch IT Group within this highly competitive industry. Most importantly, Matthew Deutsch and the Company’s marketing staff will conduct extensive direct outreach with small and medium sized businesses within the Seattle market. The Company will work with a regional marketing firm in order to acquire mailing lists of companies that have recently completed their incorporation. Of special importance will be to conduct direct outreach with food service businesses as the Company will have the ability to provide comprehensive solutions for restaurants as relates to their point of sales systems and internal technology infrastructure.
As a relates to the Company’s website, this platform will showcase all aspects of services that can be sourced through Deutsch IT Group. The platform will also feature a number of videos that showcase the business’ capabilities will also addressing common issues that are faced by entities with complex technology infrastructure. This will foster a significant degree of trust with potential clients while positioning the website as an educational resource.
The Company will also use a number of direct advertising campaigns on LinkedIn among individuals at their profession as a small business owner or as a manager of technology manager at a medium sized enterprise. To a more modest extent, the Company will maintain profiles on other social media platforms in order to engage in social signaling, which will ultimately have a net positive benefit while increasing brand visibility.
To ensure that the business is operating maximizing its potential, key performance indicators (KPIs) will be evaluated on a monthly basis to ensure that the business is capitalizing appropriately on its prescribed marketing budget.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• Matthew Deutsch will contribute $25,000 towards the development of Deutsch IT Group.
• The Company will secure a $150,000 revolving credit facility.
• The business will achieve a compounded annual growth rate of 22%.
9.2 Financial Highlights
• Deutsch IT Group will generate contribution margins of 95% on all service revenue.
• Technology, integrations, including point of sale in integrations, will have a contribution margin of 50%.
9.3 Sensitivity Analysis
Only in a highly severe recession would the revenue of Deutsch IT Group be impacted. The demand for comprehensive IT services tends to remain incredibly strong, even during challenging business climates given that this is critical infrastructure for the operations of any enterprise. They recurring nature of the Company’s revenue will fully support the operations of the business at all times.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• Integration of technology sourcing services will provide significant competitive advantage and differentiating factor.
• The Company can easily scale operations to include other services related to point of sales system management and cyber security.
• The target market is home to numerous major corporations which further contributes the economic viability of Deutsch IT Group within this market.
Weaknesses
• High cost of a payroll as the business is onboarding highly skilled IT professionals.
• This is a highly competitive industry within Seattle.
• The business will continually need to engage in education for its staff to remain at the forefront of best practices.
Opportunities
• Expansion of the Company’s direct outreach campaigns, especially as it relates to food service businesses and restaurants that have comprehensive IT needs.
• Expansion of operations to include other markets in King County.
• Integration of additional technology disciplines and specialized services that can be offered.
Threats
• Changes in global trade policies can cause the underlying inventory acquisition cost to increase, especially as it relates to components that require a significant amount of RAM.
Appendix B – Critical Risks
Development Risk – Low
To comprehensive and to end service architecture that will be offered to clients has already been developed. The primary matter that needs to be addressed to securing the revolving credit facility discussed in this document.
Financing Risk – Low/Moderate
As noted earlier, the Company is specifically seeking a working capital line of credit to be drawn down basis on and as needed basis. This will allow a business to properly control its cash flow during the early years of operation.
Marketing Risk – Low
Matthew Deutsch is a highly experienced IT professional that will be able to properly establish the operations of Deutsch IT Group while bringing it profitability. He holds numerous certifications regarding a wide range of IT related matters.
Management Risk – Low
The Company will use numerous marketing strategies that spans both online marketing and direct outreach in order to establish a highly regarded brand name in the Seattle market. These operations will be complimented by the referral relationships that management will develop over the next five years.
Valuation Risk – Low
The valuation risk is offset by:
• Substantial demand for comprehensive IT services in the greater Seattle area.
• The Company can expand to include other markets within Washington State through the development of satellite offices.
• The business can integrate cybersecurity related services, which will also provide recurring streams of revenue.
Exit Risk – Low
IT focused enterprises are some of those valuable businesses in the country given their economic stability and recurring terms of revenue. In the event of the businesses to be sold, the Company will coordinate these efforts with a business broker, attorney, CPA, and business valuation expert so that the transition of the business to a third-party is a seamless as possible.