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corporate software sales 1.0 executive summary this business plan outlines the strategy for sales of enterprise software planning solutions to medium-sized companies and franchises corporate software sales css will act as the direct sales arm of a software manufacturing firm based in oregon we expect a high degree of profitability based on our plan to key in on businesses that have already expressed the need for such services and products to the software manufacturer our management expertise in dealing with corporate decision makers and our partner s reputation will be the cornerstone of our success highlights $200000,0 $180000,0 $160000,0 $140000,0 $120000,0 $100000,0 $80000,0 $60000,0 $40000,0 $20000,0 0 fy 2001 fy 2002 fy 2003 sales gross margin net profit 1.1 objectives december 2000 academic version page 1

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corporate software sales this sample business plan has been made available to users of business plan protm business planning software published by palo alto software names locations and numbers may have been changed and substantial portions of text may have been omitted from the original plan to preserve confidentiality and proprietary information you are welcome to use this plan as a starting point to create your own but you do not have permission to reproduce publish distribute or even copy this plan as it exists here requests for reprints academic use and other dissemination of this sample plan should be emailed to the marketing department of palo alto software at marketing@paloalto.com for product information visit our website www.paloalto.com or call 1-800-229-7526 copyright palo alto software inc 1995-2002 1.2 mission the employees of css recognize that information is vital for management and presenting that information in an efficient and easily understood framework is crucial also not every business manager requires similar tools what works for a service based company might be useless for a manufacturer that s why we market an already proven third-party software planning tool which we will customize to the client s individual needs although we recognize the intimate relationship between profitability and quality products we know that our success is ultimately dependent on the well-being of our employees 1.3 keys to success the success of our company is dependent on our ability to · anticipate clients needs · adapt software solutions to these needs · identify industries/corporations that need planning tools 2.0 company summary css provides enterprise-corporate planning software solutions we identify companies planning needs and work with a third-party manufacturer to create software to address these needs although the actual software is produced outof-house we guarantee the customer the right solution academic version page 2

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corporate software sales 2.1 start-up summary start-up costs which cover phone calls office furniture letterhead and business cards come to $3,050 these costs will either be financed by owner investment or through financing from the software manufacturing partner details and assumptions are summarized in the following chart and table table start-up start-up requirements start-up expenses legal stationery etc brochures consultants insurance rent research and development expensed equipment other total start-up expenses start-up assets cash required other current assets long-term assets total assets total requirements $300 $250 $0 $0 $1.000 $0 $0 $1.500 $0 $3.050 $11.000 $0 $0 $11.000 $14.050 academic version page 3

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corporate software sales table start-up funding start-up funding start-up expenses to fund start-up assets to fund total funding required assets non-cash assets from start-up cash requirements from start-up additional cash raised cash balance on starting date total assets $3.050 $11.000 $14.050 $0 $11.000 $0 $11.000 $11.000 liabilities and capital liabilities current borrowing long-term liabilities accounts payable outstanding bills other current liabilities interest-free total liabilities capital planned investment investor 1 investor 2 other additional investment requirement total planned investment loss at start-up start-up expenses total capital $0 $0 $500 $0 $500 $9.000 $4.550 $0 $0 $13.550 3.050 $10.500 total capital and liabilities total funding $11.000 $14.050 start-up $14000,0 $12000,0 $10000,0 $8000,0 $6000,0 $4000,0 $2000,0 0 expenses assets investment loans academic version page 4

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corporate software sales 2.2 company locations and facilities the company will be located in a home-based office in portland oregon this location is ideal as it is close to the software manufacturer s facilities and several of the first potential clients home offices 3.0 products and services css will provide medium and large-sized companies with enterprise-wide collaborative planning solutions we will also provide consulting services by helping companies recognize opportunities for using technology to streamline their business processes finally we will provide complete training for the use of solutions purchased from us 3.1 product and service description software css software products consist of a business planning software package that is proven in the consumer market in fact this product is the top-rated and best-selling small business planning package the enterprise version will be similar to the consumer version however it will be modified to fit the needs of different clients the product will allow corporate sales forces and franchises to use planning tools to achieve tremendous efficiencies in their business processes in essence a sales force will be able to write concise business plans for any customer and through the use of an extranet allow the customer to collaboratively plan their own account franchises will be able to create a road map of their business plans that corporate managers can monitor and adjust accordingly the possibility exists to customize the product to work with other collaborative tools such as lotusnotes and the clients email applications consulting css will perform an analysis of all potential clients planning strategies and tactics as well as their degree of aptitude with planning software and information technology the goal of this analysis is to ensure that all clients get a solution that best fits their needs and capabilities whether they decide to purchase the product or not they will have an expert analysis of their planning strategies training css will provide further value to our customers and ease the customer service burden on our partner by ensuring that all product users are properly trained in the use of all software solutions interface through the software manufacturer css will provide an additional product which will give the client a dedicated service representative eliminating the need for product updates this will in essence create a living product which can grow and adapt with the clients needs the interface representative will function through the clients established extranet academic version page 5

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corporate software sales 3.2 competitive comparison alternative products do not offer a complete package of tools for example to get similar results from another products the client would have to integrate complex spreadsheets word processing software instructions and web based collaboration themselves 3.3 technology the software package runs on windows 95 98 2000 windows nt and macintosh platforms 4.0 market analysis summary we operate in the business-to-business segment of e-commerce which recent research estimates transactions in excess of $160 billion www.e-commerceguide.com our market is further segmented into companies with sales forces greater than 100 people and companies with branches divisions or franchises in excess of 100 units 4.1 market segmentation we segment our market by size of sales force and number of company subunits our target customers will have sales operations in excess of 100 direct sales representatives or more than 100 organizational subdivisions or franchises for the first three years of operation we will focus on u.s companies in the pacific northwest california and the southwest geographically this make sense as our office is central to these regions and management has established key client contacts in each of these areas larger clients are more likely to benefit from the efficiencies our product offers and will provide fees that will sustain our profitability exact figures for the number of businesses are hard to determine however the lean structure of our company will allow us to be profitable by generating two to three new clients per year market analysis pie sales companies franchises other academic version page 6

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corporate software sales table market analysis market analysis 2000 potential customers sales companies franchises other total growth 3 2 5 2,49 500 800 200 1.500 2001 515 812 210 1.537 2002 530 824 221 1.575 2003 546 836 232 1.614 2004 562 849 244 1.655 cagr 2,97 1,50 5,10 2,49 4.2 target market segment strategy our strategy is designed to target · medium to large-size organizations whose sales forces provide their clients with proposals and plans that the client either collaborates on or would benefit from collaboration · companies that sell franchise rights and take an active role in the success of their franchises · larger clients that will provide greater revenues through a larger volume of software licensing sales and greater chance of selling client interface solution 4.2.1 market needs customization-products that strengthen their brand and address their differences · we will private label the solution so as to further strengthen the clients brand · we recognize that different clients will have varying levels of sophistication and we will design different product templates for each customer speed efficiency and information · our product will allow the client to make better and faster business decisions and receive quicker feedback from their end-customer · managers will have the ability to monitor the progress and profitability of their staff 4.2.2 market trends the most significant trend affecting our company is the growth of business-to-business ecommerce more and more firms recognize the need to take advantage of the exchange of information over the internet and our products and services rely on this 4.2.3 market growth the fastest growing segment of the e-commerce industry is the business-to-business sector this segment has gone from less than $50 billion to more than $160 billion in three years academic version page 7

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corporate software sales 4.3 service business analysis customers tend to buy enterprise software solutions based on reputation price and reliability also compatibility with existing or legacy systems is very important with this in mind the key decision makers and influencers will be the companies chief financial officer and chief information officer 4.3.1 business participants there are currently several companies that provide business planning software for desktop applications but as yet none of these offer enterprise-wide solutions additional competitors are companies which provide word processing spreadsheet and collaborative planning software as well as publishers of business planning literature 5.0 strategy and implementation summary various strategy/and implementation topics are discussed in the following sections 5.1 competitive edge our greatest strength and competitive edge is the reputation and success of the desktop software product this product is the market leader in sales and consumer ratings our success will rely upon building on those strengths we will also rely on our experience working with decision makers at the corporate level 5.2 marketing strategy we will first target the corporate offices of franchises with more than 100 units and companies with sales forces in excess of 100 personnel the software manufacturer has already provided the names and contact information for several firms which fit this profile these firms have approached the software manufacturer about enterprise solutions in the past the software firm has also provided a list of larger businesses that purchased an executive version of their desktop product we will contact these firms with the idea of helping them take this planning tool to the next level management of css has business contacts at the decision maker level for several more prospects as well these will be our secondary targets tertiary targets will come from lists of firms fitting the above criteria which management has generated through web-based market research efforts tactics for approaching these prospects will be indirect i.e we will contact sales managers and/or franchisees to establish whether the firm fits our profile and then probe for upper or middle level management contact information we will attempt to establish a face-to-face meeting with decision makers cfo cio coo where we will present a proposal tailored to their needs if possible we will also have this proposal reside on an extranet so that the client can modify the proposal and see first-hand how the product and service work academic version page 8

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corporate software sales 5.2.1 positioning statement this is an expensive solution to develop and maintain and the price will reflect the premium quality of the offering set-up costs to the client will run between $100k 200k the dedicated service option is approximately $5k/year software licenses are $100/year 5.3 sales strategy our sales consist of two services consulting and training and one product-the software/extranet package called start-up sales our services provide a fraction of the revenue we will receive for the software/extranet solution but they will sustain our cash flow needs while we develop the enterprise sales sales of consulting training and product are predicted to grow at 30 20 and 10 respectively costs associated with these sales are estimated at 10 for start-up sales 40 for consulting fees and 50 for training we expect these costs to decrease two five and ten percentage points respectively in years two and three sales monthly $60000,0 $50000,0 $40000,0 start-up fees $30000,0 consulting fees training fees $20000,0 $10000,0 0 dic ene feb mar abr may jun jul ago sep oct nov table sales forecast sales forecast fy 2001 sales start-up fees consulting fees training fees total sales direct cost of sales start-up fees consulting fees training fees subtotal direct cost of sales $150.000 $2.400 $2.550 $154.950 fy 2001 $15.000 $960 $1.275 $17.235 fy 2002 $165.000 $3.120 $3.060 $171.180 fy 2002 $13.200 $1.092 $1.224 $15.516 fy 2003 $189.750 $4.368 $3.978 $198.096 fy 2003 $15.180 $1.529 $1.591 $18.300 academic version page 9

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corporate software sales 6.0 management summary ronald ivanhoe 33 founded the company in september of 2000 to take advantage of a partnership opportunity with a highly successful pacific nw software company he has an mba in marketing and e-commerce from the university of arizona and has designed numerous successful business plans for companies in the manufacturing e-commerce and entertainment sectors he consults with insurance brokers e-commerce and manufacturing companies in marketing strategies he has lived in asia for five years speaks japanese fluently and currently resides in portland or 6.1 personnel plan payroll expenses reflect the salary of mr ivanhoe table personnel personnel plan name or title other total people total payroll fy 2001 $0 $0 0 $0 fy 2002 $0 $0 0 $0 fy 2003 $0 $0 0 $0 academic version page 10

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corporate software sales 7.0 financial plan the most crucial issue affecting our financial plan is the receipt of start-up fees for the customization and installation of the software and extranet solution this drives our cash flow and all other aspects of our operation 7.1 important assumptions this table summarizes the general assumptions used to project our balance sheet table general assumptions general assumptions plan month current interest rate long-term interest rate tax rate other fy 2001 1 10,00 8,00 25,42 0 fy 2002 2 10,00 8,00 25,00 0 fy 2003 3 10,00 8,00 25,42 0 7.2 key financial indicators the chart below shows the relative relationships year-to-year of four business indicators sales gross margin operating expenses collection days of accounts receivable benchmarks 1,500 1,00 ,500 fy 2001 fy 2002 ,00 fy 2003 academic version page 11

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corporate software sales 7.3 break-even analysis we include salary and fixed overhead as fixed costs above and beyond start-up costs this requires a break-even in sales/month for year one of $8,680 break-even analysis $1500,0 $1000,0 $500,0 0 500,0 1000,0 0 $400,0 $800,0 $1200,0 $1600,0 $2000,0 monthly break-even point break-even point where line intersects with 0 table break-even analysis break-even analysis monthly revenue break-even assumptions average percent variable cost estimated monthly fixed cost $949 11 $843 academic version page 12

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corporate software sales 7.4 projected profit and loss monthly p&l fluctuate drastically due to the work required before a sale is closed one to two months prior to closing a sale we will incur travel costs and other miscellaneous expenses associated with our consulting service expenses are approximately 40 of fees set-up costs to the client our commission drive revenue in the period a sale is made as do training fees associated direct costs are 10 and 50 respectively however as we anticipate a learning curve in training costs these decrease to a flat rate in year two of eight percent the direct cost of start-up fees is our major expense as the client prepares to go live with the product we will need to travel more frequently to the site bring in their key end-customers and travel to the manufacturer more frequently as well we have anticipated that start-up fees will grow 10 in year two and 15 in year three consulting fees are projected to grow at a steady rate of 20 and training fees at 30 as a result net profit is projected to grow at a conservative and realistic three percent for the first three years table profit and loss pro forma profit and loss sales direct costs of goods other cost of goods sold gross margin gross margin fy 2001 $154.950 $17.235 $0 17.235 $137.715 88,88 fy 2002 $171.180 $15.516 $0 15.516 $155.664 90,94 fy 2003 $198.096 $18.300 $0 18.300 $179.796 90,76 expenses payroll sales and marketing and other expenses depreciation leased equipment utilities insurance rent payroll taxes other total operating expenses profit before interest and taxes ebitda interest expense taxes incurred net profit net profit/sales $0 $4.000 $0 $0 $480 $1.440 $4.200 $0 $0 10.120 $127.595 $127.595 $0 $31.888 $95.707 61,77 $0 $5.000 $0 $0 $0 $0 $4.200 $0 $0 9.200 $146.464 $146.464 $0 $36.616 $109.848 64,17 $0 $6.000 $0 $0 $0 $0 $4.350 $0 $0 10.350 $169.446 $169.446 $0 $43.068 $126.378 63,80 academic version page 13

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corporate software sales 7.5 projected cash flow our cash flow assumptions are dependent on the start-up fee we will receive 15-20 of the total fee in commission historical values of start-up fees are from $150k to $200k and the accounts have taken from one to four months to close conservative estimates lead us to believe that we can attain sales revenue from start-up fees of between $135k and $240k in year one cash $120000,0 $100000,0 $80000,0 $60000,0 net cash flow $40000,0 $20000,0 0 20000,0 dic ene feb mar abr may jun jul ago sep oct nov cash balance academic version page 14

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corporate software sales table cash flow pro forma cash flow fy 2001 cash received cash from operations cash sales cash from receivables subtotal cash from operations additional cash received sales tax vat hst/gst received new current borrowing new other liabilities interest-free new long-term liabilities sales of other current assets sales of long-term assets new investment received subtotal cash received expenditures expenditures from operations cash spending bill payments subtotal spent on operations additional cash spent sales tax vat hst/gst paid out principal repayment of current borrowing other liabilities principal repayment long-term liabilities principal repayment purchase other current assets purchase long-term assets dividends subtotal cash spent net cash flow cash balance fy 2002 fy 2003 $77.475 $76.895 $154.370 $85.590 $85.529 $171.119 $99.048 $98.947 $197.995 $0 $0 $0 $0 $0 $0 $0 $154.370 fy 2001 $0 $0 $0 $0 $0 $0 $0 $171.119 fy 2002 $0 $0 $0 $0 $0 $0 $0 $197.995 fy 2003 $0 $59.374 $59.374 $0 $56.661 $56.661 $0 $70.864 $70.864 $0 $0 $0 $0 $0 $0 $0 $59.374 $94.997 $105.997 $0 $0 $0 $0 $0 $0 $0 $56.661 $114.458 $220.455 $0 $0 $0 $0 $0 $0 $0 $70.864 $127.131 $347.586 academic version page 15

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