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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