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Marketer Essay

3631 words - 15 pages

1.0 Executive Summary
By focusing on its strengths, its key customers, and the underlying values they need, American Management Technology will increase sales to more than $10 million in three years, while also improving the gross margin on sales and cash management and working capital.
This business plan leads 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 also provides the step-by-step plan for improving our sales, gross margin, and profitability.
This plan includes this summary, and chapters on the company, products and services, market focus, action plans and ...view middle of the document...

1.3 Keys to Success
1. Differentiate from box-pushing, price-oriented businesses by offering and delivering service and support -- and charging for it.
2. Increase gross margin to more than 25%.
3. Increase our non-hardware sales to 20% of the total sales by the third year.

2.0 Company Summary
AMT is a 10-year-old computer reseller with sales of $7 million per year, declining margins, and market pressure. It has a good reputation, excellent people, and a steady position in the local market, but has been having trouble maintaining healthy financials.
2.1 Company Ownership
AMT is a privately-held C corporation owned in majority by its founder and president, Ralph Jones. There are six part owners, including four investors and two past employees. The largest of these (in percent of ownership) are Frank Dudley, our attorney, and Paul Karots, our public relations consultant. Neither owns more than 15%, but both are active participants in management decisions.
2.2 Company History
AMT has been caught in the vise grip of margin squeezes that have affected computer resellers worldwide. Although the chart titled Past Financial Performance shows that we have had healthy growth in sales it also shows declining gross margin and declining profits.
The more detailed numbers in Table 2.2 include other indicators of some concern
The gross margin % has been declining steadily, as we see in the chart.
Inventory turnover is getting steadily worse.
All of these concerns are part of the general trend affecting computer resellers. The margin squeeze is happening throughout the computer industry worldwide.
Past Performance | 1994 | 1995 | 1996 |
Sales | $3,773,889 | $4,661,902 | $5,301,059 |
Gross | $1,189,495 | $1,269,261 | $1,127,568 |
Gross % (calculated) | 31.52% | 27.23% | 21.27% |
Operating Expenses | $752,083 | $902,500 | $1,052,917 |
Collection period (days) | 35 | 40 | 45 |
Inventory turnover | 7 | 6 | 5 |
Balance Sheet: 1996
Short-term Assets
Cash $55,432
Accounts receivable $395,107
Inventory $651,012
Other Short-term Assets $25,000
Total Short-term Assets $1,126,551
Long-term Assets
Capital Assets $350,000
Accumulated Depreciation $50,000
Total Long-term Assets $300,000
Total Assets $1,426,551
Debt and Equity
Accounts Payable $223,897
Short-term Notes $90,000
Other ST Liabilities $15,000
Subtotal Short-term Liabilities $328,897
Long-term Liabilities $284,862
Total Liabilities $613,759
Paid in Capital $500,000
Retained Earnings $238,140
Earnings $437,411 $366,761 $74,652
Total Equity $812,792
Total Debt and Equity $1,426,551
Other Inputs: 1996
Payment days 30
Sales on credit $3,445,688
Receivables turnover 8.72
2.4 Company Locations and Facilities
We have one location-- a 7,000 square foot store in a suburban shopping center located conveniently close to the downtown area. It includes a training area, service department, offices, and showroom area.

3.0 Products and Services
AMT sells personal...

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