executivesumm

1. Executive Summary

Company Overview
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 forecasts, management team, and financial plan.

ACT Computers Mission:
ACT is built on the assumption that the management of information technology for business is like legal advice, accounting, graphic arts, and other bodies of knowledge, in that it is not inherently a do-it-yourself prospect. Smart business people who aren't computer hobbyists need to find quality vendors of reliable hardware, software, service, and support. They need to use these quality vendors as they use their other professional service suppliers, as trusted allies. ACT is such a vendor. It serves its clients as a trusted ally, providing them with the loyalty of a business partner and the economics of an outside vendor. We make sure that our clients have what they need to run their businesses as well as possible, with maximum efficiency and reliability. Many of our information applications are mission critical.

We give our clients the assurance that we will be there when they need us

Objectives:
Sales increasing to more than $8 million by the third year.
1. Bring gross margin back up to above 30%, and maintain that level.
2. Sell $2 million of service, support, and training by 2001. 3. Improve inventory turnover to 6 turns next year, 7 in 2000, and 8 in 2001.

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

Company Ownership:
ACT is a privately-held C corporation owned in majority by its founder and president, Gill Levron. There are six part owners, including four investors and two past employees. The largest of these (in percent of ownership) are Frank Cohen, our attorney, and David Rosenberg, our public relations consultant. Neither owns more than 15%, but both are active participants in management decisions.

Products and Services:
ACT Computers provides both computer products and services to make them useful to small business. We are especially focused on providing network systems and services to small and medium business. The systems include both PC-based LAN systems and minicomputer server-based systems. Our services include design and installation of network systems, training, and support.

Market Analysis:
ACT Computers 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.

Strategy and Implementation:
The home offices in Tintown are an important growing market segment. Nationally, there are approximately 30 million home offices, and the number is growing at 10% per year. Our estimate in this plan for the home offices in our market service area is based on an analysis published four months ago in the local newspaper. Home offices include several types. The most important, for our plan's focus, are the home offices that are the only offices of real businesses, from which people make their primary living. These are likely to be professional services such as graphic artists, writers, and consultants, some accountants and the occasional lawyer, doctor, or dentist. There are also part-time home offices with people who are employed during the day but work at home at night, people who work at home to provide themselves with a part-time income, or people who maintain home offices relating to their hobbies; we will not be focusing on this segment. Small business within our market includes virtually any business with a retail, office, professional, or industrial location outside of someone's home, and fewer than 30 employees. We estimate 45,000 such businesses in our market area. The 30-employee cutoff is arbitrary. We find that the larger companies turn to other vendors, but we can sell to departments of larger companies, and we shouldn't be giving up leads when we get them.

Management:
Our management philosophy is based on responsibility and mutual respect. People who work at ATC want to work at ACT becaus environment that encourages creativity and achievement

Major Milestones
The following chart highlights ACT Computers key milestones during the coming two years of operation:

Financial Highlights
The most important element in the financial plan is the critical need for improving several of the key factors that impact cash flow:
1. We must at any cost stop the slide in inventory turnover and develop better inventory management to bring the turnover back up to 8 turns by the
third year. This should also be a function of the shift in focus towards service revenues to add to the hardware revenues.
2. We must also bring the gross margin back up to 25%. This too is related to improving the mix between hardware and service revenues, because the service revenues offer much better margins.
3. We plan to borrow another $150,000 long-term this year. The amount seems in line with the balance sheet capabilities Following is the projected profit and loss and cash flow statement for the years 2000 to 2002:

Projected Cash Flow:
Following is the projected profit and loss and cash flow statement for the years 2000 to 2002, The cash flow depends on assumptions for inventory turnover, payment days, and accounts receivable management. Our projected 45-day collection days is critical, and it is also reasonable. We need $150,000 in new financing in March to get through a cash flow dip as we build up for mid-year sales:

Break-even Analysis:
we need to sell about $350,000 per month to break even, according to these assumptions. This is about half of our planned 2001 sales level.