Business Description :

A value added reseller sells, configures and in some cases maintains computer hardware and software to businesses and individuals. This business plan helps provides the basics of how to start and succeed a VAR business.


Business Overview :

Your key task would be, adding customized features to the client’s computer systems. You would not need to worry about the distribution, as the distributor would handle the delivery of the computer systems to the client.

To start business as a Value Added Reseller, you need to sign up with your contracted partner (computer distributors) subject to the fulfillment of certain specified criterion like training requirements and registration.
Customers would come either through the distributors or individually through a web portal.

The business may include customers who are retail shopkeepers, as well as end users like retail customers or small and medium scale businesses.

Product Service Description :

Your main service would be, adding value additive features to the computers of your clients.
You can also provide consulting services like advising your clients about software and hardware products that would fulfill their requirements.

Market Opportunity

AccuFund, Best Software, Blackbaud, Cyma, Cougar Mountain Software, Executive Data Systems, Intuit Fundware, Igram Micro, Synnex and Microsoft are among the many companies that hire Value added resellers, for servicing their software and hardware products.

Growth in the sales of desktops and laptops would fuel more opportunities for VAR business. Laptop sales grew by more than 20% in 2007 with the sale of 31.6 million units. While Desktop sales in 2007 were in the region of 35 million units.

Competitive Analysis

There is a huge competition in value added reseller services. The business largely depends on effective networking with partners like Microsoft, for providing software support.

Marketing Strategy

Your key focus would be to make the services popular through the following routes:

• Online advertisement like Affiliates, CPC etc.
• Distributing vouchers in public places, targeted companies and colleges.
• Email Marketing

Partnering with a good hardware or software company is the key to a large customer base.

Sales and Distribution Strategy

Your work will be, providing in-house service, by adding value additive features to computers, and you would primarily deal with the customers of your business partners and meet their quality standards.

can You would also need to hire sales personnel to market the customized services to the end users

Operations Strategy

Concentrate on getting skilled employees, since the quality of service is the key to success in this business. Keep in mind that you should partner with those companies, whose needs fall within the range of your core competency.

You may also need to go for regular marketing campaigns to acquire retail customers.

Financial projections

Hourly service rates range from $75-$300 depending on the geographic location. In some cases, resellers provide a block of support time at reduced fees, in exchange for up-front payment.

Considering the above, suppose you hire 2 employees who work 6 hours a day. It works out to a total of 12 man-hours per day. The average hourly rate in the industry averages around $70.

Assuming there are 260 working days in a year, the total revenue for the 1st year would work out to around $220,000. If one assumes a growth rate of 30% , then the revenue estimate for the next two years would be:

Category	Year 1	Year 2	Year 3	Comments
Revenue	$220,000	$286,000	$371,800
Cost of Goods sold	$120,000	$150,000	$190,000
Gross profit	$100,000	$136,000	$181,800
Expenses : -
Payroll	$40,000	$50,000	$65,000
Rent	$5,000	$5,000	$5,000	Rent for a 300 square foot area.
Advertising	$5,000	$4,000	$3,000
Telephone & utilities	$1,000	$1,200	$1,400
Miscellaneous	$8,000	$15,000	$18,000	This includes depreciation and maintenance of equipments.
Total Expenses	$59,000	$75,200	$92,400
Net operating Income
Other Income
Net Income / (loss)	$41,000	$60,800	$89,400

 

Capital Needs Analysis

 

Asset	Year 1	Year 2	Year 3	Total
Equipment	$5,000
Staff	$25,000	$25,000	$30,000
Cash	$2,000	$3,000	$3,000
Consumables	$10,000	$12,000	$15,000
Maintenance	$2,000	$2,500	$2,000
Totals	$44,000	$42,500	$ 50,000	$ 136,500

Risks and Challenges

 

Key challenges are:-

• To get highly qualified employees
• To maintain service quality
• To meet the stringent training requirements of popular and established brands who would make ideal partners.
• If the economy goes through a slump then people may not look for such value added services.

 

Exit Strategy

If you find a network partner with a good customer base, you may not want to exit from this professional service business, once it starts generating good revenue.

Tips for Success

 

• Hire well qualified computer experts
• Network with reputed branded companies
• Keep enhancing the service quality

Books

ISBN NO	Book Title	Author
979107903	A FRESH LOOK AT VAR RECRUITING	An article from: Soft-Letter [HTML]
B0006QYLRQ	An assessment of the implementation of computer industry value added reseller information support services	Gerard San Antonio
972380108	Start Your Own Computer Business	Morris Rosenthal
849373182	Value-Added Services for Next Generation Networks	Thierry Van de Velde
275981193	Marketplace Masters: How Professional Service Firms Compete to Win	Suzanne C. Lowe

Web Resources

Resource URL

http://www.gotmerchant.com/affiliates/

http://www.ic-enc.org/VAR_Application_Form.doc