Looking for a computer hardware reseller business plan? You're in the right place.
A reseller books millions in sales and keeps a few cents of each dollar, so the plan has to answer questions a retail template never asks. How much cash does 45 days of customer credit tie up? What does the bank lend against? What happens to the line of credit when sales slip? A blank template won't show what a sensible answer looks like.
In this article we'll walk through a complete sample plan for a business-to-business hardware reseller in Cincinnati, Ohio, section by section. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials, including receivables, inventory and the credit line.
Here's what you'll take away:
- The executive summary: see how to explain a thin-margin business on one page, so a banker sees the volume, the margin and the risk in the first minute
- The margin by product line: learn why hardware earns about 16 cents on the dollar and where the rest of the profit comes from
- The funding structure: find out why a reseller that doubles its sales needs a reserve larger than its equipment budget
- The receivables and inventory balances: see how customer terms, supplier terms and staged inventory turn into the cash a lender will test
- The five-year profit, cash flow and balance sheet: understand how each hire, price and payment term shows up in the numbers
- The downside case: have an answer ready for the "what if sales run 20% short?" question, along with the steps the owner takes in response
If you're setting up a reseller, read this before you write your own. The business is fictional, so take what fits your market and change the rest.
In this plan
- The Business on One Page
- Who American Management Technology Is
- The Cincinnati Business-Technology Market
- The Accounts We Sell To
- From Quote to Purchase Order
- Where New Accounts Come From
- Running the Warehouse, the Vans and the Quote Desk
- Who Runs It
- Financial Plan: Receivables, Inventory and the Credit Line
- Funding the launch and the receivables float
- Order counts, terms and margins behind the forecast
- Revenue by product and service line
- Who is on payroll, and from which month
- Profit and loss
- Where the cash goes
- Balance sheet: receivables, inventory and supplier credit
- Margin, break-even and debt cover
- If sales run 20% under plan
- Sources
If you need a computer hardware reseller business plan template for your own plan, start it in the Toolkit.
The Business on One Page
American Management Technology is a Cincinnati value-added reseller that opens on January 1, 2027. It sells servers, storage, networking gear, workstations and laptops to small and mid-size businesses with 15 to 250 employees, installs and configures what it sells, and from the second month sells managed support contracts on top. Founder Dennis Marsh owns 67% and a private investor owns 33%.
The business needs $770,000: $590,000 of equity and $180,000 from the bank, split between a $100,000 revolving line of credit and an $80,000 term loan. Of that, $578,000 is a reserve for receivables growth, the busy-season swing in cash and the first year's loss, $118,000 buys two vans, a staging bench and build-out, $45,000 buys staging inventory and $29,000 pays for legal work, licensing and the launch.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $1,724,350 | $3,001,905 | $4,100,252 |
| Net income after start-up costs | ($92,876) | $51,302 | $172,717 |
| Closing cash | $387,917 | $281,487 | $353,803 |
Year 1 is a loss because the business carries an engineer, a quote desk, a staging technician and a service desk analyst before sales can pay for them, and because every dollar of growth ties up about ten to thirteen cents in receivables and inventory. Monthly operating profit turns positive from August. Year 2 is the first profitable year, at a 1.7% net margin, and Year 5 reaches 5.4%, which is thin for a business of this size and is the number a lender will test. The rise comes from selling more managed support on top of each hardware order, not from trimming wages.
The plan tests itself. If sales run 20% below plan and Dennis drops the last hire, cuts marketing and his own pay and pays no distributions, closing cash stays positive in every year, never below $123,657 on year-end balances, and the business is profitable from Year 3. The fall receivables swing is tighter, and the downside note says how tight.
The proposition is narrow. One firm quotes, sources, configures, installs and supports the same equipment, on a fixed-fee schedule, with a named engineer on every account.
Who American Management Technology Is
Legal name: American Management Technology, LLC, an Ohio limited liability company. Owners: Dennis Marsh, 67%, and one private investor, 33%. Location: 5,500 square feet of office, staging and receiving space in a suburban business park north of Cincinnati. Start date: January 1, 2027. Stage: pre-launch. The lease is in draft, distributor credit applications are filed, and 18 existing customer relationships have been quoted for first orders.
What the company is for
Give owner-run businesses in the Cincinnati area a single supplier for the equipment their staff work on and the people who keep it running, at a price they can see in a written quote.
Targets for the first two years
- 88 buying accounts in 2027, 18 of them from existing relationships.
- 32 managed support contracts by December 2027.
- $3,001,905 of revenue in 2028, with EBITDA of about $90,000 and a small profit after tax.
- A team of eight full-time people, Dennis included, plus a part-time coordinator, by the end of 2028.
Four ways it earns
| Line | How it is priced | Year 1 share of revenue |
|---|---|---|
| Servers, storage and networking projects | Quoted per project, average $5,200 | 38% |
| Workstations, laptops and peripherals | Quoted per order, average $1,520 | 30% |
| Installation, configuration and cabling | $150 an hour, blended | 13% |
| Managed support and warranty contracts | About $1,650 a month | 19% |
Vendor and distributor standing
The business buys from national IT distributors, which extend trade credit after a credit application, and enrolls in vendor partner programs for the brands it sells. Program tiers, incentives and credit terms are set by each vendor and change often, so the plan uses its own figures: supplier payment in 21 days on average, and only a small allowance for rebates and early-payment discounts, folded into the product margins.
The Cincinnati Business-Technology Market
What the data supports
The Bureau of Labor Statistics put the median pay of network and computer systems administrators at $99,130 in May 2025 and projects a 4% fall in employment from 2025 to 2035. For computer user support specialists the median was $62,890 and the projection is a 3% fall. Both are consistent with routine administration moving to cloud services and automation, though the Bureau does not give the cause here. If that is the trend, a small business that once kept its own administrator may buy more of the service from outside, which would support the support-contract line, and it would also mean fewer on-site servers, which is why the server line grows slowly after Year 3. The hardware these businesses still need on site, mainly workstations and networking, is the rest of the demand.
The plan does not quote a Cincinnati market size. No primary figure for regional hardware spending was found, and the forecast rests on account counts and order values instead.
How the buying decision works
An owner-run office often replaces workstations every three to five years, a planning range and not a measured one, replaces a server or storage unit when support runs out, and rebuilds the network when it moves or adds a site. Purchases are expected to cluster at fiscal-year end, when remaining budget is spent and some owners time equipment buying to their tax position; the accountant confirms the treatment. The plan therefore builds a heavy fourth quarter and a second bump in June, a seasonal shape that is the plan's own estimate.
Who a customer could buy from instead
| Alternative | What it offers | Why a customer picks it | How this business differs by design |
|---|---|---|---|
| Online direct sellers and big-box stores | Low shelf prices on common units | Price and speed on one-off orders | Configuration, installation and a named engineer |
| Manufacturer direct sales | Full range and configured orders | Brand relationship and program pricing | Several brands, one quote, one invoice |
| Larger regional resellers and managed service providers | Broad stack, large teams | Scale and depth on complex projects | Smaller accounts get a senior engineer, not a queue |
| Local repair shops | Walk-in service, low rates | Convenience and price | Project quoting, staging and a service contract |
| The customer's own IT person | Knows the office | Already on staff | A buyer that takes over the sourcing and receiving |
The table describes what each category offers and where this business positions itself, not a ranking. Prices and terms in this market change often and are not quoted.
SWOT
| Strengths | Weaknesses |
|---|---|
| An owner with a book of quoted accounts and distributor relationships | Thin product margin leaves little room for a lost deal |
| One firm for sourcing, staging, installation and support | Year 1 loses money and draws on the reserve |
| Fixed-fee quotes and a named engineer on each account | Two people hold most of the technical knowledge |
| Opportunities | Threats |
|---|---|
| Managed support contracts that smooth revenue and margin | Customers moving workloads to cloud services and buying fewer servers |
| Refresh cycles and warranty expiries on the installed base | Online sellers and manufacturers discounting common units |
| Referrals from accountants, brokers and managed service providers | Slow-paying customers and a lender that tightens the line |
The Accounts We Sell To
The office with 15 to 250 employees
Examples are an accounting firm, a medical practice, a manufacturer's front office, a law firm, a distributor, a school or a nonprofit. There is a person who owns IT decisions, often an office manager or an owner, and nobody whose full-time job is IT.
How they buy today
Some order from an online seller and ask a nephew to set the equipment up. Some pay a break-fix shop by the hour. Some hold a contract with a managed provider that quotes hardware at a mark-up the customer cannot check.
What makes them switch
A server that fails with no support contract, a move into a new office, a regulator or insurer asking about backups, or a bill that no one can explain.
What they ask of a supplier
A price they can compare, a delivery date that holds, equipment that works when it arrives, a person to call, and an invoice they can pay on net 30.
Credit and payment
Small orders are paid by card or ACH at delivery. Projects over about $3,000 are quoted with a deposit of 30% and the balance on net 30. The average customer pays in 45 days.
From Quote to Purchase Order
The quote desk
Every request goes to the inside sales and quoting specialist, who returns a written quote within four business hours. Projects over $10,000 are reviewed by the systems engineer before the quote goes out.
The Year 1 pipeline
About 70 new accounts won in the year, from about 230 quotes at a 30% account conversion, plus 18 existing relationships.
| Lead source | New accounts | Share |
|---|---|---|
| Referrals from accountants, brokers and managed providers | 20 | 29% |
| Outbound calls and email from the quote desk | 18 | 26% |
| Local search and the website | 12 | 17% |
| Chamber, association and vendor events | 12 | 17% |
| Technology briefings at customer offices | 8 | 11% |
How prices are set
Hardware is quoted at distributor cost plus a markup that depends on the line and the competition: the plan averages an 18.5% margin on price for servers, storage and networking and 9.5% for workstations, and distributor rebates and early-payment discounts add about 1.5 points to each. Labor is a blended $150 an hour, with fixed fees for standard builds. Managed support is priced per endpoint on a 12-month term with auto-renewal and averages $1,650 a month for an office of about 28 endpoints; scope and response times are set in the written agreement.
Keeping accounts
The plan expects about 10% of support contracts to lapse each year. Accounts that buy hardware, installation and support from the firm stay longest, so every quote above a threshold shows the three together.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Managed support contracts at year end | 32 | 58 | 84 | 108 | 130 |
Each service desk analyst carries roughly 27 to 33 contracts, so the next hire follows the contract count: four analysts by Year 4. That is a stretched ratio and a lender may ask for a lower one.
Where New Accounts Come From
The budget and what it buys
The first-year budget is $47,000: $15,000 of launch spend from start-up capital plus $32,000 of running cost. That is 2.7% of Year 1 revenue, falling to about 1% by Year 3 as repeat business and referrals take over. Across 70 new accounts it comes to about $671 each, against about $19,600 of first-year revenue per account.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Website, quoting portal and branding (launch) | $15,000 | A site with request-a-quote forms, product-line pages and a customer portal for order status |
| Chamber, association and vendor events | $10,000 | Booths and sponsorships at local events; about 12 accounts |
| Local search | $8,000 | Searches such as "business IT equipment Cincinnati"; about 12 accounts |
| Referral program | $5,000 | A written thank-you and a first-order credit for accountants, brokers and managed providers; about 20 accounts |
| Outbound tools and lists | $5,000 | Sequences run by the quote desk; about 18 accounts |
| Technology briefings | $4,000 | Lunch sessions on backup, security and refresh planning; about 8 accounts |
Milestones
- January 2027: lease signed, website live, first 18 relationships quoted.
- February 2027: first three managed support contracts signed.
- June 2027: 40 buying accounts and 15 support contracts.
- December 2027: 88 buying accounts and 32 support contracts.
Running the Warehouse, the Vans and the Quote Desk
The building
5,500 square feet in a suburban business park, set at about $9.45 a square foot all in ($52,000 in Year 1): a staging room with racks and a bench, a receiving dock, shelving for spares, and an office for the quote desk and the service desk. The business stays in this building through Year 5; field technicians work mostly at customer sites, but at about 13 people the space gets tight, and a move is a risk the plan does not budget.
How an order moves
The quote desk raises a purchase order with the distributor on the day a customer signs. Most hardware ships to the staging room, where it is imaged, labeled and tested before delivery. Large projects ship direct to the site. The part-time coordinator, who starts in month 4, matches every distributor invoice to the order before it is paid and runs customer invoicing and collection calls. Until then Dennis does both.
Vehicles and field work
One van, bought in month one, carries the engineer and the technicians to installs, and a second joins in month 19 with the field technician. Cabling above a set size is subcontracted to a licensed contractor and billed through.
Systems
A quoting and distributor-integration tool, a service desk and remote monitoring platform, accounting software and a customer portal. Software costs $24,000 in Year 1 and $40,000 by Year 5.
Who does the work
Five full-time and one part-time person on payroll at the end of Year 1: Dennis, the engineer, the quote desk, the staging technician, the first service desk analyst and the part-time coordinator. Eight full-time at the end of Year 2, ten at the end of Year 3 and twelve from Year 4. Each hire follows revenue or the support contract count, and the downside case shows which are dropped.
Insurance and safeguards
- General and professional liability, cyber, inventory and tools in transit, commercial auto and key-person cover on Dennis, budgeted at $21,000 in Year 1. Workers' compensation for technicians sits in the payroll load.
- Written quote terms with delivery, returns and restocking conditions.
- A credit check and a written limit for every account above $10,000, approved by Dennis until the coordinator takes over the paperwork.
- Backups and written procedures for customers' data that the firm handles during installs.
Suppliers and advisors
Several national distributors, so no single one controls pricing. An accountant, an employment lawyer on call and a commercial insurance broker.
Who Runs It
Dennis Marsh, founder and president
Dennis has fourteen years in business technology sales, the last eight as a sales manager at a regional reseller in Cincinnati, where he ran a team of five and a book of about 60 accounts. He holds vendor sales certifications and a bachelor's degree in business. His $400,000 investment comes from savings and the proceeds of a house sale. A lawyer has reviewed his current employment terms, and the 18 relationships quoted are ones he is free to approach.
Where the team is thin
Dennis has never run purchasing, credit or payroll. The plan covers this with a part-time billing and purchasing coordinator from month 4, an accountant who reviews receivables monthly, and written credit limits from the first order. Technical depth rests on one engineer and one service desk analyst until the field technician and second analyst arrive in month 19, and on two engineers only from month 46.
If Dennis is out
The account manager from month 13 holds the larger relationships and the systems engineer can run quotes. The business carries key-person life and disability cover on Dennis.
Outside help
The investor, a retired IT director, reviews the first-year numbers each quarter. The local Small Business Development Center is on call for credit and pricing questions.
Ownership and the bank
Dennis owns 67% and the investor 33%, through an LLC that elects corporate tax treatment. The bank takes a personal guarantee from Dennis and a lien on receivables, inventory and vehicles, and asks for monthly receivables aging and quarterly accounts. A $100,000 standby line is on the request list and is not part of the figures.
Financial Plan: Receivables, Inventory and the Credit Line
The tables run in the order a lender reads them: what the $770,000 buys, the order counts and terms behind each revenue line, sales by line and by month, payroll, profit and loss, cash, the balance sheet with its receivables and inventory, break-even, and a year of weak sales. Year 1 is monthly. Years 2 to 5 are annual. Hardware is booked at the full price the customer pays, so revenue is large and margin is thin by design.
Funding the launch and the receivables float
| Use of funds | Amount |
|---|---|
| Staging inventory: spares, common switches, drives, memory and loaner units | $45,000 |
| First service van, equipped and lettered | $40,000 |
| Second service van for the field technician (month 19) | $40,000 |
| Staging bench, racks, test lab and tools | $21,000 |
| Office and warehouse build-out, shelving, receiving dock | $17,000 |
| Distributor credit applications, vendor partner enrollment, certifications | $6,500 |
| Legal: entity set-up, sales terms, lease review, bank documents | $7,500 |
| Launch: website, quoting portal, branding, first outreach | $15,000 |
| Cash reserve for receivables growth and the first-year loss | $578,000 |
| Total uses | $770,000 |
| Source of funds | Amount |
|---|---|
| Dennis Marsh's savings | $400,000 |
| One private investor, a retired IT director (one-third stake) | $190,000 |
| Bank revolving line of credit, drawn at opening and held (interest only) | $100,000 |
| Bank term loan for vans and build-out | $80,000 |
| Total sources | $770,000 |
Dennis Marsh puts in $400,000 of his own money, 52% of the total. A private investor, a retired IT director, adds $190,000 for a one-third stake. Equity is $590,000 and debt is $180,000, 77% and 23%. The bank provides a $100,000 revolving line of credit, drawn at opening and held with interest only, and an $80,000 seven-year term loan for the vans and build-out, interest only for six months. Both carry a personal guarantee and a lien on receivables, inventory and vehicles, and the 9.5% and 9.75% rates are figures for planning, not quotes. A real line is sized against a borrowing base of eligible receivables. At an advance rate of 80%, a planning figure, the $212,591 of receivables at the end of Year 1 would support $170,073, so the line sits inside the base by then; in the first months, when receivables are small, it rests on Dennis's guarantee. The $578,000 reserve is 75% of the raise on purpose. A reseller that doubles its sales must pay distributors in about 21 days and collect from customers in 45, so growth itself consumes cash. Working capital absorbs $221,311 in Year 1 and $351,939 by the end of Year 2, and Year 1 adds a $92,876 loss after start-up costs. The reserve is sized to the lowest month and to a weak year, not to the year-end balance: the monthly note counts receivables at 45 days of each month's billing, and the cash note repeats the check for later years and for the downside. Cash earns nothing in the model, so holding $100,000 against a drawn line costs interest the business could save in a later year by repaying part of it.
Order counts, terms and margins behind the forecast
- Two hardware lines carry most of the Year 1 revenue. Year 1 holds 125 server, storage and networking projects at an average of $5,200 ($650,000) and 340 workstation, laptop and peripheral orders at an average of $1,520 ($516,800). Order counts reach 225 and 580 in Year 3. Average order values rise 1.5% a year from Year 2, a slow drift that reflects mix and not list-price inflation. The server line grows slowly after Year 3 because some of that work may move to cloud services.
- Product margin is stated per line. Server, storage and networking projects keep 20% of price after what distributors charge, workstations keep 11%, labor keeps 88% after cabling subcontractors and parts, and managed support keeps 67% after monitoring, backup licenses and warranty pass-through, about $545 a month per contract and before the service desk payroll, which sits in the payroll table. The quoted margins on the two hardware lines are 18.5% and 9.5%, and distributor rebates and early-payment discounts add about 1.5 points to each; all of these are planning figures. In Year 1 hardware is 68% of revenue and 31% of gross profit. Margins vary deal by deal, and a competitively bid quote can fall below these figures.
- The model holds the blended direct-cost rate at its Year 1 level, 64.7%, a gross margin of 35.3%, in every later year. The plan therefore gets no credit for the shift toward labor and support contracts. Priced at the line margins above, Year 3 gross profit would be about $1,794,000 against the $1,448,663 the tables carry, a gap of about $345,000, and Year 5 about $2,754,000 against $2,020,121. Part of that gap is real operating leverage and part will be absorbed by costs the line margins leave out, such as tool-stack growth, vendor escalations and price pressure on renewals, so the plan claims none of it.
- Labor bills at a blended $150 an hour, a mix of engineer time at a higher rate and technician time at a lower one, with 1,550 hours in Year 1 and 3,650 in Year 3, rising 3% a year in rate. Capacity is built from people: each engineer at about 1,100 billable hours a year, the staging technician at about 600 and each field technician at about 1,300, roughly 60% of a working year. That covers Year 1 (the engineer and the staging technician from month 4), Year 2 once the first field technician arrives in month 19, and Year 3 with the second from month 31. The second senior engineer in month 46 covers the 4,550 and 5,200 hours of Years 4 and 5. The rate is a planning figure for the Cincinnati market, not a quoted benchmark. The thin spot is the staging technician, who also images the hardware for 465 orders in Year 1 and more than 800 by Year 3, and the systems engineer, who also handles escalations from the service desk until the second engineer arrives.
- Managed support contracts average $1,650 a month in every year, roughly a 28-endpoint office at about $59 an endpoint; market pricing varies widely, this is a planning figure and the plan holds it flat. A contract is a 12-month term with auto-renewal covering monitoring, patching, backup checks and help desk calls, with scope and response times set in the written agreement. The count grows from 32 at the end of Year 1 to 58, 84, 108 and 130, about 3,600 endpoints by Year 5. The first contracts are signed in month 2 with customers buying hardware from the 18 existing relationships, and the plan expects about a third of the 88 first-year buying accounts to sign one, which is the least proven part of the support line. A service desk analyst is hired for roughly every 27 to 33 contracts, four in all, which is about 750 to 900 endpoints each; remote monitoring makes that workable, but it is toward the stretched end, and a lender may ask for a lower ratio. Support is the slowest line to build and the one that makes later years steadier: 19% of Year 1 revenue, 34% of Year 3 and 41% of Year 5. Churn of about 10% a year is inside the net counts.
- Customers are small and mid-size businesses with 15 to 250 employees. Year 1 expects 88 buying accounts, 18 from Dennis's existing relationships and 70 won in the year, at about five orders and $19,595 of revenue per account. No single account is planned above 6% of revenue, and the ten largest are planned at about a third. By Year 3 the plan needs about 185 buying accounts at about $22,000 each. Revenue per account is a figure for this example, and the first pipeline is the other unproven part of the plan.
- Customers pay in 45 days on average, a mix of card and ACH payment on small workstation orders and net 30 on projects that often run late, so receivables are $212,591 at the end of Year 1 and $505,511 at the end of Year 3. The balance sheet takes receivables at 45 days of the year's average daily sales. Because the fourth quarter brings about 40% of the year, receivables at a month and a half of December's $256,414 billing would be nearer $385,000, about $172,000 above the balance sheet. The monthly note and the cash note count that seasonal swing, and the reserve and a $100,000 standby line the bank is asked to arrange, undrawn and outside the figures, are sized for it. Bad debt is 0.29% of revenue in Year 1 and 0.27% in Year 3.
- Distributors and vendors are paid in 21 days on average across the forecast: prepayment or card in the first months, rising to 28 to 30 days as credit limits are approved. Credit terms are set by each distributor and are not a published figure, which is why Year 1 carries the lower average and a large reserve. Accounts payable are $64,158 at the end of Year 1 and $152,557 at the end of Year 3.
- Inventory is small by design. Most hardware ships from the distributor to the business's dock or the customer's door and is configured in the staging room. The opening $45,000 buys spares, loaner units and common parts. On top of that the plan carries 2.5% of annual cost of goods in inventory, which brings it to $72,878 at the end of Year 1, about 24 days of cost, and $111,290 in Year 3, about 15 days. Price protection, returns and obsolescence on spares are not modeled and are the lender's likely questions.
- Payroll adds 27% to wages for payroll taxes, health coverage, workers' compensation on technicians and a retirement match (15% for the part-time coordinator). Wages in the personnel table are launch rates and a separate line adds 3% a year from Year 2. The Bureau of Labor Statistics put the median wage of network and computer systems administrators at $99,130 in May 2025 and of computer user support specialists at $62,890, so the $95,000 engineer sits just under the first and the $56,000 service desk analysts just under the second. Both are set a little below national medians for a Cincinnati business without a reputation yet. Sales commissions and spiffs are separate, including employer taxes, paid to the account manager and the quote desk on new accounts and renewals and not to Dennis, who is paid by salary and distributions: $40,000 in Year 1 and $94,000 in Year 3, about 6.5% of gross profit.
- The building is 5,500 square feet of office, staging and receiving space in a suburban business park north of the city, at about $9.45 a square foot all in, which is $52,000 in Year 1. The plan stays in it through Year 5, with rent rising about 3% a year. Field technicians work mostly at customer sites, but with about 13 people by Year 5 the space gets tight, and a move would be a cost the plan does not carry. Both rent and size are planning figures and a local broker confirms the market. A second van is bought in month 19 for the field technician and is funded in the raise. Insurance of $21,000 covers general and professional liability, cyber, inventory and tools in transit, commercial auto for the vans and key-person cover on Dennis; workers' compensation is inside the payroll load.
- Marketing is $47,000 in Year 1: $15,000 of launch spend paid from the raise and $32,000 of running spend. That is 2.7% of Year 1 revenue and about $671 per new account on 70 new accounts. Running spend is 1.0% of Year 3 revenue, because most hardware is sold by relationship and repeat orders and not by advertising.
- Tax is the federal corporate rate of 21%. The LLC elects to be taxed as a corporation, which a pass-through structure would change, and there is no state income tax line because Ohio has no corporate income tax. Ohio charges a commercial activity tax on gross receipts above an exclusion that secondary sources put at $6,000,000, and the forecast stays under it through Year 5 at $5,717,688. The accountant confirms the threshold, any municipal net-profit tax in the city where the building sits, and sales tax treatment of hardware, installation and support. The model carries Year 1's $63,876 loss before start-up costs forward, which absorbs Year 2's profit, so the first tax is $42,570 in Year 3, and it does not deduct the start-up costs.
- Owner distributions are $120,000 in Year 4 and $180,000 in Year 5, shared 67% to Dennis and 33% to the investor, and only from cash the model shows the business can spare. The $100,000 line is held and not repaid inside the forecast, so the business borrows while holding cash. The term loan amortizes normally.
Revenue by product and service line
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Servers, storage and networking projects | $650,000 | $976,430 | $1,205,363 | $1,332,194 | $1,434,964 |
| Workstations, laptops and peripherals | $516,800 | $771,400 | $908,246 | $985,447 | $1,048,627 |
| Installation, configuration and cabling labor | $232,500 | $363,075 | $580,843 | $745,786 | $877,897 |
| Managed support and warranty contracts | $325,050 | $891,000 | $1,405,800 | $1,900,800 | $2,356,200 |
| Total revenue | $1,724,350 | $3,001,905 | $4,100,252 | $4,964,227 | $5,717,688 |
| Growth on prior year | – | 74% | 37% | 21% | 15% |
Hardware is the volume and the labor and support lines are the margin. Servers, storage and networking projects are 38% of Year 1 revenue and workstations 30%. By Year 5 hardware has fallen to 43% as support contracts grow to 41%, the fastest line in percentage terms. Year 2 grows 74% because Year 1 includes the opening ramp and the first full year of the account manager and the second analyst. Later years grow 37%, 21% and 15%. Workstation volume depends on refresh cycles that customers can defer, and a quiet year for office moves would show first in that line.
Year 1 by month, with the budget-cycle swings
| Month | Servers, storage and networking projects | Workstations, laptops and peripherals | Installation, configuration and cabling labor | Managed support and warranty contracts | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $20,316 | $14,444 | $7,266 | $0 | $42,026 | ($38,591) |
| Feb 2027 | $24,379 | $17,508 | $8,719 | $4,950 | $55,556 | ($33,811) |
| Mar 2027 | $37,677 | $27,779 | $12,577 | $9,900 | $87,933 | ($22,371) |
| Apr 2027 | $41,555 | $30,639 | $14,862 | $14,850 | $101,906 | ($17,435) |
| May 2027 | $45,434 | $35,891 | $17,333 | $19,800 | $118,458 | ($11,587) |
| Jun 2027 | $58,510 | $48,788 | $20,926 | $24,750 | $152,974 | $608 |
| Jul 2027 | $47,576 | $40,268 | $18,231 | $29,700 | $135,775 | ($5,468) |
| Aug 2027 | $53,191 | $47,621 | $20,292 | $34,650 | $155,754 | $1,590 |
| Sep 2027 | $62,795 | $52,523 | $23,780 | $39,600 | $178,698 | $9,697 |
| Oct 2027 | $73,876 | $58,359 | $26,422 | $44,550 | $203,207 | $18,356 |
| Nov 2027 | $88,651 | $67,113 | $30,385 | $49,500 | $235,649 | $29,818 |
| Dec 2027 | $96,040 | $75,867 | $31,707 | $52,800 | $256,414 | $37,155 |
Revenue opens at $42,026 in January as the first accounts are onboarded, builds through March and again in June as fiscal-year budgets close, softens in July, and then climbs into the fourth quarter as customers spend remaining budget: November is $235,649 and December $256,414, with October to December bringing 40% of the year. EBITDA is negative through May and in July, a narrow $608 in June, and positive from August. The monthly view carries no timing of receivables, payables or inventory, but receivables are the swing that matters, so the plan counts them at a month and a half of each month's billing. On that basis Year 1 cash is lowest in November, at about $176,000, because the busy fall months bill faster than customers pay; supplier credit would soften the low and inventory purchases deepen it, and neither is counted. That low is why the reserve is $578,000 and not less. The year-end balances in the cash table use the annual average, so December's true position is weaker than the table shows, and the cash note says by how much.
Who is on payroll, and from which month
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder, president and lead account executive | $100,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Systems engineer (servers and networking) | $95,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Inside sales and quoting specialist | $50,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Staging and logistics technician | $44,000 | Month 4 | 1 | 1 | 1 | 1 | 1 |
| Account manager | $62,000 | Month 13 | – | 1 | 1 | 1 | 1 |
| Field installation technician | $56,000 | Month 19 | – | 1 | 1 | 1 | 1 |
| Billing and purchasing coordinator (part time, about 25 hours a week) | $28,000 | Month 4 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Service desk analyst | $56,000 | Month 7 | 1 | 1 | 1 | 1 | 1 |
| Second field installation technician | $56,000 | Month 31 | – | – | 1 | 1 | 1 |
| Second service desk analyst | $56,000 | Month 13 | – | 1 | 1 | 1 | 1 |
| Third service desk analyst | $56,000 | Month 25 | – | – | 1 | 1 | 1 |
| Fourth service desk analyst | $56,000 | Month 37 | – | – | – | 1 | 1 |
| Second senior systems engineer | $105,000 | Month 46 | – | – | – | 1 | 1 |
| Total payroll incl. on-costs | $412,770 | $655,770 | $798,010 | $938,028 | $1,038,040 |
Dennis, a systems engineer and an inside sales and quoting specialist open the business. A staging and logistics technician and a part-time billing and purchasing coordinator start in month 4, as the first hardware orders arrive faster than one engineer can build and invoice them. The first service desk analyst joins in month 7, once about 15 support contracts are signed, a second analyst and an account manager in month 13, a field installation technician in month 19, a third analyst in month 25, a second field technician in month 31, a fourth analyst in month 37 and a second senior systems engineer in month 46. Each hire is timed to the revenue and hours the last one made possible. Payroll is $412,770 in Year 1, $655,770 in Year 2 and $798,010 in Year 3, and Dennis's $100,000 sits inside it, so every profit figure is after his pay. Commissions are separate.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,724,350 | $3,001,905 | $4,100,252 | $4,964,227 | $5,717,688 |
| Cost of goods and subcontract labor (hardware, licenses, warranty pass-through, cabling subcontractors) | ($1,115,118) | ($1,941,299) | ($2,651,589) | ($3,210,312) | ($3,697,567) |
| Gross profit | $609,232 | $1,060,606 | $1,448,663 | $1,753,915 | $2,020,121 |
| Payroll incl. on-costs | ($412,770) | ($655,770) | ($798,010) | ($938,027) | ($1,038,040) |
| Rent | ($52,000) | ($53,500) | ($55,100) | ($56,800) | ($58,500) |
| Utilities | ($9,000) | ($9,300) | ($9,600) | ($9,900) | ($10,200) |
| Marketing | ($32,000) | ($36,000) | ($40,000) | ($42,000) | ($44,000) |
| Insurance | ($21,000) | ($25,000) | ($29,000) | ($32,000) | ($34,500) |
| Professional fees | ($9,000) | ($10,000) | ($11,000) | ($11,500) | ($12,000) |
| Software subscriptions | ($24,000) | ($30,000) | ($34,000) | ($37,000) | ($40,000) |
| Sales commissions and spiffs | ($40,000) | ($68,000) | ($94,000) | ($114,000) | ($133,000) |
| Van fuel, tolls and maintenance | ($14,000) | ($19,000) | ($22,000) | ($24,000) | ($26,000) |
| Outbound freight and courier not billed to clients | ($8,000) | ($12,000) | ($15,000) | ($17,000) | ($19,000) |
| Vendor certifications, training and partner-tier fees | ($6,500) | ($8,500) | ($9,500) | ($10,500) | ($11,000) |
| Card and ACH fees, phones, supplies | ($8,000) | ($11,000) | ($13,500) | ($15,000) | ($16,500) |
| Test-lab and tool costs | $0 | ($4,000) | ($5,000) | ($9,000) | ($8,000) |
| Bad debt allowance | ($5,000) | ($8,500) | ($11,000) | ($12,500) | ($14,000) |
| Annual pay raises (3% a year) | $0 | ($19,673) | ($48,599) | ($86,980) | ($130,283) |
| EBITDA | ($32,038) | $90,363 | $253,354 | $337,708 | $425,098 |
| Depreciation | ($14,629) | ($22,629) | ($22,629) | ($22,629) | ($22,629) |
| Interest | ($17,209) | ($16,432) | ($15,439) | ($14,345) | ($13,140) |
| Income tax | $0 | $0 | ($42,570) | ($63,154) | ($81,759) |
| Net income before start-up costs | ($63,876) | $51,302 | $172,717 | $237,580 | $307,570 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($29,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($92,876) | $51,302 | $172,717 | $237,580 | $307,570 |
Year 1 loses $63,876 before start-up costs and $92,876 after them. Year 2 is the first profitable year at $51,302, a 1.7% net margin, with no tax because Year 1's loss carries forward. Year 3 earns $172,717, a 4.2% margin, and Year 4 $237,580. Year 5 is $307,570, a 5.4% margin after $81,759 of tax, on an EBITDA margin of 7.4%. Hardware is still 43% of Year 5 revenue at thin margins and payroll runs at about 20% of revenue from Year 3, so the net margin stays in the low single digits. By Years 3 to 5 the business keeps about four to five cents of profit on each dollar it books, which is why the plan spends so much of its length on cash.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($299,559) | ($56,697) | $83,042 | $171,868 | $253,159 |
| Vans, staging bench and build-out | ($78,000) | ($40,000) | $0 | $0 | $0 |
| Funding received | $770,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($4,524) | ($9,734) | ($10,726) | ($11,820) | ($13,025) |
| Owner distributions | $0 | $0 | $0 | ($120,000) | ($180,000) |
| Net change in cash | $387,917 | ($106,430) | $72,316 | $40,048 | $60,134 |
| Closing cash | $387,917 | $281,487 | $353,803 | $393,851 | $453,985 |
Operations use $299,559 of cash in Year 1: the $63,876 loss before start-up costs, the $29,000 of start-up costs and $221,311 of working capital, less $14,629 of depreciation. Closing cash is $387,917 at the end of Year 1 and $281,487 at the end of Year 2, the lowest year-end figure, because Year 2 grows 74%, net working capital rises by another $130,628 and the second van costs $40,000. Cash then moves to $353,803, $393,851 and $453,985 while the owners take $120,000 and $180,000 in Years 4 and 5. These year-end figures use average sales. December billing leaves about $172,000 more in receivables, partly offset by about $52,000 of extra supplier credit, so true cash on December 31 of Year 1 is nearer $268,000 than $387,917. A rough check for later years, using the Year 1 monthly shape for hardware and labor, support billed at the year-end contract count and the same payment terms, puts December cash near $156,000 in Year 2 and $201,000 in Year 3. The plan reads slow-paying customers as its main threat: at 60 days instead of 45, receivables would be about $123,366 higher at the end of Year 2, leaving closing cash near $158,100, and $168,504 higher at the end of Year 3, leaving about $185,300, before the seasonal effect.
Balance sheet: receivables, inventory and supplier credit
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $387,917 | $281,487 | $353,803 | $393,851 | $453,985 |
| Accounts receivable | $212,591 | $370,098 | $505,511 | $612,028 | $704,920 |
| Inventory at cost (staging inventory and spares) | $72,878 | $93,532 | $111,290 | $125,258 | $137,439 |
| Vans, staging bench and build-out (net) | $63,371 | $80,743 | $58,114 | $35,486 | $12,857 |
| Total assets | $736,758 | $825,860 | $1,028,717 | $1,166,622 | $1,309,201 |
| Owed to distributors and vendors (about 21 days) | $64,158 | $111,691 | $152,557 | $184,703 | $212,737 |
| Bank line of credit and term loan | $175,476 | $165,743 | $155,017 | $143,197 | $130,171 |
| Paid-in capital | $590,000 | $590,000 | $590,000 | $590,000 | $590,000 |
| Retained earnings | ($92,876) | ($41,574) | $131,143 | $248,723 | $376,293 |
| Total liabilities and equity | $736,758 | $825,860 | $1,028,717 | $1,166,622 | $1,309,201 |
Margin, break-even and debt cover
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -1.9% | 3.0% | 6.2% | 6.8% | 7.4% |
| Net margin (before start-up costs) | -3.7% | 1.7% | 4.2% | 4.8% | 5.4% |
| Payroll incl. pay raises as share of revenue | 24% | 23% | 21% | 21% | 20% |
| Revenue per full-time equivalent at year end | $313,518 | $353,165 | $390,500 | $397,138 | $457,415 |
| Average monthly revenue | $143,696 | $250,159 | $341,688 | $413,686 | $476,474 |
| Monthly revenue needed to cover operating costs | $151,253 | $228,845 | $281,930 | $334,032 | $376,209 |
| Debt service cover (EBITDA / interest + principal) | -1.5x | 3.5x | 9.7x | 12.9x | 16.2x |
Year 1 averages $143,696 a month against $151,253 needed to cover operating costs, which is why it loses money. Years 2 to 5 clear the line by $21,314, $59,758, $79,654 and $100,265 a month. Inventory turns, cost of goods over year-end inventory, are 15.3 in Year 1 and 23.8 in Year 3. Gross profit is $8.36 per dollar of year-end inventory in Year 1 and $13.02 in Year 3. Debt service cover is negative in Year 1, then 3.5x in Year 2 and 9.7x or better after, and the interest-only line helps that figure. Revenue per full-time equivalent is $313,518 in Year 1 and $390,500 in Year 3.
If sales run 20% under plan
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,379,480 | $2,401,524 | $3,280,202 | $3,971,382 | $4,574,150 |
| Net income before start-up costs | ($114,322) | ($68,141) | $28,612 | $99,217 | $212,975 |
| Net income after start-up costs | ($143,322) | ($68,141) | $28,612 | $99,217 | $212,975 |
| Closing cash | $372,733 | $172,985 | $123,657 | $163,011 | $323,957 |
Every revenue line runs 20% lower in all five years. Management responds in this order: the second senior engineer is dropped, the part-time billing coordinator is never hired, marketing falls 20%, Dennis takes a 20% pay cut to $80,000, commissions, freight, card fees and bad debt move with sales, certification and test-lab spending is halved, and no distributions are paid. No other hire is deferred: the service desk analysts and field technicians are needed for contracts already signed, so payroll stays at plan, which is why this case is hard on cash. Under that response year-end cash holds at or above $123,657, the low arriving in Year 3, and the business loses $143,322 in Year 1 after start-up costs and $68,141 in Year 2, then earns $28,612, $99,217 and $212,975 in Years 3 to 5, below the base case in every year. Equity ends Year 1 at $446,678. Year 1 closing cash is only about $15,000 below the base because receivables and inventory shrink with sales, and a lower receivables balance also shrinks the line the bank will lend against, so the bank would be told in Year 1, not Year 3. Those are year-end balances. The same rough December check puts downside cash near $73,000 in Year 2 and close to zero in Year 3, so in the fall of Year 3 the business would lean on the $100,000 standby line. The case tests volume only. Slow payment is shown in the cash note.
Sources
- Bureau of Labor Statistics, Network and computer systems administrators, Occupational Outlook Handbook: median pay $99,130 in May 2025; employment projected to fall 4% from 2025 to 2035.
- Bureau of Labor Statistics, Computer support specialists, Occupational Outlook Handbook: median pay $62,890 in May 2025; employment projected to fall 3% from 2025 to 2035.
- Ohio commercial activity tax exclusion of $6,000,000 of gross receipts and a 0.26% rate on receipts above it: reported by the Ohio Society of CPAs and other secondary sources; the Ohio Department of Taxation page could not be opened. Confirm the current threshold before relying on it.
- Ohio has no corporate income tax, per the Ohio Department of Taxation's published business tax overview; this page could not be opened, so confirm with the department. Municipal net-profit tax may apply and is not modeled.
- Distributor terms, margins, billing rates, rents, insurance premiums and account counts are the plan's own figures. No primary source was found for them.
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