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Business Plan

FOCUS
Our focus is our customers’ focus
Executive Summary ...........................................................................................................3
The opportunity...............................................................................................................3
The difference ................................................................................................................3
Partnership......................................................................................................................3
Revenue sources .............................................................................................................3
The Team........................................................................................................................3
The Offering ...................................................................................................................4
1 Business Description.........................................................................................................5
1.1 The Entrepreneur environment .................................................................................5
1.2 Industry overview......................................................................................................6
1.3 Company Description................................................................................................7
1.4 Mission Statement .....................................................................................................7
1.5 Goals and Objectives.................................................................................................8
1.6 Critical Success Factors.............................................................................................8
2 Products and Services.......................................................................................................8
2.1 Products and Services Description.............................................................................8
2.1.1 Products and Services Description......................................................................8
2.1.2 Unique Features..................................................................................................9
2.1.3 New and Follow on Products and Services.........................................................9
3 The Market .......................................................................................................................9
3.1.1 Market Analysis .................................................................................................9
3.1.2 Competitor Analysis ........................................................................................10
4 Marketing Strategies and Sales.......................................................................................11
4.1.1 Introduction.......................................................................................................11
4.1.2 Pricing Strategy ................................................................................................11
4.1.3 Sales Strategy ...................................................................................................12
4.1.4 Sales Forecast ...................................................................................................12
5 Financials .......................................................................................................................13
5.1.1 Income Statement .............................................................................................14
5.1.2 Balance Sheet ...................................................................................................15
5.1.3 Cash Flow statement ........................................................................................16
5.1.4 Fund..................................................................................................................17
5.1.5 Valuation...........................................................................................................18
6 Appendices and references.............................................................................................19
6.1.1 Salaries Calculations Sheet .............................................................................19
6.1.1 Working Capital ...............................................................................................20
6.2 References................................................................................................................21
Executive Summary

The opportunity
Ministry of Information Technology in Egypt is leading aggressive projects to increase
export revenues for Egyptian IT services companies to achieve $280 million. More over
A.T Kearney estimated IT market size in GCC countries worth of $2 billion and growing
fast. According to the same survey, IT system integrators in the GCC countries are
looking forward to partner with Arab IT services partners who can run a cost effective
resource development and project delivery teams to support this demand.

The difference
- Different positioning and market penetration through partnering with system
integrators not competing with them.
- Proximity to the target markets through sales team in the region.
- Different project management and delivery model that is built on core teams
available on site and pool of professional offshore.
- Cost effective skill development and training models.

Partnership

- Partnership with Oracle, EMC and Microsoft for technology.


- Partnership with Injazat (UAE), Eljeraisy (KSA), Omnix (Qatar) and more in
GCC area.

Revenue sources
- Long term projects to focus on relation.
- Fast revenue source through outsourcing.
- Annual guaranteed revenue through support contracts.
- License and license referral revenues.

The Team
- All Focus management team members have 7+ years experience in GCC and 15+
years experience in ERP projects.
- CEO worked for IBM and Oracle for the last 15 years establishing partner
network on channel management capacity.
- Sales Director worked for Oracle and Raya in GCC, closing deals worth $10
millions.
- Operations director, an MBA and PMP professional who headed implementation
teams for 20+ ERP implementation projects in SAP and Oracle eBusiness Suite in
different business lines including government, banking and telecom.
The Offering
- Focus is raising $750,000 for its first round of financing and $500,000 in second
round. Focus projects a return of 60% IRR after 5 years of operations with 77%
share worth $13 millions.
-

1 Business Description
FOCUS Company will be founded to provide IT consulting services. With a Head
office in Cairo, Egypt and offices in Qatar, Kuwait and UAE, FOCUS will cover
GCC (Corporation Council for the Arab States of the Gulf) region.
FOCUS will be founded as a Limited Liability Company in Cairo.

1.1 The Entrepreneur environment


Through many initiatives undertaken by Ministry of Communication and Information
technology, Egypt has demonstrated an attractive strategies and action plans to promote
IT industry in general.
These strategies included:

• To leverage public-private partnerships as an implementation mechanism


whenever possible.
• To support the development of the skills required by the ICT industry.
• To support research and innovation in the field of ICT.1

These initiatives led to the foundation of Technology Development Fund


http://www.techdevfund.com/ and Social Fund for Development
http://www.sfdegypt.org/ as government organizations dedicated to help start-up business
in general and Information Technology start-up in specific.

Moreover, Egyptian government already put in place required laws and procedures to
promote Venture Capital business in Egypt.2
The mentioned strategies and actions encouraged both Ideavelopers
http://www.ideavelopers.com/ and Actis Capital LLP http://www.act.is/ to setup venture
capital and private equity organizations in Egypt.
1.2 Industry overview
The Market for IT services in GCC in 2007 exceeds $2 billion and is growing fast;
government is the largest segment comprising 20% to 25% on average.3

2007 IT services spend (1)


-$M-
178

132

704

65
397

213 31
112 16 15 15
56 54 53

KSA UAE Egypt Kuwait Oman Bahrain Qatar

Highlights

- IT services comprises 25% to 30% of the total IT market size in the GCC
states overall.
- Government is a major spending on IT services through
o Centrally managed federal eGov initiatives
o Local ministry/agency level initiatives that are not always coordinated
centrally.
- Kuwait (15%) and UAE (11%) are projected to be the fastest growing IT
services markets; others will experience 5-10% growth (2006-2010).4
Non Government Spend
Government Spend
1.3 Company Description

FOCUS will be registered in Cairo as well as in Dubai Internet City, UAE as a


Limited Liability Company.

Why Cairo and Why Dubai?

Smart Village Cairo, Smart Village Cairo launched in 2003 as the first fully
operational Technology and Business Park in Egypt, accommodates Multinational
and Local Telecommunications and Information Technology Companies, Financial
Institutions and Banks, together with Governmental Authorities on three Million
square meters in the west of Cairo. The efficient mix of business services boosts the
competitiveness and profitability of enterprises taking advantage of Fiber Optic
Network, multi-source power supply, District cooling and Heating redundant network
plant. Evenly, organizations in Smart Village Cairo, profits from world class
standards amenities including Property Management & Maintenance, Event’s
Management, Transportation Services on 24/ 7 basis. Complementary Community &
Business Services are available in Smart Village Conference Hall, Smart Village
Club, Smart Nursery, Smart School, Postal and Parcel services, Travel Agency,
Signboards Production, Copy Center, Graphic and Printing Agency, plants & flowers
and First Aid Assistance and the upcoming Smart Village Business Hotel. Currently,
12,000 professionals run the operations of more than 100 Companies and expected to
reach 80,000 by the end of 2014. 5

Dubai has emerged as a leading regional commercial hub with state-of-art


infrastructure and a world class business environment. It has now become the logical
place to do business in the Middle East, providing investors with a unique and
comprehensive value added platform.
With its strategic location, tax-free living and consistently strong economic outlook,
Dubai is the ideal base for multinationals targeting markets in Central Asia, the
Middle East, Africa, the Asian Subcontinent and the Eastern Mediterranean. These
regions have a population of over 2 billion people and a combined GDP of US$ 6.7
trillion. Accessible through its ultra modern airport, that offers connections to over
140 destinations, Its robust economic cluster of technology, media, finance and
healthcare hubs makes Dubai a viable and attractive proposition for any business. 6

1.4 Mission Statement


Is to be regionally recognized as a reliable IT consulting services partner and consistently
shares success with our customers, employees and partners.
1.5 Goals and Objectives
FOCUS will position itself lf as an implementation partner for government IT projects in
Egypt and Gulf region.
Capitalizing on Egyptian government initiatives, through ITIDA (Information
Technology Industry Development Agency), and pool of talents that are available in
Egypt FOCUS will be able to acquire startup resources.
Through partnership with multinational solution providers and local system integrators in
the GCC countries, FOCUS will be able to address a fast growing customer segment.
In first two years, FOCUS will start the operations in Cairo as a resource development
center and opening sales offices in Saudi and UAE to avail partner and customer
proximity, with a focus on delivering onsite Oracle eBusiness Suite implementation
services. In the third year, operations in GCC will be extended to cover additional
services including IT enabling services, as well as bespoke application development.

1.6 Critical Success Factors


FOCUS critical success factors are:7
- Customer focused strategy that allows consistent growth from products and
services and introducing new services within two to three years.
- Flawless operations execution that enables cost effective operations model
with a cost reduction target of 5-7% every year.
- Building an achievement oriented culture through different systems.
- Constantly building and acquiring human capital.

2 Products and Services


2.1 Products and Services Description
2.1.1 Products and Services Description
Understanding the nature of government projects as well as the nature of Enterprise
Resource Planning projects, and recognizing its long sales and delivery cycle, FOCUS
products and services will cater for various revenue sources.
- Long term projects like Oracle eBusiness Suite implementation us will
maintain customer relation and provide persistent existence, however will be a
major cash flow burden.
- Short term projects like IT enabling services and training services on the other
hand are easier to sell and deliver and a fast revenue and cash source.
- Onsite and on-call support services will contribute as a constant and revenue
source.
- Software licenses will as well contribute to FOCUS revenue and cash flow.
- Improving resource utilization through outsourcing.

Accordingly, the following services will be considered in first two to three years.
- Oracle eBusiness Suite Implementation Services with a focus on government
financials and human resources.
- IT enabling services including single sign-on, database installation services,
and Identity management implementations.
- Projects required training services for IT professionals and business users.
- Resources outsourcing.

2.1.2 Unique Features


Addressing GCC market, FOCUS will have the following features:
- Strong Technical skills
- Arabic Language skills
- Good culture fit.

2.1.3 New and Follow on Products and Services


In two to three years, FOCUS will introduce new service which is implementation of
Document management and workflow management systems. A service will complete the
business process chain of enterprises.
In addition to this services related to Portal development will be considered.

3 The Market
3.1.1 Market Analysis
In 2007, IT companies working in Egypt and exporting IT services reported revenues
exceeding $190 million, with more than $75 million from export.
Vast majority of export revenues are generated in the GCC. 8
Total reported export revenues Geographies targeted
(28 firms responding) (32 firms responding)
KSA 20

Qatar 14
MENA &
Other(1) Egypt 11

14% UAE 10

MENA 9

USA/Europe Kuwait 8
18% KSA
Bahrain 5
47%
Kuwait USA/Europe 5

1% Rest Africa 5

Qatar UAE Other 5


2% 13% Oman 1
Bahrain
5%

2007 Total Exports = $77M


More over, GCC market size in terms of IT spending will continue to surge. According to
a recent IDC study and preliminary IDC data, spending on information technology
expanded by just over 19% to more than $6.8 billion in 2006 and will grow by 15% on
2007.9

Those market trends have been discussed with sales and channel management of Oracle s
in Egypt and GCC market as well as major local system integrators in GCC countries.

3.1.2 Competitor Analysis


Number of Egyptian companies targeting GCC market in government sector and other
major sectors was about 40 companies. Based on ITIDA project initiative to support
achieves $280 million export target, and A.T. Kearney survey of current companies
strength and weaknesses the following key challenges were identified:

- Quality assurance
- Better Customer Relationship management
- Marketing plans
- Emphasize on project management
- Better value proposition
- High cost structure
- Small size causing inconsistency in quality of resources and inability to cope
with long life cycle government tendering and delivery process.
Number of Egyptian firms targeting
major verticals
Government 25

Financial Services 14

Education 9

Telecom & Utilities 9

Healthcare 8

Oil & Gas 7

Manufacturing 5

Retail 3

4 Marketing Strategies and Sales


4.1.1 Introduction
Partnership with multinational technology provider and local system integrators will be
the major marketing and sales channel deployed to promote FOCUS.
Pillars to promote FOCUS:
- Participation in government events conducted by ITIDA and technology
providers.
- Attending road shows and industry exhibitions.
- Website

4.1.2 Pricing Strategy


Different major factors will accumulate to affect pricing of services:
1- Skill set required.
2- Industry/Country average accepted daily consulting rate considering competition
pricing.
3- Engagement total cost of ownership and duration.
4- FOCUS Cost structure and breakeven point analysis.
Table below illustrates pricing model per skill set:
Country/Skill Project Senior Junior/Support Senior Junior
set Manager Consultant Consultant Developer Develop
Egypt $700 $550 $300 $400 $200
Qatar $1000 $800 $400 $600 $300
Kuwait $900 $700 $400 $500 $300
Bahrain $900 $700 $400 $500 $300
KSA $800 $650 $400 $500 $300
Oman $800 $700 $400 $500 $300
UAE $1000 $800 $400 $500 $300

Given that both Qatar and UAE cost of living is around 20% more than KSA, Kuwait and
Bahrain, selling prices for UAE and Qatar will be set more than in other GCC countries.10
Average selling price for consulting man/day will be around $550 in 2008.

4.1.3 Sales Strategy


In general sales strategy will be based on a mix of channel management and direct
account management.
In Egypt, FOCUS will tend to go into direct sales model and account management model
however in GCC FOCUS will capitalize on synergy with large system integrators to
approach the market.

4.1.4 Sales Forecast


Sales forecasts will be governed by “best case scenario and “Probable case scenario”
models.
Best case scenario assumptions:
- All billable resources will be utilized 75% of their billable time (180
man/days).
- Revenue will be increased by 1.3 every year (incline in both average daily rate
and number of resources).
- License and License referrals revenues will be achieved.

Accordingly the below table illustrates Best Case Scenario sales forecast.

Revenue Source 2008 2009 2010 2011 2012


Headcount 15 20 30 35 40
buddy shopping $1,620,000 $2,808,000 $4,212,000 $4,914,000 $5,616,000
License referral $50,000 $84,500 $109,850 $142,805 $185,647
License Revenue $0 $0 $500,000 $1,000,000 $2,000,000
License Support $0 $0 $0 $110,000 $220,000
Total Revenue $1,670,000 $2,892,500 $4,821,850 $6,166,805 $8,021,647
Probable Case Scenario

Probable case scenario assumes the following:


- Revenue sources will contain outsourcing, projects implementations, IT
enabling, support services as well as license revenues (License sales, S.W
support and License Referral fees).
- Projects implementation will go into long sales and delivery cycles.
- Average annual growth will vary from 10% to 25% according to type of
service.

The below table illustrates revenue forecast assuming Probable Case Scenario.

Revenue Source 2008 2009 2010 2011 2012


Outsourcing $724,680 $942,084 $1,224,709 $1,592,122 $2,069,759
projects implementation $50,000 $700,000 $910,000 $1,183,000 $1,537,900
Support $66,000 $132,000 $198,000 $264,000 $330,000
IT enabling $100,000 $130,000 $338,000 $439,400 $527,280
Consulting Revenue $940,680 $1,904,084 $2,670,709 $3,478,522 $4,464,939
License Revenue $50,000 $65,000 $584,500 $1,219,850 $2,362,805
Total Revenue $990,680 $1,969,084 $3,255,209 $4,698,372 $6,827,744

In both scenarios, license prices were calculated based on license prices for Oracle
Applications price lists.11

5 Financials 12
To following pro-forma financial statements were based on “Probable Case Scenario”
revenue forecast model and adopted a conservative approach in terms of operations
expenses, employee salaries and benefits and credit policy for receivables aging.

The following inputs were assumed for calculations:


- 1% of revenue was allocated for marketing and sales commissions.
- Another 3% of Revenue was allocated to training expenses.
- Another 1% of revenue was allocated to other expenses
- Average monthly salary was set to $4500 first year with increase to $7000 in
year 5 (Although industry average is $2750.13
- Employees’ benefits were set to 15% of salaries first year to be increased to
25% in year 5.
- 90 days was set for receivables outstanding balance
- 30 days was set for payables outstanding balance.
5.1.1 Income Statement
The below table illustrates the projected income statement for FOCUS for 5 years.
Year 1 Year 2 Year 3 Year 4 Year 5

NET REVENUES 992,000 1,990,300 3,256,940 4,701,272 6,831,514

1,002,08
COST OF REVENUE 0 1,338,112 1,901,496 2,312,067 3,186,276
% of Revenues 101.0% 67.2% 58.4% 49.2% 46.6%

GROSS PROFIT (10,080) 652,188 1,355,444 2,389,205 3,645,238


% of Revenues -1.0% 32.8% 41.6% 50.8% 53.4%

OPERATING EXPENSES
Sales & Marketing 211,840 372,806 528,789 704,025 866,630
Research & Development 59,920 79,903 132,569 297,013 368,315
General and Administration 171,587 297,386 336,526 422,279 529,782
Total Operating Expenses 443,347 750,095 997,884 1,423,318 1,764,727
% of Revenues 45% 38% 31% 30% 26%

EARNINGS FROM OPERATIONS (453,427) (97,907) 357,560 965,887 1,880,511

EXTRAORDINARY INCOME / (EXPENSE) (45,000) 0 0 0 0

EARNINGS BEFORE INTEREST & TAXES (498,427) (97,907) 357,560 965,887 1,880,511

INTEREST INCOME / (EXPENSE) 0 0 0 0 0

NET EARNINGS BEFORE TAXES (498,427) (97,907) 357,560 965,887 1,880,511

TAXES 0 0 0 (290,845) (752,204)

NET EARNINGS (498,427) (97,907) 357,560 675,042 1,128,307


% of Revenues -50.2% -4.9% 11.0% 14.4% 16.5%

See Appendix 1 for Salaries Calculations


5.1.2 Balance Sheet
Table below will demonstrate balance sheet projections for 5 years.
Begin Year 1 Year 2 Year 3 Year 4 Year 5

ASSETS
CURRENT ASSETS
Cash 1,000,000 347,533 650,115 389,893 447,601 563,574
Accounts Receivable 275,181 472,895 1,815,000 3,135,000 5,280,000
Inventories 0 0 0 0 0
Other Current Assets 17,856 28,660 110,000 190,000 320,000
Total Current Assets 1,000,000 640,570 1,151,671 2,314,893 3,772,601 6,163,574
PROPERTY & EQUIPMENT 0 33,333 30,000 13,333 6,667 5,000
TOTAL ASSETS 1,000,000 673,903 1,181,671 2,328,226 3,779,268 6,168,574

LIABILITIES & SHAREHOLDERS' EQUITY


CURRENT LIABILITIES
Short Term Debt 0 0 0 0 0 0
Accounts Payable & Accrued Expen 154,474 249,345 957,000 1,653,000 2,784,000
Other Current Liab 17,856 28,660 110,000 190,000 320,000
Current portion of long term debt 0 0 0 0 0 0
Total Current Liabilities 0 172,330 278,005 1,067,000 1,843,000 3,104,000

LONG TERM DEBT (less current portion) 0 0 0 0 0 0

STOCKHOLDERS' EQUITY
CommonStock 250,000 250,000 250,000 250,000 250,000 250,000
Preferred Stock 750,000 750,000 1,250,000 1,250,000 1,250,000 1,250,000
Retained Earnings (498,427) (596,334) (238,774) 436,268 1,564,574
Total Equity 1,000,000 501,573 903,666 1,261,226 1,936,268 3,064,574
TOTAL LIABILITIES & EQUITY 1,000,000 673,903 1,181,671 2,328,226 3,779,268 6,168,574
5.1.3 Cash Flow statement
Year 1 Year 2 Year 3 Year 4 Year 5
OPERATING ACTIVITIES
Net Earnings (498,427) (97,907) 357,560 675,042 1,128,307
Depreciation 16,667 23,333 26,667 11,667 6,667
Working Capital Changes
(Increase)/Decrease Accounts Receivable (275,181) (197,714) (1,342,105) (1,320,000) (2,145,000)
(Increase)/Decrease Inventories 0 0 0 0 0
(Increase)/Decrease Other Current Assets (17,856) (10,804) (81,340) (80,000) (130,000)
Increase/(Decrease) Accts Pay & Accrd Expenses 154,474 94,871 707,655 696,000 1,131,000
Increase/(Decrease) Other Current Liab 17,856 10,804 81,340 80,000 130,000
Net Cash Provided/(Used) by Operating Activities (602,467) (177,418) (250,223) 62,709 120,973

INVESTING ACTIVITIES
Property & Equipment (50,000) (20,000) (10,000) (5,000) (5,000)
Other
Net Cash Used in Investing Activities (50,000) (20,000) (10,000) (5,000) (5,000)

FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt 0 0 0 0 0
Increase/(Decrease) Curr. Portion LTD 0 0 0 0 0
Increase/(Decrease) Long Term Debt 0 0 0 0 0
Increase/(Decrease) Common Stock 0 0 0 0 0
Increase/(Decrease) Preferred Stock 0 500,000 0 0 0
Dividends Declared 0 0 0 0 0
Net Cash Provided / (Used) by Financing 0 500,000 0 0 0

INCREASE/(DECREASE) IN CASH (652,467) 302,582 (260,223) 57,709 115,973

CASH AT BEGINNING OF YEAR 1,000,000 347,533 650,115 389,893 447,601


CASH AT END OF YEAR 1,000,000 347,533 650,115 389,893 447,601 563,574
5.1.4 Fund
Begin Year 1 Year 2 Year 3 Year 4 Year 5
Beginning Cash 1,000,000
Equity
Common 250,000 250,000 250,000 250,000 250,000 250,000
Increase / (Decrease) Previous Period 0 0 0 0 0
Preferred
A Round 750,000 750,000 750,000 750,000 750,000 750,000
B Round 500,000 500,000 500,000 500,000
Total Preferred 750,000 750,000 1,250,000 1,250,000 1,250,000 1,250,000
Increase / (Decrease) Previous Period 0 500,000 0 0 0
Total Equity 1,000,000 1,000,000 1,500,000 1,500,000 1,500,000 1,500,000

Debt
Short Term Debt 0
Increase / (Decrease) Previous Period 0 0 0 0 0

Long Term Debt


Current Portion 0 0 0 0
Long Term Portion 0 0 0 0
Total Long Term Debt 0 0 0 0 0

Increase / (Decrease) Previous Period


Current Portion 0 0 0 0 0
Long Term Protion 0 0 0 0 0
Total Long Term Debt 0 0 0 0 0

Total Equity & Debt 1,000,000 1,000,000 1,500,000 1,500,000 1,500,000 1,500,000

Retained Earnings
Net Income (498,427) (97,907) 357,560 675,042 1,128,307
Dividends
Increase / (Decrease) Retained Earnings (498,427) (97,907) 357,560 675,042 1,128,307
Beginning Retained Earnings 0 (498,427) (596,334) (238,774) 436,268
Ending Retained Earnings (498,427) (596,334) (238,774) 436,268 1,564,574
5.1.5 Valuation
Assumptions
Month of IPO 60
Forecast annualized earnings at
IPO $1,128,307
P/E ratio at IPO 15

Investment Round First Second


Month of Investment 0 24
Investor required IRR 60% 50%
Amount of Investment $1,000,000 $500,000
Required Monthly IRR 5.00% 4.17%
Duration of Investment 60 36

Calculations
Market Capitalization at IPO $16,924,598

First Second
Required FV for Investor at IPO $10,485,760 $1,687,500
Individual Investor's Share 62.0% 10.0%
Individual Investor's ROI 1049% 338%
Individual Investor's IRR 60% 50%

Cumulative Investors' Share 62.0% 71.9%


Cumulative Founders' Share 38.0% 28.1%
6 Appendices and references
6.1.1 Salaries Calculations Sheet
Year 1 Year 2 Year 3 Year 4 Year 5

Net Revenues 992,000 1,990,300 3,256,940 4,701,272 6,831,514

Sales & Marketing


Sales Manager 80,000 100,000 125,000 150,000 175,000
Marketing Manager 80,000 100,000 125,000 150,000
Customer service 40,000 120,000 200,000 250,000
Total Salary 80,000 220,000 345,000 475,000 575,000
Benefits
Percent (%) 15% 15% 17% 20% 20%
Total benefit costs 12,000 33,000 58,650 95,000 115,000
Total S & M Compensation 92,000 253,000 403,650 570,000 690,000
% of Revenue 9.3% 12.7% 12.4% 12.1% 10.1%
General & Administration
Chief Executive Officer 80,000 100,000 125,000 150,000 175,000
Chief Financial Officer 50,000 60,000 75,000 100,000
Accounting 40,000 45,000 25,000 50,000 75,000
Secretarial 25,000 26,000 27,000 28,000 29,000
Total Salary 145,000 221,000 237,000 303,000 379,000
Benefits
Percent (%) 15% 15% 17% 20% 20%
Total benefit costs 0 33,150 40,290 60,600 75,800
Total G & A Compensation 145,000 254,150 277,290 363,600 454,800
% of Revenue 14.6% 12.8% 8.5% 7.7% 6.7%
Service Personnel
Number of employees 14 15 18 20 25
Salary per employee 54,000 66,000 72,000 78,000 84,000
Total salaries 756,000 990,000 1,296,000 1,560,000 2,100,000
Benefits
Percent (%) 15% 15% 20% 20% 25%
Total benefit costs 113,400 148,500 259,200 312,000 525,000
1,138,50
Total Salary Costs 869,400 0 1,555,200 1,872,000 2,625,000

Total COR's Compensation 869,400 1,138,500 1,555,200 1,872,000 2,625,000


% of Revenue 87.6% 57.2% 47.8% 39.8% 38.4%

Total Salary & Wages 225,000 441,000 582,000 778,000 954,000


Total Benefits 12,000 66,150 98,940 155,600 190,800
Total Compensation 1,106,400 1,645,650 2,236,140 2,805,600 3,769,800
% of Revenue 111.5% 82.7% 68.7% 59.7% 55.2%
6.1.1 Working Capital
Year 1 Year 2 Year 3 Year 4 Year 5
Net Revenues 992,000 1,990,300 3,256,940 4,701,272 6,831,514

Accounts Receivable
% of Revenue 16.5% 16.5% 16.5% 16.5% 16.5%
Days Outstanding 59 59 59 59 59
Accounts Receivable 275,181 472,895 1,815,000 3,135,000 5,280,000
(Increase)/Decrease from Prev.
Period (275,181) (197,714) (1,342,105) (1,320,000) (2,145,000)

Inventory
% of Revenue 0.0% 0.0% 0.0% 0.0% 0.0%
Inventory Turns 0 0 0 0 0
Inventory Days 0 0 0 0 0
Inventory 0 0 0 0 0
(Increase)/Decrease from Prev.
Period 0 0 0 0 0

Other Current Assets


% of Revenue 1.0% 1.0% 1.0% 1.0% 1.0%
Days 4 4 4 4 4
Other CA Value 17,856 28,660 110,000 190,000 320,000
(Increase)/Decrease from Prev.
Period (17,856) (10,804) (81,340) (80,000) (130,000)

Accounts Payable & Accrued


Expenses
% of Revenue 8.7% 8.7% 8.7% 8.7% 8.7%
Days 31 31 31 31 31
AP & Accrued Value 154,474 249,345 957,000 1,653,000 2,784,000
Increase/(Decrease) from Prev.
Period 154,474 94,871 707,655 696,000 1,131,000

Other Current Liabilites


% of Revenue 1.0% 1.0% 1.0% 1.0% 1.0%
Days 4 4 4 4 4
Other Current Liabilities 17,856 28,660 110,000 190,000 320,000
Increase/(Decrease) from Prev.
Period 17,856 10,804 81,340 80,000 130,000
6.2 References
1
http://www.mcit.gov.eg/ICT_Strategy_Intro.aspx
2
Promoting Venture Capital Business in Egypt, FSVC July 2006
3
IDC Business Monitor Index – A.T. Kearney analysis
4
ICT Highlights and A.T. Kearney analysis report – Marketing IT Firms to Government Clients in the Gulf.
5
http://www.smart-villages.com/docs/about.aspx
6
http://www.dubaiinternetcity.com/why_dubai/
7
What really works – 4+2 formula for sustained business by William Joyce and Nitin Nohria
8
Source based on A.T. Kearney survey responses from 28 companies.
9
IDC report IDC#ZV02N on GCC IT spending http://www.idc-cema.com/?showproduct=30243
10
GCC Human Resources overview released Feb 2007 by www.bayt.com
11
http://www.oracle.com/corporate/pricing/pricelists.html
12
Financial model is based on Financial Projection model developed by Frank Moyes and Stephen Lawrence, Leeds school
of Business, University of Colorado.
13
GCC Human Resources overview released Feb 2007 by www.bayt.com