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The gross margin for a service-based business is a reflection of the efficiency at which those services are offered. In the initial year of operations, we have targeted a gross margin of 70%. This is not an unreasonable figure for a consulting business. For the second and third year of operations, we have targeted gross margins of 75% and 80% to indicate overall improved efficiency at service delivery. Net Profit/Sales is determined to be 7.8% the first year, increasing to 9.8% the second year and 11.0% the third year. In order to fulfill the requirements of the mission statement and simultaneously reduce start up costs, we have made arrangements to purchase software on quarterly repayment options:
Staad-Pro Core is a structural engineering design and drafting suite offered through Research Engineers Ltd. This program fulfills the need to carry out three-dimensional analysis and design requirements and is a key feature of the business plan. This program supports Canadian codes and standards. We have contacted the authorized Canadian reseller (Detech Corporation Ltd.) and will made arrangements to purchase this tool on four payments of $1,550 over the first year of operations.
Errors and Omissions Insurance is required for all consultants working on behalf of the Territorial Governments. Through Falconair Insurance, we have received a quotation of $1,200/year for this coverage. The first year's premium payments are included in the start-up costs, with subsequent years indicated at the same annual premium.
Website hosting fees are included as quarterly payments to Internic.com, the Web host. As part of this service, we will have at our disposal file transfer protocol capabilities. This feature permits us to place electronic media on the Internet for our clients and strategic allies.
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