Running Head: BUSINESS PLAN FOR PRIVATE ATM

Business Plan for Setting up, Running and Maintaining a Private ATM Business

(By : xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx)

Affiliation:
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BUSINESS PLAN FOR PRIVATE ATM

Introduction

All businesses require a business plan for success especially a Private ATM business, as it is new

and its characteristics are not so well known all over the world. A Business Plan is a report

which spells out how the business will be carried out so that it is profitable. The business plan

serves the following functions (a) it spells out clearly what is to be done and in what

circumstances (b) it lists down the priority of the actions. Finally (c) it forms the guide to our

business so that in case any party who has been approached for part finance can go through it to

know all about the business and thereby come to a decision as to whether they will be safe in

investing in the business.

Trends forecast

With the increasing benefits that bank customers are enjoying and their gradual increase, banking

industry experts feel that customers will want more and more of ATMs in the very near future,

which are here to stay. Hence, ATMs will be broadly classified into two separate categories one

type, which will offer all kinds of services from filing your tax returns to investing money in the

capital market. The other, which is being considered in this plan, are the ordinary ATMs.

Profitability

Statistics show that in the US, more than 50% of ATMs are privately

owned. These privately owned ATMs are running profitably,

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BUSINESS PLAN FOR PRIVATE ATM

charging transactions with a surcharge of 2% to 4% on its value. This shows that the ATM

business is definitely profitable.

The Business Plan vide Investment required

Despite the profitability, there has not been much of a study in this line. We will therefore

form our business plan vide the old formula of (Returns less Investment equals Profit). In fact,

gauging accuracy of the Investment costs become all the more important when we consider the

lack of academic study in this business.

The most expensive item here is the ATM machine. They are available in the range of $1,500

to $3,000. It should be kept in mind that we want our ATM to have a tag of being reliable. This

is very important in retail selling. Say we go the corner drugstore twice and by co-incidence, the

things required are not in stock at the drugstore. In such a case, the store is termed unreliable.

The store therefore loses our business and the business of our friends and relatives too. In the

same way, if a customers sees that the machine is under repair twice or thrice, the ATM will go

in for an unwanted tag of unreliability. We therefore invest in a brand new machine say at $2500.

We then negotiate with the manufacturer on

1. The guarantee/warranty terms

2. Free transport and installation of the machine
3. Providing a 24/7 service helpline operator for manning
4. Providing to you ATM processors, referred to you by them
5. Other Value added services, as and when, they become available and appealing.

We can get these advantages from buying a new ATM machine. Apart from these, if we

buy a second hand machine, we have to keep in mind that many ATMs sold vide E-bay are not

3DES compliant. Triple DES is an advanced encryption technology that is now mandatory in
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BUSINESS PLAN FOR PRIVATE ATM

ATMs. Buying an old incompliant ATM will involve heavy upgrading expenditure. Further,

second hand and leased ATMs have this tendency to break down at frequent intervals.

ATM Processing

What is ATM processing? An ATM has to be programmed with software, which can be

such that apart from the common services, it can close down the machine when cash is exhausted

and inform me. If programmed, it can send a SOS text to me and the service company in case of

a defect; it can keep records of all transactions and even give out gift cards at random intervals to

customers etc. All this can be done by hooking up the ATM to the other ATMs in their WLAN

network of the company, which processes my ATM.

If required, they can even fill up my machine with cash, at a surcharge per transaction or

we can do it ourselves. All this services should be covered in the ATM processing companys

agreement and everything should be well described. My interest will be to negotiate a contract

with the company not exceeding 3 years without any upfront payment .A two year period is a

must because the processing company has to recover their costs from a part of the surcharge and

also make a profit. These companies already have a number of ATMs, which has a call center

number, and they will just add our phone number to it. Naturally, if we try to provide a similar

service our costs will be much higher. It is best to give the AMC of the ATM also to the

processing company.

While negotiating we will allow a maximum of 0.8% of the transactions. Two facts which

are favorable to us is that we can sell advertising space to the company and as the machine is

new, it will not need much servicing. As regards filling-up money, a retail ATM has been found

to operate between 8-10 times/day and an average withdrawal being $60-$ 100. Therefore, filling
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BUSINESS PLAN FOR PRIVATE ATM

up money of $1000 should be adequate. Within a few days we will be able to find out the trend

in our machine.

We decide the location of the machine, which is very important. The more the footfall in

the particular area, the more is our earnings. So we select a location which is the most favorable

for the ATM. Movie Theatres, Video game centers in malls, fast food chains, casinos etc. are

some possible locations. The actual location can only be decided by after seeing it. Inside a

video game center in a mall is a good choice. When we talk to the owner about placing our ATM

there, we need to point out that as his is a commercial enterprise where people spend money, the

maximum portion of a withdrawal is likely to be spent there itself, thereby increasing his

turnover. As soon as he realizes this, we should get a discount on your rent, payable monthly. The

deal will be concretized by an agreement. Another point is that the ATM will be secure with the

owners security arrangements. We do not need to spend money on security.

We have almost finished our job. Apart from what has been listed, we will require

1. A Power connection
2. Two telephone lines, .one for the machine and the other for the helpline .

That concludes our requirement list.

Let us consider a charge of $ 70 for the rent and $ 30 for the power and the telephone.

We charge a surcharge of 3% per transaction, out of which 0.8% is retained by the processing

company and 2.2% is credited into my bank account.

Then, considering operations for 1 month and 3 months, we have the following graphs.
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BUSINESS PLAN FOR PRIVATE ATM

1000
900
800
700
600
500 10 days 20 days
400 Processor earnings per
300 day=o.8%=$8
200
100
0
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BUSINESS PLAN FOR PRIVATE ATM

For three months,

6000

5000

4000
Month 3
3000 Month 2
Month 1
Month 0
2000

1000

0
Total Earnings Owner Earnings Processor Earnings

As can be seen from the graph, in four months I will be able to square off my investment

and earn a profit. From the fourth month onwards, it will be completely profitable.
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BUSINESS PLAN FOR PRIVATE ATM

Before we conclude the business plan, we have to list a few basic things to do at the very start,

which are

1. Comply with the law and do whatever is necessary to do before starting

2. Open a bank account separately for the ATM business.
3. Have a solicitor see to all the agreements
4. Going in for limited liability insurance as we will be dealing with cash.

We now conclude our business plan after showing the profitability of the proposed ATM

business.

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References :

Article compilation, 2008, Emerging Algeria The Report, the Oxford Business Group
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BUSINESS PLAN FOR PRIVATE ATM

McDysanD, S.D., 1999, ATM Theory and applications, New Delhi: Tata-McGraw Hill.