Construct a comprehensive business plan according to the following guidance:
PURPOSE: The purpose of this project is to practice the important skills of business planning. A well-developed business plan is essential for small business success, and lack of planning is one of the top reasons for business failure. Even if you intend on being an employee for most of your career, business planning skills are important for career growth and advancement. Either way, this project allows you to practice your business planning skills in the safe and supportive confines of a class (since you don't actually have your life savings on the line, as in a real business). If you intend to use your plan to launch or improve a business, this class almost serves as an informal advisory committee. And that’s worth the price of admission right there.
FORMAT: The final format for your plan should be one complete plan, typed into a single document. Although there are multiple ways to structure a business plan, for the purpose of this assignment the content and order of your plan will be as outlined in the instructions below.
RESOURCES: Read Chapter 4: Conducting a Feasibility Analysis and Crafting a Winning Business Plan. It outlines a business plan. You will not be completing every section of a business plan as outlined in the chapter.
GRADING: The first thing you should know about writing a business plan is that there is no special "business language" that needs to be used. Use your natural writing style. Act as if you are presenting to a set of investors. What would you tell them to be sure that they understand what you are talking about? I'll grade your business plan assignments using this criteria:
Is it complete?
Is it well thought out?
Is it presented in a professional manner?
In other words, if you are telling a hypothetical investor about your business, have you provided enough detail so that they can actually base an investment decision on the information you provide? And does your plan contain all of the information specified in the instructions below?
BUSINESS PLAN CONTENTS
(and suggested project completion schedule)
Select your business idea and post it on the discussion board. I can provide input on your idea if you’d like, and classmates are encouraged to provide input as well.
WEEK TWO: DEFINE YOUR PRODUCTS AND SERVICES
This is the most important part of your plan. This is where you actually describe what your business is and what it does. You need to be specific. If it's a restaurant, describe the restaurant to us in detail. What does it look like? What does it serve? What does it feel like to be there? If it is a construction business, what specific services do you provide? And, ultimately, don't forget the why related to all of those questions (i.e. Why does it look like the way it does? Why do you serve what you serve? etc...)
As you define your product or service, always keep the customer in mind. What problem are you solving, what pain are you relieving, what emotion are you satisfying, what need are you fulfilling? Most businesses succeed because they connect with customers in at least one of those areas. So do give a brief description of the type of customer you will be targeting. We'll be completing a marketing section later on where you'll get very detailed about the profile of your customers, but for now you can just summarize who they are.
KEY COMPONENTS: Please include all of the following components in your description (unless they truly don't apply to your business):
Product or service features
Warranties and/or guarantees
You unique selling proposition (what makes you different than your competitors?)
Any patents or trademarks you plan to get to protect your ideas
Description of the production or service process (this includes the materials you use, costs, key suppliers, etc)
An outline of your future product or service offerings (i.e. how would your business branch out as it grows)
Your vision and/or mission statement for the business (i.e. What are your values and principles, what makes you unique in this world)
As you begin to simply write a description of your business, you'll find areas that you hadn't though about - and now will be your chance to think about them. In addition to filling in some blanks, you'll also get to see your ideas on paper, probably for the first time. This allows you to see them, refine them, and brainstorm how you can add to or improve them. So be creative and be prepared to spend some timing thinking through the description of your business.
SECTION LENGTH: This is one of the longer parts of the plan. If you give a good description of your business, it will probably be at least 1 page, but don't write more than 2 pages. All parts of your plan should be single-spaced and 12-pt type maximum (except for headers, which can be bigger).
WEEK THREE AND FOUR: INDUSTRY RESEARCH
This week you will be building a profile of the industry or category you are starting your business in. This is necessary so that investors can be confident that you are an expert in this industry. Investors may be experts, and they may not be, but you need to be. If you're not an expert, don't fake it. Do the research necessary to become confident in your field. Industry research in the business plan is also necessary so that investors can understand whether there really is a market opportunity worth pursuing.
I'll be honest, this is going to be the most challenging part of the plan. It requires real research and persistence. You will need to be creative and patient. But once you make it through this part, the most difficult piece the business plan will be behind you. And you will have gained some valuable experience doing research and "building a case" for your business.
KEY COMPONENTS: Please include all of the following components in your profile:
General description of your industry, including the key players or segments in the industry.
Size of industry (either locally or nationally) in $, plus any data on size of key players or segments.
Trends in industry (what developments are taking place).
Growth rates of industry.
Key success factors for industry.
Outlook for industry in the future (will it continue on the current path and why, are there new technologies or trends that could change this industry considerably in the next 5 years?
HINTS: The first thing to remember is that building a business plan is like building a court case. In a court case, you are trying to present the information you need so that a jury will vote your way. In a business plan, you are trying to present the information you need so that the investors will invest in your business.
All sections of your business plan are part of that "case" you are building, but especially this section. This section is like the forensic evidence (i.e. stuff collected from a crime scene) that tells investors exactly what kind of business and industry they are dealing with. And just like in a court case, you might not have every fact and detail needed to tell the whole story. So you gather every piece of evidence you can, then you try to fill in the blanks by helping investors connect the dots between those pieces of evidence.
And as in court, where attorneys present their case to the judge and jury, the information needs to be quickly digested by the audience. So, if you can distill your industry into a few charts, graphs, and/or other visual representations, your investors will be able to more quickly understand what you're talking about, as opposed to pure text, data, figures, etc.
Bottom line: you want investors to know about your industry (assume they know nothing), what is going on in the industry, and whether this industry is a good place to be starting businesses and investing money.
It all starts with how you define your industry. If you are starting a coffee stand, you are in the coffee industry. If you are starting a retail clothing store, you are in the retail clothing industry. There are countless other examples. But do your best to figure out what industry you are in so that you can research it. Doing research might be new to some of you and there is no shortcut.
Last tip, you can also work with the librarians - they are research experts. But arrive with as many specific questions as you can. It doesn't work to say, "I need info on the coffee industry". Say, "I'd like to find out about the size of the coffee industry in the US, about the key players and growth rates, and the outlook for the industry according to industry watchers.".
Here are some additional notes and a helpful link for you.
SECTION LENGTH & CITATIONS: This section isn't necessarily long, but it will be dense with information. One page of well-researched info should suffice, although if you include some charts or graphs, it would be longer. Remember to provide citations for you sources (any citation format is OK, but stick to the same one throughout).
WEEK FIVE: BUSINESS STRATEGY AND COMPETITIVE ANALYSIS
In this section, you will be discussing your competitive strategy. It's fairly straightforward, and one of the most fun parts of business planning.
KEY COMPONENTS: Please include all of the following components in your profile:
Desired position in the market - meaning how do you want customers to "see" you and how do you want them to "see" your competitors in comparison to you?
Again, this assignment is fairly straightforward. You probably need to do some research in order to complete a competitor analysis. But these are fun and necessary aspects of understanding whether your business has a good shot at succeeding. You can’t be everything to everyone, so a good strategy is figuring out where there is an opportunity and defining how you’ll capture it. Doesn’t need to be complicated, just realistic. The research you did in week 3 helps you understand the market your pursuing. And surveying the competition helps you find opportunities to exploit.
A ripe opportunity could be a consumer need that is not being met by competitors. Or one that is being met, but the demand exceeds supply.
SECTION LENGTH: This section will usually be between 1.5 - 3 pages (depending on how detailed your SWOT is).
WEEK SIX: MARKETING PLAN
Marketing is a simple concept, but if often one of the most difficult pieces of business to implement successfully.
You create a product or service that fills a need.
You define who your most likely customer is.
You define where those customers can be found.
You craft a message about how they’ll benefit from your product or service.
You select promotional tactics for delivering that message to your customer.
See? Simple. And it encompasses just about every area of your business, and your ultimate success depends on it. No biggie...
KEY COMPONENTS: Please include all of the following components in your marketing plan:
DEFINE TARGET MARKET: Detailed description of the profile of your target market. Who is your most likely customer? Create a picture of them in your mind, then describe them in your plan. Be very specific. It's called "target" market for a reason. The idea is that you'll go after your target first, get loyal adopters to use your product/service, and then if successful, move on to other groups. Include demographics, such as age, income, gender, education level. Then use psychographics, such as hobbies, interests, and motivations for buying your product. If you have more than one main target market, describe them all (no more than three target markets though). DON'T say that anyone can be in your target market... that's never true. Specify who is most likely to want to use your product or service. Defining your target market and their motivations for buying your product is the most important part of your marketing plan.
MARKET SIZE AND TRENDS: For example, if you tell me you are targeting NYC males, with college degrees (AA or BA?), ages 18-25, who still live at home - how many of them are there? Try to find research on this group to see how big it is. You'll use many of the same tactics you did when doing industry research. It's straight-up detective work. www.census.gov can be a decent place to start. There are other resources out there as well. Be creative, do research, connect the dots for the reader to prove that you not only have identified your target market, but know how big it is and whether it is growing or shrinking.
DISTRIBUTION STRATEGY: What channels of distribution will you use? Direct-to-consumer? Retail stores? If so, which ones would you like to carry your product? How will your product or service physically get delivered to customers?
PRICING STRATEGY: What is your desired image in the market? What do you competitors charge? What will that mean for how much you plan to charge?
ADVERTISING STRATEGY: How will you get the word out? What channels/media will you use? What are all the ways you'll try to generate publicity and get people through the door.
EXTRA CREDIT (up to 5 points): Example of an advertisement. Including headline, picture/drawing, and text of your advertisement.
Marketing plans are fun and we're keeping things simple. So enjoy the journey.
SECTION LENGTH: This section will usually be between 1.5 - 3 pages. Always single-spaced.
WEEK SEVEN: OPERATIONS AND MANAGEMENT
This is quite straightforward, which is a nice break from all the intensive work you've been doing up to this point. Please include all of the following components in your operations plan:
LOCATION: How and why this location is good for reaching your target customers. Demographic analysis and traffic count of proposed location (or city that location is in). Lease rates, labor supply, and any other details that would justify what makes that a good location.
DESCRIPTION OF MANAGEMENT TEAM: Key managers and employees. Their background and how they'll contribute to business success (it's kind of like writing a mini-biography on the owners and key employees - this is usually a very important thing to investors, as teams implement business plans, making or breaking a business' chances of success).
PLAN OF OPERATION: Form of ownership, company organization chart, decision making authority, and compensation details (if possible).
This section simply shows that you have a good grasp of how your business will be run and who will do it.
SECTION LENGTH: This section will usually be about 1 page.
WEEK EIGHT: FINANCIAL PROJECTIONS AND EXECUTIVE SUMMARY
At the end of your plan, include these simple financial projections (you are free to provide more details if you'd like, this is minimum though):
List of startup costs in one table.
Then create another table with . . .
Estimated revenue for year 1, year 2, and year 3.
Estimated expense budget for year 1, year 2, and year 3.
Estimated profit for year 1, year 2, and year 3. (Profit is simply your revenue minus your expenses.)
Line up each year in a column. So year 1 will have revenue, then the row below it will have expenses, then row below it will have profit/loss.
We're keeping this real simple, however, if you'd like to create a more detailed expense budget, with categories like salaries, rent, marketing, etc - I will certainly take that into consideration when awarding points.
The last step for completing your plan is to write a one-page executive summary and place at the front of your plan. The executive summary goes first, and is sometimes the only thing investors and lenders read. Often times they’ll decide whether to read the rest of the plan based on the executive summary. Make it sing.
Again, the financial projections go last, but the Executive Summary is the first page of your plan.
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This business plan proposes the founding of a live, online tutoring company, targeting high school students in developing countries. The company’s motivating idea is that, as these countries develop, a confluence of underdeveloped infrastructure and hyper-burgeoning traffic brings about a situation where attending “tuition classes”—what after-school mass-tutoring is called in many Asian markets—becomes prohibitively costly in terms of time and energy. However, many of these countries have developed their broadband infrastructure, particularly via mobile data technology like 4G, to a degree capable of supporting streaming video tutoring. This development has tracked the near-total market penetration of mobile devices in these countries. It is possible that live video tutoring, largely mirroring the format experienced by students in large group after-school classes, will be attractive because being able to access instruction from home and/or via mobile devices bypasses the problems posed by traffic, class overcrowding, etc.
There are, however, a number of challenges to be overcome. These include the relatively low penetration of streaming-capable mobile devices, the relatively low prevalence of medium-large format monitors for home computers, and, perhaps most importantly, the low bandwidth limits available to most consumers at affordable prices. These challenges threaten prospects of growth because they limit the extent to which our service is accessible to significant portions of the populace. However, smart engineering of our platform geared toward providing high quality streaming video at exceptionally low bitrates, thus consuming less bandwidth, along with cheaper options for audio-only service, will mitigate these concerns. In addition, as broadband coverage increases, as broadband competition increases, and as price comes down...
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