Foundations in Business

BUSI 20173

Business Plan Assignment

Each team will write a Business Plan for your Foundation business that is due October 31st. A business plan precisely defines “your business”, identifies your goals, and serves as your firm's résumé. The real value of creating a business plan is not just in having the finished product in hand; rather, the value lies in the process of researching and thinking about your business in a systematic way. The act of planning helps you to think things through thoroughly, study and research if you are not sure of the facts, and look at your ideas critically. It takes time now, but avoids costly, perhaps disastrous, mistakes later. You should discuss within your team and agree on your target market(s), product positioning strategy, marketing programs, production, and finance plans. These plans must all align strategically to support your goals and your success measurements.

Before you begin writing your business plan, consider four core questions:

1.  What service or product does your business provide and what needs does it fill?

2.  Who are the potential customers for your product or service and why will they purchase it from you?

3.  How will you reach your potential customers?

4.  Where will you get the financial resources for your business?

Business plans may be generated in many different formats. Much depends on the target audience to whom the business plan is designed to appeal. For example, a business plan designed to inform employees of the company’s long-tem strategic intents may be written differently from one intended to appeal to bank lenders and venture capitalists. Regardless of format, there are four major phases to business planning:

1.  Determine the current state of the industry and the market

§  Situation Analysis - Identify SWOT (Strengths, Weaknesses, Opportunities, and Threats)

2.  Set forth a strategic vision for your company.

3.  Determine the specific tactics within each of the company’s functional elements that you believe will best support the strategic vision.

§  R&D

§  Marketing

§  Production

§  Finance

4.  Monitor progress by establishing benchmarks and conducting competitor analysis comparisons.

The following is an outline for your business plan with questions that you should be answering as the executive team:

Cover Page

Table of Contents

1.  Executive Summary (Write this section last. Make it enthusiastic, professional, complete, and concise.)

Summarize the fundamentals of your business:

·  What is your overall Corporate Strategy?

·  Who are your customers?

·  What will your product strategy be?

·  What is your marketing plan?

·  What is your production plan?

·  How will you finance your growth and success?

2.  Company Description

·  What is important to you in business?

·  To whom will you market your products?

·  What factors will make the company succeed?

·  What do you think your major competitive strengths will be?

o  Vision, Mission and Values Statements

o  Strengths, Weaknesses, Opportunities and Threats (SWOT) – is a tool for auditing an organization and its environment. It’s the 1st stage of planning and helps marketers to focus on key issues. (for additional information see appendix 1.0)

3.  Market Analysis

3.1 Facts about your industry:

·  Describe your industry.

·  Is it a growth industry?

·  What changes do you foresee in the industry, short term and long term?

·  How will your company be poised to take advantage of them?

3.2 Market Segmentation

·  What is the total size of your market?

·  Current demand in target market.

·  Trends in target market—growth trends, trends in consumer preferences, and trends in product development.

·  What percent share of the market will you have?

4.  Products and Services

4.1 Current product description

4.2 Detail your plans for new product introduction.

·  Will you introduce new products? If so, how many, when, and in which market segment(s) will they be positioned?

4.3 Competitive Comparison

4.4 Technology

·  Which (if any) of your existing products will be repositioned, and where?

·  What will you do with the products’ MTBF ratings, which have a direct impact on product cost?

·  Will any products be phased out?

5.  Strategy and Implementation Summary

5.1 Marketing:

·  Pricing Strategy:

o  Detail your plans for pricing, promotion, and selling tactics.

o  Will you price above, at, or below industry averages?

o  If you are going to price high, how will you justify those prices?

o  If low, how will you keep margins large enough to turn a profit?

o  Will pricing strategies be different for each market segment?

·  Promotion Strategy:

o  How much will you spend on promotion and sales?

o  What do you hope to achieve with your promotion expenditures?

§  What % customer awareness will suit your needs?

o  What do you hope to achieve with your sales expenditures?

·  Sales Forecast using Excel (for additional information see appendix 2.0)

5.2 Production:

·  Describe your plan for investing in your factories.

o  Automation

o  Capacity

·  When launching new products, will you build expensive highly automated factories or low-tech labor intensive factories?

·  Will you keep overtime to a minimum, or will you run a lot of overtime as an alternative to capacity expansions?

·  Will you invest in Recruiting and Training?

·  Which factories will you liquidate – if any – and will you do it gradually or all at once?

6.  Financial Plan

6.1 Financial Assumptions

·  Detail plans for raising capital, debt, and stock/dividend policies.

·  What is your overall strategy for financing the growth and operation of your company?

·  Will you raise capital through short-term debt, long-term debt, stock issues, factory liquidation, or a combination of these means?

·  Will you be fairly conservative and maintain a substantial cash reserve to stave off high interest emergency loans, or will you aggressively seek to make every dollar work for maximum return?

·  Identify Key Financial Measurements selected by your company and briefly describe how the elements in your Business Plan support the attainment of each measure.

6.2 Projected Profit and Loss using Excel (for additional information see appendix 2.0)

Sample Plans:

q  One of the best ways to learn about writing a business plan is to study the plans of established businesses. United States Small Business Association

http://sba.gov

http://www.bplans.com/sample_business_plans.cfm

Business Plan Expectations:

This assignment must be a typed, single spaced, (6 - 8 page minimum) document that is spiral-bound with any included attachments and appendices. You must also submit a softcopy of your plan in the Business Plan TCU Online dropbox.

Grading will include both objective and subjective components. The objective portion will focus on 1.technical errors – misspelling, incorrect word choice, structure of sentences and paragraphs, unnecessary font changes etc., and 2. the Excel quality including appropriate use of formulas and formatting. The subjective portion will focus on understanding of the simulation, clarity of the writing, meeting the needs of the target audience for the business plan.

The Sales Forecast and Projected Profit Loss components:

1.  must be created using Excel (using Excel functionality – don’t just plug numbers into the spreadsheet)

2.  appropriate tables and charts must be copied into the written business plan

3.  the team Excel file must be submitted via email to before class on the day the written document is due.

4.  For additional help and guidance, see the link on the schedule called Spreadsheet Template.

Grading for the Excel content will be based upon the effective use of Excel as a management tool, use of formulas, charts (including appropriate titles legends, and formatting of date), and overall visual clarity of the content. Assumptions should be documented in the Excel file and included as appropriate in the Business Plan.


Appendix 1.0

SWOT Analysis:

SWOT analysis is a framework for generating strategic alternatives from a situation analysis. It is applicable to either the corporate level or the business unit level and frequently appears in marketing plans. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Because it concentrates on the issues that potentially have the most impact, the SWOT analysis is useful when a very limited amount of time is available to address a complex strategic situation.

SWOT Profile

The internal and external situation analysis can produce a large amount of information, much of which may not be highly relevant. The SWOT analysis can serve as a filter to reduce the information to a manageable quantity of key issues. The SWOT analysis classifies the internal aspects of the company as strengths or weaknesses and the external situational factors as opportunities or threats. Strengths can serve as a foundation for building a competitive advantage, and weaknesses may hinder it. By understanding these four aspects of its situation, a firm can better leverage its strengths, correct its weaknesses, capitalize on golden opportunities, and deter potentially devastating threats.

Internal Analysis

The SWOT analysis summarizes the internal factors of the firm as a list of potential strengths and weaknesses. Factors should be evaluated across the organization in areas such as:

·  Company culture / ·  Operational capacity
·  Company image / ·  Brand awareness
·  Organizational structure / ·  Market share
·  Key staff / ·  Financial resources
·  Access to natural resources / ·  Exclusive contracts
·  Position on the experience curve / ·  Patents and trade secrets
·  Operational efficiency

To carry out a SWOT Analysis, answer the following questions:

Strengths:

·  What advantages does your company have?

·  What do you do better than anyone else?

·  What unique or lowest-cost resources do you have access to?

·  What do people in your market see as your strengths?

·  What factors mean that you "get the sale"?

Consider this from an internal perspective, and from the point of view of your customers and people in your market. Be realistic: It's far too easy to fall prey to "not invented here syndrome". (If you are having any difficulty with this, try writing down a list of your characteristics. Some of these will hopefully be strengths!)

In looking at your strengths, think about them in relation to your competitors - for example, if all your competitors provide high quality products, then a high quality production process is not a strength in the market, it is a necessity.

Weaknesses:

·  What could you improve?

·  What should you avoid?

·  What are people in your market likely to see as weaknesses?

·  What factors lose you sales?

Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses that you do not see? Are your competitors doing any better than you? It is best to be realistic now, and face any unpleasant truths as soon as possible.

External Analysis

An opportunity is the chance to introduce a new product or service that can generate superior returns. Opportunities can arise when changes occur in the external environment. Many of these changes can be perceived as threats to the market position of existing products and may necessitate a change in product specifications or the development of new products in order for the firm to remain competitive. Changes in the external environment may be related to:

·  Customers / ·  Social changes
·  Competitors / ·  New technology
·  Market trends / ·  Economic environment
·  Suppliers / ·  Political and regulatory environment

To carry out a SWOT Analysis, answer the following questions:

Opportunities:

·  Where are the good opportunities facing you?

·  What are the interesting trends you are aware of?

Useful opportunities can come from such things as:

·  Changes in technology and markets on both a broad and narrow scale

·  Changes in government policy related to your field

·  Changes in social patterns, population profiles, lifestyle changes, etc.

·  Local events

A useful approach for looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could create opportunities by eliminating them.

Threats:

·  What obstacles do you face?

·  What is your competition doing that you should be worried about?

·  Are the required specifications for your job, products or services changing?

·  Is changing technology threatening your position?

·  Do you have bad debt or cash-flow problems?

·  Could any of your weaknesses seriously threaten your business?

Strengths:
What do you do well?
What unique resources can you draw on?
What do others see as your strengths? / Weaknesses:
What could you improve?
Where do you have fewer resources than others?
What are others likely to see as weaknesses?
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Opportunities:
What good opportunities are open to you?
What trends could you take advantage of?
How can you turn your strengths into opportunities? / Threats:
What trends could harm you?
What is your competition doing?
What threats do your weaknesses expose you to?
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Appendix 2.0 Sales Forecast and P&L Examples:

The Sales Forecast and Projected Profit and Loss components; 1. must be created using Excel, 2. appropriate tables and charts must be copied into the written business plan, and 3. the team Excel file must be submitted via email to before class on the day the written document is submitted. Late submission of any portion of this assignment will be penalized as noted in the class syllabus.

·  Utilize your Round 1 FastTrack for 2018 actual data

·  Develop your Sales Forecast for the next 3 years

Example Data

Round: 1
Dec. 31, 2017 /

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Selected Financial Statistics

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Andrews / Baldwin / Chester / Digby / Erie / Ferris
ROS / 5.2% / 4.6% / 5.4% / 6.5% / 3.8% / 7.3%
Turnover / 2.08 / 1.61 / 1.42 / 1.63 / 1.41 / 1.77
ROA / 10.9% / 7.4% / 7.6% / 10.6% / 5.4% / 13.0%
Leverage / 1.5 / 1.9 / 1.9 / 1.9 / 1.9 / 1.9
ROE / 16.9% / 14.1% / 14.2% / 19.8% / 10.2% / 25.0%
Emergency Loan / $0 / $0 / $0 / $0 / $0 / $0
Sales / $50,008,525 / $48,980,365 / $41,363,253 / $50,297,693 / $39,833,623 / $44,110,449
EBIT / $4,799,499 / $4,737,100 / $4,672,970 / $6,316,310 / $3,574,131 / $6,062,078
Profits / $2,623,271 / $2,249,123 / $2,216,443 / $3,268,006 / $1,516,483 / $3,224,967
Cumulative Profit / $5,108,458 / $4,734,310 / $4,701,629 / $5,753,193 / $4,001,669 / $5,710,154
SG&A / Sales / 11.9% / 9.4% / 7.4% / 9.8% / 7.4% / 9.8%
Contrib. Margin % / 24.1% / 21.6% / 22.5% / 24.6% / 20.3% / 26.1%

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