Throughout the semester you have been reading and learning about entrepreneurship and small business management. These topics relate well with a simple business plan that you will create in this assignment. You must come up with a real or fictitious business idea and write a simple business plan as if you were trying to sell the idea to investors, loan officers, or potential business partners. Some of you may use this business plan as a road map to start your own business.
This assignment offers you an opportunity to exercise your creativity. This does not mean that your analysis should be based on conjecture alone. It should be based on sound quantitative and qualitative reasoning – the insight you are gaining from the class. Your conclusions should be supported with as much real-world information as possible. For example, the price of your product or service should take into account such things as the cost to produce it and the price people would be willing to pay for it, which is greatly influenced by the price of substitute products or services. You will be doing some preliminary market research to come up with the necessary information to support your conclusions.
The simple business plan should be 2 to 3 pages. It should address the following:
- A description of the product or service. It is very important that you describe the unique attributes of your product or service that distinguish it from possible substitutes and/or competition.
- A justification as to why there is a need for the product or service, supported by references from your market research.
- The industry in which this business would operate.
- A discussion of who the potential consumers are and an estimate of the size of the market.
- A list of possible substitutes for the product or service and both current as well as potential competitors.
- A recommendation for the price of the product or service. You should conduct simple research to support your recommendation.
- An explanation of the proposed business model. In other words, explain how you expect to make a profit. You need to think about how the product or service will be produced and marketed.
- If you select a product, will you manufacture the product yourself or outsource the manufacturing to another company? Where would you produce the product?
- In discussing the marketing of your product or service, you should decide whether you will sell the product directly to consumers or have retail firms (i.e., department stores) sell it for you. You might decide to sell it over the Internet. You should explain why your chosen methods of production and marketing are the best for your product or service.
- A proforma income statement for the chosen business as an Excel spreadsheet. Usually an income statement is prepared at the end of a year. A proforma income statement is prepared at the beginning of a year. As such, it contains estimates of revenue and expenses. It is important that you provide as much justification for your estimates as possible. The results from the proforma income statement should be explained and incorporated into your plan.
Here is a suggested simple business plan outline. You may chose to use your own or the software business plan package that comes with your book. For grading purposes, it does not matter which format you use.
1. Executive Summary
2. Company Summary or Business Concept
Company Locations and Facilities
3. Market Analysis
Target Customer Profile
Product (or service) description
4. Management Plan
5. Marketing Plan
6. Financial Plan
Cash Funds Needed