The business plan is a critical component of the entrepreneurial process.
Preparing a business plan helps the entrepreneur think through the business idea.
Often, the process of preparing the plan shows the strengths and weaknesses of
the venture. It’s possible that after preparing the plan, the entrepreneur discovers
that the business will not be successful. This is a valuable lesson in itself, and the
entrepreneur will not need to invest further in the process. If the idea appears
feasible, the business plan becomes the primary marketing tool for the
entrepreneur to sell his/her idea to financial resource providers, suppliers, potential
employees, and other interested parties. Consequently, the value of the business
plan is very clear. It is essential!
In order to provide each student with experience in the entrepreneurial process,
you will be placed in a venture team that will develop a business idea. You and
your team will be responsible for selecting and developing a business idea into a
formal business plan.
The Process:
The business plan will develop over the semester. The following are the steps in
the process:
- The ventures team are formed
- Teams submit a preliminary business idea & Business Model Canvas
• Instructor critiques the idea and approves or suggests other
alternatives - Teams submit financial statements
• Instructor provides feedback on financial statements and issues
grade - Formal business plan submitted.
The critical dates for the project can be found in the course schedule.
Table I: Activity Grade Weights.
Activity (Stage) % of Course
Grade - Venture teams are
formed by - Assessment of the
business idea and
business model canvas - Financial statements
submitted - Final business plan is
submitted
0%
5%
10%
20%
Total 35%
All parts of the business plan should be submitted using the assignments tool.
Only one submission is due from each group.
- Instructions and format for the Assessment of the Business Venture
Instructions can be found by clicking on the Business Plan on the course
homepage.
As the semester progresses, we will study the various parts of the business plan.
Consequently, there will be much more information concerning the structure,
content, and format of the final document.
Submission 1: Venture teams are formed:
Each student will be allowed to select a venture team (i.e., business plan team) to
join. If you don’t select a team, the instructor will make the selection for you. Most
teams will have 4 to 5 team members depending to the size of the class.
Submission 2: Assessment of the business idea and Business
Model Canvas:
Research and practical experience has demonstrated that a critical first step in
developing a new business is clearly define the business model. The business
model is a description of how the business will provide value to the customer. The
most popular business model tool today is the Business Model Canvas
developed by professors Alexander Osterwalder and Yves Pingeur along with a
co-creation process that included hundreds of academics and practicing
entrepreneurs. The tool is introduced in the Business Model Generation book
which is required for this class. Your venture team will use the tool to develop and
present the business model for you group’s business idea by creating a Business
Model Canvas.
Each group will submit an assessment of the business idea that will include a
description of the business idea (100 words or less), a Business Model Canvas
(See Business Model Generation), and answers to questions about the demand
for the product or service. Detailed instructions can be found by clicking of
Assessment of the Business idea and Business Model Canvas in the Business
Model Assignment linked on the course home page. The instructor will provide
feedback on the submission to help correct areas of concern.
The purpose of the initial idea submission is to screen ideas and make sure your
team’s proposal business idea is appropriate for the class before investing much
time and effort.
Note: If there is a business idea that one of you has wanted to pursue, this would
be a great time to start developing it. Just convince the entire group to work on the
idea for the project.
Submission 3: Financial statements submitted:
Teams will submit pro forma financial statements for instructor review and approval
(both startup and operating). Instructions for the financial statement submission
are available by clicking on Financial Statements in the Business Plan instructions.
What is required in the submission is listed below.
I expect a sources and uses statement, startup expenses (to get the doors
open), a monthly pro forma cash flow projection spreadsheet for the first
year and by quarter for years 2 and 3, a monthly income statement
(Profit/Loss) for the first year and by quarter for years 2 and 3, and a balance
sheet for year 0 (the date the firm starts) and the first three years. I also
expect a list of assumptions attached to the financials explaining where the
numbers came from. For instance, 10 employees at $10/hour, at 40 per week,
4 weeks in a month=$16k/month in payroll. See example business plans.
Example startup statements format: (Note: All the example exhibits are
found in the Gourmet to Go case #7 starting on page 476 of the
Entrepreneurship text. The page numbers are from an electronic version of
the text and may not line up exactly with your version of the text. If not, just
go to the Gourmet to Go case.)
Startup Statements: Sources and Uses Statement, Startup
Expenses, Capital Equipment list (see presentation):
- Sources and Uses of Funds – Exhibit 8 page 483 in Entrepreneurship.
The amount of working capital may need to be adjusted after the cash flow
statements have been developed in the next assignment. The working
capital is simply the needed beginning checkbook balance for the firm.
There may need to be enough in the checkbook, however, to cover negative
cash flow from early operations. - Startup Expenses statement (see lecture notes and page 478 Exhibit 1 in
Entrepreneurship.) - Capital Equipment List – Exhibit 2 page 478 in Entrepreneurship. Capital
equipment is assets that will be depreciated
Operating Statements: Example pro forma income, cash flow, and
balance sheets: - Pro Forma Income statement for the first year. See Exhibit 3 page 479 in
Entrepreneurship. Notice that the first year statement is generated
monthly. Also notice that a critical part of the statement is the list of
assumptions concerning how the numbers were derived (see notes to the
statement in text example). - Pro Forma Income statement for years two and three by quarter. See
Exhibit 4 page 480 in Entrepreneurship. Include the list of assumptions. - Pro Forma Cash Flow statement for the first year. See Exhibit 5 page 481
in Entrepreneurship. Please include the modification suggested in the
lecture notes to include a beginning checkbook balance and ending
checkbook balance for each month. Provide a list of assumptions. - Pro Forma Cash Flow for years two and three by quarter. See Exhibit 6
page 482 in Entrepreneurship. Include the modifications and list of
assumptions. - Pro Forma Balance Sheets for years 0, 1, 2, and 3. See Exhibit 7 page 482
in Entrepreneurship. Modify the text example by adding a year 0 (the
balance sheet as of the day the business opens). By making this
modification, it will be much easier to develop the years 1, 2, and 3
statements.
Note: There are two presentations available for helping with the development of
both the startup statements and the operating statements. Please listen to
these presentations. Copies of the files used in the presentations are linked in the
operating statements presentation (See Operating Statements presentation by
clicking on the Business Plan on the left side of the course homepage. The
example statements include the startup statements and year 1 of the operating
statements.)
Submission 4: Formal business plan submission:
Teams will submit a formal business plan. Details of the business plan are
available by clicking on the Business Plan on the course homepage. Included are
instructions for writing the plan and several sample plans
The business plan must follow the outline in Table 7.3 p. 195 in the
Entrepreneurship text. Do not use business plan software or other formats.
If something in your business is unique and does not fit the outline, please
get instructor permission before changing the outline. Note: If the page
number doesn’t align with your page numbers just go to Table 7.3 in Chapter
7.
MAXIMUM LENGTH IS 20 PAGES not including financial
statements and appendix material!!!!!
Note: Your individual grade for the entire project is subject to peer review. See
expectations below for more detail.
Expectations:
The following are the expectations for the assignment:
Venture Team:
• The team will submit assignments by the due dates.
• The final business plan will be a quality document that could be used as a
marketing tool for the business idea.
• The team will work together in a professional manner.
Individual Members:
• Each member of the team is expected to do his/her part of the project.
Failure to fully participate in the project will result in a substantial grade
reduction.
• Each member of the team is expected to work in a professional manner with
the other team members.
Grading:
Venture Team Grade:
The project is 35% of the course grade (see Table I above). The team grade will
be based on how well the team follows the due dates, the quality of component
submissions (each is graded separately), and the quality of the final business plan.
Individual Grade:
Your individual grade will be based on the venture team grade (above) and a peer
evaluation from the other team members. The other members of the team will
evaluate your contribution. This evaluation will be factored into the calculation of
your project grade.
Note:
• Each member of the team must do his/her part of the project. Failure
to fully participate in the project will result in a substantial grade
reduction.
• Each member of the team must work in a professional manner with the
other team members.
No team member will receive credit for the work of others. Each must fully
participate in the project. Therefore, your individual grade on this project
will be calculated as follows. Each team member will rate the contribution of
his/her teammates to the team’s business plan on a scale from 0 to 100.
Student ratings of other team members will be based on the member’s
contribution including quality of work, amount of contribution, timeliness of
contribution, and contribution to group discussions and decisions. Your
individual grade on the business plan will be the average of the individual
ratings from other team members multiplied by the group grade on the
Assessment of the Business Idea…, Financial Statements, and the formal
Business Plan. For example: If the team business plan’s grade is 90 and the
average of your team’s ratings of your performance/contribution is 80, then
your business plan grade will be 90 x .80 = 72. The same process will be
applied to each phase. As you can see, participation by each member is
required. No one will be allowed to get credit for the work of others. In all
cases, the instructor reserves the right to make the final determination of
your individual business plan grade. The instructor will usually follow the
evaluations of the other team members without compelling evidence to the
contrary.
Also note: Team members will have the right to leave a non-participating
team member’s name off the business plan. Students removed from the plan
by other team members will receive a zero on the project.