Business Plan

Just like the old adage that you never get a second chance to make a first impression, the executive summary is your business’s calling card. It needs to be succinct and hit the key highlights of the plan. Many potential investors will never make it beyond the executive summary, so it needs to be compelling and intriguing.

The executive summary should provide a quick overview of the problem your business solves, your solution to the problem, the business’s target market, key financial highlights, and a summary of who does what on the management team. It should be noted that our management team will be very unique and you will be proposing the structure we will use.

While it’s difficult to convey everything you might want to convey in the executive summary, keeping it short is critical. This section should be no longer than one page but it needs to clearly convey the following:

• 1.1 Problem
• 1.2 Solution
• 1.3 Market
• 1.4 Competition
• 1.5 Financial Highlights

The products and services chapter of your business plan delves into the core of what you are trying to achieve. In this section, you will detail the problem you are solving, how you are solving it, the competitive landscape, and your business’s competitive edge.

Depending on the type of company you are starting, this section may also detail the technologies you are using, intellectual property that you own, and other key factors about the products that you are building now and plan on building in the future.

Applying this section to our particular business, we quickly realize we will be conveying both the product (coffee) and the service (casual place to study and hang out).

• 2.1 Problem Worth Solving - What is the problem that is attempting to be addressed? This question is easily addressed at the surface but is more appropriately considered in depth. Things that should be considered include convenience, space, accessibility, options and quality. Basically, any component from value proposition or the Elements of Creating Value could be considered.
• 2.2 Our Solution - The components that are missing from the competition are the key here. While you need to include a comprehensive explanation of what you are developing, there needs to be a detailed analysis of why someone needs your product.
• 2.3 Validation of Problem and Solution - Data. Support with facts, not empty statements.
• 2.4 Roadmap/Future Plans - Once the initial solution is implemented, where is the company headed?

As critical as it is that your company is solving a real-world problem that people or other businesses have, it’s equally important to detail who you are selling to. Understanding your market anaysis is critical. Who and what are you competing against? Does the economy support the development of the business and how will you be better than your competition.

While we do not have any direct competition on campus, we most certainly have a great deal of competition surrounding our school.

• 3.1 Market Segmentation - Market Type and Customer Segment - What does this tell us about the market we are entering?
• 3.2 Target Market Segment Strategy
  • 3.2.1 Market Needs - What is the hole in the market and how is the product you are proposing filling that?
  • 3.2.2 Market Trends - Does the industry trends support investing into the product? For instance, golf is showing poor market trends.
  • 3.2.3 Market Growth - Even bad industries can show areas of growth. Top Golf is a night life spot for millennials. Where is the market still growing?
• 3.3 Key Customers - State the key customers and the segmentation strategies that will be critical to identifying these individuals. Use the keys from personas to do this: demographics, psychographics, geographics and behavioral.
• 3.4 Future Markets - From a big picture, where do we see opportunities for expanding beyond the current options being provided? If the industry is coffee, future markets could include tea, kiosks, and wholesale bean sales.
• 3.5 Competition
  • 3.5.1 Competitors and Alternatives - State the unique competitors and substitutes for your product. What are they strengths and weaknesses?
  • 3.5.2 Our Advantages - Given the market and competition why are people going to buy from your operation? This is often referred to as the value proposition.

The marketing and sales plan details the strategies that you will use to reach your target market. This portion of your business plan provides an overview of how you will position your company in the market, how you will price your products and services, how you will promote your offerings, and any sales processes you need to have in place.

• 4.1 Marketing Plan
  • Golden Ciricle - Why, how, what
  • Brand Position Statement
• 4.2 Sales Plan - How are you going to incentivize customer to purchase the product?
  • Get
  • Keep
  • Grow
• 4.3 Location and Facilities - Where a retail business sets up shop determines the success of the operation as much as any component. For our project that is especially true. This answer is going to require a meshing of curriculum, traffic, and minimizing startup costs. I personally believe your ability to articulate this point is the most crucial portion of the marketing and sales plan. It may very well be the most important component overall.
• 4.4 Technology - What technology will be needed? Ensure that we are tracking the total costs of implementing this plan.
• 4.5 Equipment and Tools - To produce our product, what are we going to need? The reality is this will change based on the supplier of coffee but we can determine the base cost by referencing Le Marzocco. This is the responsibility of the responsibility of Elli, Charlie and Gabby. Skip this and they will share their writeup of this section with you all.
• 4.6 Key Metrics - How will we measure success? The answer is the first year will establish a baseline. We will use the data from previous classes to determine our success. This section will be hard but you must come up with specific strategies for determining what is good.

The management team chapter of a business plan is critical for entrepreneurs seeking investment, but can be omitted for virtually any other type of plan. While this statement is typically true, it couldn't be further from the truth for our business. Communicating how we will manage and staff the business will be critical to proving its viability.

The management team section will include a detailed organizational chart and state the specifics of how the business will be staffed.

• 5.1 Organizational Structure - Determine the structure for oversight of the operation and who will be responsible for each component of the business. The structure should provide an outline for the responsibilities of each employee.
• 5.2 Management Team - Who is running the show? Ultimately, the management of the operation will come from the teacher and a select number of administrators.
• 5.3 Management Team Gaps - Where are the holes in the operation due to the constraints presented in the schedule? How can those potentially be addressed and who will we need to help ensure the gaps are properly addressed on a day to day basis?
• 5.4 Personnel Plan - How is the operation going to be staffed? What happens if someone is not capable of coming into work? This is all the more complex within a school environment where activities are broken up into chunks of activity. Is it possible to keep the operation open through 5 periods?

The financial plan is a critical component of nearly all business plans. Running a successful business means paying close attention to how much money you are bringing in, and how much money you are spending. A good financial plan goes a long way to help determine when to hire new employees or buy a new piece of equipment.

If you are a startup and/or are seeking funding, a solid financial plan helps you figure out how much capital your business needs to get started or to grow, so you know how much money to ask for from the bank or from investors.

• 6.1 Revenue/Sales Forecast - Now is the time to create data to determine how much we can generate in revenue. This is going to be the easy part as our minimum amount sold can be easily determined by surveying students on how much they spend on coffee per week.
• 6.2 Expenses - In order to make this money what is going to be the cost? Our costs should be broken down into the following sections:
  • One time development costs - equipment, design and build out of shop
  • Recurring sales costs - cups, the beans, lids
  • Recurring operational costs - employees, rent, electric, water
• 6.3 Projected Profit and Loss - On a year to year basis what do we believe the profit for the operation can be?
• 6.4 Projected Cash Flow - This may be a bit beyond our financial prowess.
• 6.5 Projected Balance Sheet - Assets = Liabilities and Owner's Equity - This is an essential financial statement that should clearly display what we have (assets) in comparison to what we owe (liabilities) and what we own (owner's equity).
• 6.7 Business Ratios - What are the key business ratios that we should understand? There are more than these two simple ratios but we simply do not have the information at this time to provide them.
  • Debt/Equity
  • Gross Profit Margin

Student Activity

• In your groups of three, you will be developing a business plan for the coffee shop. Our one addendum will be the addition of the floor plan and options for expansion of the store. I will provide the architectural outline of the rooms and expansion opportunities.