The Business Plan: Defining the Components of a Business Plan

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1 UNITII/LESSON4 TheBusinessPlan: DefiningtheComponentsofaBusinessPlan TimeFrame 2 5days Standards EntrepreneurialSkills:TheProcessesandTraits/Behaviors associatedwithentrepreneurialsuccess A.EntrepreneurialProcesses:Understandsconcepts andprocessesassociatedwithsuccessfulentrepreneurialperformance; A.11Assessstart uprequirements;a.13describeexternalresources usefultoentrepreneursduringconceptdevelopment; A14Assesstheneedtouseexternalresourcesforconceptdevelopment A.16Usecomponentsofabusinessplantodefineventureidea ReadySkills:FundamentalsofCommunications:D.15Preparecomplexwrittenreports BusinessConcepts:ComputerBasics:E.01Usebasiccomputerterminology; E.02Applybasiccommandsofoperatingsystemsoftware; E.03Employdesktopoperatingskills;E.04Determinefileorganization; E.09Usecontrolpanelcomponents; ComputerApplications:E.11.Demonstratebasicsearchskillsontheweb BusinessFunctions:StrategicManagementO.09.Developbusinessplan GuidingQuestion Howdoesanentrepreneurcreateabusinessplan? Objectives Studentswillbeableto Defineandillustratethecomponentsofabusinessplan. Usetheircomputerskillstosetupanappropriatetemplatefortheirbusinessplan. Demonstratetheirknowledgeofthefunctionsofthecomponentsofabusinessplaninresponseto Jeopardy stylequestions. Articulateinwritingthepurposes,mission,productsandservicesandgoalsoftheirbusiness venture. TeacherBackground Thislessonisdesignedtoensurethatstudentsgainfamiliaritywiththevariouscomponentsofa businessplan.themainobjectiveofthelessonistofamiliarizestudentswiththepurposeand definitionofeachsection.tothatend,thecoreactivityforthelessonisamatchingactivitythat requiresstudents,eitherasindividualsorinpairs,tomatchthecomponentsofthebusinessplan withthecorrectdefinition.afollow upactivityisajeopardy typegamerequiringstudentsto

2 ENTREPRENEURSHIP:SOCIETY,GOVERNMENT,ANDTHEENTREPRENEUR ThebusinessofAmericaisbusiness CalvinCoolidge UNITII/LESSON4:page2 identifythecomponentbaseduponeitherafunctionofthecomponentorthedefinitionofeach one.samplequestionswillbeprovidedforthejeopardyactivityasguidanceforinstructorstocreate additionalitems. Thecriticalissuethatmustbedecidedbyindividualinstructorsisthedegreetowhichtimewillbe devotedatthispointinthecoursetocreatingadetailedbusinessplan.itissuggestedthatatleast twoclasssessionsbedevotedtothelesson;oneforfamiliarizingstudentswiththecomponentsofa businessplanandoneforstudentstoestablishtheirowncomputerfolderandthenecessaryfiles fortheirindividualbusinessplans.therecommendationthatismadehereisthattheinstructor workwithstudentsonthefollowingsectionsofthebusinessplan:coverpage,titlepage,mission andvisionstatement(businessgoalsandobjectives),companydescription,descriptionofproducts andservicesandpossiblytheplanformanagementofthebusiness.eventhoughstudentswillnot beabletofullycompletealloftheinformationrequiredforthesesections,startingonthese business plancomponentswillgivestudentsasenseofaccomplishment,helptochipawayata massiveprojectandhelpstudentstothinkaboutsomeoftheworkthattheywillneedtodoto completetheirbusinessplans. Studentsshouldspendatleastoneclasssessionactuallycreatingthetemplatefortheirbusiness plan.itisagoodtimetogoovertheuseoftypeselection(nofancyitalics),fontsize(nothing smallerthan10orlargerthan14),useofbold(forheadings),needforfamiliaritywithaspreadsheet programsuchasexcel,etc.havestudentscopytheirplanontoaninexpensiveflashdrivethatthey cancarrywiththem;thisdriveshouldbeusedexclusivelyforthisproject.orhavethemsendthe foldertoaportabledevice,web basedserver,or address,sothatcorruptionoftheschool s computersystemisavoided.consultyourschool scomputer useguidelines. Pleasenotethatthebusinessplanformatusedhereincludesasectionthatdoesnotappearin standardplans:sustainabilityandcorporateresponsibility.animportantthemeforallvirtual Enterpriseprogramsandactivitiesistheissueofsustainability.Therefore,itisimportantthat studentsconsiderhowtheyplantoaddressthisissueintheirbusiness.theywillneedtolookat everythingfromuseofnaturalresourcestotheirenvironmentalfootprintaswellashowtheir businesscancontributetotheimprovementoftheworldeconomy.atthispointinthecourse, studentsareonlybeingaskedtoknowthatthisisanewvebusinessplanrequirement. NewVocabulary RefertoWorksheetII.4A.

3 ENTREPRENEURSHIP:SOCIETY,GOVERNMENT,ANDTHEENTREPRENEUR ThebusinessofAmericaisbusiness CalvinCoolidge UNITII/LESSON4:page3 Materials/Resources Coursetextbook EntreSkills,Chapter11,Section2 WorksheetII.4A WorksheetII.4B TeachingStrategies/SupportingActivities Havestudentsspendtenminutesdoing freewriting aboutthewords businessplan. Explainthat theycanwriteapoem,diaryentry,notetotheteacher,essay,complaint,orvisualdepictionoftheir viewsofthebusinessplan.theideahereisforstudentstoexpressanyconcerns,reluctance,or issuestheymayhaverelatedtoundertakingthismassiveproject. Havevolunteerssharetheirwritingwiththeclass.Classifyissuesandconcernsandprovidefeedback tostudentsontheirissues.theyshouldcomeawayfromthisexerciseknowingthatyouunderstand theirconcernsandwillsupportthemthroughtheprocessofdevelopingthisdocument,thatthis documentisacriticalcomponentofthecourse,andthatitwillbeevaluatedaspartoftheirgrades forthecourse.letstudentsknownowthatthebusinessplanwillcountfor25percentoftheir grade,theequivalentofamid termexam,orwhatevervalueyouhavedetermined. Nowseeifeveryone,baseduponthepreviousday sactivities,canidentifyanddefinethepurposes ofeachcomponentofthebusinessplan.distributeworksheetii.4aandhavestudentsworkeither individuallyorinpairstomatchcomponentswiththeirdefinitions.afterapproximatelytenminutes, havevolunteerssharetheirresponseswiththeclass.answeranyquestionsstudentsmayhave regardingclarificationofhowcomponentsdifferfromoneanother.forexample,studentsmayhave difficultydifferentiatingamongthecompanydescriptions,visionandmissionstatements,and productandservicedescriptions. Oncestudentsareclearontheroleofthedifferentcomponents,movetothefollowingtwo activities,whichshouldbecompletedintheorderthatisbestaccommodatedbytheavailabilityof computerequipmentintheclassroom.(oneactivityshouldserveasthelastofthedayandthe otheractivitycanstartthefollowingday slesson.) ConductaJeopardy typequizbydividingtheclassintotwoteamsandhavingthemcompeteto providequestionsinresponsetothestatementsonworksheetii.4b.(sampleitemshavebeen providedwiththeideathatinstructorswilladdadditionalitems.)thepurposeofthisactivityisto ensurethatstudentscannotonlyidentifythecomponentsofthebusinessplanbutcanapplythe definitionstoactualfunctions. Havestudentssetupacomputerfolderfortheirbusinessplansandestablishaseparatefilefor eachbusinessplancomponent.obviously,thisactivityneedstobecompletedusingacomputer

4 ENTREPRENEURSHIP:SOCIETY,GOVERNMENT,ANDTHEENTREPRENEUR ThebusinessofAmericaisbusiness CalvinCoolidge UNITII/LESSON4:page4 andthereforemaybetaughtasastand aloneactivitydependingontheschool scomputer resources.itisimportantthatstudentsatthispointknowhowtosetupafolderandhowto createfileswithinthatfolder.ideally,studentsshouldbeabletosavetheirmaterialtoan inexpensiveflashdrivethattheycancarrywiththem;thisdriveshouldbeusedexclusivelyforthis project.orhavethemsendthefoldertoaportabledevice,web basedserver,or address,so thatcorruptionoftheschool scomputersystemisavoided.consultyourschool scomputer use guidelines. Summary/Assessment Askstudentswheretheycanturnforhelptofurtherdeveloptheirbusinessplan. Askwheretheythinktheywillneedthemosthelpincompletingtheirbusinessplans.Havethem explaintheiranswers. Follow Up/Homework Foreachsectionoftheirbusinessplans,havestudentsidentifyoneresourcetheycanturntoforhelpin completingthesection.theseresourcescanbethecoursetextbook,awebsite,aprofessionalinthe industry,and/orfriendsorfamilymemberswhoknowaboutthetopic.telltheclassthatthepurposeof thisassignmentisforthemtoassesstheirresourcesastheycurrentlyexistandtoidentifyareaswhere theywillneedassistance,includingthetypeofassistanceandwheretofindit. ExpandYourKnowledge HavestudentsvisitalocalbankorCBO(community basedorganization)thatmakessmallbusinessloans andasktheloanofficerwhattheinstitutionrequiresfromastart upbusinessinitsloanapplication. Studentscanasktoshowtheloanofficerthebusinessplantheyareworkingonandaskforfeedback andadvice,includingwheretheycangoforfurtherhelp. Telltheclass:Itisimportanttomakeaphonecalltosetupanappointmentwithabusinessloan specialistandnotjustwalkinunannouncedandexpecttohaveanimmediateappointment.youcanvisit inordertosetuptheappointmentifyouareunabletoreachtheappropriatepersonbyphone.even thoughyouarenotapplyingforaloanatthispoint,itisimportanttobeprofessionalwhenaskingfor andtakingpartinthesemeetings.wearbusinessattireandbringaformofidentificationaswellasa laptopornotebook.bepreparedwithatleastfivequestionstoask.also,bepreparedtodiscussthework thatyouaredoingaspartofyourveprogram.(yourschoolmayalsohavepromotionalmaterialfrom VirtualEnterprisethattheycanbringtotheirmeetingstofurtherestablishthelegitimacyoftheirwork).

5 ENTREPRENEURSHIP:SOCIETY,GOVERNMENT,ANDTHEENTREPRENEUR ThebusinessofAmericaisbusiness CalvinCoolidge UNITII/LESSON4:page5 WORKSHEETII.4A DefiningtheComponentsofaBusinessPlan Directions:Belowisalistofthecomponentsyouwillneedtocompleteintheprocessofcreatinga businessplan,followedbydescriptionsofeachofthecomponents.matchupthetitlesofthe componentswiththedefinitions. 1. coverpage 2. titlepage 3. tableofcontents 4. executivesummary 5. companydescription 6. productsandservices 7. missionandvisionstatements/goalsandobjectives 8. industryoverview 9. marketanalysis 10. competitiveanalysis/uniquecompetitiveadvantage 11. managementteamplan 12. marketingplan/strategy 13. operationalplan/manufacturingordeliveryprocess 14. organizationalplan 15. financialdataandplan 16. growthplan 17. revisionorcontingencyplans 18. supportingdocuments 19. sustainability/corporateresponsibilityplan

6 ENTREPRENEURSHIP:SOCIETY,GOVERNMENT,ANDTHEENTREPRENEUR ThebusinessofAmericaisbusiness CalvinCoolidge UNITII/LESSON4:page6 WORKSHEETII.4A DefiningtheComponentsofaBusinessPlan(continued) a. Adescriptionofthemajorgoalsofthebusiness,aswellasabroadstatementaboutthepurposeof thecompanyanditsscope.setsoutthebusinessowner slargerviewofwherethiscompanywillfit intotheworldofbusinessbeyondthenextmonthoryear.explainstopotentialinvestorshowthe ownerviewstheimpacthisorherbusinesswillhaveinthefuture. b. Describeshowthegoodsorservicesgetfromthecompanytotheclient.Naturally,thedescriptions inthissectionwillvarydependingonwhethertheproductisagoodorservice,isbeing manufacturedbythecompanyorthecompanyisservingasamiddleman,orisbeingsoldviathe Internet. c. Proofofhowthosewhoownand/orrunthebusinesswillhavethecapabilitiestosucceedin creatingandgrowingthebusiness.explainsthetalents,education,andskillsofthetopemployees andhowthecompanywillgoaboutbringinginotherpeopletocompletethenecessarywork. d. Abriefdescription(nomorethantwopages)oftheoverallbusinessplan.Openswithaparagraphor twothatinstantlyintereststhereaderandenticehimorhertoreadfurther.highlightskeypointsof thebusinessplan. e. Althoughnotincludedinstandardbusinessplans,thissectionisanimportantcomponentoftheVE businessplan.explainsbothhowthebusiness simpactontheenvironmentwillbeminimizedand howpartoftheprofitswillbeusedtoimprovesociety. f. Identifiesthecompanyname,address,phonenumber,website,and address;displaysthe company slogo. g. Examinestrendsrelatedtocompaniesworkinginanareasimilartothecompanydescribedinthis businessplan.showshowthisnewbusinesswillcomplementoroutperformexistingbusinesses. h. Outlinesthesectionsofthebusinessplanandprovidesthepagenumberswherethecomponents aredescribedindetail. i. j. Showsthatthebusinessownersarerealisticaboutthepotentialforproblemsorissuesasthe businessgetsstartedortriestoexpand.explainshowtheyplantohandleanypotentialproblems thatmayarise. Explainstopotentialinvestorswhythisbusinessisbetterthanothercompaniesintheindustry. Preparingthissectioninvolvestheentrepreneurintheprocessofexaminingwhatothersinthe industryaredoingbyvisitingwebsites,speakingtopotentialcustomers,goingtotradeshows,and usingotherresearchmethodstoshowhowthisnewbusinesswilloutperformothers. k. Presentsthecompany splantoextenditsproductlineorservicesandexpanditsproduction.these projectionsdemonstratethatthebusinessownersarethinkingbeyondthecurrentyear.

7 ENTREPRENEURSHIP:SOCIETY,GOVERNMENT,ANDTHEENTREPRENEUR ThebusinessofAmericaisbusiness CalvinCoolidge UNITII/LESSON4:page7 WORKSHEETII.4A DefiningtheComponentsofaBusinessPlan(continued) l. Showstopotentialfundershowthedesignforthisbusinesswillproduceamonetarilysound business.usuallypresentedintheformoftablesandfinancialstatements,thissectionshowsthat theclaimsmadeinotherpartsofthebusinessplancanbesupported. m. Includesthecompanyname,aswellasthenames,titles,andaddressesofthecompanyowners.It shouldalsoincludethenameofthepersonwhopreparedthebusinessplanforthecompanyand thedatethatthebusinessplanwasissued. n. Containstheevidence,suchasbusinesstaxreturns,thatbackupclaimsofthebusiness sprofitability. o. Describeshowthecompanyplanstodevelopacompanyimage,attractcustomerstotheproduct, andusethemediatomakepotentialcustomersawareofthecompany sproductsorservices. p. Usesresearchonpotentialcustomersandhelpstheentrepreneurdeterminetheappropriate clienteletotargetwiththecompany sproductsorservices. q. Describeswhatthecompanywillactuallyproduceandoffertothepublic.Itisimportantthatthis sectionnotetheuniquefeaturesofwhatisbeingofferedthroughthisbusinessandthepotentialfor developingotheritemsinthefuture. r. s. Explainsthenatureofthebusinessandwhyitisagoodventure.Ifahistoryalreadyexists,this sectiondescribesthedevelopmentofthebusinessthusfar,helpingpotentialinvestorsunderstand howtheventurehasevolvedtothispoint. Thisstraightforwardsectiondescribeshowthebusinesswillbestructured:proprietorship, partnership,orcorporation,etc.,andthereasonforusingthatstructure.explainshowemployees aregoingtobecompensated,includingtheestimatedsalariesoftoppersonnel.thissectionshould alsodescribethemainemploymentpoliciesofthecompany.

8 ENTREPRENEURSHIP:SOCIETY,GOVERNMENT,ANDTHEENTREPRENEUR ThebusinessofAmericaisbusiness CalvinCoolidge UNITII/LESSON4:page8 WORKSHEETII.4B BusinessPlan Jeopardy Directions:ThefollowingsampleitemsaremeanttobeusedaspartofaJeopardy typeactivity;many morecanbecreated.theobjectiveofthisactivityistoensurethatstudentsbecomefamiliarwithnot onlythetitlesandfunctionsofthevariouscomponentsofthebusinessplan,butthattheycanrecognize examplesofwhatmightbepartofthosecomponents.theclasscanbedividedintoteamsforthis activity;studentscanalsobeaskedtorespondasindividuals.playersarerequiredto buzz inwiththeir answers,whichmustbeintheformofaquestion.thissheetcanalsobeusedasanend of unitquizto whichstudentscanrespondinwriting. 1. Thisisthepartofthebusinessplanwheretheentrepreneurexplainshowhisorherbusinesswill exceedtheworkaccomplishedbyotherbusinessesoperatinginthearea. 2. Istartedoutwithasmallcompanymakinghand paintedscarves.mydesignshavebeenso successfulthatinowneedaloantoexpandmybusinessbyusingmydesignstomassproducemy scarves.thissectionofthebusinessplanexplainsthisinformation. 3. Toletthereaderofmybusinessplanknowthatthenamesofmycompanyofficerscanbefoundon page3,ineedtoincludethiscomponentinmybusinessplan. 4. ThispartofthebusinessplanexplainshowIrecognizethatthoughmynewpizzashopshouldreally succeedinmyneighborhoodbecauseitwillbetheonlyshopofitskind,ifitissuccessful,another similarbusinesscouldopenupinthearea.iampreparedtodealwiththateventuality. 5. Ihaveworkedinseveralpizzashopsovertheyearsandmybusinesspartnerpreviouslyowneda successfulpizzashop.wearebringinginathirdpersonwhomakestop notchcalzones,lasagna,and otheritalianspecialties.ialsohavelinedupapersontohelpwithourfinancials.ineedtoexplainall ofourvarioustalentsandskillsinthissectionofthebusinessplan. 6. Ihavestudiedrecenttrendsinthefashionindustryandknowthat,givenatightbudget,womenwill splurgeonaspecialpieceofjewelryorascarfratherthanbuyawholenewoutfit.basedonthis research,iamconfidentthatmydesignerscarfbusinesswillsucceed.thispartofmybusinessplan discussesmyresearchandtheconclusionsi vedrawnfromit. 7. SothatapotentialinvestororbankloanofficercanseethatIhaveaclearplanforexpandingand changingmyhand madedesignerscarfbusinesswithouthavingtoreadmyentirebusinessplan,i willincludethiscomponentinmyplan. 8. Inthissectionofmybusinessplan,IwilldescribenotonlyhowIwillswitchfromhandpaintingeach ofmyscarvestoamethodofsilkscreeningthatwillenablemetoproducealargenumberof designerscarvesinashorterperiodoftime.iwillalsoexplainhowiplantoexpandmybusinessto includeitemssuchastableplacemats,napkins,and,possibly,bedlinen.

9 WORKSHEETII.4B BusinessPlan Jeopardy ENTREPRENEURSHIP:SOCIETY,GOVERNMENT,ANDTHEENTREPRENEUR ThebusinessofAmericaisbusiness CalvinCoolidge UNITII/LESSON4:page9 9. Mygoalistoshowaprofitwithmynewdesignerscarveswithineighteenmonths.Idonotplanon sellingmyproductsthroughthelargeboxstoresbutratherthroughsmallboutiqueshops.iwillnot beopeningastorebutwillbemarketingmygoodsthroughmywebsite.iexplainthisinformationin thispartofthebusinessplan. 10. Iamgoingtoopenupmypizzashopasasingleproprietorship.Iwillbethesoleownerandthe threeotherpeopleiambringingin(twotocookandonetohandlefinances)willreceiveasalary.i willalsohirefourhourlyemployeestohandlecleaningoftables,takingorders,andservingand keepingtheestablishmentclean.alloftheseideasareexplainedinthissectionofthebusinessplan. 11. Iplantoonlyusedyesformyscarvesthatdonotharmtheenvironment.Ialsoplantobringintwo internsfromartprogramswhowanttolearnaboutthetextileindustry.iplantopaythehighschool internminimumwageandthecollegeinternatleast$4anhouroverminimumwage.duringthe firstyear,iplantodonateatleast03%ofmyprofitstothelocalhumanesociety.theseideasare explainedinthissectionofthebusinessplan. 12. Ihavehadtablesdrawnupthatshowacomparisonofwhatmyprofitisoneachhand paintedscarf comparedtowhatmyprofitwillbewheniturntosilk screeningthescarvesusingmydesigns.this informationispresentedinthispartofmybusinessplan. 13. Ihavealreadydesignedmylogoformypizzashopandthisdesignwillbeusedonmynapkins, advertising,andboxes,aswellasthesignoutsidemyshop.ihavelinedupseveralnon competing businessesintheareathatarewillingtohavemedisplaymytakeoutmenusintheirshops.the localcollegeandhospitalwillalsoputmeontheirlistofneighborhoodeateriesandihaveatleasta dozenbusinessesthathaveagreedtoacceptdailyfaxesofmymenus.myplansforlettingthe neighborhoodknowaboutmybusinessispresentedinthissectionofmybusinessplan. 14. Thisistheone pagesectioninwhichiletpotentialinvestorsknowthenameofthecompanyand howtoreachme. 15. ThispartofthebusinessplanincludesitemsthatprovewhatIhavesaidinotherpartsoftheplan areactuallytrue.ihavelettersfromthreefamouspeoplewhoregularlyordermyscarvesandhave saidthat,shouldifigureoutawaytoproducemoreofmyscarvesinashorterperiodoftimefora lowerprice,theywouldbuylargenumbersofmyproducts.theselettersareincludedinthispartof thebusinessplan.