NFTE Business Plan Guide

Transcription

1 NFTE Business Plan Guide Business Plan Guide Overview This business plan guide acts as a bridge frm classrm instructin t cmpletin f the student business plan. Teachers shuld use this as a guided practice after instructin in rder t shw students hw t apply the knwledge they just learned t their wn business plans. Teachers shuld fllw the chart that demnstrates the flw f instructin n page 2 f this guide. Students can als use this guide as a reference t assist with independently cmpleting business plans. Features f the New Template Business plan guide Student Benefits Gives students a reference tl t help supprt independent student wrk Teacher Benefits Assists teachers with classrm management as students can guide their wn wrk Each sectin in the written prtin f the business plan guide cntains the fllwing: Cntent Overview A brief refresher f the cntent already learned frm class as it relates t that specific part f the business plan Exemplar Explained An explanatin f that sectin f Eva s business plan, relating hw she filled ut the business plan in relatin t the cntent learned Rubric Indicatr Excerpt frm the rubric t see what is required fr that sectin f the business plan, and hw Eva wuld be evaluated n her respnses Apply Learning t Business Plan Guided instructin t cnnect class instructin and Eva s Edibles example t the student business plan Curriculum Cnnectin A reference t where t find the instructinal material fr that sectin in the NFTE curriculum Each sectin in the presentatin prtin f the business plan guide cntains an verview f cntent n each slide, examples f cmpleted slides in the template, and instructins n where t find infrmatin n the written business plan

2 Business Plan Guide - Flw f Instructin Opprtunity Recgnitin Opprtunity Recgnitin Unit f Learning: Opprtunity Recgnitin 11 th Editin Chapters: 1,2,3,4,5,6 Experiential Activities Eva s Edibles Case Studies Eva s Edibles Exemplar Business Plan Business Plan Guide Written Plan Sectins: Written Plan Rubric Eva s Edibles Exemplar Presentatin Slides Business Plan Guide Presentatin Slides: Name f Business, Prblem/Unmet Need, Slutin/Hw Biz Fills Need, Descriptin f Prduct/Service, Qualificatins Presentatin Rubric Unit Assessment Market Research Unit f Learning: Market Research 11 th Editin Chapters: 7 Experiential Activities Eva s Edibles Case Studies Eva s Edibles Exemplar Business Plan Business Plan Guide Written Plan Sectins: Written Plan Rubric Eva s Edibles Exemplar Presentatin Slides Business Plan Guide Presentatin Slides: Market Analysis, Cmpetitin Unit Assessment Prmtin & Sales Unit f Learning: Prmtin & Sales 11 th Editin: Chapters: 8,9 Experiential Activities Eva s Edibles Case Studies Eva s Edibles Exemplar Business Plan Business Plan Guide Written Plan Sectins: Written Plan Rubric Eva s Edibles Exemplar Presentatin Slides Business Plan Guide Presentatin Slides: Prmtin & Sales, Sales Prjectins Unit Assessment Business Financials Unit f Learning: Business Financials 11 th Editin: Chapters: 10,11,12,13 Experiential Activities Eva s Edibles Case Studies Eva s Edibles Exemplar Business Plan Business Plan Guide Written Plan Sectins: Written Plan Rubric Eva s Edibles Exemplar Presentatin Slides Business Plan Guide Presentatin Slides: Business Mdel, Sales Prjectins, Start Up Funds Unit Assessment

3 Part 1: Opprtunity Recgnitin and Business Structure 1.1 Business Opprtunity A business idea is nly a gd business pprtunity if it fills a need r want in a particular market. Many f us cme up with business ideas, but very few can recgnize a great business pprtunity. Opprtunity recgnitin is the prcess f identifying a need that can be met by a new business. Here, yu shuld lk t utline and justify yur reasning fr starting a business. Think abut a cnsumer need r want. A need is smething that peple must have in rder t survive, and a want is a prduct r service that peple desire. By nw yu shuld already have asked yurself the fllwing questins: Des my idea fill a need r want that s nt currently being met? Will the idea wrk in the lcatin r in the way that yu plan t sell it? Can I put the idea int actin within a reasnable amunt f time? Cnsider yur windw f pprtunity (the time yu have t take actin n yur idea befre the pprtunity is lst). D I have the resurces and skills t create the business (r knw smene else wh culd help me d it)? Can I prvide the prduct r service at a price that will attract custmers but still earn a reasnable prfit? Exemplar Explained Take a lk at ur sample business plan, Eva s Edibles, and hw she explains her business pprtunity. The persnal chef business is a viable pprtunity fr the Clumbus area. Clumbus has a large ppulatin f prfessinals, frm the business and medical spheres, primarily, which is grwing steadily. Individuals frm these prfessins earn $50,000 r mre per year, prviding them with substantial amunts f dispsable incme. Eva sets the stage fr her business pprtunity by identifying her target market. She saw a viable pprtunity fr a persnal chef business in the Clumbus area by examining the initial market and then segmenting it by incme.

4 What these individuals have in terms f incme, they lack in terms f time. As a result, they g ut t dinner r rder in fur ut f five wrkdays each week. Eva s Edibles seeks t prvide these individuals with a healthy, hmemade, and affrdable alternative t rdering frm area restaurants. Eva bridges the gap by taking the cntext f her target demgraphic and diving deeper. She has established that there is an unfulfilled need r want in this market by lking nt nly at incme, but als at lifestyle. Eva sets Using the rubric belw, think abut hw Eva s business pprtunity aligns with indicatr 1.1 n the rubric. What imprvements culd be made? Where is there rm fr grwth in the cmmunicatin f her business idea? In rder t receive full credit, yu must identify a business idea that fulfills a want r need that is currently nt being met by an existing business. Student is able t: Identify a business idea that fulfills a want r need that is nt being met by existing businesses Indicatr 1.1 Business Opprtunity 4 Exceeds Expectatins Idea is clearly described and linked t clear need r want; data is used t supprt claims 3 Meets Expectatins Idea is clearly described and linked t clear need r want 2 Belw Expectatins Idea is described but is nt linked t a clear need r want 1 Little r N Value Idea is prly described and nt linked t a need r want Hw T Yu have identified yur idea and nw it s time t determine whether it is a valid business pprtunity. Entrepreneurs typically use ne f the three tls belw t identify whether r nt their business idea is a gd pprtunity. A Cst/Benefit Analysis ccurs when an entrepreneur adds up all the expected benefits f an pprtunity and subtracts all the expected csts. If the benefits utweigh the csts, the pprtunity may be wrthwhile.

5 An Opprtunity-Cst Analysis ccurs when an entrepreneur examines the ptential benefits that they frfeit when they chse ne curse f actin ver thers, r the value f what they give up t get smething. A SWOT Analysis is an evaluatin f the strengths, weaknesses, pprtunities, and threats f a particular pprtunity. The next page will shw yu an example f a blank SWOT analysis. Fr this exercise, we re ging t fcus n a SWOT analysis. Fllw these steps t cmplete the table belw: Step 1 Strengths: What skills d yu have that wuld enable yu t d well with this specific pprtunity? What resurces d yu have available (time, mney, and peple wh can help yu)? D yu have any unique knwledge r experiences that culd give yu an edge? Step 2 Weaknesses: In what skill r knwledge areas d yu need t imprve? What resurces are yu lacking? What might ptential custmers see as a weakness in yur prduct r service? Step 3 Opprtunities: Des this business idea fill an unmet need r want? Are there any trends r changes happening in yur cmmunity that yu culd use as an advantage? What culd yu d better than ther cmpanies already in yur field? Step 4 Threats: What bstacles stand in the way f pursuing this pprtunity? What current trends culd ptentially harm yur business? Hw fierce is the cmpetitin in this business area? Des this business idea have a shrt windw f pprtunity? SWOT Analysis: Yur Business Strengths Weaknesses Opprtunities Threats

6 1.2 Type f Business Cnsider what yu wuld like the primary functin f yur business t be and the type f prducts yu wish t sell. As yu read in Chapter 3, new businesses will be categrized as manufacturing, whlesale, retail, service, r a cmbinatin f these. The type f business yu chse shuld effectively meet the want r need in the market, Curriculum Cnnectin and reflect the pprtunity identified fr the business. It is imprtant t be aware f things ging n arund yu s that yu can recgnize ptential pprtunities. Keep an eye Exemplar ut fr prblems, Explained changes, new discveries, existing prducts and services, and unique knwledge in places such as newspapers, magazines, business and gvernmental agencies, trade resurces, and the Eva internet. came up with the fllwing summary t describe her new business, Eva s Edibles Chapter 6, Sectin 2 n pages f Entrepreneurship: Owning Yur Future Eva s Edibles will be a service business preparing healthy dinners that will be easily reheated by client. Eva explains her business clearly and links it t a cnsumer need: easily prepared dinners fr the week Des Eva s Edibles fit neatly int the categry f a service business, r culd she be cnsidered a manufacturing and service business? Remember, sme businesses may be classified as cmbinatins f different categries. Smething else t cnsider is that the functin f the type f business shuld be cnnected t the business pprtunity. Des Eva explain hw being a service business fulfills a need r a want in the market? Use the rubric belw t determine whether Eva s descriptin f her type f business is clearly cnnected t the business pprtunity.. Student is able t: Indicatr 4 Exceeds Expectatins 3 Meets Expectatins 2 Belw Expectatins 1 Little r N Value

7 Identify a business idea fulfills a want r need that is nt being met by existing businesses 1.2 Type f Business Idea is clearly described and linked t clear need r want; data is used t supprt claims Idea is clearly described and linked t clear need r want Idea is described but is nt linked t a clear need r want Idea is prly described and nt linked t a need r want Hw T Step 1 Think abut yur business and the prduct r service yu re ging t sell. Review the descriptins fr each type f business functin. Step 2 Chse the type f business yu wish t perate based n yur knwledge f manufacturing, whlesale, retail, and service businesses. Manufacturing: Describes businesses that cnvert materials int gds fr sale that are suitable fr cnsumer use. Industrial: Describes a business that sells gds t ther manufacturing businesses such as metal and plastic parts, lumber, and heavy machinery. Cnsumer: A business that sells prducts that are eventually bught by the public. Small manufacturing businesses that prduce cnsumer gds smetimes sell directly t the public. Whlesaling: A business that buys gds in large quantities, typically frm manufacturers, and resells them in small batches t retailers. Retailing: Describes a business that buys gds, ften frm whlesalers, and resells them directly t custmers in stres, shps, and butiques. Service: A business that prvides a service t custmers fr a fee. Other: Yur business might be a cmbinatin f tw types f businesses r mre. Fr example, if yur business makes baskets, it wuld be cnsidered a manufacturing business. If yu als sell directly t cnsumers, yu wuld be a retail cmpany as well. And, if yu ffer lwer prices fr bulk rders t a lcal stre, yu als perate as a whlesale business. S yu wuld be a retail-whlesalemanufacturer Use the Chart belw as a quick guide t the fur main types f businesses.

8 Manufacturing Business Creates prducts with raw materials Sells in bulk t whlesalers Whlesale Business Buys prducts in bulk frm manufacturers Sells in smaller bundles t retailers Retail Business Buys smaller bundles frm whlesalers Sells single items t cnsumers Service Business Offers a unique set f skills r expertise at a fee Step 3 Describe the type f business yu wish t start and explain in detail why yur business fits that categry. Als be sure t explain hw yur business best fits the need r want in the market. Fr example, if yu decide t be a retail business, be sure that setting up yur business in this way best serves the custmers wh wuld be mst interested in buying yur prduct r service. Curriculum Cnnectin SWOT analysis chart Chapter 3, Sectin 1 n pages f Entrepreneurship: Owning yur Future Wrkbk pages Wrkbk pages 56-60

9 1.3 Business Ownership This is where yu will describe the business wnership structure yu desire fr yur cmpany. This may be a sle prprietrship, partnership, crpratin, r a cperative Exemplar Explained Eva s Edibles will be a Limited Liability Cmpany (LLC), whlly wned and perated by Eva Tan. The LLC status will prtect Eva Tan s persnal assets and allws the cmpany t enjy sme tax benefits. Eva describes hw her cmpany plans t perate initially, but des nt, hwever, discuss hw she anticipates LLC status may affect taxes, prfits, plicies, and wnership as her business grws. Des Eva give enugh detail explaining why she chse t start her business as a Limited Liability Cmpany? What tax benefits wuld she receive with LLC business wnership? Use the rubric belw t assess Eva s perfrmance identifying the right type f business wnership. Student is able t: Indicatr 4 Exceeds Expectatins 3 Meets Expectatins 2 Belw Expectatins 1 Little r N Value Structure a business lgically and apprpriately 1.3 Type f Business Ownership Idea is clearly described and linked t clear need r want; data is used t supprt claims Ownership type is best fr the business; states ratinales fr chsen type Idea is clearly described and linked t clear need r want Ownership type is best fr the business; states ne ratinale fr chsen type Idea is described but is nt linked t a clear need r want Ownership type is identified; n ratinale prvide fr chsen type Idea is prly described and nt linked t a need r want Ownership type des nt fit business mdel; n ratinale prvided r flawed ratinale

10 Hw T When cnsidering the types f business wnership, an imprtant cnsideratin is the wner s liability, r the legal bligatin f a business wner t use persnal mney and pssessins t pay the debts f the business. Business debts culd include lans that must be repaid, mney wed t ther businesses, and judgments resulting frm lawsuits against the business. Liability can cme in the frm f unlimited r limited liability. Which type f business wnership is best fr yu? Step 1: Read Chapter 3, Sectin 2 and examine the Business Ownership chart n page 63 f Entrepreneurship: Owning Yur Future Sle Prprietrship pg. 57 General/Limited Partnership pages C Crpratin pages Subchapter S Crpratin pages Nnprfit Crpratin pages Limited Liability Cmpany pages Step 2 - Identify which type f business wnership is apprpriate fr yur business. Cnsider: Ownership Liability Taxes Prfit Distributin Vting Plicy Step 3 - This is the implementatin phase. After yu ve cnsidered the advantages and disadvantages f each type f business wnership structure, refer back t pages f the text fr next steps pertaining t implementatin. It is als imprtant t keep the future f yur business in mind. Will the current wnership structure encurage grwth? Curriculum Cnnectin Chapter 3, Sectin 2 n pages Business Ownership Chart Wrkbk pages 26-30

11 1.4 Missin Statement Yur missin statement shuld be frnt and center in the minds f everyne invlved in yur business. As the statement f why yu exist, it's als the statement that explains t them why they wuld want t d business with yu. Sme businesses g s far as t make their missin statements the themes f their advertising campaigns. If yu d nthing else, yu shuld make sure yur missin statement is highly visible in yur business premises, n yur website if yu have ne, and n all yur marketing materials. A gd missin statement isn't just a slgan, its an peratins manual. It cannt prvide the guidance that it's intended t prvide if peple are nt familiar with it. Exemplar Explained Take a lk at the missin statement frm Eva s Edibles belw: Eva s Edibles, a persnal chef service, will prvide busy clients with healthy and delicius dinners that are based n clients preferences and prepared in their kitchens. Dinners are stred in clients refrigeratrs r freezers t be reheated at their cnvenience. Eva describes exactly what her business des. She describes the service Eva s Edibles prvides and hw the service is prvided. What is missing frm Eva s Edibles missin statement here? Eva fund a way t be detailed and brief, but an excellent missin statement clearly states what the business des and why it exists. Its language shuld be appealing and exciting t the reader. Where n the rubric wuld yu grade Eva s missin statement? Student is able t: Explain the relatinship between themselves, their business, and their cmmunity Indicatr 1.4 Missin Statement 4 Exceeds Expectatins Clearly and succinctly states what the business des and why it exists; language is appealing and exciting 3 Meets Expectatins Clearly states what the business des and why it exists 2 Belw Expectatins Des nt clearly state what the business des r why it exists 1 Little r N Value Is unrelated t what the business des r why it exists

12 Hw T Step 1 Describe what yur cmpany des Step 2 Describe hw yu d it. Think abut cre values, nt a detailed descriptin f hw the business wrks. Fcus n what yur cmpany is the best at. These are its cre cmpetencies what it des better than any f its cmpetitrs. Once yu've decided which cre values are mst imprtant, add ne (r tw at the mst) t yur descriptin f what yur cmpany des. Sample Values: Prvide high prduct quality Prvide superir custmer service Prtect the quality f the envirnment Ensure equal access t resurces Encurage innvatin/creativity Practice sustainable develpment Step 3 Add Why. This is the spark r passin behind yur business. Why des yur business d what it des? Fr sme peple, it helps t think back n why they started their business in the first place. Use the fllwing examples t guide yu. The Cca-Cla Cmpany exists t benefit and refresh everyne wh is tuched by ur business. Every day, everywhere, we use ur technlgy and expertise t make payments safe, simple and smart (Mastercard Wrldwide). The missin f Suthwest Airlines is dedicatin t the highest quality f Custmer Service delivered with a sense f warmth, friendliness, individual pride, and Cmpany Spirit. Step 4 Review. When yu're finished, have anther lk at yur missin statement and see if it says what yu want t say r if there's a better way f phrasing it.

13 1.5 Scial Respnsibility A gd business balances prfit and grwth with the gd f sciety. As yu read in chapter 5, crprate scial respnsibility makes gd business sense. Whether it is a large crpratin spnsring a charity telethn r a lcal supermarket ffering a refund fr using envirnmentally friendly bags, scial respnsibility ften translates int prfits. This is ften described as ding well by ding gd. Exemplar Explained Eva s Edibles strikes this balance with the fllwing statement f scial respnsibility: Eva s Edibles will use natural, rganic, and lcally grwn ingredients whenever pssible. The cmpany s cde f ethics directs that the business be as green as pssible. It will chse vendrs wh are envirnmentally and scially respnsible. Eva starts nicely by breaking dwn her cmpany peratins int smaller elements t highlight the scial respnsibility f each part. In the future, Eva Tan hpes t vlunteer at lcal elementary schls t speak with students abut healthy eating and lifestyle chices. Eva plans t use her expertise t educate students in her cmmunity abut healthy eating. This is an excellent way t leverage her knwledge t prmte her brand in the cmmunity while ding gd After three years, Eva s Edibles plans t cntribute 1% f yearly net prfit t a lcal fd bank. Eva plans t cntribute a percentage f her earnings t a charitable cause after 3 years f slid business activity. Nt nly is this great cmmunity engagement, but als a smart business decisin. Eva s scial respnsibility plan is well-defined and innvative. She strives t engage with the cmmunity in a psitive way and has a plan t develp that partnership fr the future. Lk at the guidelines fr an exemplary scial respnsibility plan belw. Scial respnsibility plans shuld be tightly aligned with the missin statement. In this case, Eva may want t reevaluate her missin statement t make sure they bth fit well tgether. Is there rm fr imprvement here?

14 Student is able t: Explain the relatinship between themselves, their business, and their cmmunity Indicatr 1.5 Scial Respnsibility 4 Exceeds Expectatins SR Plan is well-defined, innvative, tightly aligned with missin statement 3 Meets Expectatins SR Plan is well-defined and smewhat aligned with missin statement 2 Belw Expectatins SR Plan may be unclear r is unrelated t missin statement 1 Little r N Value N SR plan prvided Hw T Scial respnsibility des nt need t be limited t the surrunding cmmunity. It is ften built initially frm within yur business and can affect emplyees, custmers, suppliers, investrs, and creditrs. Cnsider the culture and relatinships yu wuld like t cultivate within yur wrking cmmunity and begin t draft sme scial plicies and guidelines. Step 1 Examine yur missin statement and see which frm(s) f scial respnsibility are best fr yur cmpany. Which part f yur business r cmmunity d yu wish t serve? The fllwing list highlights sme f the mst cmmn beneficiaries f scially respnsible business practice. Emplyees Cmmunity Custmers Suppliers Investrs and Creditrs Envirnmentally Friendly Enterprises Energy-Efficient Wrkplace Cause-Related Marketing Philanthrpy Step 2 Once yu ve decided which area f yur business r cmmunity yu d like t serve, cnsider exactly hw yu d like t serve that cmmunity. Eva tackled scial respnsibility n three frnts: ging green within her cmpany by chsing envirnmentally respnsible vendrs, educating yuth in her cmmunity, and making a financial cntributin t a scially respnsible rganizatin. Step 3 Cnsider what a shrt-term and lng-term implementatin prcess wuld lk like. In the shrt term, Eva plans t wrk immediately with envirnmentally respnsible vendrs. This is smething can turn int a lng-term plicy. Anther lng-term plicy f Eva s is that, nce she is financially capable, she will dnate a percentage f her prfits t a lcal fd bank.

15 Step 4 - Write a shrt paragraph describing what scial respnsibility elements yu will implement in yur business. Curriculum Cnnectin Chapter 5, Sectin 2 n pages Wrkbk pages 46-50

16 1.6 Qualificatins The qualificatins sectin illustrates any relevant educatin, licenses, certificatins, interests, and wrk experience that enables yu t becme a successful business wner. This als gives ptential investrs and business partners a chance t learn mre abut yu. Exemplar Explained Eva s qualificatins make her an excellent fit fr the fd service industry. Her credentials include relevant academic and prfessinal experiences as well as training and certificatin in the culinary arts. Eva Tan has an assciate s degree in Business Management frm Clumbus State Cmmunity Cllege. As Assistant t the Directr f the Campus Dining Services at Ohi State University, Eva acquired experience in the management f varius types f fdservice peratins, as well as catering. Here, Eva highlights her qualificatins and hw they re applicable t her business. She has a degree in business management as well as practical management experience in the fd services industry at Ohi State University. She als ran her wn event-planning business, Eva s Entertainment Services, fr fur years. Eva has cmpleted an intensive training curse ffered by the U.S. Persnal Chef Assciatin (USPCA), and has received the federally recgnized trademarked designatin f Certified Persnal Chef (CPC). Eva supplements her initial credentials with experience n her wn. Her event planning experience shws that she has prir experience with entrepreneurship as well as federal certificatin and intensive training. Eva has many persnal characteristics and skills that are particularly valuable in the persnal chef business, including: a passin fr cking, attentin t detail, rganizatinal skills, flexibility, creativity, sciability, ability t multi-task, high physical energy, and endurance. This is where Eva dives deeper and explains hw her persnal characteristics make her a gd fit fr small business wnership in the fd service industry. She highlights her strengths here. What are Eva s qualificatins fr running her business? Cnsider what she says she is passinate abut and what unique knwledge she may bring t Eva s Edibles. Has she presented them clearly? Use the rubric belw t evaluate Eva s qualificatins.

17 Student is able t: Explain the relatinship between themselves, their business, and their cmmunity Indicatr 1.6 Qualificatins 4 Exceeds Expectatins Lists 3 r mre qualificatins that prvide cmpelling ratinale fr student running business 3 Meets Expectatins Lists 3 qualificatins that are all cnnected t running the business 2 Belw Expectatins Lists 3 qualificatins but qualificatins are nt all cnnected t running the business 1 Little r N Value Lists less than 3 qualificatins r qualificatins listed are irrelevant t running the business Hw T Fr this sectin, ask yurself hw yur current educatin, wrk experience, and interests qualify yu t start yur wn business. Step 1 Refer back t yur SWOT analysis. As we cntinuusly cnnect ur learning fr every aspect f the business plan, take a lk back at yur SWOT analysis t examine yur list f strengths and weaknesses. Step 2 - Perfrm an in-depth self-assessment f yur persnal characteristics and skills t determine yur strengths and weaknesses as they relate t yur business. Remember, yur SWOT analysis may nt g int great detail at this pint. What d yu cnsider t be yur strngest attributes? Where d yu see rm fr grwth? Evaluate each f these as they relate t the characteristics and skills necessary fr yur business t be successful. Step 3 Fr areas f imprvement, cnsider skills that can be develped thrugh training and practice. Fr example, yu didn t knw hw t tie a she when yu were brn. Yu learned this skill thrugh practice and the help f adults. Sme f the basic skills entrepreneurs require are: Business Skill: An understanding f hw t create and manage a business Cmmunicatin Skill: The ability t listen well, write well, and speak well Cmputer Skill: The ability t use technlgical tls effectively Decisin-Making and Prblem-Slving Skills: The ability t apply lgic, infrmatin, and past experiences t new decisins and prblems. Mathematical Skill: The ability t use math t create budgets, keep accurate recrds, and analyze financial statements Organizatinal Skill: The knack fr keeping tasks and infrmatin in rder; the ability t plan well and manage yur time Peple Skills: The ability t persuade and mtivate peple; an understanding f be a leader and wrk in a team. Step 4 Fcus n yur strengths. What are 3 r mre qualificatins that prvide a cmpelling ratinale fr yu t run yur business? This may include past

18 educatin, wrk experience, certificatin, interests, r persnal attributes. Nw, write a shrt bigraphy abut yurself using thse qualificatins, fcusing n the specific skills yu have that relate t yur industry. Curriculum Cnnectin SWOT Analysis Chapter 1, Sectin 2 in Entrepreneurship: Owning Yur Future pages Wrkbk pages 6-10

19 Part 2: Market Research 2.1 Market Research As we discussed in Chapter 1, yu start a business because yu see an pprtunity develp frm a great idea. Yu have already identified a cnsumer need r want that can be fulfilled with the help f a new business, but hw will yu determine wh yur ptential custmers will be? Each business must stay infrmed abut its market and market research is an rganized way t gather and analyze the infrmatin needed t make gd business decisins. When cnducting market research, fcus n three main areas: business envirnment, custmers, and cmpetitin.

20 Exemplar Explained The persnal chef business is ne f the fastestgrwing segments in the fd-service industry. Accrding t the American Persnal and Private Chef Assciatin (APPCA), abut 9,000 persnal chefs are currently serving sme 72,000 clients natinwide. Thse numbers are expected t duble ver the next five years. Eva prvides an verview f the verall industry in this prtin f her business plan. It prvides the reader with initial cntext. Remember, yur audience will nt necessarily be familiar with yur industry, s it s very imprtant t start ff with imprtant industry backgrund numbers. Of the 301,800 Clumbus husehlds that have tw r mre peple, 36.7% have annual, cmbined incmes f ver $50,000. The peple in this market have busy lifestyles and want healthy dinners. In general, the target husehlds g ut t dinner r rders in fur ut f five wrkdays each week. Eva s Edibles will prvide peple an pprtunity t stay healthy, withut cmprmising a busy and prductive lifestyle. Eva begins t narrw her fcus here. She knws that her business is ging t primarily serve husehlds with an incme strng enugh t supprt spending n a persnal chef service. Nt nly des she fcus n husehlds, but she als ntes that these husehlds will be thse with tw r mre peple. Fine details are imprtant here when analyzing yur market. As an intrductin t her market, Eva des a gd jb f identifying her target gegraphic area and briefly examining cmpetitin, trends, and market size. Student is able t: Determine the market size fr their business by using primary and secndary surces Indicatr 2.1 Market Research 4 Exceeds Expectatins Crrectly identifies industry name and size; cnnects current trends t further supprt business pprtunity Ptential target market size is accurate, based n clear quantitative reasning, and includes studentgenerated primary research 3 Meets Expectatins Student crrectly identifies industry name and size fr their business Ptential target market size is accurate and based n clear quantitative reasning 2 Belw Expectatins Incrrectly identifies either the industry name r size, thugh prvides evidence research Ptential target market size is inaccurate but based n clear quantitative reasning 1 Little r N Value Incrrectly identifies industry name and size; research nt cmpleted Ptential target market size is inaccurate; n quantitative ratinale prvided

21 Hw T Research in these three areas is the key t understanding yur market. When cnducting market research, try t express yur findings using numbers in rder t prvide yur audience with rganized infrmatin. Step 1 Find the ttal ppulatin f yur target gegraphic area. This is typically the city in which yu plan t start yur business. Step 2 Begin t narrw yur market using the fllwing criteria: The zip cde where yu will be selling yur prduct The age range f yur target cnsumer The gender f yur target custmer (if applicable) The incme level f yur target custmer (if applicable) Curriculum Cnnectin Chapter 7, Sectin 1 n pages f Entrepreneurship: Owning Yur Future Wrkbk pages 61-65

22 2.2 Target Market As a new business wner, yu may be tempted t try t sell yur prduct r service t as many custmers as pssible. Hwever, mst prducts are nly suitable fr a limited number f custmers wh are the mst likely t buy the prduct r service. Exemplar Explained Eva s target market included prfessinal families and cuples in the Greater Clumbus area with incmes presumably high enugh t supprt a lw-cst persnal chef service. Her target cnsumers desire t eat healthy fd at hme while spending little time in the kitchen cking and cleaning up. Her target market is identified as fllws: Demgraphic Infrmatin Prfessinal cuples and families, with husehld incmes f ver $50,000. Eva fcuses n ccupatin, marital status, and incme t describe her demgraphic. This is critical t her market. Gegraphic Infrmatin Greater Clumbus, Ohi area. Gegraphically, Eva is fcusing n her immediate cmmunity. This may nt seem like a brad reach, but it make a hme chef service much mre manageable. Psychgraphic Infrmatin Desires healthy fd, ften dualincme husehlds living hectic lives, hardwrking, wuld like t spend mre time at hme withut increasing time in the kitchen cking and cleaning up. Eva discusses the lifestyles f her target market that creates prblems and needs. The busy and hectic lifestyle Buying Patterns Eats ut ften (4 times a week) but wuld like t reduce the cst f eating ut. Eva uses gd market research t target her market further here. She wants t find families that eat ut ften and wuld get the mst benefit frm her service.

23 Eva seems t d a gd jb finding relevant infrmatin in all fur key categries. Hw wuld yu rate Eva s target market research? Des it dive deep enugh int her target market? Student is able t: Identify an apprpriate target market in terms f demgraphics, psychgraphics, and cnsumer behavirs Indica tr 2.2 Target Market 4 Exceeds Expectatins Extensive and relevant demgraphic, gegraphic and psychgraphic infrmatin; linked t prduct r service s features and benefits 3 Meets Expectatins Relevant demgraphic, gegraphic and psychgraphic infrmatin; linked t prduct r service s features and benefits 2 Belw Expectatins Limited r irrelevant demgraphic, gegraphic and psychgraphic infrmatin; smewhat linked t prduct r service s features and benefits 1 Little r N Value Limited r irrelevant demgraphic, gegraphic and psychgraphic infrmatin; nt linked t prduct r service s features and benefits Hw T Demgraphic Infrmatin: The bjective scial and ecnmic facts abut peple such as age, gender, marital status, family size, ethnic backgrund, educatin, ccupatin, and annual incme. Gegraphic Infrmatin: Grupings that include gegraphic regins such as states, cunties, cities, neighbrhds and climates. Psychgraphic Infrmatin: Psychlgical characteristics f custmers such as attitudes, pinins, beliefs, interests, persnalities, lifestyles, plitical affiliatin, and persnal preferences. Buying Patterns: What is the current buying behavir f yur target market? Cnsider current trends and which f thse trends yur target cnsumers may be trying t change. Step 1 Describe yur target market Remember, the characteristics yu identify are nt limitatins n wh culd be yur custmer, but rather a way t estimate hw many peple are the MOST LIKELY t be interested in yur prduct r service Step 2 Estimate the ppulatin f yur target market Ttal ppulatin f targeted gegraphic area: Pick the zip cde(s) yu are ging t fcus n, and use t calculate the ttal ppulatin in that/thse zip cde(s). Ppulatin f target market: Use ZipSkinny.cm r Census.gv t find the percentage f the ttal ppulatin that meets yur target market criteria. Multiply this percentage by the Ttal Ppulatin. Target Market (based n survey): Multiply the Target Market by the percentage f peple wh wuld be willing t try the prduct r service.

24 Use the chart n the fllwing page t guide yu thrugh the market analysis prtin f the business plan. Market Analysis Industry Name Industry Size What is yur prduct r service? Hw much is being spent in yur industry? Ttal Ppulatin The ttal ppulatin f my target area is peple (accrding t the statistics f yur zip cde. Insert Ttal Ppulatin here. % f ppulatin in target age & gender x Ttal Ppulatin = Insert Target Market here. Target Market Ptential Market Size I m targeting wmen between the ages f and with an annual incme between $ and $ Based n a recent survey, % f respndents in my target market are interested in purchasing my prduct % f peple surveyed wh are interested in yur prduct/service x Target Market 1 Nw, fill in yur final Gegraphic Ppulatin, Target Market Ppulatin Infrmatin, and Market Size Infrmatin belw.

25 Target Market Size Ttal Ppulatin f Target Gegraphic Area Ppulatin f Target Market. Market size (based n survey) Step 3 Estimate Industry Statistics Identify what industry yur business is a part f. Fr example, a restaurant is part f the fd service industry. Next, research hw big yur industry is. This is the grss annual sales r grss receipts, meaning the ttal amunt f mney the businesses in that industry make in sales in ne year. Use bizstats.cm t get started by ging t

26 Step 4 Summarize what yu ve fund. Write a brief paragraph r tw, summarizing yur target demgraphics, target market ppulatin, and industry size. What are judges lking fr? Extensive and relevant demgraphic, gegraphic and psychgraphic infrmatin that is linked t prduct r service s features and benefits Crrectly identifies industry name and size Cnnects current trends t further supprt business pprtunity Ptential target size is accurate, based n clear quantitative reasning, and includes student-generated primary research Curriculum Cnnectin Chapter 7, Sectin 1 pages f Entrepreneurship: Owning Yur Future

27 2.3 Cmpetitrs Anther critical area f market research invlves identifying the rival businesses in yur industry that will cmpete fr yur target market. The infrmatin yu cllect abut yur cmpetitin will be f tw types: direct cmpetitin and indirect cmpetitin. Exemplar Explained Because Eva is in the fd service industry as a persnal chef, her direct cmpetitrs include persnal chefs in the greater Clumbus area. Once she identified the brad range f cmpetitin, she narrwed her direct cmpetitrs by credentials, pricing, and marketing structure. Her indirect cmpetitin is slightly different. Keep in mind that indirect cmpetitrs may fill the same custmer need r want, but with a different prduct r service. Fr example, althugh Eva s service is that f a persnal chef, fast fd and takeut establishments with lwer prices will have a negative effect n her business. Examine each indirect cmpetitr and identify effective ways t differentiate yur prduct. Direct Cmpetitin: There are currently 15 persnal chefs, r businesses perfrming sme type f persnal chef service, in the greater Clumbus area. Of these, nly seven advertise that they are members f ne f the prfessinal persnal chef assciatins. Based n Website research, nly ne direct cmpetitr is federally recgnized as a Certified Persnal Chef. Only tw indicated specifically that they were fcused n preparing healthy meals. On average, similar persnal chefs in the Clumbus area charge between $300 and $500 fr their chef services. Grceries are an additinal cst. Eva s Edibles will charge $325, including grceries, making its pricing very cmpetitive. Eva has carefully examined her direct cmpetitin by finding persnal chefs in the Greater Clumbus area. She then fcuses n her cmpetitive advantages f prices and qualificatins Indirect Cmpetitin: Clumbus area restaurants, including fast fd and takeut establishments, \ will indirectly cmpete with Eva s Edibles. The upscale restaurants are generally expensive and will nt be an everyday ptin. The majrity f lwerpriced, family-style, and fast fd restaurants ffer meals much lwer in quality and nutritin than the dinners that will be prvided by Eva s Edibles. Eva s indirect cmpetitin is nt as clear t define. These are cmpetitrs that fill custmer needs with a different prduct r service. In this case, Eva s Edibles is cmpeting with restaurants.

28 Did Eva discuss enugh abut her cmpetitin in her business plan t meet expectatins? Where wuld yu rate her perfrmance n the rubric? Student is able t: Differentiate their business frm direct and indirect cmpetitrs Set a lng-term visin fr their business based n their understanding f market trends and future challenges Indicatr 2.3 Cmpetitrs 4 Exceeds Expectatins Identifies mre than 3 direct cmpetitrs and prvides inf abut their prices, lcatin, quality, and reputatin; prvides cmparisn between cmpetitrs and wn business Identifies multiple indirect cmpetitrs and prvides inf abut their prices, lcatin, quality, and reputatin; cmments n why cmpetitrs are indirect 3 Meets Expectatins Identifies 3 direct cmpetitrs and prvides inf abut their prices, lcatin, quality, and reputatin Identifies multiple indirect cmpetitrs and prvides inf abut their prices, lcatin, quality, and reputatin 2 Belw Expectatins Identifies 2 direct cmpetitrs and prvides inf abut their prices, lcatin, quality, and reputatin Identifies an indirect cmpetitr and prvides inf abut their prices, lcatin, quality, and reputatin 1 Little r N Value Identifies 2 r fewer direct cmpetitrs but des nt prvide inf abut their prices, lcatin, quality, and reputatin Inf n indirect cmpetitrs missing r inaccurate Hw T Summarize yur direct and indirect cmpetitin by describing what ther businesses exist and hw they are similar r different frm yur cmpany. Direct Cmpetitrs Businesses in yur market that sell a prduct r service similar t yurs. Fr example, McDnald s and Burger King are direct cmpetitrs. Indirect Cmpetitrs Businesses that sell different prducts r services frm yurs but fill the same custmer need r want. Fr example, Tac Bell and McDnalds are indirect cmpetitrs.

29 What are judges lking fr? Identifies mre than 3 direct cmpetitrs and prvides inf abut their prices, lcatin, quality, and reputatin Prvides cmparisn between cmpetitrs and wn business Cmments n why cmpetitrs are indirect Curriculum Cnnectin Chapter 7, Sectin 2 n pages f Entrepreneurship: Owning Yur Future Wrkbk pages 66-70

30 2.4 Cmpetitive Advantage What puts yur business ahead f the cmpetitin? Yur cmpetitive advantage culd cnsist f ne r mre unique characteristics that distinguish yur business frm thers. Think abut: What prduct r service can yur business prvide that yur cmpetitrs dn t? What mix f prducts r services can yur business prvide that yur cmpetitrs dn t? What specialized selling r delivery methd can give yur business a cmpetitive advantage? In what unique ways can yur business meet custmers wants r needs? Exemplar Explained After a careful lk at her cmpetitin, Eva determined that Eva s Edibles has three majr cmpetitive advantages: 1. It will fcus n custmer service by allwing clients t chse their menus. 2. It will fcus n preparing healthy versins f client favrites and, after cnsultatin with clients, will tailr dinners t meet their special dietary needs. 3. Eva Tan will be ne f the few persnal chefs in Clumbus t have the federally recgnized designatin f Certified Persnal Chef. Eva Tan is an active member f the United States Persnal Chef Assciatin. Accrding t the rubric, t exceed expectatins yu are expected t state at least 3 clear and valid cmpetitive advantages that yur business has ver its cmpetitin. This is where a cmpetitive matrix (belw) will be very helpful.

31 Student is able t: Differentiate their business frm direct and indirect cmpetitrs and set a lng-term visin fr their business based n their understanding f market trends and future challenges Indicatr 2.4 Cmpetitive Advantage 4 Exceeds Expectatins States 3 clear and valid cmpetitive advantages; uses research n cmpetitrs t supprt claims 3 Meets Expectatins States 3 clear and valid cmpetitive advantages 2 Belw Expectatins States 2 cmpetitive advantages, r advantages are unclear 1 Little r N Value States 1 r n cmpetitive advantages, r advantages invalid Hw T When analyzing direct cmpetitrs, a helpful tl t use is a cmpetitive matrix (a grid that cmpares the characteristics f yur business with thse f yur direct cmpetitrs). List at least 3 cmpetitive advantages yur cmpany has ver its cmpetitrs. In ther wrds, what makes it better than the businesses that already exist? What yu write shuld be a clear descriptin f yur cmpetitive advantage and hw it crrects what yur cmpetitrs dn t d well.

32 What are judges lking fr? States 3 clear and valid cmpetitive advantages Uses research n cmpetitrs t supprt claims Curriculum Cnnectin Chapter 7, Sectin 2 n pages f Entrepreneurship: Owning Yur Future Wrkbk pages Cmpetitive Matrix

33 2.5 Business Grwth Grwing a business invlves making changes that result in greater sales. Mst businesses expand internally by adding new prducts r services. Factrs that affect the decisin t grw a business are the cnditin f the business, the ecnmic climate, and the life gals f the business wner. Exemplar Explained In ur exemplar, Eva was able t determine bth shrt term and lng term business gals as her custmer base becmes mre prfitable. Shrt-Term Business Gals: In its first year, Eva s Edibles plans t build a prfitable custmer base s that, by the end f the year, it will be cking in clients kitchens 22 days in every mnth. This will allw the cmpany t reach its revenue gal f $81,900. Additinally, the cmpany expects t pay $1,200 against the initial lan f $2,000 received frm Eva Tan s parents. Lng-Term Business Gals: Eva s Edibles anticipates that, after a prfitable custmer base has been built, the cmpany will develp an intensive grwth strategy. Eva intends t increase her market penetratin by leasing r buying a cmmercial kitchen. This will allw increased strage and allw the cmpany t serve mre clients and increase its revenues and prfits. Dinners will be delivered t custmers. Eva s shrt term business gals are aligned with her market research and her shrt-term sale prjectins. This makes it much easier fr her t set gals fr the first year f business. Eva will fcus n building a strng custmer base t supprt her lng-term business gals. Once she reaches maximum capacity, she will expand her business utput by leasing r buying a cmmercial kitchen. This will allw her t ck ff-site, increase strage, and deliver meals t clients. Are Eva s shrt and lng term gals attainable and supprted by market research? Students ften struggle t align market research and sales prjectins with lng-term gals. Think abut where yu wuld rate Eva n the fllwing rubric fr Business grwth while yu examine yur wn business grwth strategy. Student is able t: Create a lngterm visin fr their business based n their understanding f market trends Indicatr 2.5 Business Grwth 4 Exceeds Expectatins N/A 3 Meets Expectatins Shrt- and lngterm business gals are attainable and time-bund; gals ratinale linked t market research 2 Belw Expectatins Shrt- and lngterm business gals may nt be attainable r they re nt timebund 1 Little r N Value Gals are missing r are irrelevant t the business

34 Hw T In 2-3 sentences each, please describe the gals yu have fr yur business in the shrt-term (ne year) and lng-term (five year r mre). Use the fllwing discussin pints t evaluate the best time fr grwth. Cnditin f the Business: Has the business becme gd at what it des? Des it make cnsistent prfit while achieving quality standards and custmer satisfactin targets? Can the wner keep up with the day-t-day demands f the business and devte time t grwth? A business is ready t grw when it has a slid, sustainable fundatin. Ecnmic Climate: Cnsider the ecnmic cnditins at the lcal, natinal and glbal levels. Ecnmies tend t fllw cycles f upturns and dwnturns. The ecnmic climate in which the business perates is very imprtant. Life Gals f the Business Owner: Grwing a business is as much a persnal decisin as it is an ecnmic decisin. Keep yur life gals in mind as business grwth takes n new pressures and demands mre time and mney. What are judges lking fr? Shrt-term and Lng-term gals are attainable and time-bund Gals ratinale is linked t market research Curriculum Cnnectin Chapter 21, Sectin 1 n pages f Entrepreneurship: Owning Yur Future Wrkbk: Pages

35 2.6 Challenges Business grwth invlves six practical challenges f space, business structure, materials and equipment, infrmatin technlgy, peple and skills, and mney. These challenges may require yu t revise yur business plan peridically. Exemplar Explained Althugh these are six mst cmmn business challenges, yu d nt need t categrize all challenges in this fashin. Eva tk a different apprach t her business challenges by identifying them as shrt term and lng term challenges. Shrt-Term Business Challenges: The biggest challenge facing Eva s Edibles in its early years will be its business mdel. Cking dinners at clients hmes will limit the number f clients that the cmpany can serve. Lng-Term Business Challenges: The biggest lngterm challenge fr the cmpany is space. Eva s Edibles will need t change its business mdel and lease r buy a cmmercial kitchen t increase the number f clients. This, in turn, may require additinal financing and will almst certainly require additinal emplyees, particularly thse with sme degree f cking skills. Eva is realistic abut her shrt term business challenges. Althugh it may seem easy t have a traveling hme chef business, Eva presents sme valid shrtterm challenges with her current business structure. Eva is lking int ptentially changing her business mdel in the future. This is very cmmn with new businesses. Did Eva present valid cncerns fr her business? Is there anything else she shuld be cnsidering either shrt-term r lng-term?

36 Student is able t: Indicatr 4 Exceeds Expectatins 3 Meets Expectatins 2 Belw Expectatins 1 Little r N Value Create a lngterm visin fr their business based n their understanding f market trends 2.6 Challenges N/A Shrt- and lng-term challenges are insightful, relevant, and explicitly infrmed by market research Shrt- and lng-term challenges are smewhat unclear r smewhat irrelevant Challenges are missing r are irrelevant t the business Hw T Shrt- and lng-term challenges are insightful, relevant, and explicitly infrmed by market research. In 2-3 sentences each, describe the challenges yu fresee fr yur business in the shrt-term (ne year) and lng-term (five year r mre). Yu may want t use sme f the fllwing categries t shape thse challenges. Space: A grwing business usually requires mre physical space if the existing building r rms are nt large enugh t handle the expansin. Business Structure: Yu may need t re-examine the existing rganizatinal structure f yur business in rder t meet lng term challenges. Materials and Equipment: Grwth may require yu t purchase mre materials, equipment, ffice furniture and supplies in rder t accmmdate new demands. Infrmatin Technlgy (IT): This is the use f cmputer systems, hardware, and sftware t stre and manage infrmatin. As yur business grws, IT demands fr accunting, purchasing, inventry, payrll and ther peratins will increase accrdingly. Peple and Skills: A grwing business almst always needs mre emplyees, especially at the management level. Additinally, existing staff may have t be trained in new skills in rder t achieve successful grwth.

37 Mney: Business grwth requires financing. This mney can cme frm the business itself r frm utside surces in the frm f lan r dnatins. What are judges lking fr? Shrt and lng term challenges are insightful, relevant, and explicitly infrmed by market research. Curriculum Cnnectin Chapter 21, Sectin 2 n pages f Entrepreneurship: Owning Yur Future Wrkbk: Pages

38 Part 3: Prmtin and Sales 3.1 Marketing Plan Cnsider yur 5 Ps f marketing when cming up with a way t reach yur custmers. What will be mst attractive abut yur t the target market? With the help f a marketing matrix, yu can put tgether a plan that highlights all custmer benefits and integrate this int yur presentatin. Exemplar Explained Eva s Edibles plans t market exclusively t prfessinals with an average annual incme f $50,000. Based n her research, Eva fund that many prfessinals lived hectic lives and didn t have time fr shpping and cking. The marketing plan will highlight the fllwing custmer benefits: Less time spent planning and shpping fr dinners Less time spent in the kitchen cking and cleaning up Less mney spent eating ut Eva is eliminating the negative aspects f families preparing meals the traditinal way. Mre time t spend with friends The cnvenience f eating dinner whenever the client wishes Eva highlights tw psitive utcmes that Eva s Edibles can bring t its custmers Delicius and healthy dinners tailred t the client s persnal chices Dinner chices that can be tailred fr diabetics, vegetarians, and thse wh need lw-chlesterl r lw-sdium meals Eva makes a pint t fcus n the additinal value f the Eva s Edibles service. She is specific and make sure she accunts fr ptential clients with dietary needs.

39 Eva highlights several benefits and distinct features fr her service. Hw wuld yu rate her explanatin f custmer benefits? It is t clear and tailred t her target market? Student is able t: Indicatr 4 Exceeds Expectatins 3 Meets Expectatins 2 Belw Expectatins 1 Little r N Value Cmmunicate hw their prduct r service benefits members f their target market 3.1 Marketing Plan Highlights 5 r mre distinct features f prduct r service and thrughly explains hw these will benefit members f target market; ratinale supprted by market research Highlights 5 r mre distinct features f prduct r service and explains hw these will benefit members f target market Highlights 4-5 distinct features f prduct r service but explanatin f custmer benefits are general and nt tailred t members f target market Highlights 3 r less features; features are prly described and nt cnnected t cnsumer benefits Hw T Marketing is much mre than prmtin. It is a way f presenting yur business t yur custmers and clearly cmmunicating the value f yur prduct r service. Think abut yur target market and the 4 P s Prduct, Place, Price & Prmtin. What is it abut yur prduct r service that the grup f peple yu identified in Sectin 2.2 will like, want, r need? Belw, please identify at least 5 custmer benefits that yur marketing plan will highlight. Nw, in 1-2 sentences summarize yur market plan. This shuld include yur target market and anything yu want assciated with yur brand.

40 What are judges lking fr? 5 r mre highlighted distinct features f yur prduct r service that are thrughly explained. An understanding f hw these will benefit members f target market with ratinale supprted by market research Curriculum Cnnectin Chapter 8, Sectin 1 n pages f Entrepreneurship: Owning Yur Future Wrkbk: Pages Marketing Matrix

41 3.2 Prmtin Prmting a prduct is an nging task fr an entrepreneur. An effective prmtinal plan is designed nt nly t seek new custmers, but als t retain current custmers. Prmtins are a frm f cmmunicatin and persuasin that we see daily. Hw will yu generate attentin and interest in rder t mtivate custmers t buy yur prduct? Prmtinal activities utilize varius cmmunicatin channels t send messages t ptential custmers. Nw that yu ve determined which frms f cmmunicatin wuld be mst helpful t yur prduct, recrd a detailed descriptin f yur prmtinal strategy int this sectin. Exemplar Explained Fr example, Eva came up with five types f prmtinal activities: Establishing a website, maintaining a referral listing n the USPCA website, in-stre prmtins, prmtins at lcal events, and prgrams fr retaining current clients. Cmpany Website: Eva s Edibles will cnstruct its wn Website, which will prvide full infrmatin abut services and display a selectin f dinner menus. The Website will ffer mnthly catering prmtins and ffer a sign-up list fr prspective clients. Sample dinners will be shwcased. The Website will prmte Eva Tan as ne f the few persnal chefs in the Clumbus area wh has the federally recgnized designatin f Certified Persnal Chef. It will indicate that Eva Tan is an active member f the United States Persnal Chef Assciatin. USPCA Referral Website: Eva s Edibles will use a referral listing prvided by the USPCA. Because f her membership in the USPCA, Eva Tan can access its referral listing at Eva s Edibles will be able t create and mdify its listing, as well as track listing statistics. Accrding t the USPCA, this service is the mst effective, efficient methd t put custmers and persnal chefs in tuch with each ther. Annually, hireachef.cm lgs ver 500,000 listing views, and 95,000 clicks fr mre infrmatin. These statistics represent mre than simple Web-page hits, which can be deceiving. The hireachef.cm system has actual clients reviewing persnal chef pages and making cntact. Inquiries frm ptential clients are sent directly t the chef s accunt.

42 In-Stre Prmtins: Eva s Edibles plans t ffer in-stre prmtins at lcal ckware shps n a regular basis. One stre, The Wire Whisk, has agreed t hst an hur-lng presentatin by Eva Tan every ther week, which will be dedicated t healthy eating and featuring the cmpany s dinners. At each event the cmpany will ffer a brchure describing its philsphy and prvide sample menus. Prmtins at Lcal Events: Eva s Edibles will als participate in lcal events at shpping malls, cultural fairs, envirnmental exhibits (Earth Day), and ther apprpriate venues. It will ffer free samples, gift baskets, and discunt raffles. Eva s will ffer its brchure at each f these events as well. Strategies fr Retaining Current Clients: Eva s Edibles will prvide current clients with extras fr their lyalty fr example, free snacks and desserts after purchasing three 5-Dinner Plans. Anther strategy will be t ffer current custmers a 10% discunt when they refer her t a ptential client. Eva seems t have sund prmtinal strategies. Are they feasible? Hw will she measure the level f success fr each f her strategies? Student is able t: Indicatr 4 Exceeds Expectatins 3 Meets Expectatins 2 Belw Expectatins 1 Little r N Value Prmte their business t members f their target market thrugh multiple mdalities (physical and digital) 3.2 Prmtin Describes 5 r mre feasible prmtinal strategies in detail and explains hw each is tailred t reach members f target market; ratinale is supprted by market research (7-8 pints) Describes 5 r mre feasible prmtinal strategies in detail and explains hw each is tailred t reach members f target market (5-6 pints) Describes 4-5 feasible prmtinal strategies but strategies are general and nt tailred t members f target market (3-4 pints) Describes 3 r less prmtinal strategies; strategies are unclear and nt cnnected t members f target market (1-2 pints)

43 Hw T The elements f any prmtinal mix usually fall int ne f six categries: Advertising A public, prmtinal message paid fr by an identified spnsr r cmpany. Fr example, prmtin that is fund n any frm f media, including the internet, TV, radi, newspaper, etc. is advertising. Visual Merchandising A methd f using artistic displays t attract custmers int a stre. It als refers t hw prducts are visually prmted inside a stre. Vide advertising n supermarket shpping carts is an example. Public Relatins (PR) Activities aimed at creating gdwill tward a prduct r cmpany. Fr example, Jhnsn & Jhnsn Health Care Cmpany launched a five-year public relatins campaign t educate the public n reducing childhd injuries. Publicity A frm f prmtin fr which a cmpany des nt pay. It is smetimes referred t as free advertising. The gal f publicity is t get attentin in nline and traditinal media. News cverage, feature articles, talk shw interviews, blg pstings and letters-t-the-editr are examples f publicity tactics. Persnal Selling Direct (ne-t-ne) effrts made by a cmpany s sales representatives t get sales and build custmer relatinships. This includes hw salespeple are trained and expected t act. The primary trend is tward increased prfessinalism n the part f sales persnnel. Sales prmtin A shrt-term activity r buying incentive, such as cnducting prduct demnstratins r prviding cupns r free samples. Think abut specific ways yu might implement the techniques described abve fr yur business. List them and then explain hw the strategy will wrk and why it will be effective. Summarize yur general prmtinal strategy, including the mst imprtant elements listed abve. Use the prmtinal mix graphic belw as a guide.

44 What are judges lking fr? 5 r mre feasible prmtinal strategies described in detail and explained hw each is tailred t reach members f yur target market Ratinal supprted by market research Curriculum Cnnectin Chapter 8, Sectin 2 n pages f Entrepreneurship: Owning Yur Future Wrkbk: Pages 76-80

45 3.3 Sales Methds Effective sales methds help t reach custmers by custmizing cmmunicatin methds and building persnal relatinships. Hw will yu craft yur sales strategy? Use this sectin t describe hw yur custmer will learn abut and acquire yur prduct. Once yu ve established yur prmtinal mix, frmulate a budget fr yur plan by itemizing yur expenses and frecasting the mnthly cst fr each. Exemplar Explained Eva lays ut her sales structure belw. She pints ut which sales structure she will priritize (relying heavily n persnal selling) and fllws her strategies with steps the custmer fllws t purchase the service. Eva s Edibles will depend heavily n persnal selling. This invlves cntacting past custmers f the eventplanning business and pursuing business cntacts thrugh the Ohi State University. Direct mail pieces and brchures will have a mail-back card t capture a prspective client s address and telephne number. Eva Tan will fllw up all mail-back cards persnally by r phne. Steps a cnsumer fllws t purchase my service: 1. Custmer will cntact Eva by phne r fr a free meal plan cnsultatin. 2. Custmer will schedule an appintment fr Eva t ck ne meal package (five dinners) custmers must be at hme during first visit s that Eva can be let in. (Hmewners will nt need t be present during subsequent visits if they chse t give Eva a spare key s she can let herself in.) Future selling strategies will include asking custmers fr referrals and recmmendatins f ptential clients. Again, Eva will get in tuch with each prspect persnally.

46 Student is able t: Indicatr 4 Exceeds Expectatins 3 Meets Expectatins 2 Belw Expectatins 1 Little r N Value Create effective strategies t sell t and retain custmers in their target market 3.3 Sales Methds Sales methds are specific, feasible and tailred t members f target market; innvatively uses infrmatin frm the cnsumer prfile t supprt methds Sales methds are specific, feasible and tailred t members f target market Sales methds are identified, but may nt all be feasible r apprpriate fr members f target market Sales methds are missing r are irrelevant t members f target market Hw T It is imprtant t cnsider the prcess by which yur prduct will mve frm yu t yur custmer. This prcess is mst ften referred t as distributin r place f the 4 P s in the marketing mix. Belw, yu will find sme f the mst cmmn distributin channels. Cnsider what is best fr yur cmpany and yur target custmer, remembering that yu can utilize mutiple channels. Step 1 - Describe the prcess frm the cnsumer s perspective, and then summarize the prcess frm yur perspective. Pssible Distributin Channels Direct Distributin (B2C) Yu/yur business sells directly t yur end user r cnsumer. Direct Marketing Systems: In this system, the cnsumer buys the prduct based n infrmatin gained frm impersnal cntact with the marketer. Fr example, this culd ccur when the cnsumer visits the marketer s website r rders frm the marketer s catalg. He/she can all buy based n infrmatin gathered thrugh sme persnal cmmunicatin with a custmer service persnnel wh is nt a salespersn anc can be reached thrugh a tll-free number. Direct Retail System: In this type f system the martketer perates his wn retail stres. An example f this includes Starbucks. Persnal Selling Systems: In this system, the distributin f the prduct is carried frward by peple whse main respnsibility is creating and managing sales (fr instance a salespersn). He/she persuades the buyers t place an rder. This rder may nt be handled by the salespersn, but thrugh websites r tll-free

47 telephne numbers. The sales persn plays a vital rle here in generating sales. Assisted Marketing System: In this frm f distributin, the marketer handles the distributin f his prduct and helps it reach the end user directly. Hwever, he needs assistance frm thers t spread awareness abut his prduct amng custmers. An example f assisted marketing system is Ebay. Agents and brkers can als be included in this categry. Indirect Distributin (B2B) An intermediary buys and resells yur prduct t the public. Single-Party Selling System: In this system, the marketer invlves anther party t sell and distribute his/her prduct t the end user. An example f single-party selling ccurs when the prduct is sld thrugh large stre-based retail chains r thrugh nline retailers. In this case, the distributin system is als referred t as trade selling system. Multiple-Party Selling System: In multiple-party selling system the distributr invlves tw r mre resellers in the distributin prcess befre the prduct reaches the end user. This is mst likely t happen when a whlesaler buys the prduct frm the manufacturer and then sells it t the retailer. Multi-Channel (Hybrid) Distributin System A business that utilizes several distributin systems. Starbucks is als an example f this system. It uses direct retail when it sells its prducts in cmpany-wned stres, a direct marketing system by selling via direct mail and single party selling system is put t use when its prducts are sld thrugh grcery stres. Step 2 - List the steps a cnsumer fllws t purchase yur prduct r service and then summarize hw yu will distribute yur prduct What are judges lking fr? Sales methds are specific, feasible, and tailred t members f target market Innvatively uses infrmatin frm the cnsume prfile t supprt methds Curriculum Cnnectin Chapter 9, Sectin 1 n pages f Entrepreneurship: Owning Yur Future Wrkbk: Pages 81-85

48 3.4 Sales Estimates A key part f yur cmpany s financial planning prcess includes sales frecasting r the predictin f the amunt f future sales yur cmpany expects t achieve ver a certain perid f time. Prepare a sales frecast by analyzing current cmpany and market cnditins, reviewing past sales, and making educated predictins abut the future by estimating sales fr a specific time perid. Exemplar Explained Eva brke her sales estimates dwn t accunt fr her previus market analysis, peratin and maximum capacity, seasnality, and whether r nt she meets her breakeven pint. Factr Influence n sales Market Analysis Given the large number f target husehlds in the Greater Clumbus area (27,690 husehlds), Eva must nly sell t less than 0.08% f this ptential market t meet her sales estimates. Eva believes this is highly feasible. Maximum Capacity Eva has a maximum capacity f 7 units per week (42 hurs), which means she can serve a maximum f 28 custmers per mnth. As a result, Eva s sales estimates are aligned with her maximum capacity. Breakeven Units Seasnality Eva must sell at least 7 units per mnth t cver her perating expenses. Eva s sales estimates are abve her breakeven pint. Eva s business will nt be affected by seasnality because her clients will cntinue t eat dinner, regardless f the time f year. Eva then estimates mnthly sales and multiplies this by her per unit price t find her mnthly revenue Revenue = (Selling Price) x (Units Sld) Let s first lk at revenue fr the mnth f January. Using the equatin abve, Eva calculated her revenue fr this mnth as fllws: January Revenue = $325 x 20 Units January Revenue = $6,500

49 Mnth Units Revenue January 20 $6, February 20 6, March 20 6, April 20 6, May 21 6, June 21 6, July 21 6, August 21 6, September 22 7, Octber 22 7, Nvember 22 7, December 22 7, Annual Ttal 252 $81, Hw d Eva s sales estimates and sales influences cmpare t the sales frecast rubric? Highlight any areas fr imprvement and be sure t take nt f this when yu begin t map ut yur wn sales prjectins n the fllwing page. Student is able t: Indicatr 4 Exceeds Expectatins 3 Meets Expectatins 2 Belw Expectatins 1 Little r N Value Use primary and secndary research t realistically t frecast future sales 3.4 Sales Estimates Sales estimates are reasnable; prvide cmpelling ratinale based n market research, seasnality, maximum capacity, and break even units Sales estimates are reasnable; prvides ratinale based n market research, seasnality, maximum capacity, and break even units Sales estimates are smewhat reasnable r prvides unclear ratinale based n market research, seasnality, maximum capacity, and break even units Sales estimates are nt reasnable; ratinale is missing r inaccurate

50 Hw T When prjecting sales revenue, be sure t keep pricing in mind. Hw exactly will yur decide the price f ne unit f yur prduct? Refer back t the text fr mre infrmatin n ur 3 pricing strategies: Demand-Based Pricing - This methd fcuses n cnsumer demand. Hw much are custmers willing t pay fr a prduct? Cmpetitin-Based Pricing - This methd fcuses n what the cmpetitin charges. Cst-Based Pricing - This methd sets a prduct s price based n what it csts yur business t prvide it. Refer t the tables n the next page t guide yu thrugh the sales estimates and sales influences prtin f yur business plan.

51 Estimate yur mnthly sales, keeping in mind hw much free time yu have t prduce/wrk as well as hw much peple will realistically buy (demand). Then multiply the number f units by the unit price t calculate revenue. Mnth Units Revenue January $ February Factr Market Analysis Based n the research yu did in Sectin 2.1, what effect will yur market (demand) have n yur sales? Influence n sales March April May June July Maximum Capacity Cnsider hw many hurs a mnth yu can dedicate t the business, and divide that by hw lng it takes yu t create ne prduct r render ne service. August September Octber Nvember December Annual Ttal $ Break Even Units This rati is calculated in Sectin 4.8. Seasnality When, during the year, will custmers demand mre r less f yur prduct/service? What are judges lking fr? Sales estimates are reasnable; prvides cmpelling ratinale based n market research, seasnality, maximum capacity and break even units Curriculum Cnnectin Chapter 9, Sectin 2 n pages f Entrepreneurship: Owning Yur Future Wrkbk Pages 86-90

52 Part 4: Financial Infrmatin and Operatins 4.1 Definitin f One Unit Entrepreneurs need t knw their businesses are prfitable. One imprtant way t examine prfitability is t lk at hw much prfit the business makes each time it sells ne item. A unit f sale, r what the custmer actually buys frm yu, is the amunt f prduct r service yu use t figure ut yur peratins and prfit. T define ne unit, think abut what exactly yur business is selling. Fr example: if yu were a retailer and sld shes, yur unit f sale wuld be ne pair f shes. Hwever, if yu were a whlesaler and sld a minimum f five pairs at a time, then yur unit f sale wuld be a package f five pairs f shes. Exemplar Explained Accrding t Eva s business plan, ne unit is defined as cking five dinners fr a client in the client s kitchen Student is able t: Explain hw the business defines a unit and hw that unit is prduced Indicatr 4.1 Definitin f One Unit 4 Exceeds Expectatins N/A 3 Meets Expectatins Unit is clearly defined and plan fr prductin is well-thught ut and feasible; Csts assciated are listed apprpriately 2 Belw Expectatins Unit is nt clearly defined and plan fr prductin is unclear; Csts assciated are mstly listed apprpriately 1 Little r N Value Unit is nt clearly defined at all; Plan is infeasible and unclear; Csts assciated are nt accunted fr

53 Hw T Describe ONE UNIT f yur prduct r service. This means defining n average what a custmer will buy if they buy ne unit. Fr example, yu may chse t sell yur prduct in sets, such as a package f 4 cupcakes, r a Yearly Tune-up Package that includes several sessins f a mechanic s services. If yu ffer a variety f prducts r services, think abut what is an average prduct, meaning what will prbably be yur mst ppular prduct r service, as well as have a price that is average, nt the highest r lwest in the middle. What are judges lking fr? Unit is clearly defined and plan fr prductin is well-thught ut and feasible Csts assciated are listed apprpriately Curriculum Cnnectin Chapter 10, Sectin 2 n pages f Entrepreneurship: Owning Yur Future

54 4.2 Variable Expenses NOTE: Variable Expenses per Unit are calculated fr EACH unit f sale. We will revisit annual variable expenses as we apprach the incme statement in sectin 4.6. As yu learned in chapter 10, mst businesses have variable expenses, r an expense that changes based n the amunt f prduct r service a business sells. There are tw types f variable expenses: Cst f Gds Sld (r COGS): Assciated with each unit f sale and includes the csts f materials and labr used t make the prduct r prvide the service. Other Variable Expenses: Include expenses such as cmmissins f salespeple, shipping and handling charges, r packaging. T calculate ttal variable expenses, we add the per unit Csts f Gds Sld (COGS) t Other Variable Expenses: Ttal Variable Expenses per Unit = COGS per Unit + Other Variable Expenses per Unit Exemplar Explained/Hw T Step 1 Calculating Materials Cst Let s take a lk first at Eva s Cst f Gds Sld (COGS). Eva brke these dwn int materials and labr. The cmbined csts f each will give us ur ttal Cst f Gds Sld. Her materials csts are as fllws: Materials Equatin (Per Unit) Bulk Price Bulk Quantity X Quantity Per Unit = Cst Per Unit Eva s Calculatins $100 5 X 5 Dinners Dinners = $100 per Unit Once yu ve calculated the per unit cst fr yur materials, find the sum f all materials accrding t the chart belw t find the ttal cst f materials. In Eva s case, grceries were her nly materials.

55 Material Descriptin Miscellaneus grceries (specific ingredients vary frm client t client) Materials Cst per Unit Bulk Quantity per Cst per Bulk Price Quantity Unit Unit $ dinners 5 dinners $ Ttal Material Csts per Unit $ Step 2 Calculate Labr Cst. Next, Eva needed t calculate the secnd part f COGS: labr cst. After this step, she will have everything she needs in rder t determine her ttal Cst f Gds Sld. Use the frmula and table belw t fllw Eva s calculatins. Ttal Labr Cst (per Unit) (Cst f Labr per Hur) x (Time t make ne unit) = Ttal Labr Cst per Unit Labr Cst per Unit Cst f Labr per Hur Time (in hrs) t make ne Ttal Labr Csts per unit Unit $ hurs $ Step 3 Nw that yu ve calculated all f yur materials and labr csts, yu re finally ready t determine yur ttal Cst f Gds Sld. Use the equatin belw and the fllwing table as a guide t determine Eva s Ttal Cst f Gds Sld (COGS). Cst f Gds Sld (per Unit) Materials Csts + Labr Csts = Ttal Cst f Gds Sld (COGS) per Unit Cst f Gds Sld per Unit Material Csts Labr Csts TOTAL COGS per Unit $ $ $ The final piece f variable expenses is items categrized as Other Variable Expenses. These expenses als fluctuate with the amunt f gds sld. Here is hw Eva calculated her Other Variable Expenses per unit using the fllwing frmula:

56 Other Variable Expenses per Unit Cmmissin + Packaging + Other = Ttal Other Variable Expenses per Unit Other Variable Expenses per Unit Ttal Other Variable Expenses = Cmmissin + Packaging + Other Cmmissin: $0 Packaging: $0 Other: $4 Other Variable Expenses: Other Variable Expenses: $0 + $0 + $4 = $4 $4 NOTE: Variable Expenses per Unit are calculated fr EACH unit f sale. T find expenses fr an entire year, multiply Ttal Materials per Unit, Ttal Labr per Unit, and Other Expenses per Unit by the amunt f units sld that year. Is Eva s Cst f Gds Sld clearly defined? D her variable expenses make sense? Duble check Eva s math and plan fr prductin t see if she meets expectatins n the rubric.

57 Student is able t: Explain hw the business defines a unit and hw that unit is prduced Structure their EOU and variable expenses in an accurate and cst effective manner Indicatr 4.2 Variable Expenses 4 Exceeds Expectatins N/A 3 Meets Expectatins Unit is clearly defined and plan fr prductin is well-thught ut and feasible; Csts assciated are listed apprpriately Selling price and expenses are cmpetitive, feasible, and shw evidence f research; cntributin margin are reasnable fr scpe f business 2 Belw Expectatins Unit is nt clearly defined and plan fr prductin is unclear; Csts assciated are mstly listed apprpriately Selling price may be skewed; Expenses may nt be feasible, r they may nt shw evidence f research; Cntributin margin may be unreasnable r negative 1 Little r N Value Unit is nt clearly defined at all; Plan is infeasible and unclear; Csts assciated are nt accunted fr EOU and/r Variable expense structures are missing r incmplete Hw T Use the chart belw t itemize variable expenses and calculate yur cst f gds sld. We will refer back t Cst f Gds Sld figures in the next sectin. Materials Cst per Unit Cst Per Unit = (Bulk Price Bulk Quantity) x (Quantity Per Unit) Ttal Material Csts Per Unit = All Csts Per Unit Added Tgether Material Descriptin Bulk Price Bulk Quantity Quantity per Unit Cst per Unit $ $ $ $ Ttal Material Csts Per Unit $

58 Labr Cst per Unit Ttal Labr Csts per Unit = (Cst f Labr per Hur) x (Time t make ne unit) Cst f Labr per Hur Time (in hrs) t make ne unit Ttal Labr Csts per Unit $ $ Cst f Gds Sld per Unit Cst f Gds Sld per Unit = Material Csts + Labr Csts Material Csts Labr Csts TOTAL COGS per Unit $ $ $ Curriculum Cnnectin Chapter 10, Sectin 2 n pages f Entrepreneurship: Owning Yur Future

59 4.3 Ecnmics f One Unit The ecnmics f ne unit is the calculatin f the prfit r lss fr each unit f sale made by a business. Fr example, if Eva is cnsidering starting a hme chef business, she wuld calculate the cst f making ne package f 5 meals, and cmpare it t the price she wuld charge fr that package f meals. If the prfit is psitive, the business is thught t be prfitable. Many students incrrectly chse their selling price befre even calculating their per unit expenses. By calculating variable expenses such as labr and materials cst, yu will see that n prduct r service is initially free f charge t the business wner, and that successful businesses set smart prices t allw prfitability. Fr ecnmics f ne unit, we will accunt fr ne f the tw types f expenses. Variable expenses will be used fr these calculatins and fixed expenses will be used later n in the business plan. As yu knw frm sectin 4.2 f this guide, there are tw types f variable expenses Cst f Gds Sld (r COGS): Assciated with each unit f sale and includes the csts f materials and labr used t make the prduct r prvide the service. Other Variable Expenses: Include expenses such as cmmissins f salespeple, shipping and handling charges, r packaging. T calculate all variable expenses, we will add up all Csts f Gds Sld (COGS) and Other Variable Expenses: Ttal Variable Expenses per Unit = COGS per Unit + Other Variable Expenses per Unit After expenses, yu will want t find ut exactly hw much each unit yu sell is cntributing t the financial prfits r lsses f yur business. We call this the cntributin margin, and use the fllwing frmula: Cntributin Margin per Unit = Selling Price per Unit Ttal Variable Expenses per Unit Keep in mind that the cntributin margin is the amunt f mney per unit that a prduct cntributes t the cmpany befre fixed expenses are subtracted.

60 Exemplar Explained The Ecnmics f One Unit fr Eva s Edibles fllwed by her calculatins are shwn belw. The Three main pieces here are the Selling price per unit, variable expenses, and cntributin margin. Once yu ve calculated yur variable expenses. Yu can determine whether there is a selling price that will yield a prfit fr yur business. Once yu ve chsen a selling price, subtracting yur variable expenses will give yu yur Cntributin Margin. Selling Price per Unit $ Variable Expenses per Unit Csts f Gds Sld Materials $ Labr Ttal Cst f Gds Sld $ Other Variable Expenses Cmmissin $0.00 Packaging 0.00 Other 4.00 Ttal Other Variable Expenses $4.00 Ttal Variable Expenses $ Cntributin Margin per Unit $71.00 Cst f Gds Sld and Other Variable Expenses are calculated in the tables belw. Use this as a guide t fill in the crrespnding parts f the Ecnmics f One Unit sectin (4.3) f yur business plan.

61 Cst f Gds Sld per Unit Ttal Cst f Gds Sld = Materials + Labr Materials: $100 Labr: $150 Ttal COGS: $100 + $150 Ttal COGS : $250 Other Variable Expenses per Unit Ttal Other Variable Expenses = Cmmissin + Packaging + Other Cmmissin: $0 Packaging: $0 Other: $4 Other Variable Expenses: Other Variable Expenses: $0 + $0 + $4 = $4 $4 Ttal Variable Expenses: Ttal Variable Expenses: Ttal Variable Expenses per Unit Ttal Variable Expenses = COGS + Other Variable Expenses $250 + $4 (frm COGS and Other Variable Expenses Tables Abve) $254 Cntributin Margin per Unit Cntributin Margin = Selling Price Ttal Variable Expenses Cntributin Margin: $ Cntributin Margin: $71 The fllwing graphics may als be very helpful t keep yur final calculatins rganized. Yu will need these figures later fr yur incme statement.

62 Curriculum Cnnectin Chapter 10, Sectin 2 n pages f Entrepreneurship: Owning Yur Future

63 4.4 Delivery f Service Exemplar Explained Take a careful lk at Eva s delivery f service mdel. She clearly rganizes each step and its crrespnding cst t the custmer. Descriptin f Step Time (mins) Cst 1. Cnsult with ptential client t determine what 15 $ 0.00 types f meals he r she likes best 2. Travel t supermarket t shp fr grceries fr $ 1.50 clients meals 3. Shp fr and purchase grceries 60 $ Travel t client s hme 15 $ Organize kitchen and grceries 15 $ Clean and chp vegetables 60 $ Ck clients meal package 240 $ Clean up kitchen 45 $ Return hme $ 2.00 Is Eva s plan clearly defined, feasible and well-thught ut? All csts shuld be listed apprpriately. Where wuld yu rate Eva n the rubric belw? Student is able t: Explain hw the business defines a unit and hw that unit is prduced Indicatr 4.4 Prductin Prcess 4 Exceeds Expectatins N/A 3 Meets Expectatins Unit is clearly defined and plan fr prductin is well-thught ut and feasible; Csts assciated are listed apprpriately 2 Belw Expectatins Unit is nt clearly defined and plan fr prductin is unclear; Csts assciated are mstly listed apprpriately 1 Little r N Value Unit is nt clearly defined at all; Plan is infeasible and unclear; Csts assciated are nt accunted fr Hw T It is very imprtant t lay ut yur plan fr prductin and distributin. Hw much will each step f the prductin and distributin prcess cst? Hw much time will it take t cmplete each phase f the prcess? Refer back t yur expenses t cmplete the fllwing table.

64 Descriptin f Step Time Cst 1. $ 2. $ 3. $ 4. $ 5. $ 6. $ Curriculum Cnnectin Chapter 19, Sectins 1 and 2 n pages f Entrepreneurship: Owning Yur Future

65 4.5 Fixed Expenses fr One Mnth As yu start yur business, there are certain expenses that yu will have t pay regularly. Mnthly expenses typically include insurance, salaries, advertising, interest, depreciatin, utilities, rent, and ther expenses that ccur n a mnthly cycle. An easy way t remember eight f the mst cmmn fixed expenses is t remember the phrase: I SAID U ROX Expense Type Mnthly Cst Explanatin Insurance $ As a fd services business, it is imperative that Eva s Edibles is insured t prtect against liability Salary 0.00 Eva will be paid an hurly wage Advertising Advertising will include direct mailings and pstage, as well as marketing cllateral and samples t be distributed at in-stre prmtins lcal events Interest 0.00 Eva s Edibles has a financing strategy that des nt include repaying lans with interest Depreciatin Eva will depreciate her cking equipment ver a 5- year perid f time ($1,373 ver 60 mnths) Utilities Because Eva cks in her client s kitchens, the nly utility she will pay will be service fr her mbile phne. Rent 0.00 Because Eva cks in her client s kitchens, she will nt incur csts related t rent Other Fixed EXpenses These csts are assciated with autmbile maintenance and gas t drive t prmtinal events Ttal Fixed $ Expenses NOTE: The Ttal Fixed Expenses as shwn are nly fr ne mnth. Yu will have t multiply each expense type by 12 mnths t shw an annual figure in yur incme statement.

66 Once yu ve identified yur mnthly fixed expenses, rganize them in the chart belw. Hw much will expect t pay each mnth fr I SAID U ROX expenses? Yu may want t specify any ther types f fixed expenses that are nt listed. Expense Type Mnthly Cst Explanatin Insurance $ Salary $ Advertising $ Interest $ Depreciatin $ Utilities $ Rent $ Other Fixed Expenses $ Ttal Fixed Expenses $ Curriculum Cnnectin Chapter 19, Sectins 1 and 2 n pages f Entrepreneurship: Owning Yur Future

67 4.6 Incme Statement fr First Year Operatins One f the mst imprtant dcuments fr a business is an incme statement. An incme statement (als called a prfit and lss statement) is a financial dcument that summarizes a business s incme and expenses ver a given time perid and shws whether the business made a prfit r lss. Incme statements are prepared mnthly, quarterly, and annually. There are tw frmats fr incme statements. Each frmat shws hw businesses display their variable expenses. There are typically six parts t an incme statement: revenue cst f gds sld, grss prfit, perating expenses, pre-tax prfit, net prfit (r lss). Belw yu will see Eva s incme statement fr her first year f peratins. They are categrized by her revenue and variable expenses (which are used t calculate her cntributin margin) fllwed by her fixed expenses and taxes. Take a lk at the incme statement belw. The frmulas in the middle clumn will guide yu. Keep in mind that yur variable expense ttals per unit frm sectin 4.2 must be multiplied by the amunt f units sld fr the year fr yur incme statement. Als, yur fixed perating expenses fr ne mnth must be multiplied by 12 mnths fr yur incme statement.

68 REVENUE [Frm 3.4] $ Grss Sales Sales Returns = (Selling Price) x (Annual Units Sld) = Ttal Mney Refunded t Custmers Net Sales [Grss Sales Sales Returns] $ VARIABLE EXPENSES [Frm 4.2] Csts f Gds Sld Materials Labr Ttal Cst f Gds Sld Other Variable Expenses Cmmissin Packaging Other Ttal Other Variable Expenses = (Materials Cst per Unit) x Annual Units = (Labr Cst per Unit) x Annual Units [Materials Expense + Labr Expense] $ = Cmmissin x Annual Units = Packaging x Annual Units = Other Variable Expenses x Annual Units [Cmmissin + Packaging + Other] $ Ttal Variable Expenses [Other Variable Expenses + COGS] $ CONTRIBUTION MARGIN [Revenue Ttal Variable Expenses] $ FIXED OPERATING EXPENSES [Frm 4.5] Insurance Salaries Advertising Interest Depreciatin Utilities Rent Other fixed expenses = Insurance x 12 Mnths = Salaries x 12 Mnths = Advertising x 12 Mnths = Interest x 12 Mnths = Depreciatin x 12 Mnths = Utilities x 12 Mnths = Rent x 12 Mnths = Other Fixed Expenses x 12 Mnths Ttal Expenses [Sum f All Fixed Expenses] $ PRE-TAX PROFIT [Cntributin Margin Fixed Expenses] $ Taxes (15%) (Pre-Tax Prfit) x (0.15) NET PROFIT [Pre-Tax Prfit Taxes] $

69 When filling in yur incme statement, pay clse attentin t where each piece f infrmatin needs t cme frm. Frtunately, yu ve dne mst f the necessary calculatins already! Wrk thrugh each calculatin as it crrespnds t Eva s Edibles belw. Duble check her wrk t make sure yu are cmfrtable with calculating all necessary financial infrmatin fr the incme statement.

70 Curriculum Cnnectin Chapter 11, Sectins 1 n pages f Entrepreneurship: Owning Yur Future 4.7 Startup Investment REVENUE [Frm 3.4] $81, Grss Sales $81, Sales Returns [Returned Items] 0.00 Net Sales $81, VARIABLE EXPENSES [Frm 4.2] Csts f Gds Sld Materials $25, Labr 37, Ttal Cst f Gds Sld $63, Other Variable Expenses Cmmissin $0.00 Packaging 0.00 Other 1, Ttal Other Variable Expenses $1, Ttal Variable Expenses $64, CONTRIBUTION MARGIN [Frm 4.3] $17, FIXED OPERATING EXPENSES [Frm 4.5] Insurance $1, Salaries 0.00 Advertising 1, Interest 0.00 Depreciatin Utilities 1, Rent 0.00 Other fixed expenses 1, Ttal Expenses $5, PRE-TAX PROFIT $11, Taxes (15%) 1, NET PROFIT $10,179.60

71 Exemplar Explained Hw T Eva listed all materials she needs t start her business alng with a brief explanatin f the functin, the vendr she s purchasing frm, and the cst. Her ttal startup expenditures ttal $1,742. In case f emergency, she budgeted fr a fund t cver any unexpected expenses alng with a reserve equal t 3 mnths f fixed expenses. Item Why Needed Vendr Cst Needed t chp Macy s $ vegetables and tri meat Victrinx Swiss Army Cutlery Set (8 Piece) Anln Nuvelle Cpper Hard Andized Nnstick 10-Piece Ckware Set Misc cking equipment Needed fr basic cking Amazn.cm Need specialty equipment fr preparing gurmet meals Amazn.cm Spices, ils, etc. Needed t seasn fd Whlefds Wheeled cart Needed t transprt all cking supplies and grceries Glbalindustrial.cm Ttal Startup Expenditures $1, Emergency Fund (1/2 f startup expenditures) Reserve fr Fixed Expenses (cvers 3 mnths f fixed expenses) 1, Ttal Startup Investment $4, Start-up investment is the ne-time sum required t start a business and cver the startup csts. Hw much will yu need fr yur startup fund? It is calculated as fllws: Start-up Investment = Expenditures + Emergency Fund + Cash Reserve It is very imprtant t have an emergency fund and cash reserve n-hand in case f an emergency r an unexpected financial dwnturn. Use the fllwing calculatins fr each: Emergency Fund = ½ startup expenditures Reserve fr Fixed Expenses = 3 mnths fixed expenses Item Why Needed Vendr Cst $

72 Ttal Startup Expenditures $ Emergency Fund (1/2 f startup expenditures) Reserve fr Fixed Expenses (cvers 3 mnths f fixed expenses) Ttal Startup Investment $ Curriculum Cnnectin Chapter 11, Sectins 1 n pages f Entrepreneurship: Owning Yur Future

73 4.8 Financial Ratis Finally, it s time t lk at yur financial ratis. Return n Sales (ROS) will tell yu hw much prfit yur business will make as a prprtin f its sales. Return n Investment (ROI) will give yur investrs and business partners a clear idea f hw much prfit they stand t make n each dllar they invest. Yur breakeven pint will tell yu hw many units yu will need t sell each mnth in rder t break even with yur fixed mnthly expenses (keep in mind yur variable expenses have already been taken int accunt). Exemplar Explained Return n Sales (ROS): Annual Net Prfit $10, Ttal Annual Sales $81, = 12.4% $0.12 Return n Investment (ROI): Annual Net Prfit $10, Ttal Startup $4, Investment = 249% $2.49 Breakeven Units (Mnthly): Fixed Mnthly $ Expenses Cntributin Margin $71.00 = units Use the Frmulas abve and the graphics n the fllwing pages t calculate ROS, ROI, and Mnthly Break-Even Units.

74

75

76 NFTE Business Plan Presentatin Guide In yur presentatin, yu re ging t take all the infrmatin frm yur business plan and cndense it int a presentatin. Fllw the directins and visuals belw as an example. Slide 1 Intrductin This slide will serve as a placehlder as yu intrduce yurself t the judges and audience. The slide shuld include the name f yur business and a lg. Yu may als include a slgan. Eva s example is shwn belw: Yur remarks will als include yur name, yur business and an ptinal slgan. Eva intrduces herself by simply saying: Gd afternn, my name is Eva Tan and I m here t present my business pprtunity, Eva s Edibles.

77 Slide 2 Prblem/Unmet Need This slide is meant t clearly explain hw yur business will slve an existing prblem r fulfill a need that is nt being met by ther prducts r services. This explanatin is necessary because it will prve t the judges that there is a ptential market fr yur business. This slide will include infrmatin frm ur first unit f learning, Business Opprtunity. Use sectins 1.1 and 1.2 t describe the prblem r unmet need that yur business will address. Yur presentatin slide can include a bulleted descriptin, images, r vide as a visual aid fr yur audience. Yur remarks shuld include an engaging descriptin f the prblem r unmet need that yur business will fulfill. Fr example, in Eva s presentatin she sets the stage fr her audience by describing the weekly struggles f the everyday family: It s the beginning f the week and America s hardwrking prfessinals and families are busy juggling wrk, kids, traffic and all the ther things that drive us crazy thrughut the day. When they finally get hme, they re faced with the daunting task f putting a full meal tgether fr dinner. There just aren t enugh hurs in the week t juggle their wrk, buy grceries, ck and clean up afterwards.

78 Slide 3 Slutin/Hw Business Fills Need This slide is meant t clearly explain hw yur business will be able t slve the prblem r fulfill the unmet need described in the previus slide. In ding s, yu will clearly explain what prduct r service yur business will sell. This slide shuld include a descriptin, images, r vide f hw yur prduct r service ffers a slutin t prblem r unmet need. It will als be helpful t include pht r vide f yur actual prduct r service. In yur remarks, be sure t include: An engaging descriptin f hw yur business slves the prblem r unmet need An explanatin f hw yu came up with yur business idea An engaging descriptin f yur prducts features and benefits Eva includes pht examples f meals she wuld make thrughut the week fr her custmers, and visual representatins f the benefits f a persnal chef business. This is an engaging descriptin f hw her business is slving an unmet need f her target market. She adds t these visuals with remarks that highlight the benefits f having a persnal chef business: Imagine having 5 hme cked meals f yur chice prepared fr yu r yur family every week. Nt nly des it save time and mney, but yu ll als gain peace f mind! Well I d like t intrduce yu t Eva s Edibles: a persnal chef service that prvides packages f five freshly cked, gurmet dinners t busy families and business prfessinals.

79 Slide 4 Descriptin f Prduct/Service This slide is meant t thrughly explain what yur prduct r service is, what its special features are, and hw these features benefit the target cnsumer. While the previus slide fcused n the slutin t a prblem, this slide enumerates any ther imprtant details the judges shuld knw abut yur prduct r service. This slide is meant t be creative. Yu can make this slide take any frm that yu d like. It shuld include bulleted descriptins, images, r a vide that highlights yur prduct r service s features and benefits. Yu may als want t include testimnials frm peple wh have used yur prduct r service in the past. In yur remarks, be sure t include: Engaging descriptin f yur prducts features and benefits Explanatin f hw yu create yur prduct r deliver yur service Testimnials frm peple wh have used yur prduct r service Eva highlights her three simple steps and illustrates pht examples f the fd her cmpany makes. She keeps her remarks equally as simple: Eva s Edibles makes cnvenience a pririty fr the custmer by making ur service as easy and straightfrward as pssible. We ck it, yu heat it up, yu enjy!

80 Slide 5 Business Mdel This slide is meant t shw tw things: First that yu can feasibly prduce yur prduct r execute yur service in a cst efficient and time efficient manner. Secnd, that yur business prduct r service adds value enugh value t smene s life that they re willing t pay yur fr it. Things t include n this slide: Definitin f ne unit (frm sectin 4.1) (Prducts) Bulleted explanatin r graphic f yur prductin prcess (frm sectin 4.4) (Services) Bulleted explanatin r graphic describing hw t acquire and retain new custmers (frm sectins ) COGS r COSS (frm sectin 4.2) EOU (Frm sectin 4.3) Breakeven Units (frm sectin 4.8) Yur remarks shuld highlight all pints f the financials n the slide, including: Definitin f ne unit Cmpelling explanatin f hw yu will put yur business plan int actin (prductin prcess r hw t acquire/ retain custmers) COGS r COSS EOU Breakeven Units

81 Slide 6 Market Analysis This slide is meant t shw 3 things: First, that there is an actual market fr yur business; secnd, that yu can feasibly prduce yur prduct r execute yur service in a cst efficient manner; third, that yur business has the ptential t be prfitable. Fr this slide, yu are simply ging t pull infrmatin frm varius parts f yur business plan and rganize them in the fllwing chart. The elements yu will need frm sectin 2 are: Industry Name Annual Industry Sales Demgraphics Psychgraphics Gegraphics Buying Patterns Target Market Infrmatin In yur presentatin, it s imprtant t tuch n each part f market analysis slide. This is all imprtant infrmatin, but it is imprtant nt t spend a great deal f time reading directly frm a heavily infrmatinal slide. In 2 sentences r less each, tuch n: The size f yur industry A descriptin f cnsumers in yur target market The size f yur target market Custmer surveys and any ther market research Eva manages t d this efficiently in the fllwing statement: In ur market analysis, we identified ver 110,000 peple in the target area with husehld incmes f ver $50,000. Our research shws that these are hardwrking, dual-incme husehlds with hectic lives that prevent them frm spending time at hme. They desire healthy fd, but simply d nt have the time r energy t ck and clean n a regular basis. With these figures in mind, Eva s Edibles will target ver 27,000 individuals in husehlds eating ut 4 r mre times per week and wuld like t reduce the cst f their meals.

82 Slide 7 Prmtin and Sales This slide is meant t shw hw yu plan t prmte and sell yur prduct r service t ptential custmers within yur target market. In rder t exist, a business needs custmers, and it is necessary t shw hw yu plan t identify, sell t, and retain custmers. This slide shuld be fairly simple and can include a bulleted descriptin, images, r vide f prmtinal methds (frm sectin 3.2 f yur business plan) and any f the fllwing: Screenshts f yur nline selling platfrm r business scial media page(s) Pictures r vides f yu interacting with custmers Examples f advertisements Yur remarks shuld include a descriptin f all prmtinal methds, and explanatin f why each methd will appeal t yu target market. Yu shuld als discuss yur selling strategies and platfrms with an accmpanying explanatin f why each strategy and platfrm will be effective. Take a lk at Eva s Marketing and Sales slide abve. Eva des a gd jb f clearly stating her marketing and sales strategy withut ging int excessive detail (remember, the judges will already have a detailed cpy f yur business plan). Eva s Edibles will engage in five types f prmtinal activities. First - Establishing a cmpany website at Secnd - Maintaining a referral listing n the United States Persnal Chefs Assciatin (r USPCA) Website We will als have in-stre prmtins and prmtins at lcal events Finally we re prud t intrduce a custmer lyalty and benefits prgram.

83 Slide 8 - Cmpetitin This slide is meant t shw that yu ve thrughly researched yur cmpetitrs, bth direct and indirect, and that yur business has at least ne feature that makes it unique frm yur cmpetitrs. By ding s yu shuld demnstrate that there is space in market fr yur business t exist. Yur cmpetitin slide shuld include: Bulleted list f direct cmpetitrs (frm sectin 2.3 f the business plan) Bulleted list f indirect cmpetitrs (frm sectin 2.3 f the business plan) Explanatin f yur cmpetitive advantage (frm sectin 2.4 f the business plan) Yu may als want t include: Picture f yur cmpetitrs prducts weaknesses Testimnials frm peple wh have used yur prduct r service Cmplaints frm peple wh have used yur cmpetitrs prduct r service In yur remarks, yu want t present yur prduct r service in the best way pssible in cmparisn t yur cmpetitin. This cmparisn shuld tuch nt nly n the strengths f yur prduct r service, but als the weaknesses f yur cmpetitin. Yu may wish t include: Descriptin f yur direct AND indirect cmpetitrs strengths and weaknesses. Clear descriptin f yur cmpetitive advantage and hw it crrects what yur cmpetitrs dn t d well Testimnials frm peple wh have used yur prduct r service Cmplaints frm peple wh have used yur cmpetitrs prduct r service Eva gives details n her cmpetitin and then summarizes majr pints at the very end f her presentatin: (1) I will fcus n custmer service by allwing clients t chse their menus, (2) Custmers will enjy healthy versins f their favrites tailred t meet their dietary needs (3) Eva will be ne f the few persnal chefs in Clumbus t have federal recgnitin as a Certified Persnal Chef and active member f USPCA. (4) Eva s Edibles clearly has the mst cmpetitive pricing f all persnal chefs in the Clumbus area.

84 Slide 9 - Qualificatins This slide is meant t shw that yu have the knwledge, skills, and determinatin required t start and then manage yur business. Investrs aren t just investing in yur business, they re investing in YOU. Yu will need t include a bulleted list f yur relevant accmplishments, grup affiliatins, leadership psitins, and past experiences that shw yu can start and run yur business. Pictures f relevant past experiences can als be helpful n this slide. In yur remarks, yu ll want t deliver a cmpelling explanatin f yur relevant accmplishments, grup affiliatins, leadership psitins, and past experiences that will cnvince judges yu re capable f staring and running yur business.

85 Slide 10 Sales Prjectins This slide is meant t shw the prjected sales and revenue fr the first year f yur business. Yu must prvide a ratinale fr these figures, s be sure t cite evidence such as market research, past sales, r estimated market shares (all frm sectin 2 f yur business plan) t back up yur prjectins. The visuals yu shuld include are: Graph f prjected units sld during business first year (gather data frm sectin 3.4) Ttal units sld (numerically, frm sectin 3.4) Grss revenue (frm sectin 3.4) Net prfit (frm yur incme statement in sectin 4.6) In yur remarks, be sure t include the abve figures alng with an explanatin f hw yu estimated yur sales figures (market analysis, maximum capacity, breakeven units, and seasnality).

86 Slide 11 Startup Funds This slide is meant t explain hw much startup capital yu will need in rder t get yur business started. Additinally, it is the last chance fr yu t shw the judges that yur business is a gd investment pprtunity. Be sure t include: Bulleted list f required startup materials and their csts The ttal amunt f startup capital yu need Favrable ROI Pictures f required prducts This is yur chance t tell ptential investrs exactly what yu need frm them in rder fr yur business pprtunity t grw t a reality. Include an explanatin f the materials and capital needed t start yur business and discuss why yur business is a gd investment pprtunity.

87 Slide 12 Clsing Slide This slide is simply a placehlder t be displayed while answer the judges questins. After questins, be sure t thank yur audience fr their time. Include the name f yur business and feel free t place yur slgan in these remarks as well. Eva s clsing is as fllws: Thank yu fr cnsidering Eva s Edibles. We lk frward t wrking with yu and establishing urselves as a premier fd service prvider!