Appendix A
Guidelines for the Development of the Business Plan
These guidelines are for students to create a hypotheti-
cal business plan for a good/service/business of their
choice. Students should assume to have $25,000 to start
this new business in their community.
At the end of every chapter, there will be a section
entitled “Build Your Business Plan” to assist you in the
development of the business plan.
Phase 1: Development of the
Business Proposal
You are encouraged to submit your idea for approval
to your instructor as soon as possible. This will elimi-
nate wasted effort on an idea that is not feasible in the
instructor’s view. Business plan proposals will be eval-
uated based on their thoroughness and your ability to
provide support for the idea.
The business proposal consists of the following
elements.
Business Description. This consists of an
overview of the existing good/service or the good/
service/business you will be starting (manufacturer,
merchandiser, or service provider). This includes
developing a mission (reason for existence; overall
purpose of the firm) and a rationale for why you believe
this business will be a success. What is your vision for
this proposed product/business?
Brief Marketing Plan. (The marketing plan
will be further developed as the plan evolves.) A de-
scription of your business/product is required. Identify
the target market and develop a strategy for appealing
to it. Justify your proposed location for this business.
Describe how you will promote the new business and
provide a rationale for your pricing strategy. Select a
name for this business. The name should be catchy yet
relate to the competencies of the business.
Competitive Analysis. Identify the competi-
tion as broadly as possible. Indicate why this business
will be successful given the market.
Phase 2: Final Written
Business Plan
Executive Summary. The executive summary
appears first but should be written last.
Business Description. This section requires
fleshing out the body of the business plan, including
material from your revised preliminary proposal with
more data, charts, and appendices. Include a descrip-
tion of the proposed form of organization, either a part-
nership or corporation, and the rationalization of the
form chosen.
Industry and Market Analysis. An analysis
of the industry including the growth rate of the industry
and number of new entrants into this field is necessary.
Identify uncontrollable variables within the industry.
Determine an estimate of the proposed realistic size
of the potential market. This will require interpretation
of statistics from the U.S. census as well as from local
sources such as the Chamber of Commerce.
Competitive Analysis. Include an exhaustive
list of the primary and secondary competition, along
with the competitive advantage of each.
Marketing Strategy. Target market specifics
need to be developed.
Decisions on the marketing mix variables need to
be made:
• Price (at the market, below market, above market)
• Promotion (sales associates, advertising budget, use
of sales promotions, and publicity/goodwill)
• Distribution—Rationale of choice and level of
distribution
• Product/Service—A detailed rationale of the
perceived differential advantage of your product
offering
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32 Part 1 Business in a Changing World
Operational Issues. How will you make or
provide your product? Location rationale, facility type,
leasing considerations, and sources of suppliers need to
be detailed. Software/hardware requirements necessary
to maintain operations must be determined.
Human Resources Requirement. Num-
ber and description of personnel needed, including re-
alistic required education and skills.
Financial Projections. Statement of cash
flows must be prepared for the first 12 months of the
business. This must include startup costs, opening ex-
penses, and estimation of cash inflows and outflows. A
breakeven analysis should be included and an explana-
tion of your expected financial expenditures.
Appendixes
Phase 3: Oral Presentation
Specific separate guidelines on the oral presentation
will be provided.