MGT 190. Entrepreneurship
Assignment
Mgt 190 is one of two capstone courses for students in the
BBA degree program. The goal of both
courses is to encourage students to draw upon their knowledge and insights in
order to address real world business problems.
Please follow the Syllabus listed in Course Information on
when to complete this assignment for the course.
When submitting assignments, please follow these
instructions:
Document Structure: Assignments should be submitted in
Microsoft Word or RTF format. They should be professional looking and include a
first page containing:
• Your Name
• Your StudentID
• Course Number
• Course Name
• Title of the Assignment
All documents should have page numbers as well.
Introduction
When venture capitalists are asked what they consider most
carefully when deciding whether or not to fund a new venture, they consistently
respond: “We are most concerned with the quality of the management team and the
quality of the business plan.”
The business plan is an important component of a business
start-up. It forces the business owner and his/her management team to reflect
seriously on the goals of their venture and the steps necessary to launch and
maintain it successfully. The very act of constructing a business plan offers
an important learning experience to the business owner, because it requires
him/her to take a comprehensive view of all aspects of the new venture:
organizational, financial, marketing/sales, legal, operational, and IT.
Outside investors find the business plan to be important
because it offers them a revealing picture of how the new venture will be
organized and what it will achieve. Of equal importance, the business plan
enables them to determine how effective the owner and his/her management team
will be in launching and maintaining the venture. If the business plan is
poorly written, inconsistent, and unrealistic, then the investors will not fund
the venture, because they know that it will likely fail. If you cannot write a
compelling business plan, then it is unlikely that you will be able to
establish a viable business. On the other hand, a well-crafted, compelling, and
realistic business clan suggests that the owner and his/her management team
know what they are doing.
This assignment has you put together a short business plan.
In constructing it, follow the outline provided later in this guide. As you
organize and write it, keep reminding yourself that the point of the document
is to force you to think through the most significant issues needed to launch
and maintain the business successfully, and to convince investors to provide
you with funds because you have a good money-making idea and know what you are
doing.
Selecting a business venture
Write a business plan for one of the two following ventures:
• Option A.
Expanding a one-store operation to a two-store operation
Assume you currently run a small retailing business in the
lobby of a large office building. Your store occupies 1000 square feet of
space. You spend fifty hours a week at the store and hire two employees, each
of whom spends thirty hours a week at the store. Your annual revenues are
between $150,000 – $300,000 a year. The products you sell are a mixed bag of
items. Basically, you stock up with items that occupants of the office building
will want, including snacks, pre-wrapped sandwiches, bottled/canned beverages,
greeting cards, newspapers, paperback books, and small gift items that the
building’s tenants might find attractive.
A new office building will open two blocks away from the building
you now occupy. You would like to expand your business to that building. In
fact, you begin to dream that you can establish a chain of such stores in large
buildings downtown. You have even cooked up a name for the potential chain,
“Buster’s” (named after your pet Labrador retriever).
At this point, you are not sure how you want to fund the
expansion. You need to put together a business plan to develop a sense of the
financial requirements of the new operation. You may decide to fund it using
your savings and by taking out a second mortgage on your house. Three other
options are to borrow money from the bank, borrow money from friends and
family, or to have friends/family assume an equity role in your business as
investors. In any event, your business case would be used to borrow the money
or to attract investors.
Write a business plan that describes this proposed venture.
• Option B.
Establishing Nerd Patrol ,a computer services company
John Robbins, Mary Singh, and Nabil Quresh are best friends
in college. John and Mary are computer science majors, while Nabil receives his
degree in business administration. After graduating, each goes his/her separate
way. John and Mary work as systems engineers in large technology companies,
while Nabil joins the sales staff of a software engineering services company.
Both John and Mary become fully certified on Microsoft and Oracle software
products.
Five years after graduating, the three friends get together
and toy with the idea of setting up a company to provide individuals and small
businesses with a full range of computer and networking services including
hardware and software upgrades, hardware repairs, debugging software problems,
dealing with network problems, . They would model their business after the established
franchise, Geek Squad. They would call their service Nerd Patrol.
In putting together their business plan, they have a wide
range of options they can pursue. For example, they can start cautiously, with
John being the only full-time employee at the outset, then having Mary and
Nabil join the venture later (low start-up costs). Or else they can try launch
Nerd Patrol as a full-fledged operation (high start-up costs). Identify a
strategy that they can pursue, then develop a business plan that describes
their proposed venture.
Outline of the Business Plan Document
In the world of real business, business plans can take on a
variety of shapes and sizes. They may range in length from a few pages to
hundreds of pages, depending on the nature of the venture. They can be filled
with detailed financial and marketing data, or simply a brief sketch of
financial and marketing requirements – depending on how much data are
available. They can be highly structured or casual. There is no one best way to
structure a business plan.
In this assignment, you should keep the business plan short:
10-15 pages of text, typed single-spaced, using 12-point font. Charts and
tables are extra. You should also employ the following outline, which captures
the chief elements of typical business plans:
1) Introduction
and brief description of the venture
a) Introduction
(e.g., “This business plan describes a proposed venture to expand Buster’s from
a one-store to two-store operation.”)
b) Description
of the business (“Buster’s is a small store located in the lobby of a large
office building …”)
c) Business
aspirations (e.g., “Ultimately, we hope to expand Buster’s so that it becomes a
chain of 10-15 stores situated in downtown office buildings.”)
2) Organization
of the business and key players (e.g., “Marsha Jones is owner and principal
manager of Buster’s. The current store employs two people, each of whom works
at the store 30 hours a week … The proposed store will be managed by Ms. Jones
…”)
a) Owner(s)
– role(s) and qualifications
b) Company
legal structure (e.g., sole proprietorship, partnership, LLP, S-Corporation,
C-corporation)
c) Management
team – roles and qualifications
d) Employees
– roles and qualifications
e) Contractors/vendors
(as appropriate) – roles and qualifications
3) Financials
a) Anticipated
operating costs of the new business (e.g., What are the anticipated expenses of
operating the business in a typical month?)
b) Anticipated
investment requirements to launch the new venture (e.g., furnishing facilities,
inventory purchases, meeting payroll during the first six months of operation)
c) Anticipated
revenue
d) Pro-forma
cash flow projection for the first year of operation
REVENUES Month
1 Month 2 Month 3 Month 4 Etc.
Rev source A
Rev source B
Etc.
TOTAL REV
COSTS
Rent
Payroll
Materials
Etc.
TOTAL COST
NETCASH FLOW
e) Payback
point (taken from the pro forma cash flow statement)
f) Anticipated
return on investment from the perspective of three years into the venture
4) Marketing/Sales
a) Summary
of a marketing/sales strategy
b) Marketing/sales
requirements for the business
i) Price of
goods/services
ii) Product
iii) Promotion
iv) Place
c) Competition
5) Operations
a) Location
of the business
b) How the
business will be operated (e.g., hours of operation, procedures to produce
goods/services, special operations issues)
6) Legal and
sundry issues
a) Legal and
related issues that need to be addressed (e.g., Liability, intellectual
property, structuring the business, commercial law issues, etc.)
b) How legal
issues will be handled (e.g., in-house attorney, use of outside legal services)
7) Major
challenges
a) A
realistic assessment of the challenges facing the new venture
How You Will Be Graded
1. Did you
follow the instructions for the assignment?
No 1 2
3 4 5 Yes
2. Have you
engaged in solid research of the topic? Do you have your facts straight?
No 1 2
3 4 5 Yes
3. Are your
arguments logical and compelling?
No 1 2
3 4 5 Yes
4. Is your
presentation well-written (proper grammar, good flow, without spelling errors)?
No 1 2
3 4 5 Yes
5. Are
organizational issues for the new venture handled effectively?
No 1 2
3 4 5 Yes
6. Are
financial issues for the new venture handled effectively?
No 1 2
3 4 5 Yes
7. Does the
business plan reflect an effective handling of marketing and sales issues?
No 1 2
3 4 5
Yes
8. Is your
business plan practical and realistic?
No 1 2
3 4 5 Yes
9. Would a
potential investor have confidence that your proposed venture will succeed?
No 1 2
3 4 5 Yes
