Business Solutions for Todays Traveller - Grounded LLC - Case Study Example

Business Plan Evaluation Report Executive Summary This report presents information on an analysis of a business plan titled ‘Grounded: Business Solutions for Today’s Traveller’. The report analyses the structure and presentation of the plan, which is found to contain many of the details that are necessary in a good business plan. Based on this, the strengths and weaknesses of the plan are evaluated. The strengths include recognising an opportunity, identifying the essential resources needed to exploit the opportunity – such as finance and human assets, and having a good financing structure while being relevant to the current market needs. The weaknesses identified include omission of some information such as long-term strategy and implementation plan of the business plan, poorly placed information like tables and figures which makes the plan unnecessarily long, and lack of clear information on the people to manage the various departments of the company. Overall, it is argued that the business concept could have been relevant at the time the plan was written, but it is outmoded today because of advances in communication technology which have made most of Grounded’s core services irrelevant to travellers. Table of Contents Business Plan Evaluation: Grounded LLC Business Plan The purpose of this report is to evaluate an entrepreneurial venture in order provide an understanding of the structure of a business plan as well as the information that the business plan should convey. The entrepreneurial venture being evaluated is Grounded LLC’s business plan which is titled ‘Grounded: Business Solutions for Today’s Traveller’. This report will evaluate the business plan in terms of its adherence to the conventional structure of a business plan, i.e. the clarity of the business plan as well as the manner in which information is presented. The report will also analyse the business plan content to determine its strengths as well as weaknesses. In addition, the report will analyse the industry in which the business plan is based in order to determine the relevance of the business to the specific industry. Finally, this report will evaluate the preparedness of investing in the business plan both at the time the plan was written, i.e. the year 2000, and at the present time. Structure and Presentation of the Business Plan The Grounded LLC business plan begins with an outline of the sections that it entails in the form of a table of contents. A table of contents is vital in such a long business plan since not many people read a business plan cover to cover; for this reason, a well-organised table of contents makes it easier for readers to locate what they are looking for (DollarDays International, Inc, n.d., p. 2). The business plan also has an executive summary which provides a summarised account of what the business intends to do, how it aims to obtain funds for its activities, its marketing strategy and financial projections. This summary in itself presents what the business plan is all about and suits the definition of a business plan in general, which according to Kumar (2008), is the road map for operating the resources of a business in order to meet the objectives of operation and measuring progress along the way (p. 219). The business description section of the plan gives comprehensive details about the company, including its key services, the space required, equipment such as computers and software to be used, and issues emanating from the use of its services such as privacy. The plan also highlights the mission of the company, which is to offer a platform for its “clients to become more efficient, productive and professional while travelling” (Kuratko & Welsch, 2001, p. 261). The services to be offered by the company are also highlighted and include office services, computing services, and various products such as paper and cardstock (Kuratko & Welsch, 2001, p. 261). The business description also highlights the company’s policies and standards, the industry in which it intends to operate, customer value and growth potential. These areas demonstrate an understanding of the company’s internal as well as external environment. Also included in the proposal is information about marketing which includes the target market, survey data, market share, market penetration strategy, pricing, growth, competition and advertising. The marketing information basically includes all the activities involved in marketing such as sales, advertising, networking and public relations. Each of these factors serves a unique purpose, provides specific advantages and complements every other factor. Importantly, all the various components that have been highlighted must work together to enhance the company image, reinforce its brand strength, and ensure that the company is distinct from its competitors (Pinson, 2008, p. 44). The Grounded LLC business plan also gives an account of the company’s technologies and operations. Through this section, the plan illustrates the areas that are essential to the nature and success of the company and which will provide the company with a distinct competitive advantage as suggested argued by Abrams (2003, p. 156). The plan should also have details of how the business can overcome frequent problems that occur in similar types of businesses (Abrams, 2003, p. 156). This is addressed in the core values section of the plan, where it is stated that the values will serve as a road map during tough times and when making difficult decisions in the future (Kuratko & Welsch, 2001, p. 281). The plan also outlines details of the management of the business, the business’s financial information, its location, as well as the critical risks involved and the milestones it intends to achieve. Details on the management team are important because some investors may prefer the management team to have certain attributes or to be composed of certain individuals (Longenecker, Petty, Palichm & Hoy, 2012, p. 178). The financial section is equally very important because it is the area that most investors are likely to scrutinise to a great extent (Holloman & Donnelly, 2009, p. 77). Since the Grounded LLC business proposal is aimed at obtaining funding from investors, the information presented in these sections, such as financial requirements, financial assumptions and income statements for a number of years of operation, is crucial. The information on location is also important because it describes the suitability of Indianapolis as the business base for Grounded LLC. In addition to this, the critical risks section outlines the possible risks that the company is likely to face in its operations. This shows that the plan appreciates that although Grounded LLC is supposed to be a success story, it is likely to face some challenges, which it has to deal with. As such, investors can use this information to predict the challenges that are likely to arise in the company’s operations and how to deal with them (Longenecker et al., 2012, p. 178). The last section in the Grounded LLC business plan is milestones. The company intended to start the construction work in September 2000, complete various installations and hiring in October and begin operations in November the same year. It was projected that the company would break-even by January 2002. The implication of this section is that it gives an idea of where the company wants to achieve in a given period of time. For instance, the plan shows how long the business is anticipated to be in operation before it can start making profit (Fiore, 2005, p. 23). Strengths of the Plan The Grounded LLC business plan has a number of strong attributes because it meets some requirements regarding the content and format of a business plan as described by Petty, Palich and Moore (2010, p. 153–154). These are: identifying an opportunity, identifying the critical resources required such as finance and human assets, having a good entrepreneurial team to manage the business, having a good financing structure and the context in which the business wants to operate in the existing external environment such as consideration for the characteristics of the market. In essence, the business plan has to show that the entrepreneur has put together the right opportunity, the right people, the right resources, the right financing structure and intends to operate in the right context (Petty, Palich & Moore, 2010, p.154). Notably, it is indicated in the business plan that Grounded proposes to be the first and foremost full-service office centre at the Indianapolis International Airport. This means that if the business idea is implemented, Grounded will have the first-mover advantage of providing communication and office services to people using the airport. There are several benefits that are likely to accrue to Grounded if indeed the company is the first one to offer the kinds of services it intends to provide. First is that a first-mover has an opportunity to exploit network effects and positive feedback loops, thus being able to attract customers to using its services. Second, a first mover like Grounded is in a position to establish brand loyalty, which is costly for future players in the same industry to break down. Third, a first mover may be able to increase volumes of sales ahead of its rivals and hence realise cost advantages associated with economies of scale as well as learning effects. Fourth, a first mover can create switching costs for its customers that consequently make it difficult for competitors to enter the market and take customers away from it. Fifth, a first mover like Grounded can accumulate valuable knowledge relating to customers’ needs, product or service technology, distribution channels, process technology and so forth, which might be difficult for competitors to match (Hill & Jones, 2008, pp. 244–245). The advantages above can be attained based on the point that some market research was conducted by Grounded to determine the nature of the market for its services. Hence, information is provided about survey data, market share of business travellers who may need the company’s services, as well as the specific potential market. In addition to this, the company has conducted a survey of the market and knows where sources of direct competition at the airport are likely to arise from, as well as indirect competition that the company is likely to have to contend with. In addition, to the above strengths, Grounded also has a management team as well as a legal structure as an LLC, and it has outlined how it intends to get the financing for the entire project. This is a very critical component since investors are likely to be interested in who the management of the company is as well as how the company’s resources are going to be used to attain the desired objectives. According to Kaplan and Warren (2010, p. 106), a business plan that is being used to attract investors should emphasise the management’s talents and indicate why they will help the company to attain distinctive competitive advantage. In addition, the financial section of the plan should formulate a credible, detailed set of projections that reflect the business’s expected financial performance. Further, Kaplan and Warren (2010, p. 106) note that if the projections are carefully prepared and persuasively supported, they become one of the most important yardstick of measuring the business’s attractiveness – and the same applies to the Grounded LLC business plan. Overall, the Grounded LLC business plan has strong points because it meets most of the requirements of a business plan as outlined in the ten-point entrepreneurial business plan adapted from Kuratko and Hodgetts (2004). Although some key points such as the long-term strategy are missing, the business plan generally meets the other requirements. According to Petty, Palich and Moore (2010, p. 153), the ideas being communicated in a business plan must be based on identification of a string market potential, an attractive industry, as well as the right person or team to execute the plan. These areas are clearly outlined in the respective sections of the Grounded LLC business plan. The differences between the Grounded LLC business plan and the ten-point entrepreneurial business plan can be attributed to the fact that there is no single format to be followed in writing a business plan (Petty, Palich & Moore, 2010, p. 154). Essentially, different business plans will have differences in terms of topics, order of presentation as well as what is emphasised (Petty, Palich & Moore, 2010, p. 154). But of significance is the fact that a business plan defines and shapes the nature of a business (Chell, 2001, p. 3). Chell (2001) further notes that the business plan identifies goals and the sets out and acts upon the resources and means by which the goals are to be achieved. To a great extent, the Grounded LLC business plan has achieved this. Weaknesses of the Plan Although the structure of the Grounded LLC business plan largely reflects what a business plan should look like, there are certain areas which are lacking or are disorganised, hence making the plan weak. There are several key areas of a business plan that are missing in the Grounded LLC business plan. These include the business’s long-term strategy, the implementation strategy for the plan, and the exist strategy of the company. Although the long-term strategy of the business is briefly mentioned in the executive summary of the business plan, it is not clearly addressed as a section of its own in the body of the plan. And even though the long-term exit strategy is mentioned under the financial projection section of the executive summary, the same information does not appear in the financial section of the business plan. A clear exit strategy would show investors that there is an opportunity for them in the future to recover their principal investment as well as a good return on the investment (Longenecker et al., 2012, p. 178). Additionally, the business plan in its current form is unnecessarily long since it is missing the aforementioned areas. For instance, some figures such as the income and cash flow statements and balance sheet information have been included erroneously in the body of the plan and under a subtopic which does not relate to them (these statements have been placed under the information on location of the business). Further, although the plan has a table of contents, there are no specific page numbers, and the subtopics in the body of the plan are not numbered to correspond to the numbering in the table of contents. To start with the business plan’s lack of a long-term strategy and implementation plan, there is need to have this section in the plan to show where the business is going and how it will get there. As noted by Fiore (2005) a business plan does little if it does not have an implementation strategy to get the business up and running (p. 23).The purpose of the implementation plan is to lay out objectives of the company, the actions that are necessary to attain those objectives, and a timescale of the actions or events (Fiore, 2005, p. 23; Allen, 2012, p. 223). Although the Grounded LLC business plan has some information on milestones, it does not show how it will reach the break-even point and how it will go beyond this point after the year 2002. Another notable weakness of the Grounded LLC business plan is the inclusion of elements which make the plan unnecessarily long. DePamphilis (2010) argues that a good business plan should be brief, concise and well documented. In addition, supporting documentation should be referred to in the body of the plan but placed primarily in the appendices section of the plan (p. 152). The Grounded LLC business plan has glaring errors in this context because information such as tables, layout of the airport and financial statements is included in the body of the plan rather than in the appendices section. This makes the plan needlessly long and cumbersome to read. As well, the financial statements are included under the information on the location of the business, implying that the statements are greatly misplaced as they hamper the smooth flow of information on the location of the business. Turning to other points presented in the Grounded LLC business plan, there is a lot of information missing in various areas. For instance, the description of the business lacks a statement of sustainability. As well, the information on operations does not have details on issues such as zoning and ecological, ethical, tax and licensing requirements. In addition to this, the management of the company seems to be wanting since only one person, Mr. O’Neil, is charge of hiring of the staff and is also charged with the responsibility of running the day to day operations of the organisation. This means that the business plan fails to address issues such as human resource requirements and also lacks a qualified person to run this department. That one person will be in charge of hiring, scheduling, compensation, performance evaluation and working in the store is rather ludicrous since these areas need to be managed by different people qualified in the specified areas. Relevance of the Business to the Industry The Grounded LLC business plan seems to be a hypothetical idea because even the plan itself appreciates that the business does not fall under any industry that has been documented (Kuratko & Welsch, 2001, p. 262). But at the time of coming up with the plan (2000), the idea could have been feasible because of the information collected about communication at the Indianapolis Airport at that time. The plan is based on extensive review of market information available at that time. As well, the plan projected that the business targeted to serve the communication needs of air travellers who would need services such as copying and printing, conference services, fax services, and other Internet services. It can be said that by 2000, the demand for these services was high because of the limited communication technologies that were available then. Today however, the Grounded LLC business plan would attract little attention from investors because the innovation would seem rather outdated. Notably, most airports have Internet hotspots which travellers can access using their tablets and laptops and use for communication as well as sharing documents. Documents can be shared online without having to print them. Even scanned documents can be converted to PDF and shared without the need to photocopy or print them. And perhaps the most outstanding innovation that would make the Grounded idea redundant is the advent of online conference applications such as Skype which enable video conferencing and making of international phone calls at practically no charge (Weisenberger, 2012). Such technologies make most of the services to be offered by Grounded LLC irrelevant today since travellers can use them to communicate in the different ways they want. Conclusion In conclusion, although the Grounded LLC’s business plan seems to have a detailed structure, it has many errors including missing sections and information that is not organised according to the requirements of a good business plan. A good business plan should identify an opportunity, highlight the critical resources required such as finance and human assets required to exploit the opportunity, and show an understanding of the market. It should also be short, to the point and well documented. While the Grounded LLC’s business plan meets some of these requirements such identifying an opportunity, it fails in many contexts because of lack of information on its long term strategy and implementation plan, mistakes in organisation of reference information such as tables and figures, and having inadequate information on how the company’s management role will be conducted. According to the analysis in this report, the idea presented in the Grounded business plan would be feasible at the time the plan was prepared; but compared to today, the idea would be outdated because of advances in communication technologies which have made Grounded LLC’s intended core services somewhat irrelevant to the business traveller. References Abrams, R. (2003). The Successful Business Plan: Secrets & Strategies. 4th ed. Palo Alto: the Planning Shop. Allen, K. R. (2012). Launching New Ventures: An Entrepreneurial Approach, 6th ed. Mason: South-Western Cengage Learning. Chell, E. (2001). Entrepreneurship: Globalization, Innovation and Development. London: Thomson. DePamphilis, D. (2010). Mergers, Acquisitions, and Other Restructuring Activities, 5th ed. Burlington: Academic Press. DollarDays International (n.d.). Business Plan and Business Structure. 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