Business Plan Evaluation - Example

Business Plan Evaluation Name: Institution: Date: Executive Summary This business plan evaluation report analyzes Grounded entrepreneurship business plan that has been prepared by Jason O’Neil with the intention of presenting to four investors with the aim of raising $80,000 as part of initial capital. The report looks at the ten sections benchmark of a business plan, strengths and weaknesses present, clarity and standard of business plan presentation, as well as appreciation of industry sector and whether to invest in the project. The information presented in the business plan has been evaluated against the standard expected of any viable business plan. The ten sections evaluated include executive summary, business description, marketing, operations, management, critical risks, financial forecasts, harvest or long term strategy, implementation and milestone schedule for 3-5 years, and appendices as well as bibliography references. This report comes to a conclusion with a list of references that shows sources that have been referred to when preparing the report. Table of Contents Executive Summary 2 Entrepreneur Business plan benchmark 4 Strengths of this plan 5 Weaknesses of this plan 9 Clarity and standard of business plan presentation 12 Appreciation of the industry sector in which the EBP is based 13 Preparedness to invest in this proposal 14 References 15 Entrepreneur Business plan benchmark The business description has to outline the technical details of the innovation. A business plan has to have a part that describes how innovation will be realized in the enterprise. Any business cannot grow without innovation that leads to new product development. Sustainability can be ensured through competitive advantage that is realized through innovation. An entrepreneur identifies opportunities and converts them into services or products. Technical innovation is very important part in the business description section since it is the driving force behind any business enterprise. The technical advantage that is carried in the business idea will ensure sustainability in the long-run (Chell, 2001). An entrepreneur identifies opportunities and converts them into services or products. The operations part is an essential section in a business plan and includes details of how things will be done once the business commences. Investors are keen to know how both short term and long term objectives will be met. The management runs the affairs of the business enterprise. There should be people who can be trusted with the task of delivering to investors and shareholders. There should be a lineup of people competent enough to run the affairs of the business enterprise efficiently and effectively. The critical risks have to be brought out. Entrepreneurs have their dark side that may include sense of distrust, monopoly power, overriding desire for success, and overbearing quest for control. Despite these characteristics, entrepreneurs have to be aware of critical risks that pose a threat to the success and sustainability of their business ideas. Financial forecast provides a glimpse into the future outcomes of the business operations of the business enterprise. The figures have to impress investors in order for them to commit their money into the project. If the business cannot break-even within the favorable time then it will be useless investing in the business (Kuratko & Hodgetts, 2004). Feasibility is done through systematic collection, analysis and presentation of data. Feasibility analysis is very important to an entrepreneur since it determines the viability of the project. A business plan must have a long-term strategy that will ensure sustainable growth. A schedule of how things will be done is important in order to give the timeline of events a clear sequence. Appendices and references provide important material that has been used in the preparation of the business plan and sometime further explanation through appendices. Readers can refer to them for further clarification of issues or to increase their knowledge about things mentioned in the business plan. Strengths of this plan Technical details of innovation have been discussed by this business plan. The space required, internet connections details, equipment needed, details of operations, and the services provided have been elaborated in the plan. The background of the industry has been covered under the title industry. This business plan has provided detailed figures of the situation within the communication industry where Grounded wanted to penetrate. The situation about internet access and its state in the world has been vividly drawn to show the trend the possibility of a market niche emerging within travelers. Empirical data from reliable sources has been used to justify the prospects of a profitable market niche (Allen, 2006). Such institutions like National Business Travel Association, U.S. Census Bureau, and Nua Internet Consulting and Demographic Research can be trusted for authentic information. The company wants to take advantage of time honored-traditions aided by current technology to make a fortune. High quality service will be emphasized through the use of well-trained, professional, helpful and knowledgeable clients’ assistants. The uniqueness of the project has also been described. Grounded gives travelers what they need and where they need, it is likened to Wal-Mart or McDonald’s. The business provides accessibility to professionals and managers who are on transit. Statement of sustainability is very important in any business plan (Deakins, 1999). The statement of sustainability has been covered under the title potential to grow. Grounded is poised towards extending its business across the globe once the Indianapolis International Airport business picks up. There is potential of growth across other international airports globally. Grounded has targeted business travelers whose daily business heavily depends on the use of Internet and computing in general. Grounded wants to make useful about 70% of the time that is wasted by travelers. The market size and the income amount anticipated have been defined. Grounded business plan is targeting business persons around the age from 25 years old to 54 years old. Household income has been estimated at $80,000. Occupational characteristics of target clients, income characteristics, internet usage according to income; frequency of visits and passengers dwell time have all been provided in the Grounded Travelers business plan. The potential market size has been elaborately explained. The market share of the target customers has been determined. This is a very detailed analysis of the target market that has been selected. The pricing strategy has been explained and on what basis the cost and mark up will be determined. Printing, photocopying color; and black and white has been explained. $1 will be charged per sheet of color. Sliding rates will be provided for black and white with regard to the number of copies needed. The more the copies, the higher the discount prices provided. The advertising and promotion strategy has been explained. The cost of advertising is anticipated to be low since it is only Indianapolis International Airport that is being targeted. Special promotions through various means of communications like faxes, emails, and phone will be used to reach out to clients. However, potential clients who will be passengers catching connecting flights will not learn about Grounded. The advertising strategy is one- place-centered and the other means of product awareness have to be devised (Dollinger, 1999). Details of equipments required for running Grounded operations have been discussed in the business plan. Grounded business plan has provided both software and hardware specifications that will be required to deliver the services to customers. The PCs to be used will be Gateway GP7-550. About fourteen machines are set to be leased. The business plan provides the specifications for all machines needed. In this section the business plan is very elaborate in what will be needed to run the business. The software to be used and its specifications have been provided. Client assistants will be used to offer service and direction to the target customers. The means for appraisal or client rating has been explained in the business plan. Continuous quality improvement has been as an area that will be emphasized to ensure customer satisfaction is attained at Grounded. Quality of Service Monitors will be used to ensure the target for high quality and continuous improvement is achieved. Basic rules for acceptable behavior and mode of dressing have been addressed. Employee appearance, code of conduct and dressing has been specified in the plan. The hours of operations have been specified as from 5.30 AM to 9 PM from Monday to Friday and 5.30-8PM on Sunday and Saturday. The legal structure of the company has been provided. Grounded has been established like a limited liability corporation. Legal fees will cost Grounded up to $500. The location for the business and the choice for the location have been explained vividly in the business plan. Proximity to customers and potential for growth is the emphasis in this choice. The choice of Indianapolis has been justified in terms of income levels and development with regard to technology. Accessibility to customers has been explained and thus the choice of Indianapolis International Airport. The resume of the sole manager of Mr. O’ Neil has been given. He graduated from Ball State University with a degree in management and specializing in entrepreneurship. Nine client assistants will help him to run the business. It will be upon O’Neil to hire the first lot of client assistants. Employee compensation as well as scheduling has been defined including the salary paid to Mr. O’Neil. The legal structure of the company has been explained. Professional services will be provided by Mr. Howard May. Mr. O’ Neil and his team of client assistants have the responsibility of servicing all clients of Grounded. A business plan has to point out critical risks. Critical risks have been discussed in Grounded business plan. Some of the risks include hiring and retention of client assistants who are reliable, death, managerial experience, and advent of other affordable multimedia solutions that may render traditional internet access offered by Grounded obsolete. The financial needs of the company have been quoted. Total financial needs are estimated to be $161,000. Four other investors are expected to contribute &80,000, O’Neil will invest $31,000 while a bank loan of $50,000 will also be provided. Assumptions about forecast sales and anticipated expenditure have been made in the Grounded business plan. Each cost as well source of revenue has been explained. Three to five years financial forecast has to be provided. Income statements from 2000 to 2003 have been provided in compliance with this requirement. Cash flow statements and balance sheets have also been provided over the same period (2000-2003). The long-term strategy of Grounded has been pegged on the potential growth in tourism industry. Increased tourism demonstrated by the trend means more travelers going through Indianapolis International Airport. Facts about Indianapolis International Airport reveal the potential for growth. IIA is dedicated to growth and acknowledges the potential in future. It is the largest airport in U.S.A being managed by a private firm. The uniqueness of Grounded is found in the location hence Grounded will have the ability to reach out to untapped market of travelers that require modern communication (Kuratko & Hodgetts, 2004). IIA offers the large facility that provides business travelers with a forum to conduct their office work outside their work stations. Grounded has given a schedule of how the implementation of the design will take place. The construction begins in September 2000 as well as the interview process. Accusations of equipments, training of employees, installation of phones, and termination of hiring will be done by October 2000. Business of Grounded will commence by November of 2000. The targeted break-even is expected to be attained by January 2002. Various graphs and layouts have been used within the business plan. Weaknesses of this plan Some of the information provided is not specific and only provides generalized details of the situation in the industry. The relation to Indiana International Airport has not been clearly drawn. The industry figures within Indiana will be more helpful for targeted investors than global figures. Giving a global trend does not necessarily reflect the situation on the ground within the state of Indiana at particularly at Indianapolis International Airport. The widespread of the use of the internet does not automatically justify a breakthrough to certain niche of the market without sufficient evidence. Unfortunately in its surveys Grounded was unable to distribute any surveys on the property of the airport in order to comply with laws. Consequently the actually market size cannot be estimated. Marketing data and passenger characteristics provided by the airport were relied on when preparing the business plan. A random method of surveying was used which may give false impression of the potential market in and around Indianapolis. The figures given may not provide the accurate picture of the anticipated size of the market and its profitability. Grounded does not expected just to use a simple means of advertising and reap instant profits. The promotion and advertising strategy has to be expanded to include flyers, audio and television advertisements in order to reach a wide range of potential clients. Vigorous advertising has to be done (Bridge, O'Neill & Cromie, 1998). The long term promotion strategy has not been explained. Nevertheless, there is no mention of the number of employees that will be required to run the entire business and how it will grow. Correctional modalities in case of crisis have not been discussed. Insurance and security needs as well as proximity to suppliers have not been mentioned in this business plan. There are many things that have been omitted in this section. Licensing, tax, ethical, ecological and zoning regulations have not been outlined in this business plan. The type of intellectual property held by the company has not been vividly explained in the business plan. The legal structure of the company has to be elaborate and distinguishable from the rest. In spite of Grounded being referred to as a company but there are no structures that establishes the real structure of a legal entity that is separate from the people who formed it. It is more of a sole proprietorship than a company with Mr. O’Neil as the boss. The company has to protect is intellectual property that distinguishes it from other entities. Besides the management team is not existent with all the responsibility being left to the sole manager Mr. O’ Neil. Decision making will be quick but there are high chances of O’ Neil making mistakes that will cost the profitability of the company (Chell, 2001). The professional qualifications and experience of the client assistants has not been given. While the company will be saved from paying a huge wage bill to its employees, there is the risk of having less flexibility and depth when it comes to operations and decision making (Drucker, 1985). There is no a human resource structure and functions that have been provided. There is no financial planner in this business plan and hence all the planning will be done by Mr. O’Neil. There is no board of directors to oversee the activities of the company hence making it to be run as a sole proprietorship business hence run the risk of one man show (Bhidé, 2000). There is no policy making approach that has been provided and many decisions will solely depend on discretion of Mr. O’Neil. Whereas Grounded is presented as a company its structure presents a picture of sole proprietor with Mr. O’Neil at the helm. The behavioral ethics are somehow blurred and more guidance of what is required of the workers is needed. The decision made and their executions have to be elaborated in details. There are no clear solutions or how to deal with the risks in case any of them occurs. However, comprehensive analysis of financial forecasts has not been done. There are no financial ratios, cost controls, break-even nor budgeting plans. This proves to be challenging to investors who would have an interest in investing in the company. They have to be provided with a comprehensive analysis. The future path of the company has not been chatted. While the break-even has been given, the Initial Public Offering of Grounded has not been mentioned in the business plan. The IPO has to be announced in order the capital base of the company. The four investors targeted are not enough to sustain the existence of the company. Successors have not been identified hence the threat of death of the company if something is to happen to the proprietors of the company (Burns, 2001). The role of retained earnings in future paths has not been explained. This is a necessity so as to chat the way for the company if at all it will attain the projected profits. There are no appendices or bibliography references that have been provided at the end of the business plan. There should be appendices as well as a reference lists that offers a list of sources that have been used while compiling the business plan. Obviously a lot of empirical data has been obtained from secondary sources and the authors of the business plan cannot fail to acknowledge them. Hugely the business plan has been comprehensive to a great extend. Clarity and standard of business plan presentation The clarity and standard of business plan presentation is good. The business description was elaborate and contains many important things for well done entrepreneurship business plan. The way the surveys were done may not be very clear but the other details in the business description have been explained elaborately. Financial forecasts were not comprehensively done and some details like ratios that will reveal more about the business plan were not worked out. The success of this business plan will depend on whether Mr. O’Neil will go ahead and explain some of the missing links. Apart from some areas that need further explanation, the business standard and clarity of presentation is very good. The operations and how the workers will be managed need to be explained further. The resumes of the workers have to be produced. Appreciation of the industry sector in which the EBP is based This business plan has appreciated the industry within which the entrepreneur is targeting. The business plan has outlined the importance of communication to the American population. Increase in use of mobile phones and the need for managers and professionals to travel has created a market niche that led to the Grounded business idea. Close to fifty millions of people are mobile taking close 20% or more of their time away from their desks. The need to access internet wherever someone is has become a reality. Internet access stations have come up in airports. At present close to 4,397 verified functioning cyber cafes are found in 135 countries. Computer services and internet usage are growing at a high speed. Grounded has defined its target market and acknowledged the current competition in the market. Other players in the communication realm have been pointed out. US Airways Club will not take part in direct competition. US Airways Club clientele need an exclusive environment while Grounded clientele consists of persons who desire to work in a private and productive environment. Indirect competition is embedded in telecommunications technology such as pay phones with data ports, mobile phones with internet and pay fax machines. Users are limited to only few sights, messages are often restricted and the scope of email functions on the phones are unproven and limited. Messages are restricted to a few lines and programmed responses make up replies. Grounded business has recognized the impact of direct competition on its business. However, there are no figures about how other business are doing in the industry in terms of revenue and profits. Preparedness to invest in this proposal Investors will want to invest in a project that has prospective of bringing in returns. The way the business plan has been presented; there are limitations that make people to hesitate. The financial ratios are needed to show deeper understanding of the proposed performance of the company. The management structure is skewed and there are no avenues for accountability. The company will be run more like a sole proprietorship as opposed to a company. Mr. O’Neil will run the business without having a Board of Directors to oversee his decisions. The decisions made by him will make or break the business. The critical risks have been enumerated but there are no remedies recommended in case any of the things anticipated happens. What will happen if Mr. O’Neil dies? There should mechanism to ensure continuity if at all this is a company. Further polishing of the business plan will make investors willing to invest in it. References Allen, K.R. (2006), Launching New Ventures: An Entrepreneurial Approach, Fourth Edition, Boston: Houghton Mifflin. Bhidé, A. V. (2000), The Origin and Evolution of New Businesses, Oxford: Oxford University Press. Bridge, S., O'Neill & Cromie S. (1998), Understanding Enterprise, Entrepreneurship and Small Business, London: Macmillan. Burns, P. (2001) Entrepreneurship and Small Business, Basingstoke: Palgrave Macmillan. Chell, E. (2001), Entrepreneurship: Globalization, Innovation and Development, London: Thomson Learning. Deakins, D. 1999 (2nd Edition) Entrepreneurship and Small Firms, New York: McGraw Hill Dollinger, M.J. (1999), Entrepreneurship: Strategies and Resources, Second edition, New Jersey: Prentice Hall. Drucker, P. (1985) Innovation and Entrepreneurship, Butterworth Heinemann Kuratko, D.F. & Hodgetts, R.M. (2004). Entrepreneurship: Theory, process and practice, sixth edition, Mason, Ohio: South-Western Thomson Learning. Read More