entrepreneurship assignment

ENT 200 Plan for a Startup Business, Spring 2019 Page 1

ENT 200 Plan for a Startup Business

Assessment 2, PART 2: Final Paper Developing an Entrepreneurial Venture (group assignment)

Date: Due at 11:59 PM on May 1, 2019

Description of Assignment: The goal of this assignment is to have you work together in small teams (the same teams that you were in for the in-class presentations already) to develop a detailed plan for a startup. You will have already pitched your idea in class in such a way that you can attract investors, and this plan should build on any feedback you got from your presentation.

Each team will submit their written plan, based on the guidelines below, via MyCourses. The plan will describe and justify a new start-up. The technology for the startup need not be real; what is important is the strength of the plan and how well you satisfy the assignment requirements. Your goal is to convince the reader that you are creating a startup that can be viable and is worthwhile investing in, and that you and your team have a deep understanding of your potential customers and how your product or service will meet their needs.

Your plan should be between 10 and 15 pages (but not longer than 15) and may include as many diagrams figures, and photos as you feel are helpful. Use line spacing for body text of 1.15 for readability. Appendixes do not apply to the page count.

**** Your written business plan can only be submitted as a doc, or docx via MyCourses. A link to an online storage location is NOT acceptable.

Grading Criteria / Rubric (What constitutes a good assignment?): The depth of analysis and the justification, a clear understanding of the internal and external factors impacting the business.

There are 5 REQUIRED Appendixes that must also be completed.

Background Historically, a business plan has been used before a business launches to ensure that the founders carefully think through every step of starting their company and what will happen over the next few years, and as a tool for getting investment funding. Along with a description of the problem your business will address, the typical plan would include your firm’s solution, the market / revenue opportunity, customer profiles, and income, profit, and cost projections for the next five years. While this might work for an established company that already understands its customers, competition, channels, costs, supply chain, and product / service demand, there are few answers that a startup is likely to have until it begins testing its ideas and learning from potential customers. Unlike established businesses that are executing on a business model, start-ups are looking for one, and rely much more on tools like the business model canvas, which essentially diagrams how a company creates value for itself and its customers. Since so much is unknown about your startup today, this assignment is geared towards articulating your assumptions, and testing your approach with potential customers, combined with your best thinking / knowledge about the market and about the key components of your business model. For this class, assume that your plan will be read by potential investors. Be clear and concise in your writing. A person outside of your industry should be able to understand it. Avoid making unsubstantiated claims or sweeping statements. Investors, lenders and others reading your plan will want to see realistic projections and expect your assumptions to be supported with facts. Finally, proofread your completed plan (or have someone proofread it for you) to make sure it’s free of spelling and grammatical errors and that all figures are accurate.

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Your start up plan should include the following sections. Feel free to modify these as needed to meet your businesses’ needs.

Note that some sections such as the Executive Summary, the Problem Being Solved, about your Products / Services, Customer Segments, and Competition may be one or two pages each. Some of the others may be only 1 or 2 paragraphs. I. Executive Summary

II. The Problem Your Product or Service Solves

III. Products & Services

IV. Value Proposition

V. Customer Segments and Market Size

VI. Competition / Barriers

VII. Revenue Model / Streams

VIII. Channels

IX. Customer Relationships

X. Key Resources

XI. Key Activities

XII. Partnerships

XIII. Cost Structure / Finance

XIV. Management

REQUIRED Appendices

THESE MUST BE COMPLETED AS PART OF THE ASSIGNMENT Don’t slow your readers down by cluttering your business plan with supporting documents. Instead, put these documents in the Appendices, and refer to them in the body of the plan so readers can find them if needed. (A) Appendix A. In order to understand your potential customers and how this problem impacts them, you are required to discuss this issue with 5 people or businesses to test your understanding of their needs.

Your discussion must be documented and included in the Appendix. (Include your interview questions and the answers, your key learnings, and name, date, and photo of the person you interviewed).

(B) Appendix B: For your in-class presentation, you developed an MVP. Include it in Appendix B (hopefully it has been improved since the one you showed in class).

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You can include videos, pictures and illustrations --- very simple drawings or screenshots are fine to make sure your reader fully understands your solution. If you are using a physical prototype or software that cannot be included in your paper, contact me via email at least 24 hours before the due date. (C) Appendix C. Develop 2 personas (or archetypes) of your customers. One tool I would suggest is xtensio https://xtensio.com/how-to-create-a-persona/ You have to login; it is free – look for User Persona. Up to you whether to use this or not. (D) Appendix D. Completed Business Model Canvas Attach it here, filled out with enough detail so that an outsider can understand it. You can use any tool you would like, or just download from WWW.BUSINESSMODELGENERATION.COM/CANVAS. (E) Appendix E. Impact. All businesses have an impact. Identify the Social and Environment Costs and/or Benefits caused by your business here. This can be a brief list. More detailed explanations of each section are below. I. Executive Summary

The Executive Summary is the most important part of your business plan. Often, it’s the only part that a prospective investor or lender reads before deciding whether or not to read the rest of your plan. It should convey your enthusiasm for your business idea and get readers excited about it too. Write your Executive Summary LAST, after you have completed the rest of the business plan. That way, you’ll have thought through all the elements of your startup and be prepared to summarize them. Limit your Executive Summary to one or two pages in total. II. The Problem Your Product or Service Solves

Every business needs to solve a problem (or meet a need) that its customers face. If you aren’t solving some problem, you are going to have a long and difficult climb! Use this section to talk about the problem you are solving and who has the problem. Consider using a short story when you are describing the problem. A tale about a person who benefits from using your product will highlight its relevance. The more you can make the problem as real as possible, the more your readers will understand your business and your goals. III. Products & Services

This section expands on the value proposition by describing the specific products or services your company will provide. You will likely want to focus on the following 3 questions, as appropriate. 1. What will you sell, and how will it be provided to customers? 2. How do customers use your product or service and how do they address the problems described above? 3. If there are other solutions, explain why yours is better than existing options or the characteristics that give it

a competitive edge. Why will customers choose you instead of one of the other players on the market.

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IV. Value Proposition

Your Value Proposition describes the bundle of products and services that create value for a specific customer segment. It is the reason why customers turn to one company over another. It is your company’s promise (the value you deliver) to a customer or market segment. It is an easy-to-understand reason why a customer should purchase a product or service from that specific business. A value proposition should be a clear statement that explains how a product solves a pain point (i.e. fixes the customer’s problem or improves her life), communicates the specifics of its benefits and states the reason why it's better than similar products on the market. Rarely is your value proposition the product itself or its features. Instead, it’s the way the brand or product improves the lives of your customers and the way it makes them feel V. Customer Segments and Market Size

These are the groups of people and organizations you aim to reach and serve. Describe your target customer(s) and segment them using some of the characteristics below. You may have more than one target customer group. For instance, if you sell a product to consumers through distributors, such as retailers, you have at least two kinds of target customers: the distributors (businesses) and the end users (consumers). • For consumers, you might consider: Age, Gender, Location, Income, Occupation, Hobbies, Education levels,

etc. • For businesses, you might consider: Industry, Location, Size, Stage in business (startup, growing, mature),

Annual Sales, etc. VI. Competition / Barriers

One of the biggest mistakes you can make in a business plan is to claim you have “no competition.” Every business has competition in one form or another. Even if you are opening up an entirely new market, your potential customers are usually using alternative solutions to solve their problems today. Provide a brief overview of the competition. What barriers to entry does your startup face? In a more detailed plan you would also identify how you plan to overcome them. That is not necessary. Barriers to entry might include some of the following (and/or others not mentioned below • High costs (for startup, production, marketing, research, etc.) • Existing Players with a dominant market share or brand recognition • Finding qualified employees • Need for specialized technology or patents • Government Regulations • Customer switching costs • Network effects or existing firms VII. Revenue Model / Streams

Now that you’ve described your product or service, you need to talk about how it makes money. This section doesn't need to include detailed data or financial forecasts, but it should describe who will pay for your service

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and what types of revenue models you will use. For some businesses (content sites, for example), advertisers pay the bills instead of users, so it’s important to flesh out the details here. You may have multiple revenue streams, or be earning money from more than one customer segment. Be sure to include these. How do you expect to price your products? For example, you might describe whether you will be a premium, high-price offering or a budget offering that undercuts existing solutions on the market. VIII. Channels How will you communicate with and reach your customer segments to deliver your value proposition? What methods of distribution will you use to sell your products and/or services? IX. Customer Relationships

The Customer Relationships Section describes the types of relationships a company establishes with specific Customer Segments A company should clarify the type of relationship it wants to establish with each Customer Segment. Relationships can range from personal to automated. Customer relationships may also be driven by a number of motivations, such as: • Customer acquisition • Customer retention • Boosting sales (upselling). X. Key Resources

Describe the most important assets that allow you to create and offer your Value Proposition and make your business model work. Every business model requires Key Resources that allow an enterprise to create and offer a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenues. Your Key Resources will depend on your business model. A microchip manufacturer requires capital-intensive production facilities, whereas a consulting firm focuses more on human resources. Key resources can be physical, financial, intellectual, or human. They can be owned or leased by the company or acquired from key partners. XI. Key Activities Every business model requires a number of Key Activities. These are the most important actions a company must take to operate successfully. Like Key Resources, they are required to create and offer a Value Proposition, reach markets, maintain Customer Relationships, and earn revenues. And like Key Resources, Key Activities differ depending on business model type. For software maker Microsoft, Key Activities include software development. For PC manufacturer Dell, Key Activities include supply chain management. For consultancy McKinsey, Key Activities include problem solving. XII. Partnerships

Describe any critical suppliers and partners that will be needed to make your business model work. Companies build partnerships for many reasons, such as optimizing their business models, reducing risk, or acquiring resources. You man, or may not, need 1 or more of these types of partnerships:

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1. Strategic alliances between non-competitors

2. Coopetition: strategic partnerships between competitors

3. Joint ventures to develop new businesses

4. Buyer-supplier relationships to assure reliable supplies.

XIII. Cost Structure / Finance Business plans often consist of a very detailed financial statement section. Since this is typically done by sitting in a room coming up with numbers, it is not something startups have a lot of insight into when they are first starting up. This section is highly simplified and focused only on the first year of operation. Provide the numbers / tables described below only. No other financial statements are needed. 1. Expenses, Year 1 What are the expenses involved in opening and operating your business during the first year? Be sure to include extra capital for unexpected expenses. Opening a new business almost always ends up costing more than expected, and you need to be prepared; a good rule of thumb is to set aside 20% to 25% of your total startup costs for contingencies. 2. Income, Year 1 You might want to base your income statement on one of the formats here, but there is no need to consider taxes in your calculations. You may want to review: https://www.accountingtools.com/articles/2017/5/17/the- income-statement Show three different scenarios: worst, expected, and best. What is your breakeven point? The break-even point can be determined by finding the set of numbers that lead to zero profit, which means you broke even. You should highlight the break-even point here; note that it might be several years away.

3. Investment and use of funds How much capital do you need to raise for year 1? Explain why you need the amount of money you are trying to raise from investors and how you plan on using the money. Investors will want to know how their money will help you achieve the goals you are setting out for your business. Investors expect the founders to also invest in their business. You do not need to discuss valuation or equity or anything else that you might give to your investors.

XIV. Management Who are the people behind your business, their roles and responsibilities, and their prior experience? A paragraph for each team member, highlighting If they have experience or specializations that will increase your chances of success is enough detail.

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REQUIRED Appendices Don’t slow your readers down by cluttering your business plan with supporting documents. Instead, put these documents in the Appendices, and refer to them in the body of the plan so readers can find them if needed. (A) Appendix A. In order to understand your potential customers and how this problem impacts them, you are required to discuss this issue with 5 people or businesses to test your understanding of their needs.

Your discussion must be documented and included in the Appendix. (Include your interview questions and the answers, your key learnings, and name, date, and photo of the person you interviewed).

(B) Appendix B: For your in-class presentation, you developed an MVP. Include it in Appendix B (hopefully it has been improved since the one you showed in class). You can include videos, pictures and illustrations --- very simple drawings or screenshots are fine to make sure your reader fully understands your solution. If you are using a physical prototype or software that cannot be included in your paper, contact me via email at least 24 hours before the due date. (C) Appendix C. Develop 2 personas (or archetypes) of your customers. One tool I would suggest is xtensio https://xtensio.com/how-to-create-a-persona/ You have to login; it is free – look for User Persona. Up to you whether to use this or not. (D) Appendix D. Completed Business Model Canvas Attach it here, filled out with enough detail so that an outsider can understand it. You can use any tool you would like, or just download from WWW.BUSINESSMODELGENERATION.COM/CANVAS. (E) Appendix E. Impact. All businesses have an impact. Identify the Social and Environment Costs and/or Benefits caused by your business here. This can be a brief list.