Business Plan

A1

Identification

· You must clearly identify the name of your business, as well as the specific location (city, state) of your business. You are not required to have an exact address or street name.

· Example: XYZ Computer Repair, located in Detroit, Michigan.

A2

Mission

· Clearly explain the mission you have outlined for your company.

Mission Statement Example :

The mission of Sweet Treats Bakery is to provide the highest quality cupcakes with the best possible service to our customers and community.

A3

Business Goals

· Clearly identify and discuss TWO business goals that support the mission you described in aspect A2. We provide you with one example below.

A4

Three Keys to Success

· Be sure to list three keys to success for your new company and discuss each key in enough detail to prove your competence in this area. Keys to success can be more generic in nature.

Example of Keys to Success:

· Hire the highest quality candidates at competitive wages.

· Explanation: Hiring and retaining qualified employees will be critical to ensuring that the company meets their mission of providing the highest quality service.

· Seek out the highest quality ingredients at competitive prices.

· Explanation: High quality ingredients are a key component of ensuring the company meets their mission of providing the highest quality product to our consumer.

· Treat every customer the way we would want to be treated.

· Explanation: Ensure that each customer has their questions/concerns addressed personally by the manager or staff to continue to provide excellent customer service.

B1

Industry History

· Describe the actual industry in which the business will operate. You may need to broaden the industry such as using the “history of baking” or “history of a bakery” rather than the “history of a cupcake shop”. In addition, you may have multiple industries, such as human resource consulting. In this case, you can use the main industry, such as human resources, or you could discuss both the human resources and the consulting industry.

· Be sure to give an overview of the history of your industry and not a history of your hypothetical company. This section could include, but is not limited to, a discussion of key events, dates, technological advancements, people that have contributed to the growth of the industry, government regulation, etc. Timelines work very well for this section.

· This section will require outside sources (including corresponding citations within this section), as you will want to base this information on the actual history of the industry (e.g. facts, dates, figures, etc.).

SAMPLE SEARCH TERMS: “industry history of baking”, “history of bakeries”

B2

Legal Form

· Identify the ownership and legal establishment of the company, (e.g. specifying whether your company is a corporation, partnership, sole proprietorship, limited liability partnership, limited liability company (LLC), etc.). Corporations can be difficult for the project and are discouraged. However, if you choose to use a corporation then you must be consistent throughout the paper. As an example, a board of directors would be required for the structure of the organization (B4).

· Explanation of the legal form of ownership or justification for the selected form of ownership is NOT required.

For additional information on legal forms, please see the following: https://go.openathens.net/redirector/wgu.edu?url=http://fed.ibisworld.com/sso/oathens

· Please note that LLC stands for Limited Liability Company , not Limited Liability Corporation.

B3

Location and Facilities

· Provide a description of the location and type of facilities needed for your company. Identify the geographic location of your business, including where the products/services will be produced or distributed. The location does not require a set address. A city and state for each location associated with the business will suffice.

· The location of the business and the facilities needed to operate the business must be described. This section should include a discussion of the location and the general facilities that will be utilized by the company, such as warehouse, home office, store, etc. Detailed explanations of the space may be included but are not required.

B4 Management Structure

· You must describe the management structure, including key personnel and positions.

· This section also needs to include a description of the assigned responsibilities of each management position.

· An organization chart is appropriate format for content; however, it is not required. You do not need to identify a specific functional structure for the organization. Responsibilities of the key personnel could include, but are not limited to, legal, accounting, operations, management, human resources, marketing, etc. It is not necessary to include all these areas.

· If you are the only employee in your new business, be sure to list all the duties and responsibilities that you will perform.

· Outsourced positions or functions are acceptable for this section.

B5

Products and Services

· This section should discuss in detail the actual products and services that the hypothetical company will be providing. This explanation should serve as an introduction to the product and/or service and what specifically it will be providing customers. How will the product/service meet customer needs?

· This same information can be included in D1 for the product/service component.

C1

Target Market

· Ensure you have included a very specific description of the target market for your company’s products and services and clearly identify your intended customers.

· If your business targets consumers and businesses, then you need to include both in your discussion.

· The target market can best be identified in terms of the marketing budget. Your sales will not be restructured to one group or demographic (especially if you are an online business). However, with your limited marketing budget, who will you target first with your marketing efforts. Who is most likely to buy from you in the beginning?

· Target market components for business to consumers could entail the following items:

· Geographic: Location

· Demographic: Age, Gender, Income level, Education level, Marital or family status, Occupation, and Ethnic background

· Target market components for business to business could entail the following items:

· Geographic: Location

· Demographic: Number of Employees, Years in Operation, Annual Revenue, Friendly to Outsourcing, Types of Companies (e.g. healthcare, education, manufacturing, etc.), and Values and Beliefs of the Organization

C2

Industry Analysis

The industry history (B1) talks about what has happened in the past, but the industry analysis (C2) is what is going on with your industry in the present and future. The industry discussed in both your industry history and industry analysis need to address the same industry. The industry analysis should address the current state of the industry to include current statistics. This discussion could include, but is not limited to, any of the following:

· Growth Rate

· Current Trends

· Current Size of the Industry

· Annual Revenue for the Industry

· Government Regulations

· This section will require outside resources, as you will want to base this information on the actual current state of the industry (e.g. specific facts & figures).

· IBIS World is a great resource for help with research for this section. This is a free resource provided for students in the library. Right click on the link and use your WGU single sign-on to access the resource: https://wgu.libguides.com/industryresearch/ibisworld

C3

SWOT Analysis

· Complete the four-square SWOT diagram included in the business plan template, clearly identifying 3 strengths, 3 weaknesses, 3 opportunities, and 3 threats for your hypothetical business.

· C3a: This should include short phrases for each of these SWOT elements within the table. Strengths and weaknesses are internal to the company and are things that the company can control. Opportunities and threats occur external to the company and are outside of the company’s control. You may be able to capitalize on an opportunity or mitigate a threat, but you cannot control whether they occur. Opportunities and threats could occur due to decisions made by your competition, government regulations, environmental issues, economic issues, etc.

· C3b: Below the table you will explain each element of the SWOT analysis. You will provide a brief discussion of why the item is a strength, weakness, opportunity, or threat.

D1

Four P’s

· Provide a logical discussion of the 4 Ps of Marketing, also known as the “Marketing Mix”: Price, Product, Promotion and Place (distribution) as they relate to your company’s products and services. This should be focused on the high-level strategy for each of the 4 Ps of marketing with a separate paragraph for element of the marketing mix.

· In Section D1 of the 4 P’s, the “Pricing” P is referring to your pricing strategy, whereas the D2 price list is requiring you to include an actual price list of what you are charging your customers.

· The Promotional Strategy (D3) will be an extension of the “Promotion” P from this section, while the 4 P’s will cover the strategy itself.

· As you discuss all four of these areas, you will want to focus on the overall strategy using the questions below. You are not required to address all these questions. They are to be used to help brainstorm ideas for your discussion.

· The following question prompts can help you get started in addressing each of the 4 Ps:

· Product/Service: You can use the description from B5 for this section. You may also include additional information such as the brand strategy, packaging, bundling, etc.

· Place: This section should focus on how the product/service is distributed. How do supplies that you need get to you? How does your customer access your product/service? Will they come to your office? Will you go to their location? What is the process that the customers go through to get your product/service from beginning to end?

· Price: Are there established price points for products or services in this area? What is your pricing strategy? How are your products/services priced in relation to your competitors? Will you offer discounts throughout the year? Will there be introductory promotions? This section is referring to your pricing strategy and should not include a price list.

· Promotion: This should be a summary paragraph of the overall strategy. You will elaborate on this summary with specific tasks, end dates and responsible party in D3. How will your potential customers know that you exist? How is your marketing message presented to your target market? How will you reach your audience (e.g. advertising in the press, TV, radio, billboards, direct marketing, etc.)?

· For a quick review and video of the 4 Ps of Marketing: http://www.mindtools.com/pages/article/newSTR_94.htm

D2

Price List

· Ensure you have included an appropriate and detailed price list for your company’s products and services. If you have many prices for a variety of products, you may want to group your categories and talk about the “average” price or price range for those items. You must have an actual price list to show what the business is charging customers for products/services. It is acceptable for services to be shown as a percentage vs a dollar amount.

· In Section D1 of the 4 Ps, the “Pricing” P is referring to your pricing strategy, whereas the D2 price list is requiring you to include an actual price list of what you are charging your customers.

· Refer to this article for an explanation of Inserting a Table in Microsoft Word

Price List Example

D3 Promotional Strategy

· Develop a promotional strategy with specific tasks, target dates, and responsible parties.

· The Promotional Strategy should be an extension of the “Promotion” P in the 4 Ps of Marketing that is discussed in section D1. Be sure to include specific tasks related to the promotional/marketing methods your company will be using. Many students use a table to show this information.

Promotion Strategy Example

D4

Sales Forecast

· Determine your launch date to set the first 12 months of operation.

· Develop a sales forecast based on expected market conditions. The sales forecast should begin with your company’s first month of sales.

· Pre-launch development such as the development of a software will be completed prior to the official launch date. The launch date should be the day the product is available for purchase. The cost for this development period will be included as part of pre-launch expenses on the profit and loss statement.

· Remember that the 12-month sales projection will be repeated in section F1 as your company’s revenue. For example, if you show $10,000 in your sales forecast for the month of January, then that $10,000 will show again as revenue in F1 for that same month.

Sales Forecast Example

Market Conditions Discussion: The expected market conditions discussion could include, but is not limited to, any of the following:

· Seasonality: Are there times of the year where sales will be higher or lower than others?

· Forecast Assumptions: How did you determine the figures for the sales forecast?

· Economics: Is the economy of the area expanding or contracting? Are people or businesses spending? Is there demand for the product/service? Is there a sufficient workforce for the business in the area?

· Government Regulations: Is there legislation, government regulation or laws, etc. that may impact sales or demand?

· Competition: Are there a lot of competitors in your area or very few? Are your competitors’ prices higher or lower than yours? Does your competitor have advantages or disadvantages over your business?

Market Conditions Explanation Example

The current market has few competitors that cater to both catering events as well as a storefront. The owner expects sales to be strong from the launch of the company due to marketing and signage before the opening of the store. A large event center recently opened, and the company intends to become a vendor that can be utilized by companies that book the events center. This relationship will be in place prior to the launch date, but it will take at least a month to start catering events. Event sales are not expected in month one of operations, but event sales will increase throughout the year. The company anticipates the highest revenue in the summer months as the company will be catering corporate events, weddings, and local community events such as the farmer’s market and the annual July 4th celebration. During the first year of operations, the storefront sales are expected to grow at an average of 12% each month, with the highest growth occurring at the beginning and end of the year. Storefront sales will not grow as fast during the summer months due to an increased focus on catering events, weddings, and local community events. The catering events and weddings for the business will bring in an average of $3,000 per event, with variation due to the number of attendees and options selected. Storefront sales are expected to be an average of $15 per customer group.

For additional help with your sales forecast, refer to this document: https://srm--c.na60.visual.force.com/apex/coursearticle?Id=kA00c000000hKMMCA2&

E1

Overall Strategy

Summarize your overall strategy for successfully launching the business, including target dates and high-level tasks required to launch the business. This aspect refers to all the activities that need to happen in order to launch the business, or the “pre-launch” phase. You will need to ensure that the completion dates listed in your implementation strategy occur before the launch date.

Example of Overall Strategy:

E2

Monitoring Plan

For additional monitoring plan information, review this website on control plans: https ://www.youtube.com/watch?v=lGZ2DsT22rU

The Monitoring Plan should show what measures would be in place AFTER launch to make sure you are making your projections. You should include tasks to monitor quality, customer service and the financial impact on the success or failure of the business.

Monitoring Plan Example

F1

Profit and Loss Statement

Develop a month-by-month forecasted profit and loss statement (also known as the income statement) using an estimate of revenues and operating costs based on the sales forecast. This statement provides detail on your company’s revenue and expenses for the first twelve months of operations. You can show your business starting in any month. It does not need to show January-December. However, the month in which your company opens in your Overall Strategy from section E1 should agree to the first month noted on your statement.

· Keep your estimates simple. Dollars and cents are not required.

· Revenue (Sales): This should be the same as the sales forecast you created in the marketing strategy section (D4). These numbers must match, or it will be returned by the evaluators.

· Operating Expenses: You need start by creating a list of monthly expenses for your business. Based on your sales and other factors, your operating expenses may fluctuate month-to-month. These fluctuations should be accounted for in your monthly expenses. Examples of operating expenses may include the following: Salaries/Payroll, Repairs and Maintenance, Marketing and Advertising, Accounting and Legal, Utilities, Insurance, Shipping, Web Hosting, Travel, Rent, Cost of Goods Sold, Pre-launch Expenses, etc.

· Profit Before Interest: Profit Before Interest=Total Revenue-Total Expenses

· Interest Expense: If you have taken out a loan to finance the start-up of your business, you will have interest expense that needs to be reflected on your P&L statement. If applicable, interest expense would be included under your profit before interest to reflect the monthly interest payment. We suggest using a loan calculator to determine the monthly payment and the monthly interest. The interest amount could be the same each month.

· Monthly Net Profit/Loss: Monthly Net Profit=Profit Before Interest-Interest Expense

· If you do not have interest expense, then your monthly net profit will be same amount as the profit before interest total for each month.

· Annual Net Profit/Loss: Adding together all your monthly net profit/loss figures will equal your annual net profit/loss figure. You must have one total at the end of the year. You may end the year with a loss. If so, then your retained earnings will be a negative number on the balance sheet.

· Specific Items to Consider on the Profit & Loss Statement:

· Cost of Goods Sold: If your company is producing a product or you are a wholesaler, the cost of producing or purchasing your product will be shown as Cost of Goods Sold under Operating Expenses. COGS is calculated as a percentage of sales. Basic internet research can be used to find an estimate of the COGS percentage to be used for your industry. As an example, the COGS for the bakery is estimated at 5% of sales/revenue.

· Depreciation: Depreciation of long-term assets is not required for the capstone, but if you choose to show this expense on the profit & loss statement, you will also need to show the accumulated depreciation of the items as a deduction from the long-term assets on the balance sheet.

· Pre-launch Expenses: Payments made before your company officially opens can be shown as an operating expense in month one. Most, if not all, businesses will have pre-launch expenses. Pre-launch development such as the development of a software will be completed prior to the official launch date. The launch date should be the day the product is available for purchase. The cost for this development period will be included as part of pre-launch expenses on the profit and loss statement. Include the total in month one and leave the rest of the year will be left blank.

· Taxes: Taxes are not a requirement for the capstone but can be reasonably estimated and included as an operating expense.

· Items to EXCLUDE from the Profit & Loss Statement:

· Principal Payments on Loans: While the interest expense payments made on loans will be included on the profit & loss statement in calculating net income, the principal portion of loan payments will NOT be presented on the profit & loss statement. These payments reduce the liability recorded on the balance sheet, rather than counting as an expense of a business.

· Long-Term Asset Purchases: The purchase of any long-term assets of a business (e.g. computers, vehicles, equipment, buildings) will NOT be included as an operating expense on the profit & loss statement. These purchases will be reflected in the long-term assets section of the company’s balance sheet.

F2

Balance Sheet

· For a review of balance sheets, we recommend you view the following video entitled Accounting 101: The Balance Sheet (F2):  http ://www.youtube.com/watch?v=2H3MdQAJHUU

· The Balance Sheet is a “snapshot” in time showing where your company is financially after one year of operation. It measures the overall value of your company, as if you were going to sell it to a new owner or show your financial position for possible future funding.

· The top portion (Assets) needs to equal the combined total of the bottom portion (e.g. Assets = Liabilities + Owner’s Equity). Make sure the math is done properly.

· For the purposes of the capstone, many students find it easier to start with the bottom half of the Balance Sheet first. In a real-world scenario, this will not be the case.

· Owner’s Equity: This is a heading on the balance sheet. No numeric values should be included on this line in the template.

· Retained Earnings: This must be included on the balance sheet. The retained earnings should be equal to the year-end net profit from the profit and loss statement.

· Owner Investment: Businesses should have capital to launch their product/service. This can be done as a loan and/or owner investment. If you are self-funding this new company, you will insert your capital amount as Owner Investment. If you are using a loan rather than owner investment, then this line will be blank on the balance sheet. Your total capital investment (loan and/or owner investment) must be large enough to cover pre-launch expenses and long-term asset purchases.

· Long-term Liabilities: If you are obtaining a loan for your business, make sure the year-end balance is included in the Long-Term Liabilities section of the statement. The year-end balance is the initial value of the loan minus 12 months of payments. If you have taken out a loan, the amount in G3 should be the original amount borrowed, while the Long-Term Liability on the balance sheet will reflect the remaining balance at the end of the first year. We suggest using a loan calculator to

· Current Liabilities:

· Wages Payable: If you have wages on the profit and loss statement then this would be equal to the last months’ worth of wages. If you pay your employees twice a month then this will be ½ of the last months’ worth of wages.

· Accounts Payable: AP would include any expenses in the last month of operations where your company is billed, and you have 30 days to pay those bills. Businesses typically take advantage of payment periods, so it would be reasonable that the business would have some accounts payable.

· Total Liabilities plus Owner’s Equity: Total Liabilities and Owner’s Equity=Total Liabilities + Total Owner’s Equity.

· Long-term Assets: You will estimate the long-term assets for your business. All businesses should have long-term assets. This can include but is not limited to: Equipment, Computers, Phone, Plant, Land, etc.

· Current Assets:

· Inventory: This is typically used if you are producing a good or are purchasing a good to sell. You can determine the number of weeks’ worth of inventory and create a basic estimate.

· Accounts Receivable: AR are typically more relevant to service-based businesses. You will have AR if you provide a service, bill your clients and they have 30 days to pay you.

· Cash: Cash is whatever you need it to be to get Total Assets to equal Total Liabilities Plus Owners Equity. This is not standard accounting practice but is being used here in the absence of a cash flow statement and other more complex calculations. To solve for cash, follow this process:

· Type the value from Total Liabilities and Owner’s Equity into the Total Assets.

· Use this Formula: Cash=Total Assets-Long-term Assets-Inventory-Accounts Receivable. The remaining amount is the cash value.

G1

Financial Projections

The financial projections section summarizes the financial projections and the assumptions used in estimating the financial statements prepared in Section F. Section G is considered the “narrative” of Section F. You will want to summarize the financial statements you prepared in Section F, discussing the overall categories presented on your profit & loss statement and Balance Sheet. There are two different components that must be addressed in Section G1 (Financial Projections and Assumptions).

Financial Projections: You need to summarize the financial statements you prepared in Section “F”, discussing the overall categories presented on your Profit & Loss Statement and Balance Sheet.

· We recommend discussing specific line items from your P&L Statement and Balance Sheet, such as large operating expenses, individual assets, or liability accounts (e.g. accounts receivable, equipment, wages payable, etc.).

· This discussion should be looking at the ‘big picture’ presented within your financial statements.

Financial Projection Example

· During the first year of operations, the business attempted to keep the operating expenses around $17,000 each month to prevent the need for any additional investments or loans.

· While there were four months that the business suffered a loss, three of these were during the first months of operation, when the business was still attempting to get a positive name in the market. The company does not expect to see any losses after this first year of business.

· The company’s total liabilities at the end of the first year were $18,450, leaving the business funded with a majority of equity. This enables the business to take on future debt, if needed, while keeping the debt-to-equity position low.

Financial Assumptions: Examples of assumptions could include the following: economy, competition, customer (who they and if that will remain constant), life cycle of your product/service, seasonality of product/service, availability of materials, sales projections, start-up costs, personnel needs, etc.

· We recommend focusing on expense items from your Profit & Loss Statement, along with several items from your Balance Sheet.

· This discussion should be looking at the ‘details’ presented within your financial statements, providing support for the estimated figures included.

Assumptions Example

· Utilities costs are estimates based on average costs for other businesses of similar size in the building. The winter months have higher costs for heating.

· Rent costs were estimate based on average costs for similar size buildings in the area.

· COGS are estimated at about 5% of sales.

· Payroll taxes are estimated at 8% of wages.

· The owner inherited a large sum of money from a relative’s estate and will use $50,000 to start the business.

· The company’s ending accounts receivable balance is $7,500, which are the expected amounts owed for two events completed during the final month of the year, but not paid.

· Ending inventory is calculated based on keeping two weeks’ worth of materials on hand.

G2

Financial Position

Include the estimated financial position of the company at the end of the first year. How are you feeling about the financial health of the company going into year two?

Financial Position Example

Sweet Treats Bakery will end their first month of business with a loss of $13,488, and the year with a profit of $10,424. The outlook for the bakery is a positive one, although for four out of twelve months the company operated at a loss. These losses are attributed to the establishing of a client base, understanding the buying trends of consumers and slower times of the year for booking catering events. Understanding that most small businesses overextend themselves in the beginning financially, the CEO made the conscious decision to concentrate on establishing the company’s brand and operating the business on a smaller scale, sacrificing a major profit in the beginning in exchange for longevity.

G3

Estimated Capital/

Investment Needs

· Step One: Discuss the initial investment into the company. This should include the loan and/or owner investment with corresponding dollar amounts from the balance sheet. The amounts must be identical to pass this section.

· Step Two: Explain how the capital investment was used in the company such as payment for pre-launch expenses, long-term asset purchases, offsetting losses for the first year, etc.

· Step Three: Explain the amount of initial capital investment that may or may not be needed in the future.

Investment/Capital Example:

The Owner has invested $50,000.00 of personal savings for the initial startup of the Company to offset any long-term asset purchases as well as costs associated with establishing the storefront. In addition, an initial loan of $10,000 was acquired to help offset pre-launch expenses. At year-end, the remainder of the loan balance will be $7500. There might be a need of a loan in year three or four when the company expands with a new location or food and new employees are added; however, there is no immediate need for capital now.

H

Sources

Four main elements (author, date, title, and location) are required, as available. In addition, there must be in-text citations for all information used from outside sources whether it is a direct quote or paraphrased information. These citations will be required for sections B1 and C2. Sources will not be included on the reference page unless they have a corresponding in-text citation in the paper.

I

The paper will be returned if there are multiple spelling and grammar errors or if the paper is not well organized and difficult to understand. The required templates will assist with organization and structure. We also suggest utilizing the free version of Grammarly to have your paper evaluated for writing errors. Go to www.grammarly.com for additional help!

Schedule Final Appointment Prior to Submitting: Schedule a call with a member of our course instructor team, if needed, to discuss final questions and concerns on the assessment as a whole prior to submitting your first attempt. If you have been using the tips in this document and feel comfortable with your work, you are welcome to submit the assessment. Scheduling a call with a member of our team is not required but is available if you have additional questions or concerns. Course instructors do not read papers to provide feedback prior to the first attempt, but we are more than happy to meet with you to discuss any sections prior to submitting the assessment.