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Assume you currently run a small retailing business in the lobby of a large office building. Your store
occupies 1000 square feet of space. You spend fifty hours a week at the store and hire two employees,
each of whom spends thirty hours a week at the store. Your annual revenues are between $150,000 –
$300,000 a year. The products you sell are a mixed bag of items. Basically, you stock up with items
that occupants of the office building will want, including snacks, pre-wrapped sandwiches,
bottled/canned beverages, greeting cards, newspapers, paperback books, and small gift items that the
building’s tenants might find attractive.
A new office building will open two blocks away from the building you now occupy. You would like to
expand your business to that building. In fact, you begin to dream that you can establish a chain of
such stores in large buildings downtown. You have even cooked up a name for the potential chain,
“Buster’s” (named after your pet Labrador retriever).
At this point, you are not sure how you want to fund the expansion. You need to put together a business
plan to develop a sense of the financial requirements of the new operation. You may decide to fund it
using your savings and by taking out a second mortgage on your house. Three other options are to borrow
money from the bank, borrow money from friends and family, or to have friends/family assume an equity
role in your business as investors. In any event, your business case would be used to borrow the money
or to attract investors.
Write a business plan that describes this proposed venture.
In the world of real business, business plans can take on a variety of shapes and sizes. They may range
in length from a few pages to hundreds of pages, depending on the nature of the venture. They can be
filled with detailed financial and marketing data, or simply a brief sketch of financial and marketing
requirements – depending on how much data are available. They can be highly structured or casual. There
is no one best way to structure a business plan.
In this assignment, you should keep the business plan short: 10-15 pages of text, typed single-spaced,
using 12-point font. Charts and tables are extra. You should also employ the following outline, which
captures the chief elements of typical business plans:
1) Introduction and brief description of the venture
a) Introduction (e.g., “This business plan describes a proposed venture to expand Buster’s from a one-
store to two-store operation.”)
b) Description of the business (“Buster’s is a small store located in the lobby of a large office
building …”)
c) Business aspirations (e.g., “Ultimately, we hope to expand Buster’s so that it becomes a chain of
10-15 stores situated in downtown office buildings.”)
2) Organization of the business and key players (e.g., “Marsha Jones is owner and principal manager of
Buster’s. The current store employs two people, each of whom works at the store 30 hours a week … The
proposed store will be managed by Ms. Jones …”)
a) Owner(s) – role(s) and qualifications
b) Company legal structure (e.g., sole proprietorship, partnership, LLP, S-Corporation, C-corporation)
c) Management team – roles and qualifications
d) Employees – roles and qualifications
e) Contractors/vendors (as appropriate) – roles and qualifications
3) Financials
a) Anticipated operating costs of the new business (e.g., What are the anticipated expenses of
operating the business in a typical month?)
b) Anticipated investment requirements to launch the new venture (e.g., furnishing facilities,
inventory purchases, meeting payroll during the first six months of operation)
c) Anticipated revenue
d) Pro-forma cash flow projection for the first year of operation
REVENUES Month 1 Month 2 Month 3 Month 4 Etc.
Rev source A
Rev source B
Etc.
TOTAL REV
COSTS
Rent
Payroll
Materials
Etc.
TOTAL COST
NETCASH FLOW
e) Payback point (taken from the pro forma cash flow statement)
f) Anticipated return on investment from the perspective of three years into the venture
4) Marketing/Sales
a) Summary of a marketing/sales strategy
b) Marketing/sales requirements for the business
i) Price of goods/services
ii) Product
iii) Promotion
iv) Place
c) Competition
5) Operations
a) Location of the business
b) How the business will be operated (e.g., hours of operation, procedures to produce goods/services,
special operations issues)
6) Legal and sundry issues
a) Legal and related issues that need to be addressed (e.g., Liability, intellectual property,
structuring the business, commercial law issues, etc.)
b) How legal issues will be handled (e.g., in-house attorney, use of outside legal services)
7) Major challenges
a) A realistic assessment of the challenges facing the new venture
Source:
Essentials of Entrepreneurship and Small Business Management (3rd Edition), Thomas W. Zimmerer & Norman
M. Scarborough, Prentice Hall © 2004
