Solution Manual for Entrepreneurship: Starting and Operating A Small Business, 3/E 3rd Edition Steve Mariotti, Caroline Glackin

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Chapter 2 The Business Plan: Road Map to Success
Chapter 2 Contents
Feasibility Analysis: Will My Idea Work 38
Analyzing Product and/or Service Feasibility 38
Analyzing Market and Industry Feasibility 39
Analyzing Financial Feasibility 42
What Is a Business Plan? 42
Why Do You Need a Business Plan? 43
Writing a Business Plan Early Will Save You Time and Money 43
Your Business Plan Is the Key to Raising Capital 44
The Business Plan Is an Operations Guide 44
Business Plan Components 45
Cover Page and Table of Contents 46
Executive Summary: A Snapshot of Your Business 46
Mission and Culture: Your Dreams for the Organization 46
Company Description-Background and Track Record 47
Opportunity Analysis and Research: Testing Ideas 47
Marketing Strategy and Plan: Reaching Customers 48
Management and Operations: Making the Plan Happen 49
Financial Analysis and Projections: Translating Action into Money 51
Funding Request and Exit Strategy: The Ask and the Return 54
Appendices: Making the Case in Greater Detail 55
Business Plan Suggestions 55
Presenting Your Business Plan 57
Business Plan and Venture Competitions 58
Chapter 2 Overview
This chapter is an introduction to the concept of feasibility analysis and business plans. The
reasons for creating these documents and the recommended contents and applications are
discussed.
Chapter 2 Objectives
Performance Objective #1: Know what a feasibility analysis and when to create one
Performance Objective #2: Know what a business plan is and how to describe it
Performance Objective #3: Explain the various purposes of a business plan and the audience for
each
Performance Objective #4: Understand the components of a business plan
Performance Objective #5: Be able to demonstrate proper development and formatting of a
business plan
Chapter 2 Outline
I. Define and describe a business plan.
A. Road map to success
B. History and plan for an organization
C. Meets the needs of various audiences
II. Explain the various purposes for a business plan and audiences for it.
A. Used by entrepreneurs to organize their thoughts before starting a business and
determine business viability
B. Can be used to raise money from investors and lenders
C. Can help guide the operation of a business
III. Understand the components of a business plan
A. Cover page
B. Table of contents
C. Executive summary
D. Mission, vision, and culture
E. Company description
F. Opportunity analysis
G. Marketing strategy and plan
H. Management and operations
I. Financial analysis and projections
J. Funding request
K. Exit strategy
IV. Demonstrate proper development and formatting
New to the Third Edition
? Feasibility Analysis – Section on feasibility analysis added, including a discussion of
financial and market feasibility and Porter’s Five Forces model.
Chapter 2 Teaching Notes
Class Discussion Ideas:
1. Present this problem: The students want to go from your location to Wall Street, in
New York. Ask them how they would figure out how to get there. Some may say, Use
MapQuest—particularly if it is within driving distance. Others may suggest getting
train or subway or bus or airline schedules (depending on your location). There may be
some who recommend driving east, north, or south until reaching New York City, and
then finding Wall Street. Discuss how there can be many ways to achieve the same
goal. Explore the estimated travel time and cost of each option. Emphasize that
different financial costs and time investments can be involved to accomplish the same
goal. Next, ask what happens if they simply get into a car and start driving with no
particular destination in mind. Make the connection with the road map to success.
2. The chapter’s opening quote, from Lewis Carroll, is: “If you don’t know where you are
going, any road will get you there.” Ask class how this pertains to business. How does
it relate to business plans?
3. Ask students to describe what they would want to know about a business before they
invested in it? What would determine how much they would invest? (Should help with
understanding of contents and rationale.) What would determine whether or not they
would invest at all?
4. Suggest that students imagine themselves working at a bank rather than being
individual investors. What is the role of the lending officer? (Looking for sales of
loans and making profitable loans that are repaid on time.) What would you need to
know about a business before approving a loan, or making a positive recommendation
to a loan committee?
5. Give students examples of different businesses to show distinctions in what a plan
could emphasize. Start with an example such as a student-run T-shirt silkscreenprinting
business. Then, progress to a restaurant or retail store. Next, present a hightech
venture. Discuss commonalities and differences in what their respective business
plans should include and emphasize.
6. Show examples of well-formatted and poorly formatted business plans and ask students
for their reactions to each. Explore reasons why style and format matter.
7. Select an excellent business plan presentation and a poor one, or develop one of each.
Demonstrate approximately one minute of each. Launch a discussion regarding
presentation quality