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Aazar Munir 11/12/2008
A business plan analysis of Garlic’s Restaurant, a plan written by Kathy Burns. Overview of the whole plan sorted by a per section basis from the business plan. Included are suggestions, additions, and corrections as well some ways to overcome these barriers.
simply stating that the best case scenario is an increase in Return on Investment by a percent is not going to win investors over. There are only about 10 to 11 pages of her business plan and the rest of it is all appendices. Moreover. this should be avoided because at this point .000 it simply says how much it will cost and there is no mention of how much equity Kathy is willing to surrender for the capital investment. It seems like Kathy is writing a full business plan and not a summary business plan so maybe she should increase the qualitative part of the plan into 25 to 35 pages then maybe the appendices would seem more fitted. Moreover.000 to start. however. the purpose of writing this business plan is unclear. Executive Summary The executive summary does not have enough detailed information. This sort of gives the reader an overwhelming feeling that there is going to be too much quantitative data versus qualitative. she has not asked for this investment or stated where she will be getting it from anywhere in the plan. this approach might make the business plan way too thick. that is to make it appealing enough to the reader that they want to continue reading the plan. Although. Kathy can improve the overall appeal of her case by changing the ratio of appendices to actual business plan. it is just the executive summary and it is not supposed to have every single detail. Kathy does mention that the business needs $200. Lastly. the summary does not say that the firm is requesting the $200.Aazar Munir (4376984) Overall Business Plan The first step to analysing the business plan is to look at the overall structure. Kathy can also re-evaluate which items from the appendix are absolutely necessary for the business plan and remove the extra information. One of the main objectives of a business plan is to promote “readability”. Kathy uses a quote from some book or press release which has nothing to do with the executive summary. However.
An industry analysis is one of the most important aspects of the business plan because the readers need to see the external environment the proposed business is going to take place in. to avoid overcrowding the appendix with information it is a better idea to simply state the values that are important in the table and just cite the source. Kathy should elaborate on these points and show how her idea/company is different from the rest and is in fact an opportunity and not just any idea. . this section should include a business model and properly elaborate on the core competencies of the business. Marketing Plan Right away in the marketing section there is a big table that can either be shrunk down to information that is vital to the plan or simply be put into the appendix. Business Description/Overview In this section of the plan. there is slight usage of French or a popular term used by those in the food and beverage industry. However. Furthermore. A business plan should not contain any terms that a neutral reader might not understand.Aazar Munir (4376984) the reader is only interested in the business aspect of the plan. Kathy can put more specific information about the types of restaurants and the types of consumers they attract and how Garlic’s Restaurant will get its market share. Instead of wasting all that space on the table. Furthermore. Kathy should not assume that the person reading this report knows anything about common terms used in the industry or even another language for that matter. the industry analysis should contain some hard facts from credible sources that are cited properly and not just from a Hotel and Restaurant magazine. Simply putting three points and labelling them as the competitive strategy is not the best idea. There is a lot of room left over for more information to be added. The industry analysis should be a whole different section and way more detailed. Kathy should utilize this and make the executive summary more insightful as to the actual business.
An important aspect of the marketing plan is to further explain the products/services that are to be offered and how they will create value for the customer. Another important thing to note is that Kathy’s main chef is still just a “potential”. Kathy has not described her restaurant in more detail and focused this section mainly on location of the store and customer feedback. Moreover. she does not provide any credibility to this claim. as there are many other aspects of the marketing mix that are just as important especially the product. there is little if any information about the dayto-day operations of Garlic’s Restaurant. consultants and specialists. instead product costing should be under marketing plan. however. Moreover. this section should include the full marketing mix and how they will relate to one another. Operations Product Costing is placed in the Operations section in Kathy’s plan. policies. legal structure. Venture capitalists and other investors usually like to see things more concrete.Aazar Munir (4376984) In addition. Kathy can explain in more detail about her staff in the Management section. To mention that it is a potential chef gives the illusion that there is a possibility that he might not wish to work with Kathy. and . Location and good customer service alone do not run a business. Kathy should list important suppliers and talk about them in detail instead of referring the reader to an exhibit. Company Organization Kathy lists a bunch of unorganized categories under this heading: management. Kathy should add some more detailed information about the products she is offering and what makes them unique. Without the product costing under the operations section. there is no evidence of a feasibility analysis or concept and usability testing done. Kathy claims that restaurant sales are at their peak in July and December.
they add up to make the business plan look more organized and professional which shows the reader that you have spend a lot of time into this plan. It might be a better idea to have a separate heading for management and other staff and to put the rest of the sections within the heading “Company Structure. Ownership. In the personnel policies. this is something that should be explained in more detail. and Intellectual Property”. Changing little things like this might seem insignificant.Aazar Munir (4376984) license and permits. Kathy needs to show the reader that she will in fact either get these permits for sure or that they are already on their way for approval. Within the legal structure section of the plan. She should mention who those shareholders are and if they have agreed to give all the voting rights to Kathy. there is information about lower level employees and there is a reference to their work schedule which is an exhibit. however. This is something that is unnecessary and bulks up the business plan when it is not of essential concern. There is no explanation of the benefits he will get from Kathy over his previous employer and whether he has promised to come work for Kathy yet. Kathy also mentions the need for getting licenses and permits approved by the government. . Kathy mentions that she will be the 100% of the voting rights for the company even though there are going to be four shareholders. the investor has just wasted his capital before the business even got started. however. This statement gives the impression that he has invested himself into his kitchen and might not be willing to leave and work for Kathy. If there is a risk that one of the permits or licences does not get approval. In the management section Kathy mentions that the prospective chef works in a restaurant in which he was actively involved in the start-up of their kitchen. It seems unlikely that a person will invest heavily into a business without any voting rights.
Kathy has not included any information about a liquidity event. which generally states how and when the investors will be getting their return on investment. Kathy has assumed that if her competitors are getting a certain number of customers. One of the most important parts of a business plan is the competitor analysis. Moreover. Additions to the Business Plan There are several sections of a business plan that Kathy failed to implement. this is why Kathy needs to dedicate a whole section to talking about her competitors. This assumption is made without showing how exactly these customers will be attracted and what the competitors do to attract them. that she will also get a similar amount. which is a solid edition to any business plan and shows the reader that the entrepreneur has thought the whole process through from the start-up to exit. the owner must take it competitors into consideration. A proper business plan would show pro-forma statements for 3 to 5 years and also financial need for those years. In addition. In order for a business to be successful. Another important part of a business plan Kathy skipped is the Critical Risk Factors.Aazar Munir (4376984) Financial Data In this section Kathy only explains the financial need for the first year of operation. Kathy has simply put all of her information on her competitors into an appendix. Kathy has not included a sources and uses of funds statement which shows where she will get the money and how she will spend it. Kathy should also include an exit strategy. There is not qualitative analysis of these tables present in her business plan. Every business takes some degree of risk so one of the most important things that a business plan should convey to its readers is a sense . Venture capitalists and other investors reading this report might not even read all the exhibits because of the overload of information. Her financial statements are based on the projected number of customers and seem overly optimistic.
There is also a slight problem with question number two. 10 Important Questions a Business Plan should answer An important framework for assessing the success of a business plan is offered in the course text book. There are a few questions out of the 10 discussed in class that Kathy fails to answer. Kathy should also address question number six and talk about how competitors might react to her entering in their market. A subsection of this Critical Risk evaluation should be a contingency plan to implement in case one of the critical factors of the plan went wrong. In response to question number three. However. Kathy only mentions the return on investment in the executive summary and then after fails to mention exactly what portion investors will be getting of her profits let alone when they will be receiving any return. she has not mentioned any critical risk factors and has no contingency plan to answer question number ten. A feasibility analysis would help solve this problem for Kathy. One of the biggest red-flags in a business plan is that founders should have some of their own money at risk with the opening of their business plan. In regards to question nine. There are ten questions a business plan must be able to answer in order for it to successfully appeal to its reader. There is nothing extremely unique or something that competitors cannot easily copy about her business plan except maybe the location.Aazar Munir (4376984) that the venture’s management team is on the ball and understands the critical risks facing the business. Firstly. she fails to show that her business plan is actually an opportunity with real potential. A copy of this framework is presented in appendix 1. In addition. Red Flags in Business Plans Provided in appendix 2 are five red-flags any business plan writer should avoid. there is no feasibility analysis mentioned in the plan. Kathy does not even mention the source of any income . this plan seems more like just an idea.
Kathy has not cited any major sources. the only things she has referenced are a few sources from a magazine and some quotes from food enthusiasts. Another red-flag in business plans is poor citation.Aazar Munir (4376984) whether it is from her or anyone else. trends or competitors etc. Typically investors like to see entrepreneurs who are willing to put their own money at risk because it shows how much faith the owner has in his business opportunity. It is not a good idea to request the whole $200.000 of starting expenses from an investor. There should be a section at the end of the report showing a bibliography for the reader to maybe go into some of the websites or get a hold of some of the books used in the business plan to get more detailed information about the industry. .
or will the firm be able to defend its position through patents. Does the firm have an exciting and sensible business model? Will other firms be able to copy its business model. or is it an opportunity with real potential? 2. and do they project a bright future for the firm? What rate of return can investors expect? 10. Are the financial projections realistic. and does the management team have contingency plans in place if risks become actually problems? . or some other means? 3. Is the industry in which the product or service will be competing growing. Does the firm have a well-defined target market? 6. copyrights.What are the critical risks surrounding the business. or declining in nature? 5. Is the product or service viable? Does it add significant value to the customer? Has a feasibility analysis been completed? If so. How will the firm’s competitors react to its entrance into their markets? 7. stable. and up to the task of launching the new venture? 8. what are the results? 4.Aazar Munir (4376984) Appendix 1 The 10 Most Important Questions a Business Plan Should Answer 1. Is the management team experienced. Is the firm organized in an appropriate manner? Are its strategy and business practices legal and ethical? 9. skilled. Is the business just an idea.
4. Overly aggressive financials. A poorly cited plan. Founders with none of their own money at risk.Aazar Munir (4376984) Appendix 2 Red Flags in Business Plans 1. 2. 5. 3. Defining the market size too broadly. Sloppiness in any area. .
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