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Planning a Business

Amen Mukhlis QSO 640: Project Management Southern New Hampshire University

Overview

Starting a small business can be a tricky process, especially for those who have no previous experience  Small businesses have an extremely high failure rate (many failing within the first 5 years), greatly attributed to the lack of a business plan  The idea of working for yourself and being your own boss is very attractive, but can only be carried out with the proper planning and preparation in place

Project Charter
The purpose of this project plan is to help create a business plan for two small business owners (Partner A and Partner B) who hope to open a specialty scooter shop in downtown Portsmouth, NH. The customers need a detailed, step-by-step guideline to follow, as neither have ever owned a business in the past. They are expecting that the plan will be completed no later than April 1, 2012 so that they can open their doors on May 1, 2012 and take full advantage of the Spring and Summer riding months. The beginning date of the project is October 1, 2011, giving us 6 months time (26 weeks) to complete the project. The business plan must not only be completed on time, but also include the following elements: Description of Venture, Industry Analysis, Analysis of Competition, Marketing Plan, Financial Plan, Organizational Plan, Exit Strategy, and Conclusion/Reflection. The greatest risks that Partner A and Partner B face are: No Opportunity, Loss of Capital Investment, Low Sales, Competition, and Cash Flow Issues. On the first day of each month, we will meet face-to-face with the clients to go over the project status and review any of the completed elements. If they have any questions or concerns, they will be addressed at this time, and any needed revisions will be made and brought to the next month's meeting. The clients have a capital investment of $25,000.00 and are willing to seek financing for additional costs and monthly expenses.

Scope
Requirements:
       

Description of Venture Industry Analysis Analysis of Competition Marketing Plan Financial Plan Organizational Plan Exit Strategy Conclusion/Reflection

Scope (WBS)
Planning a Small Business WBS
#

Requirements

Level 1

Level 2
- Determine type of business entity - Determine the nature of the business - Determine if there is a need for the business - Identify potential buyers/target market - Identify competition - Identify the secondary competition - Research available marketing avenues - Determine marketing costs

Level 3
- Establish a business idea

1 2 3

4

5

6 7

8

- Create a mission statement - Create a vision statement Description of Venture - Conduct a Feasibility Analysis - Determine Strengths, Weaknesses, Industry Analysis Opportunities, Threats (SWOT Analysis) - Create a synopsis chart Analysis of Competition - Establish a competitive advantage - Print fliers, create website, business cards - Submit advertisements to radio, Marketing Plan magazines, newspapers, TV - Invest personal funds - Take out a small business loan - Get a partner/investor - Conduct a Breakeven Analysis Financial Plan - Create job descriptions - Determine job assignments/ Organizational Plan responsibilities - Determine the value of the business Exit Strategy (Valuation process) - Put an action plan in place to institute changes Conclusion/Reflection - Plan to review/reassess regularly

- Identify/research market trends - Research industry growth/fail rates - Identify the primary competition - Determine marketing budget - Select target market(s) to advertise to

- Determine initial capital requirements (Who?, - Make a list of itemized start-up costs How much, What?) - Determine monthly operating expenses - Prepare 12 months itemized cash flow - Estimate 3 years' projections - Determine breakeven by # of customers needed - Create an organizational chart - Determine business entity - Determine the shareholders - Determine how the funds/losses will be dispersed - Determine areas of improvement/ opportunities - Determine the amount of cash the business can afford to lose - Identify strengths/weaknesses of the business and owner(s)

Schedule Plan
Schedule Plan
# Activity (In Sequential Order) Business Idea Nature of the Business Business Entity Mission/Vision Statements Market Trends Industry Growth/Fail Rates Target Market Competitors SWOT Analysis Primary Competition Secondary Competition Synopsis Chart Competitive Advantage Marketing Budget Target Markets Marketing Avenues Website Fliers Business Cards Advertisements Duration (Weeks) 0 0 0 2 # Activity (In Sequential Order) Itemized Start-Up Costs Monthly Expenses Initial Capital Investment Cash Flow Break-Even Analysis Shareholders Organizational Chart Job Descriptions Job Assignments Cash Business Can Lose Funds/Losses Dispersed Valuation Process Strengths/Weaknesses of Business Strengths/Weaknesses of Partner A Strengths/Weaknesses of Partner B Areas of improvement Opportunities Action Plan Duration (Weeks) 1 1 1

1

5

2

1 2 1 2 1

6

2

7

2

3

1 1 2

1 8 4

4

Total Duration (Weeks)

25

Human Resource Plan
Responsibility Chart
Task Business Idea Nature of the Business Business Entity Mission/Vision Statements Market Trends Industry Growth/Fail Rates Target Market Competitors SWOT Analysis Primary Competition Secondary Competition Synopsis Chart Competitive Advantage Marketing Budget Target Markets Marketing Avenues Website Fliers Business Cards Advertisements Partner 1 & Amen X X X X Partner 2 & Alex X X X X X X X X X X X X X X Task Itemized Start-Up Costs Monthly Expenses Initial Capital Investment Cash Flow Break-Even Analysis Shareholders Organizational Chart Job Descriptions Job Assignments Cash Business Can Lose Funds/Losses Dispersed Valuation Process Strengths & Weaknesses of Business Strengths & Weaknesses of Partner A Strengths & Weaknesses of Partner B Areas of improvement Opportunities Action Plan Partner 1 & Amen X X X X X X X X X X X X X X X X X X Partner 2 & Alex X X X

1 2 3

5 6 7

X

4

X X X X X X X X

8

X X X X X X X X X X X X X

Budget Plan
Monthly Operating Expenses Rent (F) Utilities (V) Payroll (F) Taxes (F) Insurance (F) Supplies (V) Maintenance to Rental Scooters (V) SBA Loan Payment (F) $4,500.00 Based on $15 SF, 300 SF $150.00 Based on 1675 KWH $6,250.00 (1) $50k Full-time salary and (1) $25k part-time salary $1,700.00 $150.00 $5,000.00 Replenishment of scooters and accessories $250.00 $117.00 $25k loan, 10 year term, 7% $18,117.00 Total Monthly Expenses Legend Fixed Expenses Variable Expenses

F V

Capital Requirements SBA Loan Personal Savings $10,000.00 $25,000.00 $35,000.00

Total Start-Up Capital Requirements

Monthly Sales Rentals 50 cc Scooter Commissions 125 cc Scooter Commissions Maintenance Scooter Accessories $12,000.00 Based on $40/hr, 25 customers/day,6 days a week, 6 months $4,000.00 $200 commission (10%) on 20 scooters $4,050.00 $270 commission (10%) on 15 scooters $300.00 $20 oil changes for 15 customers $500.00 10% commission on accessories sold $20,850.00 Total Monthly Sales

Net Income Sales $20,850.00

Communication Plan

Stakeholder Communication Requirements :

Face-to-face meetings every 1st of the month to discuss progress, ask questions, and discuss any necessary revisions Weekly communications to clients, via e-mail, every Friday by 5 PM

Update clients on completed activities, ask questions (both parties), and discuss any issues that my hinder an activity/project completion Reply e-mails made by the clients will be responded to within 48 hours

Responsible Parties

Communications will be sent/responded to based on the Responsibility Chart

Escalation of Issues

If either Partner A or B is having difficulty reaching their assigned PM within the agreed upon time of 48 hours, he/she is able to contact the other PM to get the issue resolved

Risk Management Plan
Risk Management Plan
# 1 Risk Great Idea, but no Opportunity Severity (S) Likelihood (L) Detectability (D) Risk Priority Number (S*L*D)

10

5

5

250

2

Loss of Capital Investment

10

5

1

50

3

Low Sales

10 5 10

8 5 8

1 5 1

80 125 80

4

Competition

5

Cash Flow Issues

Risk Mitigation - Feasibility Analysis - Determine need for business - Prepare thorough Financial Plan - Selecting the appropriate business entity - Select the appropriate marketing avenue/frequency - Determine sales needed to break even - SWOT Analysis - Prepare thorough Industry Analysis - Competitive advantage - Prepare 12 months itemized cash flow - Estimate 3 years' projections

Evaluation Methods
Was the Project a Success?
   

On Time/Early On/Under Budget Included all Requirements

Both Partners feel confident in their abilities to carry out major functions of owning/ operating a business

Opportunity or Idea?

  

Realistic Viable Fulfill a Need Not Currently Being Met

Mission Statement

Our main mission is to provide the total scooter experience to our customers while also striving to provide efficient, affordable, environmentally-friendly, trendy, and fun transportation.

Vision Statement

Seacoast Scooters is dedicated to providing scooter enthusiasts with a one-stop scooter shop where they can purchase scooters, accessories, apparel, parts and services; all from knowledgeable staff who share and are passionate about the same hobby.

Trend Research
Trend (Social)
  

Force (Economic)

Fun

High Gas Prices

Customizable “Go Green”

Economical

Inexpensive to Own/Operate

SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

Product Knowledge Passion Need for Business Strong Customer Relationships Great Location

Lack of Capital Several Product Lines

Niche Market Current Trends

Other Economical Transportation

Target Market

  

Tourists Environmentalists Budget-conscious Individuals

Scooter Enthusiasts

Marketing

  

Word-of-Mouth Website Rental Scooters


Flyers
Website

Benefits/Positioning


 

One-stop Shopping Specialty Shop Excellent Customer Service/Customer Experience

Customer is a Priority

Break-Even Analysis

Total Variable Expenses Total Fixed Expenses Net Sales Ratio of Variable Expenses to Net Sales Breakeven Sales ($) Breakeven Sales ($)/Day

$64,800.00 $152,604.00 $250,200.00 $0.26

$589,221.00 $1,888.53