The Business Plan Project
Why Do the Business Plan?
The following business plan project outline will help you develop the business plan for the
business your team decides on developing. The business should be a relatively simple one of
your choosing, perhaps a local service or retail business, one that you will be able to write a plan
about with a fairly solid scope and valid projections based on fact. This is not a novel, look up
facts, analyze them, make solid business judgments.
Your first plan assignment will include Parts 1,2,and 3, and will be due on October 14, as a PPT
presentation and a PPT hard copy.
Your second plan assignment will include Parts 4,5, and 6 and will be due on December 13, as a
PPT presentation and a PPT hard copy.
The following pages contain the following:
Business Plan Sample syllabus ………………………………………………………….2-3
Student FAQs for the Business Plan Project…………………………………………….....4
Student Business Plan Project Template: Part 1…………………………………………5-6
Student Business Plan Project Template: Part 2…………………………………………7-8
Student Business Plan Project Template: Part 3……………………………………......9-10
Student Business Plan Project Template: Part 4………………………………………11-12
Student Business Plan Project Template: Part 5………………………………………13-16
Student Business Plan Project Template: Part 6………………………………………….17
Sample Business Plan: The Friendly Café II……………………………………….....18-34
With the exception of the sample business plan (pages 18-34), the other sections have been also
included in the relevant chapters of the instructor materials to reduce preparation time for
instructors.
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BUSINESS PLAN PROJECT OUTLINE
PART 1
THE CONTEMPORARY BUSINESS ENVIRONMENT
This part of the business plan asks students to come up with a “great idea” for a business,
creating an identity and forming a concrete notion of what the business will do. The first part of
the plan also asks students to identify the type of ownership the business will take and briefly
looks at who the firm’s ideal customers are. This part of the plan also looks at how the business
will interact with the community and demonstrate social responsibility, and includes a
perspective on the impact of global business.
PART 2
THE BUSINESS OF MANAGING
This part of the business plan asks students to think about goals of their business, some internal
and external factors the affecting the business, as well as the organizational structure of the
business. As part of the assignment, students will perform a basic SWOT analysis for their
business and create an organizational chart to show the framework of the business. Students will
also explain the role of each employee, and how each relates to the others. Finally, students are
asked to examine various factors relating to operating their business.
PART 3
PEOPLE AND ORGANIZATIONS
This part of the business plan asks students to think about their employees, the jobs they will be
performing, and the ways in which they can lead and motivate them. Students take the different
job titles they created in the organizational chart in Part 2 and give thought to the skills that
employees will need to bring to the job before they begin. They also consider the training they’ll
need to provide employees after they are hired, as well as how they’ll compensate their
employees. Part 3 of the business plan also asks students to consider how they’ll lead employees
and keep them happy and motivated.
PART 4
PRINCIPLES OF MARKETING
This part of the business plan asks students to think about marketing’s “Four Ps”—product,
price, place (distribution), and promotion—and how they apply to their business. Students will
list features and benefits as well as the points of difference for their product or service. After
describing the product, the student must connect those described features and benefits to a
targeted buyer. Once the targeted buyer has been named, students will describe advertising and
promotional efforts to get the buyer’s attention.
PART 5
MANAGING INFORMATION
This part of the business plan asks students to think about their business in terms of IT needs and
costs. Students are also asked to complete a balance sheet and income statement for their
businesses.
PART 6
FINANCIAL ISSUES
This part of the business plan asks students to consider how they’ll finance their business as well
as create an executive summary for their plan.
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STUDENT FAQs FOR THE BUSINESS PLAN PROJECT
1. Where do I begin?
This project will challenge you to think about all the parts that are necessary for a business to
succeed. You should start by thinking of a business that you would like to begin. Do not use a
product that already exists, such as Coca-Cola. Learning comes through the process of using
your own ideas, not by imitating others. Each section of the business plan connects with the
information that is discussed in class and in the textbook.
2. What should my business plan look like?
There are six parts to the business plan. Your instructor will provide you with the “Business
Plan Project Student Template” file that you’ll need to complete each part. Answer the
questions that make up each part in the order that they are shown. Note that the template
includes hints that will help you answer each question. Once you are done answering the
question, you can delete the question and the tip, leaving just your answer behind.
Your instructor may also provide you with a sample business plan for you to use as a guide.
Note that your plan does not have to look exactly like the sample, but you need to show good
organizational skills. Note that each of the six parts of the business plan project is fully
explained in your textbook. These assignment instructions fall at the end of Chapters 4, 7, 10,
12, 14, and 16.
3. After I finish each part of the plan, what do I do with my assignment?
Your instructor will give you instructions as to how he or she would like you to submit each
part of the plan. You will most likely be given a chance to make improvements to your plan
throughout the grading period.
Note that you will be using the same student template file to complete the entire plan.
Therefore, after completing each part of the plan, you need to save the file on a disk or to your
hard drive.
4. How will I know if I’m doing the plan correctly?
Your instructor will provide feedback to you about your plan. Students who successfully
complete the plan have these two qualities in common:
They do not procrastinate. A well-written business plan cannot be written overnight, as they
require a good deal of thought and creativity.
They ask a lot of questions. If a term is used in the business plan template that confuses you,
check in your textbook or ask your instructor for an explanation.
5. How many pages are needed for a good grade?
It depends on the business that you will be starting. A good explanation normally requires
between 12 to15 pages. This sounds like a lot, but most sections will average 2 to 3 pages.
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STUDENT BUSINESS PLAN PROJECT TEMPLATE
PART 1: THE CONTEMPORARY BUSINESS ENVIRONMENT
BUSINESS NAME
What is the name of your business?
Hint: When you think of the name of your business, make sure it captures the spirit of the
business you’re creating. Note to students: Once you have inserted your answer, delete the
question and the tip provided here and leave just the heads so your business plan will look more
professional.
DESCRIPTION OF BUSINESS
What will your business do?
Hint: Imagine you are explaining your business to a family member or a friend. The business
should be easy to explain. Keep your description here to about 30 words or less.
FORM OF BUSINESS OWNERSHIP
What form of business ownership (sole proprietorship, partnership, or corporation) will
your business take? Why did you choose this form?
Hint: For more information on the types of business ownership, refer to the discussion of the
different forms of business ownership in Chapter 3.
IDEAL CUSTOMER
Briefly describe your ideal customer. What are they like in terms of age, income level,
and so on?
Hint: You don’t have to give too much detail in this part of the plan; you’ll provide more details
about customers and marketing in later parts of the plan.
OUR ADVANTAGES
Why will customers choose to buy from your business, instead of your competition?
Hint: In this section, describe what will be unique about your business. For example, is the
product special, will customer service be exceptional, or will you offer the product at a lower
price?
ETHICAL ISSUES
All businesses have to deal with ethical issues. One way to address these issues is to create a
code of ethics. List three core (unchanging) principles that your business will follow.
Hint: To help you consider the ethical issues that your business might face, refer to the
discussion in Chapter 2.
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SOCIAL RESPONSIBILITY
A business shows social responsibility by respecting all its stakeholders. What steps will
you take to create a socially responsible business?
Hint: To help you consider issues of social responsibility, refer to the discussion of social
responsibility in Chapter 2. What steps can you take to be a good citizen in the community?
Consider also how you may need to be socially responsible toward your customers and, if
applicable, investors, employees, and suppliers.
GLOBAL ISSUES
Do you think that you’ll sell your product in another country? If so, what countries
would you choose, and why? What challenges will you face?
Hint: To help you consider issues of global business, refer to Chapter 4. Consider how you will
expand internationally (i.e., independent agent, licensing, etc.). Do you expect global
competition for your product? What advantages will foreign competitors have?
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STUDENT BUSINESS PLAN PROJECT TEMPLATE
PART 2: THE BUSINESS OF MANAGING
MISSION STATEMENT
Provide a brief mission statement for your business
Hint: Refer to the discussion of mission statements in Chapter 5. Be sure to include the name of
your business, how you will stand out from your competition, and why a customer will buy from
you.
BUSINESS GOALS
Consider the goals for your business. What are three of your business goals for the first
year? What are two intermediate to long-term goals?
Hint: Refer to the discussion of goal setting in Chapter 5. Be as specific and realistic as possible
with the goals you set. For example, if you plan on selling a service, how many customers do you
want by the end of the first year, and how much do you want each customer to spend? If you plan
on selling a good, how many do you hope to sell?
SWOT ANALYSIS
Perform a basic SWOT analysis for your business, listing its main strengths, weaknesses,
opportunities, and threats.
Hint: We explained previously what factors you should consider in your basic SWOT analysis.
Look around at your world, talk to classmates, or talk to your instructor for other ideas in
performing your SWOT analysis.
Strengths Weaknesses Opportunities Threats
MANAGEMENT
Who will manage the business?
Hint: Refer to the discussion of managers in Chapter 5. Think about how many levels of
management as well as what kinds of managers your business needs.
ORGANIZATION CHART
Show how the “team” fits together by creating a simple organizational chart for your
business. Make sure your organizational chart indicates who will work for each manager
as well as each person’s job title.
Hint: Most businesses start off quite small. However, as you create your organizational chart,
consider what your business will look like in the future. What different tasks are involved in the
business? Who will each person report to in the organizational structure? Refer to the discussion
of organizational structure in Chapter 6 for information to get you started.
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FLOOR PLAN
Create a floor plan of the business. What does it look like when you walk through the
door?
Hint: When sketching your floor plan, consider where equipment, supplies, and furniture will be
located. Ask your instructor how he or she would like you to submit the floor plan for your
business.
RAW MATERIALS AND SUPPLIES
Explain what types of raw materials and supplies you will need to run your business. How
will you produce your good or service? What equipment do you need? What hours will you
operate?
Hint: Refer to the discussion of operations in Chapter 7 for information to get you started.
QUALITY ASSURANCE
What steps will you take to ensure that the quality of the product or service stays at a high
level? Who will be responsible for maintaining the quality of the product or service (or
both)?
Hint: Refer to the discussion of quality improvement and Total Quality Management in Chapter
7 for information to get you started.
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STUDENT BUSINESS PLAN PROJECT TEMPLATE
PART 3: PEOPLE IN ORGANIZATIONS
CORPORATE CULTURE
What do you see as the “corporate culture” of your business? What types of employee
behaviors, such as organizational citizenship, will you expect?
Hint: Will your business demand a casual environment or a more professional environment?
Refer to the discussion on employee behavior in Chapter 8 for information on organizational
citizenship and other employee behaviors.
LEADERSHIP PHILOSOPHY
What is your philosophy on leadership? How will you manage your employees day-today?
Hint: Refer to the discussion on leadership in Chapter 9 to help you formulate your thoughts.
JOB DESCRIPTIONS
Looking back at your organizational chart in Part 2, briefly create a job description for
each team member.
Hint: As you learned in Chapter 10, a job description lists the duties and responsibilities of a
job; its working conditions; and the tools, materials, equipment, and information used to perform
it. Imagine your business on a typical day. Who is working and what are each person’s
responsibilities? (Note that if your business is very large, you should ask your instructor how
many positions he or she would like you to create job descriptions for.)
JOB SPECIFICATIONS
Next, create a job specification for each job, listing the skills, credentials, and
qualifications needed to perform the job effectively.
Hint: As you write your job specifications, consider what you would write if you were making an
ad for the position. What would the new employee need to bring to the job in order to qualify for
the position?
Insert Job Title #1:
Insert Needed Skills/Credentials/Qualification for Job:
Insert Job Title #2:
Insert Needed Skills/Credentials/Qualification for Job:
Insert Job Title #3:
Insert Needed Skills/Credentials/Qualification for Job:
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TRAINING EMPLOYEES
What sort of training, if any, will your employees need once they are hired? How will you
provide this training?
Hint: Refer to the discussion of training in Chapter 10. Will you offer your employees on-the-job
training? Off-the-job training? Vestibule training?
COMPENSATION
A major factor in retaining skilled workers is a company’s compensation system—the total
package of rewards that it offers employees in return for their labor. Part of this
compensation system includes wages/salaries. What wages or salaries will you offer for
each job? Why did you decide on that pay rate?
Hint: Refer to Chapter 10 for more information on forms of compensation. You may also want to
check out sites like www.salary.com, which includes a salary wizard you can use to determine
how much people with different job titles are making in your area and across the United States.
INCENTIVES
As you learned in Chapter 10, incentive programs are special programs designed to
motivate high performance. What incentives will you use to motivate your workforce?
Hint: Be creative and look beyond a simple answer, such as giving pay increases. Ask yourself,
who are my employees and what is important to them? Refer to Chapter 10 for more information
on the types of incentives you may want to consider.
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STUDENT BUSINESS PLAN PROJECT TEMPLATE
PART 4: PRINCIPLES OF MARKETING
TARGET MARKET
Describe your target market in terms of age, education level, income, and other
demographic variables.
Hint: Refer to Chapter 11 for more information on the aspects of target marketing and market
segmentation that you may want to consider. Be as detailed as possible about who you think your
customers will be.
PRODUCT FEATURES AND BENEFITS
Describe the features and benefits of your product or service.
Hint: As you learned in Chapter 11, a product is a bundle of attributes—features and benefits.
What features does your product have—what does it look like, and what does it do? How will
your product benefit the buyer?
PRODUCT DIFFERENTIATION
How will you make your product stand out in the crowd?
Hint: There are many ways to stand out in the crowd, such as a unique product, outstanding
service, or a great location. What makes your “great idea” special? Does it fill an unmet need in
the marketplace? How will you differentiate your product to make sure that it succeeds?
PRICING
What pricing strategy will you choose for your product, and what are the reasons for this
strategy?
Hint: Refer to Chapter 12 for more information on pricing strategies and tactics. Since your
business is new, so is the product. Therefore, you probably want to choose between price
skimming and penetration pricing. Which will you choose, and why?
PLACE (DISTRIBUTION) ISSUES
Where will customers find your product or service? (That is, what issues of the distribution
mix should you consider?)
Hint: If your business will sell its product directly to consumers, what types of retail stores will
sell your product? If your product will be sold to another business, which channel of distribution
will you use? Refer to Chapter 12 for more information on aspects of distribution you may want
to consider.
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ADVERTISING
How will you advertise to your target market? Why have you chosen these forms of
advertisement?
Hint: Marketers use several different advertising media— specific communication devices for
carrying a seller’s message to potential customers—each having its advantages and drawbacks.
Refer to Chapter 12 for a discussion of the types of advertising media you may wish to consider
here.
PROMOTIONS
What other methods of promotion will you use, and why?
Hint: There’s more to promotion than simple advertising. Other methods include personal
selling, sales promotions, and publicity and public relations. Refer to the discussion of
promotion in Chapter 12 for ideas on how to promote your product that go beyond just
advertising.
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STUDENT BUSINESS PLAN PROJECT TEMPLATE
PART 5: MANAGING INFORMATION
IT RESOURCES
What kind of IT resources will your business require?
Hint: Think about the employees in your business and what they will need in order to do their
jobs. What computer hardware and software will they need? Will your business need a network
and an Internet connection? What type of network? Refer to Chapter 13 for a discussion on IT
resources you may want to consider.
CUSTOMER SERVICE
How will you use information technology to keep track of your customers and potential
customers?
Hint: Many businesses—even small businesses—use databases to keep track of their customers.
Will your business require a database? What about other information systems? Refer to Chapter
13 for more information on these topics.
COST OF DOING BUSINESS
What are the costs of doing business? Equipment, supplies, salaries, rent, utilities, and
insurance are just some of these expenses. Estimate what it will cost to do business for
one year.
Hint: Insert the costs associated with doing business in the table to the right. The list below
provides some hints as to where you can get this information. Note that these are just estimates—
just try your best to include accurate costs for the expenses you think will be a part of doing
business.
Hints for each expense in the table:
•
Rent: Refer to the floor plan. How many square feet is your place of business? What is
the “going rate” per square foot for office space in your community? A real estate agent or a
local SBA representative (www.sba.gov) can also be helpful in answering this question.
•
Salaries: Refer to the organizational chart. How much will each employee earn? How
many hours will each employee be needed on a weekly basis? Once you’ve determined the
weekly cost, expand it to a monthly and a yearly cost.
•
Supplies: Refer to the floor plan. How much will all the computers, equipment, and
furniture cost? What kinds of general office supplies will you need? Most prices for this
information can be found on an office supply Web site, such as www.staples.com.
•
Advertising and Other Promotions: Refer to your marketing section. You have described
how you wish to reach your customer—now you need to decide how much it will cost. If you are
using television, contact the sales department at a local station. If you are using newspaper,
contact their advertising department. Salespeople are usually happy to answer your questions.
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•
Utilities: These amounts will vary, depending on your business and what utilities you will
pay. If your business looks like an office, this cost may be similar to what a homeowner pays.
However, if your business involves making a product, then the costs will be significant. An SBA
representative can be a good resource.
•
Insurance: This value will be affected by the nature of the business. More equipment will
usually mean higher insurance costs. Again, contact an SBA representative for feedback.
EXPECTED REVENUE
How much will you charge for your product? How many products do you believe you can
sell in one year (or how many customers do you think your business can attract)? Multiply
the price you will charge by the number of products you hope to sell or the amount you
hope each customer will spend. This will give you an estimate of your revenues for one
year.
Hint: You will use the amounts you calculate in the costs and revenues questions in this part of
the plan in the accounting statements in the next part, so be as realistic as you can.
INCOME STATEMENT AND BALANCE SHEET
Create a balance sheet and an income statement (profit-and-loss statement) for your
business.
Hint: You will have two options for creating these reports. The first option is to use the Microsoft
Word versions that are found within this “Business Plan Student Template” (which
follow).
The second option is to use the specific templates created for each statement in Microsoft Excel.
If you make adjustments, these calculations will be performed automatically for you. You’ll find
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these templates in the file called “Business Plan Part 5 Spreadsheet” on the website at
www.prenhall.com/ebert.
12-Month Income Statement (Profit-and-Loss Statement)
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
YEARLY
Revenue (Sales)
Category 1
Category 2
Total Revenue
(Sales)
Cost of Goods
Sold
Category 1
Category 2
Total Cost of
Goods Sold
Gross Profit
Expenses
Rent Expense
Salary/Wage
Expenses
Supplies Expense
Advertising
Expense
Utilities Expense
Telephone/Internet
Expense
Insurance Expense
Interest from
Loans (if
applicable)
Other Expenses
(specify)
Total Expenses
Net Profit
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Balance Sheet
Assets
Current Assets
Cash
Cash Value of Inventory
Prepaid Expenses (insurance)
Total Current Assets
Fixed Assets
Machinery and Equipment
Furniture and Fixtures
Real Estate/Buildings
Total Fixed Assets
Total Assets
Liabilities and Net Worth
Current Liabilities
Accounts Payable
Taxes Payable
Notes Payable (due within 12
months)
Total Current Liabilities
Long-Term Liabilities
Bank Loans Payable (greater
than 12 months)
Less: Short-Term Portion
Total Long-Term Liabilities
Total Liabilities
Owners’ Equity (Net Worth)
Total Liabilities and Owners’
Equity
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STUDENT BUSINESS PLAN PROJECT TEMPLATE
PART 6: FINANCIAL ISSUES
STARTUP COSTS
How much money will you need to get your business started?
Hint: Refer back to Part 5 of the plan, where you analyzed the costs involved in running your
business. Approximately, how much will you need to get your business started?
FINANCING
How will you finance your business? For example, will you seek out a bank loan?
Borrow from friends? Sell stocks or bonds initially or as your business grows?
Hint: Refer to Chapter 16 for information on securities, such as stocks and bonds. Refer also to
Appendix I: Financial Risk and Risk Management and Chapter 3 for more information on
sources of short-term and long-term funds.
EXECUTIVE SUMMARY
Now, create an executive summary for your business plan. The executive summary should
be brief—no more than two pages long—and should cover the following points:
•
•
•
•
•
•
•
•
The name of your business
Where your business will be located
The mission of your business
The product or service you are selling
Who your ideal customers are
How your product or business will stand out in the crowd
Who the owners of the business are and what experience they have
An overview of the future prospects for your business and industry
Hint: At this point, you’ve already answered all these questions so what you need to do here is
put the ideas together into a “snapshot” format. The executive summary is really a sales pitch—
it’s the investor’s first impression of your idea. Therefore, as with all parts of the plan, write in a
clear and professional way.
Once you have written the executive summary, copy it and paste it at the beginning of your
business plan—as the very first element.
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SAMPLE BUSINESS PLAN
THE FRIENDLY CAFÉ II
Executive Summary
The Friendly Café II will be located in the town of Mt. Vernon, a city of approximately 12,000
people. The café will offer a nostalgic atmosphere for people of all ages. We will serve a large
variety of home-cooked meals and desserts.
The mission of The Friendly Café II is to provide a quality product at a quality price served by
quality people. We will demonstrate our devotion to the community through customer service
and community relations.
Our ideal customers are many. Some of them will be middle-class families with young children.
These are people who earn a modest income. Our prices and convenience are reasons to visit our
café. Our other ideal customers will be retirees. These are folks who may drop in for lunch or an
early dinner. Some retirees have a good income from their retirements, but some may be on a
fixed income.
Customers will visit us for several reasons. First is the quality of the food at an affordable price.
People want to believe that they are getting a good deal. We are dedicated to serving hot,
delicious meals at a fair price.
Our café is also part of the local history. The original Friendly Café was owned by my greatgrandfather and was open from the 1940s until the late 1960s. We plan to rent the old building
that housed the original café. Visitors will remember the original café and be curious to see the
new version. We will have pictures from the old café on the walls, which will take diners on a
trip down memory lane.
Our business will be a partnership. My family members and I will run the café together. We are a
close family, and we work well together. Financially, we could not open the café without each
other.
Each partner will serve as a manager in the café. My mother will be the floor manager, my aunt
will be the grill manager, and I will handle the accounting for the café.
Our business will thrive for a number of reasons. First, the city of Mt. Vernon has a stable
population, with a number of healthy industries. Second, the local population is somewhat older
than the national average. We believe that this segment of the population longs for “days gone
by.” Our nostalgic theme will appeal to this particular segment of the population.
Our skills and knowledge in food service, combined with our connections to the community, will
make this business a sound investment.
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PART 1 THE CONTEMPORARY BUSINESS ENVIRONMENT
Business Name
The Friendly Café II
Description of Business
The Friendly Café II will be located in the small town of Mt. Vernon, where I grew up. The café
will offer a nostalgic atmosphere for people of all ages and will serve a large variety of homecooked meals and desserts.
Form of Business Ownership
The business will be a partnership, meaning that my family members and I will run the café
together. Each partner will also serve as a manager and has special skills that they can bring to
the business. My mother will be the floor manager. She has work experience in this area, and she
knows how to organize floor space and is good with customers. My aunt has worked at a number
of restaurants in the grill area and will, therefore, serve as grill manager. She will handle orders
and manage all backroom employees. These two managers can substitute for one another so that
they both do not have to be in the café every day. Finally, I will handle the accounting
responsibilities for the café. I am currently completing my degree in accounting, and I will also
have two clerks that will help me keep all accounts up-to-date and accurate.
Ideal Customer
Our ideal customers are many. Some will be middle-class families with young children. These
customers will visit our café for its reasonable prices and convenience. Our other ideal customers
will be retirees who may drop in for lunch or an early dinner. We will have special promotions
focused on each of these two groups that will be discussed later.
Our Advantages
Customers will visit us for several reasons. First is the quality of the food and the affordable
price. People want to believe that they are getting a good deal. We are dedicated to serving hot,
delicious meals at a fair price.
Our café is also part of the local history. The original Friendly Café was owned by my greatgrandfather and was open from the 1940s until the late 1960s. We plan to rent the old building
that housed the original café. Visitors will remember the original café and be curious to see the
new version. We will have pictures from the old café on the walls, which will take diners on a
trip down memory lane.
Ethical Issues
Most restaurants deal with suppliers. We will be no different. Many restaurants must make a
choice between buying higher-priced produce and supplies or buying lower-priced produce and
supplies. The ethical issue facing The Friendly Café II, therefore, is the choice between buying
quality products and earning a little less money, or buying lower-quality products and perhaps
earning a higher profit.
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SWOT Analysis for The Friendly Café II
In the long run, we believe that a higher-quality product will lead to higher profits because our
customers will notice the difference and come back for more.
We also believe we must behave ethically to our employees, treating them fairly at all times.
Social Responsibility
Our business is in a small town. My family grew up in this town so we feel an obligation to “give
back” to the community. Our family owns a farm so we all feel a strong bond with animals.
Because of this, we are actively involved with the local humane society. And because our
business is selling food, we believe that the best way to connect our business with our hometown
is to provide free, hot meals to a local charity during the holiday season.
Global Issues
The business will be a local one so at this point in time, we do not foresee there being any global
issues we will need to address.
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PART 2 THE BUSINESS OF MANAGING
Mission Statement
The mission of The Friendly Café II is to provide a quality product at a quality price served by
quality people. We will demonstrate our devotion to the community through customer service
and community relations
Organizational Chart for The Friendly Café lI
.
Business Goals
First Year Goals:
1. To break even
2. To build a strong customer base
3. To minimize employee turnover
Intermediate to Long-Term Goals:
1. To earn net profits of $25,000 within five years
2. To open a second restaurant in a neighboring community within five years
See SWOT analysis chart above.
Management
There is one level of management in the restaurant, with three different types of managers as
follows:
• Floor Manager
• Grill Manager
• Accounting Manager All managers are also co-owners.
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Organizational Chart
The organizational chart, see below, for The Friendly Café II is quite simple given that it
contains, see below, only one level of management. As the business grows, further levels of
management and more employees may be added.
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Floor Plan for The Friendly Café lI
Floor Plan
Because we are planning on occupying the space that was previously used for the original
Friendly Café, we will be keeping the basic layout of the café intact, see exhibit above. The café
will include a counter area for those who wish to sit facing the kitchen, as well as a number of
booths and tables to fit different-sized parties.
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Raw Materials and Supplies
If we are able to lease the space used by the original Friendly Café, we will use the existing
tables and chairs. These may be in need of slight repair, but are in good condition at present.
They carry the nostalgic look and feel we are striving for so we prefer not to replace them.
The café will also need the following initial inventory:
2 Cash registers @ $225 each........................................ $450
Squirrel POS system......................................................1,500
3 Microwave ovens @ $150 each ................................... 450
Deep Fryer.....................................................................2,500
Refrigeration Unit .........................................................2,000
Freezer ...........................................................................4,000
Dishwashing Unit ..........................................................2,000
(100) Small Glasses @ $1.00 each....................................100
(100) Large Glasses @ $1.25 each....................................125
(100 sets) Plates, Bowls, Mugs @ $10.00 each .............1,000
(100 sets) Silverware @ $12 per set...............................1,200
Total.............................................................................$15,325
Most of our food products will be made fresh in the store so we do not plan to carry much in the
way of food inventory. We will stock some canned sauces, but most food will be shipped fresh.
Our inventories will not be affected by change in seasons or holidays. We plan to be open from 6
A.M. to 10 P.M., Monday through Saturday, and 8 A.M. to 6 P.M. on Sunday.
Quality Assurance
All employees will have some responsibility to ensure quality, but we believe quality begins with
the management team. The floor manager will be responsible for the appearance of the café and
the performance of the servers and hosts. The floor manager is responsible for pleasing the
customer. The grill manager will ensure that quality food is purchased from distributors and
prepared for customers. The entire management team will work to ensure that our café is
synonymous with quality.
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PART 3 PEOPLE IN ORGANIZATIONS
Corporate Culture
Our culture is reflected in our mission statement. We want excellence in every part of our
restaurant, and every employee must understand how to achieve this standard once they have
completed their training. Every employee must have a commitment to pleasing the customer,
both in the quality of the food and in the overall experience they will have once they are inside
the store.
Our employees will be encouraged to improve the quality of the restaurant through their own
suggestions and input.
We are also committed to improving our community through participation in events that make
our hometown a better place to live.
Leadership Philosophy
We believe that a participative approach will work well with our family-oriented business.
Because each family member will have an equal stake in the restaurant, each family member
(manager) will have an equal input into the operation of the store. Each manger will have an area
of specialty, which will allow them to have control over their assigned functional area. We will
also encourage input from our employees, inviting them to participate in some of the decision
making.
Job Descriptions
The job descriptions at the Friendly Café II will be as follows:
Floor Manager: The floor manager will be responsible for the “front end” of the café. This
includes the staffing and training of servers and hosts. The floor manager will also be involved
with customer relations. The floor manager will also help coordinate and work with those in the
grill area to ensure customer satisfaction. Finally, the floor manager will be responsible for
ordering any new non-kitchen inventory that the café needs, including new tables, chairs, dishes,
and so on.
Grill Manager: The grill manager will be responsible for the “back end” of the café. This
includes the staffing and training of cooks and dishwashers. The grill manager will also be
involved with customer relations in overseeing that all food served is of high quality. The grill
manager will also work with the floor manager to help coordinate with those on the floor to
ensure customer satisfaction. Finally, the grill manager will be responsible for ordering any foodrelated and cooking-related inventory that the café needs, including produce, cooking equipment,
and so on.
Accounting Manager: The accounting manager will be responsible for the financial side of the
business and for the hiring and training of accounting clerks. Most importantly, the accounting
manager will be responsible for interacting with suppliers and managing the accounts payable
that the business incurs and all other matters relating to taxes and finances.
Servers/Hosts: The servers/hosts will be responsible for serving food to customers and
24
responding to their needs. This includes keeping their sections of the café clean and orderly and
bussing dishes back to the grill area for cleaning. They will also be responsible for “side work,”
such as rolling silverware and refilling the condiments on their tables. These employees will
spend most of their time serving meals, but some of their time will be spent as hosts, greeting
and seating customers.
Cooks: These employees will be responsible for meal preparation. They will have to “prep”
everything needed for business on any given day. This includes mixing salads, estimating the
amount of different foods needed for the given day, and making desserts. The closing cook will
also be responsible for cleaning the kitchen so that the café will be ready for the next day’s
business.
Dishwashers: The dishwashers will be responsible for washing all dishes and placing them in
the correct racks. If the café is busy, they will help servers bus the tables. Dishwashers will also
be responsible for cleaning the restrooms each morning and for taking out the trash at closing
time. Finally, dishwashers will help the closing cook prep the back of the restaurant for the next
day. This “prep” includes washing/scrubbing floors and cleaning all the food preparation
tabletops.
Accounts Payable Clerks: The clerks will assist the accounting manager in recording and
organizing the accounts payable that the café will assume during the course of business.
Job Specifications
The job specifications for the three managers at The Friendly Café II will be as follows:
Job Title: Floor Manager Needed Skills/Credentials/Qualification for Job: The floor
manager must have strong human relations skills. These skills will be needed to deal with
customers and employees. The floor manager must be energetic and willing to work long hours
on his or her feet. The floor manager will be responsible for training servers and hosts. To be a
successful floor manager, one must have at least two years of work experience in management,
preferably in restaurant management.
Job Title: Grill Manager Needed Skills/Credentials/Qualification for Job: The grill manager
must have strong human relations skills. These skills will be needed to deal with customers and
employees. The grill manager must be energetic and willing to work long hours on his or her
feet. The grill manager will be responsible for training cooks and dishwashers. To be a
successful grill manager, one must have at least two years of work experience as a restaurant
cook.
Job Title: Accounting Manager Needed Skills/Credentials/Qualification for Job: The
accounting manager will need good human relations skills.
These skills will be needed to deal with the clerks and with the café’s creditors. The accounting
manager will also be responsible for training the accounts payable clerks. This position will
require a degree in accounting or a minimum of two years of work experience in accounts
payable or receivable.
Training Employees
Our employees will have a variety of skills that they will bring to the workplace. However, it
will sometimes be necessary to train new employees so they can be successful at work. Most of
25
the training will focus on performing the specific tasks needed to do each job efficiently. The
managers of each area will be responsible for seeing that the training program is completed but
may assign team members to lead that training. In many cases, the new hire will simply
“shadow” the training employee for a few days to get an idea of how to do the job.
Compensation
Each of the managers will earn $22,500 per year as salary. The food service industry does not
tend to pay high salaries. Because the managers are also the owners, they will hope to earn more
beyond their salary from the profits of the café. Compensation for all in-store personnel will
begin at $8.00 per hour, with pay increases scheduled every 120 days. These increases will be
connected to performance reviews. By having reviews three times per year, we hope to create
greater incentive for our team members. Compensation for the accounts payable clerks will begin
at $8.50 per hour. Because the clerks will need a higher level of skill and training, their
compensation will be a bit higher.
Incentives
We know that pay alone does not create incentive with our workers. The thrill of a pay raise does
not last long. First and foremost, we want to offer a fun workplace to our employees, and we
want them to feel like extended members of our family. We will be loyal and fair to good
employees and offer them benefits. We would also like to build relationships with other local
businesses to exchange rewards for each business’s employees. Our community has florists, golf
courses, salons, and a number of other small businesses. We believe that by trading with these
businesses, each employer can benefit, and the employees will also benefit.
26
PART 4 PRINCIPLES OF MARKETING
Target Market
Our café will have two markets:
The first target market is the seniors in our community. Many of these have retired with a
comfortable pension from the local industries. They do not necessarily have a high education
level since it was not needed in that time. Retirees will tend to have a good deal of discretionary
income and also time to socialize in the morning and lunchtime hours.
The second target market is middle-class families with younger children. These families will be
looking for a well-cooked dinner after work. They will likely have a higher education level than
the retirees, but will have a modest income. Dining out is probably a once-a-week event for these
families.
Product Features and Benefits
The Friendly Café II is a small café that will serve a variety of home-cooked meals in a nostalgic
atmosphere. It is a place where friends can gather over a cup of coffee, or a family can sit down
for a well-cooked meal. We will strive to serve the best meals in a happy and familiar place.
Product Differentiation
People have a lot of choices when it comes to dining out. We know that we have to offer a
product that stands out from the competition. We will have two major differences from our local
competitors. The first is the quality of the food. Without good meals, nothing else will matter.
Diners will place the highest importance on the meal itself and so will we. By providing good
meals at reasonable prices, word-of-mouth advertising will take care of itself. However, the food
is only part of the dining experience. Our nostalgia theme will connect well with the local
population. Our community is small and tightly-knit. Our older citizens grew up with the original
Friendly Café, and they have happy memories of the local diner. We hope that our décor will
help to build a bond with the older members of our community and create a new one with
younger members.
Pricing
Our pricing strategy is fairly simple. Because our target markets are seniors (who remember how
much things used to cost) and young families, we will focus on keeping prices low. The food
will be simple, home-cooked meals. The pricing will reflect the simplicity of the café. We will
also offer coupons to encourage visits by customers who are price conscious.
Place (Distribution) Issues
Our family (and our business) is connected to this small community and offers a family-oriented
setting and a connection to history and nostalgia. The small-town setting allows us to emphasize
our strengths, and we foresee no distribution issues. In the future, we hope to expand into other
communities like ours.
Advertising
27
Because we have two target markets, we will have two advertising approaches. For the seniors
market, we will advertise in the local newspaper and in the retirement center in our town. These
advertisements will include coupons for discounts on our morning and afternoon menus.
Coupons will also allow us to track the success of the advertising. We will also attempt to
advertise on local radio stations that feature news and talk. These are stations that have a strong
senior listening audience.
To get the attention of the middle-class family market, we will hang door flyers that feature our
menus in the two local housing subdivisions. Many young families in our community live in
these subdivisions. The flyers will also contain coupons, which will allow us to track the success
of the advertising.
We will also be listed in the local phone book and will have a small site on the Internet.
These ideas are fairly inexpensive ways to get our message out to our target markets.
Promotion
Because we have two main target markets, we will have two types of promotions. For the senior
market, we will have 2-for-1 priced coffee on weekday mornings. Coffee is not a great expense,
but can be a great draw into the café for other items in the morning. We will also offer breakfast
specials Monday through Wednesday since these are the days with the least amount of customer
traffic.
For the young family market, we will have a “Kids Eat Free” special on Monday nights. Again,
the goal is to get the family into the café on a slow night.
We will also have promotions during the fall, when our community has a street festival. This
festival attracts visitors from outside our community. These promotions will build attention (and
word-of-mouth) from those who live in nearby towns.
28
PART 5 MANAGING INFORMATION
IT Resources
We plan to use technology to create a small Web site about the café and to help us keep track of
our customers. Specifically, we believe that we can use the coupons we offer to measure the
success of our advertising and to create a database of customers. We will ask customers who use
coupons to fill in their name and address when redeeming the coupon. We will then create an
address list to make customers aware of special promotions for our preferred customers.
Customer Service
Like any good restaurant, our café will be customer centered. We believe that customer
satisfaction begins with a well-trained staff. First and foremost, as members of the community
ourselves, we will keep in close contact with our customers, getting to know them and their
families and finding out what they are looking for in an eating establishment.
Our managers will also be dedicated to a strong employee training program to ensure that our
focus on customers is part of every job. Our “front-end” staff will “shadow” train for at least
three days before they are allowed to work on their own. It is not enough to simply know how to
take an order; employees must also understand policies and procedures that are unique to our
café. The training for cooks will take approximately ten days. The time spent with the cooks is
longer because we aim to ensure the quality standards of the variety of dishes they will prepare.
We will also keep a suggestion box at the front of the store to be used for customer feedback. We
will encourage customers to submit ideas by rewarding them for their suggestions. Their
incentive will be free appetizers, free drinks, and so on. We hope to use their input to improve
our café.
Cost of Doing Business
Expenses
Rent
Salaries and Wages
Supplies
Advertising and
Other Promotions
Utilities: Heat,
Electricity, etc.
Telephone and
Internet
Insurance
Total
Expected
Monthly
Cost
$500
Expected
Yearly
Cost
$6,000
10,000
167
120,000
2,000
167
2,000
500
6,000
100
1,200
333
$11,766
4,000
$141,200
29
Expected Revenue
We believe that we can average 100 customers per day. However, the café will experience
different traffic for each day of the week and during different times of the year. We believe that
the average meal ticket will be approximately $5.00 per customer. This number will also vary,
depending on the time of day that the customer enters the café. This will provide our café with
revenues of $500 per day. We plan to be closed on Christmas. This will lead to yearly revenues
of approximately $182,000 per year.
30
PART 6 FINANCIAL ISSUES
12-Month Income Statement (Profit-and-Loss Statement)
The Friendly Café II (amounts in dollars) 2006
Jun05
Jul-05
Aug05
Sep05
Oct05
Nov05
Dec05
Jan06
Feb06
YEARLY
Revenue (Sales)
Food Sales
Category 2
Total Revenue
(Sales)
Cost of Goods
Sold
Food Purchases
Category 2
Total Cost of
Goods Sold
Gross Profit
15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 182,000
15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,166 182,000
3,333
3,333
3,333
3,333
3,333
3,333
3,333
3,333
3,333
39,996
3,333
3,333
3,333
3,333
3,333
3,333
3,333
3,333
3,333
39,996
11,833 11,833 11,833 11,833 11,833 11,833 11,833 11,833 11,833 142,004
Expenses
Rent Expense
500
500
500
500
500
500
500
500
500
6,000
10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000
Salary/Wage
Expense
Supplies Expense
167
167
167
167
167
167
167
167
167
2,004
167
167
167
167
167
167
167
167
167
2,004
Advertising
Expense
Utilities Expense
500
500
500
500
500
500
500
500
500
6,000
100
100
100
100
100
100
100
100
100
1,200
Telephone/Internet
Expense
333
333
333
333
333
333
333
333
333
3,996
Insurance Expense
Interest from
Loans
Other Expenses
(specify)
Total Expenses
Net Profit
0
0
0
0
0
0
0
0
0
0
11,767 11,767 11,767 11,767 11,767 11,767 11,767 11,767 11,767 141,204
66
66
66
66
66
66
66
66
66
800
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Balance Sheet
Assets
Current Assets
Cash
Inventory
Prepaid Expenses (insurance)
Total Current Assets
$25,000
3,000
4,000
$32,000
Fixed Assets
Machinery and Equipment
Furniture and Fixtures
Real Estate/Buildings
Total Fixed Assets
$12,900
8,000
0
$20,900
Total Assets
$52,900
Liabilities & Owners’ Equity
Current Liabilities
Accounts Payable
Taxes Payable
Notes Payable (due within 12 months)
Total Current Liabilities
Long-Term Liabilities
Bank Loans Payable (greater than 12
months)
Less: Short-term Portion
Total Long-term Liabilities
$3,000
6,000
0
$9,000
$0
0
$0
Total Liabilities
$9,000
Owners’ Equity (Net Worth)
$43,900
Total Liabilities and Owners’ Equity
$52,900
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Start-up Costs
Our balance sheet shows total assets of $52,900. By subtracting the $25,000 that our three
managers will invest, we will require start-up costs of $27,900.
Financing
The three managers will put a total of $25,000 into the startup of this business. The remaining
$27,900 is the amount that we are requesting for bank financing.
33