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 ………………………………………………………….2-3Student FAQs for the Business Plan Project…………………………………………….....4Student Business Plan Project Template: Part 1…………………………………………5-6Student Business Plan Project Template: Part 2…………………………………………7-8Student Business Plan Project Template: Part 3……………………………………......9-10Student Business Plan Project Template: Part 4………………………………………11-12Student Business Plan Project Template: Part 5………………………………………13-16Student Business Plan Project Template: Part 6………………………………………….17Sample 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 TEMPLATEPART 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-to-day?

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:

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Insert Needed Skills/Credentials/Qualification for Job:

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 TEMPLATEPART 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 TEMPLATEPART 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” (whichfollow).

The second option is to use the specific templates created for each statement in Microsoft Excel.

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If you make adjustments, these calculations will be performed automatically for you. You’ll find 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

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Net Profit

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Balance Sheet

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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

STUDENT BUSINESS PLAN PROJECT TEMPLATEPART 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 PLANTHE 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 great-grandfather 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 home-cooked 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 great-grandfather 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........................................ $450Squirrel POS system......................................................1,500

3 Microwave ovens @ $150 each ................................... 450Deep Fryer.....................................................................2,500Refrigeration Unit .........................................................2,000Freezer ...........................................................................4,000Dishwashing 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...............................1,200Total.............................................................................$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 food-related 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

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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

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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.

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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

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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.

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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

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Expected Expected Expenses Monthly

Cost Yearly

Cost Rent $500 $6,000 Salaries and Wages 10,000 120,000 Supplies 167 2,000 Advertising and Other Promotions 167 2,000

Utilities: Heat, Electricity, etc. 500 6,000

Telephone and Internet 100 1,200

Insurance 333 4,000 Total $11,766 $141,200

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.

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PART 6 FINANCIAL ISSUES12-Month Income Statement (Profit-and-Loss Statement)

The Friendly Café II (amounts in dollars) 2006

Jun-05 Jul-05 Aug-

05 Sep-05

Oct-05

Nov-05

Dec-05

Jan-06

Feb-06 YEARLY

Revenue (Sales)

Food Sales 15,166 15,166 15,166 15,166 15,166 15,166 15,166 15,16

6 15,166 182,000

Category 2 Total Revenue (Sales)

15,166 15,166 15,166

15,166 15,166 15,166 15,166 15,166

15,166 182,000

Cost of Goods Sold Food Purchases 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 39,996 Category 2 Total Cost of Goods Sold

3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 39,996

Gross Profit 11,833 11,833 11,833 11,833 11,833 11,833 11,833 11,83

3 11,833 142,004

Expenses Rent Expense 500 500 500 500 500 500 500 500 500 6,000 Salary/Wage Expense

10,000 10,000 10,000

10,000 10,000 10,000 10,000 10,000

10,000 120,000

Supplies Expense 167 167 167 167 167 167 167 167 167 2,004 Advertising Expense

167 167 167 167 167 167 167 167 167 2,004

Utilities Expense 500 500 500 500 500 500 500 500 500 6,000 Telephone/Internet Expense

100 100 100 100 100 100 100 100 100 1,200

Insurance Expense 333 333 333 333 333 333 333 333 333 3,996

Interest from Loans

0 0 0 0 0 0 0 0 0 0

Other Expenses (specify)

Total Expenses 11,767 11,767 11,767 11,767 11,767 11,767 11,767 11,76

7 11,767 141,204

Net Profit 66 66 66 66 66 66 66 66 66 800

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Balance Sheet

Assets

Current Assets Cash $25,000 Inventory 3,000 Prepaid Expenses (insurance) 4,000 Total Current Assets $32,000

Fixed Assets Machinery and Equipment $12,900 Furniture and Fixtures 8,000 Real Estate/Buildings 0 Total Fixed Assets $20,900

Total Assets $52,900

Liabilities & Owners’ Equity

Current Liabilities Accounts Payable $3,000 Taxes Payable 6,000 Notes Payable (due within 12 months) 0 Total Current Liabilities $9,000

Long-Term Liabilities Bank Loans Payable (greater than 12 months) $0

Less: Short-term Portion 0 Total Long-term Liabilities $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.

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