6211 - Project Description 2021 E Clark NORTHEASTERN UNIVERSITY College of Business Administration ENTR 6211 Phone: 617-373-7031 Professor Clark 218 Hayden Hall Boston, MA 02115 e-mail: [email protected] Project Description Business Plan - Term Project Background: The vast majority of all businesses (roughly of 90%) are owner managed. These businesses are started with owner capital and when financing is required it is typically acquired in the form of debt. A major source of this debt financing to businesses is from commercial banks. Banks are heavily regulated with a limited upside profit opportunity. Additionally, bankers have a fiduciary responsibility to minimize risk for their shareholders. Therefore, bankers tend to be risk adverse lenders. In order to minimize risk, as part of a loan application, bankers typically require a business plan. Additionally, business that seek assistance to acquire funding through the Small Business Administration (SBA) are required to develop a business plan. As bankers are risk adverse, the plan that a banker desires is in many ways the most detailed and comprehensive of all business plans written. Virtually every aspect of the business, its operations, marketing and finances must be explored, understood and discussed in the business plan being submitted to a bank. As the business plans required for a bank is perhaps the most comprehensive, complete and detailed of all types of business plans written, they are perhaps the best to learn how to write. When you are able to write a comprehensive and detailed plan that a banker would find acceptable, you can write any other derivative plan desired.
6211 - Project Description 2021 E Clark Term Project This course covers the wide range of issues surrounding the creation and financing of an owner operated and managed business in the service, retail or small manufacturing sectors. The topics include developing a business plan (financing package), strategy development for the small business, sales forecasting, pro forma development, debt financing, and service development. The course format is structured around the components of a business plan that would be used to obtain debt financing. The final project for the course is a complete business plan that would be suitable for obtaining debt financing from a traditional lending institution. The purpose of this project is to create as "real" of a business startup and plan as possible. The business plan will be graded based on structural content as well as conceptual content. Structural content includes completeness and degree of thoroughness. Structural content includes connections between text and financials. For example marketing is essential for a small business and expected. A discussion of your marketing activities is therefore expected in the text and the associated costs should be included in the financial statements. Conceptual content relates to the degree of appropriateness of your actions for your business idea and operations. Conceptual content considers what you are trying to do and the relationship to your proposed activities. For example, are your actions and investments appropriate for your business idea? Given the scope of the project, time available, and experience; the goal of the project is not to create necessarily a "bank ready" business plan, but rather a plan that is appropriate and accurate as a learning experience. We are looking for accuracy in the structural content of the plan, combined with a level of conceptual content that is appropriate and meaningful to provide a valuable learning experience.
6211 - Project Description 2021 E Clark THE PROJECT: The purpose of this project is to create as "real" of a business plan as possible. Use the following criteria for the project unless agreed to in advance: You are going to start a small owner operated retail, service or light mfg business (no franchises or acquisitions). 35% of the necessary startup cost of the business will be owner contributed equity. (Assume that you have personal funds available to finance 35% of the startup cost.) 65% of the startup cost of the business shall be financed through debt. The maximum start-up funding required is $1,500,000. No real estate will be purchased (lease or rent). Operating costs (negative cash-flow) will be financed via short-term loans. The business is expected to provide a reasonable annual income to the owner ($75,000). You are writing the business plan for a client. o You do not need to elaborate on the client, their background, finances, etc. o You do not need to have team members in the business or have industry experience. o Team members working on the project do not need to be employed in the business. Use real data where appropriate and possible. The purpose of this project is to create as "real" of a plan as possible. Real data must be used wherever possible, particularly for issues that are deemed to be strategic. For example, if location is a key factor for success, then a suitable location must be found. Please see me if there are problems obtaining information. It will be assumed that all data in the business plan is actual market/industry data unless otherwise approved. The following are required for the project: Use the Business Plan Template provided in class. Required Use the Financial Statements Templates provided in class. Required Financial Statements will conform to the provided templates. Required You will have long-term and short-term financing requirements. Required The business will be cash-flow negative during a start-up period Required Short term financing (line of credit) will be used, monthly as necessary, to cover cash-flow negative operational expenses during start-up period. Required You will have depreciable assets. Required Text - 12 font Times New Roman 1.5 spacing, standard margins. Required
Uploaded by GrandClover8421 on coursehero.com