Let's Get Down to Business...

Don't get the "Budget Blues"

Fighting the Budget Battle is one of the Final Plan's bigger challenges.  Here are some weapons to help you emerge victorious. 

The most frequent problem is the Capital Budget's Sources and Uses of Funds don't balance.  The total of each has to be identical, otherwise your budget won't behave. 

Next on the list is understanding the difference between (1) your capital budget's initial inventories and (2) your operating budget's periodic replenishment of those inventories.  Doesn't that sound exciting?

I'll bet you can't wait to read more.

Learning to Love Budgeting

A big part of the Business Plan Project's Final Submission is putting together a cash-flow budget for your business.  And getting started sooner is better than later. 

Doing this requires input from every team member.  It will also put your business to the ultimate test:  can it operate profitably?  Are you ready to find out the answer?

Final Details and Finishing Touches

As you round the final turn and head for the finish line, here are a few items to check off your list.

Form and Structure: They're not the same thing

In order to better understand how organizations work (and to make them work more efficiently), it's important to know the difference between an Organization’s Form and its Structure.

The terms “Form” and “Structure” describe completely opposite aspects of a businesses’ organization. They're not interchangeable and are as different as night and day.

Sample Plans from the Hall of Fame

Here are some Final Plans that are enshrined in the Hall of Fame.  They're great examples of "how to do it."  The format and contents of each differ from our course's requirements, but the essential elements are the same.  Enjoy.

Download All Things Decadent Business Plan

Download Que Bella Business Plan

Download Rainy Day Pancakes Business Plan

Team Member Evaluations

Sometime after submitting your Final Business Plan and making your Extra-Credit Presentation (if your team did that), but before the Final Exam, please evaluate how your teammates performed.

The attached form should be used for your evaluation.

The evaluation is confidential; I'm the only one who will see or know the evaluation's contents.

The evaluation can be downloaded, completed, saved and returned as an attachment to an e-mail message.  Or it can be completed, printed out and directly submitted.  It's up to you how you get it done.

Make sure you fill-in your name at the top of the form and each of your teammates in a scoring section. 

Then evaluate their contribution by category using the "Grading Standards" and by checking the box that best describes how they did.

Also, please follow the rule that "Any Score of 0, 1 or 2 must be explained."  This ensures any low scores are justified.  If no explanation is given for a score of 0, 1 or 2, a score of "3" will be awarded.

Use the "Comments, Explanation or Documentation" section to explain any score below "3."  Or you can also use this section to acknowledge a teammate's outstanding performance. 

• Download team_member_evaluation_forms.doc

Difference between the "Key Concept" and the "Executive Summary"

These two requirements are not the same thing.  There's a difference between them that's important.

First, the "Key Concept" should take no more than one-third of a page.  It will describe, in your best business writing style, what makes your product or service "compelling."  In other words, why will customers want to try your new product or service?  What makes it "better?"  And after they try it, how will your product or service earn the customer's loyalty.  What will bring them back for more?  The requirement here is to answer the "So what?" question:  What makes your product a big deal?

The "Executive Summary" shouldn't take more than two-thirds of a page and will concisely tell your readers everything they need to know about your business:  What's your product and its market?  Who are the people behind it and why will they make it successful?  How does the business work?  Who answers the phone and does the work?  When and how do your customers pay you?  And do the sources and uses of cash end up with a positive balance in your checkbook (that's also called being profitable)?

When you're done with both these requirements, you'll have produced a one-page "blurb" that investors, bankers and customers can copy and use to help your business be a roaring success!

There are Warranties, and then there are Warranties

Remember that Warranties come in at least two flavors.

First, there is what's called an "Express Warranty."  This usually takes the form of a written disclosure (it is "expressed") and is time- or use-specific (36 months or 36,000 miles, whichever comes first, for example).  This form of warranty defines what the Seller (or manufacturer) will repair or replace during the warranty's term.  There usually are also exclusions or conditions that might void the warranty or excuse the seller from having to repair or replace something.

Next, is what I call a "Value-Proposition Warranty."  This is the Seller's (or Manufacturer's) obligation to fulfill the Buyer's expectations of the product's (or service's) value.  Value, as you know, comes in many different forms; quality and durability to name a couple.  One reason customers might buy your product is its ability to deliver these valuable attributes.  Your reputation is at risk if you don't deliver (warrant) those attributes. 

It's relatively easy to perform an Express Warranty: you simply repair or replace whatever is causing the problem.  Performing a Value-Proposition Warranty isn't so easy.  There's usually an expectation that you'll do more than simply fix a broken part.  Keeping your reputation intact means doing something a little extra.  What you do will vary and depend on your business and your customer, but, whatever it is, it should restore your customer's faith in your ability to deliver the value they want and are willing to pay for.   

Financial Controls and Management Practices: Two Important Uses of Information

Section 5 of the Financial Plan asks for a description of your business's "financial reporting and performance measurement systems."

The requirement might also be phrased as, "How will you use the information produced by your firm's financial reports?"

You will be interested in your business's performance from two perspectives.

What's an "Early-Stage Development Process?"

The Fifth Section (Financial Controls and Management Practices) of the Financial Plan asks you to discuss "prototype and early-stage development processing."  You're probably wondering what that is and where you can find it.

Other (and shorter) terms for describing what's needed could be "trial run" or "dry-lab."  In other words, how are you going to make sure your product or service "works" before you "go live?"

Will you "test-market" the product before distributing it to your market segment?  Will you be doing some training before opening day?  How will you be sure, when you cut the ribbon at the grand opening, that everyone knows (1) what are the things they're supposed to do and (2) how to do them in the way you want them done?

All those questions answer the requirement's first part (what are we going to do to know our product "works).  The key word for the second part is "controls."  The question here is, "How are you going to know you're ready to launch?"  When and how will you know that the product is "right?"  It's probably impossible to get all the "bugs" out of a system, but you'll want to be sure things work pretty well when your first customer comes through the door. 

Distill your ideas down to paragraph or two that answers these questions.  Needless to say, this part is easy to overlook but can make all the difference in the end.  So, think about what you're going to do to be certain your product is right and ready to go and how you're going to know that.

Keep up the good work!