Money Money Money Money... Money

Last week, you began researching the cost associated with running your business.  I gave you a number of questions to guide you as you analyze all the expenses that go into running a business on a day-to-day basis.  This week, we will focus on going further into our analysis of dollars and cents.  After all, the main goal of our business is to maintain a comfortable standard of living (translation: make enough money) while doing what we love.

Here’s a breakdown of our weekly tasks:

Monday and Tuesday: Breakeven Analysis

Below is a photo of what a typical breakeven analysis might look like for a business plan.

Worry not.  I don’t expect you to go into such great detail for this project if you are not a member of the finance department at Office Guru.  What I would like you to do today is simple. 

·      First, add up your total fixed and the average of each variable expense you calculated last week. 

·      Next, take a look at how you generate revenue.  Do you sell merchandise?  Services?  Determine the average revenue generated per unit. 

For example, if you sell cupcakes, I’m sure they vary in price (maybe from $1.50 up to $4.50).  If you feel as if you’ll sell more of the $1.50 cupcakes, instead of having an average revenue per unit of $3.00, perhaps you will estimate it at $2.50 or $2.75.  Ultimately, what I’m looking for is proof that you understand approximate expenses and can determine how much merchandise (or services) you’ll have to sell to at least break even.

From the rubric:

Provide break-even amounts in total dollars or number of sales. Provide details about assumptions you used to perform analysis including the profit margin percentage. (Assume that all costs are fixed except for cost of goods sold.)

Once you have determined a break-even for your business, access the Excel Spreadsheet titled "Breakeven Analysis" from my Public folder and create your own chart.

Wednesday: Projected Sales

Nobody goes into business with the hope of just breaking even.  Though this may be the outcome at first, I’m certain you wish to eventually turn a profit.  Take today to project a realistic number for your sales over the next 12 months.  Be honest, and understand that in your first few months in business, customers may not be responsive to the new guy in town.  Perhaps it may take a while before you start gaining ground on your competitors.  Determine a fair estimate for how much you believe you will sell during your first year and record the numbers in your notes.  I will provide you with yet another Excel spreadsheet that will make your projections stand out.

Thursday and Friday: Financial Write-up and Blog Entry

Now that you have some concrete numbers drawn up for your business, it’s time to make those spreadsheets, graphs, and charts make sense.  Write a 250-word description of your breakeven analysis and sales projections. 

A good way to frame this would be to write one paragraph describing how you determined your expenses, and another one detailing how you came up with sales projections.  I know that many of you have decided to purchase land and building, and have calculated monthly mortgage payments with taxes and insurance, while others have looked up average rent per square foot for commercial property.  Tell me about that, along with how you found other expenses.  Then write about how you determined how your sales will (hopefully) increase over time.  Do you believe it may take a few months for a certain advertising campaign to start bringing in the money?  Will word of mouth help bring in new business after your first few months?  Will you even turn a profit in your first year (many businesses don’t) or will it take more time?  Tell me about your road to breakeven.

Copy and paste your write-up into a blog entry and title it "(Insert Company Name)'s Financial Write-up" when finished.  Next week, we will create an Executive Summary, organize our plan, and prepare for the Shark Tank.

Dual Focus!

This week we will have a dual focus for our business plan.  Our first area of concentration will be on the discussion of business risks.  Here we will outline different ways to handle our business if the assumptions in our SWOT analysis are incorrect.  We will then build on this by researching the current economic environment.  By analyzing the economic conditions, we will be more justified in our beliefs about trends that may occur in our industry, and will be better equipped to manage our business.  Our second area of concentration will be on finding as much data about the expenses of our business as we can.  In order to be able to complete a break-even analysis, and later determine how much profit we plan to earn in the future, we must first know the true cost of running the business. 

Here’s how we’ll eat the elephant this week:

Monday: Discussion of Business Risks

Have you ever heard someone break down the word assume?  If not, let’s just consider you to be one of the lucky few.  In any case, the assumptions made in our SWOT analysis are likely to be backed by research about our industry.  Unfortunately, even with hundreds of hours of research, some assumptions end up being incorrect.  Today’s classwork deals with handling business risks and incorrect assumptions.  From the rubric:

·       Discussion of business risks - 5 points

o   Identify the risks that will occur if assumptions you have made are incorrect.

o   Provide a strategy for dealing with the risks identified.

Essentially, we’re making sure we have all bases covered.  Today’s work should be somewhat challenging, but fun.  Your final draft for discussion of business risks should be about 100-150 words.

Tuesday and Wednesday: Current Economic Conditions

While you’ve already completed an industry analysis, on Tuesday and Wednesday, you will take a look at the economy from a “big picture” perspective.  Here’s a breakdown taken straight from our rubric:

·       Current economic conditions: a “snapshot” of the economic environment that may include information such as employment levels, interest rates, rate of inflation/deflation, rate of change of GDP, balance of trade, exchange rates, and/or any other information you think is appropriate.

Now, this “snapshot” is essential to determine what effects the economy will have on your business.  It’s one thing to report to me that consumer discretionary income is dwindling as a result of inflation.  It’s a completely different (and more thorough) situation when you explain that because of dwindling discretionary income, your profits will be negatively affected, since fewer consumers will be capable of actually paying for your products/services. 

Thursday/Friday: Expenses (Fixed/Variable) and Blog

The time has come to begin looking for real numbers for our business.  How much money does it actually cost to run your business?  Many of you have already done at least some research about renting a facility, paying employees, advertising expenses, etc.  For Thursday, the plan is to first list as many costs as you can for your business.  Consider these questions:

o   Will you have a facility?

o   How much is the rent for the amount of square footage you need?

o   Will you hire employees?

o   Will you advertise?

o   Approximately how much does the utility bill cost for a facility you plan to run?

o   Do you sell merchandise?  What is the cost to make or procure the merchandise?

o   What other consumable assets will you use on a monthly basis? (landscaping companies use fuel on a regular basis)

The list can go on and on.  My suggestion is that you find as many fixed and variable expenses as possible for your plan.  A simple web search can greatly help you.

Once you’ve sufficiently completed these tasks (or if we only have about 20 minutes left in class Friday), it’s time to blog about your progress.  Feel free to tell me:

What have you learned about being prepared for anything? 

How did you react to having to deal with the possibility that your original assumptions may have been wrong?

What did you learn about our economy? Has your opinion changed about anything?

How will the economy impact your business?

Were you aware of all the expenses your business would have to pay?  Which expenses stood out during your research?

That’s it for this week.  See you in class!

SWOT Analysis Time!

Welcome back to the business plan project!  Last week we took a look at how we plan to choose our employees, and what qualities we feel are essential to carrying out our vision for our business.  We profiled an ideal candidate, outlined knowledge, skills, and abilities necessary for a specific manager at our business, and have a solid idea of what our human resources will be.  With that in mind, and with a true vision for our business, we will now move forward with the SWOT analysis and discussion of risks our new venture will face.  These are important components of a business plan, since potential investors want to know whether or not they’re dealing with a realistic entrepreneur or a daydreamer.

This week, we will focus on the long-term potential of our business.  Our goal is to analyze the internal and external environment as thoroughly as possible.  This will be accomplished through completing a SWOT analysis.  Here’s a breakdown of the weekly tasks.

Monday: Internal Strengths and Weaknesses

Here is a great link to an article that summarizes how to compose a SWOT analysis.  The first two portions, strengths and weaknesses, deal with your internal operations.  In the article, there are bulleted questions that you can answer to complete your analysis for each section, but you may also choose to identify other highlights that are industry-specific if you wish.  For example, do you have any technology at your disposal that separates you?  Are your employees trained in a certain way that helps your business stand out?

We will share out some of our findings in the last 7 minutes of class, so please work diligently and be prepared.  Also, don’t hesitate to use some great points from your classmates if you can add them to your plan.  The purpose of this exercise is to share best practices (buzzword: collaborate).

Tuesday: External Opportunities and Threats

Again, reference this article for some questions that you may use to complete your analysis.  Think about it… your established competitors may be resting upon their laurels, and may be missing out on opportunities in the marketplace that you can use to your advantage.  Conversely, these established competitors do have name recognition and good reputations on their side.  Will this pose a threat to your business penetrating the market?  How will you address this?

We will again make use of the last 7 minutes of class to share out our findings.  I urge you to think hard when it comes to what “best practices” you can use for your own plan.  This is a great way to expand your thinking and be productive.

Wednesday: SWOT Analysis Final Draft

OK, today we are going to put it all together.  Take your notes/draft for your SWOT analysis and make it pretty!  Here are a few ideas for making your final draft

Now, you can use tables in Microsoft Word or use Google to search for some SWOT analysis templates if you wish.  I found a really good one that’s in my Public_Faculty folder saved as Business Plan – SWOT Analysis Template.ppt as a PowerPoint file.  I happen to LOVE slide 2 of the presentation, and would use that for my SWOT analysis. 

Your assignment today is to find an aesthetically pleasing template and enter your findings as a final draft.  I will prompt you to email me at mattspinella@gmail.com with your templates for a grade, and in the last 5 minutes of class, we will analyze and critique one of them as a group.  This will be a fun and creative day!  I know it.

Thursday: Share Out Activity

Surprise!  Well, maybe this isn’t a surprise if you’ve read ahead.  In any event, we are going to present our SWOT analysis and get some real constructive feedback.  I will gladly accept volunteers for today’s activity (I’ll need 4), but can just as easily use equity cards to choose presenters.  For some added incentive, volunteers will receive 5 extra credit points on today’s assignment (allowing you to earn 55 points today).  The rest of the class will fill out a SWOT analysis critique sheet. 

As was the case last Friday, your objective is to find 2 aspects of the SWOT Analysis that you like, 2 aspects of the analysis that you would change, and determine whether or not you feel the analysis is accurate, including an explanation of why.  Don’t worry if you don’t know too much about the industry being presented.  Simply focus on the analytical aspect of the business owner.  Was the owner realistic?  How will his analysis help him penetrate the market?  How can he gain an edge over existing competitors?

Friday: Catch-up Day and Blog

This week was pretty intense, I’ll admit.  You used your analytical skills to assess your business, your competitors, your industry, and your classmates’ hard work.  You used creativity in formatting an aesthetically pleasing SWOT analysis and presenting it to the group.  Perhaps there are still some loose ends to tie up. 

Let’s use today’s class to catch up on the entire project and write a blog entry about where you stand.  Feel free to address these questions in your blog entry:

1.     Are you caught up with every section of the plan?  If so, how have you accomplished this?  If not, what has kept you from staying on track?  Be honest and create a plan to catch up.

2.     Now that you’ve completed a majority of the plan, how well will your business perform in the marketplace?

3.     How do you think an investor will react to your plan?  Do you think you can get the startup capital needed for your business?  Why or why not?

Feel free to write a short intro to your blog entry and then list the questions in your post, addressing them one at a time.  I look forward to reading your reflections about your progress.

See you next week!

When Life Gives You Lemons...

This week, we will not have access to my classroom Tuesday, Wednesday, or Thursday.  Even worse, I will be out on Tuesday to attend New Tech training with the Health Science Academy teachers.  This creates an issue for my VE and Business Management students who are utilizing the computers in my room to draft their business plans. 

Worry not, students.  I have devised a plan that fits well with where we are in this stage of business plan creation that will keep us moving forward.  Since Coach Bruce and I both have to give up our rooms a majority of this week, we’ve decided to co-teach a mini unit about interviewing skills.  It fits well with Standard 1.3 for all of our classes:

Standard 1.3:

Communicate effectively as writers, listeners, and speakers in diverse social and business settings.

That said, although life has given us lemons, we have both decided to make lemonade.  I bet you were thinking I was going to use a baseball analogy to describe this situation, weren’t you?  So now let’s take a look at what we have planned for the week:

Monday: Interview as Performance – Know Your Audience (weather-permitting)

Bell-Ringer (3 minutes): Take out a pencil and sheet of paper, write your name/date on top of the sheet.  Then, list 3 things that you consider to be performance-based, and how you evaluate said performance (ex: actor in a play is evaluated based on how believable his character is or how much I feel for the character).

After we share out some answers, I’ll explain that the process of interviewing for a position is no different than an actor performing in a movie.  Both the interviewee and actor are attempting to send an effective message to a specific audience.

Now let’s look at today’s objectives:

Objectives:

·      Understand that an interview is a performance for a specific audience

·      Determine what an interviewer is looking for in an interviewee

·      Understand how to meet the desires of interviewer

·      Create a profile for the ideal candidate in a specific job opening.

Clear Target: We can analyze and critique characteristics of an ideal interviewee (This applies to all my classes. Each class will have a target position for which they will interview)

After reviewing objectives, I will tell each class that if you've earned an interview, you've likely impressed the interviewer enough with your resume to be included in a pool of candidates.  You likely have a similar skill set as other candidates that matches the job description.  Thus, the goal of the interviewer is twofold.  First, the interviewer is looking for consistency between your resume and you.  Your answers to position-specific questions will help the interviewer determine that you truly possess the knowledge, skills, and abilities needed for the job.  Second, and more importantly, the interviewer wants to know if he/she would like to work with you.  This is where you separate yourself, for better or worse, from your competition.  Your answers to generic and off-the-wall questions will show how well you work under pressure and how well you will fit in the culture of the organization.  Students will have guided notes for this.

Next, we will discuss what an interviewer in different industries may look for in a candidate.  Accounting I will profile a payroll administrator (read time cards, enter data to payroll register/employee earnings record, journalize transfer of funds to payroll checking account, interpret discrepancies between time cards).  Accounting II will profile a bookkeeper for accrual-based accounting firm (understand concept behind accrual accounting, create adjusting and reversing entries).  Management and VE students will create a profile for an ideal candidate for a manager at their business that they're creating for their business plan.

For closure, students will pair up with their shoulder partner to create a profile for an ideal candidate, using words, pictures, or symbols.  Profile must include a list of knowledge, skills, abilities, and must not include age/race/gender, as this is against the law.  

Notes to be turned in for a grade. 

Tuesday: (Taught by Bruce)

Minutes 1-5: Students enter LGI Room, students are assigned seats, attendance is taken.  Students are provided graphic organizer.

Minutes 6-15: Presentation/discussion regarding interview techniques, dress, strategies.

Minutes 16-30: Students watch video, evaluating interview on graphic organizer.

Minutes 31-35: In pairs, students generate a list of three interview questions.  Students write best question on the board.  Bruce saves a list of the best standard interview questions (I already have a nice list for students to practice).

Minutes 36-40:  Teacher discusses questions/finds common themes.

Minutes 41-45: Students practice "so tell me about yourself" question.

Wednesday: (Taught by Spinella)

First half of class: Students practice hand shake, introductions, 

Second half of class:  Students practice "off the wall" questions/abnormal questions.  Students write their own "off the wall" questions for use on Thursday.  Spinella saves a bank of the best off the wall questions.

Thursday: (Taught by Bruce and Spinella)

Minutes 1-5: As students enter, have them write a 2-3 sentence reflection in their graphic organizer from Tuesday, by providing their thoughts on one of these two comics (or another comic):

Rest of class:  Have "mock interviews" where students respond to one normal question and one "off the wall" question.  Spinella and Bruce lead class discussion and provide feedback to each student.

Friday: Performance/Analyze/Critique

No bell-ringer

Clear Target: We can analyze and critique an interview.

Students will enter the room and receive interview critique sheets Name/date on top of sheet

Take three volunteers to be interviewed during class.  Volunteers will receive 3 extra credit points for this assessment.  If no volunteers, equity cards will be used to fill available spots.

I will interview 3 students, and during interview, the rest of class will list 2 things the interviewee did well, 2 things the interviewee could have done differently, answer whether they would hire the student for the position, and explain in 3 to 5 sentences why/why not.  After each interview, students will discuss strengths/weaknesses and have 4 minutes to complete critique sheet for that interview.  Critique sheets turned in for quiz grade.

There you have it.  I hope you can see that we will continue to move forward even without the availability of computers this week.  Please take some free time this week to ensure you are caught up on all tasks associated with the business plan.  We will hit the ground running when we return 2/10. 

Thanks for reading