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AEM 3250: Personal Enterprise and Small Business Management (Spring 2013): Business Plan Development

A Mann Library guide to business plans, market data, business directories and research for AEM 3250 students.

Research Strategy

Step 1: Browse Business Plans using Gale Business Plan Handbooks

What: Gale Business Plans Handbooks provide actual business plans developed by small businesses throughout North America. New plans are published every year and the cost of production is updated.  If you find an older plan, then you can add inflation to the cost figures. 

How to use: Connect to Gale Business Plans Handbooks and search using keywords that broadly describe your business (e.g., restaurant, cafe,  car wash,  gallery, music, movies, etc). You cannot be too specific because if your idea is truly original, you are not going to find an exact business plan for your idea; if you do find an exact match,  then your idea is not original.

  • Electronic access:Gale Business Plans Handbooks
    Note: Sometimes the financials sections in the electronic plans are not very legible. In that event, print version of Business Plans Handbooks are available on campus.
  • Print Handbooks (Mann Library): HD62.7 .B865 2009 volume in Mann Reference (non-circulating) on first floor

Watch a 30-video on searching Gale Handbooks:

 



Step 2:  Analyze a business plan

Read a business plan to identify the information needed for the price point and revenue model.  Due to copyright restrictions,  the plan cannot be publicly posted here.   Discussion of the plan will take place in class.  Electronic copies of the plan will not be disseminated.  If you miss the class,  you can either consult with a classmate


Step 3.   Identify geographic target market and demographics

      • Use American FactFinder to locate the fact sheet for your geographic area.
      • If your business idea is a virtual idea, you can get an overall understanding of the e-commerce sector and the business potential of your segment by using the Census e-stats website



    Research Strategy

    Step 4.   Identify the competitors and competitive price structure

    If you have a plan that combines two businesses, like an organic coffee shop with a car wash),then actively seek competitor pricing for both industries.

    Sources for identifying competitors

    • You can use free websites such as yellow pages to locate the competitions. For smaller geographic regions, this is likely your best resource.
    • Consult Hoovers Online or CareerSearch for higher quality information such as business names and some sales/revenue information.

    Step 5.  Locate Market Trends

    •  Use Mintel Oxygen database to locate national trends in the segment that you intend to serve
      Note: you'll need to sign up for a (free) login from Mintel. But it's worth it! They offer exactly the kind of market information you're looking for.
    • Also check out IBISWorld

    Step 6: Determine price point & revenue model

    • Determine which expenses are fixed and variable costs
    • Adjust each operating expense element for the cost of living of the geographic region
    • Multiply the sales price per unit x number of units estimated to be sold = revenue
    • Calculate the Break Even Point (BEP) to comment on when the business will become profitable: 
      Total Fixed Costs/ (Sales Price per unit - Variable Cost per unit)


    7a.  Estimate the number of units sold
    Use an existing business plan.  You will need to adjust the potential sales volume based on income, population and the consumer expenditure on eating out. Use SimplyMap to locate consumer expenditure information

    7b.  Estimate the selling price
    You will need to estimate the selling price per unit adjusting the estimates given in your example business plan for income, population and consumer expenditure

    7c. Adjust operating expenses for the cost of living roughly

    Use a free cost of living converter such as CNN Money  and you will roughly know that the comparable salary in Ithaca is $2,632 -  it costs 31% more to live in Ithaca!

    For many other operating expenses,  the web is quite useful.  For instance, phone, utilities and rent expenses can be estimated using freely available information on business websites. But many times, the costs are fairly comparable across the nation. For instance, $720/yr for phone service in Springfield, Missouri may be on the higher side,  but it is always a good idea to overestimate the cost and underestimate the revenue.

    7d.  Total Revenue - Cost of Sales =  Gross Profit Margin