BUSINESS PLAN ASSIGNMENT
1. The Business Plan project (for a new business) is to be completed and submitted on Day 15. Most days will allow time for in class work plan. However, it will still be necessary to do other work on it. The assignment is worth 30% of the course grade.
2. The Business Plan must be based on a new business you would like to establish. It should be detailed and comprehensive. You may use the sample plans provided in the Entrepreneurship textbook and in the MyEntrepreneurshipLab. You will also be provided access to the LivePlan online software for creating the business plan. Your new business could be a service, retail, or manufacturing function. It could combine 2 of these or even all 3 but remember, KEEP YOUR BUSINESS SMALL AND SIMPLE.
Instructions for your Business Plan Assignment
1. The plan’s maximum is 25-40 (depending on the size of the business) double-spaced pages with no more than 8-10 pages of exhibits or Appendix.
2. The plan must include an Executive summary, Table of Contents, Mission, Vision and Culture, Company Summary, Market Analysis Summary, Strategy and Implementation Summary, Management and Operations Summary, Financial Plan, Funding Request and Exit Strategy. Appendices including: Sales Forecast, Personnel Plan, General Assumptions, Pro Forma Profit and Loss, Pro Forma Cash flow, Pro Forma Balance Sheet, Resumes, Fact Sheet and complete list of references.
3. It should include a detailed marketing plan that identifies the principal target market(s), its size, location and all demographic and psychographic characteristics. Students should also identify and growth trends in the market and provide appropriate statistical information to support that conclusion. Detailed sections are required on the needs filled by the product or service offering, market research conducted, pricing methods and the proposed promotional programs and distribution system.
4. The plan should also include a detailed financial plan linked to the requirements and objectives of the marketing plan. This section must cover the business’ first five years and include monthly statements (income, cash flow and balance sheet for Year 1, quarterly statements for Year 2 and annual statements for Year 3-5. Optimistic and pessimistic forecasts should be included as well.
5. Financial methods and the scheduled amounts.
6. An exit or harvest strategy for the business.
7. Identification of the key attributes and skills brought to the business by each team member who will be active in the business and description of how these will be of benefit to the business.
8. Delineation of a medium to long-term growth strategy for the business, i.e., expansion and diversification plans.
9. A brief description of the human resources, ethical and social policies of the business.
Students will be required to make a 40-minute presentation of their plan. Students will be evaluated on their creativity, enthusiasm, use of audio-visual aids (PowerPoint is strongly recommended) and public speaking skills.
Every year, 440,000 low-income high school seniors who are qualified to go to college do not enroll; 85% of them never even fill out a college application. This is in large part because low-income students face a college application information gap: they have limited access to information about which colleges to apply to, how to complete a college application, what a good application essay looks like, and how to navigate the complicated financial aid process. Low-income high schools are drastically understaffed: one college counselor may serve as many as 740 students. Moreover, less than half of low-income high school students report receiving help from an adult in preparing for college. Attending college is one of the best ways to advance economically; without the information and guidance necessary to apply to college, many low-income students are deprived of the opportunity to escape poverty.
AppSuccess bridges this information and knowledge gap so that low-income students who want to apply to college have the same opportunities as their high-income peers. AppSuccess is a web-based platform where low-income high school seniors (“Applicants”) are matched with undergraduate students at top universities (“Mentors”) who serve as volunteer college counselors throughout the course of the student’s application process. Using an in-depth curriculum, Mentors will work one-on-one with Applicants on the website to navigate the college application process: where and when to apply, how to write a compelling admissions statement, providing the same services for free that currently only privileged students can afford. The entire guidance relationship takes place online, allowing us to overcome geographic and logistical barriers that have impeded the effectiveness of other volunteer guidance organizations
AppSuccess provides low-income students who are qualified to go to a four-year college with the means to get there. We eliminate the college application information gap by matching our Applicants with students from top colleges who guide them through the college application and financial aid process via our interactive online platform. Theory of Change If we provide low-income students with personalized college application assistance, then they will get into better colleges and have improved life options and opportunities. Management Team AppSuccess has five founding members, whose backgrounds span education, computer development, finance, consulting, and nonprofits. We will hire web developers to help build the website, and will grow our staff commensurate with the growth of our organization.
AppSuccess plans to target the 440,000 low-income students who are qualified to go to college but do not enroll. We will recruit students at Title I schools, which have the largest concentration of low-income students, by reaching out to teachers and staff at those schools. In our first year, we will serve 90 Applicants, and grow to serve over more in comingg years. While there are many organizations that offer college counseling, AppSuccess will be the first to provide free, personalized college assistance to low-income students anywhere in the country. This gives us a first-mover advantage, establishing AppSuccess as the main source for college counseling to low-income students. Financial Plan Our model projects that we will be cash-flow positive by our third year of operation. We will be financed mainly by grants and individual donations, and will slowly introduce additional revenue streams including advertising and corporate partnership.
Operations In our first year, we will draw Mentors from three universities, and expand to work with the schools on the U.S. News Top 100 Colleges. In each university that we work with, we will recruit a Campus Leader—a student leader who will serve to recruit Mentors and serve as a liaison between Mentors and AppSuccess.
Key Elements for Success There are four key elements that AppSuccess needs in order to be successful: qualified Applicants, dedicated Mentors, effective Campus Leaders, and a user-friendly and functional web-based platform.
Qualified Applicants For a high school student to be eligible for AppSuccess, they must meet two criteria:
1) they must be enrolled at a Title I school1 and
2) they must be college qualified.
Title I schools are those with at least 40% low-income students. Students at Title I schools are twice as likely not to enroll in college as students at non-Title I schools that have taken the same classes. Students at Title I schools are not only more likely to come from a low-income family, but are also less likely to have access to a guidance counselor. They are also less likely to see their peers enroll in college, and more likely to decide that going to college “isn’t for me.” In order to be college qualified, students must 1) have a 2.5 GPA or higher; 2) take the SAT or ACT by November of their senior year (if an Applicant is signing up before having taken the SAT or ACT, they must have already.
Applicants sign up for an AppSuccess Mentor during September of their senior year. They will supply basic information about their academics, interests, and career goals, so they can be matched with a Mentor with a similar profile. Before being matched with a Mentor, Applicants will have to watch a series of video tutorials about the basics of applying to and attending college. This is both to give the Applicant some foundational information as well as to ensure that they are willing to put in the necessary effort to persist throughout the application process. There will be information on the website specifically for parents, so that they can be involved and understand the process that their child will be guided through with AppSuccess.
Dedicated Mentors Each Applicant will be matched with a Mentor who has recently gone through the college application process and has successfully gained admission to a top-tier school. Unlike the Applicants, who automatically qualify to be an AppSuccess participant as long as they meet the eligibility requirements, the Mentors will be subject to a rigorous application process. Specifically, we are looking for Mentors who exemplify our three criteria: responsible for their work, respectful of others, and relentless in their commitment to help others. Mentors will fill out a questionnaire which will gauge their interests and background, similar to the questionnaire that the Applicants complete, in order to facilitate the matching process. They will also go through a series of training videos to ensure that they learn 1) how to navigate the website, 2) the timeline and their responsibilities as Mentors, and 3) the process for helping the Applicants. Mentors will also be trained on the ethics behind helping Applicants, including the difference between helping the Applicant and doing the work for them. Once recruited and trained, Mentors will be responsible for several tasks, including:
• Helping their Applicant think through which colleges to apply to;
• Advising their Applicant on who to seek out for recommendations;
• Reviewing application essays; • Navigating the financial aid process;
• Ensuring that their Applicant completes requirements, meets AppSuccess milestones, and submits applications on time; and
• Answering questions, offering general advice, and providing strong encouragement throughout the process.
In total, Mentors will devote 30-40 hours to working with their Applicant during the course of the year. Effective Campus Leaders Campus Leaders are college students that we will select to run the AppSuccess chapter at each university in which we operate. Rather than AppSuccess directly recruiting large numbers of Mentors in each college, we will recruit one or two Campus Leaders, and the Campus Leaders will be responsible for recruiting Mentors at their respective universities. The ability to recruit effective Campus Leaders will be a top priority for AppSuccess, as the strength of Campus Leaders will drive our supply of Mentors. We will look for four criteria in Campus Leaders: drive, responsibility, ability to motivate others, and dedication to our mission. Potential leaders will be required to go through a rigorous selection process, which will include a written application and a phone interview. In addition to recruitment of Mentors, Campus Leaders will also be in charge of communicating regularly with Mentors to ensure that they are on track, communicating with AppSuccess staff members to ensure alignment with AppSuccess curricula, and maintaining a community of Mentors at their university through social events and meet-ups.
The interactions between the Applicant and Mentor will take place through AppSuccess’s webbased platform. The website will have several important features:
• Applications for both Applicants and Mentor, and a matching algorithm which will pair up the Mentors and Applicants based on their background, interests and hobbies, and career goals;
• Foundational videos for Applicants and their parents;
• Tutorial and training videos for Mentors, which will prepare Mentors to guide their Applicants through the application process, as well as a series of assessments to ensure that Mentors have learned the training materials;
• An interactive platform where Applicants and Mentors can edit simultaneously, chat, and video chat.
Value Proposition Our product creates value both to the Applicant and to society. Value for Applicant AppSuccess’s primary value proposition is to reduce the cost of achieving education to the Applicant. We do this in three ways:
(1) Reducing information costs: By making information that is relevant for college applications free and accessible for all high school students, AppSuccess allows both students and their parents to learn about the details of applying to, attending, and paying for college;
(2) Reducing application support costs: By providing low-income students with free college counseling services, AppSuccess gives them an opportunity to compete with their high-income peers who often have adult support and assistance with their applications; and
(3) Reducing dollar costs: By assisting Applicants to identify and apply for college fee waivers, scholarships, and grants, AppSuccess works to save each Applicant hundreds, if not thousands, of dollars to make college affordable. In addition, because the end goal of AppSuccess is to get its Applicants into college, we offer our “customers” the added value that comes with a post-secondary education. Studies over the last decade have confirmed that college graduates reap significant benefits over those that stop at high school (College Board). Compared to high school graduates, college graduates:
• Earn nearly $1 million more over a lifetime;
• Have half the unemployment rate;
• Have one-third the incarceration rate;
• Require $800-$2,700 less in social programs each year; and
• Have more educated children.
Value for Society
The financial return to society for a program like AppSuccess is substantial. Not only does it provide intangible benefits to the Applicant in the form of increased exposure to diversity of ideas and cultures, but also to society in the form of economic benefit. A first-pass analysis suggests that the net present return on investment in an AppSuccess Applicant is over $45,000, the bulk of which is derived from the increased income open to college graduates and graduates of higher tier institutions.
To ensure high-quality, high-efficiency delivery of AppSuccess services, we expect to track our progress in four critical target areas of performance: Driving Operational Success for Our Applicants Getting students accepted into colleges that match their qualifications is the fundamental goal of our organization. Leading indicators that will allow us to measure this success include the percentage of Applicants “on-track” with curriculum and the portion of available Mentor capacity being used in a given reporting period. Lagging indicators include the percentage of Applicants accepted to at least one college, the percentage of applications that result in acceptances, the number of dollars saved (e.g., via scholarship or application waivers) per Applicant, and the Applicant attrition rate. In addition, we will track growth indicators such as year-on-year growth in number of applications. With time, we will build the capacity to track Applicants postapplication, measuring enrollment and matriculation rates, as well as conducting fit surveys to measure the effectiveness of our Mentors to help match Applicants with good fit schools. Providing High-Performing Platform Functionality To provide Mentor services, we must have an operational platform that can handle high levels of Applicant/Mentor traffic. Metrics include the number of unique site hits by our Applicants, results of Quality Control audits, and feedback from Applicants and Mentors. Ensuring High Levels of Customer Service Our services are only effective if all of our stakeholders are satisfied with how our processes work. To this end, we will regularly survey Applicants, Mentors, and Campus Leaders to gauge satisfaction and solicit their suggestions for continuous improvement.
Market for Applicants AppSuccess targets low-income students who qualify to attend a four-year college. The students we target are on track to become high school graduates who, without our intervention, either would not apply to college at all or would apply to less selective colleges in which they would not be able to maximize their potential.
Market for Mentors
Approximately 3.3 million college students volunteer each year, and the median college student volunteers for more than 50 hours per year. Nearly 32% of students who volunteer work either directly with an organization in education or in youth services, and over 50% of all college volunteers have tutored or mentored youth through some type of organization. Logistics, including transportation, is ranked as one of the highest barriers that is keeping college students from volunteering. AppSuccess takes something that college students have already shown interest in—volunteering with children—and lets them do it from the comfort of their own home. Additionally, the college admissions process has grown more competitive, prompting an increase in the demand for college counseling services across all student demographics. There are two professions that assist students with their college applications: guidance counselors and college advisors. Guidance Counselors Guidance counselors work in high schools. In most cases, they cannot meet the growing demand of students who need access to information and mentorship, a ratio of 100 students to 1 guidance counselor, the guidance counselor to student ratio can be as high as 740 students per counselor in low-income schools.
AppSuccess offers free, personalized college assistance to low-income students anywhere in the country. This places us in a uniquely unoccupied space of college application assistance:
(1) Unlike for-profit substitutes, we are open to and targeted toward low-income students who most need the guidance but cannot afford it;
(2) Unlike online information services, we include a dimension of one-on-one interaction and guidance with college application “professionals” who have recently gone through the process;
(3) Unlike non-profit mentoring organizations, our Mentors will not only focus on college applications, but will be uniquely matched with Applicants based on mutual characteristics of their profiles. In addition, use of the web-based platform will eliminate geographical constraints, making it easier to link the Applicant need with the Mentor supply in both rural and urban areas. As a result, we will appeal to the target markets of many of our competitors, while offering services superior to each.
The services that AppSuccess provides will be completely free to its Applicants. Rather than charging our Applicants to cover the costs of the services we provide, we will instead use a sponsorship model, where we will get individual donors to “sponsor” an Applicant to go through our program.
AppSuccess will use two separate marketing campaigns—one targeted at Applicants and one targeted at Mentors. In each, we leverage meaningful relationships and the low costs of technology to reach our target audience. Marketing Campaign for Applicants During Stage 1 of our growth, we plan to select a handful of high schools nationwide, and foster personal relationships with teachers and staff in those schools, who will help us identify Applicants that would benefit from AppSuccess. Especially in the early phases of implementation, we will work to build relationships with staff members inside schools.
We also plan to reach Applicants through secondary channels beginning in Stage 2, by: • Encouraging successful alumni to recruit their friends who are still in high school; • Posting online advertisements on websites that students visit frequently (e.g., Facebook); • Posting online advertisements on our partners’ websites (e.g., College Board, Kaplan); • Targeting parent, community, guidance counselor, and principal organizations.
Marketing Campaign for Mentors
We plan to take advantage of college students’ insider knowledge of their own campuses by recruiting Campus Leaders. We will train Campus Leaders to find Mentors, walk them through the training process that we have created, and monitor their progress. As AppSuccess grows, we will leverage our network of local Campus Leaders and Mentors to encourage their friends at other colleges and universities to apply to become Campus Leaders at their own schools. We will also post advertisements on social networking sites like Facebook and send email announcements through campus community service offices. In addition to training our Campus Leaders on recruitment techniques, we will train Campus Leaders to use other recruitment strategies to draw in Mentors. The list includes:
• Tabling • Flyers • Posters • Table tents • Teasers (for events) • T-shirts • Banners • School Calendar • Campus radio announcement • Campus TV announcement • Student Newspaper • Small gifts (e.g., pens) • Chalking • Writing on classroom chalkboards • Announcements at events, meetings, classes • Facebook ads
Securing our Market
There are three prongs in our strategy to secure our market: Establishing First Mover Advantage By moving first to reach our target of college-qualified high school students who lack access to the college information that they need, we will embed AppSuccess in low-income communities and Title I schools. Building Brand Equity By working closely with all Applicants and Mentors during our first two years to maximize our success rate, and by publicizing our ability to get results, we will create a positive reputation for AppSuccess in the communities where we work.
The risks associated with AppSuccess are low, and the mitigation strategies will significantly reduce the likelihood of any of the main risks taking place. Risk: Low Mentor Turnout Maintaining a low Applicant/Mentor ratio will require many Mentors to volunteer their time, especially if Mentor turnover is high. We will tap into existing university community service hubs, reaching out to them a year prior to when we expect to recruit Mentors from them. Other responses to supply shortages include expanding to additional universities and temporarily allowing high-quality Mentors to take on applicants that may not match their own profile. Low-Income Applicants Lack Risk: Applicant Attrition Sustaining Applicant attention and commitment over a 6+ month period will be critical. Firstly, as mentioned, we will have leading indicators to identify when these Applicants fall “off-track” of the application timeline before attrition. In addition, we will require all potential Applicants to seek a teacher “sponsor”—an in-school teacher who will vouch for student commitment and provide their own contact information for us to use if we need someone to encourage the Applicant locally.
There are two key financial criteria to our mission: (1) that the application assistance always be provided free of charge to the Applicants, and (2) that we have a financially sustainable organization by year three of operation. Our projections achieve both of these goals. Total revenues will grow from a base of approximately $210,000 to over $940,000 by year six of operation. These gains are a direct benefit of the continued support of our donors and partners, as well as advertising related to the growth of our business. Details by line item as follows: Grants. Foundations provide a large source of funding to education-related nonprofits: four of the top 10 foundations in the US support education.5 Many other foundations, like the Citi Foundation and the Lumina Foundation, target funds specifically at activities that promote college access among disadvantaged populations. Grants will be a significant source of funding for AppSuccess in our early years, and as we grow we will rely on them increasingly less. In our first year we expect grants to make up 95% of our revenue. By our sixth year of operation we will have reduced our dependence on grants significantly, down to 30% of our revenue. As we continue to build a reputation and a corps of committed financial supporters we expect annual donations to make up an increasingly larger percentage of our revenue stream. Therefore we plan to apply initially for grants for seed funding from foundations like the Darden Foundation, whose Recipe for Success program offers seed funding to organizations that “impact the educational prospects of underserved youth, ages 14 to 18, by providing them with access to the information and tolls they need to pursue their dreams of higher education.” Partnership Revenue. AppSuccess will partner with organizations like CollegeBoard, ACT Inc., Princeton Review, Embark, CommonApp, FastWeb, and other organizations geared toward getting students into college. Our goal is to build relationships and eventually point our students toward their websites.
We will raise donations primarily through our “Sponsor an Applicant” program. The program enables donors to finance all of AppSuccess’s costs associated with supporting an Applicant for $100 per Applicant. To get long-term buy-in from donors, we will require Applicants to write letters of appreciation to their sponsors. Similar sponsorship programs have proven extremely effective for other organizations because it puts human faces to the donation.
Different from our partnerships, our advertisers will be consumer product companies and related companies that market to young adults. Revenue calculations are based on a standard ‘click through’ model. We assume our advertisers will pay us an average click through rate of $0.65, and that our Applicants will click an average of 3 times per month. Expenses Our largest expense is personnel, with salaries and benefits estimated to be around $560,000 during the first two years alone. Note that throughout the six-year projection more than 80% of our expenses are related to personnel, as the hardware/storage, real estate, and miscellaneous costs are minimal. Net Surplus Despite a minimal loss in years one and two (that could be financed by guaranteed loans), we will be fiscally sound and self-sustaining thereafter
Quarterly Statement of Income AppSuccess exhibits seasonality in accordance with the college application process. College application deadlines range from mid-November to early February, thus highest activity levels on our site will be in the first and second fiscal quarters, with web design, advertising and promotion and travel expenses weighted toward the first half of the fiscal year. Revenues are budgeted to be spread evenly over the fiscal quarters, with the first quarter of 2012 getting a boost from the $25,000 prize related to the HBS Business Plan Competition. Annual Statement of Cash Flows Our cash flow statement resembles our projected income statement. This is both due to our nonprofit status (we do not pay any taxes and therefore expense all our software development costs as incurred) and due to the web-based nature of our business, meaning that there are few fixed assets that need to be depreciated. On an annual basis, all our revenues and expenses are received and paid for in cash.
Sustainability is a serious concern for any enterprise, and especially for those in the not-for-profit realm. Through conservative planning, leveraging our partner relationships and exploiting revenue streams collateral to our core business, we hope to ensure this sustainability for AppSuccess. Our financial projections show that we will be cash flow positive by year three of operation. Yet we recognize that without charging for our services, we are dependent on the funding from individual donors and foundations to be sustainable. We plan to address this challenge in several ways. Keeping Operating Costs Low Aside from the handful of staff we need to run the business and develop the website, our operating costs are extremely low, which allows us to focus less of our time on fundraising and more of our time on creating a better product. Keeping Fundraising Goals Conservative Our financial projections show that we only need to raise about $200,000 in grants each year to be sustainable. We believe that this is a conservative estimate, since funding for education nonprofits exceed over $5.5 billion annually in the US alone. Importantly, the economic hardships did not affect funding for education.