1. by Professor Ron Fournier
Business Plans by
Professor Ron Fournier

2. Developing the Business Plan
The culmination of a lengthy, arduous, creative, and iterative process
Transforms the caterpillar of a raw idea into the magnificent butterfly of opportunity
Articulates the merits, requirements, risks, potential rewards, and execution
The point of departure for investors to begin their due diligence
i.e. Balance risks and potential of the opportunity
The risks involve technology, market, management, competition & strategy, financial

3. Developing the Business Plan
The blog will have a PDF file on THE BUSINESS PLAN
Use this as your guide
There is a sample plan for the PC Build venture that we will discuss in today in class and you can use this as a guide
Also there is an outline and discussion of what to include

4. The Opportunity - PC Build
Manufacture and sale of PC computer kits
target the home hobbyist & educational institutions, target folks “that want to get their hands dirty”
unique opportunity to provide PC kits at affordable prices
target those who love to experiment and learn, not necessarily saving money
big guys like Apple and Dell switched to providing finished products rather than kits
little or no competition in this area

5. Opportunity Rationale
3 main reasons for the opportunity
technological standardization
PC clones the standard for hardware and OS
free engineering, kits lag leader by one generation
changing consumer attitudes
PC’s are everywhere
consumers not brand loyal
PC’s no longer a mystery
consumers adding peripherals themselves
market opportunity
kit segment not being served with quality

6. The Product PC clones in a kit form 30 day money-back guarantee
3 main products (see pp54 and 55)
priced % below comparable fully assembled PC’s
lag leading edge by 1 generation
proven hardware
easy access to suppliers
recognized standard
lower cost components
customer buys to learn about computers, not to buy the leading edge technology

7. Market Entry Strategy First educational institutions
computer education camps
Next the home hobbyist via mail order
Finally retail market using stores
Expansion would include add-in boards for sound cards, modems, etc.

8. Market Analysis
Exhbiti A

9. Economics of the Business
Kits to sell for
$699 basic kit
$899 super kit
$1500 deluxe kit
Exhibit D p69 shows price sensitivity
Exhibit C p59 shows competitor comparison
Microsoft Corp license for MS-DOS, $32 per machine

13. Basic Assumptions for Cash Flow Ananlysis

14. Sales
Units
Purchases
AR collections
AR payable

15. Cash needed to make A/R payments and pay
for startup costs, sum of 1 to 2 (AR collections +
rest are expenses so -)
Startup funds in checking book
Check book balance as ending cash
= carryover – cash needs
Cash flow = cumulative total of cash needs

18. Usually the basis for royalties
Cost of Goods Sold
Net sales - COGS
Fixed costs = $228,809
Earning Before tax rate

20. PC Build Business Plan A good opportunity or just another crazy idea?
Should this business be started?
1992 versus 2009, has the environment changed?
Would you invest in the business?
What should the founders do?