Youth Entrepreneur Showcase: The Business Plan

1. Youth Entrepreneur Showcase:The Business Plan Amy Simpkins August 10, 2006

2. Why Is Entrepreneurship Important? • Helps students understand the principal characteristics of the U.S. economic system and the role of business in it. • Reinforces economic concepts taught in U.S. history, state history, and civics. • Teaches the social responsibility of business and the role of government in the U.S. economy. “The best way to predict the future is to create it.” -Alan Kay

3. What is Entrepreneurship, REALLY? Innovation + Market Savvy = Entrepreneurship An effective business plan communicates both innovation and market savvy.

4. Each piece of the business plan plays an important role in: • Defining your business; • Defining your customers; • And, defining your plan and budget. • Business plans may vary, but the basics are always the same.

5. The YES Competition: What You MUST Include

6. You will be scored in each of the following five categories: • The Company • Format of Business Plan -No more than 5 pages -12 point font -Cover page • Market and Marketing Strategy* • Financial Summary • Innovation/Creativity* A maximum of 5 points will be given for each of the above categories for a maximum of 25 points. As many as 3 Bonus Points will be given for plans that attempt to meet a need in society.

7. All Entries Will Include: • Cover Page • The Company • The Market and Marketing Strategy • Financial Summary • Proof of Concept (Prototype, Model, Drawing, etc.) Don’t forget to submit 10 copies of the business plan paper-clipped together and in a folder.

8. Steps to Making a Business Plan As Easy as 1,2,3

9. STEP 1: Visioning Entrepreneurs must focus on the future. Ask your students: • What do you want to do? What are your goals for your business? • Where do you want your business to be three months from today? • What will your business look like three months from today? A vision does not have to be grounded in reality. It is a goal to strive for.

10. Encourage Innovation • Not just a new idea, method or device, but something that is substantially different. • Ideas that spark change. How can you impact your community? (Remember: Bonus Points!) • Mess with the Status Quo. Ask yourself: Why Not? “It is the essence of Genius is to make us of the simplest ideas.” -Charles Peguy

11. STEP 2: Getting It On Paper Business plans entered into this competition must include the following required sections: • Cover Page • The Company • The Market and Marketing Strategy • Financial Summary • Proof of Concept

12. Cover page • Teacher’s name, • Student names • Contact information including email, telephone and address • Your school name • Name of company or product

13. The Company • What is the Purpose of the business? • What is the Mission, Objective and Goals? • What is the History of the business? • Who is the Management? -What is the background of your business’s management team? -What are their past successes and achievements? -Do they work well as a team? What roles will they play? • What are the Products and Services? -Describe the product or service. -What are the Features? -What are the Benefits? -Why does your product or service offer a Competitive Advantage?

14. The Market and Marketing Strategy • What is your target market? • What are the characteristics of that market? • Who are your competitors? -Who else provides a similar product or service? -Why do you think you can compete successfully against them? -How is your product or service different from what they offer? • What is your marketing strategy? -How are you going to sell your product or service? -How will you advertise?

15. Financial Summary Must include: 1.) A statement of what funds you will need 2.) An Income Statement • Gross Income • Total Operating Expenses • Net Profit

16. 1. Statement of Funds From a recent winning plan: We will get funds for snacks, arts and crafts supplies, the books, the t-shirts, and advertising by charging a $50 deposit (included in the $150) from each camper. What do you see here?

17. 2. Income Statement: Summary of the revenues, costs, and expenses for a business over a period of time. Also called a profit and loss statement. Definition of Terms: • Gross Income: Net Sales less the Costs of Goods Sold • Net Sales: Gross Sales minus returns and allowances • Costs of Good Sold: Cost of buying raw materials and producing finished goods (labor costs included here) • Operating Expenses: The costs associated with the day-to-day activities of the business • Net Profit: The sum remaining after all expenses have been met or deducted. Also called Net Income.

18. 2. Income Statement: An Example Gross Income = (Net Sales) - (Cost of Goods Sold) 30 Campers each week $8.00 per hour adult supervisor x $150 per camperx 90 total hours $4500 each week $720 total pay for adult supervisors x 3 weeks $13,500 Net Sales $6.00 per teenage worker x 105 total hours per teenage worker $630 total for one teenage worker x 5 workers $3,150 total pay for teenage workers 720 + 3,150 = $3,870 Cost of Goods Sold 13,500 – 3,870 = $9,630 Gross Income

19. 2. Income Statement: An Example Total Operating Expenses $50 cost of supplies per kid $450 Scholarships x 90 campers (one for each age group) $4,500 total cost of supplies 4,500 + 450 = $4,950 Total Operating Expenses

20. 2. Income Statement: An Example Net Profit = (Gross Income) – (Total Operating Expenses) 9,630 – 4,950 = $4,680 Net Profit

21. Proof of Concept Allows customers and investors know the value and the promise of your ideas • Proof of Concept: Evidence that demonstrates your idea is feasible • Prototype: An example of the product you will produce • Model: A visual representation of what you will produce or the service you will provide Your choice between these three is determined by the cost of your idea, the feasibility of putting it together, the availability of information, and YOUR CREATIVITY!

22. STEP 3: Putting it all Together Entry into the competition requires teams submit 10 copies of a Business Plan, paper-clipped together and in a folder: • Maximum of five (5) pages • Minimum 12-point font size • Please include a cover page listing the following (Very Important): 1. Company Name 2. Student Names, Teacher Name 3. School and Address 4. Telephone number, email NOTE: The Cover Page and Proof of Concept are NOT included in the 5-page limit.

23. Putting it all Together Lessons to share with your students: • If you want to be a professional, make it look professional. • REVIEW, REVIEW, REVIEW -Typos, grammar, financial statements: Attention to detail says a lot about you and your business. Teachers: You can help your students through this process. This is a wonderful opportunity to teach new concepts and reinforce lessons they already know in a real world application.

24. Where can you go for help? • www.newyorkfed.org/education/addpub/credit.html • Small Business Development Center • Small Business Administration • Bankers • Local Business Owners • Resources: Small Business Resource Guide, Junior Achievement Materials

25. Contact Information Amy Simpkins Community Affairs Specialist Federal Reserve Bank of St. Louis Little Rock Branch Phone: 501-324-8268 Email: amy.b.simpkins@stls.frb.org