Thef1experience Business Plan

SRI SATYA SAI UNIVERSITY SCHOOL OF BUSINESS MANAGEMENT ACCOUNTING AND FINANCE

Business Plan Assessment THE F1 EXPERIENCE

Submitted By: RANJAN SHARMA 07471

IIndMBA

A business plan is the written document that details the proposed venture. It must describe the current status, expected needs and projected results of a new business. Every aspect of the venture needs to be covered: the project, marketing, research and development, manufacturing, management, critical risks, financing, and milestones or a timetable. The business plan is the entrepreneur’s roadmap for a successful enterprise. The following is an evaluation/assessment of a proposed business plan for a “go-karting” business, viz. “the f1 experience”. The assessment has been done on the basis of various components that must be included in a sound business plan. There are mainly ten components of a business plan, they are: • • • • • • • • • •

Executive summary Business description segment Marketing segment Operations segment Management segment Financial segment Critical risks segment Harvest strategy segment Milestone schedule segment Appendix or bibliography

Let us assess these components in the given business plan and find out whether they suffice the needs of a sound business venture. 1.Executive Summary:In my opinion the executive summary has been drafted very well. It covers all the essential points to be looked at. The summary has: •

Capital needed (clearly stated)

•

Describes the F1 experience (crisp and to the point)

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Market segments and type of customers (walk in, corporate and youth camps)

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Competitor’s knowledge (lot of expertise in the field)

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Financial projections (in brief)

Mr. Whisler knows exactly what he wants for this venture, he has lot of expertise in the field and knows how to differ from the competitors. He has a clear vision. MY RATING: 4 (very good) 2. Business Description:

This section too Mr. Whisler covers in depth and with lot of details. The main highlights of this section which are covered in depth are: I.

Background information and history of the industry (entertainment and go karting industry)

II. Description of product and service: •

Arrive and drive racing

•

Arcade games

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Corporate outings/private events

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Concessions

•

League racing, youth racing camps and many more. He explains each one in detail in the report.

III. Strategies to differentiate (this tells about the uniqueness of his venture) Although Mr. Whisler talks about the growth potential of the business, all it said was that it was looking to increase the market size by appealing to new age groups with their unique programs. There is limited information available about the companies using indoor facilities and on the number and demographics on kart racing. Mr. Whisler did an extensive research and market survey to find out the current state of the industry and relative information but he could not come out with clean statistics. The section clearly tells about the type of business, products and services, growth potential and the uniqueness of the venture. MY RATING: 4 (Very Good)

3. Marketing: I found the marketing segment the most exhaustive one. Mr. Whisler has thoroughly and very meticulously defined the various parameters of this component. The areas which he covered in detail are: •

Location of his proposed venture(Indianapolis, next to a mall etc.)

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Target markets

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Market share analysis (sales and projections)

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Competition analysis

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Pricing strategies

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Sales and distribution

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Advertising and promotion

Mr. Whisler has indeed done his homework regarding marketing and formulating a sound and firm marketing plan which will surely be a big booster for his business venture. MY RATING: 5 (outstanding) 4. Operations: This segment has an excellent description of the location, zoning regulations, labor supply, business operations and supplier proximities. It also has a time schedule of a typical work week, but it is missing any cost associated with it. The standard operating procedures that will be performed during the opening and closing of the business are listed at the end of the segment. There are major parts in this segment that are missing information, or just missing completely. The suppliers are only a list of people with no additional information, transportation access for shipping and receiving is not mentioned at all. MY RATING: 2 (Fair)

5. Management: This section too has been dealt with a lot of effort and precision. The management segment is specific, and addresses all the elements it has to in great depth, except for the professional support section which is in essence a list of names. The elements are: •

Facilities director

•

Events coordinator

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Assistant facilities director

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Mechanic

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Race director

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General staff

•

Professional support

•

Regulations

Whisler states what kind of business structure will be chosen, an S corporation(organizational structure chart included), and he also states why this is decided upon. He then goes on to list how many employees that will be needed, description of the positions, the qualifications needed to fulfill the positions, as well as salaries. As this is an experience people are paying for, he also talks about how important it is that the employees contribute to a pleasant experience, and this is why he will hire people himself. Whisler will be the director, and he goes over his qualifications for the position. Because of the risk involved in motor sports, management must adhere to regulations that will affect his business, and he also goes over these very specifically. To ensure their customer’s safety they will also employ their own rules and guidelines as to what is allowed while on the track such as the box for rubbing other cars. MY RATING: 4(Very good)

6. Critical Risk Segment: Mr.Whisler has identified four critical risks •

weak economy,

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injuries to visitors,

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construction delays,

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Inaccurate sales projections.

These are the only four critical risks identified, and he is missing some risks that are vital to address.

He is missing of critical risk assessments are for example competition, supply,

transportation, and market trends. If competition reinvents their business, sharpens up, cuts prices, the entrance of a new competitor which is on par with the latest trends, what will Whisler

do then? There must be an alternative course of action. Problems like these are not addressed in the business plan and they ought to be. MY RATING: 3 (good)

7. Financial segment: This business plan has a very practical and sound financial statistics. The financial plan includes: •

Practical Financial assumptions

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Monthly cash flows

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Break even analysis

•

Complete budget The segment is lucid and easy to understand. It describes where the money is acquired,

where it is going, and includes estimates of all aspects of their business. it shows that this is a business which will be able to turn a profit. MY RATING: 4 (Very good)

8. Milestone segment: The milestone schedule was a simple, but too general. For 2002 objectives are arranged by month, and the only dated event is the Grand Opening on October 1 st. After that there are just a few plans for 2003-2004 and the future which is a little too general. Although it was easily comprehensible, it could have included more specific dates with when a project is started and when its deadline is. MY RATING: 2 (Fair)

9. Harvest strategy segment: This is one of the cardinal segment of a business plan but this was not included in the report. It might seem pointless, and not adding a lot to the picture as a whole, but it can be important in the eyes of an investor who would be putting his money into your business. It is their money and they would probably want to see all aspects of a business plan, and leaving a part out could give an investor a negative impression. The lack of this could leave an investor with a decreased sense

of an exit strategy, the transfer of company assets if ownership of the business changes, continuity of the business strategy during the transition, and designation of key individuals run the business if the management team changes. In the end the investor could end up feeling as if the entrepreneur provides him with no security in this regard and choose not to invest. This is indeed an important segment of Whisler’s plan, and he needs to add it. MY RATING: 1(Poor)

10. Appendix: There were no documents, drawings, agreements and other materials to support the plan. Also there were no names of refrences, advisors or technical sources and other supporting documents. For example: pictures of the location, design of the track layout etc. MY RATING: 1 (Poor) Summary: Scoring:

Segment

Score

Executive summary

4

Business description segment

4

Marketing segment

5

Operations segment

2

Management segment

4

Financial segment

4

Critical risks segment

3

Harvest strategy segment

1

Milestone schedule segment

2

Appendix or bibliography Total

1 30

If we add up the scores for various components the total score comes to 30, however since there were two missing segments I added two grace marks for it. A score of 30 shows that the plan is an average one. Some areas are covered in detail yet other areas show weakness.

# Components are rated on a scale of 5, where 5 – outstanding, 4- very good, 3- good, 2- fair and 1- poor.

Commnents: Mr. Whisler has a tremendous experience in the business, and with his expertise and skill I must say that he should go ahead with the venture. His venture stands out from the competitors and has a solid differentiation strategy. Though the report pretty much covers the essentials of a sound business plan, yet parts of it need to be reviewed. The strong points of the report are its executive summary, marketing segment, management segment, business description segment and financial segment. The areas which need to be relooked at are: operations, critical risk segment, milestone schedule segment, harvest segment and appendix. Mr. Whisler knows what he is doing and with a background in management, an interest in karting, and a business degree he seems to be the ideal person to head this venture. Because of his interest in the motor sport world, he would be able to make changes to the business strategy of the F1 Experience in accord with trends within the market. His competitive advantages are strong, and the competition seems to have very little innovation, which would most likely lead to the F1 Experience gaining a noticeable market share relatively quickly. Whisler also knows that what he is selling is not just entertainment, a race around the track for a few laps to blow off some steam, it is an experience. And people want experience, something which stands out and lasts long, and who would not be interested in an experience of an adrenaline rush where one could be a F1 driver for a day.