In this assignment you will evaluate and refine the three business ideas you identified in your discussion post. You’ll use a structured approach to assess the feasibility of your ideas, focusing on market desirability, technical feasibility, and business viability using the IDEO screen method and thoughtful analysis.
Instructions:
IDEO Screen Evaluation:
Utilize Skill Module 4.2 to apply the IDEO screening process to your business ideas.
Complete Steps 1, 2, and 3 of the IDEO screen for each idea.
Omit Question 4, as it may not be applicable at this early stage.
Provide an estimated response for Question 12, based on your current knowledge and analysis.
Write-Up:
Present the IDEO scores for each of your three ideas.
Describe the positioning of each score on the IDEO graph.
Discuss if any of your ideas fell outside the blue high-impact area and what this might indicate.
Identify which idea has the greatest potential, based on its proximity to the blue high-impact area, and explain your reasoning.
Considerations for Analysis:
Critically evaluate the viability of your ideas. Are they solving a genuine problem or fulfilling a need?
Consider the practical aspects: Are your ideas technically and financially feasible?
Assess market potential: Is there a demand for your ideas? How could you reach and engage your target market?
Reflect on your scoring results: Does the highest-scoring idea align with your perception of its potential?
Your assignment should be submitted as a detailed report of 400-500 words, clearly structured with your findings and analysis for the ideas.
UNIT 3
Objective: This assignment aims to provide a practical understanding of team collaboration and decision-making in a startup environment. You will create a Founder’s Operating Agreement to outline the structure and rules governing your team’s project.
Instructions:
Team Formation: Form a group of 3 members. Each team will function as a mini ‘startup’ for this project.
Agreement Overview: Use the provided template to draft your agreement, focusing on key elements that foster effective team collaboration and project management.
Agreement Contents:
Business Name and Description: Decide on your business name and write a brief description.
Problem and Solution: Clearly define the problem your project addresses and propose a solution.
Target Market: Identify who your project is aimed at.
Equity Ownership: Each member starts with an equal share of ‘equity’. All team members will start on equal footing in terms of their contribution to the team’s success, which is symbolized by having an equal ‘equity’ share. This equity is represented through profit (points received for an assignment), mirroring the concept that each team member begins with the same potential grade for the assignment. These points may be adjusted based on individual contributions and team dynamics.
Performance-Based Equity Adjustment: Equity can be adjusted based on individual contributions and team decisions. If two members agree on a change due to another member’s performance, or if an issue is brought to the instructor and deemed valid, equity distribution can be revised for an assignment/s.
Roles and Responsibilities: Assign specific roles and responsibilities to each team member.
Decision-Making Process: Outline how decisions will be made within the team.
Conflict Resolution: Establish a process for resolving disputes.
Documentation and Reflection: Keep a record of all decisions impacting equity distribution and the rationale behind them. Reflect on these decisions in your final reflection assignment for the semester.
UNIT 4
Customer Interviews: Conduct initial interviews with at least 10 potential customers. Use the template provided below. The goal is to validate the problem your business is addressing and to understand what customers are looking for in a solution. These interviews will provide valuable insights for refining your business model and inform your approach as you develop your business plan.
Provide a summary of your customer interviews, highlighting key findings and how they might impact your business idea.
UNIT 6
Develop the sales section for pro forma income statements for the next three years for your business idea, starting with market size analysis and culminating in a detailed forecast of revenues using the Excel template provided.
Instructions:
Market Size and Sales Forecast:
Year 1:
Start with your Total Addressable Market (TAM) based on market research.
Narrow it down to your Serviceable Available Market (SAM) similar to the provided example.
Calculate your Year 1 total sales by multiplying your SAM by your average price point.
Verify your sales figures by comparing them to average sales data in your industry from census or market research.
Compare your verified number to your calculated number to determine the number to use. You may go with the higher, lower number or a halfway number based on the assumptions for your business.
Years 2 and 3:
Apply the industry’s growth rate to determine your sales for the second and third year.
Use the sales forecasted number from year 1 as your basis (whether it’s the calculated number, verified number or the halfway number.
Enter Sales into Income Statement: Enter your sales forecasts into your income statement.
Assumptions Documentation (Second Tab):
Document all assumptions made in your calculations, including market size, growth rates, and pricing
Explain the rationale behind each assumption, referencing your research sources.
Submission:
Submit your completed sales forecast in the provided template.
Ensure the second tab with all assumptions is thorough and well-explained.
UNIT 7
Similarly to how you did the sales forecast for 3 years, you’ll now create and add your expenses for 3 years. Develop a detailed and realistic forecast of all business expenses over the next three years, integrating these figures into your pro forma income statements to complete the financial outlook of your business idea.
Instructions:
Expense Identification and Categorization:
List Expected Expenses:
Itemize all potential expenses you will incur in the operation of your business. Look at the income statement template for frequent expenses businesses tend to incur.
Ensure you are comprehensive and consider all facets of your business operations.
Do research on the expenses in your industry.
Year 1 Expense Estimation:
Conduct Initial Research:
Utilize a variety of sources such as industry reports, quotes from suppliers, or financial statements from similar businesses to estimate the costs for each expense in the first year.
If you are a retail business or a food and beverages establishment you will have direct costs which are your costs of goods sold. This is usually a percentage of your sales. Research what this is for your type of business (if applicable).
Document all sources of your information for transparency and future reference in your assumptions tab.
3. Document and Calculate Year 1 Expenses:
Input all researched costs into a spreadsheet or financial software, clearly categorizing each expense.
Ensure that each expense is realistic and justifiable based on your business size, industry, and location.
Expenses Projection for Years 2 and 3:
Estimate Growth and Adjustments:
Apply an industry-standard growth rate to project how each expense might increase in Years 2 and 3. Consider the general inflation rate, changes in market prices, and any anticipated expansion of your business.
Make adjustments for known future changes in your business, such as planned expansion, contractual changes in rent, or scaling of operations.
Ensure Realism and Alignment:
Cross-verify the projected expenses with the expected revenue and business growth. Ensure that your expense growth is in line with revenue projections and industry standards.
Adjust any figures that seem disproportionate or unrealistic compared to industry benchmarks or business growth plans.
Compiling and Reviewing Pro Forma Statements:
Integrate Expenses into Pro Forma Income Statement:
Add the detailed expenses forecast to your pro forma income statement alongside the sales and revenue figures.
Review the complete statement to ensure that all expenses are accounted for and that the document is easy to understand.
Review and Revise:
Double-check all figures for accuracy and realism. Consider seeking feedback from a financial advisor or mentor with experience in financial planning and analysis.
Make any necessary revisions to ensure the projections are as accurate and realistic as possible.
Assumptions and Documentation:
Document Assumptions:
In the separate tab for assumptions, clearly document all assumptions made during the expense forecasting process.
Include the rationale behind each assumption, the sources of your data, and any calculations used.
Submission:
Submit Completed Pro Forma Income Statements:
Ensure that your final submission includes a comprehensive and well-organized pro forma income statement for the next three years.
Attach the documentation of assumptions and ensure that all parts of the assignment are clearly labeled and easy to navigate.
Reminder: Accurate and realistic expense forecasting is crucial for creating a viable business strategy and securing funding or investment. Dedicate sufficient time to research, calculate, and review your projections to ensure they reflect a true picture of your business’s potential financial health.
