PLANNING AND GROWING A BUSINESS VENTURE Kauffman Center

Feasibility Plan Product/Service • Purpose of product/service • Stage of development • Product limitations • Proprietary rights • Governmental approval • Product liability • Related services and spin-offs • Production FP. 1 ™ Kauffman Center for Entrepreneurial Leadership ©© 2001 2004 Ewing Marion Kauffman Foundation PLANNING AND GROWING A BUSINESS VENTURE™

Feasibility Plan The Market • • FP. 2 Current market size Growth potential Industry trends Competition profile Customer benefits Target markets Market penetration ™ Kauffman Center for Entrepreneurial Leadership ©© 2001 2004 Ewing Marion Kauffman Foundation PLANNING AND GROWING A BUSINESS VENTURE™

Feasibility Plan Price and Profitability • • • Price list Sales estimate Cost of product/service Gross margin Three-year operating expenses and assumptions • Three-year operating statement • Start-up costs • Capital expenditures FP. 3 ™ Kauffman Center for Entrepreneurial Leadership ©© 2001 2004 Ewing Marion Kauffman Foundation PLANNING AND GROWING A BUSINESS VENTURE™

Feasibility Plan Sample Income Statement Sales $100, 000 Cost of goods 50, 000 Gross margin 50, 000 Expenses Utilities 2, 400 Salaries 18, 000 Payroll taxes and benefits Office supplies 300 Insurance 300 Legal and accounting 1, 000 Telephone 600 Travel 2, 000 Auto expense 1, 500 Advertising 5, 000 Entertainment 1, 000 Miscellaneous 3, 600 Total expenses Pretax profit FP. 4 3, 600 $39, 300 $10, 700 ™ Kauffman Center for Entrepreneurial Leadership ©© 2001 2004 Ewing Marion Kauffman Foundation PLANNING AND GROWING A BUSINESS VENTURE™

Feasibility Plan for Further Action • Needed capital • Entrepreneur’s role • Business plan Pitfalls Positives • • FP. 5 Licensed potential Corporate partners Proprietary rights Infrastructure members ™ Kauffman Center for Entrepreneurial Leadership ©© 2001 2004 Ewing Marion Kauffman Foundation PLANNING AND GROWING A BUSINESS VENTURE™