A business plan is a set of claims to check
A neat plan can hide a weak promise. “People like our bookmarks” concerns interest; “we can supply 80 by Friday” concerns capacity. Neither statement automatically proves the other. This lesson uses a wholly fictional bookmark-printing service to connect each claim to the evidence that could support it. All people, quantities and teaching prices are invented. No real survey, purchase or collection of personal information is needed.
Separate three categories. An observation records what happened in stated conditions. An estimate calculates a likely amount using named inputs. An assumption is a condition being treated as true without enough direct evidence. An estimate may depend on several assumptions. “Missing evidence” is a useful finding, not a reason to fill a gap with a confident guess.
The one-page plan: Foldleaf Bookmarks
| Plan part | Supplied statement |
|---|---|
| Customer problem | Adult book-group organisers may want small batches of matching bookmarks for events. |
| Offer | One standard printed design, sold in packs of 4; no custom artwork during the trial. |
| Proposed price | KSh 80 per pack, solely a classroom assumption; willingness to pay is untested initially. |
| Resources | One operator, a printer, pre-cut card for 72 bookmarks, and 150 minutes of permitted workspace use. |
| Operations | 30 minutes for setup; 10 minutes to print, check and pack each batch of 6. One operator completes batches sequentially. |
| Initial promise | Supply 80 bookmarks in Friday’s session, based on a favourable interest poll. |
| Order process | Record a fictional pack quantity, agreed price and collection slot; distinguish enquiries from confirmed orders. |
| Responsibilities | The operator checks the design, counts usable output, records orders and resolves a shortfall before confirming a promise. |
| Cost boundary | The cost/resource extension below supplies separate fictional cost cards and a complete conditional session forecast; demand beyond E4 remains unverified. |
| Next decision | Revise the quantity promise, then test a clear offer using the supplied fictional trial cards. |
This is a complete small operational plan for the bounded trial, not a financing application. It states the product, intended customer, resources, responsibilities, order method and decision. Its gaps remain visible. A low materials estimate would not answer whether anyone wants the offer, whether all costs are covered, or whether production can finish on time.
An evidence register keeps claims attached to records
| Card | Record | What it supports | What remains uncertain |
|---|---|---|---|
| E1 | 18 of 20 friends answered “yes” to “Would you support our lovely bookmarks?” No price was shown. | Positive answers in this particular poll | Representative demand or paid orders |
| E2 | Three timed batches of 6 usable bookmarks each took 10 minutes per batch. | Observed short-run processing time | Whether the pace and usable yield continue |
| E3 | 72 pre-cut cards and 150 available minutes are confirmed for Friday. | Two session resource limits | Delays, failures or extra supplies |
| E4 | A later trial offered the exact pack to 10 fictional organisers; 4 bought 2 packs each at the stated price. | 8 packs sold under this trial offer | Repeat orders or demand elsewhere |
Worked case 1: a favourable poll is not an order book
The proposed conclusion is “90% of organisers will buy.” The arithmetic 18 ÷ 20 × 100 = 90% describes the recorded replies. The interpretation fails twice: friends are not shown to represent organisers, and the leading question invites encouragement without mentioning price or pack size. Even a perfectly calculated percentage can answer the wrong question.
A defensible replacement is: “18 of 20 friends expressed support when no price was stated.” The next useful check presents the same design, pack size, price and collection conditions to the fictional target group, with neutral choices including “would not order” and “need more information.” Keep its results as interest until an actual order or purchase is stipulated. This improves the question without inventing a conversion rate.
Worked case 2: test the production promise
Available processing time is 150 − 30 = 120 minutes. At the observed pace, 120 ÷ 10 = 12 complete batches fit; 12 × 6 = 72 bookmarks. Materials also allow 72. The plan’s 80-bookmark promise therefore exceeds both stated limits by 8. Having two limits with the same result does not allow them to be added.
Under these assumptions, the upper session estimate is 72 bookmarks, or 18 complete packs. It is not a guaranteed yield: the three timed batches may not represent a longer run. The operator should lower the promise or obtain evidence for a changed resource plan before accepting 80. Merely writing “work faster” changes an assumption, not the evidence. Any time reserved for extra checks would reduce processing capacity further.
Worked case 3: update the claim after a small trial
E4 records 4 buyers × 2 packs = 8 packs, containing 8 × 4 = 32 bookmarks. The other 6 recipients did not buy in that trial. The supported statement is therefore “4 of these 10 organisers bought the stated offer, producing sales of 8 packs.” It is stronger than an interest response because a purchase is explicitly supplied.
Do not multiply 8 packs by an imagined number of future groups. The trial does not establish repeat demand, total market size or profit. Production of 32 lies within the 72-bookmark estimate, leaving room for 40 more under unchanged conditions; that spare capacity is not unsold demand. A useful next check would compare another clearly described fictional trial or inspect repeat-order evidence, rather than simply repeat the original friendly poll.
Three solved practice tasks
Practice 1: repair a claim
Task: A card says 9 of 12 visitors liked a sample; no order question was asked. Write one supported sentence and one missing check. Answer: 75% of these visitors liked this sample. There is no supported count of buyers. A neutral stated-price order question would examine a different, commercially relevant claim. Calling all nine customers would overstate the observation.
Practice 2: find the tighter constraint
Task: Another session allows 100 minutes after setup. A batch of 5 takes 10 minutes, but only 45 cards are supplied. Find the maximum complete-batch output under the stated conditions. Answer: Time permits 10 batches or 50 bookmarks; materials permit 9 batches or 45. The estimate is 45, governed by materials. The unused time does not create extra card.
Practice 3: distinguish cancellation from fulfilment
Task: Six fictional organisers each request one pack. Two cancel before confirmation; the remaining four pay and collect. How many requests and fulfilled sales are supported? Answer: There were 6 requests and 4 fulfilled pack sales, containing 16 bookmarks. Preserve both stages in the record. Neither number alone establishes what another event will sell.
A short decision note
Finish an audit with a claim, evidence card, limitation and next check. For example: “Friday’s 80-bookmark promise is unsupported because E2 and E3 imply at most 72 under the present assumptions. Revise the promise and record actual usable output in another timed run.” This tells the reader what changes and why, without pretending that one calculation settles the entire venture.
Complete the Foldleaf trial: costs, resources and a conditional decision
This extension uses the same Foldleaf offer, Friday session and E1–E4 cards above. The figures below are additional fictional evidence cards for that trial, not market quotations. There is no borrowing, tax or finance cost in this model. The operator’s time is paid and included; a free printer or free labour is not silently assumed.
| Card | Supplied condition | Amount |
|---|---|---|
| F1 | Card for one pack of four usable bookmarks | 12 per produced pack |
| F2 | Ink and printing per pack | 8 per produced pack |
| F3 | Packaging per pack | 4 per produced pack |
| F4 | Workspace for the entire Friday session | 180 fixed |
| F5 | Operator payment for the entire session | 240 fixed |
| F6 | Printer hire for the session | 60 fixed |
| F7 | Owner cash available before any sales; no debt | 1,000 |
| F8 | No spoilage; same tested pace; no other costs in this bounded session | Assumed, not guaranteed |
Match the production unit to the selling unit
Variable production cost is 12 + 8 + 4 = KSh24 per pack; fixed session cost is 180 + 240 + 60 = KSh480. Two complete batches of six bookmarks make twelve bookmarks, or three packs. For the forecast below, make and sell complete groups of three packs, with no closing stock. The maximum remains 72 bookmarks = 18 packs. The cost model does not increase that physical capacity.
Using the contribution method, each sold pack contributes 80 − 24 = KSh56. Model profit = 56q − 480. Algebraic equality is 480 ÷ 56 = 8.5714… packs. The smallest feasible whole-pack no-loss quantity is nine, which also fits the three-pack production grouping. Nine packs require six batches and 30 + 6 × 10 = 90 minutes, within 150 minutes.
| Packs made and sold | Bookmarks; total minutes | Revenue | Total cost | Profit or loss |
|---|---|---|---|---|
| 6 | 24; 70 | 480 | 624 | −144 |
| 9 | 36; 90 | 720 | 696 | 24 |
| 12 | 48; 110 | 960 | 768 | 192 |
| 18 | 72; 150 | 1440 | 912 | 528 |
At nine packs, 9 × 80 = 720 and 480 + 9 × 24 = 696, giving KSh24 profit. At capacity, all session costs total KSh912. Supplied cash of KSh1,000 covers that maximum outlay even if paid before sales, leaving KSh88 until receipts arrive. This is a stipulated funding check; it does not prove that eighteen packs will sell.
Use the observed eight sales honestly
E4 establishes eight packs sold, not nine or eighteen. To fulfil eight packs in complete six-bookmark batches, produce 36 bookmarks (nine packs) and retain one unsold pack. Under the additional assumption that this usable unsold pack is carried at its KSh24 production cost, cost assigned to the eight sold packs is 8 × 24 = 192; revenue is 640; session profit is 640 − 192 − 480 = −KSh32. Cash paid is 696 and cash received 640, so cash falls by KSh56 to 944. Closing stock of KSh24 reconciles the difference: 944 + 24 = 968, KSh32 below the opening 1,000. If the extra pack were unusable, its cost would also need charging; that is a different condition.
Decision: the trial is physically feasible and funded within these supplied assumptions, but its eight sales do not cover all included session costs. Do not scale the venture from the friendly poll. Check demand for at least nine packs at this price and repeat usable-yield and timing observations before making a larger promise. A one-session model is not a long-term forecast or investment recommendation.
Related independent decision task
Task: A later stipulated Friday has nine firm pack orders at KSh80, but workspace cost is KSh240. All other costs and resources above remain unchanged. Can nine sales cover the session, and what feasible made-and-sold quantity would avoid a loss?
Answer: fixed cost becomes 240 + 240 + 60 = 540. Nine packs contribute 504, so the model loses KSh36. The algebraic threshold is 540 ÷ 56 = 9.6429…; ten whole packs would suffice arithmetically, but the made-equals-sold production grouping requires twelve packs. Twelve need 48 bookmarks, eight batches and 110 minutes; profit = 672 − 540 = KSh132. Nine orders supply no evidence for those extra three sales. The supported action is to reconsider the supplied cost or demand assumptions, not silently invent orders.
Frequently asked questions
Is an estimate the same as a guess?
An estimate should show its inputs and method. Its reliability still depends on whether the inputs and conditions describe the decision being made.
Does interest prove willingness to pay?
No. Someone can like a sample without accepting its price, quantity or collection conditions. Record the kind of response actually observed.
Why is the friends poll limited?
Its participants are not shown to represent the proposed customer group, and the wording encourages support. A larger version of the same poll could retain both weaknesses.
Can unused capacity be called demand?
No. Capacity describes what could be supplied under stated constraints. Demand evidence concerns what customers would purchase under a specified offer.
Must an uncertain plan be abandoned?
Not necessarily. A bounded next check may resolve an important uncertainty. The case supports revising unsupported promises rather than declaring success or failure.
Would a favourable cost estimate settle the decision?
No. It leaves demand, missing costs, timing and operating constraints to be tested separately. The extension below calculates conditional session results from supplied costs; those results do not establish long-term viability.
Should I interview real customers for these tasks?
No. Every answer uses the supplied fictional cards. The exercise requires no names, contact details, payments or real-world business commitment.
References
U.S. Small Business Administration: business-plan structure. The teaching cases, questions, tables and answers are original.
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