AP/ADMS 3920 3.

0 - WINTER 2012

NEW VENTURE AND SMALL BUSINESS MANAGEMENT

Drafted Dec 29, 2011

INSTRUCTOR Tony Johnston, MBA, BA (Econ), CGA, CMC Email: tonyjohn@yorku.ca

Tony Johnston is a pragmatic and resourceful results-oriented business leader and management advisor. Having worked for and with a range of mainly B2B oriented companies, his industry experience spans oil & gas, energy, mining, technology, biotechnology, manufacturing, commercial services, financial services and investment banking. This has provided him opportunities to analyze the strategic, operational and financial dimensions of hundreds of companies and help many address pressing issues and achieve better results in their businesses. Over the course of his career Tony has successfully held top-level executive and management advisory positions, launched new ventures, led sales & marketing teams, directed manufacturing operations and met the financing needs of a wide range of public and private small, medium and large-sized companies. Consequently, he has both proven strengths in general & turnaround management, strategy evaluation & reformulation, finance & financing, and operational execution and an extensive and functionally diverse network of senior level contacts that can be drawn on as needed. His record of success in public and private company CEO, CRO, CFO, and other senior management positions includes: i) negotiating and closing more than $2.5 billion in major public and private debt, equity, derivative and M&A transactions; ii) growing a public company's value by over $66 million; iii) delivering a $12.6 million / 3x investment gain for venture capital partners within 2 years; iv) leading five corporate turnarounds; and v) launching successful new businesses in Biotechnology, Securitized Mortgage Servicing, and Consulting.

The Course Instructor will be available for discussions with students in the hallway outside the R-N203 lecture location during the 30 minutes before and after each session.

COURSE OVERVIEW Number of sessions: Length of each session: Total session length: 12 (spread over 13 weeks due to Reading Week on Feb 18 to 24) 3 hours on Fridays from 11:30 AM to 2:30 PM 36 hours

The goal of this course is to help prepare students to become successful entrepreneurs and/or effective members of an entrepreneurial team, should some future circumstance present them with such an opportunity or create such a need. This will be done helping them (a) explore the dimensions of new venture creation and small business management, and (b) from both an academic and a practical perspective, examine the multidimensional challenges and rewards inherent in being an entrepreneur, intrepreneur, family business participant or franchise operator.

Central to the course will be the formation of entrepreneurial teams, the development of a viable new venture concept and the preparation and presentation of a goal-oriented business plan. This set of activities will assist students to consider the multitude of factors that contribute to venture success such as opportunity recognition, evaluation of industry attractiveness, assessment of what is a realizable market opportunity, recruiting partners and key staff members, organizing a sales effort, structuring finances and human resources, and managing such other factors as production, facilities, cost containment, administrative operations and results management and reporting. Over the course of these studies, the various functional areas operative in most businesses will be reviewed, particularly in the context of how they relate specifically to planning for a new venture and the management of ongoing operations in a small business setting. COURSE OBJECTIVES On completing this course, students should have achieved the following educational objectives:
1.

2. 3.

4.

5.

6. 7.

become familiar with the current state and characteristics of entrepreneurship in Canada, and be able to identify and understand models of success as typified by profiles of successful entrepreneurs; understand the advantages, disadvantages and appropriateness of different (i) legal structures for businesses and (ii) avenues of entry into small business ownership; have developed a framework for the analysis of strategic problems and practical operational issue resolution in new ventures and small businesses situations and become familiar with how to approach managing key functional areas such as marketing, sales, operations, human resources management, finance, etc.; appreciate the importance of business planning, the different types of plans used in business, the steps required to prepare these and when and to what extent detailed vs conceptual planning is useful and/or appropriate; with partners, have prepared and presented a goal-oriented business plan for a start-up enterprise of their choice utilizing appropriate techniques and theory covering all needs and functional areas of their proposed new business venture; be able to identify and understand the defining characteristics of the critical stages in the cycle of business start-up, growth, re-evaluation and exit and what issues typify each; and be able to identify the warning signs of difficulty in a business enterprise, appreciate the risks and costs of failure, and be familiar with generic turnaround / renewal strategies.

REQUIRED COURSE TEXT Longenecker, J.G, Donlevy; L.B, Calvert, V.A.C., Moore, C.M., Petty, J.W., Palich, L.E., Small Business Management: Launching and Growing New Ventures. Fourth Canadian Edition. (2010) Thompson-Nelson. OPTIONAL SUPPLEMENTARY RESOURCE TEXTS Kawasaki, Guy, The Art of the Start: The Time-Tested, Battle-Hardened Guide For Anyone Starting Anything. Penguin Group (2004) > a free download PDF containing the table of contents, index and Chapter 1: The Art of Starting (PDF: 295KB) is available at 2

http://www.guykawasaki.com/the-art-of-the-start/artprop.pdf and for a description of this book and testimonial recommendations refer http://www.guykawasaki.com/the-art-of-thestart/ [Note: this book can be borrowed from the Toronto Public Library in both hard back version (17 copies) as well as an internet accessible, downloadable audio book version at http://www.torontopubliclibrary.ca/detail.jsp?Entt=RDM2765381&R=2765381] Kubr, T, Marchesi, H, Ilar, D, Starting up: Achieving success with professional business planning. McKinsey & Company (1998) > available for free download online via http://www.entrepreneur.dk/Dokumenter/startUpHandbook.pdf Business Plan Preparation: Manual For Entrepreneurs. McKinsey & Company (1998) > 65 PowerPoint slide presentation PDF available for free download online via http://www.cartierwomensinitiative.com/site/uploads/pdf/McKinsey%20BP%20advice.pdf Business Plan Preparation Templates. Business Development Bank of Canada (Word document template for preparing and presenting verbiage and Excel workbook template for preparing and presenting financials) with examples of a completed plan (Doors to the World) in PDF format > available for free download online via http://www.bdc.ca/en/advice_centre/tools/business_plan/Pages/default.aspx

COURSE STRUCTURE The course has been organized so as to cover key sub-topics and explore the nature of the principal activities and functional components inherent in establishing and operating a small business. To help better position students to become successful entrepreneurs, should ambition, opportunity or circumstance compel them to take such a step, over the course of the session they will be required form and structure themselves into up to 16 new venture entrepreneurial teams consisting of some 4 to 7 people (e.g. leader, marketing, sales, operations, finance, human resources, product development, etc). These teams will be tasked with researching venture opportunities, formulating a new business idea, documenting the marketing rationale supporting the idea, developing a business plan, and preparing and presenting a objective oriented business presentation.

Week 1 2 3 4 5

Date Jan 6 Jan 13 Jan 20 Jan 27 Feb 3

Topic Overview of Course and Introduction to Entrepreneurship Legal and Regulatory Issues Concept, Strategy and Business Plan Marketing, Promotion and Distribution Sales and Human Resources

Readings Ch. 1, 3 Ch. 4, 10 Ch. 2, 5 Ch. 6, 7, 8 Ch. 9

Submissions

GroupMember Forms

Feb 10

Q&A / General Discussion Session Midterm: In class

7 8 9 10 11

Feb 17 Feb 24 Mar 2 Mar 9 Mar 16

Operations (Premises and Production) Reading week no class Finance, Financing and Accounting Growth, Crisis, Turnaround and Exit 5 Student Business Pitch Presentations*

Ch. 11, 12

BusConcept 2-Pager

Ch. 13, 14 Ch. 15, 16 Written Business Plan 1st Presenting Groups Peer Evaluations

12

Mar 23

6 Student Business Pitch Presentations*

2nd Presenting Groups Peer Evaluations 3rd Presenting Groups Peer Evaluations

13

Mar 30

5 Student Business Pitch Presentations*, Course Summarization and Exam Topic Review Final Exam: exact date, time and location set by Registrar's Office

14 to 17

Between Apr 4 & Apr 20

* Business Pitch Presentation: To consist of up to 20 minute presentation + 10 minute Q&A based on 10 to 12 slides in which all group members will be required at least to introduce themselves

EVALUATION
Item 1 2 Description of Student Product Midterm (in class) New Business Concept Document (to serve as basis for developing Bus Plan and Pitch Presentation) Business Plan (based on above) New Business Pitch Presentation Group-Member Peer Evaluation Final Exam Total

Weight 20% 5%

3 4 5 6

25% 15% 5% 30% 100%

Group Mark: assigned equally to all group members

GROUP PROJECT DESCRIPTION: - NEW BUSINESS CONCEPT, PLAN, AND PITCH PRESENTATION In this course students will be required to develop a business concept, a purpose-driven business plan and a goal-oriented business pitch presentation for a new venture of your choice. Your new venture can be a product-based or a service-based business that is bricks-and-mortar based or an online business, etc. Students individual course grades will include the results from each students business plan project related group work, namely: 1. 2. 3. 4. groups result on written new business concept /idea document, groups result on written business plan, groups result on new business pitch presentation, and individual peer evaluation mark as judged by your groups other 3-6 students.

IMPORTANT NOTE: All students will be responsible for (i) finding, forming and structuring themselves into one of a maximum of 16 groups comprised of some 4-7 students each and (ii) for cooperatively working together to so that the courses required 4 group project related components mentioned above get completed and presented on or before the required due date. Should students experience difficulties or have uncertainties about matters related to their groups business plan project, you are invited but not required to brainstorm ideas and / or discuss your possible new business idea(s) with the Prof as well as seek the Profs feedback on your proposed business concept 2-pager before the documents required submission date of Feb 27 (optional). REQUIRED GROUP PROJECT RELATED SUBMISSIONS: 1. Written Business Concept / Idea Document:
o o

Due in class Feb 17. No late submissions will be accepted. Your Business Concept / Idea Document assignment must be typed, 1.5x to 2x spacing with one-inch margins on 8.5" X 11" paper. Max 2 pages in length with cover plus up to 4 illustrations and / or charts. Marks will be deducted for unprofessionally presented papers that show sloppiness or significant defects in spelling, grammar, punctuation and fundamental written expression. Recommended format is:
New business concept / idea
Title page Name of the product or service Name of initiator/entrepreneur/legal entity Confidentiality notice Illustration, if appropriate.

Maximum of two pages of text, including: Description of product or service Customer benefit Innovative characteristics Description of customers & what will compel them to buy offering Revenue mechanism. Maximum 4 illustrations or charts, if necessary, to understand the idea o

Task Relevant Instructional Support Information: Kubr, T, Marchesi, H, Ilar, D, Starting up: Achieving success with professional business planning, McKinsey & Company (1998) > pages 29 to 43

Evaluation: 5% of total grade based on mark given by Prof

2. Written Business Plan:

o o

Due in class Mar 23. No late submissions will be accepted Your Business Plan group project assignment submission must be typed, 1.5x to 2x spacing with one-inch margins on 8.5" X 11" paper and be a maximum of 25 pages in length plus appendices. Marks will be deducted for unprofessionally presented papers that show sloppiness or significant defects in spelling, grammar, punctuation and fundamental written expression. Importantly, each venture group will be required to select and clearly identify one of the following as the objective or purpose that their formalized, detailed business plan is intended to service: 1. raise capital (i.e. equity from angel or venture investors or debt from a lender) 2. attract key recruit (i.e. important director, experienced / rain-maker CEO or key employee) 3. attract key third-party business support (i.e. strategic partner, key supplier or major customer) 4. obtain government support (i.e. get grant or win regulatory approval) 5. other (as appropriate to circumstance groups selecting this option will be required to get Profs approval prior to Reading Week)

Task Relevant Instructional-Support Information: Longenecker, J.G, Donlevy; L.B, Calvert, V.A.C., Moore, C.M., Petty, J.W., Palich, L.E., Small Business Management: Launching and Growing New

Ventures. Fourth Canadian Edition. (2010) Thompson-Nelson. > pages 102 to 129 Johnston, T., How to Prepare a Company to Successfully Raise Equity Capital [White Paper]. Compass North Inc. (2011) > available for free download online via http://www.compassnorthinc.com/CNi White Paper_How to Prepare a Company to Successfully Raise Equity Capital_20111207.pdf Business Plan Preparation Templates. Business Development Bank of Canada (Word document template for preparing and presenting verbiage and Excel workbook template for preparing and presenting financials) with examples of a completed plan (Doors to the World) in PDF format > available for free download online via http://www.bdc.ca/en/advice_centre/tools/business_plan/Pages/default.aspx Kawasaki, Guy, The Art of the Start: The Time-Tested, Battle-Hardened Guide For Anyone Starting Anything, Penguin Group (2004) > pages 66 to 75 Entrepreneurship 101 - Essential information for emerging entrepreneurs. MaRS Discovery District (A member of the Ontario Network of Excellence) > available for free download or accessing online via http://www.marsdd.com/entrepreneurs-toolkit/entrepreneurship101
o

Evaluation: 25% of total grade based on mark given by Prof

3. Group Business Pitch Presentation (maximum of 20 min plus 10 minute Q&A):

o

Pitch Presentations will be due to be given as scheduled during one of the last three sessions in March Task Relevant Instructional-Support Information: Kawasaki, Guy, The Art of the Start: The Time-Tested, Battle-Hardened Guide For Anyone Starting Anything, Penguin Group (2004) > pages 44 to 65 Entrepreneurship 101 - The Pitch: overview of the essentials of building and delivering an effective pitch to help you find financing for your entrepreneurial venture. MaRS Discovery District (A member of the Ontario Network of Excellence) > available for free download or accessing online via http://www.marsdd.com/entrepreneurs-toolkit/sessions/the-pitch

Evaluation: 15% of total grade (2/3 weight by Prof and 1/3 weight by student groups)

4. Peer Evaluation:
o

Evaluations your other group members are due to be handed in to the Prof in class on same day your groups business pitch presentation is given. No late submissions will be accepted. To avoid having free-riders in your group, you will have an opportunity to evaluate your other group members in terms of their contribution to the project. You will simply submit a sheet of paper with the names of all group members and a score from 1 to 5 next to each name (not including yourself!), indicating how much each person contributed to group assignment (i.e. from low where 1 = very little to high where 5 = full). As what goes around comes around, make sure to be fair in scoring your group members! YOUR personal peer evaluation score will be calculated as an average of the scores YOU receive from your groups other members. For example, if YOU receive 4, 5, 3, 4, then YOUR score will be 4 out of 5. IMPORTANT WARNING: If you do not submit a peer evaluation score for your group members, you will not receive a peer evaluation score yourself (i.e., you will get 0 out of 5) Evaluation: 5% of total grade based on average mark given by peers in student group.