Bachelor of Business

(Incorporating Graduate Diploma in Business and

Graduate Certificate in Business)

Entrepreneurial and Small

Business Finance
397005

Semester 2 2010
Table of Contents

Item Description Page

1 Welcome
1.1 Welcome
1.2 Overview of Paper 2
1.3 Timetable
2 Teaching team and contact details
2
3 Paper Information
3.1 Pre-requisite Requirements
3.2 Aim
2
3.3 Learning Outcomes
3.4 Programme Learning Goals
3.5 Content
4 AUTonline Programme Organisation
4

5 Texts
5.1 Prescribed Texts 4
5.2 Recommended Readings
6 Weekly programme
4

7 Assessment Information
7.1 Assessment Guidelines
7.2 Moderation of Assessment
5
7.3 Assessment Schedule
7.4 Pass Requirements
7.5 Assessment Details

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1. Welcome to paper and overview

1.1. Welcome

Welcome to the “Entrepreneurial and Small Business Finance” paper. I hope that
everyone will find the paper enjoyable and let’s make your study of this paper a
fascinating learning experience. On the following pages you will find some useful
information on the way in which this paper is organised, including the timing and
the structure of the assessments.

1.2.Overview of the paper

This paper runs for 12 weeks and is structured in a three-hour session per week.
Students are expected to be well-prepared for each session and have familiarised
themselves with the textbook chapters prior to the class. It is recommended that
each hour of class is supplemented with three hours of personal reading,
research and assignment preparation. This is a level 7 paper, worth 15 points.

1.3. Timetable:

Class Day Time Location

397005/80 Monday 18:00-21:00 WF 311

397005/60 Tuesday 8:00-11:00 WF 310

397005/61 Tuesday 14:00-17:00 WF 311

2. Teaching team and contact details

Name Office Phone Email Address Office Hours
Dr. Hardjo Koerniadi WF903 9219999 hkoernia@aut.ac.nz Monday
ext. 5042 14-16pm
(WF 903)

3. Paper Information

This paper examines the financing and valuation of start-ups and small firms
which are different from those of mature listed firms. This paper is designed to
introduce students to the process of creating new businesses and the financing
aspects of new businesses. It addresses a variety of topics including business

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planning, business financing, business valuation, and exit strategies for these
firms.

Classes involve lectures, problem solving sessions and case discussions.

Students are expected to be adequately prepared for the class and actively
participate in class discussions. Students are assessed on the outcome of their
performance in individual and group assignments, and the outcomes of their final
exams.

3.1.Prerequisite Requirements

Corporate Finance (396002) or Financial Modeling & Data Analysis (396005)

3.2.Paper Aim

The aim of this paper is to provide students with an applied view of finance for
entrepreneurs, start-ups and small firms. It offers an integrated set of concepts
and applications from finance, entrepreneurship, and accounting theory and
practices. The paper will prepare students for the challenges facing young and
innovative firms. Special attention is paid to the venture capital market and exit
strategies.

3.3. Learning outcomes

By the end of this paper the students will be able to:

• Explain the concepts of entrepreneurial and small business finance and
how it differs from those of traditional corporate finance
• Determine the financing needs of entrepreneurial and small firms
• Demonstrate basic skills in constructing financial forecasts in Excel for
small growing firms
• Explain how different financial resources of entrepreneurial firms are
managed
• Demonstrate understanding and skills in issues related to the exit
strategies like stock market listing and sale of an entrepreneurial firm

3.4. Programme learning Goals

• Be confident, capable learners

• Be effective communicators (written and oral) in professional and business
contexts
• Be analytical, reflective, and problem solvers
• Be aware of ethical and social responsibility issues in a New Zealand
context and in a global context
• Be able to work well with others and be effective leaders
• Be able to demonstrate knowledge in their major field of study

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 3.5. Content

This paper covers the following topics:

• Building integrated financial forecasting

• Monitoring financial performance
• Internal and external sources of funds
• Venture capital
• Business valuation
• Exit planning

4. AUTonline Organisation

Details of all papers, major requirements, full paper descriptors, exam schedules,
assessment forms, semester timetables and all other information relevant to
current students can be found on AUTonline under your programme
organisation. http://autonline.aut.ac.nz Do not log into view Programme
Organisations. Getting Around AUTonline information is available here or
visit WF1 Student Info Desk.

5. Texts

5.1.Prescribed text:

Leach, J.C. and Melicher, R.W. (2006). Entrepreneurial Finance, 3th Edition.
South-Western.

5.2. Recommended readings:

Bygrave, W.D. and Zacharakis, A. (2007). Entrepreneurship, 1st Edition. Wiley

Adelman, P.J. and Marks, A.M. (2007) Entrepreneurial Finance, 4th Edition.
Pearson/Prentice Hall.

It is recommended that students have a financial calculator such as Texas

BAII PLUS or HP10-B to get through the paper.

6. Weekly programme

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 Week Ses Topics Readings
Beginning sion

19-07-2010 1 Overview of entrepreneurial finance. Chap 1.

Starting a business
26-07-2010 2 Chap 2, 3.
From the idea to the business plan.
02-08-2010 3 Measuring financial performance. Chap 4.
Library database workshop
09-08-2010 4 Chap 5.
Evaluating financial performance.
Assignment 1 due
16-08-2010 5 Financial planning: short term and long Chap 6.
term.
23-08-2010 6 Types and costs of financial capital Chap 7.
Chap 9
30-08-2010 7 Valuing a business
and 13
2 weeks semester break
Case discussion: SofTec Products
20-09-2010 8
Company and RxDelivery Systems
Assignment 2 due
27-09-2010 9 Chap 10.
Venture capital valuation method.
Other financing alternatives Chap 12,
04-10-2010 10
Exit strategies 14.
Group Assignment due
11-10-2010 11
Case discussion: JH’s New Venture
18/10/2010 12 Class presentation

Note: The weekly program may be subject to changes.

7. Assessment Information

7.1. Assessment Guidelines

All students should obtain (free of charge) a copy of the Faculty of Business and Law
Assessment Guidelines booklet which includes information on:
• Academic Honesty,
• Attendance Policy
• Assignments (Format, Presentation, Referencing, Submission, Extensions)
• Exams (Regulations, Timetables, Special Consideration Applications)
• Assessment (Handback, Uncollected Assessments, Reconsideration)
• Results
Also available on AUTonline at http://autonline.aut.ac.nz

7.2. Moderation of Assessments

Pre-moderation
There is a moderation schedule for all papers. This ensures that assessments are
appropriate to the particular paper level, sampling of learning outcomes or elements

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is appropriate, questions and instructions are unambiguous and without cultural
and/or gender bias and that marking schedules are clear and appropriate

Post-moderation
Part of the moderation process ensures that students have been fairly assessed.
This includes consideration of the results of the assessment to ensure fair treatment
of students, marking consistency and reliability, appropriate grade
distinctions/boundaries and spread, and to identify and resolve any issues with the
assessment or the marking.

7.3. Assessment Schedule

Item % of Mark Group/Individual Max Due date

Allocation mark
Assignment 1 15% Individual 15 Week 5
Assignment 2 15% Individual 15 Week 9
Assignment 20% Group 20 Week 11
Final Exam 50% Individual 50 TBA – See AUTonline for
details

Exam timetables are available only on AUTonline from the Business

Undergraduate Programmes Organisation, under the Exams Tab. Visit the
Kiosks on WF1 to view or go to http://autonline.aut.ac.nz

7.4. Pass Requirements

In order to gain a pass in this paper you must:
Complete all assessments and
Obtain 50% overall in the paper

7.5. Assessment Details

ASSESSMENT 1 – INDIVIDUAL ASSIGNMENT 1

16 August 2010 (stream 80) and 17 August 2010 (streams 60 and

Due Date: 61) by 12pm

Weighting: 15%

Type: Individual Assessment

Length: -

Submission: Bar-coded to WF1

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 Students are required to solve a mini case located at the end of
Requirements: chapter 4 (questions B, C, F, G, H, I and J). Students are
required to submit the hardcopy to assignment box at WF1. The
assignment must be typed. A late assignment will be accepted
subject to a deduction of 10% of the total mark available for the
assessment for each 24 hour period after the due date.

ASSESSMENT 2 – INDIVIDUAL ASSIGNMENT 2

27 September 2010 (stream 80) and 28 September 2010

Due Date: (streams 60 and 61) by 12pm

Weighting: 15%

Type: Individual Assessment

Length: -

Submission: Bar-coded to WF1 and electronic submission to AUTonline

Students are required to solve a mini case (Wok Yow Imports,
Requirements: Inc.) located at the end of chapter 13 (questions C, F, G, H and I).
Students are required to submit the hardcopy to assignment box
at WF1 and the Excel file to AUTonline. The assignment must be
typed. A late assignment will be accepted subject to a deduction
of 10% of the total mark available for the assessment for each 24
hour period after the due date.

ASSESSMENT 3 – GROUP ASSIGNMENT

11 October 2010 (stream 80) and 12 October 2010 (streams 60

Due Date: and 61) by 12pm

Weighting: 20%

Type: Group Assessment

Length: Max. 15 pages not including appendices.

Submission: Bar-coded to WF1 and electronic submission to Turnitin

Please read the instructions below
Requirements:

General Instructions for Group Assignment

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1. Each group should have about five students in it. You should have formed
your group and submitted the names of your group members by the third week
of classes. It is your responsibility to form or be a member of a group. You
are not allowed to join a group in a different stream.

2. Each group member is expected to contribute to the group work and will be
responsible for the overall results for the whole group. Each group must
ensure that all group members contribute equally to the assignment. If for
whatever reason, some members of the group do not contribute equally, you
may fill in the Individual Contribution to the Group Assignment form
located on AUTonline.

3. For the assignment, each group will write and submit one report. The written
report accounts for 10%. Group members will present in class their work and
the presentation accounts for 10%.

4. Each group shall submit a hardcopy to WF1 and a softcopy of the written
report to AUTonline by the due date. Please click on the “Assignment” button
on AUT online and follow the instructions to upload the softcopy. A late
assignment will be accepted subject to a deduction of 10% of the total mark
available for the assessment for each 24 hour period after the due date.

5. A completed and signed BBus group assessment cover sheet should be

attached to the hardcopy of the written report. You may find a link to BBus
group assessment cover sheet by clicking on the “Cover Sheets” button on
AUT online.

The Assignment:

Write a report following the structure below.

I. The Market

1) Find a business opportunity and clearly articulate the business

opportunity.

2) What problem you are solving for the consumers.

3) Specify clearly your target market (e.g., age, gender, income, etc.) and
How big is the market ($, NZ and/or overseas).

II. The product

4) Describe your product. How much is the selling price. Explain why.

5) How is your product unique or better than competitors in the

marketplace. Can the idea / product be protected (patent, trade secret,
etc).

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 III. The competition

6) Describe the competitors and how big they are. Who is the main
competitor and why.

IV. Funding and exit

7) How long can your venture survive without external financing.

8) When will you need external financing, how much and where to obtain
the funding. [The maximum equity contribution from your group
members and families is $60,000. The maximum bank loan is $10,000.
No limitation if you seek funding from angels or venture capital firms but
you must explain the deal in detail (for example, the number of equity
issued, percentage ownerships sold to investors, show the changes in
equity in the balance sheets, etc.)].

9) What level of sales is needed to break even and when to break even

10) What is your proposed exit strategy and explain why.

Notes:

1. Your report should ideally be no more than 15 pages (not including

appendices).

2. Print screen all information obtained from the internet or databases, highlight
them, and put in the appendix.

3. Put the projected financial statements and all calculations in the appendix.

Useful websites
GMID www.portal.euromonitor.com/portal/default.aspx
Statistics New Zealand www.stats.govt.nz
Companies Office www.companies.govt.nz
Intellectual Property Office www.iponz.govt.nz
Tax for business www.ird.govt.nz
Employing staff www.ers.govt.nz
ACC levies and cover www.acc.co.nz
Health and safety www.business.govt.nz
Franchise www.franchise.co.nz

Detailed Marking Guide

Part I: Written Research Project 10 marks

Marks Criteria

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 8-10 All relevant financial data and information are gathered and analysed
well using the appropriate finance theories.
Excellent links are made between appropriate finance theories and the
real life complexities reflected in the selected topics.
Interpretation and analysis is logical, clearly developed and consistent.
Well presented with robust arguments to support any statements made.
Spelling and grammar free from errors.
Excellent referencing.

6-8 Most relevant financial data and information are gathered and analysed
well using the appropriate finance theories.
Good links are made between appropriate finance theories and the real
life complexities reflected in the selected topics.
Interpretation and analysis is largely logical, clearly developed and
consistent.
Well presented with reasonable arguments to support any statements
made.
Spelling and grammar largely free from errors.
Could be better presented and/or with better referencing.
4-6 Some relevant financial data and information are gathered and analysed
well using the finance theories.
Some links are made between appropriate finance theories and the real
life complexities reflected in the selected topics.
Interpretation and analysis is not always logical and/or inconsistent
Average presented with weak arguments to support any statements
made.
Spelling and grammar contain some errors.
Could be better presented and/or with better referencing.
0-4 Some relevant financial data and information are gathered. Little attempt
at analysing them using the finance theories.
Lack of links made between appropriate finance theories and the real life
complexities reflected in the selected topics.
Interpretation and analysis is inconsistent and contains errors.
Spelling and grammar contain many errors
Poor presented with few arguments to support any statements made.
Poor referencing.

Part II: Group Presentation 10 marks

Marks Criteria
8-10 Presentation is consistent with the written research project.
Excellent teamwork and even contribution.
Well presented with excellent referencing to underlying analysis.
6-8 Presentation is consistent with the written research project.
Good teamwork and reasonably even contribution.
Could be better presented and/or with better referencing to underlying
analysis.
4-6 Presentation is largely consistent with the written research project.
Team work and contribution balance lacking.

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 Could be better presented and/or with better referencing to underlying
analysis.
0-4 Presentation is inconsistent with the written research project.
Teamwork not evident.
Presentation and/or referencing to underlying analysis poor.

ASSESSMENT 4 – FINAL EXAM

Due Date: TBA

Weighting: 50%

Type: Individual Assessment

Length: 3 hours
The exam covers all the topics discussed during the semester. A
Requirements: financial calculator is needed.

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