Description
During in this detailed description regarding entrepreneurship fall 2012 course outline.
4SE3 - Fall 2012 - 1 of 18
Commerce 4SE3 - Entrepreneurship
Fall 2012 Course Outline
Strategic Management Area
DeGroote School of Business, McMaster University
COURSE OBJECTIVE
The purpose of this course is to explore practical applications of entrepreneurship to small
business management. Case studies are used to give practice in analyzing opportunities and
implementing entrepreneurial actions. In the first few weeks, the course tries:
1) To establish the business plan as a key success factor in starting a small business; and
2) To provide some basic marketing and financial tools to assess the business environment and
help develop a business plan.
Later in the term, different forms of small business ownership will be explored. We will also
discuss the differences between start-up for a franchise and an individually generated idea.
INSTRUCTOR AND CONTACT INFORMATION
Section 1: Wed. 11:30 to 1:30 p.m.
Fri. 1:30 to 2:30 p.m.
[email protected]
Office: DSB 215
Marvin Ryder Tel: (905) 525-9140 x23997
Assistant Professor of Marketing and Entrepreneurship Class Location: KTH/B105
Course Website:http://www.business.mcmaster.ca/courses/com4se3/ryder.html
COURSE DESCRIPTION
With three-quarters of the new jobs created in the Canadian economy coming from small
business, the particular problems and experiences encountered in starting and developing new
enterprises are clearly worth studying. Using case studies, lectures and visits from local
entrepreneurs, students will develop an appreciation of the challenges and rewards that come
from starting a small business. A cornerstone of the course is the development, by a group, of a
detailed business plan examining the finance, marketing, production, logistic and strategic
COURSE ELEMENTS
Credit Value: 3 Leadership: No IT skills: No Global view: No
AVENUE: No Ethics: Yes Numeracy: Yes Written skills: Yes
Participation: Yes Innovation: Yes Group Work: Yes Oral skills: Yes
Evidence-based: Yes Experiential: Yes Final Exam: No Guest speaker(s): Yes
4SE3 - Fall 2012 - 2 of 18
implications of starting a potential new business. Ideally, this course is designed for the
individual who has a business idea but has not yet had the time or direction to see if there is a
true business opportunity behind the idea.
LEARNING OUTCOMES
Upon completion of this course, students will be able to complete the following key tasks:
Write, critique, and refine a business plan;
Better weigh the risks and rewards of starting a new business venture;
Personally assess their potential for becoming entrepreneurs;
Understand the entrepreneurial mindset and how best to work with entrepreneurs; and
Understand the risks in growing a business from an entrepreneur-run business to one with the
entrepreneur as a manager.
REQUIRED COURSE MATERIALS AND READINGS
Commerce 4SE3 - Custom Courseware.
EVALUATION
Learning in this course results primarily from in-class discussion and participation of
comprehensive business cases as well as out-of-class analysis. The balance of the learning
results from the lectures on strategic concepts, from related readings, and from researching your
presentations, cases, assignments, simulation decisions and projects. All work will be evaluated
on an individual basis except in certain cases where group work is expected. In these cases group
members will share the same grade adjusted by peer evaluation. Your final grade will be
calculated as follows:
COMPONENTS AND WEIGHTS
Business Plan 35%
Participation in Class Discussions 15%
Interim Business Plan Submission 10%
In-Class Group Oral Presentation of Business Plan 10%
Three Hand-in Cases Completed by the Group (Each
Case Worth 10%)
30%
Total 100%
4SE3 - Fall 2012 - 3 of 18
CONVERSION
In this course, your cases may be graded using different marking and reporting techniques. For
example, cases may be graded on an index of 10. This does not mean that 5/10 represents 50%.
Similarly, when percentages are reported, they should not be interpreted as letter grades. Please
note, then, that when your work is returned after grading, you will be informed regarding how
your performance should be interpreted for that particular item.
At the end of the course your overall percentage grade will be converted to your letter grade in
accordance with the Commerce grade conversion scheme shown below:
LETTER GRADE PERCENT LETTER GRADE PERCENT
A+ 90 to 100 C+ 67 to 69
A 85 to 89 C 63 to 66
A- 80 to 84 C- 60 to 62
B+ 77 to 79 D+ 57 to 59
B 73 to 76 D 53 to 56
B- 70 to 72 D- 50 to 52
F 0 to 49
PARTICIPATION
Name cards are used to help give credit for your participation. You must have a name card with
your full first and last name clearly written and displayed in front of you for every class. It is
imperative that you prepare for every case. Class participation marks are based on the quality as
well as the quantity of participation. However, no class participation results in 0 marks. Marks
are not awarded for attendance only. In general, contributions are evaluated on a three point
scale: 1) physically but not mentally present; 2) good contribution; and 3) quite substantial
contribution. Debate and challenge are important activities that help in the learning process and
the willingness of individuals to engage in such activities with their classmates is critical.
During the term students should consult the professor about their level and quality of
participation. Interim contribution marks will be posted about half way through the course.
Come to see me then if your mark is low, or well before if you are concerned that it will be low.
There are ways I can help you to participate more effectively.
COMMUNICATION AND FEEDBACK
Students who are uncomfortable directly approaching an instructor regarding a course concern
may choose to send a confidential e-mail to the Acting Area Chair Ken Deal
([email protected]) or the Associate Dean, Kiri Kanagaretnam ([email protected]).
Students who wish to correspond with instructors or TA’s directly via e-mail must send
4SE3 - Fall 2012 - 4 of 18
messages that originate from their official McMaster University e-mail account. This
protects the confidentiality and sensitivity of information as well as confirms the identity of the
student. E-mails regarding course issues should NOT be sent to the Area Administrative
Assistant.
The instructor will conduct an informal course review with students by Week #4 to allow time
for modifications in curriculum delivery. The instructor will provide evaluation feedback for at
least 10% of the final grade to students prior to Week #8 in the term.
Students who wish to have a course component re-evaluated must complete the following form:http://www.mcmaster.ca/policy/Students-AcademicStudies/Form_A.pdf
For the component to be re-read, the component must be worth 10% or more of the final grade in
the course. Students pay a fee of $50 in Gilmour Hall Room 209 (receipt is then brought to the
Academic Programs Office (APO), DSB/104). The Area Chair will seek an independent
adjudicator to re-grade the component. An adjustment to the grade for the component will be
made if a grade change of three points or greater on the twelve point scale (equivalent to 10
marks out of 100) has been suggested by the adjudicator as assigned by the Area Chair. If a
grade change is made, the student fee will be refunded.
ACADEMIC DISHONESTY
It is the student’s responsibility to understand what constitutes academic dishonesty. Please refer
to the University Senate Academic Integrity Policy at the following URL:http://www.mcmaster.ca/policy/Students-AcademicStudies/AcademicIntegrity.pdf
This policy describes the responsibilities, procedures, and guidelines for students and faculty
should a case of academic dishonesty arise. Academic dishonesty is defined as to knowingly act
or fail to act in a way that results or could result in unearned academic credit or advantage.
Please refer to the policy for a list of examples. The policy also provides faculty with procedures
to follow in cases of academic dishonesty as well as general guidelines for penalties. For further
information related to the policy, please refer to the Office of Academic Integrity at:http://www.mcmaster.ca/academicintegrity
REQUESTS FOR RELIEF FOR MISSED ACADEMIC TERM WORK
1. A student may request relief from a regularly scheduled class discussion, presentation, or
other course component in the following two ways: a) for absences from classes lasting up to
five (5) working days; or b) for absences from classes lasting more than five (5) working
days.
a) For absences from classes lasting up to five (5) working days
A student must use the McMaster Student Absence Form (MSAF). This is an online, self-
reporting tool, for which submission of medical or other types of supporting documentation
is not normally required. A student may use this tool to submit a maximum of one (1)
request for relief of missed academic work per term as long as the weighting of the
4SE3 - Fall 2012 - 5 of 18
component is worth 29% or less of the final grade. A student must immediately follow-up
with their course instructors regarding the nature of the relief. Failure to do so may negate
the opportunity for relief. It is the prerogative of the instructor to determine the appropriate
relief for missed term work in his/her course.
If the value of the component is worth 30% or more, students must report to the APO to
discuss their situation and will be required to provide appropriate supporting
documentation.
b) For absences from classes lasting more than five (5) working days
A student cannot use the MSAF. They MUST report to the Academic Programs Office
(APO) to discuss their situation and will be required to provide appropriate supporting
documentation.
2. A student who wishes to submit more than one request for relief of missed academic work per
term cannot use the MSAF. They MUST report to the APO to discuss their situation with an
academic advisor. They will be required to provide supporting documentation and meet with
the Director.
3. A student who requires accommodations to meet a religious obligation or to celebrate an
important religious holiday must make their requests within three weeks of the start of term to
the APO. If you need scheduled health care (e.g., rehabilitation after an accident or wisdom
teeth removed), do not schedule it opposite a class and then seek accommodation. Students
should not design their class schedule to create a conflict between two courses. If they do,
an instructor is not obligated to provide any accommodation.
4. A student seeking relief due to work-related commitments (for part-time students only) or
representing the University at an academic or varsity athletic event have the option of
applying for special arrangements. Such requests must be made to the APO at least ten (10)
working days before the scheduled class along with acceptable documentation. Adjudication
of the request must be handled by the APO.
POTENTIAL MODIFICATIONS TO THE COURSE
The instructor and university reserve the right to modify elements of the course during the term.
The university may change the dates and deadlines for any or all courses in extreme
circumstances. If either type of modification becomes necessary, reasonable notice and
communication with the students will be given with explanation and the opportunity to comment
on changes. It is the responsibility of the student to check their McMaster e-mail and course
websites weekly during the term and to note any changes.
RESEARCH USING HUMAN SUBJECTS
Research involving human participants is premised on a fundamental moral commitment to
advancing human welfare, knowledge and understanding. As a research intensive institution,
McMaster University shares this commitment in its promotion of responsible research. The
fundamental imperative of research involving human participation is respect for human dignity
4SE3 - Fall 2012 - 6 of 18
and well-being. To this end, the University endorses the ethical principles cited in the Tri-
Council Policy Statement: Ethical Conduct for Research Involving Humans:http://www.pre.ethics.gc.ca
McMaster University has mandated its Research Ethics Boards to ensure that all research
investigations involving human participants are in compliance with the Tri-Council Policy
Statement. The University is committed, through its Research Ethics Boards, to assisting the
research community in identifying and addressing ethical issues inherent in research, recognizing
that all members of the University share a commitment to maintaining the highest possible
standards in research involving humans.
If you are conducting original research, it is vital that you behave in an ethical manner. For
example, everyone you speak to must be made aware of your reasons for eliciting their responses
and consent to providing information. Furthermore, you must ensure everyone understands that
participation is entirely voluntary. Please refer to the following website for more information
about McMaster University’s research ethics guidelines:http://reo.mcmaster.ca
Organizations with which you are working are likely to prefer that some information be treated
as confidential. Ensure that you clarify the status of all information that you receive from your
client. You MUST respect this request and cannot present this information in class or
communicate it in any form, nor can you discuss it outside your group. Furthermore, you must
continue to respect this confidentiality even after the course is over.
GROUP WORK
You will form groups of three or four people. Each group has three assignments to complete -
due approximately every three weeks. The group is also responsible for completing both an
interim and a final Business Plan for a client and for making an in-class presentation of the plan.
For the in-class presentation, all group members should take a turn at speaking to the class. Use
of PowerPoint is recommended. Photocopies of results or tables too small to read when
projected should be distributed to the class.
Throughout the course, cases will be assigned and it will be assumed that all students are familiar
with each case and are prepared to discuss relevant issues. Choose your fellow group members
wisely. All group members will be assigned identical grades for group work.
COURSE EVALUATIONS
About the tenth week of the course, a formal evaluation of the instructor and the course will be
conducted by the Michael G. DeGroote School of Business. All students are expected to
participate in this evaluation as your answers will be used to help change the course structure and
your evaluation of the instructor will be used in tenure, promotion and merit pay decisions.
4SE3 - Fall 2012 - 7 of 18
STUDENT ACCESSIBILITY SERVICES
Student Accessibility Services (SAS) offers various support services for students with
disabilities. Students are required to inform the SAS of accommodation needs for course work at
the outset of the term. Students must forward a copy of such SAS accommodation to the
instructor normally within the first three (3) weeks of classes by arranging an appointment with
the instructor. If a student with a disability chooses NOT to take advantage of an SAS
accommodation, a petition for relief may not be filed after the fact. The SAS website is:http://sas.mcmaster.ca
COURSE SCHEDULE
WEEK DATE MATERIAL COVERED
1 Fri. Sept. 7 Introduction
2
Wed. Sept. 12
Fri. Sept. 14
Defining Entrepreneurship
Case: Song Maestro
3
Wed. Sept. 19
Fri. Sept. 21
Entrepreneurial Traits
Case: Jane Smith (A)
Case: Kolapore Inc.
4
Wed. Sept. 26
Fri. Sept. 28
The Business Plan DUE: Project Description Sheet
Case: Dorothy’s Little Women
Case: Wing and a Prayer - Hand-in Case – DUE: In-class
5
Wed. Oct. 3
Fri. Oct. 5
Developing the Nuts and Bolts
Case: Strategic Adventure Park
Case: The Fit Stop
6
Wed. Oct. 10
Fri. Oct. 12
Marketing for Small Business
Case: Black Water Rafting
Case: Restored Vision Inc.
7
Wed. Oct. 17
Fri. Oct. 19
Support for Small Business Forum DUE: Interim Business Plan
Guest Lecture: Government, Lawyer, Banker
Case: Baker Hardware Ltd. - Hand-in Case – DUE: In-class
4SE3 - Fall 2012 - 8 of 18
8
Wed. Oct. 24
Fri. Oct. 26
Franchising or Growing the Small Business
Case: Beano’s Ice Cream Shoppe
Case: Diego’s/Marketec Business Consultants Ltd.
9
Wed. Oct. 31
Fri. Nov. 2
Entrepreneur’s Forum
Guest Lecture: Three Entrepreneurs from the Community
Case: The Crowne Inn
10
Wed. Nov. 7
Fri. Nov. 9
Entrepreneurial Ethics
Case: Johannson and Associates
Case: Industrial Equipment Inc. – Hand-in Case – DUE: In-class
11
Wed. Nov. 14
Fri. Nov. 16
Final Thoughts on Business Success
Case: MacDonald Flooring Company
Class Consultation – Questions & Answers
12
Wed. Nov. 21
Fri. Nov. 23
Group Presentations - Business Plans
Group Presentations - Business Plans
13
Wed. Nov. 28
Fri. Nov. 30
Group Presentations - Business Plans
Group Presentations - Business Plans
Completed Business Plans DUE: Friday, December 7, 2012 by 4:30 p.m. in
DSB/203
SUGGESTED DISCUSSION QUESTIONS FOR CASES
Song Maestro
1. Pretend you are a “Shark” or “Dragon”. What aspects of the business do you like/dislike?
2. Which of the four target markets have the best potential? Why?
3. Is 25% of the proposed company worth $100,000?
Jane Smith (A)
1. Is J ane Smith an entrepreneur? Can she become an entrepreneur?
2. What more should J ane do to determine her entrepreneurial potential?
3. Try to use the same evaluation process on yourself? Are you an entrepreneur?
4SE3 - Fall 2012 - 9 of 18
Kolapore Inc.
1. What are the problems facing Kolapore?
2. Does the company have any value?
3. What strategy has been followed and are there viable alternatives to this strategy?
4. Could you make a profit with this business on a part-time or a full-time basis?
5. As Adrian Demmers, what is your decision regarding Kolapore?
Dorothy’s Little Women
1. Make an annual sales estimate of the women’s petite clothing market for Hamilton.
What might Dorothy’s market share be?
2. What non-quantitative considerations should enter this analysis?
3. Prepare a quick income statement and calculate R.O.I. for the first year of operation.
4. What would you recommend to Dorothy?
Wing and a Prayer
1. Do you think this business should be pursued?
2. Why did the business idea develop in the minds of the entrepreneurs?
3. Are the “heroes” of the case entrepreneurs?
Strategic Adventure Park
1. What went wrong? What was unrealistic about the original plan?
2. What are the chances of a second season being sufficiently profitable to justify
continuing to operate the company?
3. Outline a plan for the upcoming season should the owners decide to continue in business.
The Fit Stop
1. Assess Karim’s success as an entrepreneur.
2. What are the most pressing issues faced by the health club?
3. Should the club grow and, if so, how? Assess the options facing Karim and make a
recommendation.
Black Water Rafting
1. Why has Black Water Rafting been successful?
2. What issues could impact on future operations of the business?
3. What should Ash and Chandler do?
Restored Vision Inc.
1. Evaluate the first year of this business. What went right or wrong?
2. Is the key to profitability simply more customers? If so, how does this company build
profitable volume?
3. What would you do to improve profitability if you were running this company?
Baker Hardware Ltd.
1. What other information should Mr. Baker obtain before he makes this decision?
2. Using the information provided, evaluate the alternatives Mr. Baker has identified. Be
sure to evaluate the attractiveness of the proposed merchandise lines.
3. What other alternatives has Mr. Baker not explored?
4SE3 - Fall 2012 - 10 of 18
Beano’s Ice Cream Shoppe
1. What are the operating characteristics of this business? Why is a franchise attractive?
2. Should Smith and Harris become partners in this venture?
3. Should Smith give up his secure job paying $60,000 per year for a Beano’s franchise?
Are there other opportunities available to him?
Diego’s/Marketec Business Consultants Ltd.
1. Is Dr. Albert Collins an entrepreneur?
2. Is there an unfilled market for Mexican food in Montreal?
3. Should Dr. Collins invest in Diego’s?
4. What next steps should he follow?
The Crowne Inn
1. What mistakes did Harvey make during the succession process?
2. Did Bruce produce a fair contract for his mother to sign? What changes would you
suggest?
3. Using whatever technique(s) you choose, place a value on this business.
4. What would you recommend to the J ohnston family? Why?
Johannson and Associates
1. Imagine one could “pause” the interview half way through. Any problems with what you
have heard? Would you walk out?
2. Imagine the interview is complete. Any problems with the marketing research being
proposed to you? Would you do the work?
3. If you chose to not take the project, would you alert any colleagues about the project?
Industrial Equipment Inc.
1. Should J im Costello again attempt to purchase Hines Equipment from his father-in-law?
2. What should he offer for the business? Specifically, what is the maximum price he
should be willing to pay?
3. What changes to the business would you make following acquisition?
MacDonald Flooring Company – Assume you are acting from George London’s position
1. Use ratio analysis to identify problems. What is your assessment of the company’s risks?
2. Assess the quality of the company’s inventory and receivables as security for the bank.
3. Assess the alternatives set out in the case.
GUIDE TO WRITTEN CASE REPORTS
Title Page: Identify the case, the course and the team members.
Table of Contents: Provide a detailed listing of section titles, tables, exhibits and appendices.
Problem: State the main issues of the case, omitting descriptive details. Distinguish between the
issues as seen by the actors in the case and additional theoretical or practical issues
perceived by you.
4SE3 - Fall 2012 - 11 of 18
Context: Subdivide into sections and subsections as appropriate.
Internal Analysis: This is a listing of the company’s (or potential company’s) key
strengths and weaknesses. They are internal to the company and directly controllable
by the entrepreneur. Each strength or weakness should consist of a statement and then
the implication. This answers the question – “So what?” – and gives the characteristic
meaning in terms of the company or the problem.
Use one sub-heading for “Strengths” and one for “Weaknesses.” You may also find
that several characteristics can be grouped. For instance you might want to suggest that
a firm is innovative because: 1) it launches one new product per year; 2) it invests in
new technology to streamline operations; and 3) invests heavily in research and
development. These are not three separate strengths but three aspects of one strength.
Be sure to conclude this section with a summary statement telling the reader if you see
the company as stronger or weaker.
External Analysis: This is a listing of the key opportunities and threats in the
environment. They are external to the company or potential company and are not
completely controllable. They may be trends to be embraced or exploited but they may
also be trends which could hurt the company or its products/services. Use the same
format here as you used for the Internal Analysis. Remember to both identify the
opportunity or threat and then the implication of this fact for the firm or problem.
Be sure to conclude this section with a summary statement telling the reader if you see
the environment as more threatening or filled with opportunity. NOTE: If you find
yourself writing, “The company has the opportunity to ….”, you have identified an
alternative not an opportunity. If the company can control the characteristic, it is not
part of the external environment.
Alternatives: Use one subsection for each alternative presented. The correct number of
alternatives might be suggested by the case. Other cases are more open-ended and
the group could generate a near infinite list of alternatives. As a rule of thumb
consider no less than three alternative courses of action for the company or
potential company and certainly no more than five.
Analysis should consist of stating a prospective strategy and an analysis of its pros
and cons. The analysis should focus on the strategy’s ability to repair weaknesses,
mitigate threats, build on strengths, or exploit opportunities facing the company.
Be clear and concise. You are writing a business report – not an essay.
Recommendation and Implementation: Always conclude a case report with specific
recommendations for the future. Conceivably, you might recommend a
combination of alternatives to cover shorter and longer planning horizons. J ustify
your choice by saying why you rejected the other alternatives. Do not name a
strategy here that was not described and evaluated in the previous section.
4SE3 - Fall 2012 - 12 of 18
Implementation is the action plan (when and what) that puts the recommended
strategy into effect. It flows directly from the chosen strategy but should overlap
it very little. This is not a restatement of your recommended strategy. It probably
will help to create a timeline with defined steps/stages.
Bibliography: Necessary only if sources other than the case text or your own analysis are used.
Appendices: Place for long tables, complicated calculations, less important graphs, etc.
Length : Maximum length of ten double-spaced word-processed pages (not including the Title
Page, Table of Contents, Bibliography and Appendices).
Timing: Case assignments will be accepted for grading only on or before the assigned due date.
TEMPLATE FOR COURSE PROJECT: THE BUSINESS PLAN
Each group of students should work with a “client” who needs a business plan completed. This
should give plans a sense of reality. Using local media for publicity, I already have some
entrepreneurs who would like to work with your group to complete a plan. Some groups will
develop an internally generated idea into a business plan. Pure service-based businesses (such as
a consulting firm) should not be the subject of a business plan. One other constraint is that the
business must not be a “non-profit organization.” I know that these groups need plans completed
but their unique character makes evaluating and developing a plan for a non-profit organization
much more difficult. If you need further clarification, please see me.
By no later than Wednesday, September 26, you should have a contact and a tentative
business description. By completing the last page of this outline and submitting it to me, I will
approve the project and client. By no later than Wednesday, October 17, I want an Interim
Business Plan. The completed business plan is due on Friday, December 7, 2012 by the close
of business (4:30 p.m.).
Writing a Business Plan
The Business Plan is a written summary of the overall activities of the business enterprise. Its
creation forces management to separate achievable objectives from “pie-in-the-sky” conjecture.
Detail is important here. Typically, entrepreneurs create business plans in which some sections
are very detailed (i.e., the entrepreneur had given the material a lot of thought) while other,
equally important, sections have little detail. You must not fall into this trap. The audience for a
business plan is either a banker or a venture capitalist. These people thrive on details - who
specifically is the competition? where specifically will the business operate? specifically how
many staff will be employed? what specifically are the products? how specifically will the cash
required be used?
A well prepared business plan:
* Induces realism in the founders. When they are forced to sit down and really study and
quantify the cost-volume-profit relationship, they frequently discover their own
optimism;
4SE3 - Fall 2012 - 13 of 18
* Exposes management to the whole planning, budgeting, forecasting and reporting
process, its method and its merits;
* Identifies customers, competitors, marketing strategy, and conditions needed for success;
* Provides the budget and break-even point which will be a useful barometer for an
assessment of project feasibility and attainment;
* Allows investigations of deviations from plan before conditions become irreparable;
* Provides a measure of anticipated return on investment; and
* Discloses timing and the amount of sources and uses of funds (especially the timing of
capital expenditures and the need for working capital) and the need for short-term bank
borrowing.
General Structure - While your actual structure will depend on type of business to be started,
use this as the required outline for your business plan.
Executive Summary - one to two pages
Table of Contents - with page numbers and contents of appendices identified
Service/Market Description (Product/Market Description) – one and half pages
For Product or Service Description make sure it is thorough and complete. It sometimes
helps to define the offering by talking about products or services not being offered. For
the market, describe customers both in demographic and psychographic terms - Why do
people want these products or services? For an e-business one might add why customers
want to acquire these products or services in this manner rather than from another
traditional delivery medium.
Entrepreneur Profile - one page
Begin by describing the form of ownership (sole proprietorship, partnership, or
corporation), percentage ownerships, and the initial cash investment planned. The key
here is to explain how the entrepreneur brings value to the venture. Build both their
general business credibility and credibility specific to this venture. For example, the
entrepreneur might imagine a web site selling cheese to the world but if s/he doesn’t
make cheese, what value is s/he bringing to the venture?
Basis of Competitive Advantage - half page
Answer the question - why are people buying from this business rather than a competitor?
Most likely an organization only has one or two true competitive advantages which it can
use to defeat the competition. A person reading the plan will try to determine whether
these advantages truly are significant and sustainable.
Business and Personal Objectives - Quantitative
- Qualitative
- half page (in total) for both
Probably no more than five major objectives. All objectives should be connected to a
time frame and most should be measurable. While some can be qualitative, specific and
measurable sales and profit objectives for the first three years allow the entrepreneur
to determine if the business truly is successful. The personal objectives may tell a funder
4SE3 - Fall 2012 - 14 of 18
something about the commitment of the owner (for instance, a goal might be to do an
IPO in five years – that is different than starting the company and keeping it small).
Market Analysis
Customers - J ustify potential demand using secondary (historical) data and primary data
(gathered locally from potential customers)
This is a major section of the plan and allows the writers to present their major evidence.
This could include results of marketing research, general trends identified through
secondary data, reports from industry insiders, etc. Usually one tries to estimate demand
in two manners. Top-down suggests one starts with a target population and then reduces
that number based on market statistics to show that there are X number of consumers who
want this product or service (with X normally being a very large number). An implication
is that there are so many consumers this business cannot fail. For instance, start with the
population of Canada and then reduce that number for adults between 21 and 65, and then
reduce it for the number with access to computers, and then reduce it for people with the
target income, and then reduce it for the percentage engaged in a specific activity, etc.
One might also present environmental trends in the top-down analysis. Is anything going
on in the environment (technology, political/legal, social/cultural, and economic) which
affects customers or, more importantly, is affecting their buying habits? If so, what
impact will this have on the business?
Bottom-up analysis suggests that one starts with the individual consumer and a measure-
ment of their needs/wants through a very specific market survey. In this course, students
typically design a two-page questionnaire containing roughly ten questions. The typical
sample size is 30 to 50 people. Remember that I need to review and approve
questionnaires before you execute a survey. To help you design your survey, there is
a template document on the course website. The best way to get my approval is to
send me the questionnaire as a Word document via e-mail and give me a couple of days
to complete a review.
Remember to always begin discussing results from a survey by giving the reader some
context: how many people were surveyed, when the survey was completed, where the
survey was completed, how you chose the participants. It also helps to summarize any
demographic variables at the start so people can picture the people you surveyed.
The power of bottom-up analysis is talking to potential customers in the geographic
target market. You could learn that out of 50 consumers surveyed, 31 said they would
definitely buy the products/service of this business. Scaling that number up would lead
to some more conclusions about demand. It also allows you to confirm the data gathered
from secondary sources.
At the end of this section, a reader should be convinced that a big market exists for the
product or service and that this venture is the logical victor in any battle for customers.
4SE3 - Fall 2012 - 15 of 18
Competition - Primary Competitors (no more than six with a half page summary of each)
and Secondary Competitors
- In addition provide a summary table/chart
- Identify location, number of employees, age of business, volume of
business, its customers, how aggressive each is, any sense of sales/profits,
types of products/services offered
Who specifically are the most likely competitors? What is happening in these
companies? Are they growing or shrinking? Getting more aggressive or less? What is
each primary competitor’s competitive advantage? Is anything going on which affects
customers or, more importantly, is affecting their buying habits? If so, what impact will
this have on the business?
This is another major section. The reader will evaluate whether any key competitors
were overlooked. The detail presented is also critical. One cannot simply acknowledge a
competitor but one must demonstrate strategic knowledge of its action. At the end of
reading this section, the reader should be convinced that the new company has a
sustainable competitive advantage that will lead to success.
Marketing Strategy
Distribution - hours of service, physical location, layout of space, etc.
Promotion, Advertising and Selling Tactics - specific details with costs
Pricing and Profit Margins
This starts to address some specific tactics to meet objectives. How will consumers
become aware of the new business? How will they be convinced to try the services or
products offered? What pricing strategies will be followed? How will products or
services be distributed?
Manufacturing Analysis or Supplier Analysis (if applicable) - one to two pages
This is an optional section if the company is selling physical goods. How will inventory
be generated? If production is being sub-contracted, explain the deals in place and
back-up plans in case of failure. If one is retailing goods, talk about major suppliers,
their quality assurances, billing practices, the order cycle, etc. Why has a certain supplier
been chosen? What is the history of the supplier? Should some of this involve
international trade, here is a good place to talk about currency challenges as well as
customs barriers.
Information Technology Analysis (if applicable) - one to two pages
This is an optional section most applicable for an e-business. There should be a
description of the technology being installed. This shouldn’t be too detailed but it should
assure the reader about processes for hot back-ups in case of failure, handling of peak
demand (say at Christmas time), what a web site will or won’t do, key technology
partners, etc.
4SE3 - Fall 2012 - 16 of 18
Organization Structure and Personnel Requirements - include a chart and brief job descriptions
- one page
What staff are needed? Who has committed to the project and what openings remain to
be filled? In the entrepreneur’s mind, what positions are critical for success? For each
box in the organizational chart, define the responsibilities, qualifications, and pay rate for
that person. If a position is to be added after start-up but within a three year time horizon,
use a dotted or dashed outline for the box. The reader will look to see that appropriate
skill sets are present and levels of compensation appear appropriate. The reader will also
look for a match with the entrepreneur’s skills/talents.
Present Situation and Start-Up Requirements - half page
Right now, where is the business - glint in the eye or a month from launch? Clearly the
closer to reality, the greater the likelihood of funding. To write this section, start by
defining a target opening date. Work backward to define three to five steps to get from
now to then. If a step has costs, list them and how they will be financed. Start-up
requirements address the question of what is needed to get the business from where it is
now to being open in the manner envisioned by the entrepreneur.
Financial Projections
• Assumptions
• Three Year Income Statements (Most Likely Scenario) Showing Return on Investment
• Quarterly Cash Flow Projections for Year 1
• Proforma Balance Sheet at end of Year 1
• Break-even Analysis
• Sensitivity Analysis on Three Year Income Statements - Pessimistic and Optimistic
Scenarios - state any new/altered assumptions
Placing this last does not mean this is unimportant. Many readers won’t even bother
looking at financial projections if they aren’t convinced that the business is likely
offering quality products to a group of consumers who can’t wait to buy. The reason for
this is simple - projections can be made to show anything. A look at the business plan of
an unsuccessful business does not show financial projections awash in red ink!
Normally this section begins with a list of key assumptions affecting the projections.
This is followed by a three year income statement reflecting what the entrepreneur thinks
is the most likely operating scenario for the business. This is followed by quarterly cash
flow projections. A common mistake of many entrepreneurs is not being able to
distinguish between cash flows and profits. Many profitable businesses are strangled by
poor cash flows (especially if they are growing quickly).
Typically, this is followed by a pro forma balance sheet (usually created for the year end
of the first operating year projected in the income statements). This is then followed by a
break-even analysis for the first year. Finally, there is some sensitivity analysis on the
income statements usually demonstrating a pessimistic and optimistic scenario. Not only
do these serve to paint the best and worst case that the entrepreneur can foresee but they
also show the reader the effect of key variables on the business.
4SE3 - Fall 2012 - 17 of 18
Interim Business Plan
By Wednesday, October 17, 2012, I want to receive a five-page summary of your business
plan. There is no need for a Table of Contents or an Executive Summary. The first four sections
(i.e., Product (Service)/Market Description, Entrepreneur Profile, Basis of Competitive
Advantage, and Business/Personal Objectives) should be complete. You should list the headings
for the remaining sections and highlight the types of information you have gathered and have yet
to gather. You should list the titles of the two optional sections and tell me whether you think
they apply to your plan. I will add input about missing information and additional sources to be
contacted. If you are uncertain how to complete a section, explain what you have and I will add
details. Once graded, this plan will trigger a one-hour meeting between me and your group. I
will review your interim business plan and set a roadmap for project completion.
Please note that the Interim Business Plan will be graded. Zero will be assigned for this course
component to any group who fails to complete an interim business plan in a timely manner.
Thoughts for the Final Business Plan Submission
A major problem of business plans has been a lack of “specifics.” For instance, in analyzing
competition, some people merely mention a company name and store location. A full discussion
of the competition includes their strategies, product lines, whether they are growing or declining,
and how they will have an impact upon the entrepreneur’s business. To give a second example,
one entrepreneur intended to develop a new product. While she had a name for it, she did not list
its features. She mentioned that its construction would be sub-contracted but never indicated
what company would do the manufacturing for her and why this company was chosen.
The best business plans are not a simple academic exercise but read as if a real business would
be started from this blueprint. I will be keeping the copy of your submitted business plan for my
records. You may wish to print extra copies for each group member but you should keep in mind
that these copies must be kept confidential so that no harm can come to the entrepreneur.
4SE3 - Fall 2012 - 18 of 18
COMMERCE 4SE3 – ENTREPRENEURSHIP – PROJECT DESCRIPTION SHEET
GROUP #: (To be assigned by Instructor)
(Please Complete by No Later Than Wednesday, September 26, 2012)
GROUP LEADER:______________________________________________________________
---------------------------------------------------------------------------------------------------------------------
GROUP MEMBERS
1._________________________________________________________________________
2._________________________________________________________________________
3._________________________________________________________________________
---------------------------------------------------------------------------------------------------------------------
4._________________________________________________________________________
A) Briefly describe the product or service at the heart of the proposed business. Please note
that your business cannot operate in either the “not-for-profit” sector or “pure service”
sector.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
B) Briefly describe the market for the product or service (size, types of competition, etc.).
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
C) Please list the name, phone number, and e-mail address of your project client.
________________________________________________________________________
doc_574554600.pdf
During in this detailed description regarding entrepreneurship fall 2012 course outline.
4SE3 - Fall 2012 - 1 of 18
Commerce 4SE3 - Entrepreneurship
Fall 2012 Course Outline
Strategic Management Area
DeGroote School of Business, McMaster University
COURSE OBJECTIVE
The purpose of this course is to explore practical applications of entrepreneurship to small
business management. Case studies are used to give practice in analyzing opportunities and
implementing entrepreneurial actions. In the first few weeks, the course tries:
1) To establish the business plan as a key success factor in starting a small business; and
2) To provide some basic marketing and financial tools to assess the business environment and
help develop a business plan.
Later in the term, different forms of small business ownership will be explored. We will also
discuss the differences between start-up for a franchise and an individually generated idea.
INSTRUCTOR AND CONTACT INFORMATION
Section 1: Wed. 11:30 to 1:30 p.m.
Fri. 1:30 to 2:30 p.m.
[email protected]
Office: DSB 215
Marvin Ryder Tel: (905) 525-9140 x23997
Assistant Professor of Marketing and Entrepreneurship Class Location: KTH/B105
Course Website:http://www.business.mcmaster.ca/courses/com4se3/ryder.html
COURSE DESCRIPTION
With three-quarters of the new jobs created in the Canadian economy coming from small
business, the particular problems and experiences encountered in starting and developing new
enterprises are clearly worth studying. Using case studies, lectures and visits from local
entrepreneurs, students will develop an appreciation of the challenges and rewards that come
from starting a small business. A cornerstone of the course is the development, by a group, of a
detailed business plan examining the finance, marketing, production, logistic and strategic
COURSE ELEMENTS
Credit Value: 3 Leadership: No IT skills: No Global view: No
AVENUE: No Ethics: Yes Numeracy: Yes Written skills: Yes
Participation: Yes Innovation: Yes Group Work: Yes Oral skills: Yes
Evidence-based: Yes Experiential: Yes Final Exam: No Guest speaker(s): Yes
4SE3 - Fall 2012 - 2 of 18
implications of starting a potential new business. Ideally, this course is designed for the
individual who has a business idea but has not yet had the time or direction to see if there is a
true business opportunity behind the idea.
LEARNING OUTCOMES
Upon completion of this course, students will be able to complete the following key tasks:
Write, critique, and refine a business plan;
Better weigh the risks and rewards of starting a new business venture;
Personally assess their potential for becoming entrepreneurs;
Understand the entrepreneurial mindset and how best to work with entrepreneurs; and
Understand the risks in growing a business from an entrepreneur-run business to one with the
entrepreneur as a manager.
REQUIRED COURSE MATERIALS AND READINGS
Commerce 4SE3 - Custom Courseware.
EVALUATION
Learning in this course results primarily from in-class discussion and participation of
comprehensive business cases as well as out-of-class analysis. The balance of the learning
results from the lectures on strategic concepts, from related readings, and from researching your
presentations, cases, assignments, simulation decisions and projects. All work will be evaluated
on an individual basis except in certain cases where group work is expected. In these cases group
members will share the same grade adjusted by peer evaluation. Your final grade will be
calculated as follows:
COMPONENTS AND WEIGHTS
Business Plan 35%
Participation in Class Discussions 15%
Interim Business Plan Submission 10%
In-Class Group Oral Presentation of Business Plan 10%
Three Hand-in Cases Completed by the Group (Each
Case Worth 10%)
30%
Total 100%
4SE3 - Fall 2012 - 3 of 18
CONVERSION
In this course, your cases may be graded using different marking and reporting techniques. For
example, cases may be graded on an index of 10. This does not mean that 5/10 represents 50%.
Similarly, when percentages are reported, they should not be interpreted as letter grades. Please
note, then, that when your work is returned after grading, you will be informed regarding how
your performance should be interpreted for that particular item.
At the end of the course your overall percentage grade will be converted to your letter grade in
accordance with the Commerce grade conversion scheme shown below:
LETTER GRADE PERCENT LETTER GRADE PERCENT
A+ 90 to 100 C+ 67 to 69
A 85 to 89 C 63 to 66
A- 80 to 84 C- 60 to 62
B+ 77 to 79 D+ 57 to 59
B 73 to 76 D 53 to 56
B- 70 to 72 D- 50 to 52
F 0 to 49
PARTICIPATION
Name cards are used to help give credit for your participation. You must have a name card with
your full first and last name clearly written and displayed in front of you for every class. It is
imperative that you prepare for every case. Class participation marks are based on the quality as
well as the quantity of participation. However, no class participation results in 0 marks. Marks
are not awarded for attendance only. In general, contributions are evaluated on a three point
scale: 1) physically but not mentally present; 2) good contribution; and 3) quite substantial
contribution. Debate and challenge are important activities that help in the learning process and
the willingness of individuals to engage in such activities with their classmates is critical.
During the term students should consult the professor about their level and quality of
participation. Interim contribution marks will be posted about half way through the course.
Come to see me then if your mark is low, or well before if you are concerned that it will be low.
There are ways I can help you to participate more effectively.
COMMUNICATION AND FEEDBACK
Students who are uncomfortable directly approaching an instructor regarding a course concern
may choose to send a confidential e-mail to the Acting Area Chair Ken Deal
([email protected]) or the Associate Dean, Kiri Kanagaretnam ([email protected]).
Students who wish to correspond with instructors or TA’s directly via e-mail must send
4SE3 - Fall 2012 - 4 of 18
messages that originate from their official McMaster University e-mail account. This
protects the confidentiality and sensitivity of information as well as confirms the identity of the
student. E-mails regarding course issues should NOT be sent to the Area Administrative
Assistant.
The instructor will conduct an informal course review with students by Week #4 to allow time
for modifications in curriculum delivery. The instructor will provide evaluation feedback for at
least 10% of the final grade to students prior to Week #8 in the term.
Students who wish to have a course component re-evaluated must complete the following form:http://www.mcmaster.ca/policy/Students-AcademicStudies/Form_A.pdf
For the component to be re-read, the component must be worth 10% or more of the final grade in
the course. Students pay a fee of $50 in Gilmour Hall Room 209 (receipt is then brought to the
Academic Programs Office (APO), DSB/104). The Area Chair will seek an independent
adjudicator to re-grade the component. An adjustment to the grade for the component will be
made if a grade change of three points or greater on the twelve point scale (equivalent to 10
marks out of 100) has been suggested by the adjudicator as assigned by the Area Chair. If a
grade change is made, the student fee will be refunded.
ACADEMIC DISHONESTY
It is the student’s responsibility to understand what constitutes academic dishonesty. Please refer
to the University Senate Academic Integrity Policy at the following URL:http://www.mcmaster.ca/policy/Students-AcademicStudies/AcademicIntegrity.pdf
This policy describes the responsibilities, procedures, and guidelines for students and faculty
should a case of academic dishonesty arise. Academic dishonesty is defined as to knowingly act
or fail to act in a way that results or could result in unearned academic credit or advantage.
Please refer to the policy for a list of examples. The policy also provides faculty with procedures
to follow in cases of academic dishonesty as well as general guidelines for penalties. For further
information related to the policy, please refer to the Office of Academic Integrity at:http://www.mcmaster.ca/academicintegrity
REQUESTS FOR RELIEF FOR MISSED ACADEMIC TERM WORK
1. A student may request relief from a regularly scheduled class discussion, presentation, or
other course component in the following two ways: a) for absences from classes lasting up to
five (5) working days; or b) for absences from classes lasting more than five (5) working
days.
a) For absences from classes lasting up to five (5) working days
A student must use the McMaster Student Absence Form (MSAF). This is an online, self-
reporting tool, for which submission of medical or other types of supporting documentation
is not normally required. A student may use this tool to submit a maximum of one (1)
request for relief of missed academic work per term as long as the weighting of the
4SE3 - Fall 2012 - 5 of 18
component is worth 29% or less of the final grade. A student must immediately follow-up
with their course instructors regarding the nature of the relief. Failure to do so may negate
the opportunity for relief. It is the prerogative of the instructor to determine the appropriate
relief for missed term work in his/her course.
If the value of the component is worth 30% or more, students must report to the APO to
discuss their situation and will be required to provide appropriate supporting
documentation.
b) For absences from classes lasting more than five (5) working days
A student cannot use the MSAF. They MUST report to the Academic Programs Office
(APO) to discuss their situation and will be required to provide appropriate supporting
documentation.
2. A student who wishes to submit more than one request for relief of missed academic work per
term cannot use the MSAF. They MUST report to the APO to discuss their situation with an
academic advisor. They will be required to provide supporting documentation and meet with
the Director.
3. A student who requires accommodations to meet a religious obligation or to celebrate an
important religious holiday must make their requests within three weeks of the start of term to
the APO. If you need scheduled health care (e.g., rehabilitation after an accident or wisdom
teeth removed), do not schedule it opposite a class and then seek accommodation. Students
should not design their class schedule to create a conflict between two courses. If they do,
an instructor is not obligated to provide any accommodation.
4. A student seeking relief due to work-related commitments (for part-time students only) or
representing the University at an academic or varsity athletic event have the option of
applying for special arrangements. Such requests must be made to the APO at least ten (10)
working days before the scheduled class along with acceptable documentation. Adjudication
of the request must be handled by the APO.
POTENTIAL MODIFICATIONS TO THE COURSE
The instructor and university reserve the right to modify elements of the course during the term.
The university may change the dates and deadlines for any or all courses in extreme
circumstances. If either type of modification becomes necessary, reasonable notice and
communication with the students will be given with explanation and the opportunity to comment
on changes. It is the responsibility of the student to check their McMaster e-mail and course
websites weekly during the term and to note any changes.
RESEARCH USING HUMAN SUBJECTS
Research involving human participants is premised on a fundamental moral commitment to
advancing human welfare, knowledge and understanding. As a research intensive institution,
McMaster University shares this commitment in its promotion of responsible research. The
fundamental imperative of research involving human participation is respect for human dignity
4SE3 - Fall 2012 - 6 of 18
and well-being. To this end, the University endorses the ethical principles cited in the Tri-
Council Policy Statement: Ethical Conduct for Research Involving Humans:http://www.pre.ethics.gc.ca
McMaster University has mandated its Research Ethics Boards to ensure that all research
investigations involving human participants are in compliance with the Tri-Council Policy
Statement. The University is committed, through its Research Ethics Boards, to assisting the
research community in identifying and addressing ethical issues inherent in research, recognizing
that all members of the University share a commitment to maintaining the highest possible
standards in research involving humans.
If you are conducting original research, it is vital that you behave in an ethical manner. For
example, everyone you speak to must be made aware of your reasons for eliciting their responses
and consent to providing information. Furthermore, you must ensure everyone understands that
participation is entirely voluntary. Please refer to the following website for more information
about McMaster University’s research ethics guidelines:http://reo.mcmaster.ca
Organizations with which you are working are likely to prefer that some information be treated
as confidential. Ensure that you clarify the status of all information that you receive from your
client. You MUST respect this request and cannot present this information in class or
communicate it in any form, nor can you discuss it outside your group. Furthermore, you must
continue to respect this confidentiality even after the course is over.
GROUP WORK
You will form groups of three or four people. Each group has three assignments to complete -
due approximately every three weeks. The group is also responsible for completing both an
interim and a final Business Plan for a client and for making an in-class presentation of the plan.
For the in-class presentation, all group members should take a turn at speaking to the class. Use
of PowerPoint is recommended. Photocopies of results or tables too small to read when
projected should be distributed to the class.
Throughout the course, cases will be assigned and it will be assumed that all students are familiar
with each case and are prepared to discuss relevant issues. Choose your fellow group members
wisely. All group members will be assigned identical grades for group work.
COURSE EVALUATIONS
About the tenth week of the course, a formal evaluation of the instructor and the course will be
conducted by the Michael G. DeGroote School of Business. All students are expected to
participate in this evaluation as your answers will be used to help change the course structure and
your evaluation of the instructor will be used in tenure, promotion and merit pay decisions.
4SE3 - Fall 2012 - 7 of 18
STUDENT ACCESSIBILITY SERVICES
Student Accessibility Services (SAS) offers various support services for students with
disabilities. Students are required to inform the SAS of accommodation needs for course work at
the outset of the term. Students must forward a copy of such SAS accommodation to the
instructor normally within the first three (3) weeks of classes by arranging an appointment with
the instructor. If a student with a disability chooses NOT to take advantage of an SAS
accommodation, a petition for relief may not be filed after the fact. The SAS website is:http://sas.mcmaster.ca
COURSE SCHEDULE
WEEK DATE MATERIAL COVERED
1 Fri. Sept. 7 Introduction
2
Wed. Sept. 12
Fri. Sept. 14
Defining Entrepreneurship
Case: Song Maestro
3
Wed. Sept. 19
Fri. Sept. 21
Entrepreneurial Traits
Case: Jane Smith (A)
Case: Kolapore Inc.
4
Wed. Sept. 26
Fri. Sept. 28
The Business Plan DUE: Project Description Sheet
Case: Dorothy’s Little Women
Case: Wing and a Prayer - Hand-in Case – DUE: In-class
5
Wed. Oct. 3
Fri. Oct. 5
Developing the Nuts and Bolts
Case: Strategic Adventure Park
Case: The Fit Stop
6
Wed. Oct. 10
Fri. Oct. 12
Marketing for Small Business
Case: Black Water Rafting
Case: Restored Vision Inc.
7
Wed. Oct. 17
Fri. Oct. 19
Support for Small Business Forum DUE: Interim Business Plan
Guest Lecture: Government, Lawyer, Banker
Case: Baker Hardware Ltd. - Hand-in Case – DUE: In-class
4SE3 - Fall 2012 - 8 of 18
8
Wed. Oct. 24
Fri. Oct. 26
Franchising or Growing the Small Business
Case: Beano’s Ice Cream Shoppe
Case: Diego’s/Marketec Business Consultants Ltd.
9
Wed. Oct. 31
Fri. Nov. 2
Entrepreneur’s Forum
Guest Lecture: Three Entrepreneurs from the Community
Case: The Crowne Inn
10
Wed. Nov. 7
Fri. Nov. 9
Entrepreneurial Ethics
Case: Johannson and Associates
Case: Industrial Equipment Inc. – Hand-in Case – DUE: In-class
11
Wed. Nov. 14
Fri. Nov. 16
Final Thoughts on Business Success
Case: MacDonald Flooring Company
Class Consultation – Questions & Answers
12
Wed. Nov. 21
Fri. Nov. 23
Group Presentations - Business Plans
Group Presentations - Business Plans
13
Wed. Nov. 28
Fri. Nov. 30
Group Presentations - Business Plans
Group Presentations - Business Plans
Completed Business Plans DUE: Friday, December 7, 2012 by 4:30 p.m. in
DSB/203
SUGGESTED DISCUSSION QUESTIONS FOR CASES
Song Maestro
1. Pretend you are a “Shark” or “Dragon”. What aspects of the business do you like/dislike?
2. Which of the four target markets have the best potential? Why?
3. Is 25% of the proposed company worth $100,000?
Jane Smith (A)
1. Is J ane Smith an entrepreneur? Can she become an entrepreneur?
2. What more should J ane do to determine her entrepreneurial potential?
3. Try to use the same evaluation process on yourself? Are you an entrepreneur?
4SE3 - Fall 2012 - 9 of 18
Kolapore Inc.
1. What are the problems facing Kolapore?
2. Does the company have any value?
3. What strategy has been followed and are there viable alternatives to this strategy?
4. Could you make a profit with this business on a part-time or a full-time basis?
5. As Adrian Demmers, what is your decision regarding Kolapore?
Dorothy’s Little Women
1. Make an annual sales estimate of the women’s petite clothing market for Hamilton.
What might Dorothy’s market share be?
2. What non-quantitative considerations should enter this analysis?
3. Prepare a quick income statement and calculate R.O.I. for the first year of operation.
4. What would you recommend to Dorothy?
Wing and a Prayer
1. Do you think this business should be pursued?
2. Why did the business idea develop in the minds of the entrepreneurs?
3. Are the “heroes” of the case entrepreneurs?
Strategic Adventure Park
1. What went wrong? What was unrealistic about the original plan?
2. What are the chances of a second season being sufficiently profitable to justify
continuing to operate the company?
3. Outline a plan for the upcoming season should the owners decide to continue in business.
The Fit Stop
1. Assess Karim’s success as an entrepreneur.
2. What are the most pressing issues faced by the health club?
3. Should the club grow and, if so, how? Assess the options facing Karim and make a
recommendation.
Black Water Rafting
1. Why has Black Water Rafting been successful?
2. What issues could impact on future operations of the business?
3. What should Ash and Chandler do?
Restored Vision Inc.
1. Evaluate the first year of this business. What went right or wrong?
2. Is the key to profitability simply more customers? If so, how does this company build
profitable volume?
3. What would you do to improve profitability if you were running this company?
Baker Hardware Ltd.
1. What other information should Mr. Baker obtain before he makes this decision?
2. Using the information provided, evaluate the alternatives Mr. Baker has identified. Be
sure to evaluate the attractiveness of the proposed merchandise lines.
3. What other alternatives has Mr. Baker not explored?
4SE3 - Fall 2012 - 10 of 18
Beano’s Ice Cream Shoppe
1. What are the operating characteristics of this business? Why is a franchise attractive?
2. Should Smith and Harris become partners in this venture?
3. Should Smith give up his secure job paying $60,000 per year for a Beano’s franchise?
Are there other opportunities available to him?
Diego’s/Marketec Business Consultants Ltd.
1. Is Dr. Albert Collins an entrepreneur?
2. Is there an unfilled market for Mexican food in Montreal?
3. Should Dr. Collins invest in Diego’s?
4. What next steps should he follow?
The Crowne Inn
1. What mistakes did Harvey make during the succession process?
2. Did Bruce produce a fair contract for his mother to sign? What changes would you
suggest?
3. Using whatever technique(s) you choose, place a value on this business.
4. What would you recommend to the J ohnston family? Why?
Johannson and Associates
1. Imagine one could “pause” the interview half way through. Any problems with what you
have heard? Would you walk out?
2. Imagine the interview is complete. Any problems with the marketing research being
proposed to you? Would you do the work?
3. If you chose to not take the project, would you alert any colleagues about the project?
Industrial Equipment Inc.
1. Should J im Costello again attempt to purchase Hines Equipment from his father-in-law?
2. What should he offer for the business? Specifically, what is the maximum price he
should be willing to pay?
3. What changes to the business would you make following acquisition?
MacDonald Flooring Company – Assume you are acting from George London’s position
1. Use ratio analysis to identify problems. What is your assessment of the company’s risks?
2. Assess the quality of the company’s inventory and receivables as security for the bank.
3. Assess the alternatives set out in the case.
GUIDE TO WRITTEN CASE REPORTS
Title Page: Identify the case, the course and the team members.
Table of Contents: Provide a detailed listing of section titles, tables, exhibits and appendices.
Problem: State the main issues of the case, omitting descriptive details. Distinguish between the
issues as seen by the actors in the case and additional theoretical or practical issues
perceived by you.
4SE3 - Fall 2012 - 11 of 18
Context: Subdivide into sections and subsections as appropriate.
Internal Analysis: This is a listing of the company’s (or potential company’s) key
strengths and weaknesses. They are internal to the company and directly controllable
by the entrepreneur. Each strength or weakness should consist of a statement and then
the implication. This answers the question – “So what?” – and gives the characteristic
meaning in terms of the company or the problem.
Use one sub-heading for “Strengths” and one for “Weaknesses.” You may also find
that several characteristics can be grouped. For instance you might want to suggest that
a firm is innovative because: 1) it launches one new product per year; 2) it invests in
new technology to streamline operations; and 3) invests heavily in research and
development. These are not three separate strengths but three aspects of one strength.
Be sure to conclude this section with a summary statement telling the reader if you see
the company as stronger or weaker.
External Analysis: This is a listing of the key opportunities and threats in the
environment. They are external to the company or potential company and are not
completely controllable. They may be trends to be embraced or exploited but they may
also be trends which could hurt the company or its products/services. Use the same
format here as you used for the Internal Analysis. Remember to both identify the
opportunity or threat and then the implication of this fact for the firm or problem.
Be sure to conclude this section with a summary statement telling the reader if you see
the environment as more threatening or filled with opportunity. NOTE: If you find
yourself writing, “The company has the opportunity to ….”, you have identified an
alternative not an opportunity. If the company can control the characteristic, it is not
part of the external environment.
Alternatives: Use one subsection for each alternative presented. The correct number of
alternatives might be suggested by the case. Other cases are more open-ended and
the group could generate a near infinite list of alternatives. As a rule of thumb
consider no less than three alternative courses of action for the company or
potential company and certainly no more than five.
Analysis should consist of stating a prospective strategy and an analysis of its pros
and cons. The analysis should focus on the strategy’s ability to repair weaknesses,
mitigate threats, build on strengths, or exploit opportunities facing the company.
Be clear and concise. You are writing a business report – not an essay.
Recommendation and Implementation: Always conclude a case report with specific
recommendations for the future. Conceivably, you might recommend a
combination of alternatives to cover shorter and longer planning horizons. J ustify
your choice by saying why you rejected the other alternatives. Do not name a
strategy here that was not described and evaluated in the previous section.
4SE3 - Fall 2012 - 12 of 18
Implementation is the action plan (when and what) that puts the recommended
strategy into effect. It flows directly from the chosen strategy but should overlap
it very little. This is not a restatement of your recommended strategy. It probably
will help to create a timeline with defined steps/stages.
Bibliography: Necessary only if sources other than the case text or your own analysis are used.
Appendices: Place for long tables, complicated calculations, less important graphs, etc.
Length : Maximum length of ten double-spaced word-processed pages (not including the Title
Page, Table of Contents, Bibliography and Appendices).
Timing: Case assignments will be accepted for grading only on or before the assigned due date.
TEMPLATE FOR COURSE PROJECT: THE BUSINESS PLAN
Each group of students should work with a “client” who needs a business plan completed. This
should give plans a sense of reality. Using local media for publicity, I already have some
entrepreneurs who would like to work with your group to complete a plan. Some groups will
develop an internally generated idea into a business plan. Pure service-based businesses (such as
a consulting firm) should not be the subject of a business plan. One other constraint is that the
business must not be a “non-profit organization.” I know that these groups need plans completed
but their unique character makes evaluating and developing a plan for a non-profit organization
much more difficult. If you need further clarification, please see me.
By no later than Wednesday, September 26, you should have a contact and a tentative
business description. By completing the last page of this outline and submitting it to me, I will
approve the project and client. By no later than Wednesday, October 17, I want an Interim
Business Plan. The completed business plan is due on Friday, December 7, 2012 by the close
of business (4:30 p.m.).
Writing a Business Plan
The Business Plan is a written summary of the overall activities of the business enterprise. Its
creation forces management to separate achievable objectives from “pie-in-the-sky” conjecture.
Detail is important here. Typically, entrepreneurs create business plans in which some sections
are very detailed (i.e., the entrepreneur had given the material a lot of thought) while other,
equally important, sections have little detail. You must not fall into this trap. The audience for a
business plan is either a banker or a venture capitalist. These people thrive on details - who
specifically is the competition? where specifically will the business operate? specifically how
many staff will be employed? what specifically are the products? how specifically will the cash
required be used?
A well prepared business plan:
* Induces realism in the founders. When they are forced to sit down and really study and
quantify the cost-volume-profit relationship, they frequently discover their own
optimism;
4SE3 - Fall 2012 - 13 of 18
* Exposes management to the whole planning, budgeting, forecasting and reporting
process, its method and its merits;
* Identifies customers, competitors, marketing strategy, and conditions needed for success;
* Provides the budget and break-even point which will be a useful barometer for an
assessment of project feasibility and attainment;
* Allows investigations of deviations from plan before conditions become irreparable;
* Provides a measure of anticipated return on investment; and
* Discloses timing and the amount of sources and uses of funds (especially the timing of
capital expenditures and the need for working capital) and the need for short-term bank
borrowing.
General Structure - While your actual structure will depend on type of business to be started,
use this as the required outline for your business plan.
Executive Summary - one to two pages
Table of Contents - with page numbers and contents of appendices identified
Service/Market Description (Product/Market Description) – one and half pages
For Product or Service Description make sure it is thorough and complete. It sometimes
helps to define the offering by talking about products or services not being offered. For
the market, describe customers both in demographic and psychographic terms - Why do
people want these products or services? For an e-business one might add why customers
want to acquire these products or services in this manner rather than from another
traditional delivery medium.
Entrepreneur Profile - one page
Begin by describing the form of ownership (sole proprietorship, partnership, or
corporation), percentage ownerships, and the initial cash investment planned. The key
here is to explain how the entrepreneur brings value to the venture. Build both their
general business credibility and credibility specific to this venture. For example, the
entrepreneur might imagine a web site selling cheese to the world but if s/he doesn’t
make cheese, what value is s/he bringing to the venture?
Basis of Competitive Advantage - half page
Answer the question - why are people buying from this business rather than a competitor?
Most likely an organization only has one or two true competitive advantages which it can
use to defeat the competition. A person reading the plan will try to determine whether
these advantages truly are significant and sustainable.
Business and Personal Objectives - Quantitative
- Qualitative
- half page (in total) for both
Probably no more than five major objectives. All objectives should be connected to a
time frame and most should be measurable. While some can be qualitative, specific and
measurable sales and profit objectives for the first three years allow the entrepreneur
to determine if the business truly is successful. The personal objectives may tell a funder
4SE3 - Fall 2012 - 14 of 18
something about the commitment of the owner (for instance, a goal might be to do an
IPO in five years – that is different than starting the company and keeping it small).
Market Analysis
Customers - J ustify potential demand using secondary (historical) data and primary data
(gathered locally from potential customers)
This is a major section of the plan and allows the writers to present their major evidence.
This could include results of marketing research, general trends identified through
secondary data, reports from industry insiders, etc. Usually one tries to estimate demand
in two manners. Top-down suggests one starts with a target population and then reduces
that number based on market statistics to show that there are X number of consumers who
want this product or service (with X normally being a very large number). An implication
is that there are so many consumers this business cannot fail. For instance, start with the
population of Canada and then reduce that number for adults between 21 and 65, and then
reduce it for the number with access to computers, and then reduce it for people with the
target income, and then reduce it for the percentage engaged in a specific activity, etc.
One might also present environmental trends in the top-down analysis. Is anything going
on in the environment (technology, political/legal, social/cultural, and economic) which
affects customers or, more importantly, is affecting their buying habits? If so, what
impact will this have on the business?
Bottom-up analysis suggests that one starts with the individual consumer and a measure-
ment of their needs/wants through a very specific market survey. In this course, students
typically design a two-page questionnaire containing roughly ten questions. The typical
sample size is 30 to 50 people. Remember that I need to review and approve
questionnaires before you execute a survey. To help you design your survey, there is
a template document on the course website. The best way to get my approval is to
send me the questionnaire as a Word document via e-mail and give me a couple of days
to complete a review.
Remember to always begin discussing results from a survey by giving the reader some
context: how many people were surveyed, when the survey was completed, where the
survey was completed, how you chose the participants. It also helps to summarize any
demographic variables at the start so people can picture the people you surveyed.
The power of bottom-up analysis is talking to potential customers in the geographic
target market. You could learn that out of 50 consumers surveyed, 31 said they would
definitely buy the products/service of this business. Scaling that number up would lead
to some more conclusions about demand. It also allows you to confirm the data gathered
from secondary sources.
At the end of this section, a reader should be convinced that a big market exists for the
product or service and that this venture is the logical victor in any battle for customers.
4SE3 - Fall 2012 - 15 of 18
Competition - Primary Competitors (no more than six with a half page summary of each)
and Secondary Competitors
- In addition provide a summary table/chart
- Identify location, number of employees, age of business, volume of
business, its customers, how aggressive each is, any sense of sales/profits,
types of products/services offered
Who specifically are the most likely competitors? What is happening in these
companies? Are they growing or shrinking? Getting more aggressive or less? What is
each primary competitor’s competitive advantage? Is anything going on which affects
customers or, more importantly, is affecting their buying habits? If so, what impact will
this have on the business?
This is another major section. The reader will evaluate whether any key competitors
were overlooked. The detail presented is also critical. One cannot simply acknowledge a
competitor but one must demonstrate strategic knowledge of its action. At the end of
reading this section, the reader should be convinced that the new company has a
sustainable competitive advantage that will lead to success.
Marketing Strategy
Distribution - hours of service, physical location, layout of space, etc.
Promotion, Advertising and Selling Tactics - specific details with costs
Pricing and Profit Margins
This starts to address some specific tactics to meet objectives. How will consumers
become aware of the new business? How will they be convinced to try the services or
products offered? What pricing strategies will be followed? How will products or
services be distributed?
Manufacturing Analysis or Supplier Analysis (if applicable) - one to two pages
This is an optional section if the company is selling physical goods. How will inventory
be generated? If production is being sub-contracted, explain the deals in place and
back-up plans in case of failure. If one is retailing goods, talk about major suppliers,
their quality assurances, billing practices, the order cycle, etc. Why has a certain supplier
been chosen? What is the history of the supplier? Should some of this involve
international trade, here is a good place to talk about currency challenges as well as
customs barriers.
Information Technology Analysis (if applicable) - one to two pages
This is an optional section most applicable for an e-business. There should be a
description of the technology being installed. This shouldn’t be too detailed but it should
assure the reader about processes for hot back-ups in case of failure, handling of peak
demand (say at Christmas time), what a web site will or won’t do, key technology
partners, etc.
4SE3 - Fall 2012 - 16 of 18
Organization Structure and Personnel Requirements - include a chart and brief job descriptions
- one page
What staff are needed? Who has committed to the project and what openings remain to
be filled? In the entrepreneur’s mind, what positions are critical for success? For each
box in the organizational chart, define the responsibilities, qualifications, and pay rate for
that person. If a position is to be added after start-up but within a three year time horizon,
use a dotted or dashed outline for the box. The reader will look to see that appropriate
skill sets are present and levels of compensation appear appropriate. The reader will also
look for a match with the entrepreneur’s skills/talents.
Present Situation and Start-Up Requirements - half page
Right now, where is the business - glint in the eye or a month from launch? Clearly the
closer to reality, the greater the likelihood of funding. To write this section, start by
defining a target opening date. Work backward to define three to five steps to get from
now to then. If a step has costs, list them and how they will be financed. Start-up
requirements address the question of what is needed to get the business from where it is
now to being open in the manner envisioned by the entrepreneur.
Financial Projections
• Assumptions
• Three Year Income Statements (Most Likely Scenario) Showing Return on Investment
• Quarterly Cash Flow Projections for Year 1
• Proforma Balance Sheet at end of Year 1
• Break-even Analysis
• Sensitivity Analysis on Three Year Income Statements - Pessimistic and Optimistic
Scenarios - state any new/altered assumptions
Placing this last does not mean this is unimportant. Many readers won’t even bother
looking at financial projections if they aren’t convinced that the business is likely
offering quality products to a group of consumers who can’t wait to buy. The reason for
this is simple - projections can be made to show anything. A look at the business plan of
an unsuccessful business does not show financial projections awash in red ink!
Normally this section begins with a list of key assumptions affecting the projections.
This is followed by a three year income statement reflecting what the entrepreneur thinks
is the most likely operating scenario for the business. This is followed by quarterly cash
flow projections. A common mistake of many entrepreneurs is not being able to
distinguish between cash flows and profits. Many profitable businesses are strangled by
poor cash flows (especially if they are growing quickly).
Typically, this is followed by a pro forma balance sheet (usually created for the year end
of the first operating year projected in the income statements). This is then followed by a
break-even analysis for the first year. Finally, there is some sensitivity analysis on the
income statements usually demonstrating a pessimistic and optimistic scenario. Not only
do these serve to paint the best and worst case that the entrepreneur can foresee but they
also show the reader the effect of key variables on the business.
4SE3 - Fall 2012 - 17 of 18
Interim Business Plan
By Wednesday, October 17, 2012, I want to receive a five-page summary of your business
plan. There is no need for a Table of Contents or an Executive Summary. The first four sections
(i.e., Product (Service)/Market Description, Entrepreneur Profile, Basis of Competitive
Advantage, and Business/Personal Objectives) should be complete. You should list the headings
for the remaining sections and highlight the types of information you have gathered and have yet
to gather. You should list the titles of the two optional sections and tell me whether you think
they apply to your plan. I will add input about missing information and additional sources to be
contacted. If you are uncertain how to complete a section, explain what you have and I will add
details. Once graded, this plan will trigger a one-hour meeting between me and your group. I
will review your interim business plan and set a roadmap for project completion.
Please note that the Interim Business Plan will be graded. Zero will be assigned for this course
component to any group who fails to complete an interim business plan in a timely manner.
Thoughts for the Final Business Plan Submission
A major problem of business plans has been a lack of “specifics.” For instance, in analyzing
competition, some people merely mention a company name and store location. A full discussion
of the competition includes their strategies, product lines, whether they are growing or declining,
and how they will have an impact upon the entrepreneur’s business. To give a second example,
one entrepreneur intended to develop a new product. While she had a name for it, she did not list
its features. She mentioned that its construction would be sub-contracted but never indicated
what company would do the manufacturing for her and why this company was chosen.
The best business plans are not a simple academic exercise but read as if a real business would
be started from this blueprint. I will be keeping the copy of your submitted business plan for my
records. You may wish to print extra copies for each group member but you should keep in mind
that these copies must be kept confidential so that no harm can come to the entrepreneur.
4SE3 - Fall 2012 - 18 of 18
COMMERCE 4SE3 – ENTREPRENEURSHIP – PROJECT DESCRIPTION SHEET
GROUP #: (To be assigned by Instructor)
(Please Complete by No Later Than Wednesday, September 26, 2012)
GROUP LEADER:______________________________________________________________
---------------------------------------------------------------------------------------------------------------------
GROUP MEMBERS
1._________________________________________________________________________
2._________________________________________________________________________
3._________________________________________________________________________
---------------------------------------------------------------------------------------------------------------------
4._________________________________________________________________________
A) Briefly describe the product or service at the heart of the proposed business. Please note
that your business cannot operate in either the “not-for-profit” sector or “pure service”
sector.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
B) Briefly describe the market for the product or service (size, types of competition, etc.).
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
C) Please list the name, phone number, and e-mail address of your project client.
________________________________________________________________________
doc_574554600.pdf