Entrepreneurship: A Contemporary                                              MW 9:00-11:00

Approach, 5^th Edition                                         Office: BAK 307

Phone: 677-2310

E-mail: ffry@bradley.edu

Home Page: www.hilltop.bradley.edu/~ffry

The American dream for many individuals is to own their own business. For many, investing one's own capital, taking the necessary risks, forming and molding an idea into reality, watching the firm grow, and building a team of employees is the epitome of personal challenge and reward.

Some entrepreneurs want to start a business that will provide a steady income for their family. To them, a successful business is one that allows them to live comfortably while providing products or services to their customers and jobs for their employees. Others want a business that they can grow and harvest successfully. For them, success is couched in monetary terms in addition to the challenge of starting and growing a business. Yet, in some cases, the potential entrepreneur does not have the necessary management skills to operate the business. In many cases, the necessary financing is not available. In some cases, the market has not been thoroughly researched. Or perhaps, the business is launched and then does not meet up with the entrepreneur's expectations. For whatever reasons, the American dream sometimes becomes a nightmare with significant negative impacts on the entrepreneur’s personal capital and ego.

This course is designed to give some of the tools necessary for the launch and operation of a venture. Regardless of whether the business becomes a high-growth venture or remains a small business primarily designed for the support of the immediate family, there are several common actions that must be taken to insure that the firm will endure.

The major objective of this course is to increase the knowledge of entrepreneurship and the tasks required to start, finance, and grow a venture. We will look at how to analyze new venture opportunities and determine their feasibility, how to launch a venture, how to organize it, how to finance it, how to grow it, how to harvest it when appropriate, and -- perhaps most important -- how to plan for it all. We will discuss the development of business plans for the venture and the work that goes into developing the plans. You will have the opportunity to develop a forecast for a new venture and then create an actual business plan for it.

We will use a combination of textbook readings, class discussions and a business plan to maximize the learning of the theory and its applications. Throughout it all, we recognize that entrepreneurship is a learning-by-doing concept. Thus, even though you will leave this course with a better understanding of venture creation and management, the acid test can come only when you, yourself, actually launch and operate one for a period of time. Entrepreneurship is a great deal like swimming. You can know all the theory and mechanics of swimming, but until you jump into the pool you can not test that theory.

Jan 25 Introduction None

30 The World of Entrepreneurship Ch. 1 & 2

(Select teams)

Feb 1 Guest Speaker -- Diana Hall, Bard Optical

(EE teams meet in Jobst 200 at 4:00)

(ME team meet in Jobst ME department on Friday at 4:00)

6 Feasibility Studies Ch. 11 + attachment to syllabus

8 No formal class (work with teams to begin planning feasibility study).

13 The Entrepreneur Ch. 4

(Business Plan project to be approved no later than today)

15 Macro-information Ch. 7 + My Ch. 4 on web

20 Analyzing High-tech Opportunities My Ch. 6 on web

22 Determining Financial Needs Ch. 9

27 Business Plans Ch. 10

Mar 1 Case: Roaring 20s Museum

6 Creativity & Innovation Ch. 5

8 Legal Issues in Entrepreneurship Ch. 13

(Feasibility Studies due)

13 Review for Mid-Term Exam

15 Mid-Term Exam

27 Entrepreneurial Ethics Ch. 6

29 Financing the Venture I Ch. 14

Apr 3 Financing the Venture II

(Venture Capital & IPOs) Same

5 Strategic Planning Ch. 15

10 Entrepreneurial Strategies Handout

12 Franchising Handout

17 Global Entrepreneurship Ch. 17

19 Structuring the Venture Ch. 12

24 Managing Growth Ch. 16

26 Valuation Ch. 18

May 1 Harvesting the Venture Ch. 19

3 Final Exam

May 8 Business Plan Presentations (attendance required)

(Written business plans due)

12 Business Plan Presentations (attendance required)

(Saturday, 9:00 - 11:00 a.m.)

Two Exams @ 100 each 200

Feasibility Study 100

Business Plan (team) 200

Written Plan = 150

Presentation = 50

Total 500

There will be two examinations, worth 100 points each. The exams will be a combination of multiple-choice (60%) and essay (40%). The essay questions will be situational in nature. The multiple-choice questions will cover both the book and the lectures, including any guest speakers. Exams test your knowledge of factual material and your ability to apply it. The exams are not cumulative.

Teams of three or four members will create a business plan for a new venture. The business plan will be a full-scale business plan, suitable for presentation to investors or lenders. It must include pro forma balance sheets, income statements, and cash flow statements. (Opening Day Balance Sheet plus year-end balance sheets for five years. Income statements and Cash Flow statements are two years by month and three years by quarter.)

Based on the success of a pilot offering last year, six or seven teams will be working with teams in ME or EE to develop business plans for products being developed in engineering classes. The remaining teams will develop plans for a business that you may want to start.

The business plans will be prepared and suitably bound such that investors would be impressed. The business plan will be graded based on the thoroughness of the plan, the quality of the document, and the appropriateness of the plan, including the pro formas. (We will talk about pro formas briefly in class. I expect you to recall or re-learn the accounting/finance topics such that you can do the pro formas. Typically, more points are lost on this aspect of the business plan than any other.)

Each team will make a presentation of their business plan during the last two class periods. All team members must be involved in the presentations. Professional dress is required. Computer aided presentations or other audiovisual aids are not absolutely required, but they do help the grade. Preparation of slides is totally your responsibility. (I will provide the computer projection equipment that includes Power Point.) I may invite a banker or other business person to class to observe your presentations.

The entire team gets the same grade on the business plan with one exception. We will do a peer evaluation on the day the business plan is due. That peer evaluation (plus my own evaluation) of each individual’s contribution can affect a person’s final grade up to a complete letter-grade. Therefore, choose your team members carefully, and make sure that you do your part at all times. I have found that team members support each other well up to a point but can be very cruel to non-performers.

The feasibility study is a necessary prelude to an excellent business plan. Each team will conduct a feasibility study for its planned business based roughly on the format attached. You should also consult Chapter 11 of your text, especially Tables 11.1 and 11.5. The feasibility study will count 100 points toward your final grade. More importantly, information from the feasibility study will become an integral part of your final business plan.

1. Size of the total market? How many customers? Is the market growing significantly or slowly?

2. Are customers identifiable or known in general terms?

3. How many competitors are there? What are their strengths and weaknesses? Are the competitors all small and about the same size, or are there some dominant firms?

4. Are there similar products or services on the market that could do the same as yours?

5. What demographic or social trends are relevant that could affect future sales?

6. Are there any legal ramifications -- Patents? Hazardous wastes? Regulations?

7. Is the product or service a fad or enduring?

8. How long will it take for new competitors to mimic what you are doing?

9. Can the product or service be priced competitively and still produce a profit?

1. What fixed costs must be incurred both before the business starts and during the first three years of the venture's existence? Can any of these fixed costs be shifted through leasing or subcontracting?

2. How long will it be before profit will be achieved? What is the break-even point in terms of number of sales, and when will that occur?

3. How long before a positive cash flow occurs?

4. What gross margins can be expected?

5. How much total financing will be required? What percent will be debt? How much ownership will have to be given up?

6. What is the estimated price elasticity of the product or service? Can prices be raised without losing sales?

7. What overall return on investment can be expected?

1. Will a prototype of the product be necessary?

2. Are locations readily available?

3. How much lead time will be necessary to install equipment, train employees, or locate suppliers?

4. Can any of the production processes be subcontracted?

5. What equipment will be needed to produce the product or service? Does it have to be specially designed? Will the equipment be salable in the event of failure of the venture? Is used equipment available?

After all your analysis, are there any fatal flaws -- items that may kill the venture regardless of other strengths? Examples might be a very small market, overwhelming financial requirements, or inability to produce the product at a competitive price.