Thursdays 7:00 pm 9:30 pm Wheatley, 1 st floor, Room 12

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1 COLLEGE OF MANAGEMENT University of Massachusetts, Boston Spring Semester, 2015 MBA-MGT 667 Entrepreneurship and New Venture Creation Dr. Benyamin B. Lichtenstein Thursdays 7:00 pm 9:30 pm Wheatley, 1 st floor, Room 12 Office: McCormick Hall, 5/214 Office Phone: 617/ Benyamin.bml@gmail.com Home Office: 617/ Office Hours: Wednesdays 1:30 pm 4:45 pm; Thursdays 2:30 pm 6:30 pm Always via or by phone. Course Description: Entrepreneurship is about creating value; identifying an opportunity and organizing a venture that can capitalize on it. In this class we will learn and enact the entrepreneurial process, especially through the identification and feasibility of an opportunity, and the construction of a business model that can leverage that potential market into a sustainable business. Students will learn how to analyze the feasibility of a venture idea, how to mobilize resources, create different forms of new ventures, and build a top management team for the growth of the venture. The course centers around the writing of a professional business plan for a business you are or could create. Required Text: Bill Aulet, Disciplined Entrepreneurship: 24 Steps to a Successful Start-Up. Wiley Press. [Available at the bookstore or online, e.g. Amazon] Additional Texts: George Kawasaki, The Art of the Start. Portfolio Penguin Books William Bygrave & Zach Zacharachas (Eds), 2001 Portable MBA in Entrepreneurship (4 th edition). John Wiley & Sons. [Available In Library Reserves] 1

2 Learning Objectives & Skill Development: This course will draw on and extend everything you have learned in marketing, management, operations, MSIS, finance, and accounting, and equally, on your professional experiences and knowledge. The course will develop your skills in creative problem solving, business research, market analysis, financial projection (creating a full, three-year proforma income statement). The primary goal is an experiential understanding of how business models are created and how they operate, and how to develop and pursue a new endeavor with a compelling business case. In addition, you will work on your own or in a team, pursuing a venture idea through an experiential and technical analysis of its feasibility. Through taking the course, students will: Understand what it takes (in action and in skills) to get a new initiative off the ground Gain insight into the seven core process of new venture creation: Opportunity Tension, Customer Profiles, Value Proposition, Distribution and Exchange, Business Model, Minimum Viable Product, and Scaling. Use these to analyze the feasibility of proposed Business Model. Produce a complete Business Plan for one venture, including full pro-forma Income Statement. The venture can be a potential company, a new initiative, a new product line, or a social innovation. Deliverables for the Course: Assignments Week Due Deliverable % of Grade: Individual Team Innovation: A Solution/Idea Week 3 10% Feasibility (Re)Analysis Week 5 20% Class Contributions; Professionalism Throughout 20% Full Business Plan & Presentation Week 13 40% 10% TOTAL: 50% 50% 2

3 Course Rules and Expectations: Please BE ON TIME to class OR alert me by 5:00 pm that you ll be late. For me this is (a) an issue of respect of your classmates who DID plan ahead enough to get here on time, and (b) really helps me with the flow and momentum of the lecture and discussion. You may alert via , or telephone. Cell phones: NO RINGS in class. You may check phones during the break. Your writing should be clear, concise, and business appropriate. It s really unacceptable as MBAs to have any spelling or grammatical errors. All assignments are in syllabus, attached. Clarifications and Improvements to each one are forthcoming, within 2 weeks before their due dates. I m positive you re all here to learn, so consider this a great opportunity. My aim is to create and launch as many businesses as possible out of this class, with support from the new Entrepreneurship Center so let s aim for professional, high-end business proposals. Group Work: You are expected to contribute fully as a team member. At the end of the semester we will each evaluate our own degree of participation in our teams, and each others participation in teams; these evaluations form part of your overall individual participation grade. Remember your work in MGT 650: If there are any issues with the group s dynamics, PLEASE work them out, and contact me if you want some consulting support. Assignments are DUE in class (at the start of class) on the dates listed in the syllabus. If you are traveling or face a printer error, Please attach the file to an , as long as the message is received before class time. Emergencies must be communicated to me BEFORE class begins see staying in integrity above. Professor Benyamin reserves the right to modify syllabus in consultation with the class. Grading and Evaluation As a graduate student, you ve come to expect nothing less than a B+ for your management courses, and that is appropriate. However, my grading is a bit more stringent. In my mind, virtually all students should be able to earn a B+, which means Nice Job, you understand the material. In order to get an A in any given assignment in the class, you have to teach me something: show me something I ve not heard before; surprise me in some way. I am teachable, but you have to really apply yourself to get to that level in this course. In the same regard, you will learn exactly as much as you re willing to put into the course. Grade Equivalents: A = 92% or above A- = 90% - 91% B+ = 88% - 89% B = 83% - 87% B- = 80% - 82% 3

4 Internet Resources Blackboard course for MBA MGT 667: Library Research website for MBA 667: Academic Honesty: Academic honest involves (a) citing any and all resources you use in your research and writing, and (b) having integrity in your work, which most obviously includes not cheating. Plagiarism includes copying someone else's words and claiming them as your own, paraphrasing someone else's words and/or ideas and claiming them as your own, or collaborating excessively with another person or persons and claiming the work as solely your own. If you are unclear about what constitutes plagiarism, please see me for an explanation. Plagiarism on any assignment will, at minimum, result in an "F" for the assignment. I reserve the right to pursue further disciplinary action if appropriate (e.g., any student caught cheating on an exam will receive an "F" for the course). I strongly recommend students maintain a record of the preparation of their assignments. For further information, refer to the Code of Student Conduct section listed in the University Catalog, the Student Handbook, or at -=-=-= Disabilities: If you have a disability and expect to need accommodation to complete the course requirements, please contact the Ross Center for Disability Services (M-1-401) at (617) For more information see: CM Writing Guide: For the CM writing guide and other useful information please see: Incompletes A final grade of Incomplete will be granted only rarely. To receive an Incomplete you must formally request this grade from me, providing substantial justification. I will then evaluate your request and make a decision. If the request is granted, guidelines for completing the work will be arranged in a mutually agreeable plan. Although completing a feasibility analysis may seem daunting, much much much more difficult is NOT completing it, and trying to get back to it. JUST FINISH IT UP!! 4

5 OUTLINE FOR COURSE Professor reserves the right to change this schedule, with at least 1 week notice to all students. TOPIC READING IN PREPARATION DELIVERABLES, PROJECTS Week 1 January 29 th Week 2 February 5 th Week 3 February 12 th Week 4 February 19 th Week 5 February 26 th Week 6 March 5 th Week 7 March 12 th Value Creation and the Dynamic States of Business Types of Entrepreneurship / Innovation Opportunities, Trends, and Opportunity Tension Disciplined E ship: Getting Started (through page 22). Art of the Start first 4 chapters Analyzing Feasibility Art of the Start all other chapters Guest Speaker: I. Who Gains Benefit: Customer Profile and TAM DisciplinedE ship: Steps 1, 2, 3, 4, 5 II. Value Proposition Disciplined E ship: Steps 6, 7, 8, 9, 10, 11 III. Customer Acquisition Disciplined E ship: Steps 12, 13, 18 Guest Speaker: IV. Business Model Disciplined E ship: Steps 15, 16, 17, 19 Opportunity Exercise Innovation Idea DUE Create Teams Teams report initial business idea Feasibility Re-Analysis DUE Venture Teams pitch ; get feedback March 19 th Spring Break Working on your venture Week 8 March 26 th Week 9 April 2 nd Week 10 April 9 th V. Minimum Viable Product. Disciplined E ship: Steps 20, 21, 22, 23 Guest Speaker: VI. Growth and Scaling. ProFormas Disciplined E ship: Step 24 Entrepreneurship as a Career Guest Speaker: Draft ProFormas (12 months) in Excel Week 11 Sustainability Entrepreneurship Draft of Entire Plan via to April 16 th Professor, by Monday 13 th April 23 rd Week 12 Guest Speaker: Week 13 Final Presentations I COMPLETE BUSINESS PLAN DUE April 30 th 5

6 May 7 th Week 14 Final Presentations II 6

7 INNOVATION: SOLUTION/IDEA Due: Week 3 January 27 th Worth: 10% of course grade Deliverable: Really cool venture idea, presented in class Many of you came into the class with a business idea you want to pursue. Some are thinking about it for the first time; others have been engaged for many months or longer. You may have an idea for a social innovation, i.e. a venture that generates enough revenue to support an initiative that makes a positive difference in society. As everyone knows, ideas are a dime a dozen anyone can have a good idea, but rarely do ideas in and of themselves create value, and certainly they won t start a business. In entrepreneurial terms, behind every good idea is a solution to a problem, a satisfaction of a need, a way to make something better-cheaper-faster. The core to an opportunity is this problem that (a lot of) people face, or a new technology/business model that makes life easier. Find that, and you have a good idea. In this exercise, you will develop and present an initial idea for a venture. The idea should capitalize on (or create) an entrepreneurial opportunity, and will likely be focused at a certain segment of society (a market). You will make a short pitch to the class, five minutes or less (preferably no power point). Just give us the essence of the idea, why it is a good idea, and why you care about it. We ll get to ask a question or two, and everyone will present. These innovation ideas will be the source of the teams for the class; teams will form around the most compelling of the ideas. If you want to pursue yours on your own, that is perfectly fine; groups of 2, 3 and 4 are welcome. 7

8 FEASIBILITY RE-ANALYSIS Due: Week 5 Wednesday February 26 th Worth: 20% of grade. Deliverable: A written paper. (8-12 pages double-spaced) The goal of this exercise is begin to learn how to evaluate business opportunities; specifically, to understand how to determine the feasibility of a venture. Feasibility includes: Opportunity Tension: A contribution or solution that capitalizes on a real business opportunity, and drives you with some passion A clear identification of the target market, and a compelling case that these people will actually buy the product, The likelihood of sustainable sales (based on the business plan), and the potential for high margins and relatively low costs, The expertise of the team to actually deliver on their value proposition, i.e. can they do the activities necessary to make customers happy, The resources that the team currently has including access to partnerships and social networks which would allow them to pursue the business, and The overall cost structure, including the investments needed to maintain positive cash flow during the start-up of the business. Each student will choose one of ten business plans to analyze these have been written by teams of U-Mass Boston students from one of my recent Entrepreneurship courses (MBA and undergrad). Each plan includes the text and an Excel file; all cases are loaded on Blackboard. The students themselves have already aimed to prove the feasibility of the opportunity and business idea; some were more successful than others. The first step in this assignment is doing a due diligence analysis of this business plan, to make YOUR assessment as to its feasibility. More importantly, you will then improve their business model, i.e. through increasing the value of the offering, expanding the market, developing new revenue streams, creating new partners and collaborations, etc. Conclude with the next steps you would take in organizing the venture. Start by reading the plan, carefully reviewing the spreadsheet numbers. Do some of your own research on the idea, the opportunity, the customer profile. In particular: 1) Examine the assumptions, including the number of potential customers, the rate of sales, and the projected earnings for each month. Do these assumptions make sense, given what you ve read and researched on your own? If not, experiment with making changes to their projections based on your own assumptions. 2) Take another look at their marketing plan. Will their approach be effective at reaching their target market, both now and into the future? Have they put together a smart combination of outreach, advertising and promotions in order to get the kinds of sales they re projecting? What other sales methods should they pursue? 3) Look at the cost of goods sold. Are those numbers realistic? How are they sourcing their materials? Do they already have networks in place, or are they hoping to figure it out as they go? How would you re-design or extend their value chain? 8

9 4) What about the rate of growth what are they projecting? Does this follow from their assumptions, and their analysis of the potential market? If they grow slower than they say, what happens to their cash flow and overall viability of the business? New Revenue models? 5) Consider the start-up costs, and the entire amount of capital they ll need. Most businesses need around $20,000 to $50,000 to get started. Some require more than $100,000. Whatever they need, ask how feasible this amount is? What is their plan to get the money? Do you believe they can do it? How might they restructure the plan so they they d need less money? 6) Take a step back and ask: Who are the founders? Look at their resumes or bios. Does one of them have expertise in the industry they re entering? Does anyone on the team have experience working in a small business or a start-up? Given their skills and experience, do you think they can pull this off? If not, how might you augment their expertise who would you bring on to help, or how would you alter the plan to take advantage of the experience they do have? 9

10 PROFESSIONALISM, AND CLASS CONTRIBUTIONS Due: Throughout Semester Worth: Professionalism 10% of course grade Class Contributions 10% of course grade Your participation grade will be based on the following elements: High Professionalism throughout the course a) Staying in integrity with me and your classmates, through good communication, and being on time to class. b) Being accountable and responsible in the class and with your deliverables and the business plan project. Engagement Contributions c) Class preparation, and contribution to discussions and overall d) Addition or tags or RSS feeds that reflect your entrepreneurial interests and the themes of the course e) Engagement and value brought to your business planning team. Personal effort and value to your team (business plan) f) Individually scored evaluation at conclusion of course g) Group scored evaluation at conclusion of course h) Quality of group dynamics, e.g. effectiveness; shared workloads, etc. (Prof. scored) 10

11 FULL BUSINESS PLAN & PRESENTATION Due: Week 13 April 30 th Worth: Written & Spreadsheet = 40% of grade. Presentation = 10% of grade Graded as a group, with exceptions Deliverable: Plan, tentative outline below. Excel spreadsheets, with 3 years of monthly income / costs Compelling Presentation to the class. This outline is drawn from numerous sources. It includes all the information that any investor or key stakeholder will want to know about your venture, and represents a degree of professionalism that is expected in world-class organizations. The text we re now using will likely lead to another outline. Be flexible on this, knowing that all these questions have to be answered, but the process of gaining the information is substantively different in the MIT model than the most accepted models from Babson or Univ. Colorado. 11

12 Business Plan Complete Framework: Table of Contents Please use this as a general structure for the contents of your plan. Executive Summary (write LAST) Opportunity Current Situation: Market Size; Growth; Trends Changes in Industry, Technology, Society Compelling Need Points of Pain Opportunity = demand, seeking a solution Company and Product Description Company mission, history, current status Product: Features, Benefits Proprietary Rights Stage of Development Competitive Advantage of Company Competitive Advantage of Product Business Model innovation, sustainability Risk factors and possible solutions (see pg of Portable DisciplinedE ship) Industry, Customer & Competitor Analysis Target Market Industry Structure\Competitive environment) Competition (competitor analyses) Marketing Plan Target Market Strategy Product/Service Strategy Pricing Strategy Distribution Strategy Advertising, Promotion Sales Strategy E-commerce Overall Revenue Model Operations Plan Operations scope and strategy Ongoing operations Development Plan Development Strategy and timeline Management Team Team Bios and Roles Advisors, Directors, Strategic partners Compensation, Equity Financial Plan Financial Projections Key assumptions Sources and uses of funds Funding requirements and strategies Offering Appendices: Resumes (2 pg. max) of founders, principles Any figures, tables, etc. that will help illuminate and sell your project Excel Workbook with: Key financial assumptions 3-year income statement 3-year cash flow 3-year balance sheet Key Success Metrics Additional analyses 12

13 MBA 667 ENTREPRENEURSHIP AND NEW VENTURE CREATION 2015 SPRING, 13