6.5 Staffing Headcount, Cost and Hiring Plans

6.6 Operating Expenses and Working Capital Needs

FYI:

Chapter Notes

Introduction

• Many investors and others look first at the executive summary, and then go directly to the management team section to assess the strength of the people starting the firm

• There is a prevalent belief that unless a proposed new venture has a strong management team, little else matters

• It’s often not the idea or market that wins funding among competing plans, but the perception that one management team is better prepared to execute their idea than the others

• Investors tend to evaluate management teams in the context of the type of business they’re proposing and the type of funding or financing they’re seeking

• The best candidate for investment resides in Box 2 of the 2 x 2 matrix—an untested idea and a tested management team

• The management team section should be crisp and to the point, with material such as resumes of key employees placed in an appendix

• The way your management team is assembled provides an indication of the extent to which you’re open to advice and you’re able to generate enthusiasm for your firm

• Clearly describe how your team will evolve; most new ventures will have gaps in their management teams at the business plan stage

• Describe where the gaps are and how they’ll be filled; for example, if the start-up can’t afford to hire a marketing person during its product development state, that’s understandable, but evidence should be provided showing where the firm is getting access to marketing expertise

• Leaving issues like these unaddressed or unresolved gives the impression that the founders don’t really know what they’re doing and erodes credibility

Management Team

• The management team of a new firm typically consists of the founder and a handful of key management personnel

• The description should be largely factual but should be presented in a way that makes it easy to visualize where the firm is today and where it plans to be in the foreseeable future in regard to key management team personnel

• Indicate the name or names of the founders, how many employees the company has, where the major gaps are, and how quickly the company will be adding personnel

• The three major parts to this section are management team personnel, management team ownership and compensation, and common mistakes to avoid

Management Team Personnel

• A brief profile of each member of the management team should be provided starting with the founder or founders

• Title of the position

• Duties and responsibilities of the position

• Previous industry and related experience

• Previous successes

• Education background

• Certain attributes of a management team should also be highlighted if they apply in your case

• Team members who’ve worked together before are preferred because it usually means that they get along personally and trust one another

• The skills and ability of the members of the team should complement one another rather than reinforce a single skill or competency

• The next step in describing the management team is to identify gaps that exist

• Complete a management team skill profile grid, indicating which skills are satisfied by each management team member

• The grid illustrates the skills or competencies that currently have no coverage and roughly the number of people who need to be hired

Management Team Ownership and Compensation

• You must also fully disclose the ownership structure of the new venture and the compensation of the members of the management team

• List each owner, his percent ownership in the company, and his base compensation

• An options pool is an inventory of company stock that is set aside for future employees

• Attracting high-quality people to a start-up often necessitates the granting of stock options as an incentive form of compensation

• Finally, it should be clear how the money for the firm has been raised so far

Common Mistakes to Avoid

• Do not place unqualified friends or family members in key management positions

• Don’t assume that previous success in other industries automatically translates to your industry

• Don’t adopt a “one-man team” philosophy

• Don’t hire top managers who share no ownership in the firm

• Be sure to disclose management team skill or competency gaps

• Don’t use vague or unclear language to discuss plans for filling the skill or competency gaps that are disclosed

Board of Directors

• If a new venture organizes as a corporation, it is legally required to have a board of directors, which is a panel of individuals elected by the corporation’s shareholders to oversee the management of the firm

• Technically a board of directors has three responsibilities: (1) appoint the firm’s officers, (2) declare dividends, and (3) oversee the affairs of the corporation

• An inside director is a person who is also an officer of the firm

• An outside director is someone who is not employed by the firm

• If you include this section in your plan, you should list your board members and provide a brief bio for each member

Provide Guidance

• Providing guidance and support to the managers of the firm is the most useful role of the board of directors

• Boards can also help fill competency gaps within the company

• If a firm gets investment capital, the investor will normally occupy a seat on its board of directors

Lend Legitimacy

• Providing legitimacy for a firm is another important function of a board of directors

• It is assumed that a high-quality individual would be reluctant to serve on a board of a low-quality firm; this individual’s presence on the board is known as “signaling” that the company has the potential to be successful

• Investors like to see management teams, including the board of directors, that have people with enough clout to get their foot in the door with potential suppliers and customers

• If a company doesn’t currently have a board of directors, it may be prudent to indicate that the firm anticipates having a board of directors at some point in the future

Board of Advisors

• A board of advisors is a panel of experts asked by a firm’s managers to provide counsel and advice on an ongoing basis

• Many people are more willing to serve on a board of advisors than on a board of directors because it requires less time and no legal liability is involved

• Most boards of advisors have between 5 and 15 members

• Having a board of advisors can make your start-up stand out because, although having a board of advisors is widely recommended, most start-ups do not have one

Retained Professionals and Other Professionals

• Retained professionals are those who work on a “retainer” basis. Generally these are Lawyers and Chartered Accountants. New businesses often can’t justify insourcing these management functions and rely on Retained Professionals for these services.

• You may also occasionally work with other professionals such as bankers and investors.

• The objective is not only to disclose who you’re working with but also to assure the readers of your plan that you’re getting good-quality advice

• Paid Consultants – individuals who are hired to give professional or expert advice, make up an important source of advice for many start-up firms

• Some start-ups use the services of consulting companies such as Bain & Company and Accenture, but usually on a limited basis

• Unpaid Consultants include organizations such as the Small Business Development Center and SCORE

Company Structure

• Even if you are a small firm, you should outline how the company is currently structured and how it will be structured as it grows

• Company structure is a “nuts-and-bolts” type of issue that deals with the inner workings of a firm

• The most effective way to illustrate a company’s structure and lines of authority and accountability is to include an organizational chart in the plan

• An organizational chart is a graphic representation of how authority and responsibility are distributed within the company

• Companies are generally organized along functional, product, or geographical lines

• There may be some unfilled boxes on the organizational chart, consistent with the “gaps” in management personnel shown in the skill profile

• If your firm has more than one founder, you should comment on the specific role that each founder will take on as the firm moves forward

• Some business plans complement their discussion of company structure with a brief analysis of how the firm will be managed from a leadership, motivation, and corporate culture point of view

Discussion: Examining Nursing Specialties

You have probably seen one or more of the many inspirational posters about decisions. A visual such as a forked road or a street sign is typically pictured, along with a quote designed to inspire.

Often decisions are not so easily inspired. Perhaps you discovered this when choosing a specialty within the MSN program. This decision is a critical part of your plan for success, and you no doubt want to get it right. This is yet another area where your network can help, as well as other sources of information that can help you make an informed choice.

To Prepare:

• Reflect on your decision to pursue a specialty within the MSN program, including your professional and academic goals as they relate to your program/specialization.

Post an explanation of your choice of a nursing specialty within the program. Describe any difficulties you had (or are having) in making your choice, and the factors that drove/are driving your decision. Identify at least one professional organization affiliated with your chosen specialty and provide details on becoming a member.

Part 1

Write a paragraph to justify selecting this organization. Include the following:

· The organization’s name: Integrated Project Management Inc. https://www.ipmcinc.com/

· The purpose for this organization’s existence

· The mission, vision and/or value statements

· Why this organization is of interest to you

· Availability of organizational data: Avoid selecting an existing organization for which there is no publicly available historical data.

Part 2

Answer each question with a minimum 85 words each.

What are the major components of a strategic management process?

Which of these components is the most difficult for managers to perform? Explain your answer.

How would you describe the work of strategic leaders?

What does the resource-based model suggest a firm should do to earn above-average returns?

What is the effect of strategic leadership on determining the firm’s strategic direction?

Why are strategic controls and financial controls important aspects of strategic leadership and the firm’s strategic management process?

Introduction:

G.W.F. Hegel, the famous 19th Century philosophy, proclaimed that Antigone was the greatest masterpiece of all time. For Hegel, tragedy does not depict a war of good vs. evil. Rather, at its best, tragedy portrays a war of good vs. good. In a true tragedy, the audience is presented with two equally desirable, but incompatible courses of action, purposes or ideals. In this segment of the course, we will be examining this concept of tragedy in relation to Sophocles’ Antigone.

• Sophocles, Antigone
• Hegel on Tragedy
• Film – Antigone 1 and Antigone 2 (BBC, 2 hours)
• Film – Antigone (Genevieve Bujold)

Objectives

By the end of this session, students should be able to:

• Understand Hegel’s theory of tragedy
• Evaluate the relationship between the city and the family in Antigone

Assignment:

• Oral Presentation: Does the film version of Antigone you watched substantiates Hegel’s view that Antigone and Creon created a war of “good versus good.”