1. Ownership, The Management Team, Organization, & Staffing Plan Dr. Stan Abraham MHR 423 Spring 2010

2. Ownership Who owns the company? Who owns the company?  Typically, the founding entrepreneur, 100%  Or the founding team, in equal parts  Say, four people, 25% each  Or the founding team, unequally CEO—50%, VP R&D—30%, VP Mktg—20%CEO—50%, VP R&D—30%, VP Mktg—20% State the ownership at the time of writing the business plan State the ownership at the time of writing the business plan

3. Ownership (cont.) When some percentage of the company is given to an investor in exchange for the investment When some percentage of the company is given to an investor in exchange for the investment  The existing shares of the current owners are diluted  If owners do not “cash out” at an IPO but retain their shares, they are heavily diluted

4. Management Team Typically, the founding owners also manage the company Typically, the founding owners also manage the company Define the roles that each person will play Define the roles that each person will play  Basic roles are marketing, operations, and finance  If it’s a high-tech company, R&D becomes critical  Someone has to be CEO or president  One or more people may play multiple roles  For example, one or two principals have to do everything Give thumbnail sketches of each person, emphasizing relevant experience Give thumbnail sketches of each person, emphasizing relevant experience  Give full resumes in an appendix Comment on how long this team has worked together Comment on how long this team has worked together

5. Management Team (cont.) If some key positions are not filled yet If some key positions are not filled yet  At least identify the person who will fill it Say roughly when that person will join the firmSay roughly when that person will join the firm  Leaving it unfilled and unidentified is bad, though sometimes unavoidable Future management positions can be identified in the staffing plan (next) Future management positions can be identified in the staffing plan (next)

6. Organization Charts Except for very simple organization charts, provide one for the inception of the business Except for very simple organization charts, provide one for the inception of the business Also provide one you think will apply at the end of two years Also provide one you think will apply at the end of two years  It will show how you intend to grow the company  It will highlight changing management responsibilities For example, one owner could be acting CFO for the first year until a real CFO is hired in Year 2For example, one owner could be acting CFO for the first year until a real CFO is hired in Year 2 Discuss briefly the two charts and how the company will be run Discuss briefly the two charts and how the company will be run

7. Staffing Plan At various points in the early life of the new business, people (managers and employees) will be hired At various points in the early life of the new business, people (managers and employees) will be hired What types of people and when form the basis of the staffing plan What types of people and when form the basis of the staffing plan  Do a staffing plan only if number of hires are appreciable over the next two years  By combining it with salaries and/or wages, it forms the “salaries” line in the financial projections

8. Optional Additions Values Statement Values Statement Philosophy of doing business Philosophy of doing business Company culture Company culture  The key things you look for in new hires to know they will fit in with the culture

9. Any Questions?