Lessons Learned in a First Business Plan Competition at San José State University In spring semester 2003, San José State University (SJSU) launched its first business plan competition. The Entrepreneurial Society a student-run organization and several faculty and community advisors organized the competition. To prepare for the competition, SJSU implemented E-Teams (E is for excellence and entrepreneurship), as promoted by the NCIIA. E-Teams are composed of students from various colleges within the university, engaged in developing new products and services leading to viable business plans. We initiated the process with three departments in the Colleges of Engineering, Science, and Humanities and Arts, each interfacing with three departments in the College of Business (i.e., management and organization, finance, and marketing). Our objective was to empower business, engineering, industrial design, and computer science students with the entrepreneurial skills to start businesses. We viewed the business plan competition as an outcome measure. The business plans were not simply an academic exercise but rather an effort to promote new ventures. Implementation of the business plan competition in a large state university We found the implementation of the business plan competition an extensive project to manage. There were numerous issues to address, including teamwork, coordination, mentors, complementary activities, assessment, and future research on teams. Burton Dean, Asbjorn Osland, and Michael Solt San José State University Teamwork We found that E-Teams should be supported by management faculty who can teach them teamwork and group problem-solving skills, so that they can complete the desired outcome a business plan leading to a new venture. Students from the various disciplines must be taught to recognize how their contributions are crucial to a successful business plan. One cannot assume that students will somehow participate actively in teams when they haven t had experience doing so. Faculty can ensure that various functional specialties (e.g., marketing, finance) are represented in the teams, as well as native speakers or others who have demonstrated effective communication abilities. Coordination Coordination in a large university with commuter students can be a challenge. Ideally, the university would have a new venture course where the different disciplines would participate in interdisciplinary E-Teams. However, at SJSU this is difficult because the two courses focused on business plans fill up quickly with business students, thereby precluding the registration of students from other disciplines. Another possibility we re contemplating for spring 2004 is to schedule participating classes from various disciplines at the same time and have periodic plenary meetings of all interdisciplinary classes to listen to lectures or presentations from the various professors. Having classes scheduled at the same time would facilitate interdisciplinary team meetings and E-Team projects. We ve found it works well to use Burton Dean s Project Management course as a structural coordinating mechanism. Dean teaches a method he calls project management of innovative start-up firms (PMIS). He demonstrates that there are eight basic tasks in every start-up, and that applying the Critical Path Method to the activities in these tasks, along with corresponding precedence relations and activity durations, yields status reports on the start-up firm, as well as information that is useful in the start-up s business plan. During spring 2003, Dean s students applied PMIS in thirteen E-Teams and in three start-up firms in Silicon Valley. The thirteen project management teams of two students each joined other technical and business student E-Teams. In each case, the joint E-Teams prepared business plans. In some E-Teams, the project management teams were also responsible for developing elements of the E-Team s business plan. This method worked well in that Dean was able to monitor the progress of the various teams across disciplines and arrange for mentoring or technical assistance where needed, as well as encourage both students and faculty where needed. Papers 291
Papers One structural mechanism for bridging the chasm that exists between colleges is our Silicon Valley Center for Entrepreneurship (http://www.cob.sjsu.edu/ent/ index.html ), led by Burton Dean. Dean is an experienced and senior organization and management professor who has developed a network of personal and professional relationships that allow him to collaborate with faculty and others outside the College of Business. Two of the business faculty on the steering committee, Professors Giglierano and Solt, are experienced scholars and teachers who also have a network of relationships within the campus and the entrepreneurship community in Silicon Valley. The membership of the steering committee also includes chairs from science and engineering, in addition to the previously mentioned business professors. Another coordination mechanism we found essential was the business plan and E-Team advisory committee, formed in February 2003. The committee consisted of the seven technical and business faculty supervisors of E-Teams, two successful entrepreneurs, and the president of the student entrepreneurial society. The objectives of the advisory committee were to administer, monitor, direct, and coordinate the activities of the E-Teams, leading to the business plan competition. The advisory committee, together with the student entrepreneurial society, arranged monthly talks by Silicon Valley entrepreneurs and venture capitalists. It also planned and scheduled three rounds of the first SJSU business plan competition in May-June 2003. After completion of the competition, the advisory committee planned the next round of E-Teams and the business plan competition for 2003-2004. One conclusion was that students needed a full year to prepare for the business plan competition. Hence, E-Teams developed the business concept and preliminary marketing analyses in fall 2003 and presented a new venture fair for the SJSU and Silicon Valley communities in December 2003. Viable concepts will be developed into business plans in spring 2004. Mentors E-Teams had faculty support and industry mentors to help the them develop and manage projects. The SVCE recruited mentors. Two entrepreneurs have remained especially committed to the process. Assessment The advisory committee had an independent investigator conduct two surveys in May-June 2003 to assess progress with the E-Teams and the business plan competition. E-Teams Fifty students responded to the survey. When asked, What has worked particularly well? students responded with the following: guidelines, details, and direction provided by the E-Team advisors, mentors, and faculty; use of e-mail and the Internet as a communication tool; weekly assignments given by the faculty provided a step by step approach; input from cross-functional team members during the product development stage helped in the product development process; collection of data and market research as a team; and group discussion and brainstorming sessions. When asked about challenges faced, students responded with the following problems: communication problems; not all required disciplines were represented on some teams; coordination with students from other departments was difficult; the division of work was unclear; time constraints (e.g., more time to perform market research); difficulty in estimating the size of the market and its future trends; and difficulty in finding the first customer for developed products. When asked, What support was particularly useful? students included the lectures, seminars, and training sessions provided by faculty in marketing, finance, and business planning; the presence of mentors (e.g., entrepreneurs from the business community); group support during the various stages of developing the business plan; and feedback from advisors. According to the students surveyed, additional support was required in the following areas: market research and identifying the test market; professional guidance from industry experts; and better coordination of seminars and guest lectures to accommodate work as well as class schedules (i.e., most students work and have related time constraints). When asked what they would do differently if they had it to do over again, students responded: begin working on the plan earlier; in some cases the plan should be spread over two semesters; establish regular deadlines and milestones to monitor progress; work on group process; make sure that all team members have the foundation skills required to develop a business plan. Challenges observed by one professor included the following: combining too many tasks, too many student activities, and a weak feedback loop. The E-Team con- 292
cept arose in fall 2002 and was easy to graft onto the spring semester New Venture Finance course, but no appropriate marketing course was scheduled. So, both the marketing and finance activities were carried out in the New Venture Finance course; requiring a complete business plan, concurrent with product/service development, was perhaps too much. The students were working full time, taking other courses, and covering finance content, and this squeezed the time available for the E-Team project. Although the milestones were useful, former entrepreneurs serving as advisors to specific teams noted shortcomings in both pace and achievement, compared to real life in Silicon Valley. All involved still believe the approach is beneficial. Improvements in future semesters will involve sequencing (innovative ideas precede business student involvement), scheduling (coordination of appropriate course offerings), work flow (covering important course topics while allowing for E-Team tasks; allocating portions of business plans to relevant business courses), and support services (faculty and advisors counseling of E-Teams, scheduling of workshops on specific topics outside of class, coordination between faculty and advisors, and developing a broader list of advisors). To address these issues, faculty have decided to do the following: ensure that students begin in a timely manner by asking for their business concepts early in the fall semester; establish regular deadlines and milestones to monitor progress; where possible, spread the plan over two semesters; work on group process through experiential exercises; make sure that all team members have the foundation skills required to develop a business plan through prerequisites or additional training; support existing strong collaboration between engineering and business as well as industrial design and business; have business and engineering graduate students enroll in the same entrepreneurship course, where the focus would be the development of a business plan; continue the internal business plan competition and send promising teams to regional and international competitions; reinforce mentorship relationships with industry experts and the incubators; continue with bi-weekly meetings of faculty and mentors where people are free to express their concerns and coordinate activities; continue providing complementary support to E-Teams; and encourage strong E-Teams to continue on from the business plan to incubation and eventual start-up. Business plan competition On May 13, 2003 the first round of the competition was held. Six plans were presented to a panel of eight judges six professors and two entrepreneurs. After the students presented they were asked to comment on their experiences. A summary of their comments follows. 1. Only two of the teams had patents on their products a lathe attachment, and a process to convert used automobile tires into activated carbon for use in water filters. 2. Four of the six teams believed that their strengths came from their unique product, whereas the other two believed it came from their marketing skills and industry and product knowledge. 3. The weaknesses included market uncertainty, poor financial analyses, strong competitors, and lack of industry experience. 4. Students that needed support found that the professors were knowledgeable and helpful during the entire process. Every group reported adequate supervision from their advisors, and seemed quite pleased. 5. Every start-up needed additional financial and human resources. 6. Group meetings took place both face-to-face and through e-mail. 7. School schedules were sometimes difficult to coordinate, but overall students were able to meet. 8. One team, E-Recruiting, had a number of meeting conflicts regarding project development, but the others reported clear agendas and did not report conflict. 9. Some groups reported language barriers. 10. All of the groups got some outside assistance, either through consultants or speaking to companies. 11. One group, Blind Control, thought the presentations should be half as long, start earlier in the semester and line up marketing and financial assistance early in the project s life. 12. Students viewed the experience as positive, in terms of developing the plans, working with others, and selling themselves to others in the competition process. 13. Four of the six groups felt that this experience had significantly increased their chances of becoming Papers 293
Papers entrepreneurs. 14. One group, Neptune, saw the experience as a technical rather than a business experience. The judges from the first round also commented: 1. They valued the ability of the presenters to field questions well. 2. They found an imbalance between business and technical aspects, with the presentations appearing too technical, with poorly developed marketing and financial plans. 3. The first panel of judges was fairly critical of the plans, and provided students with numerous suggestions for improvements to be made prior to the second round. The teams and judges of the third round on June 27th, 2003 were also asked for feedback. The E-Teams valued the feedback on financials, marketing, and presentation skills that they had received in the previous rounds. Further, the E-Teams felt they had benefited through the exposure to real investors in terms of feedback and networking (e.g., the two winners received incubator space and feelers from angel investors). When asked how the students felt the competition in 2003-2004 should be handled, they made a variety of comments: there should be no changes, professors should allocate specific times each week to assist, and there should be more time between rounds to improve plans. The judges on June 27th were Ziya Boyacigiller, Venture Capitalist (VC), Formative Ventures; Rick Ellinger, VC, Osprey Ventures; John Hall, VC, Horizon Ventures; Eric Hardgrave, VC, Acuity Ventures; Harold Nissley, Angel, International Angel Investors; Bill Paseman, Angel, CEO of Calico; and Jim Robbins, Executive Director, Environmental Business Cluster. When asked what were the three most important parts of the plan? each judge responded somewhat differently. However, all emphasized the importance of the market. Four of them mentioned the critical importance of the management team. When the judges were asked what were the most important aspects of a presentation? again there were a variety of responses, including teamwork, ability to field questions, logical process and clarity of presentation, market knowledge, passion, and knowledge of markets. The judges perceived the strengths of the plans as market research, presenters hard work, financials, enthusiasm and commitment, and the overall quality of the plans. When asked about the weaknesses, the judges said lack of customer contact, unclear executive summaries, lack of relevant background of some presenters, variable quality in the presentations, underestimation of start-up problems, poor depth in financials, and lack of clarity regarding critical success factors. In their final comments to the participants, the judges were highly complimentary. Lessons learned There were many lessons learned from the first competition but the main points were as follows: 1. The preparation should be spread over an entire academic year. One semester was too rushed. 2. Since we could not always schedule all the classes we needed in a given semester, some workshops had to be provided outside of the classroom. 3. The objective of the competition should be new venture creation rather than learning the process of writing a business plan. This was a controversial point, but we found the students learned more when the perception was that they were engaged in a real world process. 4. The inclusion of external mentors was crucial. They filled gaps and provided a real world perspective. 5. Extensive coordination was necessary. Regular meetings of faculty and mentors were needed. The project management course was one coordination mechanism. 6. The overall process needs a champion. 7. Relatively modest resources were needed the first time. No one had release time. The mentors received no pay. Prize money was not offered, though incubator space was given to the top two winners. One can start on a shoestring. 8. More business plan classes should be opened to students from varied disciplines. Business classes fill quickly and the College of Business can t offer space to students from other disciplines readily. We have not solved this problem yet. 294
References Dean, B.V. 1986. The project management approach in the systematic management of innovative start-up firms. Journal of Business Venturing 1: 149-160. Endnotes 1 Please address correspondence to Asbjorn Osland, San José State University, San José, CA 95192-0070. osland_a@cob.sjsu.edu; Phone: 408-924-3574. Fax: 408-924-3555. Papers 295
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