ACCG 308 Macquarie University Accounting Business Plan Questions

Description

Why are advisors important to you new venture? For your business idea, list who three key advisers will (or might) be. At least one of these people should be someone that you already know.
Briefly describe the difference between organisational structures of product, functional, geographic, matrix and hybrid. 

Select one of these structures and create an organisational chart for your enterprise. Explain why you chose this structure and provide a brief role description for three key positions in this structure (regardless of whether you are initially filling one or more of these roles).

What are your supply requirements, in terms of nature (i.e. what supplies do you need), quality, timeliness and price. Identify a key supplier for your business idea. 

Taking a step back and looking at your business plan, what use could you make of on-line outsourcing for your operations? Select one important task and go to an outsourcing site (e.g. freelancer.com; upwark.com; fiverr.com; mturk.com). What skills can you purchase, and how much do they cost compared to a traditional approach?

Following the approach of Hirai (2010), for your business idea create a ‘risk matrix’ with ‘consequence’ on one axis and ‘likelihood’ on the other. Plot the five biggest risks to your organisation on the matrix. Briefly define each risk and explain how you would manage it.  

According to Rauch and Hatack (2016) what are the three types of HR-motivating practices positively correlated with success of SMEs? How can you use the insights of this research for your own venture?

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Operations
The Matt Barrie story
Born 1973
Education:
Sydney – BSc
Stanford – Masters Electrical Engineering
Macquarie – Masters of Applied Finance
Etc.
DEPARTMENT OF ACCOUNTING AND
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Startup 1: Sensory Networks
• ‘4 guys and a PowerPoint presentation’ raised $4 million
• Company that made a chip to scan network traffic at high
speeds.
• Ended up needing to build the technology and consulting to
implement it, requiring lots of capital
• One of the investors immediately wanted to remove him as CEO
• The “$30 million MBA” moment
• Left, burnt out, in 2006
Sources: 1/
DEPARTMENT OF ACCOUNTING AND
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http://www.smh.com.au/technology/technologynews/the-aussie-making-a-motza-from-offshoringwhitecollar-jobs-20120219-1thyc.html
2/ http://www.afr.com/technology/startup-war3
stories-matt-barrie-on-the-most-difficult-moment-
Startup 2: Freelancer.com
• Wanted a business with few employees and little investment
• Thought that digital outsourcing presented an opportunity
• Ran his business plan by an old friend, who provided seed
funding
• Bought GetAFreelancer.com and redesigned it
• Freelancer.com launched in 2009
• Reported 14m users and 7m projects by 2011
• Listed on ASX in 2013 with market cap of $1.1b
• March 2017 market cap $372m
Source:
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http://www.afr.com/technology/startu
p-war-stories-matt-barrie-on-themost-difficult-moment-of-sensory4
networks-20150713-giatll
How will you hire and organise
your workforce?
• What people do you need?
• Are you going to hire them as
employees or contractors?
• What organisational structure is
best?
• What administrative
requirements will you have?
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Human Resources
• Identify key employees
• Design a Board of Directors or
Advisers
• Establish employee
compensation and benefit
plans
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What can you outsource?
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Legal structures
Options
• Company
• Partnership
• Trust
Key considerations
• Tax
• Liability
• Investment opportunity
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Organisational structures – Product
Source: Rogoff (2007) Bankable Business Plans
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Organisational structures – Location
Source: Rogoff (2007)
Bankable Business Plans
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Organisational structures – Function
Source: Rogoff (2007) Bankable Business Plans
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Organisational structures – Matrix
Source: Rogoff (2007) Bankable Business Plans
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Organisational structures – Hybrid
Source: Rogoff (2007) Bankable Business Plans
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Suppliers
• Specify key criteria: materials;
timeliness; quality; price
• Select key suppliers and contractors
• Establish credentials and track records
• Establish agreement
• Create backup plan
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Franchises
✓ Established
business
model
✓ Training
✓ Marketing
X Upfront cost
X Ongoing fees
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Entrepreneurial Risk Management
Recap – What is entrepreneurship?
The activity of setting up a business or businesses,
taking on financial risks in the hope of profit.
Oxford Living Dictionary
Someone who organises a business enterprise,
especially a risky one.
Macquarie Dictionary
Entrepreneurship is a process by which individuals pursue
opportunities without regard to the resources they currently control
(Kodithuwakku and Rosa, 2002, citing Hart et al., 1995;
Stevenson, 1997)
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Risk Matrix
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Managing quadrant A
• Do nothing!
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Managing quadrant B:
Behaviour change
• The printer runs out of toner while
you’re preparing the proposal for
the customer meeting that starts in
30 minutes.
Solutions: don’t wait until the last
minute, and always keep extra toner on
hand.
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Managing quadrant B:
Behaviour change
• Your lead engineer gets the flu
three days before the scheduled
release date of your first customer
beta.
Solutions: create a development
process free of dependencies on any
one person, and build in contingencies
for the fact that almost everything
seems to take twice as long and cost
twice as much as you originally expect.
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Managing quadrant B:
Behaviour change
• You knock a mug of coffee into
your laptop keyboard and coat
your hard drive in cream and sugar,
making your marketing plan
inaccessible.
Solution: use software to perform
automated daily backups so that you’ll
lose, at most, a day of work if you
destroy your computer.
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Managing quadrant C:
Insurance
•
•
•
•
•
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Property & Casualty Insurance can
mitigate losses from fire and theft;
Key Executive Insurance can mitigate
losses from the death or incapacitation of a
management team member;
Liability Insurance can mitigate lawsuits
resulting from product defects or on-site
injuries to visitors;
Errors & Omissions Insurance can mitigate
lawsuits from disgruntled customers; and
Directors & Officers Insurance can mitigate
lawsuits in cases of negligence,
harassment, or discrimination.
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Managing quadrant D:
The Company Killers
The problem:
Compounding risk
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Managing quadrant D:
The Company Killers
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Managing quadrant D:
Risk identification
•
•
•
•
•
•
•
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Market Risks
Competitive Risks
Technology & Operational Risks
Financial Risks
People Risks
Legal & Regulatory Risks
Systemic Risks
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Managing quadrant D:
Risk Table
Risk Factor: List anything you can think of that could cause substantial
harm to your business.
Type: Risk category (and owner)
Likelihood: High, medium, low.
Consequences: What would happen if this risk factor manifests itself.
Mitigation Tactics: Possible strategies to either reduce the likelihood or
impact of the consequences if this risk factor manifests itself.
Mitigation Costs: Costs for each mitigation tactic.
Status: Decision as to which mitigating tactics, if any, you need to
implement. Your choices will depend on your personal risk tolerance there’s no right or wrong answer.
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Conclusion
Pragmatic risk management isn’t about trying to anticipate and
mitigate every possible source of risk.
It’s really about:
• Engaging common sense to recognize and mitigate the most
obvious risks in a cost effective manner, using some of the
techniques described in this article; and
• Developing a culture of responding to unanticipated developments
– that is, putting out fires – in a calm, rational way.
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Conclusion
Don’t let risk paralyze you entrepreneurs are, by definition, risk
takers.
Strong risk management is an
important source of competitive
advantage.
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HR focus for entrepreneurs
Is investing in HR worthwhile?
Entrepreneurs have lots of
demands on their time.
To what extent is a focus on
HR practices worthwhile?
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If so, what
should the
focus be?
• Empowerment;
• Motivation; and/or
• Skill- enhancing practices
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Study
Rauch, A. and Hatak, I. (2016), “A meta-analysis of
different HR-enhancing practices and performance of
small and medium sized firms”, Journal of Business
Venturing, Vol. 31 No. 5, pp. 485-504.
A meta-analysis of 56 HR studies.
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Key findings
“Results show that skills-, motivation-, and
empowerment-enhancing HR practices are
positively related to SME performance” (p. 499),
This effect was twice the size of studies of the
relationship between firm performance and the
characteristics of the founder.
However, not all practices are equally important:
Empowerment practices more important than
motivation or skill practices (e.g. job descriptions).
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Key findings
“[E]mpowerment/participation revealed highest
effect sizes in the meta-analysis. These practices
might positively affect self-efficacy of employees
and increase task meaningfulness and task
significance (Subramony, 2009).
Thus, HR practices that enhance employee
autonomy, decision-making involvement, and
responsibility levels are generally more important
in the SME context than directing employee
behavior through often times costly incentives
and rewards.” (p. 499, emphasis added)
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Implications
The HR practices you implement may be more
important than your skills to the ultimate success
of your business(!).
The optimum approach is to empower employees
through giving them areas of responsibility and
then granting them the decision-making authority
to achieve the desired outcomes.
Doing this will improve intrinsic job satisfaction to
the point it will reduce (or even eliminate) the need
for complex and expensive extrinsic incentivebased systems.
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