Entrepreneurship

Michael Goldman taught a graduate level course for fifteen years that examined the personal and resource related issues involved with change in existing companies or the creation of a new venture.  The course taught both the analytical framework and skills for evaluating and implementing entrepreneurial opportunities.  Students in the course learned to understand the personal issues facing an entrepreneur, identify the driving forces of new venture success, evaluate ideas and ventures as viable opportunities, understand key elements of a business plan, understand the essentials of entrepreneurial finance, and discuss how to deal with distressed situations.

 Michael Goldman has also given a published interview discussing what it is like to be a sole practitioner.

The Entrepreneurial Decision

It is important to understand what entrepreneurship is, the creative process, the risks and rewards, the importance of self-knowledge, the managerial competencies that entrepreneurs must have, the demands of entrepreneurship, and the thought process involved in becoming an entrepreneur.  Entrepreneurship can be incredibly rewarding, but it is not for everyone.

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Opportunity

Opportunities are often spawned from marketplace conditions: structural rigidity (usually government created), lags or leads in technology, changing circumstances, demographics, changing tastes, economic factors, inventiveness, or simply seeing something obvious.  Focus on what customers want and are willing to profitably pay you for.

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Management

The importance of putting together the right team is critical.  The team should be built on the requirements of the opportunity and should mesh well together.  There are significant differences between managing in a new venture and managing a mature, established venture.

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Entrepreneurial Finance

Students and entrepreneurs both tend to shy away from the financial aspects of entrepreneurship because they don't like numbers.  This is normal - entrepreneurs tend to have personalities and expertise in areas different from number-crunching.  It is important to keep in mind that numbers are not menacing or intimidating - they are merely another way of symbolizing your thought process.  When your thought process is well developed, the numbers should come easily.  Wherever you get stuck quantifying something, that is a good indication of where you need to think it through more.

One of the most illuminating exercises we do in this course is to develop a financial plan in class from scratch.  The group agrees on what type of business (such as a coffee shop or book store) to plan for and then almost immediately starts throwing numbers out in an attempt to get the plan done.  It is easy to project a Profit and Loss statement, but the group quickly finds that the more they just plucked numbers out of the air, the less confidence they have in them.  After we step back and start discussing the driving forces of the business, more sharply defining exactly what we want to do, how we want to do it, how to project the costs and benefits of each proposed activity, and what driving forces underlie each action or result, it becomes much easier to quantify the plan with a much higher degree of confidence.

Lecture Notes for the Finance Section

The in-class exercise of putting together a financial plan is what students seem to get the most benefit from in this section.  The lecture discussions that surround this exercise include Entrepreneurial Finance,  Sources of Money, Valuation, and How to Structure and Close a Deal.

Business Plans

The discipline of writing a business plan is a fantastic learning experience.  Preparing a comprehensive and thoroughly substantiated plan helps evaluate your idea as a commercially viable opportunity and of understanding the driving forces determining the success of your venture.  The process of thinking through a dynamic plan and explicitly enumerating your assumptions is an invaluable exercise.  A good Executive Summary demonstrates clear thinking.

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Staying or Getting out of Trouble

Every business is unique, but business problems tend to follow the same predictable patterns.  It is important to know the principle causes and danger signals of a business in trouble, the successive stages of a down-ward spiral, and possible turnaround strategies and action plans to fix it.  Understanding that most business problems are self-inflicted wounds makes them easier to heal.  Know that running out of cash is a symptom, not the root problem.  Most importantly, don't panic. 

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