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Kristen Farberman Michelle Hoffmann Jeff Laughlin Xin Liu April 29, 2004

Starting Your Own IT Company. Kristen Farberman Michelle Hoffmann Jeff Laughlin Xin Liu April 29, 2004. Presentation Outline. Traits of a typical entrepreneur How to start a business The business plan Case studies Grant Willer, Note Knowledge, LLC

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Kristen Farberman Michelle Hoffmann Jeff Laughlin Xin Liu April 29, 2004

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  1. Starting Your Own IT Company Kristen Farberman Michelle Hoffmann Jeff Laughlin Xin Liu April 29, 2004

  2. Presentation Outline • Traits of a typical entrepreneur • How to start a business • The business plan • Case studies • Grant Willer, Note Knowledge, LLC • Richard Laughlin, Midwest Testing, Inc. • Charles Wang, Computer Associates, Inc. • Reasons for failure • Conclusion

  3. Definition • An entrepreneur is described as one who organizes, manages, and assumes the risks of a business or enterprise Miriam Webster Online, www.m-w.com, March 17, 2004

  4. Characteristics of Successful Business Owners • Vision • Need for achievement • Desire to work for self • Willingness to listen • Opportunistic • Creativity and innovativeness • Awareness of risk Johnson, David & Ma, Rosa Suet Fan, “A Method for Selecting and Training Entrants on New Business Start-up Programmers”, International Small Business Journal; Apr-Jun 1995; 13, 3; pg. 80~84

  5. Benefits to Owning a Business • Self-management • Financial independence • Creative freedom • Full use of personal skills and knowledge • Greater opportunities “Start up Basics.” www.sbaonline.sba.gov, March 17, 2004 <http://www.sbaonline.sba.gov/starting_business/startup/basics.html>

  6. Determine an Entrepreneurial Passion • What do I like to do with my time? • What technical skills do I possess? • What do others say are my strengths? • Could this endeavor become a profitable business? "Are You Ready?." www.sbaonline.sba.gov, March 17, 2004 http://www.sbaonline.sba.gov/starting_business/startup/areyouready.html

  7. Identify a Business Niche • What services or products will be sold? • Is the idea practical? • Who are the competitors? • What are the competitive advantages? • Can better quality service be provided? • Can a demand be created? “Start up Basics.” www.sbaonline.sba.gov, March 17, 2004 <http://www.sbaonline.sba.gov/starting_business/startup/basics.html>

  8. The Business Plan • Defines the business • Identifies goals • Includes a current and projected balance sheet, income statement, and cash flow analysis • Allows all stakeholders to better understand the company • Identifies the potential customers for the product of service "Busines Plan Basics.” www.sbaonline.sba.gov, March 17, 2004 http://www.sbaonline.sba.gov/starting_business/planning/basic.html

  9. The Business Plan • Establishes marketing strategies to reach customers • Projects all necessary financial needs • Displays technical competency and business efficiency "Busines Plan Basics.” www.sbaonline.sba.gov, March17, 2004 http://www.sbaonline.sba.gov/starting_business/planning/basic.html

  10. Next Steps • Hire a management team • Follow a budget to control costs • Determine accounting procedures • Build key relationships Pentilla, Chris. “Souped Up.” www.entrepreneur.com, October 2002. March 16, 2004 <http://www.entrpreneur.com/article/0,4621,303085-1,00.html>

  11. The Ultimate Goal • Locate customers • Satisfy customers • Retain customers

  12. Grant Willer President of Note Knowledge, LLC Personal Interview with Grant Willer, President of Note Knowledge, LLC, Feb. 28, 2004

  13. Background • Born in 1980 in Saint Louis • Oldest of four boys • Graduated from UMSL in 2003 with degrees in marketing and management • Family history of entrepreneurship

  14. Creative Inventive Constructive Rational Outgoing Friendly Down-to-earth Assertive Personality Traits

  15. Motivations for Starting a Company • Escape • Freedom • The challenge • Success • Desire to lead

  16. Note Knowledge Objectives • Website will initially target beginners • The business purpose is to teach guitar playing at a lower cost by means of the internet • The short term goal is to have the website active within two months

  17. Current Development of Note Knowledge • Wrote a business plan • Used strategic management principles • Surveyed potential customers • Spoke with an accountant • Met with a lawyer • Talked with a web designer • Create lessons • Begin advertising

  18. Major Challenges • Designing the service to create maximum value for customers • Encouraging efficient learning through an entertaining website • Developing the step-by-step detailed lessons

  19. Words of Wisdom • “Don’t be discouraged. Write a solid business plan and seek advice from those who have been through the process.” • “We planned for over a month before we even incorporated.” • “Planning is key.” - Grant Willer

  20. Comparison to Successful Entrepreneurs

  21. Midwest Testing, Inc. Personal Interview with Richard Laughlin, President of MTI, Feb. 25, 2004

  22. Company History • Founded in 1985 by Richard Laughlin • Financed with $30k loan from a friend • Started with 3 employees, currently 40 total personnel • A highly mobile construction firm based in the St. Louis metro area

  23. Richard Laughlin’s Bio • Born March 27, 1953 • Older of two boys • Graduated UMR Civil Engineering in 1975 with Masters in Geotechnical • Brief experiences as an employee

  24. Childhood Experiences • Always took charge and thrived as a leader • Learned business principles for independence (Ex. pulling weeds) • Constantly brainstorming different ways to earn money

  25. Entrepreneurial History • Mowing lawns • House painting • Laughlin Brothers • Broetke-Laughlin partnership • Midwest Testing, Inc

  26. Major Challenges • Learning to be a businessman • Finding work during difficult times such as a recession • Making the tough decisions, especially in regards to costs

  27. His Vision “ Our clients talk. We listen. We deliver creative solutions. Let Midwest Testing apply innovation and technology to make a positive impression on the construction industry.” - Richard Laughlin "Midwest Testing." www.mwtesting.com 23 Mar. 2004

  28. Closing Thoughts • Customers, customers, customers • Simplify how to run a business • Honesty, hard work, persistence, and the desire to listen • Find and maintain long term relationships • Hire great people and make them part of the team

  29. Comparison to Successful Entrepreneurs

  30. Charles B. Wang • Chairman of the Board at Computer Associates International, Inc. (CA) from April 1980 to November 2002 • CEO of the company from 1976 to July 2000. • Co-founded the company with three associates in 1976 Inglesby, Tom. “An Interview with Charles Wang”, MSI; Jul 1991; 9, 7; pg. 28~34

  31. Player Behind the Scene “In 1999, CA sold $5.6 billion worth of software, trailing only Microsoft Corp. and IBM, but did not take in a dollar from the consumer market. CA makes a vast array of programs for managing large, diverse computer systems. ‘We are all the plumbing behind the scenes, as opposed to all the pretty faucets,’ says Wang” Anthony Bianco, Steve Hamm, Manjeet Kripalani, Software's Tough Guy:Charles Wang muscled his way to the top. Now he wants respect, Business Week, New York: March, 6, 2000, Iss. 3671;  pg. 132

  32. Company Profile CA delivers software and services that enable organizations to manage their IT environments. “About CA”, Computer Associates. 15 Apr. 2004. <http://www.ca.com/about/timeline.htm>

  33. Investor Relations • Revenue: Over 3 billion in fiscal year 2003 • Number of employees: ~ 16000 • Stock symbol and price: NYSE: CA “MSN Money”, MSN, 20 Apr. 2004, <http://moneycentral.msn.com/scripts/webquote.dll?ipage=qd&Symbol=CA>

  34. Merger Mania Five Largest Deals in the History of Software Industry by 2000 Anthony Bianco, Steve Hamm, Manjeet Kripalani, Software's Tough Guy:Charles Wang muscled his way to the top. Now he wants respect, Business Week, New York: March, 6, 2000, Iss. 3671;  pg. 132

  35. Charles B. Wang • “We may be reluctant to commit to something, but when we commit to it, its our word on the line” • “So I told my mother, I thought that I was going to be a programmer. She said, ‘What’s that?’ I said, ‘I don’t know, Mom, but boy, they need them” Nahm, H.Y., GoldSea Asian American, 1991. 12 Mar. 2004, <http://goldsea.com/Money/Wangcharles/wangcharles.html>

  36. Biography • Born in Shanghai, China in August 1944 • The second of three sons • Grandfather was a landowner involved in business and politics • Father studied law at Harvard. He served for a time as a justice of the Shanghai Supreme Court • Moved to the United States with his family in 1952 • Raised in Queens Village, New York • Attended Brooklyn Technical High School Nahm, H.Y., GoldSea Asian American, 1991. 12 Mar. 2004, <http://goldsea.com/Money/Wangcharles/wangcharles.html>

  37. Biography • Earned B.S. in Mathematics from Queens College • Became a programmer trainee at the Electronics Research Laboratory of Columbia University in 1967 • Joined the software division of Standard Data Corporation in 1971 • Spun off SDC in 1976, founded CA, CEO • Became the Chairman of the Board in 1980 • Retired in 2002 Nahm, H.Y., GoldSea Asian American, 1991. 12 Mar. 2004, <http://goldsea.com/Money/Wangcharles/wangcharles.html>

  38. Personality • Sense of adventure • Integrity of man’s word • Independent • Practical approach to life • Fearless • Confident • Hard-working • Make work fun

  39. Starting CA • Conceived the idea for the business • Spun off SDC • Sold the first product CA-SORT • Utilized product-for-equity swap strategy • Initial public offering on December 10, 1981 • First acquisition: Capex Corp. Anthony Bianco, Steve Hamm, Manjeet Kripalani, Software's Tough Guy:Charles Wang muscled his way to the top. Now he wants respect, Business Week, New York: March, 6, 2000, Iss. 3671;  pg. 132

  40. Major Challenges • Giving up a quality job to start a company • Preparing the payroll initially • Establishing market driven ideas • Surviving a fast-changing technological industry • Maintaining cultural stability during acquisitions • Understanding the market • Obtaining sufficient resources

  41. Comparison to Successful Entrepreneurs

  42. 10 Common Mistakes • Miscalculating potential market share, market size, timing, and ease of entry • Underestimating financial requirements and timing • Hiring too many people and spending too much money on offices and other facilities • Lacking a contingency plan for unexpected shortfalls in the expectations Henricks, Mark. “What not to do.” Entrepreneur Magazine, February 2004

  43. 10 Common Mistakes • Making cost projections that are too low • Lacking simplicity in your vision • Lacking a long-term plan and business purpose • Hiring for convenience rather than skill • Neglecting to manage the entire company as a whole • Lacking an exit strategy Henricks, Mark. “What not to do.” Entrepreneur Magazine, February 2004

  44. Comparison of Three Entrepreneurs

  45. Questions?

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