NV 3: Operating Plan

Strategy 491


Instructors:

Jon Fjeld                        email: fjeld@duke.edu
Ashish Arora                  email: ashish.arora@duke.edu
Dan Ariely                      email: dandan@duke.edu
Rich Burton                    email: rmb2@duke.edu 
David Robinson              email: davidr@duke.edu
________________________________________________________________________

References

1.    “Fuqua Program for Entrepreneurs.”
2.    Guidelines for Creating and Growing Ventures: Center for Entrepreneurship and Innovation Wiki
3.    “Operating Plan Overview”: Word document implementation of the process steps of the operating plan stage of the Program for Entrepreneurs.
New Ventures Creation: Overview
New Ventures Creation: Operating Plan is the third of a sequence of four courses:
•    NV 1: Opportunity Evaluation
•    NV 2: Strategy Development
•    NV 3: Operating Plan

New Ventures: Operating Plan

The student team will develop a full operating plan for a new venture. This work assumes that the students have already developed a strategy in NV 2. The level of detail will be suitable for a business plan document for a company seeking initial investment. The business plan should be fundable at the completion of the project.
This course is a 2-term, 6-credit course.

Pre-assignment

The NV: Operating Plan course requires that the student team is working on a project that has successfully completed the Strategy Development step or has been granted an exception to this step by the Program for Entrepreneurs Advisory Committee. In addition, the instructor must have approved the project.

Course content

The course is organized to allow teams to follow a structured process in doing their analysis and developing an operating plan. Four major areas form the basis of the operating plan developed for the proposed venture.

Summary

The Operating Plan stage consists of four sections.
  1. Core competencies: Based on the proposed foundation for sustainable competitive advantage for the venture, this will be an analysis of the core competencies (functions and capabilities) that must be internal to the firm. This analysis will guide which functions can be outsourced or achieved through partnerships.
  2. Elements of the operating plan: This section is the heart of the analysis. It will be a plan of the activities and investments envisioned and what they will yield in terms of revenue and profit. The main elements of the plan will correspond to the main components of the income statement:
    • Sales forecast: including addressable market, customer segmentation, revenue model.
    • Gross margin: analysis of the costs to produce the product or service and the underlying assumptions.
    • Sales and marketing plan: including product definition, pricing, distribution plan, supporting marketing programs.
    • Research and development: (if needed) including product release schedule, assumptions and required resources.
    • Operations and manufacturing: where and how will the product be built, including assumptions about customer support and warranty?
    • General and administrative: what is required to run the company: people, systems, etc.
  3. Budget: The plan developed will be translated into pro forma financial statements (income statements, cash flow statements and balance sheets) for a timeframe appropriate for the nature of the venture (probably somewhere between three and seven years).
  4. Financing plan: How will this venture be financed? This will include an analysis of funding needs (including staging) and appropriate sources of funding.
A more detailed description of the process can be found at: Operating Plan Process.

Deliverables  

The team will create the following deliverables:
•    A complete submission of the appropriate information using the Operating Plan Process template.
•    A Business Plan document which integrates the operating plan with the strategy sections developed during NV 2: Strategy Development.
•    An oral presentation of the overall plan to a panel consisting of the Program for Entrepreneurs Advisory Committee and other investors.

Grading

The instructor will grade the team based on the set of deliverables. 50% of the grade will be based on the content of the Operating Plan Document, 25% on the business plan document and 25% on the final presentation.
Course structure & schedule
Four milestones provide the structure for the class. The deliverables for the milestones are the appropriate section of the Operating Plan Process Document itself and a 45 minute presentation of the material.
The course will follow the following schedule.

Week 1        Presentation of work plan to Duke Ventures Project
Advisory Committee
Week 3        Milestone 1: Core competencies, addressable market
Week 6        Milestone 2: Complete plan for all the functional areas
Week 9        Milestone 3: Budget and financing needs
Week 11        Milestone 4: Financing plan
Week 12        Deliverables complete
Presentation of company strategy to Advisory Committee
 

Enrollment

Students require permission of the instructor to enroll in this course.

ĉ
Jon Fjeld,
Sep 28, 2009, 11:04 AM
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