1. Joel Adams Ken Stuart Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10: Incorporation and Management March 18 2003

2. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.1: Class Objectives 1.The Business Plan Assignment 2.Business Incorporation 3.Roles and Responsibilities within a typical corporate structure. 4.Shareholders, Board of Directors, Officers and Management 5.Management Section of Business Plan

3. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.2: Incorporation Types of Companies: 1. Sole Proprietorship 2. Partnership 3. Incorporation We will focus on the Incorporation in this course.

4. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.3: Incorporation Forms 1.Using a lawyer to Incorporate vs. Doing it yourself? Depends on Complication of the Incorporation 2.Basic requirements when you incorporate 1.Name (NUANS Search) 2.Official Address 3.Board of Directors (Chairperson, Secretary) 4.President 5.Shareholders Meetings

5. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.4: Corporate Structure

6. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.5: Shareholder Share Holders Founders, Investors, Employees Founding members of the corporation hold “founder’s shares” Investors hold shares that represents equity they have purchased by investing in the corporation Key employees may hold shares as a result of their employment package and/or vested stock options Shareholders are governed by the Shareholders Agreement

7. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.6: The Shareholder Certificate?

8. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.7: Board of Directors Represents the bests interest of the Shareholders Board Positions are often appointed by the early stage investors Early Stage Board Dilemma Investors want the board to protect their investment. The entrepreneur want a board that will provide mentorship

9. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 Ideally the Board should consist members that have external experience with: –Finance –Operations –Sales/Marketing –Engineering and R&D Legal and accounting expertise is also highly recommended Chairperson governs board meetings and speak on behalf of the board Often a the management is represented on the board by the President The Founder of the Corporation may also have a seat on the Board but it is not required 10.8: Board of Directors - Skills Set

10. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 Ensure that the New Venture Business Plan is adhered to by the Management Team It will change that Plan if it is in the best interests of the shareholders The Board approves the Budgets set forth by the President and the Management Team Devise a corporate roadmap to achieve long term goals of the company The Board should NOT interfere with the Day-to-Day operation of the Company! 10.9: Board of Directors - Duties

11. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 Often held, in the early stages, by a founder of the corporation Most founders should consider letting go of this position for someone with someone that has “done it before” Founders are often emotionally attached to the corporation which blurs their judgment 10.10:The President/CEO

12. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 Communicate with the Board of Directors on the progress of Executing the New Business Venture (Presidents Report) Manage the day-to-day operations of the business Although the President of a corporation can come from many different back grounds, in the early stage development of a corporation a Sales background is common 10.11:The President – Responsibilities

13. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 President (CEO) –Reports to the board and has the four positions listed below reporting to him/her Finance/Admin (CFO, V.P. Finance) –Assists the president in preparing the budget and measuring performance against it, in providing financial and management information, and in providing administrative support 10.12: The Management Team

14. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 Sales&Marketing (CMO, V.P. Marketing, V.P. Sales) –Responsible for carrying out the sales and marketing tasks Operation (COO, V.P. Operations) –Manages and coordinates the functions required to actually deliver the products and services to the customers Engineering/ R&D (CTO, V.P. Engineering) –Responsible for developing products and services 10.13: The Management Team

15. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.14: Example Organizational Chart (Org. Chart.) President CFOV.P. R&DV.P. OpsCMOV.P. Sales Dir. Sales Product A Dir. Sales Product B Dir. Service Dir. Security Admin Staff Legal Dir. Marketing Communications Advertising Dir. Eng. Dir. Business Development Dir. Advanced Product Dev.

16. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.15: Keys to a Successful Venture Good Business Plan Good Investors Good Management Good Board + + + = Successful Business

17. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 Length 1-2 pages List the team members and the positions they will hold in the company Give a 1-2 paragraph summary of each individual and their expertise in handling the position they will be holding Identify weaknesses in the management team and discuss how they we be strengthened Be sure to account for these strengthening actions in your financials –Example: If you need someone to hire someone with Sales & Marketing expertise make sure you have accounted for that in your income statement 10.16: Management Section of Business Plan

18. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 Use the Innovation Chain to guide you in when key position need to be filled. 10.17: Management Section of Business Plan OperationsSales & Marketing President, Finance & Admin, Engineering

19. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.18: The Business Opportunity Document This will start the process of getting your ideas down on paper. “There exists an opportunity to….” Try to communicate in as little time as possible to the reader what the overall theme of your business will be. This is the written version of the “Elevator Pitch” “The research into seismic sensor technology which has been carried out in the Department of Geology at Canuck University has resulted in the identification of a new type of blast monitoring device that could be marketed in large quantities to the construction, mining and quarry industries.” – Doyle, page 17

20. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.19: Key Objectives of your BOD What is your product/service? What is your target market? What is the size/strength of this opportunity? Why do you need financing? Do you have any evidence? Why you? Do you consider and address the risks?

21. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.20: Your Opportunity Document Expected length 1/2 page It’s about Quality not Quantity Assignment: Hand in next Thursday. It won’t be marked and it can be changed in your final report.

22. Incorporation and Management Engineering Science 466b © J. Adams & K. Stuart 2002-2004 10.21: Next Week Tuesday March 23 rd 7:00PM – 8:00PM Dennis Ensing, CFO of 5 start-up companies Chair, Selection Committee, Toronto Venture Fair Chair, TechAlliance Venture Services (London Venture Group) Thursday March 25 th 7:00PM – 9:00PM Sales, Marketing, Engineering, and Operations The Marketing Section of the Business Plan ½ page Business Opportunity Statements due