Factor

Business Incubator
Business Plan

April 17th, 2008

Josh Bloom
Adam Finkel
Sam Garfinkel
Rich Nemesi
Gary Weintraub

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 NONDISCLOSURE AGREEMENT

This Business Plan was assembled by Josh Bloom, Sam Garfinkel, Gary Weintraub, Adam Finkel,
and Rich Nemesi for the use of potential investors or their agents in considering their interest in
support of the MFactor Business Incubator.

The information included in the Plan was created to assist interested parties in making their
evaluation of the Project and does not purport to contain all of the information that a potential
investor may need to complete its analysis. The work contained in this business plan has not been
independently verified. In addition, we do not make any representation or warranty as to the
accuracy or completeness of this Plan, nor shall we assume any liability for any of the
representations (expressed or implied) contained in this plan, or any other written or oral
communications provided to the recipient during its evaluation of the Project. It is expressly
understood that it is the obligation of any investor or recipient of the Plan to conduct its own due
diligence regarding the project and its industry.

By accepting this plan, the recipient agrees and acknowledges that: (1) all of the information
contained herein is highly confidential, and that none of the information will be used by the
recipient or any of its employees or representatives in any manner whatsoever, in whole or in part,
other than in connection with its evaluation of the Project for the purpose of considering its
investment in the Project; (2) the recipient will not reproduce this Plan, in whole or in part, and will
not distribute all or any portion of this Plan to any person other than a limited number of the
recipient's employees or representatives who have a clear need to know of such information for the
purpose set forth above, and who are informed by the recipient of the confidential nature of such
information; (3) if the recipient does not wish to pursue this matter, it will immediately return this
Plan to us, together with any other material relating to us or the Project which the recipient received
from us and will destroy all memoranda, analyses, compilations, studies and other documents
containing or reflecting information set forth in the Plan or otherwise received from us that relates
to the Project and will confirm such destruction in writing to us, and, (4) any proposed actions by
the recipient which are inconsistent in any manner with the foregoing agreement will require the
prior written consent.

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 Executive Summary
Business Concept
The MFactor Business Incubator will be a “pure play” business incubator located in Ann Arbor,
Michigan. We envision MFactor becoming the best University affiliated business incubator in the
country. A business incubator in Ann Arbor is uniquely positioned to achieve this goal because of
its access to the faculty and students of an elite university, a strong business community, and
numerous potential investors for clients.

MFactor will offer comprehensive business plan assistance as well as start-up funding to its clients.
To begin the process, potential clients will apply for year-long admittance to the incubator. Once
admitted, our executive director will serve as a counselor and business strategist to our clients while
they develop their business plan. In addition to the executive director, MFactor will employ legal,
accounting, strategy and IT advisors to provide expertise on their respective portions of the client’s
business plan. During their time in the incubator, clients will have access to work space, computers,
full-time secretary, and wet lab facilities (access to wet labs depends on the location we are able to
secure). Finally, upon graduating from the incubator, clients will receive start-up funding from the
incubator to cover some of their initial costs.

MFactor expects to handle six clients at a time initially. Of these six clients, we anticipate four
students and two entrepreneurs from outside the university; however this may be adjusted based on
demand. Students will not be required to pay rent, while outside entrepreneurs will be required to
pay a sub-market rate of $500/month.

MFactor hopes to recruit an elite Board of Directors to serve as the backbone of the organization.
With that in mind, we have identified 15 potential board members with entrepreneurial experience
as well as influential ties to the Michigan business community. The Board of Directors will be
instrumental in the application review process as well as recruiting staff for the business incubator.

It is unclear at this point how much support we will receive from the University of Michigan.
Ideally, the University will see our incubator as a tremendous differentiating opportunity, and fully
support us through underwriting our expenses and boosting our brand image. However, we are
financially and strategically sustainable without University assistance and still could capitalize on
the wealth of human resources it provides.

The Market
The State of Michigan has fallen on extremely difficult economic times, with an unemployment rate
of 7.6% at the beginning of the year. i Both Governor Jennifer Granholm and University of
Michigan President Mary Sue Coleman have stated that entrepreneurship will be a key thrust to
turning Michigan’s economy around. President Coleman has gone so far as to appoint Cynthia
Wilbanks to head up the University’s entrepreneurial endeavors. In addition to what is happening at
the State and University level, the New Economy Initiative is a $100,000,000 fund targeting
entrepreneurial initiatives in Southeast Michigan. We have met with representation from the New
Economy Initiative and received positive feedback on our idea.

Our incubator will be located in Ann Arbor, MI, near the central campus of the University of
Michigan. This will provide access to 41,000 students as well as approximately 114,000 residents
in Ann Arbor. ii Ann Arbor was also recently named the 42nd best place to start a business in the
country. iii In terms of competition, Ann Arbor offers only SPARK, which does not provide the type

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of in-depth services our incubator will offer. However, as we grow in size and prestige, we hope to
compete on an international level with the finest incubators in the world.

Customer
MFactor will target two types of customers: University of Michigan students and local
entrepreneurs. Within both categories, we will focus on ideas that can be harvested into sizable
businesses. We will target our customers through our company website, entrepreneurial groups on
campus, pulsed advertising via newspaper, and social networking sites.

Strategy and Competitive Advantage

The key to our business incubator will be the people we find to work in it. To recruit the type of
entrepreneurs we are targeting, it is vital that our incubator boast employees with impressive
backgrounds in entrepreneurship. Another key advantage for our incubator is convenience for our
University clients. We are only targeting locations close to campus to be as accessible as possible
to U of M students and faculty. Additionally, we will explore the possibility of independent study
credit for student clients to free up more time for them to work on their entrepreneurial idea.

Operations
We have identified two potential locations for MFactor: (1) Off State Street in the Nichols Arcade
or (2) the University of Michigan Life Science Building. The Life Science Building is our ideal
choice but could be contingent on University affiliation. Both of these locations offer the proximity
to campus necessary to draw in students.

Potential clients will have to apply to be in MFactor; the applications will be reviewed by the Board
of Directors. If accepted, clients will go through a twelve week process of building their business
plan. For the remainder of their year in the incubator, clients build their business so it is ready to
move out at the end of the year. Clients that need another year to develop their business will have
the opportunity to reapply at the end of their first year.

Management Team
During the fundraising stage of this project, our management team will consist of the five founders:
Josh Bloom, Adam Finkel, Gary Weintraub, Sam Garfinkel, and Rich Nemesi. In addition to
fundraising, the management team will also be recruiting potential members for the Board of
Directors. Once we have received the necessary funding and identified a location, the management
team and Board of Directors will conduct a search for the Executive Director, who will be the face
of the incubator.

Financial Projections
After conservative financial analysis, we found our business incubator to be both profitable and
sustainable for the long term. Our projected cash outflows will be approximately $400,000 per
year. Also, we will have a start-up fund to provide approximately $400,000 per year in seed
funding to graduated businesses. To sustain our operations, we will take a 5% equity stake in
graduated businesses and will begin to receive equity payments when graduated businesses pass the
minimum threshold of $500,000 in revenues. In year 3, we receive our first equity inflow from
companies which totals $281,637. In year 4, our equity inflows will sustain our business operations
cash outflows, and in year 6, they sustain our start-up fund outflows.

To cover our cash outflows up until our operations and start-up fund become sustainable, we are
requesting $2,500,000 in funding. The fund we have targeted is the New Economy Initiative

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located in Southeastern Michigan with total funds of $100,000,000. The breakdown of our grant
request is in the following table.

Operations
Grant Request $870,000
Reason *$819,013 will cover the cash outflows until year 3. In year 4, equity income will sustain our operations
*Our request for $870,000 is to cover expected error in our budget projections
Start-up Fund
Grant Request $1,630,000
Reasons *$1,593,202 will cover the cash outflows until year 5. In year 6, equity inflow will sustain the fund
*Our request for $1,630,000 is to cover expected error in our budget projections

TOTAL FUNDS REQUESTED

$2,500,000
Possible Financial Source
The New Economy Initiative has a pool of $100 million dollars that we’d like to tap into for early
funds. This is a revolutionary venture from Michigan’s ten largest foundations. Its mission is to
provide grants for ideas like ours to accelerate a more innovative economy. As it has already been
recognized by President Coleman and is linked with many of Michigan’s most successful business
leaders, it is a highly credible group. Its sole purpose is to promote entrepreneurship in Southeast
Michigan, including in the Ann Arbor area. Our vision is in line with the objectives they hope to
accomplish. Our growth would help them fulfill the metrics they hope to achieve. Our success
would empower them to become a catalyst for the new, creative economy they desire. We’ve
already had discussions with the executive director and chairman of the organization whom have
encouraged the development of MFactor. This is a highly promising resource that we feel we are
well-timed to utilize.

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 Table of Contents
Executive Summary 3
Company Description 7
Market Analysis 9
Competitive Analysis 10
Customer Analysis 11
Marketing Strategy 12
Operations 14
Management Team and Ownership 16
Risk Analysis 20
Financial Section 21
Future Orientation/Next Steps 23
Conclusion 24

Appendices 27
Application 25
Elevator Pitch 28
Interviews Conducted 28
Prospective Board Candidates 29
Additional Financials 32
Founders Resumes 39
In-Depth Interviews 44
Sources/Citations 48

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 Company Description
Company Description
MFactor will help entrepreneurs at the University of Michigan as well as in the Ann Arbor area
develop their business ideas to create an actual enterprise. Entrepreneurs will have to fill out an
application to be reviewed by an oversight board for acceptance into the incubator’s development
program. The executive director at the incubator will then work side-by-side with the entrepreneur
to assist him/her through the set stages of business development. In addition to a director,
entrepreneurs will have access to office space, lab space (potentially), and a team of experts in
fields such as law, accounting, strategy, and finance. At the end of their stay with the incubator,
clients may be funded by the start-up arm of the incubator; clients will also introduced to a network
of potential investors looking to fund emerging businesses.

Vision Statement
Become the best University-affiliated business incubator in the country.

Mission statement
Create successful start-up businesses and act as a business catalyst and development agency to
advance the Michigan economy while maintaining a healthy profit.

Location
We have identified two locations for the business incubator. A major factor towards determining
the location of MFactor will be if we can gain University of Michigan affiliation, or at least the
University’s permission to use the Life Science Center. With that in mind, we will discuss the
possible locations in later sections of this document.

Market Opportunity
Relative Size of Targeted Customer Group
Even though every University of Michigan student could eventually become an entrepreneur, our
target customer is of a different mold. As stated above, our target collegiate entrepreneur is highly
motivated with the “big idea”. We plan to use the membership rosters of the following
organizations and courses as a pipeline:
 Entrepreneur and Venture Club, Ross School of Business ≈ 50
 Entrepreneurial Management Course (ES395) ≈ 120
 MPowered of College of Engineering ≈ 300
 Entrepreneurship (IOE422) ≈ 60
Total ≈ 530 Students
Even though 530 is a small pool to pull from, we are only looking for 4 students per year. 4/530 is
under 1%. Also, the student population including graduate students surpasses 40,000 students and
therefore, we are not concerned about the pipeline of collegiate entrepreneurs.

Products/Services & Technology

Service Feature Benefit
Legal Attorneys/Business Law Experienced counseling on
professors corporate forms and legal
issues in client’s industry

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Accounting Accountants/Accounting Help creating balance sheets,
professors/MAcc students cash flow statements, doing
breakeven analysis
Strategy Successful entrepreneurs, First-hand insight on start-up
corporate strategists challenges; inspiration on
possibility for success;
experienced advice creating a
business plan
Office Space Office, meeting rooms, Tools necessary to conduct a
phones, copiers, faxes fledgling business
Administrative Assistance Part-time administrative Someone to answer phones,
assistant take messages, assist with in
office activity
Lab Space* Clean rooms, lab stations, wet Potential to develop biological
labs, chemicals and chemical entrepreneurial
ideas
Funding Networking Networking opportunities with Introduction to people looking
local venture capitalists/angel to fund entrepreneurial
investors endeavors

Legal Form and Location

We are planning on registering as an LLC in the state of Michigan. An LLC is ideal because it
provides limited liability to owners and allows us a lot of freedom regarding management rights.

Financial Projections
Based on conservative graduating rates of our entrepreneurs, as well as national statistics on
business incubators, MFactor will be sustainable in year 4 of operations. Attached to our incubator
model is a start-up fund that will be managed by the executive director and the board. The goal of
the fund is to provide up to $400,000 a year of seed funding for graduated businesses based on their
working capital requirements. The goal of this incubator above all else is to help create successful
enterprises, and we believe a start-up fund will allow us to provide the necessary seed money to
achieve a success rate of 87% for graduated businesses becoming sustainable enterprises.

Our grant proposal consists of two grant requests that total $2,500,000. Our team requests a grant
of $870,000 to cover the cash outflows for the first 3-4 years. At this point, our business would be
creating enough revenue to become sustainable. In addition, we need $1,630,000 to create the start-
up fund and cover the outflows up until year 6, when our revenues could also cover our start-up
fund cash outflows.

Our target fund is the New Economy Initiative, based in Southeastern Michigan, because they are
targeting organizations that have a focus of fostering innovation and entrepreneurship. This fund
has roughly $100,000,000 at their disposal, and our incubator is a target organization for them
because of our mission statement and business objectives. We were able to have a conversation
with the chair of the fund, Steven Hamp, and gave him an elevator pitch of our business plan. Mr.
Hamp had nothing but strong encouragement for our idea.

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 Market Analysis
Market Analysis - PEST+G
Political & Legal
The combination of political factors affecting our business proposal is like a double-edged sword.
There are both positive and negative factors to be noted. Currently, politicians in the sate of
Michigan are looking for ways to boost the struggling economy. Since Ann Arbor is the home of
the prestigious University of Michigan and a flourishing urban center, politicians see the town as an
opportunity to spark substantial economic growth. In her speech entitled “Five Years Forward – An
Address to the University of Michigan Community” given on November 15, 2007, Mary Sue
Coleman proclaimed:

For our state to prosper, we absolutely must cultivate a stronger culture of innovation and
entrepreneurship…The Michigan Innovation and Entrepreneurship Initiative, with at least $100
million available in resources, will be funded by foundations and universities themselves... iv

Unfortunately, politicians have yet to allocate funds for entrepreneurship and other ventures could
be pursued. Many politicians see Ann Arbor growing and would rather utilize funds to spark
growth in other areas of Michigan. In addition, the bureaucracy associated with University
Affiliation complicates the funding process.

In regards to the legal environment, there are several Ann Arbor zoning restrictions regarding
opening a business that we must work around. Also, at the beginning of the year, Ann Arbor
repealed its Single Business Tax (SBT) or payroll tax and replaced it with the Michigan Business
Tax, which offers a number of credits to help businesses reduce taxes. v

Economic
The Michigan economy is in a state of crisis. In 2006, Michigan was the only state in America with
a shrinking Gross Domestic Product. Comerica Bank’s Chief Economist stated, “A lot needs to go
right for the state economy to bottom out…Michigan's one-state recession is now three years old
and counting.” vi Currently dependent on the success of the auto and manufacturing industry,
Michigan must diversify its business portfolio and pursue ventures in other industries. We see an
Ann Arbor business incubator as a potential long-term contributor to the turnaround of the
Michigan economy, and others agree. Big-time entrepreneurs and foundations recognize the
problem and are seeking multiple ways to boost the economy. We have spoken to a few of these
people and they were very interested in the prospect of a business incubator in Ann Arbor. Stephen
Hamp, Chairman of the New Economic Initiative, said, “If a business incubator like yours is going
to succeed in Michigan, it is going to be in Ann Arbor. You have what it takes.” vii The volume and
plethora of intellectual resources in Ann Arbor and at the University of Michigan is encouraging.
The state must capitalize on the resources available if it wants to turn things around. Unfortunately,
with the state in economic crisis, funding will be difficult to find. We must look to foundations and
investors instead of the state government.

Social
Entrepreneurship has been playing a more significant role in Ann Arbor’s social climate over the
past few years. New businesses are continuously opening their doors and prospering including BTB
& BTB Cantina, No Thai, Bubble Island, and more. These businesses are not only successful in
Ann Arbor. Their owners have all opened other locations. In addition, both the Stephen M. Ross
School of Business and the College of Engineering are promoting entrepreneurship via various
courses and clubs, which we will elaborate on later. Both of these schools could potentially assist

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with our business incubator. Additionally, there is a greater American trend towards
entrepreneurship. The U.S. government has supported entrepreneurship because of the link between
entrepreneurship and economic growth. viii Finally, Fortune Small Business recently named Ann
Arbor the 42nd “Best Place to Live and Launch” because of the “strong high-tech industry, eco-
minded area, and abundant college sports.”v

Technological
The quality of our business incubator will rely almost exclusively on the people we recruit as staff
rather than technology. However, if we are able to develop a facility with high-tech capabilities, it
could establish a larger competitive advantage. The Life Science Building possesses several wet
labs and these may serve vital to incubator occupants with innovative tech ideas. Also, we will
have the most-up-to-date technological resources via the University of Michigan. Lastly,
technology is a huge area of opportunity. One “big idea” could sustain the incubator and provide
plenty of funding for future occupants. The only downside to tech ideas is they tend to necessitate
large research and development costs and take years to develop.

Global
Initially, this project is geared specifically for Ann Arbor and the University of Michigan. We
would like to capitalize on the vast resources provided by the University including brilliant and
driven students, experienced and helpful faculty, top-of-the-line facilities, and unparalleled
networks. However, if we have success locally, there is always the opportunity to take our business
plan and apply it at other universities with similar prestige and capabilities. Globally, more and
more incubators are sprouting. There are many successful incubators around the world including in
Ireland and Israel. They can be extremely profitable with the right ideas and resources. If we were
successful, we would not expect another competitor to open its doors in Ann Arbor. However, if
we eventually expand globally, we will be facing competition from these foreign incubators.

Competitive Analysis
There are a few indirect and direct competitors for MFactor. The chart below highlights the presence
of key incubator resources or lack thereof in the competitive set:

Enterprise Independent Mpowered

SPARK Ireland Entrepreneur & Ross MFactor
University Affiliation  
Proximity to Campus    
Consistent Working
Relationships (Accountant,
Lawyer, & Strategist)  
Full-time Entrepreneurial
Guidance  
Office Space  
Networking    
Funding   
Growth Fund  

Similar Products/Solutions Available to Target Market

For our target market of University of Michigan students, our only viable competitor offering a
packaged service is SPARK. Even though SPARK’s mission as an incubator is similar to ours,
their approach is very different. During our visit to SPARK’s office on E. Liberty Street, we

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obtained valuable information about their strategy and the overall competitive landscape. Instead of
providing a framework for business growth, SPARK coordinates large-scale weekend seminars and
workshops and provides low-rent office space. At these seminars, professionals present to
entrepreneurs on various topics including writing a business plan, incorporating, preserving
intellectual property, obtaining funding, and more. After the sessions, entrepreneurs can approach
the presenter or panel to chat for a few minutes individually. However, our full-service bundle or
one-stop shop enables a competitive advantage. Entrepreneurs need more than a weekend session
and a few minutes of advice. They need personal and consistent attention from experienced
professionals who know their business concept in detail.

Instead of using a business incubator, Michigan students can individually utilize university
resources. Students in the Stephen M. Ross School of Business may access the Zell Lurie Institute
or Entrepreneur and Venture Club but these organizations cannot provide the full-service bundle of
MFactor. Also, students in the College of Engineering may belong to MPowered, its
entrepreneurial organization. MPowered simply recommends classes, arranges contacts, and
promotes entrepreneurship on campus but does not provide entrepreneurial guidance, strategy,
funding, or consistent working relationships with professional accountants and lawyers. We are
optimistic that the aforementioned organizations will be pleased to work directly with MFactor and
provide a pipeline of potential entrepreneurs and viable business ideas. All in all, we foresee future
collaboration, not competition.

Alternates & Substitutes to Meet Market Need

The one alternative way to start a business is to do it independently. If an entrepreneur is confident
in his or her abilities, one could attempt to launch the business without any outside guidance. This
is extremely risky, especially for a college student with minimal disposable income and
responsibilities in the classroom. The other option for someone who is not seeking a full-service
business incubator is to hire a lawyer, accountant, and strategist individually. Overall, the
entrepreneur would be creating a small-scale incubator. Even though this can be done, it is not
financially optimal. MFactor will provide this professional help plus the aforementioned resources
including networking, funding, office space, and more. Overall, we feel that there are minimal
substitute ways to obtain guidance on opening a business and therefore, we are proposing the
University of Michigan business incubator, MFactor.

Customer Analysis
Customer Groups
The customer group that we are looking to serve is the collegiate and local entrepreneur. We hope
to solely have collegiate entrepreneurs in the incubator long-term and consequently, we will focus
our customer analysis on the collegiate entrepreneur. The collegiate entrepreneur is an on-campus
student (from September to April) with many responsibilities and very little experience in the
business world. The collegiate entrepreneur is seeking guidance from experienced professionals to
avoid catastrophic mistakes and help grow the business. To gain a better understanding of the
collegiate entrepreneur, we conducted several in-depth interviews. See the Appendix for full
interview transcript. A few quotes are below:

Would you have been interested in utilizing a business incubator at the University of Michigan and
for what assistance?

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“Of course! I dove in way too early without understanding the entire process. A diverse network of
key contacts would have been extremely helpful!” ix
“Absolutely! I could have benefited from creating a much more detailed plan…I had no formal
business education. I had never even heard of PEST, SWOT, matrices or the Porter model, all of
which are useful resources.” x
“Yes. We could make it on our own right off the bat if we had the time (no school) and drive, but
having an expert strategist and entrepreneurial network at our disposal would mean the difference
between crawling for a few years and taking off running.” xi

Clearly, there is a need for a business incubator in Ann Arbor. Back to the collegiate entrepreneur,
he/she must balance academics, social life, and an entrepreneurial drive while maintaining a healthy
lifestyle. He/she is extremely driven and motivated with a big idea but the overall stress and
demands of college lift can be very daunting. The collegiate entrepreneur likely has 15-20 hours of
class per week plus the related workload including homework, essays, tests, group projects, and
presentations. With such a demanding lifestyle, our customer will demand the best service from our
incubator. If successful, we will generate positive word-of-mouth via the student body and the
applications will pile in.

The Solution to Collegiate Entrepreneur’s Problem

Our target customer, the collegiate entrepreneur, lacks the experience and knowledge to start a
business. They are young and need the guidance of experienced entrepreneurs and professionals
before pursuing a risky venture. Also, these collegiates have yet to develop a meaningful social
network, which is vital in building a team and obtaining funding. MFactor is the full-service
solution to the collegiate entrepreneurial problem. Our schedule, structure, strategy, and
professional services will help the collegiate entrepreneur launch the business idea with the optimal
potential for success and profitability.

Marketing Strategy
Segmentation
Sides – Students with small business ideas hoping to make a little extra money on the side while
obtaining an education. While the business ideas may be interesting, these students lack the level of
commitment necessary to start a serious business. In addition, the ideas may have limited potential
as the student has not given the venture much thought.

Big Ideas – Students (both undergraduate and graduate) with big entrepreneurial ideas looking to
pursue their own interests rather than succumb to corporate America. These students are looking
for more than a short-term college business. They aspire to start a very profitable company and
sustain consistent growth for the next five to ten years. Their ideas have serious potential for
growth on a regional, national, or even international scale.

Scavengers – Ann Arbor residents looking to create or purchase a small family business. While the
idea may be financially sound, it has limited potential. The entrepreneur is thinking local with their
family’s financial stability in mind.

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Hunters - Ann Arbor residents or professors with a passion for excitement and a business idea with
the potential to become a major force in an industry. They have a big idea that they are
wholeheartedly dedicated to pursuing. The Hunter is the older version of the Big Idea.

Park Rangers – National or international entrepreneurs with a history of successful business

models looking to create large conglomerates. They may be living in the Ann Arbor area but are
usually involved with many businesses and travel often. Their experience allows them to invest
without much guidance or support.

Targeting
We are pursuing a multiple target market approach, targeting both the Big Ideas and Hunters. Since
these target customers are different, we will employ unique marketing plans for each. We chose
these two target markets because our business incubator is thinking big. We do not want our
incubator to help small-businesses with limited potential. On the contrary, we intend to grow the
incubator and consequently, we must take on large projects and the associated risk. The other
market segments just do not have the drive or idea that our incubator is seeking.

Positioning
For the Big Ideas, we will be the primary resource for building a business while attending class and
tending to a social life due to our inexpensive office space and expert advice from experienced
professionals.

For the Hunters, we will be the most efficient way to start a new business because of our
networking opportunities, funding, expert advice, and in total, the one-stop shop.

Marketing Mix - Promotion

For the Big Ideas, we will utilize a variety of marketing mediums. The goal is to surround our
target with different mediums at key points throughout the year. We will access the entrepreneurial
pipeline via the entrepreneurial clubs on campus including the Entrepreneur and Venture Club, Ross
School of Business Entrepreneurial Management Course (ES395), MPowered of College of
Engineering, and the College of Engineering’s Entrepreneurship course, IOE422. Our research
suggests that word-of-mouth is the optimal way to reach our target and therefore, we intend to give
multiple in-class presentations in both the business school and school of engineering at the
undergraduate and graduate level. We will also utilize e-mail via iMpact, the business school
network. In addition, we will maintain an up-to-date website as well as Facebook group and blog.
We plan to have several informational meetings, DIAG events throughout the year, and business
plan competition sponsorships. We will also advertise in “The Michigan Daily”. The detailed
marketing plan is below and will be pulsed three times throughout the year. We are pulsing the
marketing at key points in the school year including July/August/September, November/December,
and March/April. This way, we will have the most application submissions at the beginning,
middle, and end of the school year. Lastly, we plan to speak with guidance counselors who will
recommend our incubator to students interested in entrepreneurship.

To reach the Hunters, we will advertise in the Ann Arbor Observer and Detroit Free Press. We will
also use bank and venture capitalist networks to raise awareness.

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Marketing Plan
Local Newspaper Ads
Ann Arbor Observer [$310 x 6 days (1/16 page)] xii $1,860
Detroit Free Press [$392.99 for 28 days] xiii $393
xiv
The Michigan Daily [$50.55 for 2 weeks] $95
$2,348
Web-site N/A*
Facebook & Blog N/A*
Informational/Orientation Meeting $150
Flyers/Posters on Campus $200
Brochures $150
DIAG Event $100
Presentations to Clubs and Organizations $150
BBA Orientation
Entrepreneur and Venture Club (EVC)
ES395
MPowered
IOE 422
Business Plan Competition Sponsorship $200
*Web-site and Facebook/blog costs are covered in Webmaster’s salary
Total $3,298
Operations
Geographic Location
The business incubator will be located either just off State Street in the Nichols Arcade or in the
University of Michigan Life Science Building that is directly between CC Little and The Hill on
campus. The reason we have chosen to be so centrally located is that we have seen our predecessor
in the on campus business incubation industry fail in large part because students and staff were
either unwilling or unable to walk to the Main Street office. In addition to its tremendous location,
the Life Science Building would provide access to wet labs and the opportunity to grow within the
same building.

Facilities & Improvements

Below is the outline of our office facility. When you first walk in you will be greeted by a secretary
who is working under the umbrella of all the businesses in the incubator. To the right of the
secretary will be our Executive Director who provides logistical support and day to day advice with
problems that may arise during the businesses term in the incubator. Behind him will be the work
space for our smaller businesses in the incubator who employ fewer than three employees. Finally,
in the back of the office will be those businesses that have more than three employees and require a
separate workspace from the rest of the incubator.

ES 395 14
Depending on whether or not we choose to locate in the University of Michigan Life Sciences
Building there may be the option of having wet lab facilities within the incubator. Those facilities
will not be located within the main incubator office, but rather down the hall for logistical reasons.
Additionally, as the incubator grows so too will our offices. The Life Sciences Building provides
an easy growth model because expansion within the same building becomes possible. However, if
we were to locate on State Street we would need to relocate to a larger space once the threshold is
reached that is discussed in the financial section.

Secretary Executive Office

Small Small Cafeteria/

Work Area Work Area Kitchen

Conference Room

Small Small
Work Area Work Area

Large Office (for Large Office (for Bath

businesses with more businesses with more
than three employees) than three employees)

Strategy and Plans (Growth)

Our long term location strategy is to open up offices in various metropolitan areas to service the
needs of our growing businesses. We plan to model our national and international growth strategy
after Enterprise Ireland, in terms of the way they have been able to provide continued support to the
business that became successful within their incubator throughout the world. Keep in mind that this
is an extremely long term strategy, and for the relevant future we intend on carving out a niche in
the Ann Arbor market and establish a strong revenue stream in that location.

ES 395 15
 Management Team and Ownership
Organization Chart

Strengths, Challenges, Opportunities, Threats

Strengths Challenges
Proximity to campus Gaining credibility as a new
venture
Caliber of staff and mentors
High overhead costs
Availability of funding for projects
Bureaucracy of involving U of
University of Michigan affiliation
M/Government
Sustaining profitability

Opportunities Threats
Utilize resources of MPowered and Failing to obtain facility close to
new entrepreneurship center at campus
engineering school.
Over-involvement of University
Abundance of wealthy investors in
Competing resources arise to
Ann Arbor
serve student and local business
New community grants and community
resources focused on MI
entrepreneurial growth

Management Overview
The structure of the management is meant to create a first-rate team of leaders to develop and grow
the University of Michigan’s premier business incubator; MFactor. We wanted to ensure that the
executive team has the diversity and experience to not only operate the incubator, but make sure
that it provides a solid return to participants and has long term viability. We also took into
consideration that the operations of the business incubator would need to be especially focused

ES 395 16
during its early years. It would need to prove that its formula is effective and could not have
excessive expenses that would detract from its chief focus of growing and spreading student
enterprise. A key component of the management structure is to allow it to be and act as
entrepreneurially as it can. This is meant to eliminate bureaucracy and better recruit creative
thinkers to become supporters and participants of the program. The management team also has
positions that, at least at first, may not be full time. Advisory positions at the incubator could be
assumed by students, recent graduates, faculty at the Zell-Lurie Center and even retired
entrepreneurs. It’s important that our program attracts members of the business community from
diverse age groups. To do this, we plan on being a haven for youthful, creative thinkers and equally
welcoming to experienced, successful business leaders who can help mentor, network with, and
invest in, student ideas.

Management Descriptions
Executive Director:
The executive director leads the business incubator. This position oversees day-to-day operations,
making the final decision on all matters of the program. Working with the executive team, the
Executive Director ensures that each facet of the business incubator is making and setting goals to
increase effectiveness. The Director also develops a long term strategy to grow its operations. This
is a crucial position, especially during the early stages of existence, as the business incubator needs
to earn and sustain credibility amongst its leaders, supporters, funders and participants.

Financial responsibilities include overseeing all of the money that is raised and spent at the business
incubator. This includes such expenses as talent, real estate and supplies. This positions works with
the board to ascertain how much money is needed to manage the program on a day-to-day basis and
what will be needed to grow it in the future. A key component of the financial department is to
connect entrepreneurs with capital to help them successfully develop and spread their ideas.

Marketing responsibilities include promoting the resources we offer to students at the University of
Michigan. It is important to continually asses how the business incubator should be positioned to
best attract students. This position oversees the workshops, speakers, networking forums and other
events offered. The marketing department is also responsible for student recruitment, and oversees
the process each year to select the top ideas to be incubated. An interactive website, a key tenet of
our business incubator, will also be developed by the chief marketer.

An additional facet of the Executive Director’s responsibilities includes external relations. In this
capacity, the Executive Director engages with the university community, local business community
and supporting philanthropists. This position finds roles for supporters to become better connected
with University of Michigan’s only business incubator. Foundations and benefactors wishing to
support new venture creation at Michigan would work with the Executive Director to grow the
program and support student ideas. The External Relations department also has a relationship with
the local press to keep them abreast of continuing developments at the business incubator.

Office Assistant:
The Office Assistant provides key support for the administration of the business incubator. These
responsibilities include connecting entrepreneurs with community resources, scheduling talks for
the Executive Director in the local business community and fielding initial questions from

ES 395 17
prospective supporters about the mission of the business incubator. This position ensures that the
business incubator is open and active during normal hours, has the appropriate supplies and
promptly addresses inquiries received from interested parties. Finally, this role will provide support
for businesses within the incubator that may require such services.

Part-time positions:
In addition to the full-time staff, MFactor has a committed team of professionals available to serve
the entrepreneurs. These include experts in the fields of law, accounting and strategy. They are
available throughout the week to answer any pressing questions that may arise. Each week, they
will also visit MFactor for a personal consultation with each group. MFactor also employs a
technology expert. This person will be utilized to create our website and be available to consult on
the technology needs of the entrepreneurs in the business incubator.

Management Compensation
After researching similar programs at a collegiate level and local economic development
organizations, we’ve created a compensation level that is reasonable for the given jobs and
competition for high-caliber people. Each of the salaries easily fit within our budget and we do not
feel that we are over paying for any of the jobs. The Executive Director salary of $120,000 is a
significant first year expense for our organization, but a vital amount to attract the high-caliber
talent we require. This salary is in-line to attract an experienced MBA-educated candidate. The part
time salaries are able to attract local professionals to devote about six hours a week and share their
expertise with our organization. The secretarial salary is also a competitive salary and will allow us
to find an experienced employee to put in the hours and time needed.

Year 0 Year 1 Year 2

Employee-Related
Operating Expenses:
Executive Director Salary $0 $120,000 $120,000
Part Time Accountant $0 $49,200 $49,200
Part Time Lawyer $0 $49,200 $49,200
Part time Strategist $0 $49,200 $49,200
Part Time Web Master $0 $5,100 $800
Secretary Salary $0 $50,400 $50,400

Ownership
Ideally, MFactor will be originally established as a club within the University of Michigan. This
will allow us to be affiliated with the University of Michigan and receive University funds while
also maintaining a distinct identity and largely unregulated business mission. It will provide us the
credibility that many competing resources in the area lack within the student body. Once the
incubator is established, a separate entity will be established to oversee the capital that is used to
fund new ventures. This will be overseen by the Board of Directors of the incubator and run through
the university. It is important that we are connected with the development office at the University of
Michigan to become eligible for funds from foundations in the state. If we are unable to secure
University affiliation, we will lean more heavily on outside investors for funding.

ES 395 18
Board/Management Assistance

We have identified several people we feel would be ideal to serve on our board of directors. There
names are listed below and their backgrounds are available in Appendix D.

Top Row: David Brophy, Professor of Entrepreneurial Finance at the Ross School of Business;
Doug Rothwell, CEO of Detroit Renaissance; Denise Ilitch, former President of Ilitch Holdings;
Stanford Ovshinsky, founder of ECD Ovonics; Jeffrey Schox, Schox PLC Intellectual Property
Lawyer
Middle Row: Andy Lawlor, Professor of Strategy at the Ross School of Business; Michael Finney,
CEO of Ann Arbor SPARK; Leonard Middleton, Professor of Entrepreneurship at the Ross School
of Business; Gauri Nanda, founder of NANDA Home, Marc Weiser, founder of RPM Ventures
Bottom Row: Tom Porter, General Partner, Trillium Ventures; Dr. Larry Brilliant, President of the
Google Foundation; Cynthia Wilbanks, Vice President of Governmental Affairs at the University of
Michigan; Bruce Wasserstein, CEO of Lazard Capital; Steven Hamp, Chairman of the New
Economy Initiative.
Outside Support
The MFactor will utilize the resources of the local and state business community. Prominent
communal partners will be the Detroit Renaissance, which brings together incubators in the state of
Michigan and Ann Arbor SPARK, the economic development organization for the Ann Arbor
community. A mentorship board will be providing startup advice to aspiring entrepreneurs. It will
be composed of experienced, successful leaders from diverse areas including marketing, science

ES 395 19
and engineering. Members will participate on a volunteer basis and offer their services pro-bono to
students. This is a great way for alumni and business leaders in the community to help develop
future business talent. The volunteer board will include a few dozen members who will typically
spend about five hours a month mentoring other entrepreneurs.

Risk Analysis
Issues and Mitigation
There are several issues we face as we develop and grow this venture. While many are easily dealt
with, there are issues that can become of concern to us and we hope to plan accordingly to
overcome them if they do arise. These issues include preparing for the potential of weakening
foundation and communal grants to our incubator, decreased University Support, if economic and
financial projections do not scale as planned and internal disagreements arise with entrepreneurs or
employees of the incubator. Additionally, especially during the first few years, it is vital that
MFactor effectively markets itself, communicates its message, executes its mission as planned and
earns the needed credibility of its vested partners.

We’ve taken these issues seriously throughout the business plan by offering conservative financial
estimates and creating alternative plans to pursue in case we face difficulty with our first plan of
action. For example, we are depending on support from the University of Michigan to financially
support our venture. However, we have a plan in place to seek funding from external sources such
as grants from state foundations to fully underwrite all our expenses.

We’ve researched successful incubators around the world and have also studied incubators on the
collegiate level. This information has allowed us to learn the best-practices needed to effectively
create a sustainable incubator. This has also allowed us to learn from the challenges and mistakes
other business incubators have made to better prepare our idea to become commercially feasible
once it is launched. To help us get through additional challenges, we’ve composed an advisory
board of some of the most successful entrepreneurs in America. We can rely on them for advice and
support to help us mitigate issues that arise as we open and grow MFactor.

Finally, MFactor is an ambitious idea that fills a large demand at the University of Michigan. It is
an unprecedented program at Michigan and is structured different from any other incubator. Yet, we
do not have unrealistic plans. We start out by selecting a few entrepreneurs to service that we will
competitively select. They will have our undivided attention as we seek to gain credibility through
the quality – not quantity – of successful business launches. Thus, we will not try to do unrealistic
things for Michigan’s economy or Michigan entrepreneurs that are outside of our reach. By having
and maintaining a disciplined focus, our objectives will be easier to reach and sustain.

Exit Strategy
If our projections are incorrect and we are unable to become a sustainable enterprise in year four, it
is important to have an exit strategy in place. Disassembling the business would not be difficult as
we do not have many fixed assets to sell off. However, it is important that we have an exit strategy
for the clients that would be currently using the facilities, as well as the employees. In the first
several years of business we will establish ties with incubator organizations, venture capital firms,
local banks, accountants, and lawyers. If we had to close down operations, we would tap into our
network to re-direct clients and employees as part of the winding up stage of shutting down.
ES 395 20
 Financial Section
Overview
Our operations have a cash outflow of approximately $400,000 per year. This covers employee
salaries, rent, utilities, marketing budget, and insurance expenses. We projected out two scenarios
for calculating our cash outflows based on whether the University of Michigan chooses to
underwrite our employee salaries, and allow us to operate in the Life Sciences Building.

Our revenue comes from two sources: charging below market rental prices to non-student
entrepreneurs, and a 5% equity stake in graduated companies revenue streams after they hit a
minimum threshold of $500,000 in revenues. Based on conservative numbers for graduation rates,
growth projections, survival rates, and revenue growth rates of graduated businesses, we will begin
to receive equity income in three years of operations.

Attached to our business operations will be a start-up fund that will be managed by the executive
director and the board. Upon graduation, clients will present to the board with a request for seed
capital from our start-up fund, and the board of directors will grant businesses with sufficient
working capital based on their individual needs to become sustainable enterprises. We projected to
use approximately $400,000 of seed funding per year, with no set amounts for individual grants.

Income Statement
Expenses on the income statement consist of salaries expense, rent expense, insurance expense,
utilities expense, and start-up funds expenses. Under option A, we would have total operating
expenses of approximately $770,000 annually. The grant request of $2,500,000 is factored into our
year 1 revenues, which explains why in year 1 we report a positive net income, but in years 2-5 our
net income is negative. In year 6, our equity income from graduated businesses covers all operating
expenses and we report a positive net income of $179,152. Under Option B, the University of
Michigan would underwrite approximately $361,000 of our annual expenses which would include
salaries and rent expenses. Under this option, we report a positive net income in year 4 of $ 48,282.
A snapshot of our income statement is below, and the full income statement is included in our
appendix.
Option A Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Total Revenues $0 $2,508,000 $12,000 $293,637 $470,875 $689,791 $950,386
Total Operating Expenses $0 $790,182 $771,234 $771,234 $782,633 $771,234 $771,234
Net Income $0 $1,717,818 -$759,234 -$477,597 -$311,758 -$81,443 $179,152

Option B - University Plan Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Total Revenues $0 $2,508,000 $12,000 $293,637 $470,875 $689,791 $950,386
Total Operating Expenses $0 $424,842 $410,194 $410,194 $421,593 $410,194 $410,194
Net Income $0 $2,083,158 -$398,194 -$116,557 $49,282 $279,597 $540,192

Cash Flows
As stated earlier, our business operation has approximately $400,000 in cash outflows per year.
Year 3 is the first year that we receive equity income, and in year 4 the equity income will sustain
our operations portion of the incubator. To cover cash outflows up to year 3, we would need
$870,000 in grant money. Also, the start-up fund has a cash outflow of $400,000 a year, as the
incubator will provide seed funding to graduated businesses. To sustain this fund up until year 6

ES 395 21
(when our equity income can sustain it), we need $1,630,000 in grant money. Below is a snapshot
of our cash flow statement for Option A.
Business Operations Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Equity $0 $0 $281,637 $458,875 $677,791 $938,386 $1,240,661
Grants $870,000 $0 $0 $0 $0 $0 $0
Rent Payments $8,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000
Total Cash Inflow $878,000 $12,000 $293,637 $470,875 $689,791 $950,386 $1,252,661
Cash Outflow $390,182 $371,234 $371,234 $382,633 $371,234 $371,234 $371,234
Net Cash Flows $487,818 -$359,234 -$77,597 $88,242 $318,557 $579,152 $881,427

Begin Balance $0 $487,818 $128,584 $50,987 $139,229 $457,785 $1,036,938

End Balance $487,818 $128,584 $50,987 $139,229 $457,785 $1,036,938 $1,918,365
*In year 4, equity income will sustain our operations
*A grant request of $870,000 will cover expected error in our budget projections

Start-up Fund Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Grants $1,630,000 $0 $0 $0 $0 $0 $0 $0
Equity Inflow $0 $0 $0 $0 $88,242 $318,557 $579,152 $881,427
Capital Outflow $0 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
Net Cash Flow $1,630,000 -$400,000 -$400,000 -$400,000 -$311,758 -$81,443 $179,152 $481,427

Beginning Balance $0 $1,630,000 $1,230,000 $830,000 $430,000 $118,242 $36,798 $215,951

Fund Balance $1,630,000 $1,230,000 $830,000 $430,000 $118,242 $36,798 $215,951 $697,378
*In year 6 equity inflow will sustain the fund
*A Grant request of $1,630,000 will cover expected error in our budget projections

Revenues
We make revenue from taking a 5% equity stake in businesses that have graduated from our
incubator. Once those businesses pass the minimum threshold amount of $500,000 in revenue, the
incubator begins to receive payments from those businesses. We receive our first payment in year 3
of $281,637. The equity payments depended on projecting out revenue growth for graduated
businesses, and we based our growth figure on a national statistic for businesses that have graduated
from incubators. Below is a snapshot of the revenue projections for a single graduated business,
broken down into either a student business, or a local entrepreneur business. Our appendix includes
the entire sales projections statement.

Entrepreneur Growth and Equity Stake Projections

Average Annual Sales Growth Figure $239,535

Equity Stake 5%
Individual Entrepreneur's Firm Projections
Post Incubator Graduation Year 0 Year 1 year 2 Year 3 Year 4 10 Year Totals
Client Annual Revenue
Student Entrepreneurs $0 $200,000 $439,535 $679,070 $918,605 $12,779,075
Equity Payments $0 $0 $33,954 $45,930 $606,977
Local Entrepreneurs $0 $400,000 $639,535 $879,070 $1,118,605 $14,779,075
Equity Payments $0 $31,977 $43,954 $55,930 $718,954

ES 395 22
Start-up Fund
Upon graduating, each entrepreneur will present their business to the board and the director, and
potentially request a funding amount. The start-up fund will allow the board and director to allocate
$400,000 per year to graduated businesses, based on their individual needs.

Growth Projections
If our projections are accurate, our operations will be sustainable in year 4, and our start-up fund in
year 6. If this is the case, under Option A we will expand our business into another location in year
6. Under Option B (with University underwriting, and space in Life Sciences Building), we will
simply expand the number of clients we have per year. The appendix includes the statements for
our growth projections.

Funding
To cover the cash outflows until our operations and start-up fund is sustainable, we our requesting a
grant of $2,500,000. $870,000 will be directed towards business operations and covering annual
cash outflows. $1,630,000 will be directed towards our start-up fund and covering the $400,000
annual seed-funding outflows. Based on our projections of revenue, our operations will be
sustainable in year 4, and our start-up fund will be sustainable in year 6.

Target Fund
The New Economy Initiative is our target fund. Ten foundations have each contributed ten million
dollars for a $100 million venture to fund promising ideas that promote Michigan entrepreneurship.
The ability for us to gain support from this group is high because the fund has told us we are the
exact type of concept that they are looking to assist. They have big money, big resources and big
names with the hope that they can create a big impact on our state’s economy. We feel MFactor can
become a catalyst for their goals: retaining talent, promoting entrepreneurship and embracing
innovation. Thus, it is likely that they will fund our concept. If we become affiliated with the
University of Michigan and can have the donation go through the Office of Development, that will
provide us the credibility needed to obtain suitable grants for a sustainable business incubator.

Our financial documents are included in our appendix to go into further detail of the financial
projections for MFactor.

Future Orientation and Next Steps

Major Milestones – Timeline (Action Plan - Project Chart)
 Submit Business Plan (4/17)
 Contact Potential Donors (4/24)
 Receive Funding (6/2)
 Select Location (6/9)
 Contact Potential Board Members (6/23)
 Finalize Board Membership (7/1)
 Begin Hiring Process (7/8)
 Establish University Relationship (8/1)
 Post Applications (8/15)
 Admit First Class Into The Incubator (9/1)

ES 395 23
Operational Plan
The application process will be evaluated strictly by our Board of Directors. In the preliminary
stage, the application submissions will be divided evenly amongst the members and evaluated
individually. Applications of interest will then move on to the next stage of evaluation where the
entire Board discusses each application. Members of the board will then each vote on their top four
ideas. The votes will be compiled assigning 4 points for a vote of best idea, 3 points for second
best, etc. and the points will be totaled. The four applications who receive the most points will then
be accepted into the program. This process will be the same for the Hunter group, however there
will be two open spots rather than four, and voting will follow accordingly.

During the program, there will be one full time staff member who is an experienced entrepreneur.
This staff member will be available by meeting request during regular business hours. On Tuesday
and Thursday our part-time panel will be available for meetings by request. The part-time panel
will include an attorney, accountant, and an additional successful entrepreneur. There will also be a
full time administrative assistant at the front desk to facilitate the appropriate business functions.

Week End of the Week Progress/Presentation

1 Present Raw Business Idea to Board
2 Develop/Present Business Plan Outline
3 Develop/Present Business Strategy
4 Develop/Present Marketing Plan
5 Operations Model
6 Obtain Legal Documentation/ Licenses
7 Develop/ Present Financial Model
8 Finalize Location
9 Establish Supplier Relationships
10 Finalize Funding
11 Misc. Activities Related to Start of Operations
12 Misc. Activities Related to Start of Operations

As discussed earlier, following this twelve week process the entrepreneurs will begin to take those
steps required in order to establish their business. Because these entrepreneurial steps are so
unpredictable, it is difficult to create an exact schedule. Finally, after the year term has expired,
entrepreneurs will have the opportunity to re-apply to the incubator, request funding, or a
combination of the two.

Conclusion
The window of opportunity for this project is now. The State of Michigan and the University of
Michigan have both stated that entrepreneurship will be a catalyst for revitalizing Michigan. The
New Economy Initiative is looking to invest $100,000,000 in entrepreneurial initiatives in Southeast
Michigan and its Chairman likes the potential of a business incubator in Ann Arbor. MFactor can
be part of the solution that Michigan leaders are seeking. MFactor will help take advantage of the
vast resources of the University of Michigan and help bring businesses and jobs back to Michigan.
Not only is the external environment positive, there is significant demand for a business incubator
in Ann Arbor. Numerous in-depth interviews highlighted collegiate entrepreneurs' frustrations and

ES 395 24
fears associated with starting a business. In addition, Ross School of Business and College of
Engineering students have displayed unprecendented interest in entrepreneurship via the related
courses and organizations. But these opportunities are not enough. There is a hunger for our
generation to become entrepreneurs and hundreds of those bright, clever minds are students in Ann
Arbor. Finally, MFactor allows the University of Michigan to become even more competitive with
schools like MIT, Stanford and the University of Pennsylvania which currently house incubator for
students to harvest their ideas. With a suitable external environment and demand, the only
remaining obstacle is financials. After a detailed financial analysis, our business incubator, with a
5% equity stake, will be profitable and sustainable for the long-term. There is no time like the
present to make this a reality. We see this as a definite "go" opportunity.

ES 395 25
Appendix A: Application

MFactor

Business Incubator
Application for
Admission

2008

ES 395 26
In order to review an application a student must have completed the following sections. Once all
sections are completed, and the student has submitted their application to the board, we will begin
the evaluation.

Idea
In 500 words or less, please present a compelling business concept that addresses the three
questions below in addition to describing the general business purpose and function.
Value Proposition
Please identify how your proposal will add value either to the customer or supply chain.
Problem Solved
How does your product/service solve a problem that currently exists in the market.
Target Market
Please identify and explain your target market

Market Size/Potential
Please provide justification for the following numbers in appendices that will be attached to the end
of this application. Label the appendices with the title used in the left columns.
Overall Market Size (Source)
_____________________________________
Expected Market Share:
_____________________________________
Growth Expectations:
_____________________________________

Financials
Please provide a detailed analysis of the financial numbers quoted below in your appendix. If your
company is currently doing business, please provide any financial statements you may have.
Is the company making money? Yes No
If yes, what are revenues/
current gross margins? _____________________________________
Burn rate: _____________________________________
Revenue forecasts: _____________________________________
Expected margin: _____________________________________
Industry margins: _____________________________________
Breakeven: _____________________________________
Customer acquisition costs: _____________________________________
Revenue growth rates: _____________________________________

ES 395 27
Technology
Technology preference: Buy (out of box) Build
‫ٱ‬ ‫ٱ‬

Does the company have YES NO

proprietary technology? ‫ٱ‬ ‫ٱ‬

Any patents granted/pending? YES NO

‫ٱ‬ ‫ٱ‬

Is solution/offering scalable? YES NO

‫ٱ‬ ‫ٱ‬
Time frame for development: _____________________________________
_____________________________________

Appendix B: Elevator Pitch

We would like to start a business incubator affiliated with the University of Michigan. The
University of Michigan is an ideal site for a business incubator. First it offers a premier faculty and
student body to provide clients and employees for the incubator. Additionally, Ann Arbor was
recently voted one of the top 100 places to start a business. Politically, we feel that now is the time
to implement this project. Michigan is undergoing a single-state recession and needs to create jobs,
and community leaders such as Jennifer Granholm and Mary Sue Coleman have both cited
entrepreneurship as one of the keys to turning around Michigan’s economy. Our incubator can be a
catalyst for the type of change Michigan is searching for. In sum, our incubator has a tremendous
opportunity for success through combining the resources available at U of M and in Ann Arbor with
a state thirsting for economic growth.

Appendix C: Interviews Conducted

Steve Hamp- Chairman of the New Economy Initiative

Mark Neathercit- Executive Director of the New Economy Initiative
Glen Lappin- Director of Development, Detroit Renaissance
Kathryn Simon- Former Entrepreneurship Director at the University of Colorado
Alan Bloom - CEO and President of Bloom General Contracting
Ann Arbor, MI
Laura Berdish – Kresge Librarian

ES 395 28
Justin Vincent – BBA Class of 2008, Stephen M. Ross School of Business at U of M
Jerry Kozak - BBA Class of 2008, Stephen M. Ross School of Business at U of M
David Landau - BBA Class of 2008, Stephen M. Ross School of Business at U of M
Daniel Epstein – President & Founder, Billboard Bands™ LLC & PMbuzz.com

Appendix D: Board of Directors Prospects

Len Middleton: Len provides unparalleled expertise into the growth of new ventures. He is an
Adjunct Professor of Corporate Strategy and International Business, and Entrepreneurship at the
University of Michigan Business School. He is Co-Director of the Global MBA Projects Course
(international field studies). He is also a board member of the Samuel Zell & Robert H. Lurie
Institute for Entrepreneurial Studies, faculty member with the William Davidson Institute, and
faculty advisor for the Tauber Manufacturing Institute. xv

Jeffrey Shox: Jeffrey Schox provides legal expertise, with specific knowledge related to the
legalities of startups and technology issues. He is a Registered Patent Attorney and the founding
member of Schox Patent Group, a boutique patent firm devoted to inventors and entrepreneurs.
Drawing on his experience of over ten years in the patent law field and his training in both
mechanical and electrical engineering, he strategically advises his clients and advances their patent
portfolios. He has filed of over 200 patent applications in a broad range of cutting-edge
technologies, including hybrid vehicle drivetrains, semiconductor manufacturing, medical devices,
wireless communications, computer software, and eco-technologies. Before starting his own law
firm, Jeffrey worked at Brinks Hofer Gilson and Lione, one of the largest patent law firms in the
nation, where he coordinated the majority of patent applications for a Fortune 100 company. xvi

Marc Weiser: Marc Weiser is a successful venture capital and provides insight into rapid
prototyping, real estate and technology ideas. He brings 12 years of software, technology, and
startup experience spanning roles that include marketing and engineering. At RPM, Weiser is
involved with the boards of ATC Onlane, BountyJobs, Oxlo Systems, RiverGlass, and Xtime. He
was previously involved with the boards of Entegrity Solutions, R4 Global Services, Applimation,
and QuantumShift. xvii

Dr. Stephen Forest: Dr. Stephen Forest connects the business incubator with the university
administration. He has expertise in engineering, and oversees Michigan’s tech transfer program. He
currently serves as Vice President of Research at the University of Michigan and serves as an
executive officer of the University, overseeing a research enterprise exceeding $750 million, one of
the largest programs in the country. xviii

Andrew Lawlor: Andrew Lawlor provides important insight into business finances and strategy. He
is currently a popular Lecturer of Entrepreneurship and Strategy at the Ross School of Business. He
also oversees the Global MBA Projects and is involved with the William Davidson Institute. His
research focuses on new business development, market development, business planning and
strategic planning. xix

ES 395 29
Denise Illitch: Denise Ilitch provides legal expertise, successful entrepreneurial experience and
insight into the Michigan business climate. Denise currently serves as serves as a lawyer in Clark
Hill’s Business and Government Policy practice groups and focuses her practice in the areas of
business practice, corporate law, and government policy. Prior to joining Clark Hill, Ms. Ilitch was
the president of Ilitch Holdings, Inc., a company that oversees the management and operations of
such entities as Little Caesar Enterprises, the Detroit Red Wings, the Detroit Tigers, and Olympia
Entertainment. Ms. Ilitch was also a part of the team that created a sports and entertainment district
in the heart of the city, a project that brings millions of people into the city each year. xx

Bruce Wasserstein: Bruce Wasserstein is a former alumnus and serves as an honorary board
member. He is a highly successful investment banker and the current CEO of Lazard. Over his
career, he has spearhead over a thousand business deals collectively valued at over a trillion dollars.
He brings his experience in the financial world and passion for new venture creation to the
incubator. xxi

Larry Brilliant: Dr. Larry Brilliant is the Executive Director of Google.org. In this role, Larry
works with the company's co-founders to define the mission and strategic goals of Google's
philanthropic efforts. Google.org, the umbrella organization for these efforts, includes the Google
Foundation as well as Google Grants (the AdWords giving program) and the company’s major
initiatives aimed at reducing global poverty, improving the health of the least advantaged in the
world, and working to halt or even reverse the effects of the climate crisis. In addition to his
medical career, Larry co-founded The Well, a pioneering virtual community, with Stewart Brand in
1985. He also holds a telecommunications technology patent and has served as CEO of two public
companies and other venture-backed start-ups. He was Associate Professor of epidemiology, global
health planning and economic development at the University of Michigan. xxii

Cynthia H Wilbanks: Cynthia Wilbanks is Vice President for Government Relations and directs the
University's Government Relations programs at the local, state and federal levels. Her
responsibilities include planning and developing the institution's response to proposed legislation;
developing and maintaining effective relationships with governmental agencies and officials; and
analyzing and assessing legislative, administrative and regulatory activities as they pertain to
University programs, activities and operations. She also supervises the activities of the State
Outreach office. An additional responsibility that she recently attained which will be especially
relevant to our venture is helping the University promote economic development. xxiii

Gauri Nauda: Gauri Nanda works in design and engineering. She is a graduate of the
Massachusetts Institute of Technology Media Lab. Gauri has also worked for Apple Computer and
has a bachelors degree in computer science and art from the University of Michigan. Some of her
notable designs involve computers that work by falling to the floor or after being ripped apart. After
receiving her master's degree Gauri began Nanda, a company dedicated to bringing new intriguing
products to market. Nanda's first product, Clocky, the alarm clock that runs away was launched in
December 2006 and is available for sale at nandahome.com. Gauri is 27. xxiv

Tom Porter: Tom Porter is General Partner for Trillium Ventures in Ann Arbor, Michigan. Porter
has a broad range of experience in founding, managing and advising successful technology growth
companies. He co-founded and is a General Partner Emeritus in EDF Ventures, an Ann Arbor,
Michigan-based venture capital firm investing in early stage market driven companies in health care

ES 395 30
and information technology. At EDF he served as interim Chief Executive Officer for several health
care companies in the portfolio, and was a founder of five: Theragen, Inc.; Coagulation Systems,
Inc.; Matrigen, Inc.; IntraLase Corp.; and HandyLab, Inc. He previously has held board positions
for numerous health care and software companies. xxv

Steven Hamp: Steven Hamp enjoyed a 27-year career at the Henry Ford, during which he rose to
serve as the historical institution’s President from 1996 to 2005. Under his leadership, the Henry
Ford’s operating infrastructure was fundamentally revised, rebuilt, and expanded to include the
establishment of the Henry Ford Academy, a public charter school academy, the Ford Rouge
Factory Tour, Michigan’s only auto assembly plant tour open to the public, the Benson Ford
Research Center, and other new user experiences and services such as the IMAX® theatre. Mr.
Hamp was also responsible for increasing the annual budget from $25M to $55M, increasing the
endowment from $175M to $285M, improving visitation from 1 million guests annually to over 1.5
million, and raising capital and project funds in excess of $150M. xxvi

Doug Rothwell: Doug Rothwell has been President of Detroit Renaissance since 2005. During
Doug’s tenure he has led the development of the region’s first economic growth strategy, the Road
to Renaissance, and helped found One D, a collaboration of the region’s major civic organizations.
Prior to joining Detroit Renaissance, Doug served as Executive Director of Worldwide Real Estate
for General Motors overseeing the largest private sector property portfolio in the world with 400
million square feet of real estate. Doug also founded and served as President and Chief Executive
Officer of the Michigan Economic Development Corporation. xxvii

Mike Finney: Mike Finney is president and chief executive officer of Ann Arbor SPARK. Prior to
joining SPARK in November of 2005, he was president and chief executive officer of Greater
Rochester Enterprise, the public/private economic development arm of the greater Rochester, NY
area. xxviii

Stan Ovshinsky: Stan Ovshinsky is Founder and Chief Scientist and Technologist of Energy
Conversion Devices, Inc. (ECD Ovonics) headquartered in Rochester Hills, Michigan. He has about
350 U.S. patents and is the author of over 275 scientific papers ranging from neurophysiology to
amorphous semiconductors. He serves on various scientific, educational and civic boards and is the
recipient of numerous awards, including the Diesel Gold Medal for Invention presented by German
Inventors Association. xxix

ES 395 31
Appendix E: Financials – backup documents

Sources and Uses Statement

Funding Operations
Source of Funds
Grants and Donations $2,500,000
Total of Funding Sources $2,500,000

Application of Funds

Business Operations Grant Proposal $870,000

Employee Compensation $323,100
Rent $36,000 TOTAL FUNDING REQUIRED
Supplies $14,948 $2,500,000
Marketing $9,894
Insurance $1,440
Utilities $4,800
Total Funds for Annual Operations $390,182

Start-Up Fund Grant Proposal $1,630,000

Capital Investments $400,000
Total Annual Funds for Start-up $400,000

*Grant proposals based on covering cash outflows until equity stream sustains the businesses
*Business Operations grant money will be used up until year 3
*Start-Up Fund grant money will be used up until year 5
*Our incubator will on average give $400,000 per year to graduated clients to help with start-up costs
*Our Target fund is the New Economy Initiative Fund, based out of Detroit with available funds of $100 million

Business Incubator Cash Flow Statement Option A

Business Operations Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Equity $0 $0 $281,637 $458,875 $677,791 $938,386 $1,240,661
Grants $870,000 $0 $0 $0 $0 $0 $0
Rent Payments $8,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000
Total Cash Inflow $878,000 $12,000 $293,637 $470,875 $689,791 $950,386 $1,252,661
Cash Outflow $390,182 $371,234 $371,234 $382,633 $371,234 $371,234 $371,234
Net Cash Flows $487,818 -$359,234 -$77,597 $88,242 $318,557 $579,152 $881,427

Begin Balance $0 $487,818 $128,584 $50,987 $139,229 $457,785 $1,036,938

End Balance $487,818 $128,584 $50,987 $139,229 $457,785 $1,036,938 $1,918,365
*In year 4, equity income will sustain our operations
*A grant request of $870,000 will cover expected error in our budget projections

ES 395 32
*Business will begin operations in May of 2008
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Year 1 Total
Cash Inflows:
Revenues
Equity $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $0 $0 $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $8,000
Grants and Donations $870,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $870,000
Total Cash Inflows $870,000 $0 $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $878,000

Cash Outflows
SG & A:
Executive Director Salary $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $120,000
Part Time Strategist $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $49,200
Part Time Accountant $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $49,200
Part Time Lawyer $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $49,200
Part Time Web Master $1,500 $1,500 $1,500 $0 $0 $200 $0 $0 $200 $0 $0 $200 $5,100
Secretary Salary $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $50,400
Rent $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $36,000
Liability Insurance $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $1,440
Utilities/Telephone/Gas $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $4,800
Marketing Expense $0 $0 $1,649 $1,649 $0 $0 $1,649 $1,649 $0 $0 $1,649 $1,649 $9,894
Office Supplies $3,737 $3,737 $3,737 $3,737 $0 $0 $0 $0 $0 $0 $0 $0 $14,948
Total Cash Outflows $35,257 $35,257 $36,906 $35,406 $30,020 $30,220 $31,669 $31,669 $30,220 $30,020 $31,669 $31,869 $390,182

Net Cash Flow $834,743 -$35,257 -$36,906 -$35,406 -$29,020 -$29,220 -$30,669 -$30,669 -$29,220 -$29,020 -$30,669 -$30,869 $487,818
Beginning Balance $0 $834,743 $799,486 $762,580 $727,174 $698,154 $668,934 $638,265 $607,596 $578,376 $549,356 $518,687 $0
Ending Balance $834,743 $799,486 $762,580 $727,174 $698,154 $668,934 $638,265 $607,596 $578,376 $549,356 $518,687 $487,818 $487,818

May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Year 2 Total
Cash Inflows:
Revenues
Equity $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $12,000
Grants and Donations $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cash Inflows $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $12,000

$0
Cash Outflows $0
SG & A: $0
Executive Director Salary $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $120,000
Part Time Strategist $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $49,200
Part Time Accountant $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $49,200
Part Time Lawyer $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $49,200
Part Time Web Master $0 $200 $0 $0 $200 $0 $0 $200 $0 $0 $200 $0 $800
Secretary Salary $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $50,400
Rent $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $36,000
Liability Insurance $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $1,440
Utilities/Telephone/Gas $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $4,800
Marketing Expense $0 $0 $1,649 $1,649 $0 $0 $1,649 $1,649 $0 $0 $1,649 $1,649 $9,894
Office Supplies $100 $100 $100 $0 $0 $0 $0 $0 $0 $0 $0 $0 $300
Total Cash Outflows $30,120 $30,320 $31,769 $31,669 $30,220 $30,020 $31,669 $31,869 $30,020 $30,020 $31,869 $31,669 $371,234

Net Cash Flow -$29,120 -$29,320 -$30,769 -$30,669 -$29,220 -$29,020 -$30,669 -$30,869 -$29,020 -$29,020 -$30,869 -$30,669 -$359,234
Beginning Balance $487,818 $458,698 $429,378 $398,609 $367,940 $338,720 $309,700 $279,031 $248,162 $219,142 $190,122 $159,253 $487,818
Ending Balance $458,698 $429,378 $398,609 $367,940 $338,720 $309,700 $279,031 $248,162 $219,142 $190,122 $159,253 $128,584 $128,584

ES 395 33
Assumptions
*1/3 (2) of our entrepreneurs will be non-students, whom we will charge 70% of local market rental rates
*Equity stake based off of 5% of graduated entrepreneur's revenue
*Major Office Equipment has a 4 year useful life
*Utilities based off of similar size building with similar operations
*Insurance figure based from Len Middleton
*Marketing Budget pulsed around 3 application times per year
*Web Master paid every three months to update the site
*$2,412,214 in Grant money will cover negative cash flows until equity stream can sustain our operations
*$2,500,000 is what we request to cover error in budget projections

Business Incubator Income Statement

Option A
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenues:
Equity $0 $0 $0 $281,637 $458,875 $677,791 $938,386 $1,240,661 $1,584,615 $1,970,247 $2,397,559
Rent $0 $8,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000
Grants and Donations $0 $2,500,000 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Revenues $0 $2,508,000 $12,000 $293,637 $470,875 $689,791 $950,386 $1,252,661 $1,596,615 $1,982,247 $2,409,559
Operating Expenses:
Employee Salaries Expense $0 $323,100 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800
Rent $0 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000
Insurance $0 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Utilities/Telephone/Gas $0 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800
Marketing Budget $0 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894
Office Supplies $0 $14,948 $300 $300 $11,699 $300 $300 $300 $11,699 $300 $300
Capital Investments $0 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
Total Operating Expenses $0 $790,182 $771,234 $771,234 $782,633 $771,234 $771,234 $771,234 $782,633 $771,234 $771,234

Net Income $0 $1,717,818 -$759,234 -$477,597 -$311,758 -$81,443 $179,152 $481,427 $813,982 $1,211,013 $1,638,325

Option B - University Underwriting

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenues:
Equity $0 $0 $0 $281,637 $458,875 $677,791 $938,386 $1,240,661 $1,584,615 $1,970,247 $2,397,559
Rent $0 $8,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000
Grants and Donations $0 $2,500,000 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Revenues $0 $2,508,000 $12,000 $293,637 $470,875 $689,791 $950,386 $1,252,661 $1,596,615 $1,982,247 $2,409,559
Operating Expenses:
University Underwrites
Employee Salaries Expense $0 $323,100 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800
Rent $0 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000
Insurance $0 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Utilities/Telephone/Gas $0 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800
Total University Charges $0 $365,340 $361,040 $361,040 $361,040 $361,040 $361,040 $361,040 $361,040 $361,040 $361,040
Marketing Budget $0 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894
Office Supplies $0 $14,948 $300 $300 $11,699 $300 $300 $300 $11,699 $300 $300
Capital Investments $0 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
Total Operating Expenses $0 $424,842 $410,194 $410,194 $421,593 $410,194 $410,194 $410,194 $421,593 $410,194 $410,194

Net Income $0 $2,083,158 -$398,194 -$116,557 $49,282 $279,597 $540,192 $842,467 $1,175,022 $1,572,053 $1,999,365

ES 395 34
 Start-up Fund

Start-up Fund Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Grants $1,630,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Equity Inflow $0 $0 $0 $0 $88,242 $318,557 $579,152 $881,427 $1,213,982 $1,611,013 $2,038,325
Capital Outflow $0 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
Net Cash Flow $1,630,000 -$400,000 -$400,000 -$400,000 -$311,758 -$81,443 $179,152 $481,427 $813,982 $1,211,013 $1,638,325

Beginning Balance $0 $1,630,000 $1,230,000 $830,000 $430,000 $118,242 $36,798 $215,951 $697,378 $1,511,359 $2,722,372
Fund Balance $1,630,000 $1,230,000 $830,000 $430,000 $118,242 $36,798 $215,951 $697,378 $1,511,359 $2,722,372 $4,360,697
*We plan on giving on average $400,000 a year to fund our start-up businesses
*$918,363 grant will balance out our negative cash flow until our equity stream can sustain the fund
*We are asking for $1,000,000 to initiate our start-up fund to account for budgeting margin of error
*$400,000 capital outflow based on Enterprise Ireland's 100K average capital requirements for a start-up firm * 4 firms graduating per year
*Equity Inflow based on Equity Payments Received and not used to cover expenses

Entrepreneur Growth and Equity Stake Projections

Average Annual Sales Growth Figure $239,535

Equity Stake 5%
Individual Entrepreneur's Firm Projections
Post Incubator Graduation Year 0 Year 1 year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 10 Year Totals
Client Annual Revenue
Student Entrepreneurs $0 $200,000 $439,535 $679,070 $918,605 $1,158,140 $1,397,675 $1,637,210 $1,876,745 $2,116,280 $2,355,815 $12,779,075
Equity Payments $0 $0 $33,954 $45,930 $57,907 $69,884 $81,861 $93,837 $105,814 $117,791 $606,977
Local Entrepreneurs $0 $400,000 $639,535 $879,070 $1,118,605 $1,358,140 $1,597,675 $1,837,210 $2,076,745 $2,316,280 $2,555,815 $14,779,075
Equity Payments $0 $31,977 $43,954 $55,930 $67,907 $79,884 $91,861 $103,837 $115,814 $127,791 $718,954
*Year 0 is the year the clients are developing their business in the incubator
*Equity Payments based on 5% of annual revenue after $500k minimum threshold has been met
*Each student firm will have sales in the first year of approx. $200K, with growth based on the average sales growth figure of post-grad incubator firms
*Each Non-Student firm will have sales in the first year of approx. $400K, with growth based on the average sales growth figure of post-grad incubator firms

Cumulative Entrepreneurs Firm Projections

Post Incubator Graduation Year 0 Year 1 year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 10 Year Totals
Client Annual Revenue
Student Entrepreneurs $0 $348,000 $1,112,791 $2,294,373 $3,892,745 $5,907,909 $8,339,864 $11,188,609 $14,454,145 $18,136,472 $22,235,591 $87,910,499
Total Firms Graduated 2 3 5 7 9 10 12 14 16 17
Local Entrepreneurs $0 $696,000 $1,808,791 $3,338,373 $5,284,745 $7,647,909 $10,427,864 $13,624,609 $17,238,145 $21,268,472 $25,715,591 $107,050,499
Total Firms Graduated 2 3 5 7 9 10 12 14 16 17
Cumulative Client Revenue $0 $1,044,000 $2,921,582 $5,632,745 $9,177,491 $13,555,818 $18,767,727 $24,813,218 $31,692,290 $39,404,945 $47,951,181 $194,960,997
TOTAL Incubator Equity Received $0 $0 $281,637 $458,875 $677,791 $938,386 $1,240,661 $1,584,615 $1,970,247 $2,397,559 $9,549,771
*Based on 4 student and 2 non-student firms always in the incubator program
*2 student firms will graduate every year, while 2 will re-apply
*2 Non-student firms will graduate in approximately one year
*Based on 4 student and 2 non-student firms always in the incubator program
*87% survival rate of businesses post incubation period of operations factored into formula by multiplying the annual revenue and the total firms graduated by .87

ES 395 35
 Balance Sheet

Business Operations
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Cash $878,000 $499,818 $422,221 $521,862 $829,020 $1,408,172 $2,289,599 $3,514,979 $5,114,594 $7,152,919
Total Assets $878,000 $499,818 $422,221 $521,862 $829,020 $1,408,172 $2,289,599 $3,514,979 $5,114,594 $7,152,919

Liabilities
Salaries Payable $323,100 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800
Rent Payable $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000
Insurance Payable $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440
Utilities Payable $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800
Marketing Payable $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894
Accounts Payable $14,948 $300 $300 $11,699 $300 $300 $300 $11,699 $300 $300
Total Liabilities $390,182 $371,234 $371,234 $382,633 $371,234 $371,234 $371,234 $382,633 $371,234 $371,234

Retained Earnings $487,818 $128,584 $50,987 $139,229 $457,786 $1,036,938 $1,918,365 $3,132,346 $4,743,360 $6,781,685
Total Shareholders' Equity $487,818 $128,584 $50,987 $139,229 $457,786 $1,036,938 $1,918,365 $3,132,346 $4,743,360 $6,781,685

*Accounts Payable is office supplies

Ratio Analysis

Efficiency
Company Turnover: 2 student firms every year, and 2 local entrepreneur firms every year
Applications Reviewed 530
Accepted into program 4
Acceptance Rate: 1%
Profitability

Individual Entrepreneur's Firm Projections

Post Incubator Graduation Year 0 Year 1 year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 10 Year Totals
Client Annual Revenue
Student Entrepreneurs $0 $200,000 $439,535 $679,070 $918,605 $1,158,140 $1,397,675 $1,637,210 $1,876,745 $2,116,280 $2,355,815 $12,779,075
Equity Payments $0 $0 $33,954 $45,930 $57,907 $69,884 $81,861 $93,837 $105,814 $117,791 $606,977
Local Entrepreneurs $0 $400,000 $639,535 $879,070 $1,118,605 $1,358,140 $1,597,675 $1,837,210 $2,076,745 $2,316,280 $2,555,815 $14,779,075
Equity Payments $0 $31,977 $43,954 $55,930 $67,907 $79,884 $91,861 $103,837 $115,814 $127,791 $718,954

Return on Investment (Grant)

Business Operations Grant Proposal $870,000
year 1 year 2 year 3 year 4 year 5 year 6 year 7
Net Cash Flow -$382,182 -$359,234 -$77,597 $88,242 $318,557 $579,152 $881,427
ROI -43.93% -41.29% -8.92% 10.14% 36.62% 66.57% 101.31%

Start-up Fund Grant Proposal $1,630,000

year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8 year 9 year 10
Net cash Flow -$400,000 -$400,000 -$400,000 -$311,758 -$81,443 $179,152 $481,427 $813,982 $1,211,013 $1,638,325
ROI -24.54% -24.54% -24.54% -19.13% -5.00% 10.99% 29.54% 49.94% 74.30% 100.51%

ES 395 36
 Growth Projection

Option A facility near campus year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8
clients in program 6 6 6 8 8 14 14 14
Locations 1 1 1 1 1 2 2 2
*Growth projections not factored into cash flow statements because of desire to remain conservative with numbers
*Increase clients in year 4 due to sustained cash flows
*We will target a similar size office and similar rental price of our existing facility, with location close to campus

Option B facility in Life Sciences Building year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8
clients in program 6 6 8 10 10 12 14 14
Locations 1 1 1 1 1 1 1 1
*Increase clients in year 4 due to sustained cash flows
*Life Science building has the capacity for more clients already, goal is to sustain the existing program before growth

ES 395 37
 Appendix F: Founders Résumés
JOSH UA M . BLOOM
4155 Hickory Ridge Rd. • A nn A rbor, MI 48104
jmyles@umich.edu • 734.646.5620
ED UCA TI ON UN I V ERSI TY OF M I CH I GA N A nn A rbor, M I
Stephen M . Ross School of Busi ness
Bachelor of Business A dministration, M ay 2008
• GPA 3.41/ 4.0
• Emphasis in Finance and A ccounting
• M ember of Finance, A ccounting Clubs
• Selected by A ccounting Club as Tutor for Financial A ccounting
• Currently Developing University Business Incubator
• M ember of Tamid Investment Group, N on-profit Israeli investment fund
Col l ege of Li terature, Sci ence and A rts
Broad Liberal Arts curriculum w ith pre-business emphasis, April 2006
• GPA 3.5/ 4.0 (Fall 2004-Winter 2006)
• Study A broad, International Education of Students, Barcelona Espana
EXPERI EN CE I N TEL CORPORA TI ON FI N A N CE Portl and, OR
2007 Fi nanci al A nal yst
• Participated on a finance team in actively managing a 1600 employee division w ith a
$400,000,000 spending budget.
• A nalyzed Intel's validation division by using a SWOT analysis to make the business more
cost-effective.
• Created a should-cost project forecasting tool that allow ed Finance to evaluate potential
projects, and more accurately budget their exp enditures.
Summer 2006 YA H OO!, I N C. RESEA RCH & D EV ELOPM EN T Barcel ona, Spai n
Researcher
• Developed plan to reorganize Yahoo Question and A nsw er forum by analyzi ng consumer
behavior and customer segmentation, leading to program updates and increased
costumer satisfaction
• Participated on cross-cultural team to improve Yahoo! information retrieval capabilities
resulting in increased search engine efficiency
• Conducted independent research initiative on international professional business
environment to analyze cross-cultural differences
Summer 2005 BLOOM GEN ERA L CON TRA CTI N G Redf ord, M I
I ntern
• A nalyzed potential commercial building project in order to achieve company standard
return on investment of 10%
• Processed receivables, payables, payroll and employee travel expenses and through
procedural refinement, increased efficiency of these processes and decreased loss caused
by common accounting mistakes and delays
• Processed and assessed vendor proposals in medical and auto insurance resulting in cost
reduction from $157,000 annual to $134,000 annual
2005-Present BOSS CON SULTI N G GROUP A nn A rbor, M I
Proj ect M anager
• M anaged a team that analyzed and improved several initiatives taken by the University
H ealth Services including: A ids A w areness, health A w areness program, and "Stay In The
Blue" Alcohol A w areness program resulting in increased student participation
• Worked with team to re-organize the University's Student A ctivities Leadership Board
improving overall organization in operations
• Built relationship and developed project with University H ealth Services resulting in the
creation of a two-semester, 10 team member consulting project

ES 395 38
A D D I TI ON A L • Proficient in Spanish
• PA DI Certified Scuba Diver
• Captain: Varsity, Junior Varsity, and Freshman High School Soccer teams
• Interests: Soccer, H iking, M ountain biking, Skiing, Rock-Climbing, H orseback riding

GA RY D A V I D WEI N TRA UB
1320 Cambridge Road • Ann A rbor, MI 48104-3563
garydw@umich.edu • 610.999.1711

ED UCA TI ON UN I V ERSI TY OF A nn A rbor, M I

M I CH I GA N
Stephen M . Ross School of Busi ness
Bachelor of Business A dministration, M ay 2008
• Emphases in M arketing and General M anagement
• BBA Marketing Club VP External A ffairs and Michigan Gourmet Club member
• G.P.A . 3.6/ 4.0 (M arketing Concentration G.P.A . 4.0/ 4.0)

Col l ege of Li terature, Sci ence and the A rts

• Pre-Business and H ebrew and Judaic Cultural Studies emphases
• University H onors Program
• G.P.A . 3.5/ 4.0

EXPERI EN CE S.C. JOH N SON & SON , Raci ne, WI

I N C.
Summer 2007 M ark eti ng I ntern
• Led eight cross-functions in year one launch management analysis and developed best
practices go-to-market strategy based on key drivers of success.
• Worked with Promotion Department and performed A .C. Nielsen based analysis to
optimize value, creative, and circulation of 11/ 11/ 07 FSI (Free Standing Insert).
• Collaborated with Art, Marketing Research, and Engineering Depts. to develop stimulus,
secure consumer feedback, assess costs implications, and recommend lead option for next
generation unit.
• Recommended list of marketing tests to conduct for continued learning.
• Exposed to advertising progression, from initial story-boards to first cut.

2004-2006 PROGRESSI V E BUSI N ESS Bryn M aw r, PA

PUBLI CA TI ON S
Summers Col l ege I ntern
Supervi sor
• Promoted from A ccount Representative to Senior Representative July 2004 and College
Intern Supervisor M ay 2005; maintained sales average in top 5% of 450 person division.
• H eld dual responsibility of producing subscription sales of business publications to high
level executives as w ell as supervising sales representatives.
• Implemented improved training programs such as monitoring sessions and w orkshops,
contributing to 30% rise in office sales from previous summer, 18,500 to 24,000.

ES 395 39
 • Interview ed 100 prospects for intern program, making independent hiring decisions.

2004-Present PSI UPSI LON A nn A rbor, M I

FRA TERN I TY
Presi dent
• H eld positions as President 2006, VP Fall 2005, and Pledge Class President Fall 2004.
• Represented 68 member fraternity at w eekly Interfraternity Council meetings.
• Led w eekly Chapter and Executive Board meetings.
• Planned and executed innovative rush activities, leading to 100% increase in pledge class
membership, from 12 to 24, and largest pledge class in over decade.
• A ttended Archons' A cademy, convention for Psi Upsilon Presidents w here topics of
discussion included leadership, goal setting, and communication.

2004-Present V OLUN TEERS I N A nn A rbor, M I

A CTI ON
Executi ve Board
• Restructured marketing plan by repositioning organization and targeting additional
segments, leading to 75% membership increase, from 24 to 42.
• Facilitated monthly trips to Food Gatherers' soup kitchen with group of 10 students.
• Tutored middle school students w eekly at Peace N eighborhood Center.

A D D I TI ON A L • Interests include culinary arts, athletics, professional sports, and travel.

• Coached w heelchair basketball team of physically challenged adolescents, ages 12-14.
• Graduated from H averford H igh School, June 7, 2004; Varsity basketball team member.
• Earned Jewish Community H igh School Diploma in Jew ish Studies and H ebrew School
Teaching Certificate from Gratz College, M ay 16, 2004; fluent in H ebrew language.
• Proficient in M icrosoft Word, Pow erPoint, and Excel.

ES 395 40
 SAMUEL GARFINKEL
720 Arbor Street • Ann Arbor, MI 48104
garfisa@umich.edu • 301.943.9530
EDUCATION UNIVERSITY OF MICHIGAN Ann Arbor, MI
Stephen M. Ross School of Business
Bachelor of Business Administration, May 2008
• Emphasis in Marketing
• G.P.A 3.4/4.0
• Marketing Club Member
College of Literature, Science, and the Arts
• Broad liberal arts curriculum with Pre-Business and Economic emphasis
• Phi Beta Kappa Wheelhouse, University Honors Winter 2005
EXPERIENCE BEST BUY CO., INC. Richfield, MN
Summer 2007 Buyer Analyst Intern
• Led a cross-functional team in the introduction of a revolutionary gaming laptop. The
resulting marketing strategy created a unique partnership designed to become an
industry leader despite having significantly fewer SKU’s than its competitors.
• Developed techniques to increase regional market share for the laptop category through
the use of product assortment, space management, and advertising.
• Using demand curves, analyzed price fluctuations and their effect on sales to coordinate
regional pricing strategies and end of cycle markdowns.
Summer 2006 SPHERE TRENDING Waterford, MI
Summer Intern, Marketing Research
• Conducted product and consumer trend research for Sphere Trending's "Monthly Macro
Report" used by clients to develop new products, line extensions, and marketing
strategies.
• Assisted in demographic research and analysis to quantify market size which supported
acquisition suggestions made to holding companies.
• Participated in ideation sessions to identify new product opportunities for retail and
consumer goods companies based on extensive trend research. Many suggestions
developed in those meetings are currently in production.
2006-Present SIGMA PHI EPSILON FRATERNITY Ann Arbor, MI
New Member Developer, Greek Week Coordinator, Rush Chair
• Integrate new members into the organization by designing a four month program
incorporating all necessary events, coordinating activities, and facilitating two meetings
each week.
• Organized the fraternity's involvement in Greek Week, an extensive charity that
includes more than 4,500 members of Greek organizations, raising thousands of dollars
for charity.
• Promoted fraternity recruitment events to potential new members, resulting in record
attendance for the fall of 2006.
Summer 2005 BEGAL ENTERPRISES Rockville, MD
Office Assistant
• Oversaw inventory management processes used to track status and location of client
items.
• Communicated with clients on the status and location of their items in addition to
organizing delivery to ensure customer satisfaction.
• Reformatted and updated warehouse maps to allow customers to view up to date
information on the location and condition of damaged items.
ADDITIONAL • Played soccer throughout the United States and Europe on a travel soccer team, in
addition to being a member of the number one high school team in the Washington D.C.
metropolitan area.
• Studied abroad in Spain at the University of Alicante.

ES 395 41
 ADAM FINKEL
3872 Columbia • Bloomfield Hills, MI 48302
finkelad@umich.edu • Mobile: 248-302-3477

EDUCATION
THE UNIVERSITY OF MICHIGAN Ann Arbor, MI
COLLEGE OF LITERATURE, SCIENCE AND THE ARTS
Interdisciplinary Program, April 2008
• Focus in political science
EXPERIENCE
Winter 2008-Present AMBASSADOR RONALD WEISER Ann Arbor, MI
Internship
• Overseeing a legal settlement which will result in a cash reimbursement
exceeding $18,000

Fall 2007 THE WHITE HOUSE Washington, DC

Internship
• Interim staff assistant for the Deputy Director of Presidential Personnel
• Researched and sourced senior level candidates recommended to the President
• Helped form the President’s Advisory Council on Financial Literacy

MICHIGAN NOW! Southfield, MI

Internship
Summer 2007
• Worked with Chief Financial Officer of top real estate group to analyze business
needs of state and develop new venture to promote economic growth
• Created marketing and strategy plans for the twenty core partners of the
program, the academic and media community, and prospective partners

MACHINETOOLS.COM West Bloomfield, MI

Internship
Summer 2007 • Supported founder and CEO of top-ranked machinery website with daily
business functions; including billing, database management and customer support
• Assisted development of new company targeted to fishing enthusiasts

UBS FINANCIAL Birmingham, MI

Summers 2004-2006 Internship
• Followed trends for various industries and kept up on relevant analyst reports
• Researched foreign and domestic equities, as well as macroeconomic trends
• Examined asset allocations of client portfolios, suggested diversification strategies
Summer 2005 STARTUPNATION Birmingham, MI
Internship
• Initiated research report for weekly small business radio show
• Compiled facts and news articles to be used for future feature segments
• Developed media library to keep track of articles about StartupNation

Fall 2004-Fall 2005 CREATIVE CAPITALIST COLLOQUIUM East Lansing, MI

Founder and President
• Established a speaking series facilitating student discussion with prominent
entrepreneurs across the nation; Organized the logistic and publicity needs

December 2004- INTERNAL COMBUSTION Internet

September 2006 Book Researcher
• Worked with award winning, bestselling author and international team of
researchers on Pulitzer-nominated publication
• Assisted the research of an investigation into the effects of America’s dependence
on foreign oil

Winter 2006 HILLEL BUSINESS AND TECHNOLOGY MISSION TO ISRAEL Israel

Participant
• Attended a highly selective, 10-day fact finding trip with students across the
nation that explored the current economic framework in Israel
• Addressed financial topics in discussions with venture capitalists & investors

ES 395 42
ES 395 43
 Appendix G: In-depth Interviews

Business Incubator Questionnaire for Entrepreneurs

Please briefly introduce yourself and the business that you started.
Are you familiar with the idea of business incubation?
Business incubator accelerates the successful development of entrepreneurial companies via an
array of business support services, offered both in the incubator and through a network of contacts.
Would you have been interested in utilizing a business incubator at the University of Michigan and
for what assistance?
Please write down the top 3 challenges/uncertainties you experienced when starting your business.
What potential business incubator resources could have helped you overcome these challenges?
If these resources had been readily available, which would you have most likely used and why?
How interested are you in office space? Expert counseling? Interacting with other entrepreneurs?
Networking with potential investors?
How much time do you feel you would need in a business incubator before you could make it on
your own?
Would you potentially rather pay an hourly fee, royalty, or equity stake? [5 min]
Where would you have liked to have learned about a business incubator? An ad in the Michigan
Daily, flyers, word-of-mouth, on-location, e-mail, posters, orientation?
Please tell me what you think about the following potential names for the business incubator:
Genesis, iMpower, mTHincERS, etc.
Please copy and paste three pictures/images from the internet that describe the process of starting
your business and write down a quick explanation of why you chose each specific image.

-My name is Jerry Kozak. I started an online t-shirt retail site featuring internally designed college
humor t-shirts. The idea was to fill the market niche caused by the fact that there were very funny
college shirts online addressing global themes, and incredibly lackluster local humor shirts. We
designed funny local shirts. We also employed a crafty marketing technique on facebook, finding
groups with several hundred members devoted to something we could make a t-shirt for (like Chuck
Norris, Steve Irwin, etc.) We then offered the administrator a free t-shirt in exchange for messaging
his/her entire group, which received a much, much higher read-rate than spam, as the lack of spam
on facebook means that people usually read all messages. Our return on a typical endeavor of this
sort yielded about five shirts per hundred people at a cost of about $5 to cover the free admin shirt.

ES 395 44
-No
-Not at the time, as we were only making a half-hearted business venture to get experience and into
the business school. If I were to try to do this for real, though, and make a career out of it ,
absolutely.
-Copyright and libel were major concerns, particularly after being forced to return profits to Chuck
Norris by his attorney after they found out we had been selling shirts with his image. Access to legal
advice without having to pay lawyer fees would have been stellar.
Production faculties were also a huge concern and headache, as we were using hobby-grade
equipment and running the process out of our rooms. We really wanted to outsource the production,
but did not know where to look. This was the number one factor contributing to our decision to stop
the business-the production took so much time we were doing poorly in school and losing our social
lives. Networking in this area to find a supplier would have saved the business.
Financing for capital equipment was also an inhibitor. As college students, we did not have credit to
get a conventional loan for major equipment, and access to financing resources who were willing to
look at the strength of our business plan rather than running the numbers through a calculator could
have meant an influx of cash for production that we would not have access to otherwise.
-I really needed a supplier to outsource production to. Hell, if I could find that, I would restart the
business today. We were great at selling and marketing, it was just the production that sapped the
life out of us.
-Office space would be superfluous, but a physical retail location would be huge, and if that were
available, finding a financial backer would be essential. So, in a word, all of the above.
-We could make it on our own right off the bat if we had the time (no school) and drive, but having
resources like that at our disposal would mean the difference between crawling for a few years and
taking off running.
-A royalty would be ideal. We couldn’t afford an hourly fee, but royalties or an equity stake would
work really well.
-Word of mouth.
-I hate “iWords” a lot, and mTHincERS is off-putting and convoluted. If the premise of an
incubator is to help the new entrepreneur navigate the jungles of new business, I don’t think a word
like mTHincERS conveys an image of clarity at all.
Genesis makes me think of Mortal Kombat on Sega Genesis, which was awesome, but entirely
different from what I want for my business. However, the concept of a cool word to describe the
spawning process is baller (Genesis just carries too much connotation with it to me). Something
like Taproot to emphasize the role that the incubator plays in a business, that is, providing the
resources it needs to grow.
With that said, Genesis is very good, and if you found in surveys that most people do not conjure up
images of the band or video game console, it is a very fitting, descriptive, stylish name.

ES 395 45
 1. Starting a business is terrifying. Especially when
you get bills and do not have money saved,
investors to infuse cash, or another job.

2. Seeing your sales pile up on your dashboard is a

total “Holy Shit!” moment. It is very exciting and
tremendously rewarding

3. My favorite stock photo site tells me that

this is what “confused” looks like. I am not
sure, it looks more like someone who just
shit themselves in the middle their
grandkid’s recital. Either way, the point is
that the entire process gets confusing at
times, and in my case in particular, there
was always an over-arching sense of
confusion stemming from the fact that I
think we knew that we were not going to
put our all into the enterprise, we just didn’t
have the time, and the future of it was
always ambiguous. Even had this not been
the case, I think there is always confusion
for a young company regarding the future
and where to go next.

ES 395 46
-I’m a 23 year old senior at the University of Michigan, Ann Arbor. I started Elysium Contracting, a
full service residential and commercial painting company that performs maintenance and alterations
for clients in Washtenaw County. In 2007, Elysium grossed $258,000 and employed 22 workers.
-I understand the concept but have never read about it extensively or had experience with it.
-Yes; to direct me on areas I needed to research before embarking on certain ventures or expanding.
Also, on help with general business budgeting, hidden overhead costs I may have overlooked [tax
rates, etc], and support in developing a business plan, and having that plan scrutinized by a
professional. I could have benefited from creating a much more detailed plan, and even when I went
to the Chamber of Commerce for free small business counseling the idea never came up.

1. Employer taxes on wages – every employee has a different tax rate! It took much more
paperwork than I thought determining how much to budget for, and made financial
planning very difficult.
2. Market analysis – I wish I knew of a better way to judge which customers had a greater
need and greater ability to pay. I could assume property values would be one indicator
but had no idea which area of research to begin for the trades industry.
3. Competitive analysis – I wish I had a stronger understanding of my competition and
ways I could uniquely appear superior to them

-The second, market analysis. As I had no formal business education I had never even heard of
PEST, SWOT, matrices or the Porter model, all of which are useful resources.
-Only if it’s available during all regular business hours and weekends, accessible to the general
public, and at a lower cost than the general market for leasing office space.
-It depends on who’s the “expert.” Are they better than SCORE or SPARK? How much does it cost,
is it customized, and is there follow-up?
-Depends on who they are, but yes. I go to SPARK and Chamber events regularly.
-Not so much at this point, perhaps in the future very interested.
-I’ve already made it on my own; an incubator would only help improve the process. However, if
and when I develop a new concept I would consider using an incubator only if I considered it
superior to any potential business mentors I had access to.
-Hourly. I wouldn’t even consider royalty or equity unless there was an objective, 3rd party free
educational seminar on the benefits and detriments of each.
-Any credible source; all those avenues could work if done well.
-Genesis is great. How about iGenesis? mGenesis? mTHincERS is way too bizarre and looks stupid
and amateur.
− Started business by himself. Didn’t want to share profits, stopped when school began
Notes from Justin Vincent Interview
− Direct to consumer model, didn’t manufacture products, bought wholesale
− Came up with idea in late July
− Wanted to make easy money
− 5 hours a week for one to two months

ES 395 47
− Justin saw two large markets. International students who were unable to bring big products to
campus and high end neighborhoods that had big demand for consumer products
− Minimal initial costs, mostly limited to getting a $10.00 DBA in his city
− Accountants and Lawyers assisted pro bono to help him establish the business
− Early failure in understanding legal and accounting needs to grow business
− Lacked enough time in summer to get off the ground
− Another mistake: diving in too early, not knowing entire process
− Would not prefer workshops at incubator, crash course more helpful
− Diverse network vital for successful incubator, contacts key in getting established
− Independent study would be helpful, popular with students
− Incubator must help with strategic issues
− Dialogue needed with entrepreneurs, speakers alone don’t provide it
− Informal places best to meet – ie: library, coffee shop
− Incubator would spread best through word of mouth, Daily article would help
− Incubator must have credibility
− Important for incubator to be affiliated with university to have credibility
− Many entrepreneurs thinking more than just about college
− Some view starting a business as part time job
− Assistance with equity may have helped getting started
− Wasn’t sure of early capital needs

i
"Michigan Unemployment Hit 7.6% in December." MLive.Com. 17 Jan. 2008. The Associated Press. 15 Apr. 2008
<http://www.mlive.com/business/index.ssf/2008/01/michigan_unemployment_hit_76_p.html>.
ii
"Ann Arbor Population and Demographics." Area Connect. 2008. 2000 US Census. 15 Apr. 2008
<http://annarbor.areaconnect.com/statistics.htm>.
iii
“100 best places to live and launch - 1. Bellevue, Wash. (1) - FORTUNE Small Business,”
http://money.cnn.com/galleries/2008/fsb/0803/gallery.best_places_to_launch.fsb/.
iv
Coleman, Mary Sue. “Five Years Forward - An Address to the University of Michigan Community.” 11/15/2007.
v
“100 Best Places to Live and Launch.” Fortune Small Business. 19 March 2008.
http://money.cnn.com/galleries/2008/fsb/0803/gallery.best_places_to_launch.fsb/index.html
vi
Aguilar, Louis. “Worse Yet To Come for Michigan Economy.” The Detroit News. 13 June 2007.
vii
Steve Hamp Meeting.
viii
Audretsch, David B. and Roy Thurik. “Linking Entrepreneurship to Growth.” OECD Directorate for Science,
Technology, and Industry. 9 May 2005.
ix
Interview with Justin Vincent. 6 March 2008.
x
Interview with David Landau. 9 March 2008.
xi
Interview with Gerry Kozak. 10 March 2008.
xii
“Ann Arbor Observer 2008 Media Guide.” <http://www.arborweb.com>.
xiii
“Detroit Free Press Ad Rates.” <http://placead.advertise123.com/adstar_nexus.asp?pubid=506&refid=506>.
xiv
“The Michigan Daily Advertising Booklet.” <http://www.michigandaily.com/advertise>.

ES 395 48
xv
Len Middleton Biography. <http://execed.bus.umich.edu/Faculty/FacultyBio.aspx?id=000392010>
xvi
Jeffrey Schox Biography. <http://www.schoxplc.com>
xvii
Marc Weiser Biography. <http://www.wpvc.com/team_partners.htm>
xviii
Stephen Forrest Biography. <http://www.physics.lsa.umich.edu/department/directory/bio.asp?ID=1109>
xix
Andy Lawlor Biography. <http://execed.bus.umich.edu/Faculty/FacultyBio.aspx?id=000119740>
xx
Denise Ilitch. <http://www.clarkhill.com/people/attorneys/denise_ilitch>
xxi
Bruce Wasserstein Biography. <http://www.lazard.com/AboutLazard/Firm_Mgmt.aspx#first>
xxii
Larry Brilliant Biopgrahy. <http://www.google.com/corporate/execs.html>
xxiii
Cynthia Wilbanks Biography. <http://www.umich.edu/~govrel/wilbanks.html>
xxiv
Gauri Nanda Biography. <http://alumni.media.mit.edu/~nanda/index2.html>
xxv
Tom Porter Biography. <http://www.bus.umich.edu/FacultyBios/FacultyBio.asp?id=000194623>
xxvi
Steven Hamp Joins McKinley Board. <http://www.mckinley.com/about-mckinley/news/2007/steven-k-
hamp-joins-mckinley-board-of-directors/>
xxvii
Doug Rothwell Biography. <http://www.detroitrenaissance.com/about-us/staff/doug-rothwell>
xxviii
Michael Finney Biography. <http://www.annarborspark.org/>
xxix
Stanford Ovshinsky Biography. <http://www.ovonic.com>

ES 395 49