Yeshiva of Greater Washington - Fall of 2006

Through the Know Idea program, five management teams created five different business proposals. At the semester's end, each management team handed in their written proposal and verbally presented their business concept including the marketing plan, financial analysis, etc. Each person in the class had $100,000 dollars to invest in four businesses. (Each executive couldn't invest in their own business.) The business with the most cash invested in their business was... The Winner.

Over the past two months, five management teams created business plans within the Know Idea Business Incubator. Over the past week, we had twenty investors (so to speak) with $10,000 each listen to the five companies present their business plans and all five of our companies received substantial financial investments. Nineteen investors invested a total of $190,000.

Fifth Place
The company with the lowest investment total received a respectable $17,051 or 9% of the total potential investment dollars. This company was very smart in choosing to market a benefit as opposed to a product to their consumer. The primary benefit was "to provide a consumer-centric product" to consumer-centric grocery stores. e.g. Whole Foods, Trader Joe's, and Wild Oats. The product they were selling happened to be a shopping cart cooler. The concept they sold to the retailers was that a shopping cart cooler that keeps the customer's frozen food cool while shopping conveys that the grocery store cares about the customer's shopping experience.

Unfortunately, this company had two major hurdles that they never cleared to the investors' satisfaction. The investor questioned the product design and never believed that the product would actually keep frozen foods cooler. This was made worse by there not being a description or depiction of the product within the business plan as well as a statement within the company's business plan that said they would bring two pints of ice cream and a cooler for their presentations to the retailers that would show over time the difference between a cooled and a non-cooled pint of ice cream. Why wouldn't they demonstrate this for the investors? Along with these product issues, there were numerous inconsistencies within their financial statements. This includes not accounting for the costs associated with hiring a salesperson and buying a warehouse to store the shopping cart coolers. Their total potential market size was around 40,000 units yet they proposed to sell 100,000 and 180,000 units in years four and five respectively. Investor confidence was low.

With this said, the issues mentioned were hurdles, not show-stoppers. The management of this company was competent and capable of turning this company around. As a consequence, investors invested $17,051 in their business. This company was… The Shopping Cart Cooler Company (David Goodman, Yaval Sassoon, Yosef Cohen, Shmuel Silverman, David Pensak, and Barak Oxman).

Fourth Place
This company received a respectable $28,200 or 14.8% of the total potential investment dollars. This company did numerous things very well including creating detailed financial statements and a thorough description of the company’s operations. The business managers seemed to know the business they were running as well as the market they were entering. The investors felt relatively confident in this company.

This company had three major hurdles that caused investors to balk. First, the product offering that this company was providing seemed to be undifferentiated from innumerable competitors within their market. Second, this was a sales driven business and sales were strongly deemphasized. The company planned to have $2 million in revenues by Year Three as a direct result of the sales efforts of employees with no sales background. The back-up plan for the business in the event of their not driving enough sales was to take a $100 sales course online. Lastly, and possibly most importantly, during the presentation, the company shirked responsibility for the holes within their business plan. Investors asked questions about a weak marketing plan and the response was that the marketing person within the company wasn’t available to answer these questions. Investors asked questions about the meaning of “IT in a Box” and the response was to shirk responsibility for this description. Investors are keenly aware that if they give their investment to a business, they will have a similar meeting to the one they are currently having in three months, six months, and/or one year. When an investor hears "That hole in our business is not my fault" during a meeting, whether explicitly or implicitly, the investor is wondering whether these same business managers are going to be using this same excuse in three months, six months, and/or one year. e.g. In three months, when the investor says, "I gave you $10,000 and there seems to be no Return on Investment", will these business managers say "Our business failures are not our fault." A business manager has to take responsibility for their business.

With this said, the issues mentioned were hurdles, not show-stoppers. The management of this company was knowledgeable, detailed, and more than capable of making their company perform. As a consequence, investors invested $28,200 in their business. This company was… Business Computer Solutions (Yehuda Katz, Moshe Katz, Naftali Fink, and Michael Bates).

Third Place
This company received a respectable $38,050 or 20.0% of the total potential investment dollars. This company selected an interesting product and created a scenario where investors’ interests were peaked. The concept was colored toilet paper to consumers who actively decorate their homes and, more specifically, their bathrooms. The research was relatively thorough and the management was professional. Overall, they made a strong case to invest in their business.

This company had several small hurdles but one major hurdle: consumer demand. The investor questioned whether their target market will want and will buy this product. The company provided lots of good information but the investor was never really convinced.

With this said, this issue was very much a hurdle since some targeted preliminary market research and focus groups would most likely resolve this issue. As a consequence, investors invested $38,050 in their business. This company was… South Bay (Moshe Muller, Levi Cohen, Yonatan Waxman, and Moshe Singer)


There are two remaining companies: one with the most investment dollars and one with the second most investment dollars. I first want to discuss the "winning company" who received the most invested dollars.

First Place
This company received an impressive $57,699 or 30.4% of the total potential investment dollars. This company, like South Bay, had an interesting business concept: customized cars to the hip-hop market. Their concept and documentation to back-up the concept was strong. But, the overwhelming strength of this group was their confidence, clarity, persuasiveness, and charisma.

This company had two major hurdles. This included a weak marketing plan which relied heavily on word-of-mouth and several serious question marks within their financial statements. The warehouse doesn't seem big enough, the machinery used to make the cars isn’t accounted for, and the company hasn’t allocated for any marketing costs. On top of all of this, even with the financial inconsistencies, the company doesn't turn a profit until Year Six.

None the less, this company received the most investment dollars. During the course of the semester we learned that employees are irrational. We learned that consumers are irrational. We learned that customers (e.g. retailers, suppliers, etc.) are irrational. And, now we've learned that investors are irrational. The investors were very attracted to the confidence, clarity, persuasiveness, and charisma that this company conveyed and they invested accordingly. As a consequence, investors invested $57,699 in their business. This company was… MI Cars (Moshe Zwany and Isaac Franco). Yasher Koach to M.I. Cars.

I’d like to say that M.I. Cars was the winner of the "People’s Choice Award". Staying with this film metaphor, I'd like to give an "Academy Award". This award goes to a company that proved that the key to a strong business and business plan is solid financial statements and competent, trustworthy management. This company fulfilled both.

Second Place (in Invested Dollars)
This company received a more-than-respectable $49,000 or 25.8% of the total potential investment dollars. Frankly, if there was one more investor and this investor gave their entire $10,000 to this company, they would have earned the most investor dollars. This company had a strong business concept. They had a compelling market description, a clear targeted consumer segment, and their financials were relatively detailed and believable.

This company had three major hurdles. This included a weak assessment of their competition, an unfocused marketing plan, and a less-than-thorough description of their operations.

With this said, the issues mentioned were clearly hurdles and not show-stoppers. The key to a strong business and business plan is solid financial statements and competent, trustworthy management. This company fulfilled both. As a consequence, investors invested $49,000 in their business. This company was… Baby Boomer Apartments (Michael Schafer, Avi Hillman, Chezke Silbiger, Max Kates, and Adam Sragg).

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