Factors Affecting The Students Business Plan and Implementation in The PPM Incubators

cafe incubator ppm manajemenThe undergraduate student in PPM Management and Business School has to implement the business idea in the incubators in the entrepreneurship class. The students are divided into three groups related to the 3 PPM incubators in its campus.

This study is limited in the business plan in running the incubators for three groups, because the incubators are just running in the first week. The business plan of the incubators has been presented in the front of 3 faculties as reviewers.

Using qualitative research, it can be explored that the first, major of the students do not correlate to the good business plan. The group that does not have the marketing major members can make the excellent marketing plan in incubator business plan.

The complete major of the members has the lowest grade in business plan. Second, GPA (Grade Point Accumulation) of the leader influences of the good business plan, but the average GPA of the members of the group does not influence the best business plan.

The good business plan can predict the good result of business performance. Student in any major can be an entrepreneur and the role of the leader in term of GPA as a champion in a group has dominant factors in entrepreneurship. The incubator has the important role to implement the business plan.

I. Introduction

Knowledge transfer between firms and universities plays a big role in the US. Research at American universities is often geared towards commercial application. Business incubators encourage students and professors to bring new research from the laboratories to the market.

Government research only plays a minor role for most startups. The source of spin offs, as an incubator of new venture initiation, can be from government, universities and private companies. Martin (1984) describes that the private companies are more effective incubators than the other institutions.

Whereas, Olken (1974) says that to achieve the utmost in spin offs of this kind, is a matter of getting the right government research and development contracts, a subject which has been treated extensively elsewhere.

The successful growth of high technology companies in and around Cambridge, and their relation-hip with the University, has recently been documented as the Cambridge Phenomenon (Smith, Fleck, 1987).

Moreover, Smillor (1987) explains that the incubator idea is still new and ex¬perimental, consequently some incu¬bators will fail; others will be modi¬fied and still variations on the concept are likely to emerge.

II. Definitions

Business Incubators are unique resources for early-stage development of start-up businesses and serve the same purpose and facilities. Each incubator will target specific kinds of businesses and select clients in a very competitive process that evaluates the future potential of the business.

Incubators help entrepreneurs develop homegrown businesses that add stability to the local economy. Incubators typically offer below-market lease rates plus shared equipment, on-site clerical and management assistance, and easy access to other business services.

Teresa Gillotti and Ryan Ziegelbauer state that Business incubators are facilities that provide small, entrepreneurial businesses with affordable space, shared support and business development services.

They can help young businesses during their start-up period when they are most financially vulnerable. While not a panacea for a community’s economic struggles, incubators can provide a boost to small business and promote entrepreneurship.

1. Clear and Well Communicated Goals. There are many incubator types and structures. Universities develop incubators to benefit from the science, technology and intellectual property resulting from university research. Private investors start incubators as a way to show investment in multiple firms and to make a profit.

Government’s reasons for starting incubators vary, but can include jump-starting the economy, job creation, sector development, etc. Other communities may chose to create an incubator to fill a missing piece of the economic mix whether it is a retail, office or light industrial incubator. Determining specific goals is essential to developing the application process and communicating the benefits of locating within the incubator to potential tenants.

2. Incubator Manager. Incubator tenants will likely struggle with their start-up businesses. An incubator manager involved in tenant selection, day-to-day operations and coordination and facilitation of business services can be not only an invaluable asset to incubator businesses, but also the key to the incubator reaching its goals.

The manager would be responsible for all the key components of an incubator listed here and will serve as a facilitator, mentor, coordinator and colleague of all the incubator tenants.

3. Business Services. While tenants will come with a variety of skills and experience, in deciding the services to provide, it is important to consider the various stages of business development from planning, startup, maintenance and eventual expansion/graduation from the incubator.

Services may include Business Plan Development, Promotional Assistance, Business Network, Technical Support, Funding for Startup and Maintenance, Customer Service, Hiring and Managing Employees, Accounting and Finance

4. Shared Resources. Depending on the focus of the incubator, the shared resources can vary. Some services, including duplicating, faxing and secretarial services can be charged to specific tenants based on use either at a regular or reduced rate.

Shared services can include: duplicating and faxing, answering service, secretarial/receptionist services, conference rooms, shipping and receiving, warehousing, computer support, insurance, joint purchasing agreements, incubator manager or staff, an integrated sound, alarm and music system, credit reports, joint marketing and promotional assistance, high speed Internet service and even an e-commerce website.

5. Physical Space. Space needs will vary with the focus of the incubator. If several tenants decide to produce food, a commercial kitchen and cold storage area would be appropriate common equipment and areas. If retail is more of the focus, then shipping and receiving docks and storage may become necessary.

Generally, subsidized rent is the first thing that attracts potential tenants. Flexible layout and size will encourage the longevity of the incubator as will the ability for tenants to grow in the incubator either by occupying a larger space or by expanding their current site.

6. Financing. The incubator manager or incubator support team should work to gain access to capital for tenants by developing partnerships and pursuing grants and other funding opportunities.

7. Application and Acceptance Process. The goals of the incubator will help determine the application and acceptance process. The criteria selected should provide room for flexibility and creativity. The idea-oriented entrepreneur may not be able to put together the plan, while the detailed businessperson may be able to run a shop but not come up with the exciting product or service to market.

However, business counseling should be available to applicants including access to business and financial planning assistance.

Consideration – Basic assessments include examination of the business and financial plan looking for clear market potential, strategy for reaching the market and sound implementation strategy. The incubator support team may show preference to certain target population groups if one incubator goal is draw a certain market segment.

The location and purpose of the incubator will also help determine if the potential tenant is a good match. Separately, tenants should consider if the incubator provides them the services they will need including location, adequate facilities, appropriate services, enough time before graduation and cost. Tenants should consider any tradeoffs they may experience by entering the incubator as compared with a home business or other location.

Tenancy – Once selected, tenants should have a complete business and financial plan, a signed rental or leasing agreement noting any rent increases over the course of their tenancy in the incubator, and any guidelines regarding graduation. Additionally, tenants should gain working knowledge of the facilities and services available through the incubator.

III. Methodology

Qualitative method is applied to this research, even the number still exist, but statistical calculation is not used. Qualitative researchers study things in their natural settings, attempting to make sense of or interpret phenomenon in terms of the meanings people bring to them. (Denzin & Lincoln, 2000, p.3).

A qualitative approach is one in which the inquirer often makes knowledge claims based primarily on constructivist perspectives (i.e. the multiple meanings of individual experiences, meanings socially and historically constructed, with an intent of developing a theory or pattern) or advocacy/participatory perspectives (i.e. political, issue-oriented, collaborative or change oriented) or both. (Creswell, 2003, p.18).

Qualitative study inquirers state research questions, not objectives (i.e. specific goals for the research) or hypotheses (i.e. predictions that involve variables and statistical tests). (C., 2003, p.105).

IV. Trustworthiness and Validity of The Study

Thomas (2002) explained in how trustworthy are qualitative data that consists of consistency checks in data analysis, stakeholder checks, triangulation of data sources, and independent replication of findings. Whereas, triangulation techniques may involve: two or more data-collection methods, two or more research frameworks or perspectives, two or more data sources (using the same method) and two or more data analysis techniques.

A case study is an exploration of a ‘bounded system’ that is over time through detailed, in-depth data collection involving multiple sources of information rich in context.  This bounded system is bounded by time and place, and it is the case being studied a program, an event, an activity, or individuals.

V. Research Questions

By the independent variables and many influence factors, the research questions are how factors affect the student’s business plan in the PPM incubators? The factors include major composition of the students, academic record showed by GPA to the grade of business plan

VI. PPM’s Incubator

Prof Dr Aloysius M Kadarman SJ, Rector of Sanatha Dharma University in Yogyakarta, the founder of PPM, had an idea of starting a school to teach management skills along the lines of the Harvard Business School.

The dream was soon crystallized in 1967 when Kadarman was in the Nederlands and met FG Hendricks, a Director of Fokker and member of Morakl Rearmament. And together with Prof Dr. Bahder Djohan, from Muslims, Dr. T.B. Simatupang, a senior figure in Protestant, Dr AM Tambunan and later from Hindus and Buddhists, become the circles of PPM, the inter-denominational institute.

PPM-Management now has graduate and undergraduate program in Management Business. For the undergraduate students, in the sixth semester or sophomore, all students must participate in business incubators (compulsory).

The incubators are just for café incubators. The student must sell the foods and beverages, with conditions must be followed that is trading products are not allowed. Every product must have finishing touch in the café. Branding product from out side must be processed. Added value of the products is compulsory to the cafe

In that semester, the student also must decide what major should be chosen that are marketing, finance, human resource and operation.

The students have one semester of entrepreneurship class. During the entrepreneurship class, the incubator business plans also have to be prepared earlier. The students divided into 3 groups and the members are voluntary grouping according to the student preferences.

The locations of 3 incubators are in the PPM campus area, between new and old building, in very strategic places. The steps of the incubator process consist of:

  1. Marketing Analysis; potential markets, competitors inside and outside PPM building, marketing program including segmenting, targeting and positioning, and marketing strategy.
  2. Marketing presentation
  3. Operation Analysis; preparing the menu, source of raw material and machine, layout design.
  4. Operation presentation. Product samples are also presented and tested.
  5. Human Resource Analysis; preparing job description, organizing, employees recruitment procedure.
  6. Human Resource presentation
  7. Finance Analysis; calculating all aspect in term of financial measurement including profit and loss, working capital, and investment needed. All of the money comes from the students. Available credit from PPM is Rp 5 millions per incubators maximum. However, no one takes this opportunity.
  8. Finance Presentation.
  9. Market and Promotion test in the PPM employees and students
  10. Final presentation
  11. Incubator implementation; decorations, recruitment, installations and other preparation
  12. Opening

cafe In ppm manajemenPicture 1: Incubators

This is long preparation and exhausted process during the entrepreneurship class. The motivation of the students must be maintained properly, especially in the incubator process.

VII. Discussion

The names of the three incubators are disguised: Acafe, Bcafe and CCafe. The Acafe has no finance major of the members, but the financial aspect is very detail. Bcafe has no marketing and operation majors, but the marketing plan was excellent. Ccafe has complete major of the members, but score is the lowest form the others two. The other important factor is that there are students not decided yet of their majors.

The Acafe has the higest GPA for the group leader of the incubator; however, the Bcafe has the highest of the GPA average of the members. The Ccafe has the lowest GPA of the group leader and the members.

The important results are:
–    The high GPA of the leader will produce the best business plan of the group
–    The good business plan predicts the good result.

Therefore, incubator is one importance thing to support the realization of business plan, other wise business plan is still a dream without any action.

The theoretical framework is developed as follow:

Table 2: Theoretical framework

theoritical framework

The result of business plan proposed and other variables can be seen in the table as follow:

recapVIII. Conclusion

Using qualitative research, it can be explored that the first, major of the students do not correlate to the good business plan. The group that does not have the marketing major members can make the excellent marketing plan in incubator business plan.

The complete major of the members has the lowest grade in business plan. Second, GPA (Grade Point Accumulation) of the leader influences of the good business plan, but the average GPA of the members of the group does not influence the best business plan.

The good business plan can predict the good result of business performance. Student in any major can be an entrepreneur and the role of the leader in term of GPA as a champion in a group has dominant factors in entrepreneurship. The incubator has the important role to implement the business plan.

References

  • Barrow, Colin. Incubators: A Realist’s Guide to the World’s New Business Accelerators. Chichester; New York: John Wiley & Sons, 2001.
  • Creswell, J.W.  (1998).  Qualitative inquiry and research design.  Choosing among five traditions. Thousand Oaks, CA: Sage.
  • Creswell, J.W. (2003).  Research design.  Qualitative, quantitative and mixed methods approaches.  Thousand Oaks, CA: Sage.
  • Denzin, N.K. & Lincoln, Y. (2000).  Introduction: The discipline and practice of qualitative research.  In N.K. Denzin & Y. Lincoln (Eds.), Handbook of qualitative research (2nd ed., pp.1-17).  Thousand Oaks, CA: Sage.
  • Miles, M. B. & Huberman, A. M. (1984). Qualitative Data Analysis: A Sourcebook of New Methods. California; SAGE publications Inc.
  • Madison gas and electricity. http://www.mge.com/ecodev/business/incubators.htm
  • National Business Incubator Association. http://www.nbia.org/resource_center/index.php
  • Wisconsin Department of Commerce. http://www.commerce.state.wi.us/MT/MT-COM
  • Teresa Gillotti and Ryan Ziegelbauer are graduates students in Urban
    and Regional Planning at the University of Wisconsin-Madison. http://www.uwex.edu/ces/cced

Maria NainggolanMaria Nainggolan
PPM-Manajemen, Jakarta, Indonesia
mar@ppm-manajemen.ac.id

Yanto Sidik PratiknyoYanto Sidik Pratiknyo, International CEFE Association for Entrepreneurship, Frankfurt Germany
PPM-Manajemen, Jakarta, Indonesia

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