Smeal Students Crafting Real Business Plans, Winning Accolades

UNIVERSITY PARK, PA (October 8, 2008) – Partnering with several startup companies each semester, students in an honors Finance class at Penn State's Smeal College of Business are drafting business plans for actual companies, working with their principals on implementation, and winning more than a few awards along the way.

For several years, Smeal Finance Instructor Greg Pierce has had his Corporate Finance (BA301H) honors class work directly with the owners and managers of up-and-coming business ventures to craft business plans to lead their companies to success. The experiential learning process is a win-win for both the students and the business owners, according to Pierce. The students get real-world experience drafting actual plans intended to be put into practice and the companies are able to tap the minds of some of Smeal's best and brightest students.

"Our students are gaining such a reputation for their outstanding work that I've had to turn down several companies who want to work with them," says Pierce.

A portion of that reputation stems from the success of three of his student teams last semester. Working with The Learning Factory at Penn State's College of Engineering, three of Pierce's student teams collaborated with teams of engineering students on projects that required both engineering and business design. The integrated teams walked away from The Learning Factory's Design Showcase with three awards for best design.

The first-place winners in the Lockheed Martin Design Award category worked with a company called Maximus V Fitness Products, a limited liability corporation formed in January 2007 with a business office at Penn State's Innovation Park. At the time of the student project, the company was developing its ergonomic, hand-held, adjustable weight alternative to dumbbells, called Hand X.

While the engineering students focused on the design and manufacturing of the product, the Smeal students researched the company, studied the personal fitness and rehabilitation equipment industry, identified a target market, named competitors, and created a 40-page business plan to launch Hand X. The student's plan included everything from marketing materials to balance sheet projections to an exit strategy.

"We had to figure out the segments of the market where our product would fit best, and then we had to do in-depth research of our potential competitors and develop strategies on how to market and improve our product so it stands out among its competition," says Serge Muchnik, one of the Smeal students who worked on the Maximus V team.

"Making these choices and giving suggestions to a real business was a great opportunity for gaining hands-on experience and more in-depth knowledge of the process of starting a business, which I can't receive in a classroom setting," he says.

Muchnik's teammate, Smeal student Maureen McCabe, agrees. "Dealing with business professionals and liaising with the engineering team on this project was a great real-world experience," she says. "The project was a good complement to the classroom knowledge we gained at Penn State."

And that's because the project requires students to implement what they've learned in their classes, from marketing to finance to supply chain to management.

"The collaborations with the College of Engineering and the businesses require the students to see the whole picture," says Pierce. "They have to step out of their major focus and put their entire bank of knowledge to use if they’re going to create a successful plan, just like if they were managing their own company."

"We learned that you can't just focus on only one part to be successful in business," McCabe adds. "Although a product may have a great design, it must also have a market niche, a strategic position in the marketplace, and the company must have the operational support and financial capacity to accomplish its long-term goals."

Learning Factory Director Timothy Simpson says the collaboration works well for his engineering students, too. "It makes a lot of sense to have our engineers learn how to work with business men and women because that's what they'll be doing in industry," he says. "The Smeal students certainly bring the practicalities of business into the projects that they engage. 'Is there a market?' 'What does it cost to make?' 'What does the competition look like?' are just a few of the questions that they help the team to answer."

Also sharing in The Learning Factory honors last semester were Smeal teams working on business plans for the Gawryla Company and the Impetus Company.

Gawryla needed a plan to market and license its ProGarner turf aerator, which aerates lawns and athletic fields and, unlike other aerators on the market, automatically collects the remaining soil cores, cutting down on manual labor. The ProGarner team of business and engineering students took fourth place in the Lockheed Martin Design Awards at the Design Showcase.

Impetus grew out of a project in the College of Engineering to create a mobile power source to assist the impoverished residents of Kenya in a variety of the daily activities. The engineering students were tasked with creating a product called "Nguvu," which is the Swahili word for "power," while the business students were responsible for turning this humanitarian effort into a viable business by marketing it to entrepreneurs, community organizations, and NGOs in Kenya. Their resulting design and business plan won the Learning Factory's first-place Humanitarian Engineering Design Award.

A fourth team last semester, working outside of the Smeal-Engineering collaboration, also won accolades in a separate competition. Sushi Tokyo, a sushi lunch box distribution business based out of Lansdale, Pa., took third place in Penn State's first IdeaPitch competition, organized by Smeal's Farrell Center for Corporate Innovation and Entrepreneurship. The startup business is co-managed by one of Pierce's students and owned by his father, who approached Pierce to have his students create a plan for growing the business.

Sushi Tokyo makes sushi overnight for sale the following day in cafeterias at high schools, hospitals, universities, and other institutions. The company, founded in 2007, operates in the five counties surrounding Philadelphia and is projecting annual sales in 2009 to be nearly $1.4 million.

This semester, a team in Pierce's class is again working with Maximus V, this time to bring to market a product aimed at preventing ACL injuries in women, who have a higher ACL injury rate than men.

Another Smeal team is working with Penn State's EcoCAR challenge team, which is competing against 16 other universities to reengineer a Saturn Vue to make it more environmentally friendly. The Smeal students are developing a business plan for the new car as well as for the challenge itself.

A third Smeal team is working with the Penn State Crew club to grow the club, identify a new boathouse and practice facility, and plan possible regattas. Pierce's fourth team this semester is working with Triple Overtime Productions, a startup founded by two Penn State engineering students in the Lion Launch Pad business incubator that manufactures and sells novelty refrigerator magnets with university logos and trademarks.

All four teams received their organization's contact information on the first day of class and are currently in the midst of developing the first stages of their business plans. They'll work on the plans for the entire semester, and present them to Pierce and their company principals in December.

For more information or to have your company considered for planning assistance, please contact Greg Pierce in the Smeal College of Business at 814-865-8750 or grp3@psu.edu.