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ground. Branding and marketing specialist Brian Erdman also has a thorough knowledge of con-
sumer research acquired at P&G as well as an engineering background. Neal Cawi, our IS expert,
also has sales experience and has participated in the start-up of a successful new venture. Product
supply, development, and quality specialist David Rucker, has had significant exposure to the
commercial side of running a business through his interactions with brand managers and sales
employees at P&G. All four partners have MBAs from Indiana University’s respected Kelley
School of Business. This blend of practical strategic and tactical skills will allow them to contin-
ually challenge each other in making the best decisions for babyyourway.com.
The résumés of each partner are found in Appendix C of this document (omitted).
Partner Compensation and Incentives. Starting in Year 2 each partner will receive an annual
salary of $20K to subsidize normal costs of living. As the company grows, the compensation
package will be revisited. The primary incentive for each partner to deliver strong results is his
ownership/equity stake in the company’s long-term success. Owners will also be eligible to take
discretionary distributions from the company once an agreed-upon level of profitability has been
achieved.
Board of Directors. Babyyourway.com will not initially integrate a hired board of directors to
oversee and consult on the start-up operation. Over time, as the company grows and business
complexities increase, the partners will be open to bringing in a board of directors. Note, how-
ever, that the partners are open to accepting an initial financing offer. Each potential financing
arrangement will be evaluated on its own merits. Details are in the Deal Structure section
below.
Human Resources Management Strategy. During the start-up period, Babyyourway.com will
be very closely run by the core team. Their combined expertise and experiences coupled with
their intent to closely manage the venture for the first couple of years mean that the owners will
personally support several functions, including HR management. There will be no initial need
to divert significant funding toward HR.
As Babyyourway.com grows, the core management team’s ability to own the HR role will be
challenged. At this point, the management team will look for an outsourced HR provider to
ensure that the company’s most important asset, its people, are sufficiently cared for. As the com-
pany grows, a formal development and training program will be implemented to make certain
that the staff is adequately equipped to drive Babyyourway.com toward success. Early thinking
is that this evaluation process will mirror that of many successful larger corporations such as
P&G and GE, where all employees are evaluated annually and this evaluation links directly to the
company’s recognition and reward system. In addition Babyyourway.com will give all employees
some stock ownership (specifics TBD) to further create an environment of employee ownership
and to align the interests of individual with the interests of the company.
At the start, the management team is very committed to driving the company toward long-
term success and is willing to sacrifice short-term personal gain. The LLC structure offers the
owners the advantages of a corporation’s limited liability and a partnership’s taxation. (Note:
This is why no federal income taxes are listed on the provided pro forma financials). As the com-
pany grows and new employees are brought on board, the company’s entity structure and com-
pensation packages will be revisited to attract and retain top-caliber talent without significantly