Vance Gough[footnoteRef1] [1 2001, W. Ed McMullan. Prepa.docx

Vance Gough[footnoteRef:1] [1: 2001, W. Ed McMullan.
Prepared for class discussion and not to illustrate correct or
incorrect management practices.]
Some History: From High School to the MBA
Before the MBA, Vance Gough had been a leader in his
university years and not only became a vice president of the
student union but also a member of the University’s Senate.
He developed ambitions during those years to serve in political
life, sometime in the future.
His father had been a military officer for 31 years. After Vance
completed his undergraduate degree in Political Science with a
minor in Business, he immediately joined an officer’s training
program in the Canadian Naval Reserve. “I thrived on
structure when I first joined the military, even enjoying them
telling me when to get up in the morning and what to wear. I
had a rank and a position. People knew to salute me and I knew
whom to salute. It is all on your shoulder as to how you treat
someone. This is something you accept as normal. It is nice
and easy and very structured. I was a model up and coming
junior officer. I played the military game as well as I could and
I succeeded.” From his military experience moreover, he felt
that he learned how to lead people in the face of personal
danger.
He wanted to build on skills he learned in the previous nine

years (three years, full time) with the Canadian Armed Forces in
food services. He learned how to run a galley, what hygiene
standards are required for food preparation and how to work
with people, cooks in particular.
Vance entered the first year of the University of Calgary MBA
at age 27, thinking that he would specialise in public
administration. However, as Vance entered the program, it was
in transition from being a traditional MBA to being one focused
on Enterprise Development. Vance wasn’t properly informed
that the program was to be an Enterprise Development MBA
until he was registered and the program was, in fact, underway.
He decided to go ahead anyway. “I decided on Calgary over the
MBA in Edmonton because Calgary was more applied and over
BYU because it was less expensive. I thought that with the
Calgary program I could do the second year with as many
Public Administration courses as possible.” Given that
Edmonton and BYU were out of the picture he thought that
since Calgary was focusing on entrepreneurship it wouldn’t hurt
him to study it anyway.
Exhibit I: Time Line from High School to Business
Opening
1984
- Graduated high school.
- Joined Naval Reserve.
1985 - 1987
- Participated on Mormon mission in California.
1987 - 1993
- Completed undergraduate in Political Science.

- Became an officer in the Naval Reserve.
- Spent one year, full time in Student Union as V. P. -
Academic.
- Spent one year, full time in Naval Reserve.
1993 -1995
- Completed Enterprise Development MBA.
- Substantial but sporadic consulting.
- Identified business opportunity in Utah.
- Started as program director in New Venture Program at
University.
- Started teaching entrepreneurship to undergraduates.
1997
- Opened first retail outlet.
Consulting Experiences
During the MBA program he worked with 16 different small and
medium-sized companies and their entrepreneurial founders
(Exhibit II). The first year was spent working with one
company in a group of four over the entire year. “Then I did 3
paid consulting jobs on my own over the summer. The first was
a valuation of three different dental practices that were for sale
on behalf of my brother who had just completed his commitment
to the army for putting him through medical school. The second
was instructing rural economic development officers about
encouraging new business formation. One of the
entrepreneurship faculty members gave me that lead. The third
one was helping a small health care firm in Calgary set up their

information systems. This I got through a referral from a
previous employer.
Then in the second year clinic I did consulting projects for 5
more early stage companies. Three more projects were done
through other courses and finally I did 3 more paid consulting
projects on my own before I was finished.” The paid consulting
jobs were picked up through the New Venture Program in the
Faculty. He found that he could make between $30 and $75 per
hour doing market analyses and business plans by the second
year of the MBA.
Exhibit II: Consulting Projects - Both in MBA Classes and on
Own
A. Consulting Projects Done As Partially Requirements to the
Completion of an MBA.
Time Taken
Integrated business assessment and TQM implementation for
mid-sized industrial binder company
16.0 weeks
Fund raising for provincial sports association
.4 weeks
Prototype evaluation and marketing strategy for and industrial
tank liner company
.4 weeks

Market research and strategic plan for provincial agriculture
producer association
6.0 weeks
Financial plan for medical prosthetic CAD/CAM product
2.5 weeks
Marketing plan & industry analysis for land developer
.8 weeks
Market feasibility study for a secret shopper organisation
.4 weeks
Consumer behaviour profile for adventure tourism business
2.5 weeks
Business plan for aboriginal development business
6.0 weeks
Total Course Based Consulting During
MBA
35 weeks
B. Independent For Profit Consulting During MBA @ $25 -
$75/Hr

Set-up and trouble-shoot data base (2 contracts)
2.4 weeks
Dental practice selection and evaluation (2 contracts)
3.0 weeks
Small business development seminar for rural econ. develop.
.2 weeks
Prioritising business deveop. projects for aboriginal community
3.0 weeks
Set-up personal computers (2 contracts)
.2 weeks
Business plan evaluations (2 contracts)
1.6 weeks
Dental practice software evaluation and selection
2.0 weeks
Total paid business consulting during MBA program
12.4 weeks

Deconstructing the Entrepreneurial Mystique
All this exposure to entrepreneurial ventures eventually broke
the ‘bubble of mystery’ surrounding ‘entrepreneurship’ for him.
Before the program he used to put successful entrepreneurs on a
pedestal, thinking you had to be a very special type of person to
become an entrepreneur. He saw entrepreneurs as risk prone - a
belief, which was based on an uncle whom he saw as a typical
entrepreneur. The uncle appeared to always be chasing business
deals. He even found methods to cut back on his sleep to
increase the amount of business that he could do in off-hours in
order to do more during the day. He would invest numbers of
millions of dollars on single deals realising that some wouldn’t
work. Vance, even though he admired his uncle, viewed
himself as very much a different person in that he was more risk
averse and less focused on money.
“Within the first few weeks of the program I saw that the
entrepreneur in our MBA client company had as many
weaknesses as the rest of us. He had a temper and suffered
chronic depression. He was a control freak with around sixty
employees and ten to fifteen million dollars worth of sales.
However, he couldn’t do everything by himself anymore. He
couldn’t run the shop floor, do shipping and receiving, and get
more sales. His solution was to hire followers and yet still
spend his time trying to micro-manage - checking everything
that everyone was doing. He appeared to be flying by the seat
of his pants. But despite all his limitations he had a successful
company that had been growing for ten years both in sales and
profitability. The students from other groups with other client
entrepreneurs had similar observations.”
An entrepreneur who was a guest speaker in the first couple of
months of the program said to the class that “you only hire
someone to help you make money”, this was for Vance a novel

thought at the time. “I therefore figured that you had to pay
employees less than the value they generate, otherwise you
don’t hire them. Suddenly, I knew that I didn’t want to be
someone else’s employee. I thought: why can’t I make what
I’m worth?”
Fellow Students Starting New Ventures
As fellow students started launching their own ventures during
the program, Vance’s confidence grew and he increasingly
began to believe that he too could start his own business. The
first were two students who planned to launch a chain of bagel
shops in time to catch hold of a new craze. “These people were
my peers.” As they stretched themselves over one summer to
get a bagel shop launched. Vance realised that “it didn’t take
15 or 16 years to get launched.” “When those guys got started
an energy started happening in the class.” Another student
joined the executive group of a small wine distribution firm
with an understanding for equity sharing based on growth.
Three more were planning a computer training business for
children that looked like it might get launched. Someone he
had known for years was putting together a CD ROM business
and looking for other opportunities. A guy everyone thought of
as Mr. Technology had one idea or another on the go. “People
started helping them with their marketing plans. Then others
started getting launched. There was a wave of energy around
doing your own business.”
But it wasn’t everyone who impacted Vance. Some like his
long time acquaintance and Mr. Technology “were the types to
start businesses. I think that I was most impressed by one of
the two ‘bagel boys’ and by one of the people with the computer

camp idea. Whereas some of the other people were intimidating
by their competence, I didn’t see those two as any more special
than me. I thought that if they could do it, then I could too.”
Vance saw people starting businesses beyond the area of their
past education and experience. “When I saw an engineer
opening a bagel shop, for example, I thought that I could and
would open up my scope. I started to get my mind around the
idea of searching for a good opportunity that had potential for
growth. Because the class was sharing ideas anyway, I thought
that if I found something useful that wouldn’t benefit me, it
might benefit someone else.”
“We were a small class of 34 or so and were often split into two
sub-classes for discussions. We were able to spend 25 minutes
or so debriefing ideas from clients or from each other. We were
able to get into depth on things. Moreover the small size
produced an intimacy and bound us to each other. There was
much probing of ideas. People weren’t afraid to challenge one
another either. ”
Thinking about Opportunities
During the second year clinic Vance consulted entrepreneurs
who were in earlier stages of development. “These people were
even more common and many were even risk averse in that they
seemed to want to minimise their risk. Yet, some were
succeeding.”
Also after doing an opportunity identification exercise in the

second year, Vance noticed that his receptivity to opportunities
heightened. “We had read this case about an MBA student at the
University of Washington who was systematically searching for
a business opportunity in Vesper’s book, New Venture
Experience. I saw that his search for opportunities wasn’t all
that effective. Sometimes we close our eyes and ears to what is
around us. I wasn’t going to miss something right in my face. I
became more sensitive to the potential of anything that was
around me, including what the professors were trying to tell us.
The whole group was focusing on how to get to the next step,
whether it was with a client’s project or one’s own. When we
got together socially, we weren’t just talking about the courses,
we were asking about what business ideas they were looking
at.”
The opportunity exercise required him to develop an idea and
present it to 4 other MBAs, who in turn presented their ideas to
him. All were told to be as constructive as possible in their
suggestions to each other. The one that each group judged to
have the best idea then presented their idea to the class. It
didn’t bother him that his idea wasn’t chosen because he felt
that he hadn’t pushed himself enough to seek a really good idea.
But when he saw the simplicity of many of the
ideas[footnoteRef:2] that selected people identified in the class
presentations then he knew he could find something better for
himself. “That was the point in the program where I started
actively looking for opportunities. Although the energy was
already there, the exercise was a spark. The time had come for
me to declare my own direction.” [2: He remembers the
selected venture ideas including a dude ranch, a landscaping
company, a cafe and a lotus notes third party applications
company. Nothing was particularly exciting to him.]
“Although I have always been goal focused, I had largely
accomplished things. I had done my mission for the church; I

had become an officer in the military; and I had obtained a
degree. This time I was going to set my own direction
according to my own needs and not for somebody else or an
organisation. I wasn’t going to let my past determine what my
company was going to be.”
An Idea for a Bakery
Finding a businesscame during a trip by car to Provo, Utah
while in the second year of his MBA. He went with an
entrepreneurship faculty member to deliver a presentation at
BYU on entrepreneurship education. He was the research
assistant on the project. “The MBA students there were asking
such simple questions[footnoteRef:3] that I realised how far
they were behind our program. This gave me even more
confidence.” [3: He remembered the gist of two different
comments/questions posed by both faculty and students. A
faculty member was wondering how you really expected to
educate people to be entrepreneurs. He thought that their
family background, age and disposition made you an
entrepreneur or it didn’t. A student thought that if you
understood how a large company worked then you should know
how a smaller one worked as well.]
While travelling about in Utah County he noticed a bakery that
had a line-up of people waiting to buy bread. Where before he
might have seen the line-up and thought ‘good bread’, he was
now primed to think ‘opportunity’. He waited in line. “After
tasting the bread, I understood why people were lining up to
buy it. It was delicious.”
Vance visited a friend and fellow student from his days at the

University of Calgary as an undergraduate. She was at BYU
completing her Master’s Degree. By an unusual coincidence
she happened to be engaged to marry one of the bakers at the
bakery Vance had visited. They shared ideas about going back
to Calgary and opening a similar business there together. When
they parted company they had already agreed to do some
research on the feasibility of the idea. For one thing the baker
would check out the prices of all the equipment they would
need.
“Before the professor and I left to drive back to Calgary I made
sure that we stopped by the bakery for cinnamon rolls and bread
for the trip back. Because of a snowstorm it took 14 hours
driving and a night stay over to get back. He and his professor
talked about their respective business ideas all the way back.
His professor had heard of the bread company and of its growth
in other states. They discussed how to evaluate the potential of
the opportunity for him in Calgary. “Perhaps because we spent
at least six hours talking about business feasibility I learned
more about it on that trip than I did during the program.”
The idea for a bread store wasn’t the only idea Vance had for a
business during that time. “I probably wrote down four or five.
When I had a neat idea I would make sure that I got it down,
even if it was on a napkin. I figured it was worth a
conversation. I’d pull someone I trusted aside and talk to them
about it. The only other idea, other than the bakery, that I put
real time into, however, was setting up a dental practice
consultancy. My brother was a dentist. I did a major project on
this idea in second year MBA clinic (and as a result didn’t get
to use my time during the MBA to check out the bakery). I
even worked for my brother for a couple of months after
graduation. I saw the work that I did for his business as a
possible template for the dental consulting practice. It is an
idea that still intrigues me and something I have reasons for
pursuing in the future.”

Background Research
“Despite the fact that I was developing more ideas for
businesses, I was becoming much more critical of opportunities.
When I am with other people and they mention business ideas I
often have to keep my ideas to myself. I’m just too critical
when it comes to the holes in ideas. For me, it is a question of
four-part feasibility: market, financial, people and operations. I
look for holes in those four areas.”
Considering himself risk averse, he figured that if he was going
to work for himself he was going to pick something that was
going to succeed. Why not a natural bread store? “Then I
started to rely on what I was taught in order to analyse the
venture. I’d done marketing research and business planning for
other people. I had done strategic industry analysis and I
understood cash management. I knew: how to tackle a
feasibility analysis, how to segment and then target a market,
how to get financing, and why to put together a shareholder’s
agreement. There were so many other bits and pieces of
knowledge I gained that are hard to specify, even tidbits such as
“he who has the gold makes the rules.”
“I wouldn’t have done the business if I hadn’t obtained the
necessary skills in the program. I would have gone back into
the military or somewhere else in the public service.”
After the MBA he found: “in fact, I needed even more than they
were able to deliver in the Enterprise Development MBA. They
didn’t give me enough education in market research, in the
interpretation of financial statements or even on how to do cash
flow projections. These were topics covered in an hour or two.

That was not nearly enough. And I wish I had learned how to
do a work flow diagram for a real start-up in my Operations
Management course, but I didn’t. I added substantially to my
knowledge about new venture start-ups when I began teaching
entrepreneurship to undergraduates. I learned more about the
valuation of a venture from the entrepreneur in residence during
brief discussions in the hallway than I did in the MBA courses.
Moreover I took a fantastic course in negotiations through a
management leadership program after the MBA. For example, I
learned the skills for negotiating a deal with my future partner
and for my lease for which we saved the first three months rent.
This latter was no small feat as there was a very low vacancy
rate in the city at the time.”
Since he had a full time job at the time he had to develop the
business in his spare time. It took time to find a baker with the
right type of expertise to be his partner, and then he had to wait
till his potential partner completed an unrelated university
program (1-year). Market research took between 35 and 40 full
days but was spread out over about a year. “I also got two
marketing classes at the university to do more work for free. I
think that I needed the third party perspective. I needed the
ratification. At this point it was still in the feasibility stage. It
took me 4 months to do a pro-forma cash flow. Writing a
business plan took me another 6 weeks. Then there was a year
to find used equipment. Legal and accounting work, and setting
up a board of advisors altogether took about 2 weeks. Site
selection took 4 months. Raising $20,000 from investors took 6
months. Then it took another 3 weeks to get $75,000 from the
bank. I think that the whole process was really very efficient.
Not only that but the growing familiarity with the evolving
business concept was reducing my anxiety around getting
launched.” Of course the times for these various projects was
overlapping over the two years between graduation and start-up.
Over the time frame Vance took a trip to Virginia to check out a
number of stores. He ran cost benefit analyses on a number of

scenarios that were the four variations on the theme: new
equipment, new store; old equipment, old store; new equipment,
old store and old equipment, new store. He chose the old
equipment, new store combination because this strategy allowed
us to create our own image in the location of our choice while
keeping costs in check.”
Exhibit III: Vance’s Business Development Activities
(total time and duration)
Business Development Activities
Time Required[footnoteRef:4] [4: Total time required assuming
50 hour weeks of Vance’s time only. Partner spent time as well
on site selection and used equipment acquisition.]
Duration
Searching For Business Opportunity
1.0 week
Nov. 94 - Feb. 95
Initial Screening of Idea
0.5 weeks
Feb. 95
Develop Partnership Commitments

2.5 weeks
Feb. 95 - May 96
Complete Market Research
10.0 weeks
Mar. 95 - Mar. 96
Acquire Site and Used Equipment
1.5 weeks
Aug. 96 - May 97
Complete Pro-forma Cash Flow
0.5 weeks
Nov. 96 - Feb. 97
Find Private Investors
1.0 weeks
Nov. 96 - April 97
Write Business Plan
2.0 week
Dec. 96 - Feb. 97
Retain Professionals and Board of Directors

0.2 weeks
Jan. 97
Obtain Bank Financing
0.2 weeks
Feb. 97
Making Commitments
“Our wives’ support was also critical because both of us have
young families. In order to get their wives more fully involved,
they concluded that it might make sense to make them vice-
presidents: one, VP of Human Relations and the other VP of
Marketing. At the time they didn’t realise how much the wives
would be prepared to put into the business.” As it worked out
both women have become very committed and have spent long
hours helping the business succeed.
By the time he had completed a business plan it became obvious
to Vance that he would have to hold onto his job for the time
being because there was no way one store would support both
families. In fact it would take two or three stores before he
could consider giving up his job.
There were a couple of times where he nearly quit, one mainly
because of the increasing demands for a greater proportion of
ownership by his partner. It looked to his partner that he would
be stuck with much more of the work. Why shouldn’t he get
more of the ownership? His and his partner’s wife were

required to sort out their different expectations regarding risk
and reward. “Essentially our wives said: okay, we are going to
work this out and we are going to get over this.” Another time
that he contemplated quitting was just before signing the lease.
“After the lease was signed we were committed. The day we
signed the lease was almost like the day before I got married. I
was filled with trepidation. I felt like I was stepping off into
the unknown.”
His dad didn’t believe he would do it until within two months of
his opening. “My family became supportive once they
recognised that I was going ahead no matter what.” Friends who
knew him well told him that he wasn’t an entrepreneur and that
he would never do it until he was actually underway.
“Everyone was surprised.”
Time for Perspective
Three months after opening the bakery Vance and his partner
were at break-even including market salaries for their time, and
soon thereafter they were making enough money to pay off their
investment within one year. The profits were used to pay down
their bank debt. It was beginning to look like the one small
store could actually support two families.The second store was
expected to open within 11 months after opening the first one.
The critical path to the second store was determined by the time
it takes to train a new baker rather than by the time it takes to
put together the financing. The second time around financing
looked like it should be straightforward.
Although Vance continues to see ideas for other new businesses
he is just not receptive at this time. “I have to keep my focus

on what I am doing now.”
In his full-time job, Vance worked as a project officer (assisting
entrepreneurs) and a part-time instructor of entrepreneurship.
He saw his full-time employment “as a means to both learn
more about start-ups and entrepreneurs, and to act as an interim
job until my company becomes financially capable of
supporting me without draining off too much growth capital”.
In any case the bank demanded that he hold onto the job as part
of their security arrangement.
In retrospect, Vance sees himself as an entrepreneur now,
although he doesn’t see himself as really any different than
before, even though he acknowledges that he wasn’t an
entrepreneur before. “I still don’t see myself as much different.
I used to be risk averse and now I’m just a risk minimizer. The
transformation in me personally is not that great. My values
and goals certainly didn’t change. I learned about what was
required and I learned I could do it.”
“I could do a business plan and knew how to put the right spin
on it for the intended audience. I knew what a finance plan was
and how to raise money. Now I knew how to launch the
business as well. When I think back to what was essential, it
was really a combination of things, most importantly the
combination of course work with the clinic work with real
clients.”
“Although, theoretically speaking, I could have done this
business even without the Enterprise Development MBA, I
probably wouldn’t have done it and almost certainly wouldn’t
have done it as well. The MBA helped me to anticipate and
prepare for the hurdles along the way. The market research I
orchestrated affected my location, my layout, the colour
scheme, the logo, the use of pine and even the type of
employees we selected. Moreover my partner would have been

very unlikely to have accepted my leadership without the
MBA.”
“During my MBA I remember seeing those entrepreneurs as
human with failings like my own. It was important to bring
them down to earth to give me the confidence to proceed on my
own. Now I imagine that my employees see me with many
faults, as their employees saw them. I realise what they went
through now. I too must fly by the seat of my pants. We have a
loose vision of where we want to be, but daily we adapt how we
are going to get there.”
But on some further reflection he observed that “I lived within
the box before and now I don’t care about the box anymore. I
don’t need anyone else’s structure anymore. I’m content with
my own.” Even the structure that the university was imposing
on him in his job was becoming a source of substantial
frustration. “Now it doesn’t bother me to be an individual and I
find I don’t care much about the rank and structure within the
university. I value people for what they tell me. All I care
about is getting my job done right.”
In the university he finds a lot of controversy over how things
should be done. “In a small business you don’t have to deal
with all this crap!”
“If neither the bakery nor my second venture choice, a dental
consultancy, had worked out I would have kept my mind open,
but one thing that really appeals to me is to do a PhD in
Entrepreneurship. I am really fascinated by the subject and
would like to be an entrepreneurship professor in a university
teaching people how to create and grow companies.”
“In my current courses I have had an opportunity to introduce
some of the things that I have learned by doing this business.
Since I found that talking with my peers played a large role in

my realisation that I could do it, I now have my students do idea
generation and opportunity analysis in peer groups. I have
students overcome their anxieties by conducting feasibility
studies on the opportunities they identify. I teach cash flows
from a banker’s perspective because I have had to face a
banker’s questioning. I also have lots of good examples from
my own experience and they seem to like it. They particularly
like getting free bread to sample in class.”
Case Questions:
1. How hard was it for Vance to convince himself that not only
could he be an entrepreneur, but also that it was something he
might like to do?
2. What pieces of knowledge were the most relevant for making
a decision about the new venture?
3. How much work did he need to do to create a credible
opportunity? Explain your response
4. To what degree is Vance an entrepreneur at the end of the
case?

Vance Gough[footnoteRef1] [1 2001, W. Ed McMullan. Prepa.docx

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Vance Gough[footnoteRef1] [1 2001, W. Ed McMullan. Prepa.docx