Upload
lekhanh
View
221
Download
6
Embed Size (px)
Citation preview
• 11,000+ mentors • Experienced executives as
volunteers • Seminars • Free Mentoring
o One-on-one o E-mail
• Resources for small business: http://www.score.org
What Is SCORE? How Can We Help?
Myth: All I need is a good idea Myth: On your own, you won’t have to work hard or long hours Myth: You won’t have to report to a boss. Myth: Business owners do the work they want to do Myth: Self employment limits what you achieve. !!
Myth #1 Start-Up Myths
6
• Cash • Commitment • Advice • Not alone • Not fast growth • Innovate • Communication skills
Key Success Factors
•Multi-task ability •Education/experience •Time and location •Work ethic •Time management •Willingness to ask •Viable business plan !
• Self-starter • Resourceful • Responsible • Organized • Hard worker • Persistent • Decisive • Healthy • Family support
Are You an Entrepreneur?
Chart Title
33%
Failed
Successful
SuccessfulFailed
Source: U.S Dept. of Commerce, Bureau of the Census, Business Dynamics Statistics
Reality: Business Success
Percent New Businesses After Five Years
• Not held back by old • Choose location, name,
logo, alliances • Explore new markets and
directions • See a dream come true
• No base • Greater risk • No track record financing • Dream can become a
nightmare
ADVANTAGES DISADVANTAGES
BusinessStart Your Own Business
• Established clientele • Known quantity • Help in running
business • Available records • Easier financing
• Hidden issues: o Debts, transfer issues o Taxes o Reputation o Loyalty to owner o inventory
• No guarantee of success
Buy a Business
ADVANTAGES DISADVANTAGES
• Convenient location • Less expensive • Flexible schedule • Tax Advantages
• Zoning restrictions • Isolation • Difficult financing • Distractions • IRS scrutiny • Possible scams
Home Based BusinessesHome-Based Business
ADVANTAGES DISADVANTAGES
* Not all organizations in these businesses are scams, but many individuals have been cheated by
numerous unscrupulous operators in these fields.
• Lower startup costs • Greater geographic
reach • Convenience &
accessibility • Flexibility !
• Low conversion rates • Higher competition • No personal contact • Limited information
(e.g., taste, texture, odor)
Online BusinessOnline Business
ADVANTAGES DISADVANTAGES
• Proven product or service • Marketing power • Training, guidance • Continuing relationship • Access to others for help
• Loss of control • Franchise = royalty
plus other costs • Operational boundary • Binding contract • Franchisor problems
are your problems
\FranchiseFranchise a Business
ADVANTAGES DISADVANTAGES
Franchise Disclosure Document FDD
What Is A Business Plan
Your business plan is your road map. It lays out the route to your business future.
Why You Need A Business Plan
1515
• To sell yourself on the business!
• focus
• financing
• key employees
• keep you aimed in the right direction
• To define why buyers will prefer you
1616
Goal - not just to write a plan / It is a to complete the process
•Research the big picture - industry, market, competition, etc
•Document data & draw conclusions
•Determine actions (strategies & tactics) to achieve a successful business
•Develop a detailed outline for yourself
•End with an Action Plan– long view / 3 years
Business Plan Process
Operating Cash NeedsConstructing Your Plan
•Define product or service •Define Target Market •Analyze competition •Clarify business model •Develop marketing / sales tactics •Forecast sales/ P&L/Cash Flow •Develop operations tactics !
Operating Cash NeedsConstructing Your Plan
•Create implementation schedule •Develop start-up expenses •Forecast P & L •Estimate Cash flow •Create budget -> $$$ Required •Owner Worker
•Worker competitive wage •Owner Profit
1919
:
• Strengths – assets
• Weaknesses - liabilities
• Opportunities – current and future customers
• Threats - competition
What’s In Your SWOT?
20
• Their advantages?
• Location / promotion?
• Client base?
• Visit competitors
• How do you compare to them?
• What are your “F-A-Bs”? o Features, Advantages, Benefits
WHY WILL BUYERS PREFER YOU?
Know The Competition
• Product attributes
• Unique Service
• Better Value
• Convenience
• Experience
• What makes you special?
KNOW WHY BUYERS
WILL PREFER YOU?
Competitive Advantages - Examples
• Your experience • Your purpose • The problem in the marketplace • The solutions you offer • Customer benefits • The market, your marketing plan • Competition • Proof of profitability
Your Plan Deals With Key Issues
• Who is the customer? • What do they want? • How will you reach them? • What value is provided? • What’s the competition? • How does the company
actually make money?
What Business Are You Really In?
!• What is it?!• Who needs it?!• Why do they need it?!• Who are the competitors!• How is yours different/better !! than the competition?
Your Product or Service
Business Design: How You... • Generate revenue • Attract customers • Configure resources • Make money • Capture profits Business Strategy: How You… • Cope with competition • Differentiate yourself • Provide a value proposition • Select niche or target markets • Gain and hold your U.S.C.A.
Business Model
.
Business Model
•Caters to moderate income market
•Lower cost goods
•Large, easy to park
•Print ads in newspapers
.
Business Model
•Caters to high-end market
•High cost, gourmet goods
•Boutique feel
•Full color circulars to specific zip codes
• Your Target Market !• Product / benefits delivered
• How are you different?!• How are customers reached!• Costs to reach customers?!• Price/Value relationship!• Distribution / Advertising / Sales
• Who & where are your competitors
• Will market price = profit? At what volume?
Marketing Plan
– Chambers of Commerce! – Banks – Civic Organizations – Census Data – Internet – Focus groups – Reference library – Government websites – Trade associations
Marketing Plan Data Sources
• Responsibilities • Relevant experience o use names o verify information o include yourself
• Identify management needs and strategies o technical, finance o marketing, operations, other
Your Marketing PlanManagement Plan
Financial Plan
• Forecast 3 years of projections • Why Forecast? ▪ Hobby or Business ▪ Impact of assumptions
• NOT exercise in accuracy • Cash needed • Focus P&L Cash Flow • Communicate in financial terms
• Monthly cost of living • Costs you can cut back • Outstanding debt • Amount in savings • Total needed to cover 6 to 12
months of expenses
Personal Personal Budget
Start-up Needs: • Tools and equipment
• Leasehold improvements
• Licenses and permits
• Professional fees
• Initial inventory
• Working capital reserve fund
Start-up Cash NeedsEssential Cash Needs
Operating Needs: • Salaries • Rent • Insurance • Taxes and fees • Marketing • Loan interest/principal • Utilities • Maintenance
• Most important section • Max two pages • Written last • Viewed first. • Enthusiastic snapshot • Explains who you are, what you do, how, why.
The Executive Summary
!• Describes customers & market needs you meet
• Tells how you make money • Stresses your unique sustainable competitive advantage
• Tells where you are now / Where the company will go
• Your 15 minutes of fame
The Executive Summary
• Ensures you fully understand cash requirements
• Guides to keep you on track to success
• Provides you with a powerful management tool for life of your business
• Shows you as a smart and serious business owner
• Is your dream in your own words
!
A Good Business Plan
• Is a dynamic, evolving, living document
• Focuses on the work to be done
• Has SMART Goals
• Details action plans
• Cycles through plan several times
• Changes actions to change results
A Good Business Plan
!37 38
Understand & manage business Understand impact of changes Plan financials are PROJECTIONS !Key Financials Income: Profit & Loss Balance Sheet: Own & Owe
Cash Flow: Where is the CASH
.
Why Financials
Sales $500 Cost of sales: Materials 50 Labor 75 Overhead 25 Total Cost of Sales 150 Gross Profit 350 Operating Expenses 150 Depreciation expense 50 Total expenses 200 Earnings before tax $150
Profit and Loss Sample
ASSETS - LIABILITIES = EQUITY !What your business OWNS minus what your business OWES = EQUITY !You can think of equity as the NET WORTH of the business
Owner’s Equity
Greater Phoenix
ASSETS LIABILITIES Cash $550 Accounts Payable $400 Accounts Receivable 300 Payable to Credit Card Co. 50 Inventory 450 Total Liabilities $450 Office Equipment 250 Less: Depreciation (50) Total equipment 200 Utility Deposits 100 Total Assets $1600 OWNER'S EQUITY Owner's Investment 1,000 Retained Earnings -- Current Year's Earnings 150 Total Owner's Equity 1,150 Total Liabilities & Equity $1600
Balance Sheet Sample
Beginning Cash $ 0 Receipts: Owner Investment 1,000 Cash Sales 200 Total Receipts 1200 Payments: Make Utility Deposit 100 Payment of Expenses 150 Payment on Payables 400 Total Payments 650 Cash Flow for the Period 550 Ending Cash $ 550
Cash Flow Statement Sample
• Open a separate bank account for your business ASAP
• Deposit all receipts “intact”
• Use a petty cash fund
• Separate sales tax receipts on your books
• Hang on to cash as long as you possibly can
• Reconcile bank account monthly
Cash: Most Important AssetCash Is Key!
45
To protect personal assets? !• Sole Proprietorship: no • Partnership: no • Corporation: possibly yes • Limited Liability Company (LLC):
possibly yes
SCORE© seminar facilitators do not represent themselves as Legal or Tax Experts. The information being provided to you is correct to the best of our knowledge at the time of presentation. We strongly urge you to seek advice from an attorney and/or a CPA.
Types of Business Structures
• Business Licenses and Approvals
• Labor Laws • Immigration Laws • IRS and Social Security
Withholding & Payments • IRS’ Employer Identification
No. (EIN)
Government RegulationsGovernment Regulations
Equity - Signifies Ownership • Personal savings • Family and friends • Partners’ contributions • Retained profits • Investors Angels VC
Sources of Funds
Debt - Does NOT Signify Ownership • Banks* and credit unions • Credit cards (not recommended) • Community Express Micro Loans* *Usually guaranteed by SBA !
!
Sources of Funds
Crowdfunding • Currently Donations
• Kickstarter • Indiegogo
• SEC equity rules to be defined !
Sources of Funds
• Character • Commitment • Credit rating • Cash flow • Collateral • Capital • Competition • Conditions
Lender’s View of BorrowerLenders’ View of Borrowers
51
• Banks hesitate to approve a loan for a start up business without an SBA Guarantee
• SBA may guarantee up to 75%
• Banks may lend for a longer time (depends on use)
• You must present a viable Business Plan to an SBA qualified lender
SBA Guaranteed Loan Advantages
Eligible: • Working capital • Inventory • Machinery & equipment • Land & building • Debt refinancing • Change of ownership • Floor plan financing Ineligible: • Real estate held for investment • Purchase part of the business • Payment to principals • Delinquent payroll taxes
Use of SBA Loan Proceeds
53
• Do your homework
• Be prepared to work hard
• Be prepared for success
• Meet with a SCORE Counselor frequently to help you reality-check the progress of your plan in face to face meetings
• Attend workshops on facets of planning •“Nothing great is ever achieved without enthusiasm” Ralph Waldo Emerson
Summary
Before You Start
Topic Question
Idea Feasibility
My product/service is servicing an unmet need.
My product/service could be expanded to gain additional customer groups.
Market IdentificationI know who my potential buyers are.
I have a clear value proposition for my potential buyers.
ImplementationI know what it will take to start my business.
I know what it will take to run my business.
FundingI understand what it will take to obtain funding.
I have a plan to fund my business start.
Personal Readiness
I am ready to work hard to achieve my business goals.
I understand the challenges ahead and have a plan to tackle them.
Small Business Readiness Self Assessment