NCDC Director TrainingNovember 22, 2011

• So You Want to Start a Business

Matthew H. WilliamsPresidentGothenburg State BankPO Box 81Gothenburg, NE  69138308-537-7181308-537-7185 Faxmwilliams@gothenburgstatebank.com

 

                                                        

Come see Me.

• Financial planning and analysis

• Managing people and payroll

• Marketing and advertising

• Selling and merchandising

• Processing and manufacturing

• Accounting and cash flow analysis

• Banking including borrowing

• Insurance

• Equipment repair

A new study of 12,185 companies by the U.S. Small Business Administration (SBA) shows that 67 percent of new ventures are successful after four years - a dramatic contrast to the popular estimate that only 10 percent of start-up businesses survive the first year.

The study corrects the long-held belief that a large majority of start-up businesses fail - a belief that may have deterred many would-be entrepreneurs from taking on the risk. Knowing only 33 percent fail after four years may encourage more entrepreneurs to start a new venture.

The study also indicates that businesses most likely to succeed begin with $50,000 in capital, an owner with a college degree and a home office.

Taken from an NFIB Study - 2003

Small Business Profile: NEBRASKA

Small businesses are the heart of Nebraska’s economy.Research by the Office of Advocacy shows that smallbusinesses create most of the nation’s net new jobs, andthey bring dynamic ideas, innovative services, and newproducts to the marketplace. They account for almost all ofthe nation’s employer firms and generate half of non-farmprivate output. New business creation is key to a state’sability to increase its gross state product, state personalincome, and total state employment.

U.S Small Business Administration - 2007

•Business Plan

•Financing

•Vision for Success

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• Isn’t planning for “big business” only?

• How does planning help management?

• Can’t I hire someone to do this for me?

• How can I know all the answers?

• How often do I have to do this?

• The owner assumes the lead in the process.

• The planning process involves everyone in the family and/or business.

• The plan reflects reality.

• There is a contingency plan for the worst case scenario.

• The goals and objectives are achievable and clear.

• The plan is flexible.

• The plan is reviewed often and revised whenever “reality” dictates.

• Forces you to look at the whole business.

• Focuses attention on important questions.

• Helps clarify and communicate your goals and objectives.

• Becomes a means of assigning priorities.

• Becomes a framework for daily decision- making and better management.

• Helps maintain a “proactive" business attitude.

• Serves as a benchmark to track performance.

• Stimulates development of new/future business opportunities.

• Becomes a tool to access capital, acquire business partners, attract employees.

• Road map increases your chances of success.

Financing

*

• Research and development

• Growth (or start-up) expenses

• Purchase a business

• Seasonal working capital

• Permanent working capital

• Equipment acquisition

• Real estate acquisition

• Other…

• Short Term Debt• Used to meet short-term needs, such as seasonal

inventory purchases or short term liquidity problems; repayment within one year.

• Intermediate Debt• Three to seven years. Used for permanent

expansion of working capital or to acquire equipment.

• Long Term Debt• Used for real estate purchases or the initial

purchase of a business.

• Change in ownership

• Obligation to repay

• Tax considerations

• Capital structure

• Time required to do it

• Cost of obtaining the funds

• Personal factors/preferences

• Lender and investor reactions

•Lender

• Partner

• Investor

• Owner

• Credit History

• Character

• Capacity

• Collateral

• Conditions

• Capital

• Self• Friends and Family• Suppliers• Customer Deposits• Credit Cards• Insurance Companies

• Factoring Companies• Loan Guarantor• Loan Broker• Franchising• Grants• Other…

• Deal with a local bank when possible

• Make an appointment

• Select a banker you trust

• Select a banker familiar with your type of business

• Dress appropriately

• Ask for advice (listen)

• Develop a long term relationship

• Know your needs

• Present a complete proposal

• Explain uses and benefits of the loan

• Be flexible

• Be patient

• Tell the truth

Vision for 2007

Develop Core ValuesLeadership is the Key!

Vision for Success

“Decide that you want it more than you are afraid of it.” Bill Cosby

1. RECOGNIZE THE IMPORTANCE OF PEOPLE IN OUR SUCCESS.

• We must recognize that everything we do involves people. We must be sure that all decisions are made after considering what is in the best interests of people. People include not only our customers, but also our employees. Businesses that pay attention to people have demonstrated the ability to survive because they recognize needs and adapt to change.

Teamwork Makes the Dream Work!

2. CONDUCT OURSELVES WITH A SENSE OF RESPONSIBILITY.

• We must recognize that this is our company and we are the custodians. We are responsible for our future. We cannot blame problems on the economy, the competition, the regulators, or other external factors. We must pay attention to those things that count the most.

• ETHICS“You don’t make decisions because they’re easy, you don’t make them because they’re cheap, you don’t make them because they’re popular; you make them because they’re right.”

3. STRIVE TO REACH OUR POTENTIAL. • We must be committed to out hustling,

out working, out thinking, out communicating, and out organizing the competition. The beginning of success in any business is organization. We need to learn how to work smarter and not always harder.

“Some succeed because they are destined to; most succeed because they are determined to.”

What about Retirement?

Tommy Lasorda