Simple Steps for Starting Your Business Start-up Overview

Simple Stepsfor Starting Your Business

Start-up Overview

Today’s Agenda

• SCORE – Who we are• Business and you• Your business idea• Finances of business• Next steps

SCORE Ft Lauderdale

Our Mission is to help start new businesses

and grow existing businessesin the Broward County community

About BrowardSCORE

• 50+ experienced executives• Will mentor 900 in 2015• 15 + Workshops each month• For 2000 attendees• Turnaround Team• SCOREboard• Radio program on 880theBiz• broward.score.org

Simple Steps Process Roadmap

Session 1: Start-Up Basics

“Go or No-go” decision & next steps with mentor

Mentoring/Build

Business Plan

Session 5: Funding Sources

Session 2: Business Concept

Session 3: Marketing

Plan

Session 4: Financial

Projections

Start-up Myths

• All I need is a good idea.• Won’t have to work as hard as I

do as an employee.• Will do only the work I want to

do.• Working alone limits my

achievement capabilities.

Critical Success Factors

• Adequate capital.• Ability to manage and multi-task.• Education / experience in field.• Strong work ethic.• Effective time management.• Willingness to ask for input from

others.

Entrepreneur Characteristics

• Self-starter• Resourceful• Responsible• Organized• Hard worker• Persistent• Decisive• Healthy• Supportive family

The Many Hats Will You Wear

Different Starting Options

• Start a New Business• Buy an Existing Business• Buy a Franchise• Be a Home-Based Business• Be a Non-Profit Organization• Run and Online Business

Simple Steps for Starting Your Business

Your Business Idea

Why did you select your business?

What do investors want to know?

• Is there a market for the idea?– A problem needing a solution

• Have a unique solution to the problem?– To capture a share of that market?

• Can that share make a profit?– 30% - 50%+ Net Simple Profit

• Can that profit produce a nice return?– Can that profit pay back a loan?

The Business Idea Process

• Who are your Customers?• What desperate Need/Problem do they

have?• What Features/Services do they expect?• What does your Competition provide?• Where your Industry is going?• Your Unique….Solution?• Your Business Differentiation Strategy?• Your Marketing Plan?• Your Management Team?

Who are your customers?

• How many revenue streams do you have?

• Demographically, who are they?• How do they want to get your service….

– Determines your market size

What desperate need do they have?

• Improve their quality of life?• Save time or money?• Solution to a problem?• Help to be successful?• Protection from something bad?• Something that makes them feel

good?

Features/Services they expect?

• Pre-sale services?• Basic features?• Special / quality features?• Price ranges?• Post-sale services?

Your competition?

• How many direct competitors are there?

• Is there indirect competition?• What customer needs are not

satisfied?• What customer required

features/services are not provided.

Where is the Industry going?

• Targeting a niche in a growing market?

• Do you understand the current industry standards? Service Quality Price

• Is your’s a breakthrough idea?• Changes looming on the horizon?• Barriers to entry?

What is your Unique Solution?

• A Solution to your customer’s problem • With Features your customer wants • And Services your customer expects• Including some:

– Not provided by your competitors

• An unequaled Experience

Your Business Differentiation Strategy

• Clearly define how you will exceed the industry and competitor norms– Pre-after sale services– Exceed in product quality– Quality comes with price– Overall experience you will provide

Your Marketing Plan

• The best coverage of your target market

• With the best response rates• At the lowest cost

– Tell them you are in business– Have solutions to their needs– That the competition does not have

Your Management Team

• Industry-specific knowledge and experience

• Management skills and experience• Experience delivering earnings• Experience managing cashflow• Business function skills• Required technical skills

Period 1

Your Niche Market Size 100 Revenue Stream 1 # Cust Comp Share % Targeted

Customer Segment 1 200 50% 100% 100

Marketing Plan (to contact your niche customers)Stream 1 Segment 1 % Chnnl # Contacts % Resp 50

Mktg Channel 1 100% 100 50% 50 Mktg Channel 2 0% - 4% -

Total Responses 50

Sales Plan (converts marketing plan reponses into sales)Sales Success Rate % Rate % Repeat # Times

Stream 1 Segment 1 90% 100% 4 180 Total Sales 180

Product / Service Plan % Sales Avg Price Avg Mtl Cst

Standard Product / Service 100% 2,000$ 500$ 360,000$ Hi-Profit Product / Service 0% -$ -$ -$ Economy Product / Service 0% -$ -$ -$

100%

Revenue from Sales 360,000$ 100%

Type Exp

Cost of Service Provided (per order) Variable 90,000$ 25%# of Orders 180 Materials Expense Hours Hrly Rate 90,000$ Fullfilment Labor Expense 0.00 15.00$ -$ Transport/Fuel Expense Av Miles/Order Av M/Gal Av $/Gal

- 15 4.00 -$

Marketing Expense (The cost to contact the target market)Fixed -$ 0%

Stream 1 Segment 1 $ Piece # Times

Mktg Channel 1 0% 2.00$ 1 -$ Mktg Channel 2 0% 1.00$ 2 -$

Sales Expenses Fixed -$ Marketing Responses Hours Hrly Rate 50

Hours per Contact and Hourly rate 0.00 10.00$

Gen & Admin Expenses Months 130,000$ 36%# of Orders Hours Hrly Rate 180 12

G&A Labor Exp 0.00 10.00$ Fixed -$ F$ Month Start-up

Rent -$ -$ Fixed -$ FWebsite -$ -$ Fixed -$ FUtilities -$ -$ Fixed -$ FInsurance -$ -$ Fixed -$ FProfessional -$ -$ Fixed -$ FOther 10,833$ -$ Fixed 130,000$ Warranty (% of Sales) 0% Fixed -$ FStart-up Expenses -$ Start-up -$ S

Total Expenses 220,000$ 61%

Net Income 140,000$ 39%

Assumptions

Revenue Stream 1

Your Critical Numbers Model


The Finances of Business

• Total monthly cost of living

• Outstanding debt

• Amount in savings

• Total amount needed to cover

12 to24 months of expenses

Budget Considerations

How much do you need to…

Live for a year…..……………………..$..............

RoT x 3………………..…………………$.............

Selling Price/ Unit…..…………...…….$............

Average # of purchases per year.…..#............

# Purchases x Selling Price…………$.............

# Customers needed………………….#..................


Live for a year…..……………………..$.30,000

RoT x 3………………..…………………$.............






Live for a year…..……………………..$30,000

RoT x 3………………..…………………$90,000






Live for a year…..……………………..$30,000

RoT x 3………………..…………………$90,000

Selling Price per unit………………….$100

Average # of purchases per year.…..#




Live for a year…..……………………..$30,000

RoT x 3………………..…………………$90,000

Selling Price/ Unit…..…………...…….$100

Average # of purchases per year.…..# 5




Live for a year…..……………………..$30,000

RoT x 3………………..…………………$90,000

Selling Price/ Unit…..…………...…….$100


# Purchases x Selling Price…………$ 500....



Live for a year…..……………………..$30,000

RoT x 3………………..…………………$90,000

Selling Price/ Unit…..…………...…….$100..


# Purchases x Selling Price…………$ 500

# of Customers Needed……………….# 180

Funding Opportunities

• Debt– Decision based mostly on your credit report.

• And on your personal financial situation.

– Partially on your business plan.– You keep 100% ownership.

• Equity– Decision based totally on your business plan.– You trade funds for ownership.

Lender’s View of Borrower

• Character, Commitment• Credit rating• Cash flow• Collateral, Capital• Industry knowledge• Personal investment• Financial history• Financial projections• Management skills• Competition

Your Funding Situation

• Your past financial decisions affect:– Your funds available to start your business– Your credit score for getting a loan

• The business you choose affects:– Your revenue possibilities– Your net profit opportunity affects:

• Your start-up funding needs• Whether the business can fund the business

Your Credit Report

• A report of past performance:– An indicator of future performance.

• Uncovers: civil judgments, unpaid taxes, liens, bankruptcies.

• Credit Scores use data in the credit report.– www.annualcreditreport.com

• Credit Score is the major decision factor.• 700+ Credit Score is workable.

Your Credit SCORE

• 35% based on payment history.• 30% based on amount owed.• 15% based on length of credit

history.• 10% for new credit.• 10% for types of credit used.

Have a Walk-Away Strategy

• Avoid signing contracts / leases.• Don’t take-on a loan – (or only a 1

year loan for start-up exp).• Finance only inventory and working

capital.• Don’t purchase unnecessary

equipment.

Don’t….Don’t…..Don’t

• Spend money you don’t have

• On things you don’t need

• To please people you don’t like

• That includes……. rents / leases

• capital equipment

• future expenses


Next Steps

Legal Structure Considerations

• Owner’s personal financial exposure:– If business involves risk– If owner has substantial assets

• Control, if more than 1 owner• Ease of ownership Transferability• Costs:

– To organize– To comply with reporting requirements

• Note….Business Insurance still needed:– Fire&Theft - Business Interruption - General liability

Typical Legal Structures• Sole Proprietorship

– Simple to create and operate– Profit / Loss on personal tax return– Personally liable for business debts

• Partnership - 2 or more owners required• C Corporation

– Limited personal liability on business debts– Double taxation because C corp is a separate entity

• S Corporation– Can use S corp losses to offset personal income

• Limited Liability Company– Limited liability for business debts– P&L can be allocated differently than ownership

interest

Licenses, Insurance, Taxes

• Decide on your business structure; www.sunbiz.org

• Get your Accountant, Banker, and Insurance agent

• Get your state licenses, if necessary: www.myflorida.com/dbpr

• Get your Broward county Business tax license: http://www.broward.org/RecordsTaxesTreasury/TaxesFees/Pages/LocalBusinessTaxes.aspx

• Register your Fictitious D/B/A Name: www.sunbiz.org

• Get your Federal Tax EIN (Form SS-4): www.irs.gov

• And, if you do a taxable transaction: www.myflorida.com/dor

Process Roadmap

Session 1: Start-Up Basics

“Go or No-go” decision & next steps with mentor

Mentoring/Build

Business Plan

Session 5: Funding Sources

Session 2: Business Concept

Session 3: Marketing

Plan

Session 4: Financial

Projections

Now What…..?


series.

Four three hour sessions …Wednesdays 6-9 pm

English

Details at broward.score.org

•Test the feasibility of your idea

•Get you to GO or NOGO decision

If it is GO…….then

• Complete business plan

• Start small and grow

• Get a SCORE Mentor

• Watch the Money

If it is NO GO…….then

• Revisit concept

• Revisit Marketing

• Revisit Cash Flow

• New decision

Thank You

Documents

Simple Steps for Starting Your Business Start-up Overview