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Welcome toWelcome to
Business Seminars Business Seminars
How to How to ReallyReally StartStartYour Own BusinessYour Own Business
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What What isis SCORE? SCORE?
• A Non-Profit OrganizationA Non-Profit Organization SBA SponsoredSBA Sponsored
• Experienced VolunteersExperienced VolunteersAll facets of businessAll facets of business
• Personal Counseling & MentoringPersonal Counseling & MentoringFace-to FaceFace-to Face
• On Line Cyber CounselingOn Line Cyber Counseling www.score.orgwww.score.org
Counselors to America’s Small BusinessCounselors to America’s Small Business
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Today’s AgendaToday’s Agenda
1.1. A Small Dose of Reality TherapyA Small Dose of Reality Therapy2.2. Developing the Idea… Developing the Idea… 3.3. Structuring Your BusinessStructuring Your Business4.4. Understanding Money & Cash FlowUnderstanding Money & Cash Flow5.5. The Business PlanThe Business Plan6.6. Starting Out on the Right FootStarting Out on the Right Foot7.7. Q&A - Counselors RoundtableQ&A - Counselors Roundtable
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Reality TherapyReality TherapyThe taste is terrible…The taste is terrible…
but it works!but it works!
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Reality TherapyReality Therapy
• Advancing technologyAdvancing technology
• Corporate subcontractingCorporate subcontracting
• Accessible marketing informationAccessible marketing information
• E-commerce, InternetE-commerce, Internet
This can be a DeceptionThis can be a Deception
Perhaps you think…Perhaps you think…
““It’s easy to start a new business”It’s easy to start a new business”
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Reality TherapyReality Therapy
• Intense competitionIntense competition
• Fickle customersFickle customers
• Difficulty raising capitalDifficulty raising capital
• Difficulty finding good peopleDifficulty finding good people
These can be Land Mines…These can be Land Mines…
Have you noticed how fast Have you noticed how fast business conditions change?business conditions change?
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Reality TherapyReality Therapy
Difficulty raising capitalDifficulty raising capital Difficulty finding good peopleDifficulty finding good people Finding the right marketplaceFinding the right marketplace
The Land Mines!The Land Mines!
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Reality TherapyReality Therapy
• FamilyFamily• LocationLocation• Income – now or laterIncome – now or later• TalentsTalents
Your Your PersonalPersonal GoalsGoals……the most important issuesthe most important issues
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The IdeaThe IdeaHow to look at How to look at your your ideaidea…… objectivelyobjectively
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The IdeaThe Idea
• Personal goalsPersonal goals• Prior work experiencePrior work experience• Knowledge baseKnowledge base• Solving a problemSolving a problem• The right attitudeThe right attitude
Where does it come from?Where does it come from?
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Evaluate the IdeaEvaluate the Idea
1.1. Has the Has the IdeaIdea passed the passed the Time TestTime Test??
2.2. Are you ready to commit Are you ready to commit 55 years? years?
3.3. Is this Is this IdeaIdea reallyreally for you? for you?
4.4. What is the What is the rewardreward potential? potential?
5.5. Are you plugged into the Are you plugged into the right right networksnetworks??
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Test the IdeaTest the Idea
• Gather your factsGather your factsGet more than you needGet more than you need
• Talk to prospective customersTalk to prospective customersExpress your Idea…listen carefully!Express your Idea…listen carefully!
• Assess the CompetitionAssess the CompetitionStrengths & WeaknessesStrengths & WeaknessesPricing & DistributionPricing & Distribution
Startup market researchStartup market research
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Protect the IdeaProtect the Idea
• Theft? Theft? Much less danger than you think!Much less danger than you think!
• Protect what is proprietary Protect what is proprietary Patents & AgreementsPatents & Agreements
• Understand reality…Understand reality…Copyright & TrademarksCopyright & Trademarks
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A New TechniqueA New Technique
The The Elevator Talk:It’s a well-practiced answer to the questionIt’s a well-practiced answer to the question
Tell me, what’s Tell me, what’s youryour business? business?Brevity and content are what countBrevity and content are what count
Your mother would understand in the Your mother would understand in the time it takes to ride an elevator up to time it takes to ride an elevator up to the second floor. the second floor.
Experts say, “Be ready to sell your business Experts say, “Be ready to sell your business whenever the opportunity arises.”whenever the opportunity arises.”
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WorkshopWorkshopHow to create How to create
youryour
“Elevator Talk”“Elevator Talk”
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Put the Idea in WordsPut the Idea in Words
1.1. State your business conceptState your business concept What is it What is it you doyou do for Customers? for Customers?
2.2. How does the Customer benefit?How does the Customer benefit? What’s What’s in itin it for the Customer? for the Customer?
3.3. Who is in your Target Market?Who is in your Target Market? How can Prospects be How can Prospects be identifiedidentified? Separate from others?? Separate from others?
4.4. How do How do youyou want customers to want customers to perceiveperceive your business? your business?
Write your Write your Idea’sIdea’s components… components… (each in (each in 2525 words or less) words or less)
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Your Elevator TalkYour Elevator Talk
Now…Now… Boil down all 4 answers to just…Boil down all 4 answers to just…
2525 toto 3030wordswords
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Select yourSelect yourBusiness StructureBusiness Structure
ExamineExamine 44 AlternativesAlternatives
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Business StructureBusiness Structure 4 choices… 4 choices…
• Sole ProprietorshipSole Proprietorship• Partnership Partnership • Incorporation Incorporation • Limited LiabilityLimited Liability
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Business StructureBusiness Structure
• Most used – 70% of 20 million Most used – 70% of 20 million businessesbusinesses
• Easy and inexpensiveEasy and inexpensive
• You own the liabilityYou own the liability
Sole ProprietorshipSole Proprietorship
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Business StructureBusiness Structure
• Group gains Tax benefitsGroup gains Tax benefits
• Easy, inexpensive & flexibleEasy, inexpensive & flexible
• You still own the liabilityYou still own the liability
PartnershipPartnership
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Business StructureBusiness Structure
• Separates personal from businessSeparates personal from business
• CredibilityCredibility
• FlexibilityFlexibilityCapitalizationCapitalizationHealth & Insurance benefitsHealth & Insurance benefits
• S-CorporationS-Corporation Tax benefitsTax benefits
IncorporationIncorporation
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Business StructureBusiness Structure
• A Hybrid – Corporate & PartnershipA Hybrid – Corporate & Partnership
• Professional servicesProfessional services
• Income and Tax benefitsIncome and Tax benefits
Limited Liability CompanyLimited Liability Company
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Managing your MoneyManaging your Money
Cash FlowCash Flow is the most is the mostimportant process important process you have to masteryou have to master
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Cash FlowCash Flow
Cash FlowCash Flow helps you know helps you know how much how much cashcash you’ll need you’ll need beforebefore the business the business supports itself.supports itself.
Cash FlowCash Flow is is notnot the same as the same as Profit & Loss.Profit & Loss.
Cash FlowCash Flow is the movement of money is the movement of money into and out of the business over into and out of the business over a specified period of time.a specified period of time.
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Stretch Your CashStretch Your Cash
• Watch Watch overheadoverhead costs costs
• Always Always negotiatenegotiate on price on price
• Give credit Give credit very very carefullycarefully
• Collect very Collect very aggressivelyaggressively
Spend & Collect with care…Spend & Collect with care…
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WorkshopWorkshopUnderstanding Cash FlowUnderstanding Cash Flow
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Cash Flow CriteriaCash Flow Criteria
• Cash Sales -Cash Sales - Begin at $5,000 monthly and Begin at $5,000 monthly and increase by $3,000 in month 3 and $2,000 increase by $3,000 in month 3 and $2,000 thereafter.thereafter.
• CollectionsCollections -- Are $1,000 each in months Are $1,000 each in months 2 and 3 and increase by $1,000 monthly 2 and 3 and increase by $1,000 monthly thereafter.thereafter.
CASH IN…CASH IN…
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Cash Flow TerminologyCash Flow Terminology
• The amount of cash you have on hand at The amount of cash you have on hand at the start of the month. Starting cash is the the start of the month. Starting cash is the same number as the previous month’s same number as the previous month’s ending balance.ending balance.
Cash In:Cash In:• Sources of cash – sales, paid receivables, Sources of cash – sales, paid receivables,
interest and others.interest and others.
Starting Cash:Starting Cash:
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Cash Flow TerminologyCash Flow Terminology
• Fixed expensesFixed expenses – regular and not – regular and not easily eliminated (rent, etc).easily eliminated (rent, etc).
• Variable expensesVariable expenses – Can change – Can change from month to month (advertising, from month to month (advertising, supplies, promotion, services.supplies, promotion, services.
Cash Out:Cash Out:
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Cash Flow TerminologyCash Flow Terminology
Ending Balance:Ending Balance:How much cash is left at the end of the How much cash is left at the end of the
month. (Cash In less Cash Out)month. (Cash In less Cash Out)
Cash Flow:Cash Flow:The amount of cash that has flowed The amount of cash that has flowed
through the business. It is a measure of through the business. It is a measure of change for that month.change for that month.
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Cash Flow CriteriaCash Flow Criteria
Rent is $3,000 a month.Rent is $3,000 a month.Two employees are hired at salaries Two employees are hired at salaries
of $24,000 a year each, paid on a of $24,000 a year each, paid on a monthly basis.monthly basis.
Supplies cost $2,000 the first month and Supplies cost $2,000 the first month and increase $1,000 a month until month 3, increase $1,000 a month until month 3, then stay the same.then stay the same.
CASH OUT…CASH OUT…
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Cash Flow Month 1Starting Cash $0
Cash INCash Sales $1,000
Collections $0Other
Total Cash IN $1,000
Cash OUTRent $700
Payroll $1,000Other $300
Total Cash OUT $2,000
Ending BALANCE ($1,000)
Change (CASH FLOW)($1,000)
Determining Cash Flow
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Determining Cash Flow Cash Flow Month 1Month 2 Starting Cash $0 ($1,000)
Cash INCash Sales$1,000 $1,500
Collections $0 $500Other
Total Cash IN $1,000 $2,000
Cash OUTRent $700 $700
Payroll $1,000 $2,500Other $300 $300
Total Cash OUT $2,000 $3,500
Ending BALANCE ($1,000)($2,500)
Change (CASH FLOW)($1,000)($1,500)
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Determining Cash FlowDetermining Cash Flow
Cash Flow Month 1Month 2 Month 3Month 4Month 5Month 6Starting Cash $0 ($1,000)($2,500)($2,200) ($400)$2,900
Cash INCash Sales$1,000 $1,500 $3,000 $4,000 $5,000 $5,000
Collections $0 $500 $1,000 $1,500 $2,500 $2,500Other
Total Cash IN $1,000 $2,000 $4,000 $5,500 $7,500 $7,500
Cash OUTRent $700 $700 $700 $700 $700 $700
Payroll $1,000 $2,500 $2,500 $2,500 $2,500 $2,500Other $300 $300 $500 $500 $1,000 $1,500
Total Cash OUT $2,000 $3,500 $3,700 $3,700 $4,200 $4,700
Ending BALANCE ($1,000)($2,500)($2,200) ($400)$2,900 $5,700
Change (CASH FLOW)($1,000)($1,500) $300 $1,800 $3,300 $2,800
Start Up Cash Required
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Determining Cash FlowCash Flow Month 1Month 2 Month 3Month 4Month 5Month 6Starting Cash $2,500 $1,500 $0 $300 $2,100 $5,400
Cash INCash Sales$1,000 $1,500 $3,000 $4,000 $5,000 $5,000
Collections $0 $500 $1,000 $1,500 $2,500 $2,500Other
Total Cash IN $1,000 $2,000 $4,000 $5,500 $7,500 $7,500
Cash OUTRent $700 $700 $700 $700 $700 $700
Payroll $1,000 $2,500 $2,500 $2,500 $2,500 $2,500Other $300 $300 $500 $500 $1,000 $1,500
Total Cash OUT $2,000 $3,500 $3,700 $3,700 $4,200 $4,700
Ending BALANCE $1,500 $0 $300 $2,100 $5,400 $8,200
Change (CASH FLOW)$1,500($1,500) $300 $1,800 $3,300 $2,800
Start Up Cash Invested
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The Business PlanThe Business Plan Just Just whatwhat is a business plan? is a business plan? Do I Do I reallyreally need it? need it? Do I Do I reallyreally have to have to writewrite it? it?
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The Business PlanThe Business Plan
Discussing future plansDiscussing future plansDemonstrating achievabilityDemonstrating achievabilitySatisfying reader’s needsSatisfying reader’s needs
A selling document that sells by:A selling document that sells by:
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The Business PlanThe Business Plan
• Bank FinancingBank Financing
• Investment FundsInvestment Funds
• Strategic AlliancesStrategic Alliances
• Mergers & AcquisitionsMergers & Acquisitions
• Customer & Distributor RelationsCustomer & Distributor Relations
Using the Plan – Outside the CompanyUsing the Plan – Outside the Company
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The Business PlanThe Business Plan
A “Sanity Check”A “Sanity Check”Force a thinking processForce a thinking processSet specific, achievable goalsSet specific, achievable goalsOblige management commitmentOblige management commitment
Using the Plan – Inside the CompanyUsing the Plan – Inside the Company
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The Business PlanThe Business Plan
• CompanyCompany• PeoplePeople• MarketMarket• AccomplishmentsAccomplishments• ProductionProduction
The data you’ll need:The data you’ll need:Information about…Information about…
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The Business PlanThe Business Plan
• Summary PlanSummary Plan – 10 to 15 pages – 10 to 15 pagesStartup, bank funding, investment Startup, bank funding, investment
• Full PlanFull Plan – 20 to 40 pages – 20 to 40 pagesMajor financingMajor financing
• Operational PlanOperational PlanUsed internally to guide the company Used internally to guide the company
and its management.and its management.
How big a Business Plan?How big a Business Plan?
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Business Plan ContentsBusiness Plan Contents
• SummarySummary• The CompanyThe Company• Markets & Markets &
CompetitionCompetition• Product/Service Product/Service
DescriptionDescription
• MarketingMarketing• ManufacturingManufacturing• Financial Financial
InformationInformation• Timetables & Timetables &
BenchmarksBenchmarks
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Starting OutStarting Out has a Dual Focus:has a Dual Focus:
All these business issues All these business issues plusplus
Your own state of mindYour own state of mind
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Put your right foot first…Put your right foot first…
Make a Make a TOTALTOTAL Commitment Commitment
SellSell yourself yourself
Be Be single-mindedsingle-minded in seeking customers in seeking customers
Prepare yourself mentally to…Prepare yourself mentally to…
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Setup your first appointment Setup your first appointment for a 1-on-1 Counseling Meeting: for a 1-on-1 Counseling Meeting:
Go to Go to www.scoreworks.org,,Press the “Counseling” buttonPress the “Counseling” button
Ask for dates and subjects for upcoming…Ask for dates and subjects for upcoming…
SCORE Business SeminarsSCORE Business SeminarsGo to Go to www.scoreworks.org,,
Press the “Seminars” buttonPress the “Seminars” button
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