Transcript NxLeveL Instructor’s Presentation

NxLeveL Instructor
Presentation
“Business Plan Basics”
NxLeveL Guide for MicroEntrepreneurs
Course Overview
Session 1:
Session 2:
Session 3:
Session 4:
Session 5:
Session 6:
Session 7:
Session 8:
Session 9:
Session 10:
Keys to Your Business Success
Assessing Your Business Idea
Business Planning
The Marketing Plan
Government Regulations
Management
Market Analysis
Product and Pricing
Placement and Promotion
E-Commerce
NxLeveL Guide for MicroEntrepreneurs-OHD 1-a
Course Overviewcontinued
Session 11: Selling Success
Session 12: Where’s the Cash?
Session 13: Managing the Money
Session 14: Financial Tips and Tools
Session 15: Bringing It All Together
NxLeveL Guide for MicroEntrepreneurs-OHD 1-b
Participant Materials
SESSION OUTLINESOne Page Session-by-Session
Outline for the Course
TEXT  “Business Plan Basics”
NxLeveL® Guide for
Micro-Entrepreneurs
WORKSHEETSNxLeveL®
Micro-Entrepreneur Business Plan Worksheets
RESOURCE GUIDENxLeveL® Business Resource
Guide
OTHERClass Handouts
Supplemental Material
NxLeveL Guide for MicroEntrepreneurs-OHD 1-c
Class Agenda
Class Opener
Instructor Topics
Guest Speaker
Break
Refreshments
Networking Activity
Work Hour
Discussion Groups
Worksheet Activities
Business Plan Sections
NxLeveL Guide for MicroEntrepreneurs-OHD1-d
Expectations & Ground Rules
Attendance
Absenteeism
Punctuality
Participation
Discussion
Confidentiality
Listening
Assignments
Reading
Worksheets
Written Business Plan Sections
Format
General
Safe environment to test ideas
Ask questions
Add ground rules as needed
NxLeveL Guide for MicroEntrepreneurs-OHD 1-e
Traits of Successful
Entrepreneurs
Passion
Persistence
Good Health, High Energy
Communication and Listening Skills
Creativity
Self-Confidence
Willingness to Work Hard
NxLeveL Guide for MicroEntrepreneurs-OHD 1-1
What Are Your Goals?
Your goals may focus on:
Yourself
Family
Children
Health/weight/exercise
Friends/relationships
Further education/degree
Job/career
Cars/vehicles
Home ownership
Starting a business
Travel/vacation
Retirement
NxLeveL Guide for MicroEntrepreneurs-OHD 1-2
Personal Assessment
Why do you want to start a business?
What special skills, experience, and
knowledge do you have?
How’s your personal financial health?
Do you have a mentor or advisor? Can
you get one?
NxLeveL Guide for MicroEntrepreneurs-OHD 1-3
The Risks of Entrepreneurship
Failure: Can you bear the emotional and financial risk of
failure?
Long Hours: 60-70 hours per week is normal
Family Strain: Potential strain on relationships because of long
hours
No Regular Paycheck: How will you support yourself and your
family?
No Health Benefits: No employer-provided health coverage
Isolation: You’ll be working by yourself much of the time
Debt: You may have to take on additional debt
Responsibility: Everything may rest on your shoulders
Stress: New emotional, financial, and physical pressures
NxLeveL Guide for MicroEntrepreneurs-OHD 1-4
The Rewards of
Entrepreneurship
Success: You’ll be able to support yourself, and hire others!
Independence: You get to be your own boss
Learning: No matter what happens, you’ll have valuable new
skills and knowledge
Self-Respect: Few things are as rewarding as succeeding
through your own talent and hard work
Recognition: It’s always nice to be noticed…and it can lead to
new opportunities, too!
Family Benefits: You’ll have something special to leave your
children
FUN: You can make money doing something you really enjoy!
NxLeveL Guide for MicroEntrepreneurs-OHD 1-5
Why Do Businesses Fail?
Poor management
No business plan
Don’t listen to customers
Don’t set prices appropriately
Poor cash flow management
Don’t ask for help
NxLeveL Guide for MicroEntrepreneurs-OHD 1-6
Why Do Businesses Succeed?
Careful planning
Clear focus and purpose
Offer a unique product
Understand customers’ needs
Sell at the right price
Seek and follow expert advice
Get help when necessary
Understand industry and competition
Do regular bookkeeping
Know how to keep existing customers, and get new ones
Understand cash flow management
NxLeveL Guide for MicroEntrepreneurs-OHD 1-7
Professionalism in Business
Health and Hygiene
Personal ImageFirst Impressions REALLY Count!
Appearance and Dress
Etiquette and Manners
–
–
–
–
–
–
–
Always use the magic words: PLEASE and THANK YOU
Be on time
Keep your promises
Respect people and be courteous
Follow up with thank-you notes
Return all phone calls
Call ahead to confirm appointments
NxLeveL Guide for MicroEntrepreneurs-OHD 1-8
Check Your Verbal Skills
Speak at a comfortable pacenot too fast, not
too slow
Make sure people can understand you
Speak at a good volume—not too loud, not
too quiet
Avoid slang and swear words
Answer the phone slowly and clearly
Practice talking into a tape recorder and play it
back…
How does it sound?
NxLeveL Guide for MicroEntrepreneurs-OHD 1-9
Check Your Nonverbal Skills
Stand and sit straight, but comfortably
Make eye contact
Don’t yawn when someone is talking with you
Respect people’s “personal space”
keep at least 18” between you & your listener
Don’t fidget, rock, tap your feet, etc.it looks like you’re bored
Look confident and proud of your business
Smile!
Know what signals your different facial expressions send to
your listener
Practice shaking handsit should be firm (not like a vice grip,
but not like a wet rag, either!)
Practice talking into a mirror…
Do you look comfortable and professional?
NxLeveL Guide for MicroEntrepreneurs-OHD 1-10
Written Communication Skills
Make written communication
Simple, Short, Specific
Make sure it answers:
–
–
–
–
–
–
Who
What
Where
When
Why
How
Don’t write when you’re angry or upset. Sleep on
it…you may feel differently the next day!
NxLeveL Guide for MicroEntrepreneurs-OHD 1-11
Check Your Listening Skills
Stop what you’re doing and pay attention to
what the other person says
Maintain eye contact…look alert and
interested
Prove that you’re listening by summarizing
points and asking questions
Listen, understand, judge carefully…and
then react
NxLeveL Guide for MicroEntrepreneurs-OHD 1-12
Networking Tips
Have a purpose for networking
Have a confident handshake
Be aware of your body language
Wear something unusual to spur conversation (unique pin,
watch, tie)
Always carry your business cards
with you
Be able to talk about more than
just the weather
At a networking event, don’t try to
juggle food and drinks
Follow through on promises you make
Set up a system to keep in touch with your network
If you’re not comfortable networking, learn from a pro
NxLeveL Guide for MicroEntrepreneurs-OHD 1-13
What Are Your Time Wasters?
TV
Talking on the telephone
Not keeping lists; poor planning
Disorganization
Unclear goals
Lack of motivation
Procrastination
No schedule; no procedures
Interruptions from co-workers, family, friends
Waitingdoctor appointments, long lines, etc.
Red tape
Always tired
Lose or misplace things often
Negative attitude
Not able to say “No”
NxLeveL Guide for MicroEntrepreneurs-OHD 1-14
Time Saver Tips
Set priorities
Keep lists; cross off completed items
Use a calendar or planner…EVERY day!
Combine personal and business calendars
Ask family for help with household responsibilities
Involve family or friends in the business as appropriate
Complete difficult tasks during your peak time
Call ahead; confirm appointments
Set time aside each day to handle the unexpected
Set working hours and family time
Learn to say “No”
Create agendas for meetings
Reward yourself when major projects are completed
Keep desk clear of clutter; file papers immediately
Keep business papers in one location
Be on time; encourage others to be on time
NxLeveL Guide for MicroEntrepreneurs-OHD 1-15
Coping With Stress
Take a break! Step away from the problem for a while
Take a walk! Exercise will clear your head
Think positively! Refuse to be negative
Identify the problem, and isolate it
Ask for help and advice
Don’t overreact! Choose to be in charge of your emotions
Take control! Manage your time better
Breathe deeply
Relax, reflect, meditate, pray
Carry some inspirational quotes
with you
Be open to change, and make the most of it
NxLeveL Guide for MicroEntrepreneurs-OHD 1-16
Your Personal Budget
1. The money you expect to come in
each month (income, earnings)
2. The money you expect to go out each
month (expenses)
3. The amount left over
NxLeveL Guide for MicroEntrepreneurs-OHD 1-17
Personal Financial Statement
What you own:
Assets
minus
What you owe:
Liabilities
equals
What’s left:
Net Worth
NxLeveL Guide for MicroEntrepreneurs-OHD 1-18
What You Should Know About
Credit
It’s good to establish a credit history
Each time you purchase something on credit, or apply for
credit, it’s reported to a national credit bureau
National credit bureaus track your credit and payment history
If you apply for credit, a credit report is generated based upon
your name & SS#
A “credit score” is a rating assigned to you based upon your
credit and payment history, and is used by creditors or lenders
to make decisions about your application.
You can and should obtain a copy of your credit report.
Your personal credit will affect your ability to get credit for a start-up
business.
NxLeveL Guide for MicroEntrepreneurs-OHD 1-19
How to Protect Your Credit
Obtain a consumer copy of your credit report (small
fee)
Clear up any disputes on your credit report (in
writing)
Do not carry too many credit cards
Protect your SS#do not give it out haphazardly
Don’t apply for credit too often; it will count against
you
Don’t give your credit card number to telemarketers
you’re not familiar with
Be aware of hidden costs at check-cashing or rentto-own establishments
NxLeveL Guide for MicroEntrepreneurs-OHD 1-20
Ideas for Dealing with Bad Credit
Develop a budget and stick to it
Obtain a consumer copy of your credit report
If you find an error on your report, contact the credit bureau(s) in writing
If you are denied credit, find out why
Contact creditors to make arrangements to pay back old debt
Do not ignore student loans, utility bills or delinquent taxesPAY THEM!
Do not apply for more credit
Do not incur more debt
Keep only one or two credit cards; destroy others and close the accounts
Work with a reputable credit counseling or debt management service
Be wary of quick advertisements to repair creditthere are no easy cures
Do not automatically file bankruptcy; it can be more damaging in the long run
NxLeveL Guide for MicroEntrepreneurs-OHD 1-21
Credit Bureau Information
Trans Union Corporation
800-916-8800
www.tuc.com
Experian
800-682-7654
www.experian.com
Equifax
800-685-1111
www.equifax.com
Also contact your local
Consumer Credit Counseling Service (CCCS)
1,400 offices nationwide
NxLeveL Guide for MicroEntrepreneurs-OHD 1-22
Business Idea Sources
NxLeveL Guide for MicroEntrepreneurs-OHD 2-1
Types of Businesses
Characteristic
Mfg.
Service
Retail
Start-up costs
High
Low
Medium
Start-up time
High
Low
Medium
Technical Skills
High
Medium
Low
Selling skills
Medium
High
High
Creative skills
Medium/High
High
Medium/High
Cost Pressures
High
Low
Medium
Medium/High
Medium
Low
Medium
Low
High
Medium/High
Low
Medium/High
Technology
Business
Location
Risk to
Entrepreneur
NxLeveL Guide for MicroEntrepreneurs-OHD 2-2
What Can Make Your
Business Unique?
Features (different size, color, format, etc.)
Your location
Offer things that cannot be found elsewhere
New invention
Use of materials (green, recycled, American-only)
Pricing, guarantees
Customer service policies
Unique packaging
Individual artistry (e.g., crafts)
Add-ons or extras that come with a purchase
Your experience
Delivery policies / timeframes
NxLeveL Guide for MicroEntrepreneurs-OHD 2-3
Who Are Your Customers?
Gender (male or female)
Age or age range
Income level
Education level
Residence location
Employment/job location
Worker type (professional, hourly, etc.)
Marital status (married, single, widowed)
With or without children
Renter or home owner
Lifestyles/interests (sports, arts, pets...)
Level of familiarity with your service
Beliefs/Opinions
Specifics to your business
NxLeveL Guide for MicroEntrepreneurs-OHD 2-4
What Do You Need To Know ?
Who?
What?
Where?
When?
Why?
How?
NxLeveL Guide for MicroEntrepreneurs-OHD 2-5
Start the Research Process
Things to learn about…
Your niche
The need for your product
Customer identification
Competition
Location
Pricing
Costs/financing information
Regulations, licensing, certification
NxLeveL Guide for MicroEntrepreneurs-OHD 2-6
Is Your Business Idea Viable?
Work in your industry on a
part-time basis
Get a business mentor and learn from him or her
Volunteer for a small business owner to learn day-to-day
operations
If you have a product, test it at a trade show, community fair, or
block party
Call sales reps that supply your industry
Talk with local realtors, business owners, bankers, elected
officials, etc.
Research the competition – start with the phone book
Contact local economic development and/or government
agencies
NxLeveL Guide for MicroEntrepreneurs-OHD 2-7
Where to Begin…
Accessing Business Resources
Public Library
Trade Associations
Published Reports and Articles
Studying the Competition
Talking with Customers
Suppliers/Vendors
Local Economic Development or Business
Resources
Banks
Internet
Small Business Administration
NxLeveL Guide for MicroEntrepreneurs-OHD 2-8
Questions About
Business Planning
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?
What if I don’t complete the process
during class?
What’s in it for me?
NxLeveL Guide for MicroEntrepreneurs-OHD 3-1
The Planning Cycle
NxLeveL Guide for MicroEntrepreneurs-OHD 3-2
Keys to a Successful Planning
Process
The owner assumes the lead in the process
The planning process involves everyone in
the family and business
The plan reflects reality
There is a contingency plan for the worstcase scenario
The goals and objectives are achievable and
clear
The plan is flexible
The plan is reviewed often, and revised when
necessary
NxLeveL Guide for MicroEntrepreneurs-OHD 3-3
Managing Your Personal and
Business Goals
Goals: Dreams with deadlines
Objectives: How you’ll get there
(The steps to reach the goals, including
what, who, when)
Business goals can be set for many parts of
your business:
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Sales volume
Number of employees
Desired owner compensation
Profit
Time commitment
Other:
Other:
NxLeveL Guide for MicroEntrepreneurs-OHD 3-4
NxLeveL® Micro-Entrepreneur
Business Plan Outline
Cover Page
Table of Contents
Section I. Executive Summary
Section II. Personal Background Information
A. Personal Skills and Experience
B. Personal Financial Resources
Section III. Business Concept
A. General Description of the Business
B. Business Goals and Objectives
C. Industry Information
Industry Background Information
Current and Future Industry Trends
Business Fit in the Industry
Section IV. Business Organization
A. Ownership, Regulations, and Contracts
Ownership
Government Regulations and Taxes
Contracts and Leases
B. Management Issues
Managing People
Internal Management Team
Employees
Outside Services/Advisors
Risk Management
C. Managing Books and Records
NxLeveL Guide for MicroEntrepreneurs-OHD 3-5
NxLeveL® Micro-Entrepreneur
Business Plan Outline (Cont.)
Section V. The Marketing Plan
A. Product Description
Product Description
Features/Benefits
B. Market Analysis
Customer Analysis
Competitive Analysis
Market Potential
C. Market Objectives, Strategies, & Tactics
Product Lines
Positioning
Packaging/Branding
Pricing–A First Look
Placement (Distribution)
Promotional Strategies
Customer Service
Section VI. The Financial Plan
A. Investment Required for Start-Up
Start-up Costs/Needs
Investment Required–Bank Loan/Self
B. Cash Flow Projections
Monthly Cash Flow Projections–Year One
Notes to Cash Flow Projections
Annual Cash Flow Projections—Years Two and Three
C. Additional Financial Information
Summary of Financial Needs
Personal Financial Statement
D. Conclusion
Attachments
NxLeveL Guide for MicroEntrepreneurs-OHD 3-6
Overview of Marketing
Research
Study the industry…then study the customer,
competition and location.
Analysis
Analyze your research about the industry,
customer, competition and location.
Analyze your competitive advantage.
Strategies and Tactics
Determine the best method of getting your goods
and service to market, based on your analysis
NxLeveL Guide for MicroEntrepreneurs-OHD 4-1
Contents of the Marketing Plan
PRODUCT DESCRIPTION:
Features and benefits (what makes it different or better?)
Design and material choices
Life cycle and seasonality
MARKET ANALYSIS:
How big is your target market?
Who are your customers? (Demographics and psychographics)
Who are your competitors? What are their strengths and
weaknesses?
What are the political, economic, social, and technological trends in
your market?
MARKETING OBJECTIVES, STRATEGIES, AND TACTICS:
What are your business’s objectives? How will you achieve them?
What’s your business niche?
NxLeveL Guide for MicroEntrepreneurs-OHD 4-2
Sales Forecasting Methods
Breakdown Forecasting:
Start with largest population, and break it down
to estimate sales from target customers
Buildup Forecasting:
Estimate size of each market segment, and add
them to get a total
Indirect Forecasting:
Find possible indicators of sales when specific
market data are missing
NxLeveL Guide for MicroEntrepreneurs-OHD 4-3
Primary and Secondary Sources
SECONDARY:
Government (federal, state, local)
Small Business Development Centers
Women’s Business Centers
U.S. Small Business Administration
Trade and industry associations
Chambers of Commerce
Local newspapers and magazines
Census data
Business magazines
PRIMARY:
Interviews
Surveys
Focus groups
NxLeveL Guide for MicroEntrepreneurs-OHD 4-4
Research Tools
Libraries (Public, University/College, Private)
– Online and offline
Trade Associations
Business Periodicals
State and Federal Resources
Local Resources (Chambers of Commerce, SBDCs,
WBCs, BICs)
Professional Research Companies
NxLeveL Business Resource Guide
Studying the Competition
Surveys (focus groups and interviews)
Observation
NxLeveL Guide for MicroEntrepreneurs-OHD 4-5
Ways to Contact
Information Sources
In Person
Telephone
Facsimile (Fax)
Internet
E-mail
U.S. Mail
Express Delivery Services
NxLeveL Guide for MicroEntrepreneurs-OHD 4-6
Drawing Industry Conclusions
How has the industry developed?
How do small businesses operate within this industry?
What are the current growth patterns in the industry?
What is the industry’s size at present? What’s projected
a year from now?
Five years from now?
Are there any niche markets that are hot?
How does international trade affect your industry?
How will current and new government regulations affect
your industry?
How will technology affect your industry and the small
businesses within it?
NxLeveL Guide for MicroEntrepreneurs-OHD 4-7
Sole Proprietorship
Advantages
Easy to form and the simplest way of doing business
Owner has complete control
Owner receives all the income
Avoids double taxation
Disadvantages
Unlimited liability for all acts and debts of the business
Fewer tax benefits
The business dies when you die
Can’t expand the business through new owners and use
of their money
NxLeveL Guide for MicroEntrepreneurs-OHD 5-1
General Partnership
Advantages
Fairly simple to set up
Combination of resources & talents
Personal tax benefits
Disadvantages
More recordkeeping requirements
Unlimited liability (including for each other’s actions)
Dissolution upon death of a partner
Partnership profits taxed as income to the partners
Possible friction between partners
NxLeveL Guide for MicroEntrepreneurs-OHD 5-2
Limited Partnership
Advantages
General partners can provide additional source of
funding
Limited partners have limited liability
Allocation of income and losses to owners (no business
income tax)
Finite existence
Disadvantages
Initial organizational cost high
Limited partners have no control… might be hard to find
partners to invest without having authority
Compliance with state and federal securities laws
NxLeveL Guide for MicroEntrepreneurs-OHD 5-3
Corporation
Advantages
Limited liability of shareholders
Existence continues even if death of owner or sale of
stock
Flexibility of financing through outside investors
Transfer of ownership by sale/gift of stock
Tax benefits available to corporate employees
Disadvantages
Initial organizational cost high
Annual reporting requirements
Double taxation if paying dividends
NxLeveL Guide for MicroEntrepreneurs-OHD 5-4
S Corporation
Advantages
Same as for corporation
Taxed at the individual shareholder level
Disadvantages
Except for the tax consequences, same as for
corporation
With some exceptions, only individuals can be
shareholders
Limited number of shareholders
Limited to one class of stock
Must use calendar year
NxLeveL Guide for MicroEntrepreneurs-OHD 5-5
Limited Liability Company
Advantages
Limited liability without limits on management
participation
Flexible ownership and capital structure
No double taxation
Allocation of tax benefits among members
Disadvantages
Initial organizational cost high
Poor tax treatment of fringe benefits
Ownership transfer must be governed by buy/sell
provisions
NxLeveL Guide for MicroEntrepreneurs-OHD 5-6
Cooperatives
Advantages
Members own and control the business
Potential for collective efforts to improve marketing and
add value to products
Shared expertise in operation is a potential benefit
Disadvantages
Lengthy process by members to set up (bylaws, major
policy issues, direction, board)
Effectiveness depends on members dedication to long
term
Group decision-making and “shared ownership” can be
cumbersome
NxLeveL Guide for MicroEntrepreneurs-OHD 5-7
Government Regulations
Which Affect YOUR Business?
General Business Taxation
Personal Income Tax
Business Income Tax
Sales Tax
Property Tax
Business License Fees
Employee Regulations
Payroll Tax/Withholding
Employee vs. Independent Contractor
Wage and Hour Regulations
Hiring Regulations
OSHA
Consumer Protection Regulations
Warranties
Uniform Consumer Credit Code
NxLeveL Guide for MicroEntrepreneurs-OHD 5-8
Government Regulationscont’d
Which Affect YOUR Business?
Commerce Regulations
Professional Licenses
Business Registration
Uniform Commercial Code
Zoning Regulations
Home-based business
Signage
Manufacturing / retail
Bankruptcy Regulations
How much protection?
Transportation Regulations
Professional Licenses
Customs
Environmental Regulations
Waste disposal
Storage tanks
Siting / Buying property
NxLeveL Guide for MicroEntrepreneurs-OHD 5-9
IRS 20-Point ChecklistIndependent
Contractor or Employee?
Primary Factors
Yes
No
1.
Does the service recipient have the right to require compliance with
significant instructions?
2.
Does the service recipient have the right to set the hours of work?
3.
Does the service recipient have the right to set the order or sequence
of services to be performed?
4.
Does the service recipient have the right to discharge the service provider?
5.
Does the service provider have the right to hire, pay and supervise
assistants as the nature of the work requires?
6.
Does the service provider have no ability to realize a profit or loss?
7.
Does the service provider have no investment in significant tools, materials
and other equipment when such items are necessary to accomplish
the task and are customarily provided by the service provider?
8.
Does the service provider have no significant investment in facilities when they
are necessary to accomplish the task and they are customarily provided?
Secondary Factors
9.
Does the service recipient train the service provider?
10.
Does the service recipient have the right to require oral or written reports?
11.
Does the service recipient pay by the hour, week or month?
12.
Does the service recipient pay for business and/or travel expenses?
13.
Does the service recipient have the right to require personal service?
14.
Does the service provider usually not work for more than one firm at a time?
15.
Does the service provider maintain a continuing relationship with the
service recipient?
16.
Does the service provider devote substantially full time to the service recipient?
17.
Does the service provider have the right to terminate the relationship at any
time without incurring liability?
18.
Is the service provider integrated into the service recipient’s business?
19.
Does the service provider not make his or her services available to the
public on a regular and consistent basis?
20.
Does the service provider work only on the service recipient’s property
or designated location?
Note:
 “Yes” suggests employee status. “No” suggests independent contractor status.
 More weight should be given to the first eight questions than the last twelve.
 If you answered “yes” to any of these 20 questions, proceed with caution. Consult an accountant or tax lawyer who is familiar with the problems raised by
hiring individuals as independent contractors.
NxLeveL Guide for MicroEntrepreneurs-OHD 5-10
Basic Contract Terms
Performance. What actions must you
complete?
Price. How much, in what currency?
Place of delivery. Where, by what
method? Who’s liable?
Time to perform. When are goods or
services due? When is payment due?
Legal remedies. How can you enforce the
contract?
NxLeveL Guide for MicroEntrepreneurs-OHD 5-11
What’s in a Lease?
What are you leasing?
True cost of the lease
Payment “escalators”
Permitted uses
Lease responsibilities
(insurance, maintenance, etc.)
Renewal options
Purchase rights
Right of first refusal
Exclusivity
NxLeveL Guide for MicroEntrepreneurs-OHD 5-12
Protecting Your
Intellectual Property
What needs protecting?
Patent
– Prevents others from copying and selling your invention.
Costly to enforce.
Trademark
– Words, logos, symbols, that represent your company.
Copyright
– Protects work that is independently created, such as songs,
textbooks, creative writing. Inexpensive to register.
Trade secrets
– Secret processes, methods and information may be
protected under Uniform Trade Secrets Act.
NxLeveL Guide for MicroEntrepreneurs-OHD 5-13
Traits of Effective Managers
Build a team and lead it
Organize and plan
Solve problems
Manage money
Provide superior customer service
Build strong public relations
NxLeveL Guide for MicroEntrepreneurs-OHD 6-1
Business Communication
Written Communication
– Be clear and to the point
– Keep duplicates
– Develop a filing system
Verbal Communication
– Be honest! Don’t make promises you can’t keep!
– Don’t say anything you wouldn’t put in writing!
Phone Etiquette
–
–
–
–
Sound confident and enthusiastic
Answer with a greeting
Keep message pads handy
Always end with “Thank you!”
Networking
– When you get something from a networking partner, always give
something in return!
NxLeveL Guide for MicroEntrepreneurs-OHD 6-2
Traditional Organizational Chart
Traditional Organization Chart
President
Operating
Manager
Sales
Manager
Quality
Control
Assembly
Logistics
Employees
Employees
Employees
Area
Managers
Marketing
Manager
PR
Employees
NxLeveL Guide for MicroEntrepreneurs-OHD 6-3
Financial
Manager
Promotion
Accounting
Finance
Employees
Employees
Employees
Optional Organizational Chart
Operations
Marketing
Owner/
Entrepreneur
Finance/
Accounting
Other
NxLeveL Guide for MicroEntrepreneurs-OHD6-4
Key Management Issues
Learn to let go and delegate
Develop your internal team and your external
team
Look at the big picture
– Develop management goals and strategies
– Create a workable structure
– Assign responsibilities
Communication is key
Lead by example
Get advice
Have fun, be creative!
NxLeveL Guide for MicroEntrepreneurs-OHD 6-5
Key Employee Management
Practices
Identifying tasks and job descriptions
Interviewing, selecting and hiring, and
training
Setting performance goals
Evaluating/measuring performance
Creating compensation and incentive
strategies
Facilitating communication and learning
Creating cooperative teams
Building in fun and creativity
NxLeveL Guide for MicroEntrepreneurs-OHD 6-6
Elements of a Personnel /
Company Handbook
A letter from the founder, team leader, and
coach (you!)
Company mission statement
Employee relations policy
Employee benefits package
“Principles of doing business” statement
Employee performance appraisal procedures
Employee problem resolution procedures
Vacation and holiday policies
Reporting structure and functions
NxLeveL Guide for MicroEntrepreneurs-OHD 6-7
Types of Insurance
Covering Your Business
–
–
–
–
–
–
–
General liability
Product liability
Key-person
Business property
Business interruption
Automobile
Electronic data
Covering Your Employees
–
–
–
–
Workers’ compensation
Life insurance
Health/Medical
Pension plans
NxLeveL Guide for MicroEntrepreneurs-OHD 6-8
Risk Management Check-Up List
Are my goals written, measurable and realistic?
Have I communicated those goals with everyone in the
business?
Do I understand the goals of other family members and/or
employees?
Do I know which risks can keep me from attaining my goals?
Have I decided which risks I’m comfortable managing myself,
and which I should seek assistance with?
Have I scheduled regular insurance check-ups for health, life,
casualty, property, disability, and long-term care?
Do I have a confident relationship with my risk management
advisors?
Do I understand how much coverage I need to provide
adequate cash flow for my business?
Will my lender understand my overall plan for my business and
help me achieve my goals?
NxLeveL Guide for MicroEntrepreneurs-OHD 6-9
Risk Management Check-Up
Listcont’d
Are all of my assets covered in my risk management plan?
Do I know what financial records I need to adequately manage
my business? To document my borrowing requests?
Do I understand the terms and conditions of my borrowing
arrangements?
Do I have alternative sources of income in case of business
slowing, business failure, etc.?
Do I have a will? When was it last reviewed?
Have I advised family members as to the location of my will,
other important documents, etc.
Do I have life insurance? Is my list of beneficiaries up to date?
Have I explored ways of transferring assets to the next
generation?
___________________________________________
___________________________________________
___________________________________________
NxLeveL Guide for MicroEntrepreneurs-OHD 6-10
The Purpose of Market Research
You want to identify:
Customers: Who will buy your product?
Market Niche: Who’s your competition, and
where do you fit into the market?
Price: What price will make your product
competitive?
Competitive Edge: What makes you better
than or different from the competition?
Location: Where will you sell your product to
reach your target customer?
NxLeveL Guide for MicroEntrepreneurs-OHD 7-1
Important Info-Gathering Tips
Keep your eyes and ears open
Ask lots of specific questions
Carefully listen to the answers
Honestly evaluate the importance of the
answers
Don’t let wishful thinking, assumptions,
or prejudices affect how you gather or
interpret data
NxLeveL Guide for MicroEntrepreneurs-OHD 7-2
Sources of Information
Survey of potential customers
Small Business Development Center
Chamber of Commerce
Library
Commercial Sources (local utility companies, market research
companies)
Trade Associations
Stock Brokers
Online Resources
Phone Book
Competition (visit, review advertising materials, buy their product)
Census Information
Local Zoning Plan
Suppliers
Test Market
Other: ________________
NxLeveL Guide for MicroEntrepreneurs-OHD 7-3
The Marketing Mix
The Four Ps will guide your research,
analysis, and strategies:
PRODUCT
PRICE
PROMOTION
PLACEMENT
NxLeveL Guide for MicroEntrepreneurs-OHD 7-4
Features vs. Benefits
Features:
–
–
–
–
–
Size
Quality
Varieties
Types
Materials
Benefits:
– What your product will DO FOR your customer
(time savings, convenience, status, security, etc.)
PEOPLE BUY BENEFITS,
NOT FEATURES!
NxLeveL Guide for MicroEntrepreneurs-OHD 7-5
Your Product In Use
If you sell something to eat…
ask people to taste it.
If you offer a service…
ask people to use it.
If you sell something to wear…
ask people to try it on.
THEN
When people hate it, ask them WHY.
When people love it, ask them WHY.
Then, ask them more questions about themselves.
These are your
target customers.
NxLeveL Guide for MicroEntrepreneurs-OHD 7-6
Demographics
Age
Gender
Location
Education
Occupation
Income Level
Marital Status
Kids / No Kids
NxLeveL Guide for MicroEntrepreneurs-OHD 7-7
Psychographics
Needs
– Security, esteem, love, acceptance, understanding,
beauty, good health
Values
– Status, success, greed, simplicity
Buying Styles
– Price, fads, quality, technology, luxury, convenience
Cultures
– Modern, artistic, religious, liberal, conservative,
environmental
Interests
– Sports, reading, fitness, cooking, workaholic,
gardening
NxLeveL Guide for MicroEntrepreneurs-OHD 7-8
Why Analyze the Competition?
Because You Might:
Learn more about what the customer really
wants
(or doesn’t want)!
Discover unserved niche markets
Get ideas for marketing, merchandising,
product mix
Obtain valuable advice, support, information
from remote or indirect competition
Because You Will:
Determine whether or not you have a
COMPETITIVE ADVANTAGE
NxLeveL Guide for MicroEntrepreneurs-OHD 7-9
Things You Should Know About
Your Competition
Direct or Indirect Competition?
Where are they located?
What is their brand image?
Who are their customers?
How do they price their products?
How is their overall performance?
How is their customer service?
What type of promotions do they use?
What are their strengths and weaknesses?
NxLeveL Guide for MicroEntrepreneurs-OHD 7-10
Choosing a Location
Proximity to customers
Neighborhood
Convenience
Safety (lighting, off-street parking, etc.)
Accessibility (ADA)
Visibility
Foot traffic, vehicle traffic
Other complementary businesses nearby
Size/floor plan requirements
Lease or own
Zoning restrictions; landlord restrictions
Costs (property, amenities, required improvements)
NxLeveL Guide for MicroEntrepreneurs-OHD 7-11
Your Target Market
Questions You Need to Answer:
? Are there enough people in the target
market to make enough sales to
generate a profit?
? Does it have unique and definable
characteristics that will let you develop
marketing strategies for it?
? Are there unmet or under-met needs
within the target group that your
product or service could fill?
? Is there room for growth?
NxLeveL Guide for MicroEntrepreneurs-OHD 8-1
Product Strategies
Understand the features and benefits of your
products
Determine product lines and appropriate
product mix (depth and width)
Position your product in the marketplace
Package your products and your business
Develop service enhancements
Create a unique brand identity
NxLeveL Guide for MicroEntrepreneurs-OHD 8-2
What Makes a Good Name?
Choose your business name wisely!
Guidelines:
Tells people what you do
Easy to pronounce
Not used by someone else
No double or hidden meanings
Be careful with acronyms
Be creative, but not too cute
Not too long
Be cautious about using your last name or initials
Develop appropriate logo or trademark
NxLeveL Guide for MicroEntrepreneurs-OHD 8-3
Basic Pricing Concepts
VALUE is what your customer believes
your product is worth
PRICE is the amount of money you
charge your customers per sales unit
of your product
COST is what you spend to make your
product or deliver your service
PROFIT is what’s left over after you
subtract COST from PRICE
NxLeveL Guide for MicroEntrepreneurs-OHD 8-4
Pricing Considerations
What are your costs?
What will your customer pay?
What image do you want to convey?
What does the competition charge?
What will the market bear?
Where do you want to be positioned?
How does a service business determine
price?
NxLeveL Guide for MicroEntrepreneurs-OHD 8-5
You Must Understand Your Costs!
Variable Costs
Costs that go up or down in relation to sales volume.
Example: You sell personalized T-shirts for $10.00 each.
Selling Price
$10.00
Variable Costs:
Raw material (t-shirt)
$3.00
Hourly labor
$1.00
Sales commission (10%)
$1.00
Shipping charge
$ .50
Total Variable Costs
$5.50
Price minus Variable Costs
$4.50
The $4.50 is called the contribution margin because it represents how
much each unit of sales “contributes” towards paying for fixed costs
and profits.
NxLeveL Guide for MicroEntrepreneurs-OHD 8-6
You Must Understand Your
Costs!
Fixed Costs
Costs that don’t change regardless of sales volume.
Example: Fixed expenses (per month)
Rent
$ 800.00
Telephone
100.00
Insurance
50.00
Bookkeeping
100.00
Loan payments
300.00
Total Fixed Expenses
$1,350.00
QUESTION:
How many t-shirts do you have to sell each month to pay for your
variable and fixed expenses?
NxLeveL Guide for MicroEntrepreneurs-OHD 8-7
Break-Even Analysis
NxLeveL Guide for MicroEntrepreneurs-OHD 8-8
Your Break-Even Point
How many t-shirts do you need to sell each month before you pay for your variable
and fixed expenses and start making a profit?
Break-Even Units Volume =
Fixed Costs
Price minus Variable Costs
Example:
Selling Price
$10.00 per unit
Variable costs
$ 5.50 per unit
Contribution margin
$ 4.50 per unit
Fixed costs
$1,350 / month
Break-Even Point in Units =
$1,350.00 = 300 t-shirts per month
$4.50
When you sell t-shirt #301, you will start making a profit for that month.
Break-Even = 300 t-shirts x $10 =$3,000
NxLeveL Guide for MicroEntrepreneurs-OHD 8-9
Planning for Profit
? Can you sell 300 t-shirts per month?
? If it takes 300 t-shirts per month to break even, how
many more can you sell to make a desired amount of
profit?
? How much profit do you want to make?
Example: You want to make $900 profit per month.
How many more t-shirts per month do you have to
sell?
It took 300 t-shirts to just break even
After the first 300, $4.50 per t-shirt contributes to
profit
$900.00  $4.50 = 200 t-shirts more to make $900
per month profit.
? Can you sell 500 t-shirts
per month?
NxLeveL Guide for MicroEntrepreneurs-OHD 8-10
Pricing Strategies
Cost-based pricing
Competition-based pricing
Value-based pricing
Retail pricing
NxLeveL Guide for MicroEntrepreneurs-OHD 8-11
Distribution Basics
Questions You Need to Answer:
Where will I distribute my product?
Retail location?
Wholesalers?
Customer’s site?
Internet?
How will I deliver my product?
UPS, express mail services, USPS?
Personal delivery?
Special packing, warehousing?
My office or their office?
Will I need someone to help me sell?
In-house sales team?
Sales representatives?
NxLeveL Guide for MicroEntrepreneurs-OHD 9-1
Distribution Strategies
Direct marketing (to customers or to other
businesses)
Manufacturer to retailers through
intermediaries (sales reps, agents, brokers,
wholesalers)
Consignment
Mail-order catalogs
Classified ads
Home shopping networks
“Piggyback” with other products
Internet
NxLeveL Guide for MicroEntrepreneurs-OHD 9-2
Elements of Effective Advertising
WHO?
– Right Audience
WHAT?
– Right Message
WHEN?
– Right Time
WHERE?
– Right Place
HOW MUCH?
– Right Cost
NxLeveL Guide for MicroEntrepreneurs-OHD 9-3
Types of Advertising
Word of Mouth
Print (Newspaper)
Broadcast (Radio and TV)
Other:
–
–
–
–
–
–
–
–
–
–
Business Cards/Letterhead
Brochures/Flyers
Catalogs
Magazines
Classified Ads
Direct Mail
Telemarketing
Signage
Novelty/Specialty Advertising
Yellow Pages
NxLeveL Guide for MicroEntrepreneurs-OHD 9-4
The ABCs of Signage
Attracting new customers
You need to “restock” customers who move
away or change their buying habits!
Branding your business
Your sign is a promise that tells customers
what to expect. Remember, first impressions
count!
Creating impulse buys
Impulse buys make up 68% of total sales!
NxLeveL Guide for MicroEntrepreneurs-OHD 9-5
Public Relations & Networking
P.R. is:
Promotion without paid advertising
Press releases
Sponsoring events
Drawings, contests,
Giveaways
Speaking as a “Guest Expert”
Participating in community organizations
NxLeveL Guide for MicroEntrepreneurs-OHD 9-6
Online vs. Offline Buying
WHY PEOPLE BUY ONLINE:
Speed and convenience
Vast product selection
It’s easy to compare prices and save
Search capabilities
No driving and parking, or crowds
WHY PEOPLE DON’T BUY ONLINE:
Product is easily available locally
Doubts about reliability of seller or shipper
Security, fraud, and privacy issues
Shipping costs are too high
Inability to sample, try on, taste, or test product
Return and warranty issues (trust)
NxLeveL Guide for MicroEntrepreneurs-OHD 10-1
Benefits of Being Online
Provides business and product info to global
markets
Increases consumer awareness of your
product
Improves customer service by providing
online product tips, instructions, and links to
helpful sites
Gives prospective customers one more way
to contact you
Networking, partnering, and bootstrapping
opportunities
NxLeveL Guide for MicroEntrepreneurs-OHD 10-2
Building Your Own Website: Pros
and Cons
Advantages:
Your company learns site-building skills
You can update your site instantly
Site maintenance costs may be lower
Disadvantages:
Time spent learning skills distracts from core
business tasks
Time spent maintaining site distracts from core
business tasks
Cost of site-building tools, and possible training
Site may not have a professional look, and may take
longer to develop
NxLeveL Guide for MicroEntrepreneurs-OHD 10-3
Hiring a Web Designer: Pros and
Cons
Advantages:
You don’t have to learn new skills
Costs are upfront and known
No time wasted on site-building
Site can be built quickly
Professional look
Disadvantages:
You must rely on outside help
Higher expenses
It may take longer to update site
Site maintenance costs will be higher in the long run
NxLeveL Guide for MicroEntrepreneurs-OHD 10-4
Selling Through an E-Commerce
Host: Pros and Cons
Advantages:
Usually very easy
No time wasted on site-building
E-commerce functions already in place, with appropriate
security
Some hosts may have consumer trust, and offer problemresolution services
Professional look
Disadvantages:
Higher charges (per month, per transaction, by traffic volume,
etc.)
Some hosts have uniform look and provide fewer opportunities
for branding
“One size fits all” format may not suit your business
NxLeveL Guide for MicroEntrepreneurs-OHD 10-5
Issues to Address When Planning
Your Site
What business tasks do you need to do
online?
Do your customers buy online?
What information do your customers need?
How quickly do you need a functioning site?
How much can you budget for site creation
and maintenance?
How will you market your site?
Are you prepared to sell internationally, or
will you only sell in the USA?
How often will your site get updated?
NxLeveL Guide for MicroEntrepreneurs-OHD 10-6
Website Tips
Clean design, and fast-loading pages
Accept as many forms of payment as
possible
Avoid backorders
Send an e-mail confirmation for all orders
Offer many shipping options, including
express mail
Include shipping info for foreign consumers
Make sure site fits brand identity
Optimize for search-engine placement
NxLeveL Guide for MicroEntrepreneurs-OHD 10-7
Things to Consider Before You
Start Selling
Your image is your business’s image.
These things influence that image:
First Impressions
Dress
Language
Being On Time
Business Meeting Etiquette
NxLeveL Guide for MicroEntrepreneurs-OHD 11-1
Traits of Successful Sellers
High energy
Self-motivation
Good grooming
Persistence and perseverance
Good listening skills
Technical knowledge
Ability to use the product
Ability to explain the product
Good communication skills
Ability to overcome objections
Knowing how to close the sale
NxLeveL Guide for MicroEntrepreneurs-OHD 11-2
Six Steps to Sales Success
1. Prospect and Prioritize Accounts
2. Plan and Prepare for Sales Calls
3. Make the First Contact Count
4. Present your Product
5. Handle Objections
6. Close the Sale
NxLeveL Guide for MicroEntrepreneurs-OHD 11-3
Closing Techniques
Basic Close
Offer Alternative Choice
Compare Pros and Cons of Buying the
Product
Ask Closing Questions and Summarize
Cite Examples of Others Who Have
Purchased
Isolate the Customer’s Potential
Objection and Clarify
Use a Secondary Question to Close
NxLeveL Guide for MicroEntrepreneurs-OHD 11-4
Four Customer Service Basics
Positive Talk
Recognizing Customer Needs
Finding Common Ground
Building Trust
When We Communicate…
7% of our message is
delivered by words
93% of our message is
nonverbal!
NxLeveL Guide for MicroEntrepreneurs-OHD 11-5
Learn What Your Customer Needs
To Be Understood
To Feel Welcome
To Feel Important
To Feel Comfortable
Why We Lose Customers:
1% die
3% move away
4% drift to another business
5% change on a friend’s recommendation
9% buy it cheaper somewhere else
10% have a service problem that is not resolved
68% leave because they feel they’re not getting good
service
NxLeveL Guide for MicroEntrepreneurs-OHD 11-6
What Customers Expect
Clean, comfortable, attractive surroundings
To be welcomed pleasantly
Well-groomed, professional sales personnel
Immediate, focused attention
Eye contact
To be addressed by name
To be assisted by someone with excellent product
knowledge
Confidentiality
To be treated with courtesy and respect
Other: ___________________
_________________________
_________________________
NxLeveL Guide for MicroEntrepreneurs-OHD 11-7
General Guidelines for Dealing
with a Complaint
1. LISTEN!
2. Recognize the customer’s feelings
3. Apologize when it’s the right thing to
do
4. Clearly explain what you’re going to
do about the situation
5. Thank the customer for bringing the
problem to your attention
6. Take action to make things right
NxLeveL Guide for MicroEntrepreneurs-OHD 11-8
Customer Service Essentials
Welcome customers to your business
Thank customers for coming to you
Educate customers about your products
Answer questions
Follow up promptly
Thank customers for choosing you
Follow up with the customer, to make sure
that your product and service were
satisfactory
Use follow-up responses to improve your
product or service
NxLeveL Guide for MicroEntrepreneurs-OHD 11-9
Cash Flow Projection Worksheet
Sections
(A) Beginning Cash Balance
(B), (C) & (D)
Cash From Operations
–
–
–
–
(B)
(C1)
(C2)
(D)
Cash In from Operations
Variable Expenses
Operating Expenses
Net Operating Cash
(E) Cash From Investment or Loan Activities
– (E1)
– (E2)
Other Cash In
Other Cash Out
(F) Net Monthly Cash
(G) Ending Cash Balance
NxLeveL Guide for MicroEntrepreneurs-OHD 12-1
Sample Chart of Accounts
Account #
Asset Accounts:
100
Description
Cash On Hand
101
102
105
110
Cash in the Bank
Petty Cash
Inventory
Equipment (Net)
111
Liability Accounts:
200
210
Capital Accounts:
300
310
Revenue Accounts:
400
401
402
403
410
420
Accum Deprec-Equip
Accounts Payable
Payroll Taxes Payable
Owner’s Equity
Owner’s Draw
Sales
Product #1 Sales
Product #2 Sales
Service #1 Sales
Interest Income
Other Income
NxLeveL Guide for MicroEntrepreneurs-OHD 12-2
Sample Chart of Accountscont’d
Account #
Expense Accounts:
500
600
610
620
630
640
650
660
670
700
710
720
730
740
750
760
Description
Inventory Purchases
Advertising
Auto Expense
Bank Charges
Dues & Subscriptions
Insurance
Licenses
Office Expense
Miscellaneous
Payroll Taxes
Professional Services
Rent
Supplies
Telephone
Travel
Utilities
NxLeveL Guide for MicroEntrepreneurs-OHD 12-3
Start-Up Expenses Worksheet
START UP EXPENSES WORKSHEET
Mo nt hs
1
Janu ar y
ST
AR
T UP
(A) BEGINNING CASH BALANCE
(B) CASH IN FROM OPERATI ONS
Ope ra t ing
Cas h In
To
ta
l Operat
ing Ca
sh In (B
)
No ne
(C) OPERAT ING CASH OUT
(C1) Vari
abl
e E
xpe
nses (Cos t of Go
ods S
ol
d)
6.
Inv en tor y
7.
Ma ter ials
8
Pur c ha se s
Fi
lmP
ro
cessin
g
9.
Other D
ir
ectLa
bo
r
1 0.
Co mmis sion s
1 1.
Oth er
To
ta
l Variable E
xpenses (C1)
(C2) Ope rating E
xpenses
1 2.
1 3.
1 4.
A d ve r tis in g
Ba
n
kSe
r vi
ce C
h
arg
e
Cr
edi
tC
a
rd Fe
e
s
1 5.
De live r y
1 6.
He alth
1 7.
Ins ur a nc e
1 8.
Inte r es t
1 9.
Misc ella ne ou s
In su r an ce
2 0.
Of f ice
2 1.
Pay r oll
2 2.
P
a
yro
ll T
axe
s
2 3.
Pr of e ss io na l Fee s
2 4.
Re
n
to
r L
ease
2 5.
Sa
ary (o
l
w ne
r)
2 6.
Su
b
scripti
on
sa
nd D
ue
s
2 7.
Su pp lies
2 8.
Ta
xe
s an
d Li
cen
ses
2 9.
Ut
ili
tiesan
dT
ele
ph
o
ne
3 0.
Oth er :
To
ta
l Operat
ing E
x
pens es ( C2
)
(D
) N
et O
pera
ti
n g Cash (B- C1- C
2)
(E)
CASH F
ROM INVEST MENT or LOAN ACT IVITI ES
(E
1) Ot her Cash In
3 1.
In
ve
stm
en
ts inBu
sine
ss
3 2.
Lo
anP
rocee
d
s
3 3.
Oth er :
To
ta
l Other Cash In (
E
1)
(E
2) Ot her Cash Ou
t
3 4.
3 5.
3 6.
Ca
p
ital P
urcha
ses (Assets)
Lo
anP
rin
ci
p
al P
aym
en
ts
Oth er :
To
ta
l Other Cash O
ut (E
2)
(E
) N
et Other C
ash (E
1 -E
2)
(F
) N
et MonthlyCa
s h (D + E
)
(G) E
nding C
as h B
a
lan
ce ( A + F
)
NxLeveL Guide for MicroEntrepreneurs-OHD 12-4
Operating Cash Out Worksheet
CASH FLOW PROJECTION WORKSHEET—January through June
Mo nt hs
START U P
1
Janu ary
2
F eb ruary
(A) BEGINNING CASH BALANCE
(B) CASH IN FROM OPERATIONS
(C) OPERATING CASH OUT
(C1)Variable Expenses (CostofGoods Sold)
6. InventoryPurchases
7. Materials
8 Processing
9. Other DirectLabor
10.Commissions
11.Other
Total Variable Expenses (C1)
(C2)Operating Expenses
12.Advertising
13.Bank Service Charge
14.Credit Card Fees
15.Delivery
16.Health Insurance
17.Insurance
18.Interest
19.Miscellaneous
20. Office
21.Payroll
22.Payroll Taxes
23.Professional Fees
24.Rent or Lease
25. Salary(owner)
26. Subscriptions and Dues
27. Supplies
28. Taxes and Licenses
29.Utilities and Telephone
30. Other:
Total Operating Expenses (C2)
(D) Net Operating Cash (B- C1 - C2)
NxLeveL Guide for MicroEntrepreneurs-OHD 12-5
3
March
4
Apri l
5
May
6
Jun e
Operating Cash In Worksheet
Product/Service Sales Forecast
1
Jan
Months
2
Feb
3
Mar
4
Apr
5
May
6
Jun
Product/Service #1:
Units Sold
Price perUnit
Total Sales
Product/Service #2:
Units Sold
Price perUnit
Total Sales
Product/Service #3:
Units Sold
Price perUnit
Total Sales
Total - All
Product/ Service
Sales
CASHFLOW PROJECTION WORKSHEET - January through June
Months
START U P
1
January
2
February
3
March
(A) BEGINNING CASH BALANCE
(B) CASH IN FROM OPERATIONS
Operating Cash In
1. #1 Product/Service
2. #2 Product/Service
3. #3 Product/Service
4. #4 Product/Service
5. #5 Product/Service
Total Operating Cash In (B)
(C) OPERATING CASH OUT
NxLeveL Guide for MicroEntrepreneurs-OHD 12-6
4
Apri l
5
May
6
June
Michele’s Photo StudioBlank
Worksheet
MONTHLY CASH FLOW PROJECTION WORKSHEET
Mo nt hs
S TART U P
1
Janu ary
2
F eb ruary
(A) BEGINNING CASH BALANCE
(B) CASH IN FROM OPERATI ONS
Ope ra ting Cas h In
1.
#1Wedding P
ack
age
2.
#2Graduation P
ackage
3.
#3PortraitPackage
4.
# 4 Frame s
5.
# 5 A lbu ms
To
tal Operating Cash In (B)
(C) OPERAT ING CASH OUT
(C1) Vari
abl
e E
xpenses (Cos t of Go
ods Sol
d)
6.
Inv en tory Purc ha se s
7.
Ma terials
8
FilmP
rocessing
9.
Other DirectLabor
1 0.
1 1.
Co mmis sion s
Oth er
To
tal Variable E
xpenses (C1)
(C2) Ope rating E
xpenses
1 2.
A d ve rtis in g
1 3.
BankService Charge
1 4.
Credit Card Fees
1 5.
De live ry
1 6.
He alth In su ran ce
1 7.
Ins ura nc e
1 8.
Inte res t
1 9.
Misc ella ne ou s
2 0.
Of f ice
2 1.
Pay roll
2 2.
Payroll T
axes
2 3.
Prof e ss io na l Fee s
2 4.
Rent or Lease
2 5.
Salary (ow ner)
2 6.
Subscriptions and Dues
2 7.
Su pp lies
2 8.
Taxes and Licenses
2 9.
Ut
ilitiesand T
elephone
3 0.
Other: Auto Fuel
To
tal Operating E
xpens es (C2)
(D) Net O
perati
n g Cash (B- C1- C2)
(E) CASH FROM INVEST MENT or LOAN ACT IVITI ES
(E
1) Other Cash In
3 1.
Investments inBusiness
3 2.
LoanProceeds
3 3.
Oth er:
To
tal Other Cash In (E1)
(E
2) Other Cash Ou
t
3 4.
Capital P
urchases (Assets)
3 5.
LoanPrincipal P
ayments
3 6.
Oth er:
To
tal Other Cash O
ut (E2)
(E
) Net Other Cash (E
1 - E2)
(F
) Net MonthlyCas h (D + E)
(G) E
nding Cas h Balan
ce ( A + F
)
NxLeveL Guide for MicroEntrepreneurs-OHD 12-7
3
March
Qu arter
S ub tot al
Michele’s Photo StudioStart-Up
Expenses
STARTUP EXPENSES WORKSHEET—Michele'sPhotography Studio
Mo nt hs
(A) BEGINNING CASH BALANCE
START UP
1,000
1
Janu ary
(B) CASH IN FROM OPERATIONS
Ope rating Cas h In
1. #1Wedding Package
2. #2Graduation Package
3. #3PortraitPackage
4. #4 Frames
5. #5 Albums
Total Operating Cash In (B)
0
(C) OPERATING CASH OUT
(C1) Variable Expenses (Cost of Goods Sold)
)6. Inv entory Purc hases
500
7. Materials
8
FilmProcessing
9. Other DirectLabor
10. Commis sions
11. Other
Total Variable Expenses (C1)
500
(C2) Operating Expenses
12. Advertis ing
314
13. BankService Charge
58
14. Credit Card Fees
15. Delivery
16. Health Insurance
17. Ins uranc e
50
18. Interes t
19. Misc ellaneous
20. Of f ice
45
21. Pay roll
22. Payroll Taxes
23. Prof ess ional Fees
24. Rent or Lease
25. Salary (ow ner)
26. Subscriptions and Dues
27. Supplies
550
28. Taxes and Licenses
50
29. Utilitiesand Telephone
30. Other: Auto Fuel
Total Operating Expenses (C2)
(D) Net OperatingCash (B- C1- C2)
1,067
(1,567)
(E) CASH FROM INVESTMENT or LOAN ACTIVITIES
(E1) Other CashIn
31. Investments inBusiness
32. LoanProceeds
33. Other:
Total Other Cash In (E1)
0
(E2) Other CashOut
34. Capital Purchases (Assets)
1,000
35. LoanPrincipalPayments
36. Other:
Total Other Cash Out (E2)
1,000
(E) Net Other Cash (E1 - E2)
(1,000)
(F) Net MonthlyCash(D + E)
(2,567)
(G) Ending CashBalance ( A + F)
(1,567)
NxLeveL Guide for MicroEntrepreneurs-OHD 12-8
(1,567)
Michele’s Photo StudioCompleted
Worksheet
MONTHLY CASH FLOW PROJECTION WORKSHEET - Michele's PhotographyStudio
Mo nt hs
1
Janu ary
START U P
(A) BEGINNING CASH BALANCE
1,000
2
F eb ruary
3
March
Qu arter
Sub tot al
(1,567)
(84 9)
(36 1)
1,000
1. #1Wedding Package
600
600
600
1,800
2. #2Graduation Package
550
275
275
1,100
3. #3PortraitPackage
125
125
125
375
4. #4 Frames
55
65
75
5. #5 Albums
125
155
155
435
1,455
1,220
1,230
3,905
7. Materials
50
45
60
155
8
10
10
10
30
500
60
55
70
685
314
50
50
50
464
(B) CASH IN FROM OPERATIONS
Ope rating Cas h In
Total Operating Cash In (B)
0
195
(C) OPERATING CASH OUT
(C1) Variable Expenses (Cost of Goods Sold)
6. Inv entory Purc hases
500
FilmProcessing
500
9. Other DirectLabor
10. Commis sions
11. Other
Total Variable Expenses (C1)
(C2) Operating Expenses
12. Advertis ing
13. BankService Charge
58
58
14. Credit Card Fees
15. Delivery
16. Health Insurance
17. Ins uranc e
50
22
22
22
116
18. Interes t
19. Misc ellaneous
20. Of f ice
45
45
21. Pay roll
22. Payroll Taxes
23. Prof ess ional Fees
50
50
500
500
500
1,500
15
15
15
24. Rent or Lease
25. Salary (ow ner)
26. Subscriptions and Dues
27. Supplies
550
28. Taxes and Licenses
45
550
50
50
29. Utilitiesand Telephone
70
70
70
30. Other: Auto Fuel
20
20
20
60
1,067
677
677
727
3,148
(1,567)
718
488
433
72
0
0
0
Total Operating Expenses (C2)
(D) Net OperatingCash (B- C1- C2)
210
(E) CASH FROM INVESTMENT or LOAN ACTIVITIES
(E1) Other CashIn
31. Investments inBusiness
32. LoanProceeds
33. Other:
Total Other Cash In (E1)
0
0
(E2) Other CashOut
34. Capital Purchases (Assets)
1,000
1,000
35. LoanPrincipalPayments
36. Other:
0
1,000
(E) Net Other Cash (E1 - E2)
(1,000)
0
0
0
(1,000)
(F) Net MonthlyCash(D+ E)
Total Other Cash Out (E2)
(2,567)
1,000
718
0
488
0
433
(928)
(G) Ending CashBalance ( A+ F)
(1,567)
(849)
(361)
72
72
NxLeveL Guide for MicroEntrepreneurs-OHD 12-9
Michele’s Photo StudioWhat If I
Borrow $2000?
MONTHLY CASH FLOW PROJECTION WORKSHEET—"WhatIf"... Michele Borrows $2000
Mo nt hs
1
Janu ary
START U P
(A) BEGINNING CASH BALANCE
1,000
2
F eb ruary
3
March
Qu arter
Sub tot al
43 3
1,091
1,519
1,000
1. #1Wedding Package
600
600
600
1,800
2. #2Graduation Package
550
275
275
1,100
3. #3PortraitPackage
125
125
125
375
4. #4 Frames
55
65
75
5. #5 Albums
125
155
155
435
1,455
1,220
1,230
3,905
7. Materials
50
45
60
155
8
10
10
10
30
500
60
55
70
685
314
50
50
50
464
(B) CASH IN FROM OPERATIONS
Ope rating Cas h In
Total Operating Cash In (B)
0
195
(C) OPERATING CASH OUT
(C1) Variable Expenses (Cost of Goods Sold)
6. Inv entory Purc hases
500
FilmProcessing
500
9. Other DirectLabor
10. Commis sions
11. Other
Total Variable Expenses (C1)
(C2) Operating Expenses
12. Advertis ing
13. BankService Charge
58
58
14. Credit Card Fees
15. Delivery
16. Health Insurance
17. Ins uranc e
50
18. Interes t
22
22
22
116
10
10
10
30
19. Misc ellaneous
20. Of f ice
45
45
21. Pay roll
22. Payroll Taxes
23. Prof ess ional Fees
50
50
500
500
500
1,500
15
15
15
24. Rent or Lease
25. Salary (ow ner)
26. Subscriptions and Dues
27. Supplies
550
28. Taxes and Licenses
45
550
50
50
29. Utilitiesand Telephone
70
70
70
30. Other: Auto Fuel
20
20
20
60
1,067
687
687
737
3,178
(1,567)
708
478
423
42
Total Operating Expenses (C2)
(D) Net OperatingCash (B- C1- C2)
210
(E) CASH FROM INVESTMENT or LOAN ACTIVITIES
(E1) Other CashIn
31. Investments inBusiness
32. LoanProceeds
2,000
2,000
33. Other:
Total Other Cash In (E1)
2,000
0
0
0
2,000
50
50
50
150
1,000
50
50
50
1,150
(E) Net Other Cash (E1 - E2)
1,000
(50)
(50)
(50)
850
(F) Net MonthlyCash(D+ E)
(567)
658
428
373
892
433
1,091
1,519
1,892
1,892
(E2) Other CashOut
34. Capital Purchases (Assets)
1,000
35. LoanPrincipalPayments
1,000
36. Other:
Total Other Cash Out (E2)
(G) Ending CashBalance ( A+ F)
NxLeveL Guide for MicroEntrepreneurs-OHD 12-10
Michele’s Photo StudioWhat If No
Wedding Sales?
MONTHLY CASH FLOW PROJECTION WORKSHEET—"WhatIf"... No Wedding Sales
Mo nt hs
1
Janu ary
START U P
(A) BEGINNING CASH BALANCE
1,000
2
F eb ruary
43 3
3
March
49 1
Qu arter
Sub tot al
31 9
1,000
(B) CASH IN FROM OPERATIONS
Ope rating Cas h In
1. #1Wedding Package
0
0
0
0
2. #2Graduation Package
550
275
275
1,100
3. #3PortraitPackage
125
125
125
375
4. #4 Frames
55
65
75
125
155
155
435
855
620
630
2,105
7. Materials
50
45
60
155
8
10
10
10
30
500
60
55
70
685
314
50
50
50
464
5. #5 Albums
Total Operating Cash In (B)
0
195
(C) OPERATING CASH OUT
(C1) Variable Expenses (Cost of Goods Sold)
6. Inv entory Purc hases
500
FilmProcessing
500
9. Other DirectLabor
10. Commis sions
11. Other
Total Variable Expenses (C1)
(C2) Operating Expenses
12. Advertis ing
13. BankService Charge
58
58
14. Credit Card Fees
15. Delivery
16. Health Insurance
17. Ins uranc e
50
18. Interes t
22
22
22
116
10
10
10
30
19. Misc ellaneous
20. Of f ice
45
45
21. Pay roll
22. Payroll Taxes
23. Prof ess ional Fees
50
50
500
500
500
1,500
15
15
15
24. Rent or Lease
25. Salary (ow ner)
26. Subscriptions and Dues
27. Supplies
550
28. Taxes and Licenses
45
550
50
50
29. Utilitiesand Telephone
70
70
70
30. Other: Auto Fuel
20
20
20
60
1,067
687
687
737
3,178
(1,567)
108
(122)
(177)
(1,758)
Total Operating Expenses (C2)
(D) Net OperatingCash (B- C1- C2)
210
(E) CASH FROM INVESTMENT or LOAN ACTIVITIES
(E1) Other CashIn
31. Investments inBusiness
32. LoanProceeds
2,000
2,000
33. Other:
Total Other Cash In (E1)
2,000
0
0
0
2,000
50
50
50
150
1,000
50
50
50
1,150
(E) Net Other Cash (E1 - E2)
1,000
(50)
(50)
(50)
850
(F) Net MonthlyCash(D+ E)
(567)
58
(172)
(227)
(908)
433
491
319
92
92
(E2) Other CashOut
34. Capital Purchases (Assets)
1,000
35. LoanPrincipalPayments
1,000
36. Other:
Total Other Cash Out (E2)
(G) Ending CashBalance ( A+ F)
NxLeveL Guide for MicroEntrepreneurs-OHD12-11
Sample Income Statement
Your Business Income Statement
For the Year Ended
December 31, 20__
NET SALES
Product Sales
Services Sales
Total Net Sales
COST OF GOODS SOLD
Beginning Inventory
Plus Purchases
Less Ending Inventory
Other Direct Labor
Other Materials Expense
Total Cost of Goods Sold
GROSS PROFIT
OPERATING EXPENSES
Advertising
Bank Charges and Interest
Insurance
Office
Professional Fees
Salaries (Indirect Wages/Benefits)
Subscriptions and Dues
Supplies
Taxes and Licenses
Utilities
Miscellaneous
Depreciation
Total Operating Expenses
NET PROFIT (LOSS) BEFORE TAXES
Income Taxes Due
$ 630
$ 3275
$ 3905
$
0
500
(185)
315
0
185
$ 500
$ 3405
$ 464
88
116
45
50
1500
45
550
50
210
60
100
$ 3278
$ 127
NET PROFIT AFTER TAXES
$
NxLeveL Guide for MicroEntrepreneurs-OHD 12-12
0
127
Sample Balance Sheet
Balance Sheet Formula:
Your Business
Balance Sheet
As of December 31, 20__
ASSETS
Current Assets
Cash
Accounts Receivable
Inventory
Other
Total Current Assets
Fixed Assets
Equipment
Less Accum Depreciation
Furniture and Fixtures
Less Accum Depreciation
Total Fixed Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Accounts Payable
Payroll Tax, due not paid
Sales Tax, due not paid
Total Current Liabilities
Long Term Liabilities
Notes Payable
Mortgages Payable
Total Long Term Liabilities
TOTAL LIABILITIES
OWNER’S EQUITY
TOTAL LIABILITES TOTAL EQUITY
$ 1892
0
185
0
$ 2077
$
1000
(100)
0
0
$ 900
$ 2977
$
$
$
0
0
0
0
1850
0
$
$
$
$
1850
1850
1127
2977
NxLeveL Guide for MicroEntrepreneurs-OHD 12-13
Preparing for Success
Set achievable financial goals
Do business on the books
Keep personal and business money
separate
Accept the responsibility of paying
taxes on time!
Develop a code of ethics for your
business, and stick to it
Commit to keeping track of your
budgets and comparing them to actual
expenses
NxLeveL Guide for MicroEntrepreneurs-OHD 13-1
Why Keep Records?
Financial Management
– To provide financial background information about your
business
– To help produce financial statements
– To provide tax preparation information
– To provide borrowing information
– To pay and/or collect bills when due
– To control cash flow
Internal Control
– To watch costs and budgets
– To prevent theft
Legal
– To document events in case of lawsuits
Management Decisions
– To provide planning information
– To monitor business progress
NxLeveL Guide for MicroEntrepreneurs-OHD 13-2
Learn the Terminology
What is Recordkeeping?
Recordkeeping (or bookkeeping) is the tracking of income and
expenses that relate to your business.
What Does “Cash vs. Accrual” Mean?
There are two methods of accounting for your income and
expenses:
Accrual Method
Work is done
Cash Method
Cash is received
Record revenue &
expenses at this time
even though cash may not
have been collected yet
Record revenue &
expenses at this time
even though work
may not be complete
NxLeveL Guide for MicroEntrepreneurs-OHD 13-3
Record Retention Guide
Type of Record
Bank statements
Business licenses
Cash register tapes
Check registers
Canceled checks
Deeds, titles, title insurance
Financial statements
General ledger
Inventory records
Invoices (A/P)
Invoices (A/R)
Phone/Utility bills
Property, plant & equip.
records
Purchase orders
Receiving reports
Tax returns (& related backup)
Time cards or tickets
Travel expense records
Other: ______________
____________________
____________________
Retention Period
7 years
Until expired
3 years
Keep permanently
3 years
While you own property
Keep permanently
Keep permanently
7 years
3 years
3 years
3-6 years
Keep permanently
3 years
3 years
10 years minimum
3 years
7 years
__________________
__________________
__________________
NxLeveL Guide for MicroEntrepreneurs-OHD 13-4
Paperwork and Forms
Form Name
Purpose of the Form
Sales Order Form
Purchase Order Form
Price List
Packing List
Shipping Record
Invoice
Statement
Time Sheet
Payroll Sheet
Accounting Ledgers
Out-of-stock Memo
Phone Message Form
Accident Report Form
Payroll Tax and
Reporting Forms
Business Entity Tax
Forms
Other:
NxLeveL Guide for MicroEntrepreneurs-OHD 13-5
Supplier
Computerized Accounting Systems
Be sure you find out about:
– Hardware requirements
– Ability to modify
– Support services
– Ability to expand
– User friendliness
– Training
– Reports and documents
– Personnel requirements
– Local use (other businesses using this
software)
NxLeveL Guide for MicroEntrepreneurs-OHD 13-6
Business Ownership & Tax Forms
Each legal entity has its own tax filing requirements.
Contact your accounting professional for help in
finding out which forms must accompany your tax
returns.
Common Payroll Tax Forms
941 Employer’s Quarterly Federal Tax Return
940 Employer’s Annual Return
8109 Tax Deposit Coupon
W2 Wage and Tax Statement
1099 Miscellaneous Income Statement (used to
report independent contractor wages)
Workers’ Compensation
NxLeveL Guide for MicroEntrepreneurs-OHD 13-7
Tips for Keeping Better
Books and Records
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Keep your records daily!
Deal with your bookkeeping on a regular basis, and it could take as
little as 20 minutes a day.
Keep an audit trail
Keep checks in numeric order. Never skip a number, and always
record voided checks. Keep invoices filed sequentially and/or
alphabetically. Make everything easy to find and track!
Request a bank statement with a “month-end” cut-off date
It’s easier to reconcile your records when they all end at the same
time.
Keep withholding taxes withheld
Don’t spend this moneyit’s NOT YOURS!
Don’t panic if you find a mistake
Everything can be fixed, if you’ve kept up with your recordkeeping
chores.
NxLeveL Guide for MicroEntrepreneurs-OHD 13-8
Twelve Check-Writing Tips
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Always write in ink (or type the check)
Always write clearly, and be sure the spelling is correct
Date the check correctly
Write the payee’s name after the printed words “Pay to the
Order of…”
Write the amount of the check in numbers close to the
printed dollar sign ($) so that other numbers can’t be inserted
Write the amount of the check in words starting as far to the
left as possible leaving no room for the amount to be
changed
Draw a wavy line through any blank space
Do not sign a blank or partially complete check
Sign the check just as you signed the signature card
Use the memo line to help keep a record of your spending
Record each check you write or deposit you make in your
checkbook register immediately
Don’t forget to record automatic withdrawals or deposits in
your checkbook register
NxLeveL Guide for MicroEntrepreneurs-OHD 13-9
Why Do You Need Financing?
Research and development
Start-up expenses
Purchase a business
Seasonal working capital
Permanent working capital
Equipment acquisition
Real estate acquisition
Other: __________________
NxLeveL Guide for MicroEntrepreneurs-OHD 14-1
Sources of Capital
Debt Capital
– Money borrowed for the business
– Use of the money is repaid, with interest as “payment” for
the use of the loan
Equity Capital
– Money invested by the owner(s)
– Not a debt; nothing to pay back
– Investor(s) get a part of the ownership, and share in the
profits or losses
Personal Capital
– Personal funds of the owner(s)
– Any debt borrowed on a personal basis
– Includes savings, second mortgages, personal loans, etc.
Angel Money
– Money received from friends, family, or interested 3rd party
– Document as you would for other debt or equity financing
NxLeveL Guide for MicroEntrepreneurs-OHD 14-2
Fitting the Loan to the Need
Short-term Debt
–
–
–
–
–
Used to meet short-term needs:
Bullet loan
Seasonal inventory purchases
Line of credit
Accounts receivable financing
Intermediate Debt
– Three to seven years:
– Permanent working capital loans
– Equipment loans
Long-term Debt
– Longer than seven years:
– Real estate purchases
– Initial purchase of
a business
NxLeveL
Guide for MicroEntrepreneurs-OHD 14-3
Debt or Equity Considerations
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
NxLeveL Guide for MicroEntrepreneurs-OHD 14-4
Other Sources of Financing
Home Equity Loans
Alternative Lenders
Suppliers
Customer Deposits
Credit Cards
Insurance Companies
Factoring Companies
Loan Guarantor
Loan Brokers
Grants
Other:
______________________________
______________________________
NxLeveL Guide for MicroEntrepreneurs-OHD 14-5
Financing Factors
1. The growth potential of your business
2. The risk of your business venture
3. The length of time you need the
money
4. The kind of money you need (debt or
equity)
5. The amount of interest you can pay
(debt) or the amount of ownership you
will give up (equity)
6. Profit potential of the business
NxLeveL Guide for MicroEntrepreneurs-OHD 14-6
Preparing for the Loan Process
Before You Apply for a Loan:
– Find a lending institution that regularly lends to
microbusinesses
– What size businesses do they normally lend to?
– Do they shy away from making loans within certain
industries?
– Check your credit history
– Are there credit problems you need to clear up?
– Do you know how to repair your credit?
– Are there credit items you don’t know about?
– Get your business records in order
– Have your business plan ready
– Be able to describe your recordkeeping procedures and
accounting system
– Find out what books and records the lender will want to see,
and gather them
NxLeveL Guide for MicroEntrepreneurs-OHD 14-7
What Lenders Require
Business Loan Application Form
Complete Business Plan
Cash Flow Projections
Monthly for 12 months
Quarterly or Annual for Years 2 and 3
Personal Financial Statement
Personal Tax Returns
(2 to 3 years)
Other Documentation (Options)
Accounts payable aging
Accounts receivable aging
Inventory status reports
Appraisals
NxLeveL Guide for MicroEntrepreneurs-OHD 14-8
The Cs of Credit
Credit History
Character
Capacity
Collateral
Conditions
NxLeveL Guide for MicroEntrepreneurs-OHD 14-9
Tips for Working with Your Banker
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 or clarification of anything you do not
understand
Develop a long-term relationship
Know your needs
Present a complete proposal
Explain source and uses of the loan
Be flexible
Be patient
Tell the truth
Recommend your banker to others
NxLeveL Guide for MicroEntrepreneurs-OHD 14-10
Understanding the Financial Health
of Your Business:
Ratio Analysis
– Current Ratio =
current assets  current liabilities
Example: $1,000  $500 = 2 (or 2:1)
– Debt to Equity Ratio =
long-term liabilities  owner’s equity
Example: $5,000  $10,000 = .5 (or 1:2)
– Net Profit Margin =
net profit  gross revenue from sales
Example: $1,000  $10,000 = .10 or 10%
What do the ratios tell you about the health of your
business?
How are ratios used by lending institutions?
NxLeveL Guide for MicroEntrepreneurs-OHD 14-11
Ways to Offer Your
Customer Credit
Credit Cards
Checks
Credit Terms
– Credit Card Considerations
Know what equipment you need to process the credit card
payment
Look for the best merchant account rates (discount rate and
transaction fee)
Know when deposits will be made to your account
– Check Considerations
Call the bank on large check amounts
Decide on your check acceptance policies
Trust your instincts!
Know your collection policies/options
NxLeveL Guide for MicroEntrepreneurs-OHD 14-12
Basics of Negotiation
There would be no negotiation unless
both sides expected a benefit
A goal of negotiation is to create a new
situation that’s better than the old one
Unfair deals last only while one party
feels weaker than the other
Win-win negotiation delivers the best,
most enduring deals
Like any other skill, negotiation can be
learned and practiced
NxLeveL Guide for MicroEntrepreneurs-OHD 15-1
Traits of Effective Negotiators
Good negotiators:
– Understand their counterparts' interests
and perspectives
– Understand the difference between
positions and interests
– Understand the difference between real
power and perceived power
– Know their settlement range
– Know their BATNA (Best Alternative To a
Negotiated Agreement)
– Tough on problems, easy on participants!
NxLeveL Guide for MicroEntrepreneurs-OHD 15-2
Stages of Negotiation
Setting an Agenda
– Why are you negotiating? What are the issues,
and what are the goals?
Voicing Demands and Offers
– What are your interests and positions?
– What do you want, and what are you willing to
give in return?
Working to Minimize Differences
– Where do interests overlap?
– Where is the common ground?
Closing the Deal
– “Win-win” means both sides are better off than when
they started
NxLeveL Guide for MicroEntrepreneurs-OHD 15-3
Negotiation Strategies
Soft Negotiators
– Avoid conflict at any cost
– Usually don’t stand up for their best interests
Hard Negotiators
– Aggressive and competitive
– May use threats of bluffs
– Not trusting or trustworthy
Win-Win Negotiators
– Work towards the best outcome for all
– Flexible, but can be firm when it’s appropriate
– Attack problems, not people
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Pitfalls of Business Growth
Growth may be short-term
Inability to maintain performance standards
Unprofessional behavior
Poor employee morale
Lack of adequate employee training
High employee turn-over
Loss of profitability
Inefficient use of resources
Loss of customer loyalty
Diminished quality
Inability to focus on core strengths
Paralyzed or overworked leadership
Cash crunch
Bankruptcy
NxLeveL Guide for MicroEntrepreneurs-OHD 15-5
Bringing It All Together!
Celebrate what you’ve accomplished
Organize what you have learned
Fill in the gaps
Complete your business plan
Ask for help
Remain positive
Never stop planning!
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