Transcript NAME OF PRESENTATION

Entrepreneurial Essentials
2
E
Presented by:
Northeast Minnesota’s Small Business Development Center
HELPING BUSINESSES GROW AND SUCCEED
www.umdced.com
218-726-7298
A member of the Minnesota Small
Business Development Center Network
What we will cover today:
Am I an Entrepreneur?
Feasibility
Business Plan
Business Financing
Basic Legal Requirements for Start-Up
Questions to ask yourself…
Are YOU…
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Self-starter
Positive thinker
Lifelong learner
Well-disciplined
Willing to put in
long hours
?
• People-person
• Have family
support
• Willing to make
sacrifices
• Face challenges
Resources
Small Business Administration (SBA)
www.sba.gov
– Assessment tools
– Sample business plans
– Online workshops and seminars
– Library of resources
Myths
• Myth: There are grants to help start
your business
Fact: There are no grants or easy money
• Myth: You can set your own hours
Fact: Your hours depend upon the business
and the work that needs to be done
• Myth: You are your own boss
Fact: Your customers are your boss
More Reality
• Plan on long hours every day, every week
• Consider the financial investment risks
• Meeting normal family expenses
• Funding for the business
• Financial commitment
• Loss of investment
Don’t underestimate the amount of time and
investment needed in the beginning and growing
stages of your business
Feasibility
• Start with your idea
– What is the business you want to start or buy
– Does fit with your lifestyle
– Do you have the necessary skills to manage this type
of business
• Identify your market(s)
– What is the businesses market and where is it
located
Feasibility
• Identify your competition
– What products/services are competitive to yours
– Who and where is your competition your competition
and do they compete for the same market share
• Can you make a profit
– Is the business financially feasible
– Will it provide enough profit to meet your personal
needs and lifestyle
• Experience as a manager/supervisor
• Knowledge of the industry
• Basic business knowledge
• Basic financial knowledge
• Willingness and ability to hire someone
to fill gaps in knowledge
• Does it offer something not currently
available or being offered
• Can it serve an existing market in which
demand exceeds supply
• Can it be competitive based on quality,
selection, price, or convenience
• Who are your target customers?
• What do they ‘look’ like?
– age, sex, education, nationality, income, etc.
• Where do they live and shop?
• What are their needs, wants, hobbies,
interest?
• Will you offer a product or service they will
use and benefit from?
• What are your monthly sales estimates?
– price
– units sold
• What will it cost you (product vs. service)?
– cost
– units purchased
• What are your monthly sales estimates?
– price
– units sold
• What will it cost you (product vs. service)?
– cost
– units purchased
• How do you make good revenue
projections?
– Start with national trends
– Use demographic information
• Decide how much you need to spend on
initial marketing.
– cost
– Where will you spend it?
• What are your one-time start-up costs?
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equipment
building or renovation
down payments
legal fees
Supplies
Computers
Software
Website
• What are the on-going monthly expenses?
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lease – building/equipment
wages
utilities/telephone
Supplies
Supplies
Payroll
Website (internet marketing)
• Financial literacy
•Credit score
•Lender possibilities
•Seasonal trends (cash flow)
•Monthly personal income needs
•Expansion plans
•Receivables/collections
•Written business plan
Where do we go from here?
Business Plan
Financing
Legal Issues
Failing to Plan is
Planning to Fail……
The importance of your
Business Plan
Do I really need a business plan?
• A business plan is a powerful business
document
• A well thought-out plan tells the story of
the business
→Where is it now…
→Where is it going...
→How it will get there!
The business plan is vital because…
Maps the Provides
future
Insight
Provides Explains
A
In
System
Detail
Business Plan - Narrative
Executive Summary
• Written last – Placed first
• Considered most important
– A lender will often read only the Executive
Summary when making a preliminary decision
to finance a business.
Business Description
• Detailed outline of the business
– Business name
– Owners
– Business history
– Location
– Description of the legal structure
– Mission Statement
Goals and Objectives
• Define short and long term goals of
the business
• Use the SMART approach
– Specific
– Measurable
– Achievable
– Relevant
– Time bound
“I will achieve one million in annual sales revenues within
3 years by selling household cleaning products and
providing personal business opportunities to motivated
entrepreneurs through the community.”
Amway Independent Business Owner
Industry Analysis
– What is scope of the businesses industry?
– What are its current trends?
– Is the industry growing? Stable?
Declining?
– How does your business fit into the
existing industry?
Products and Services
What is your
product or
service?
Describe
What is the
each
benefit to
product or
your
service
customer?
In detail. How will the product
or service be
produced or
delivered to the end
user?
Marketing Analysis and Strategy
– Who or what is the market you will serve?
– How will you reach them?
– Who or what is your competition?
– What sets you apart from your competition?
– What are your promotional strategies?
– What distribution channels will you use?
– What is your price point?
– What technology will you use?
– Will you have a website?
Operational Plan
– How will your business operate?
– What facilities will the business require?
– Where will the business be located?
– Will the location meet the immediate and
future needs of the business?
– What is your exit strategy – retirement,
merger, buyout, go public, low performance,
etc.?
Management and Organization
– What are the personnel requirements of the
business?
– Who are the key people that will manage
the business?
• What are their responsibilities?
• Describe their experience, document their
education and background.
• Why are they are best-suited for the position within
the business?
Financials
• Your opportunity to persuade the
investor/reader that the business makes
“cents” (aka money)
• Must reflect what is included in the plan
• Must be conservative and realistic
The process of thinking through the financial plan
will improve your insight into the inner workings of
your company
Financial Plan
• Equipment and Supply List
– Details purchases of substantial property such
as land, facilities, vehicles and equipment
• Sources and Uses of Funds
– Verify where the business funds will come
from and where they will be spent
• Loan Application
– Application specific to the lender you are
approaching
Financial Plan
• Breakeven Calculation/Analysis
– Estimates how much you need to make in sales
each month before you begin to turn a profit
• Cash Flow Projections
– Shows how money will flow in and out of your
business
– Indicates whether you will earn enough money
to pay your bills
Financial Plan
• Balance Sheet
– The value of the company
– States the business’s assets, liabilities & net
worth
• Profit and Loss (P&L) Projections
– Indicates when and if your business will be
profitable
– Three years of projections – first 12 months
must be more detailed
Financial Plan
• Assumptions
• The financial part of the business plan is based
upon these assumptions
• Any part of the financials that are not obvious to
the reader should be explained in this section
Appendix
• Owner’s financial statements
• Brochures and advertising materials
• Industry studies
• Magazine or other articles relating to your
business
• Letters of support from future customers
Understanding
Business Financing
Sources of Funding
Where do I get the money to start a business?
Guarantee to pay back an obligation at a
certain rate (or variable rate), usually over a
time period or at some point in time.
Equity
No guarantee of repayment, often management
control, share in profits, and expected residual
value when sold or closed.
Sources of Debt Capital
Bank
Family
&
Friends
Non-bank
Lenders
Suppliers
or
Debt
Trade Credit
Private
Investors
Sources of Equity Capital
Savings
Sale of
Assets
Family
and
Friends
Equity
Personal
Credit
Resources
Investors
or
Partners
How do I get money from a lender?
Capacity
5 C’s
of
Credit
Collateral
Conditions
Character
Commitment
What does a lender want from me?
Business Plan
Legal
Documents
Funding
Request
Personal
Financials
Proposed
Collateral
Financial
Projections
Selecting a Legal Structure
Main Considerations
Liability
Taxes
Level of Liability
Income Tax
Liability Insurance
Self Employment Tax
Basic
Legal
Requirements
Four Levels of Government
– Federal Government
– State of Minnesota
– County Government
– City Government
THANK YOU
www.umdced.com
218-726-7298