starting yourownbusiness

www.scorepdx.org503-326-3441

Starting Your Own

Business? 10 Questions to Consider

Before Investing a Dime.

Welcome to the

Portland chapter of SCORE

Griff Lindell

Your Counselor…

What is SCORE?

SCORE provides professional

guidance

and information to maximize

the success

of America‟s existing and

emerging

small businesses.

What is SCORE?

A Non-Profit Organization

– Over 390 chapters, 800 offices,

Experienced Volunteers

– 10,500+…all facets of business

Personal Counseling & Mentoring - FREE

– Face-to-Face, Telephone, On-Line

Workshops & Seminars

– About 7,000 workshops reaching >120,000 clients

Counseling & Learning

Effective personal

counseling

Powerful learning

resources.

Helping make success

happen

“For The Life Of Your

Business!”

RISKING SAVINGS, LIFESTYLES

AND RELATIONSHIPS…

Contemplating the “Big Step” of…

…pursuing the dream of working for yourself.

This Workshop is for those who are:

HOUSEKEEPING

• Facilitates

• Introductions

• Why this workshop?

• Kind of business you are considering

Resources Offering

Encouragement and Guidance

• Practical material

• Personal and instant

feedback

• Performance

journaling

Resources Offering

Encouragement and Guidance

• Practical material

• Personal and instant

feedback

• Performance

journaling

One who

organizes,

manages, and

assumes the risks

of a business

enterprise.

Entrepreneur:

Three Foundational Questions

What are yours?

• Why do you want to move from being employed to Self-employed?

• Are you suited to be an

entrepreneur?

• What should you do next?

5 Shapes: Select the one that is different from the others

A: the only one with no points!

B: the only one that has all straight

lines!

C: the only one that is

asymmetrical.

D: the only one with both a straight

line and a curved line.

E: the only one that looks like a projection

of a non-Euclidean triangle into Euclidean

space.

Do You Know the “Shape” of…

…your risk of

starting a

business?

Starting Your Own Business?

• A business idea that recognizes:

– A need in the marketplace

– A product or solution

– A real value to the customer

The 10 Questions

Have you counted the costs?

Are you ready, willing and able for a change in your lifestyle?

Is your support team on board?

Do you enjoy the business of business?

Are you comfortable making tough decisions on the fly?

What's your track record of making stuff happen?

How well do you communicate?

Is this new business something about which you are passionate?

Are you a person that gives others energy – a self-starter?

Do you have a “partner”?

Question 1

Have you counted the costs?

Kinds of Costs

What kinds of costs?

• Start-up costs

• Investor costs

• Business costs

• Personal costs

QUESTION 1:

Have You Counted the Costs?

• Have you penciled the numbers?

– Start-up costs

– Business Capital

• Do you know your Break Even point?

– Fixed costs

– Variable costs

Counting the Costs

• Start-Up Expenses

• Cash Considerations

• The Funding Plan People you know

Bank Loan (good credit)

Government programs

equipment

setting up books

Some Start-Up Expenses

second & third month’s rent

licenses

merchandise

fixtures

furniture

Deposits

living expenses during start-up...

salariesStock reorders

advertising

Legal Structure

Choosing A Legal Structure

The four (4) legal structures are:

Sole Proprietorship

Partnership

Incorporate S Corporation

C Corporation

Limited Liability

Local, State & Federal

Business Regulations• Legal Structure

• Licenses

• Procedures

– Fictitious Name Act

• Business Tax

Information

• Insurance

• IRS - Employer

Identification Number

(866) 816-2065

• Federal Self-

Employment Tax

Counting the Costs

• Start-Up Expenses

• Cash Considerations

• The Funding Plan People you know

Bank Loan (good credit)

Government programs

QUESTION 1:

Have You Counted the Costs?

• Have you penciled the numbers?

– Start-up costs

– Business Capital

• Do you know your Break Even point?

– Fixed costs

– Variable costs

Break-even Analysis

$900/75 = $12.00

Information is PowerWhat do you want to know about your business?

How much am I putting on the books?

How much of this can I turn into money?

How much am I spending?

Is my business making any money?

What’s the value of what my

business owns?

How much does my business owe

to others?

What is my business worth?

Revenue

Expenses

Revenue –Expenses

Assets

Liabilities

Equity

Dashboard Dials

Cash Flow defined…

1. Cash Flow is the flow of cash INTO and

OUT OF a business over a selected time

period

2. Cash Flow is:

Positive when cash receipts exceed cash

payments – YOU CAN PAY YOUR BILLS!

Negative when cash payments exceed cash

receipts – YOU HAVE TO BORROW TO PAY BILL

Cash Flow Rules

• Rule Nº 1: Cash is the most important resource you have…

– More cash is better than less cash

– Collect Cash now is better than later

– Pay out Cash later is better than now

• Rule Nº 2:

– Focus on Cash Flow rather than Operating Statement (P&L) profits

Cash Flow Projection

• Plot anticipated cash flow positions

• Anticipate shortfalls

• Help you spot sales trends

• Tell if your customers are slow pay

• Help you plan for major asset purchases

Cash Flow Flow Forecast

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6

Week of:

Beginning Cash Balance 0 0 0 0 0

Cash Receipts:

Estimated Cash in from A/R

Estimated Cash in from Sales Counter

Decrease (Increase) in Savings

Miscellaneous

Borrowing from Line of Credit

Sub total 0 0 0 0 0 0

Total Cash Available 0 0 0 0 0 0

Disbursements:

Payroll (Net)

Payroll Taxes

Sales Tax

Purchases for Resale

Utilities

Total Cash Out 0 0 0 0 0 0

Balance Forward 0 0 0 0 0 0

Mar Apr May Jun Jul Aug

Beginning Cash -$ (2,861)$ (549)$ 3,769$ 5,089$ (573)$

Loans from Founder 5,000$ 3,000$ 5,000$ 2,000$ -$

Beginning Cash available 5,000$ 139$ 4,451$ 5,769$ 5,089$ (573)$ OUTFLOWS

THAILAND Program Services 1,208$ 534$ 597$ 368$ 1,319$ 1,319$

Administrative 94$ 145$ 105$ 109$ 144$ 144$

Fund Raising 2,625$ -$ -$ 193$ 107$ 108$

Total Thailand Project Expenses 3,927$ 679$ 702$ 670$ 1,570$ 1,570$ CORPORATE

Payroll -$ -$ -$ -$ -$ -$

0.16 Payroll burden -$ -$ -$ -$ -$ -$

Minus Allocated Payroll

MARKETING 57$ -$ -$ -$ -$ -$

Travel -$ -$ -$ -$ 3,500$ -$

Phones -$ -$ -$ -$ -$ -$ WEB 3,500$ -$ -$ -$ -$

Insurance -$ -$ -$ -$ -$ -$

Training/conferrences 352$ -$ -$ -$ -$

OTHER 25$ 10$ 10$ 10$ 10$ 10$

Total corporate expenses 3,934$ 10$ 10$ 10$ 3,510$ 10$

Total Expenses 7,861$ 689$ 712$ 680$ 5,080$ 1,580$

Capital expenses 1,000$ 6,000$

Total outflow 7,861$ 689$ 712$ 680$ 6,080$ 7,580$

Mar Apr May Jun Jul AugEstimated Revenue by source

Loans from Directors 5,000$ 3,000$ 5,000$ 2,000$ -$ -$

Corporate Donations $0 $0 $0 $0 $0 $0

Foundation Grants $0 $0 $0 $0 $0 $0

Special Events $0 $0 $0 $0 $0 $0

Public Donations $0 $0 $30 $0 $0 $0

Web DONATIONS $0 $0 $0 $0 $418 $427

Interest Income $0 $0 $0 $0 $0 $0

Other Income $0 $0 $0 $0 $0 $0

Total est revenue $0 $0 $30 $0 $418 $427

Cash available in period $5,000 $139 $4,481 $5,769 $5,507 ($147)

Cash balance ($2,861) ($549) $3,769 $5,089 ($573) ($7,727)

CASH FLOW

($2,861)

($549)

$3,769

$5,089

($573)

($7,727)

($8,508)

($8,614)

($17,920)

($16,669)($20,000)

($15,000)

($10,000)

($5,000)

$5,000

$10,000

Mar Apr May Jun Jul Aug Sep Oct Nov Dec

CASH FLOW

($2,861)

($549)

$3,769

$5,089

$14,427

$7,273 $6,492

$6,386

($2,920)

($1,669)($4,000)

($2,000)

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

Mar Apr May Jun Jul Aug Sep Oct Nov Dec

$15,000 investment from Founders

SCORE Planner

• Software that will

help you manage

your cash.

Simple.

Easy to use.

Question 2

Are you ready, willing and able for a change in your lifestyle?

Lifestyle Change

• New hours

• New pressure

• Less family time

• Less play time

• More work calls

• More financial pressure

Have you prepared yourself and

your family for a change in

lifestyle?

Can you pay

current bills

without

drawing

funds from

the new

business?

Question 3

Is your support team on board?

Just WHO is the Support

Journal!!!

Support Team

Have you written a

business plan; has

your S.O. read it;

does your S.O

understand the

impact on your

current

RELATIONSHIPS ?

Support Team

Have your talked about your hopes, dreams, fears,

finances – and how they can best support you?

Question 4

Do you enjoy the business of business?

Business of Business

• Business Plan

• Business tools

• Business Plan

• Business tools

• Market research

• Business Plan

• Business tools

• Market research

• Competitive Analysis

• Business Plan

• Business tools

• Market research

• Sales Skills

• Business Plan

• Business tools

• Market research

• Sales Skills

• Elevator Pitch

• Business Plan

• Business tools

• Market research

• Sales Skills

• Elevator Pitch

• Book-keeping

• Business Plan

• Business tools

• Market research

• Sales Skills

• Elevator Pitch

• Book-keeping

• Negotiating

BUSINESS PLAN

The Plan Parts

• Executive Summary

The Company

Products and Services

Market Analysis

Competition

Business Strategy and Implementation

Operations

Organization

Financial Analysis

• Supporting Documentation

Planning Process

PlanPrepare for the future

Recordmeasure the results

Evaluateexplain variances from the plan

Analyzecompare results to the plan Results

something happens

Actimplement the plan

Planning Process

something happens

2Success

FAILURE

IN PRODUCING

A RESULT !

YOU ALWAYS

SUCCEED

Planning Process

something happens

Planning Process

Evaluate

Analyze

RecordResults

Actexplain variances from the plan

measure the results

compare results to the plan

something happens

implement the plan

Planning Process

Evaluate

Analyze

RecordResults

measure the results

something happens

implement the plan

Planning Process

Evaluate

Analyze

RecordResults

measure the results

something happens

implement the plan

Planning Process

something happens

Help in Writing Your Plan

• Community groups

• SCORE

• SBDCs

• Free templates online

Persistence

• Plan carefully

• Execute vigorously.

• Persist continuously.

You always must be planning.

UNDERSTANDING THE

COMPETITIVE LANDSCAPEMarket Research &

Competitive Analysis

BUSINESS OF BUSINESS

Understand the Competitive

Topography• Who is in YOUR market?

• What do they offer?

• How different?

• What is unique?

• Why do people use them?

• What do they communicate?

– Copies of brochures, Web, Ads, etc.

Collection of competitive

Marketing Communications

War-wall

What To Look For

• Battles chosen

• Comparisons made

• Claims made

• Areas ignored

CompetitorsKeep your friends close and

your competitors closer.

Question 5

Are you comfortable making tough decisions on the fly?

Mountain Climbing

Frozen Falls Climbing

A New Boss

• YOU make the

decisions

A New Boss

• YOU make the

decisions

• No “team” to turn to

A New Boss

• YOU make the

decisions

• You don’t report to

anyone who couldguide or help

A New Boss

• YOU make the

decisions

• You don’t report to

anyone who couldguide or help

• The buck stops

with you.

How Well Do You Handle

Just a little uncertainty…

Question 6

What's your track record of making stuff happen?

Getting Stuff Done

• S.M.A.R.T.

• Specific

• Measurable

• Accountable

• Realistic

• Timely

Ideas Have Power

Question 7

How well do you communicate?

Communicating to People

in Ways They Prefer

AssertivenessCholeric

Dominant

Driver

Controlling-Taking

Competing

Assertiveness

Responsiveness

Phlegmatic

Accommodating

Adapting-dealing

Amiable

Steadiness

Melancholic

Compliant

Analytical

Conserving/Holding

Avoiding

Sanguine

Influencer

Excelling

Supporting-giving

Expressive

Communicating to People in Ways They Prefer

Melancholic

Compliant

Analytical

Conserving/Holding

Avoiding

Choleric

Dominant

Driver

Controlling-Taking

Competing

Phlegmatic

Accommodating

Adapting-dealing

Amiable

Steadiness

Influencer

Excelling

Sanguine

Expressive

Supporting-giving

Melancholic

Compliant

Analytical

Conserving/Holding

Avoiding

Choleric

Dominant

Driver

Controlling-Taking

Competing

Phlegmatic

Accommodating

Adapting-dealing

Amiable

Steadiness

Influencer

Excelling

Sanguine

Expressive

Supporting-giving

Melancholic

Compliant

Analytical

Conserving/Holding

Avoiding

Choleric

Dominant

Driver

Controlling-Taking

Competing

Phlegmatic

Accommodating

Adapting-dealing

Amiable

Steadiness

Influencer

Excelling

Sanguine

Expressive

Supporting-giving

If you want to learn more…

…contact me after the class for

my LIFO® (life orientations) offer.

Question 8

Is this new business something about which you are

passionate?

“Each of us has a fire in our

heart for something. It’s our goal

in life to find it and keep it lit.”

- Mary Lou Retton

Passion is not a substitute…

…for business understanding

…for market intelligence

…for product knowledge

…for positioning strategy

…for planning excellence

What is positioning?

Do You Have the Passion to

Discover the Dominant Paradigm?

• Core Beliefs – Dominant Paradigm– Cotton is cooler than wool

– All sugar is the same

• What are the Core Beliefs that must be

managed in your market?

Reason to Buy

• What is unique about your offering?

– Location?

– People?

– Other characteristics?

– Service?

– ? ? ?

Passion to Position Your Value

What is unique about your offering?

Passion is a choice!

A daily choice.

Passion Drives the Discipline to

Learn, Grow and Produce Great

Results!

Question 9

Are you a person that gives others energy – a self-starter?

Self-starter Tips

• Do you know your purpose?

• Why are you on earth?

• How does this business

help you fulfill your

purpose?

Business / Happiness

5 Paths to Giving Others Energy February 2011 Reader’s Digest

1. “Use your resources

wisely”

2. “Create a family culture”

3. “Avoid „just this once‟”

4. “Remember to be

humble”

5. “Choose the right

yardstick”

Question 10

Do you have a “partner”?

Advisory Board – Why?

• Networking Potential

• Industry Trends

• Educated Opinion-makers

• Business Advice

• Emotional Support

Advisory Boards - Who

• Suppliers

• Retailers

• Wholesalers

• Lawyers / CPA

• Retired Small Business People

• Professors

In the counsel of

many there is wisdom.

Advisory Boards

ARE YOU READY TO

CHANGE?

Today’s offer

Any 3 eBooks

$14.95

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starting yourownbusiness

business of business

kinds of costs

business idea

kind of business

new business

fixed costs variable

startup expensessecond

funding plan people

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