defense information system network - ningapi.ning.com/.../baserevised032312.pdf · bootstrapping is...
TRANSCRIPT
![Page 1: Defense Information System Network - Ningapi.ning.com/.../BASErevised032312.pdf · Bootstrapping is building the business from internally generated funds. • You need to establish](https://reader035.vdocument.in/reader035/viewer/2022070609/5ad8665c7f8b9a5b538dd438/html5/thumbnails/1.jpg)
Consider us your business
partner…
Only Better!
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Who is the SBDC at Columbus State?
An experienced & award winning team
providing no-cost, one-on-one business
management advice with three centers
to serve you at one location:
Core SBDC
Manufacturing & Technology SBDC
International Trade Assistance Center
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An experienced & award winning
team whom in 2011…
Advised 936 Small Businesses…
Who is the SBDC at Columbus State?
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Who is the SBDC at Columbus State?
An experienced & award winning
team whom in 2011…
Facilitated $5,863,724 in loans /
investment capital
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An experienced & award winning
team who was awarded…
Who is the SBDC at Columbus State?
The Ohio SBDC Performance
Award
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An experienced & award winning
team who was awarded …
Who is the SBDC at Columbus State?
The SBDC Service Excellence
Innovation Center Award by
the SBA
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Named one of the top 10 SBDC’s
out of over
900 SBDC’s in the country
An experienced & award winning
team who was…
Who is the SBDC at Columbus State?
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www.ideas2deals.com
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twitter.com/Ohio_SBDC
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facebook.com/SBDC.Columbus
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Starting Your Own Business
Everything takes longer than expected.
Don’t be in a hurry to get started.
Everything costs more than expected.
The third attempt at an idea is often the one that
finally works.
Consider other sources of income for living
expenses.
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Entrepreneurship
“The process through which people pursue
opportunity, use resources, And initiate change to
create value.”
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Entrepreneurship
Entrepreneurs are not risk takers. Entrepreneurs
recognize risks and are able to minimize the risks
associated with their opportunity to optimize their
chances of success.
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• What is your product or service?
• Who is your primary customer?
• Do you need financing to start your business?
• Where do you see your business in 5 years?
• Why do you want to own your own business?
Introduce yourself and
your business.
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Are a natural Entrepreneur?
Complete the entrepreneurial
Enter a Yes or No response for each question.
Score your quiz.
Are you naturally inclined to be an entrepreneur?
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+ and – of being an
entrepreneur
List the advantages and disadvantages of being an
entrepreneur.
Prioritize the top 5 advantages and top 5
disadvantages of being an en entrepreneur.
For each disadvantage list 2 things you can do to
minimize that disadvantage in your business.
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Define Your Product or Service
What is your product or service?
How is it different?
Who will buy your product?
Where will it be sold?
When will it be ready to be sold?
How will it be promoted?
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Define Your Product or Service
Can you do it?
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Profitable Process of “P’s”
• Perceive ~ The “Ah-Ha Moment”
• Pleat & Prove ~ Research and Prove it works
• Plan ~ Create your plan of action
• Process ~ Start to make things happen
• Proceed ~ Do It!
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Make Meaning Make a difference Make Value
If you succeed in building a business,
either funding sources will be fighting to give you money or you won’t need their money.
Build A Business
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Evaluating Your Idea
Can your idea be turned into a business?
Is there a “real” need for your product or service?
Who is out there to buy your product?
Will they pay for your product?
How big is your market?
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Evaluating Your Idea
What are your product’s “features” and “Benefits”?
What are your key “Go/No Go” decisions?
• What do I want out of this business financially?
• What do I want out of this business emotionally?
• Can I afford to go into business?
• How long can I wait to see financial success?
• What am I willing to put at risk?
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Market Research
Everything you listed in the previous exercise needs to
be verified.
How do you do that?
• Database customer research.
• Direct customer research.
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Market Research
WHO ~
Demographics: the statistical data of a population, esp.
those showing average age, income, education, etc.
WHY ~
Psychographics: the use of demographics to determine
the attitudes and tastes of a particular segment of a
population, as in marketing studies.
Examples p. 17
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Do it for you.
Keep it simple.
Keep it real.
Internalize it.
Work it.
Key to Writing an Operating Plan
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Mission / Vision
Vision – Mission
A vision statement is sometimes called a picture of your
company in the future but it’s so much more than that. Your
vision statement is your inspiration, the framework for all
your strategic planning.
The mission statement articulates the company's purpose.
It announces to the world at large why your company exists.
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Everything you do to promote
your business to get customers
to buy your product/services on a
regular basis.
What is Marketing?
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Marketing Analysis
Who is your Target Customer?
What do you know about your customer?
What markets are you competing in?
How are you positioned?
What is your competitive edge?
How does price affect your positioning?
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Market Research
Prove or Disprove
There is someone out there to buy my product
There is someone out there to buy my product at
my price
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Marketing Your Business
• Set Goals
• Identify your target market
• Establish Your Objectives
• Map out your tactics
• Construct your budget
• Build your timeline
• Evaluate – Evaluate - Evaluate
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What is Sales?
The exchange of goods or
services for an amount of
money or equivalent
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Execute
Even if you are on the right track,
you will get run over if you just
sit there.
~ Will Rogers
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Legal Structure
Key Factors:
• Control
• Taxes
• Liability
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Legal Structure
Key Factors:
• Transferability of Ownership
• Longevity of the Business
• Raising Capital
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Legal Structure
Sole Proprietorship ~ Simplest structure. Based 100%
on the business owner. Liability lies with the business
owner. Tax liability flows through to the owner.
Partnerships ~ Agreement to operate between one or
more individuals. Tax liability flows through to the
owner. Partnership agreement is critical. Does not
have to be 50/50
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Legal Structure
Corporation (C Corp) ~ Separate legal entity. Liability
Lies with the corporation. Double taxed. More complex,
Popular with investable companies.
S Corporation ~ S Corp is a small business designation
of a corporation. Tax liability flows through to the owner.
Liability protection provided.
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Legal Structure
Limited Liability Company (LLC) ~ State designation.
Tax liability flows through to the owner.
Liability protection provided.
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Where To Start
Ohio’s 1st Stop Business Connection
http://development.ohio.gov/edd/1ststop/onestop/index.cfm
Name Registration
Legal Structure Designation
Vendor’s License
Etc.
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“In preparing for battle I have
always found that plans are
useless, but planning is
indispensable.”
- Dwight D. Eisenhower
Plan to Win…
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Make Meaning Make a difference Make Value
If you succeed in building a business,
either funding sources will be fighting to give you money or you won’t need their money.
Build A Business
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Do it for you.
Keep it simple.
Keep it real.
Internalize it.
Work it.
Key to Writing an Operating Plan
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Record Keeping
Critical to keep all records of your business.
• Business Operations and Monitoring
• Tax Purposes
• Financing
• So you know how you are “REALLY” doing
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Review Startup costs material
Everything takes longer than you think and costs more than you
think
Go to the “Green” pages
Startup Costs
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Building Your Plan
Feasibility Planning
Vs.
Business Planning
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Financing Your Business
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Bootstrapping is building the business from internally generated funds.
• You need to establish a foundation for your
business.
• Build credibility and show that your business has customers and a product that people want to buy.
• Focus on customers and cash flow.
• Work hard and be creative in seeking ways to drive revenue while holding expenses down.
Friends, Family, Founder
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To make money not to make loans.
Lending is a tool to making money.
Why are banks in business?
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Banks typically lend for “stuff”.
Banks are a great option if you have history and are looking to expand. However, for an early stage company with limited history and minimal collateral, getting a loan could prove difficult.
Commercial Banks
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When the company is new the entrepreneur should establish a banking relationship and utilize this as far as it will go. The relationship with a bank will be very helpful in the future as the business becomes established.
There is no 100% financing from a typical commercial bank.
Commercial Banks
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SBA is not in the business of making bad loans.
Once the bank has agreed that the loan is good but in some way outside their guidelines they will seek an SBA guarantee.
The SBA is there to help you with your cash flow.
Longer term Lower down payment
Small Business Administration
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Credit Credit Score should strive to be over
740 +
Guard Your Credit Score
What do banks look for?
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Business Plan
The business plan tells the bank how you are planning to repay the loan.
What do banks look for?
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Collateral
There is no 100% financing
To a bank collateral is real estate or equipment.
What do banks look for?
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Short-term money to operate the
business.
Typically financed by a Line of
Credit.
Working Capital
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Know your credit score going in.
Establish a banking relationship
Keep you plan tight, clear and easy to understand.
Use common format, don’t be creative.
Help the banker say yes. Put yourself in the banker’s shoes.
Structure your ask. Separate working capital, equipment and real estate.
Getting the bank to say YES!
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Business Operations
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Everything you do to promote
your business to get customers
to buy your product/services on a
regular basis.
What is Marketing?
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What is Sales?
The exchange of goods or
services for an amount of
money or equivalent
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Key to Sales
How Full is Your Funnel?
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Effective Sales Process
• Define Target Market
• Generate Sales Leads
• Quantify Sales Leads
• Approach Prospects
• Make Sales Presentation
• Handle Objections
• Close the Sale
• Create Relationship
• Service after the Sale
• Repeat
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Pricing
Factors that Influence Price
Cost of goods
Demand for product/Service
Competition
Market Pricing
Customer Perception
Margin Standards
Factors Influenced By Price
Sales Volume
Sales Revenue
Market Share
Competitive Advantage
Company Image
Profitability
Price
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Components of Profitability
Income Statement
Sales
- Cost of Goods Sold
Gross Margin
- Operating expenses
Net Income
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Components of Sales
Sales = Number of Units Sold x Price (per unit)
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Income Statement
XYZ Company
Revenue 39,000
Operating Expenses 14,850
Payroll Expenses 22,500
Depreciation 1,450
TOTAL EXPENSES 38,800
NET INCOME $200
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Income and Cash Flow
XYZ Company
Income Statement
Revenue 39,000
Operating Expenses 14,850
Payroll Expenses 22,500
Depreciation 1,450
TOTAL EXPENSES 38,800
NET INCOME $200
XYZ Company
Cash flow Statement
Cash Sales 19,000
A/R 20,000
Total Revenue 39,000
Operating Expenses 14,850
Payroll Expenses 22,500
Depreciation
TOTAL EXPENSES 35,500
Cash Flow (16,500)
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Income and Cash Flow with A/R
XYZ Company Cash flow
Statement, January
Cash Sales 19,000
A/R 20,000
Total Revenue 39,000
Operating Expenses 14,850
Payroll Expenses 22,500
Depreciation
TOTAL EXPENSES 35,500
Cash Flow (16,500)
XYZ Company Cash flow
Statement, February
Cash Sales 19,000
A/R 20,000
Payments on Account 20,000
Total Revenue 59,000
Operating Expenses 14,850
Payroll Expenses 22,500
Depreciation
TOTAL EXPENSES 35,500
Cash Flow (0)
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Business Plan
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Should be “concise”
Should provide a clear description of the problem you solve.
Should show how you solve it.
Should clearly articulate your business model.
The underlying magic of your product.
Should show your competitive advantage
Should contain a stand alone summary of no more than “four-pages”.
The Business Plan Should…
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Business Plan Process
Business Plan Template available
at http://sbdcfreeadvice.ning.com
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Next Steps…
Prepare Your Plan
Work Your Plan
Engage with the Ohio SBDC in
BizStartNow Consulting Sessions
Starting May 12 here at INC. @ 8000
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Everything is always impossible
before it works.
That is what entrepreneurs are all
about – doing what people have told
them is impossible.
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The Ohio SBDC at Columbus State
p. 614-287-5294
http://sbdcfreeadvice.ning.com
For Information on SBDC Activities