finding and financing your small business and... · entrepreneur’s source“and ... • high...

Finding and Financing Your Small Business

Hosted by Susan Strong ’77

Veteran2Entrepreneur

Welcome to the V2E Seminar “Entrepreneurial Career Options”

Thank You For Your Service To Our Great Country!

Presenters Susan Strong

Business and Transition Coach Graduate UC Berkeley

Lifetime Member CAA

•  35 years of business experience in Human Resources, Marketing, Finance

•  Independent franchise owner of The Entrepreneur’s Source“and Advicoach starting in August of 2009.

•  Uncle was a decorated WW II fighter pilot in the Army Air Corps. Nephew is currently a Nuclear Engineer with the US Navy assigned to the USS George Washington.

•  As a founding member of V2E, have been working with veterans as a coach for three years.

Presenter: Susan Strong

American’s face a challenging career market! It’s called “The New Career Economy”

With the changing job market, Americans need to educate themselves about every option they have for their future.

Building Someone Else’s Wealth

American workers labor longer hours than anyone else in the industrialized world. “I built the business with a tremendous amount of hours, sweat, and sometimes tears. Only problem was I was still an employee, not the owner”

Dan, U.S. Army (Ret.)

Are we out of our minds?

What’s Impacting American Workers?

“… a flat world is one in which the individual worker is going to become more and more responsible for managing his or her own career, risks, and economic security…”

Thomas L. Friedman, The World is Flat “ …what’s coming is a world in which most workers will be in effect contractors

or temps, and self-employment will become the norm.” Kevin Mellyn, Broken Markets

Alternative career options should be explored

Why Seek Business Ownership? What are you looking for?

How Will You Build Wealth?

Imagine…if you could design the perfect career for yourself, what would it look like?

•  Job? •  Start Up Business? •  Franchised Business?

What is the best option for you?

Developing Your Goals, Needs, and Objectives

•  Income •  Life Style •  Wealth •  Equity

What might stop you from being in your own business

•  Needle in a Haystack •  Have to Love the Product •  Crabs in the Basket •  Definition of Insanity •  Open or Closed Mind •  Fear

Don’t Let Fear Stop You!

Best way to overcome FEAR is through:

•  Information •  Eductation •  Time •  Thought •  Planning

What is an Acronym for FEAR?

Do you have what it takes to be an Entrepreneur?

Entrepreneur Defined: “One Who Assumes the Risk & Responsibility for Starting & Managing a Business.“

•  What are your Core Strengths? •  What are your Transferable Skills?

Do you have what it takes to be an Entrepreneur? •  Are you self motivated and look at the world as full of

opportunity? •  Are you organized and can you operate with intent? •  Can you admit to what you do not know? •  Are you willing to grow in the areas required and put your

business before yourself?

•  Do you believe there is a relationship between risk and reward? •  If a franchise, can you set aside old habits & beliefs to follow a

system?

The Advantages of Being an Entrepreneur •  Freedom & Independence •  Control Over a Major Aspect of Your Life •  Outlet for Creativity •  Excitement •  Satisfaction & Sense of Achievement •  Self-Esteem •  Status & Recognition •  Flexibility •  Job Security – Can’t Be Fired or Laid Off •  No Cap on Income Potential •  Growth of Initial Investment

The Disadvantages of Being an Entrepreneur

•  Risk, Responsibility & Pressure •  Fear of Failure •  Obstacles & Frustration •  Loneliness •  More Work, Longer Hours at Start-up •  Less Time or Energy to Spend With Friends & Family

at Start-up •  Less Financial Security at Start-up •  Risk of Losing Investment •  Income Fluctuation •  Responsible for Taxes; Social Security

Do You Want to Make a Difference?

Small businesses in the USA: •  Represent 99.7% of all employers •  Employ more than 50% the private-sector employees •  Pay 44% of the total U.S. private payroll •  Have generated more than 64% of all new jobs

during the past 15 years •  And create more than 50% of the private gross

domestic product *statistics from U.S. Small Business Administration

Veterans as Entrepreneurs!

Veterans represent 6% of the U.S. population, but account for 13.5% of U.S. Small Businesses (3.7 million) Mission Focus, Resourcefulness, Resilience, Discipline, Leadership. Entrepreneurs are the warriors of todays business world.

A Military Perspective

•  Over 4,300 military veterans have signed franchise agreements over past 18 months

•  61,000 veterans have been hired by franchise businesses in same period - eventual owners?

•  560 businesses have joined VetFran •  Over 200,000 veterans retiring over next 5 years…

trying to figure out “what they want to be when they grow up”

•  Veterans can make great business owners

Military Veterans are Great Hires and Great Business/Franchise Owners

•  Focused on accomplishing mission. •  Trained To Take Initiative. •  Adaptable To Change. •  Conditioned To Managing People. •  Quick To Learn, Rapid To Adapt. •  Take Accountability Seriously.

Making the Case to Hire Veterans

•  Proven Learner, with great skills and training •  Leadership, strategic and planning foresight •  Proven ability to work as a team and independently •  Diversity and strong interpersonal skills •  Ability to work diligently under pressure •  Strong sense of responsibility, procedure, and accountability •  Loyalty and integrity with the ability to see a task through to

completion •  Positively enhances the image of a company •  High degree of professionalism, respect, health, and safety •  Adaptability, quick thinking, with the ability to triumph over

adversity

Military Veterans Benefits

•  Reduced franchise fees from most franchisors •  Franchise businesses are in sync with military concepts and

values •  Franchisors adding “other” incentives for military personnel:

•  Territory •  Financing / loans •  Education – training fees •  SBA and community bank support

VetFran

Developed By The International Franchise Association: To honor those men and women who have served in the U.S. military, the Veterans Transition Franchise Initiative, known as “VetFran,” was developed to help them transition to civilian life. To date, over 600 franchise companies participate in the program.

Start a New Business

Advantages: •  Lower Start-Up Cost •  Independence •  Creative Freedom •  Freedom with Location &

Procedures •  No Inherited Problems From

Existing Business Owner

Disadvantages: •  More Time and Energy

•  Higher Risk of Failure

•  Takes Longer to Become Profitable

•  On Your Own

•  Financing Difficult to Obtain

•  Expensive to Develop a Brand

Buy an Existing Business

•  Develop acquisition criteria •  Mine network contacts: Lawyers, CPA’s, Universities,

and Brokers •  Consider a buyer’s broker firm •  Have skilled support team for due diligence and

negotiations

Why Most Independently Owned Business Don’t Work

Working “On”your Business versus working “In”your business

Source: Michael E. Gerber. The E Myth Revisited June 2001.

E-Myth’s Seven Centers of Management Attention

•  Leadership: Develop your vision for your business

•  Marketing: Understand your best customers

•  Money: Establish, track and maintain predictable cash flow

•  Management: Assemble and motivate the right team

•  Lead Generation: Attract your target market

•  Lead Conversion: Create a predictable sales system

•  Client Fulfillment: Deliver on your promise...every time

Franchising: The Trillion-Dollar Business Option The team concept in action

Source: The International Franchise Association, 2005.

What is Franchising? •  Over 4000 Franchises in 75+ Industry Groups •  41% of all independent businesses •  Contributes < $1.5T/year to the economy •  Generates one out of every seven jobs •  New Franchisee every 8 minutes

Owning a Franchise?

Advantages: •  Increases the chance of

business success through proven products and methods. An 85% vs. a 15% success rate after 5 years.

•  Easier access to capital. •  Reduces business start up time

and cost •  Established product or service

with brand recognition. •  Industry specific knowledge not

required •  Improved buying power. •  Franchisees share secrets

Disadvantages: •  Not completely independent •  Required to operate according to

procedures & restrictions in franchise agreement

•  Fees - initial franchise fee, royalties & advertising

•  Balance restrictions & support. •  Damaged image if others perform

poorly or if the Zor runs into a problem

•  Contract Agreement Terms Usually Limited

What do I get for my money?

•  Proven business system •  Initial training •  On-going support & training •  Business software •  Marketing campaigns and materials •  Exclusive marketing territory •  Equipment •  Site location assistance •  Build out assistance •  Future vision & operational growth plans •  Possible financing assistance

Trends and Growth

•  Products and Services for Seniors

•  Early Childhood Education

•  Green Products and Services

•  Services for the Two Income Family

•  Business Services

•  Home Based

6 Options for Franchise Business Ownership

1.  Self-Employment

2.  Service Businesses

3.  Brick and Mortar

4.  Investor/Manager

5.  Area Developer

6.  Resales and Coversion

Broad Industry Perspectives •  100 Automotive-Appearance Services •  102 Automotive-General Repair & Related

Services •  104 Automotive-Rental & Leasing Services •  106 Automotive-Tune-Ups, Lubes & Oil-Related

Services •  108 Baked Goods-Bagels, Etc. •  110 Beauty Products & Services •  112 Building and Construction Products &

Services •  114 Business-Advertising & Direct Mail •  116 Business-Consulting & Financial Services •  118 Business-General •  120 Children's Products & Services •  122 Clothing and Accessories •  124 Computer Related •  126 Consulting-Franchise and Business •  128 Decorating Products and Services •  130 Educational Services and Training

Programs •  132 Health and Fitness Products and Services •  134 Lodging •  136 Maintenance-Commercial Cleaning & Maid

Service Agencies •  138 Personnel Services and Employment 140 Pet

Products and Services •  142 Photography and Photo Services •  144 Printing Services

•  146 Publications •  148 Real Estate Brokerage and Related Services •  150 Restaurants-Family Style •  154 Restaurants-Traditional Fast Food •  156 Restaurants-Pizza •  158 Restaurants-Sandwiches and Salads •  160 Retail Food-Convenience Stores •  162 Retail Food-General •  164 Retail Stores-General •  166 Retail Stores-Gifts and Crafts •  168 Security and Home Improvement/Inspection •  170 Service Businesses-General •  172 Service Businesses-Mailing, Packaging and

Shipping •  174 Service Businesses-Signs •  176 Sports and Recreation-General Goods and

Services •  178 Travel Agencies and Services •  180 Video Rental and Taping Services

Finding the Right Option…Some Common Myths

•  Must do something I love

•  Know someone who was “successful”

•  Found it on some “list of top franchises”

•  Friend of a friend said “bad idea”

•  I can’t be creative in a franchise

•  Corporate HQ will dictate everything

Financial Considerations

•  Liquidity

•  Monthly Income Requirements

•  Borrowing Capacity

•  FICO Score

•  Net Worth

Financing for Vets: SBA Veterans Advantage SBA Veterans Advantage reduces the upfront guaranty fee from 3% to 0% for SBA Express loans up to $350,000 approved by SBA through September 30, 2015, for small businesses that are at least 51% owned by veterans, service-disabled veterans, active duty service members participating in the military’s Transition Assistance Program (TAP), reservists and national guard members, their current spouses, or the widowed spouses of service members or veterans who died during service or of service-connected disabilities Applications reviewed within 36 hours of submittal.

Choosing Stakeholders: “Mastermind Group”

•  Mentors

•  Coaches

•  Accountants

•  Attorneys

•  Insurance Agents

•  Bankers

•  Be sure they specialize in Small Biz

Ideal Candidates for Franchising

1.  Entrepreneurial Drive 2.  Willing to Follow System 3.  Military, Firefighter or Law Enforcement

Veteran 4.  General Business Knowledge and Skills 5.  Comfortable with Promotion and Marketing 6.  Adequate Financial Resources

•  Liquid Assets = Can support oneself for 3 months

•  Net Worth – Includes Home, Retirement Funds, Checking and Savings, Mutual Funds and/or Stocks, other income property

•  Credit Worthy – 680 Score or better

Insights into Getting Information

•  Know what you are looking for

•  Make sure the franchise is registered in the state you will operate in

•  Ask the franchisor for a complete understanding of the business model – especially the marketing components

•  Read the FDD’s

•  Consider a coach - they normally get paid from the franchisor.

Financing a Startup

•  Friends and Family

•  Home Equity

•  Signature Loans/Credit Cards

•  Entrepreneur Pensions

•  Angel Investors

•  Venture Capital

•  SBA

•  SBA Brokers

Why Write a Business Plan?

•  Every business needs a plan.

•  Bank lender most likely will require it.

•  Helps your employees function as a team.

•  Helps to rationalize the business.

•  If franchise, agreement may require it.

What Does a Business Plan Outline Look Like?

•  Cover sheet •  Table of Contents

•  Executive Summary •  Description of Products/Services

•  Organizational Structure

•  Competition •  Marketing Plan

•  Financial Documents •  Risks

•  Appendix