simple steps for starting your business start-up overview
TRANSCRIPT
Today’s Agenda
• SCORE – Who we are• Business and you• Your business idea• Finances of business• Next steps
SCORE Ft Lauderdale
Our Mission is to help start new businesses
and grow existing businessesin the Broward County community
About BrowardSCORE
• 50+ experienced executives• Will mentor 900 in 2015• 15 + Workshops each month• For 2000 attendees• Turnaround Team• SCOREboard• Radio program on 880theBiz• broward.score.org
Simple Steps Process Roadmap
Session 1: Start-Up Basics
“Go or No-go” decision & next steps with mentor
Mentoring/Build
Business Plan
Session 5: Funding Sources
Session 2: Business Concept
Session 3: Marketing
Plan
Session 4: Financial
Projections
Start-up Myths
• All I need is a good idea.• Won’t have to work as hard as I
do as an employee.• Will do only the work I want to
do.• Working alone limits my
achievement capabilities.
Critical Success Factors
• Adequate capital.• Ability to manage and multi-task.• Education / experience in field.• Strong work ethic.• Effective time management.• Willingness to ask for input from
others.
Entrepreneur Characteristics
• Self-starter• Resourceful• Responsible• Organized• Hard worker• Persistent• Decisive• Healthy• Supportive family
Different Starting Options
• Start a New Business• Buy an Existing Business• Buy a Franchise• Be a Home-Based Business• Be a Non-Profit Organization• Run and Online Business
What do investors want to know?
• Is there a market for the idea?– A problem needing a solution
• Have a unique solution to the problem?– To capture a share of that market?
• Can that share make a profit?– 30% - 50%+ Net Simple Profit
• Can that profit produce a nice return?– Can that profit pay back a loan?
The Business Idea Process
• Who are your Customers?• What desperate Need/Problem do they
have?• What Features/Services do they expect?• What does your Competition provide?• Where your Industry is going?• Your Unique….Solution?• Your Business Differentiation Strategy?• Your Marketing Plan?• Your Management Team?
Who are your customers?
• How many revenue streams do you have?
• Demographically, who are they?• How do they want to get your service….
– Determines your market size
What desperate need do they have?
• Improve their quality of life?• Save time or money?• Solution to a problem?• Help to be successful?• Protection from something bad?• Something that makes them feel
good?
Features/Services they expect?
• Pre-sale services?• Basic features?• Special / quality features?• Price ranges?• Post-sale services?
Your competition?
• How many direct competitors are there?
• Is there indirect competition?• What customer needs are not
satisfied?• What customer required
features/services are not provided.
Where is the Industry going?
• Targeting a niche in a growing market?
• Do you understand the current industry standards? Service Quality Price
• Is your’s a breakthrough idea?• Changes looming on the horizon?• Barriers to entry?
What is your Unique Solution?
• A Solution to your customer’s problem • With Features your customer wants • And Services your customer expects• Including some:
– Not provided by your competitors
• An unequaled Experience
Your Business Differentiation Strategy
• Clearly define how you will exceed the industry and competitor norms– Pre-after sale services– Exceed in product quality– Quality comes with price– Overall experience you will provide
Your Marketing Plan
• The best coverage of your target market
• With the best response rates• At the lowest cost
– Tell them you are in business– Have solutions to their needs– That the competition does not have
Your Management Team
• Industry-specific knowledge and experience
• Management skills and experience• Experience delivering earnings• Experience managing cashflow• Business function skills• Required technical skills
Period 1
Your Niche Market Size 100 Revenue Stream 1 # Cust Comp Share % Targeted
Customer Segment 1 200 50% 100% 100
Marketing Plan (to contact your niche customers)Stream 1 Segment 1 % Chnnl # Contacts % Resp 50
Mktg Channel 1 100% 100 50% 50 Mktg Channel 2 0% - 4% -
Total Responses 50
Sales Plan (converts marketing plan reponses into sales)Sales Success Rate % Rate % Repeat # Times
Stream 1 Segment 1 90% 100% 4 180 Total Sales 180
Product / Service Plan % Sales Avg Price Avg Mtl Cst
Standard Product / Service 100% 2,000$ 500$ 360,000$ Hi-Profit Product / Service 0% -$ -$ -$ Economy Product / Service 0% -$ -$ -$
100%
Revenue from Sales 360,000$ 100%
Type Exp
Cost of Service Provided (per order) Variable 90,000$ 25%# of Orders 180 Materials Expense Hours Hrly Rate 90,000$ Fullfilment Labor Expense 0.00 15.00$ -$ Transport/Fuel Expense Av Miles/Order Av M/Gal Av $/Gal
- 15 4.00 -$
Marketing Expense (The cost to contact the target market)Fixed -$ 0%
Stream 1 Segment 1 $ Piece # Times
Mktg Channel 1 0% 2.00$ 1 -$ Mktg Channel 2 0% 1.00$ 2 -$
Sales Expenses Fixed -$ Marketing Responses Hours Hrly Rate 50
Hours per Contact and Hourly rate 0.00 10.00$
Gen & Admin Expenses Months 130,000$ 36%# of Orders Hours Hrly Rate 180 12
G&A Labor Exp 0.00 10.00$ Fixed -$ F$ Month Start-up
Rent -$ -$ Fixed -$ FWebsite -$ -$ Fixed -$ FUtilities -$ -$ Fixed -$ FInsurance -$ -$ Fixed -$ FProfessional -$ -$ Fixed -$ FOther 10,833$ -$ Fixed 130,000$ Warranty (% of Sales) 0% Fixed -$ FStart-up Expenses -$ Start-up -$ S
Total Expenses 220,000$ 61%
Net Income 140,000$ 39%
Assumptions
Revenue Stream 1
Your Critical Numbers Model
• Total monthly cost of living
• Outstanding debt
• Amount in savings
• Total amount needed to cover
12 to24 months of expenses
Budget Considerations
How much do you need to…
Live for a year…..……………………..$..............
RoT x 3………………..…………………$.............
Selling Price/ Unit…..…………...…….$............
Average # of purchases per year.…..#............
# Purchases x Selling Price…………$.............
# Customers needed………………….#..................
How much do you need to…
Live for a year…..……………………..$.30,000
RoT x 3………………..…………………$.............
Selling Price/ Unit…..…………...…….$............
Average # of purchases per year.…..#............
# Purchases x Selling Price…………$.............
# Customers needed………………….#..................
How much do you need to…
Live for a year…..……………………..$30,000
RoT x 3………………..…………………$90,000
Selling Price/ Unit…..…………...…….$............
Average # of purchases per year.…..#............
# Purchases x Selling Price…………$.............
# Customers needed………………….#..................
How much do you need to…
Live for a year…..……………………..$30,000
RoT x 3………………..…………………$90,000
Selling Price per unit………………….$100
Average # of purchases per year.…..#
# Purchases x Selling Price…………$.............
# Customers needed………………….#..................
How much do you need to…
Live for a year…..……………………..$30,000
RoT x 3………………..…………………$90,000
Selling Price/ Unit…..…………...…….$100
Average # of purchases per year.…..# 5
# Purchases x Selling Price…………$.............
# Customers needed………………….#..................
How much do you need to…
Live for a year…..……………………..$30,000
RoT x 3………………..…………………$90,000
Selling Price/ Unit…..…………...…….$100
Average # of purchases per year.…..# 5
# Purchases x Selling Price…………$ 500....
# Customers needed………………….#..................
How much do you need to…
Live for a year…..……………………..$30,000
RoT x 3………………..…………………$90,000
Selling Price/ Unit…..…………...…….$100..
Average # of purchases per year.…..# 5
# Purchases x Selling Price…………$ 500
# of Customers Needed……………….# 180
Funding Opportunities
• Debt– Decision based mostly on your credit report.
• And on your personal financial situation.
– Partially on your business plan.– You keep 100% ownership.
• Equity– Decision based totally on your business plan.– You trade funds for ownership.
Lender’s View of Borrower
• Character, Commitment• Credit rating• Cash flow• Collateral, Capital• Industry knowledge• Personal investment• Financial history• Financial projections• Management skills• Competition
Your Funding Situation
• Your past financial decisions affect:– Your funds available to start your business– Your credit score for getting a loan
• The business you choose affects:– Your revenue possibilities– Your net profit opportunity affects:
• Your start-up funding needs• Whether the business can fund the business
Your Credit Report
• A report of past performance:– An indicator of future performance.
• Uncovers: civil judgments, unpaid taxes, liens, bankruptcies.
• Credit Scores use data in the credit report.– www.annualcreditreport.com
• Credit Score is the major decision factor.• 700+ Credit Score is workable.
Your Credit SCORE
• 35% based on payment history.• 30% based on amount owed.• 15% based on length of credit
history.• 10% for new credit.• 10% for types of credit used.
Have a Walk-Away Strategy
• Avoid signing contracts / leases.• Don’t take-on a loan – (or only a 1
year loan for start-up exp).• Finance only inventory and working
capital.• Don’t purchase unnecessary
equipment.
Don’t….Don’t…..Don’t
• Spend money you don’t have
• On things you don’t need
• To please people you don’t like
• That includes……. rents / leases
• capital equipment
• future expenses
Legal Structure Considerations
• Owner’s personal financial exposure:– If business involves risk– If owner has substantial assets
• Control, if more than 1 owner• Ease of ownership Transferability• Costs:
– To organize– To comply with reporting requirements
• Note….Business Insurance still needed:– Fire&Theft - Business Interruption - General liability
Typical Legal Structures• Sole Proprietorship
– Simple to create and operate– Profit / Loss on personal tax return– Personally liable for business debts
• Partnership - 2 or more owners required• C Corporation
– Limited personal liability on business debts– Double taxation because C corp is a separate entity
• S Corporation– Can use S corp losses to offset personal income
• Limited Liability Company– Limited liability for business debts– P&L can be allocated differently than ownership
interest
Licenses, Insurance, Taxes
• Decide on your business structure; www.sunbiz.org
• Get your Accountant, Banker, and Insurance agent
• Get your state licenses, if necessary: www.myflorida.com/dbpr
• Get your Broward county Business tax license: http://www.broward.org/RecordsTaxesTreasury/TaxesFees/Pages/LocalBusinessTaxes.aspx
• Register your Fictitious D/B/A Name: www.sunbiz.org
• Get your Federal Tax EIN (Form SS-4): www.irs.gov
• And, if you do a taxable transaction: www.myflorida.com/dor
Process Roadmap
Session 1: Start-Up Basics
“Go or No-go” decision & next steps with mentor
Mentoring/Build
Business Plan
Session 5: Funding Sources
Session 2: Business Concept
Session 3: Marketing
Plan
Session 4: Financial
Projections
Now What…..?
Simple Steps for Starting Your Business
series.
Four three hour sessions …Wednesdays 6-9 pm
English
Details at broward.score.org
•Test the feasibility of your idea
•Get you to GO or NOGO decision
If it is GO…….then
• Complete business plan
• Start small and grow
• Get a SCORE Mentor
• Watch the Money