Presentation on theme: "www.lakeoftheozarks.score.org First Steps in Starting a Business."— Presentation transcript:
First Steps in Starting a Business
theozarks.score.org Start-up Basics
theozarks.score.org Successful and experienced executives and business owners acting as volunteers Seminars and workshops Free Mentoring –One-on-one – Resources for small business About SCORE
theozarks.score.org Counseling Locations Two Locations: Camdenton Chamber of Commerce Lebanon Chamber of Commerce Mentoring can be done in person, by telephone and/or by . We can also meet at your location or another alternative location.
theozarks.score.org Myths Business Opportunities Assessing Your Journey Organization, Insurance, Regulations Funding and Cash Management Business and Marketing Plans Next Steps Agenda
theozarks.score.org Briefly tell us a bit about you: Your name Your Business idea(s) What you want to learn today Nice to Meet You!
theozarks.score.org Start-up Myths
theozarks.score.org Myth: All I need is a good idea to be a successful entrepreneur. Reality: A good idea is a great start, but it takes hard work, research, and planning plus successful implementation strategies to turn your idea into a profitable enterprise. Myth #1
theozarks.score.org Myth: If you go out on your own, you wont have to work so hard or such long hours. Reality: Youll probably work harder and longer than youve ever worked before, but youll enjoy it more. Exhaustion fades at the moment you proudly say, I did this! Myth #2
theozarks.score.org Myth #3 Myth: Youll be able to deduct everything so you dont have to pay taxes. Reality: Taxes are based on net income, which can be lowered by subtracting expenses related to the business from gross income. Strict regulations apply, so keep good records and learn how to make the tax system work for you.
theozarks.score.org Myth #4 Myth: If you work independently, you wont have to report to a boss. Reality: You dont have a single boss, you have many. These are your clients and customers, each of whom have specific needs and demands. Your challenge is to keep all of them happy.
theozarks.score.org Myth #5 Myth: Business owners get to do the work they want to do and only what they find interesting. Reality: Think again. You will have to wear many hats and juggle many skills, some of which may bore you or be downright challenging.
theozarks.score.org Myth #6 Myth: If you choose to be self- employed, youll be limited in what you can achieve, since youll be working alone. Reality: The limitations are created mostly by the space between your ears. Be realistic, but dont trap yourself with self-imposed limitations. You can make a difference.
theozarks.score.org Reality: Business Success Percent of New Businesses after Four Years (Source: SBA)
theozarks.score.org Good choice of time and location 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 Critical Success Factors
theozarks.score.org Business Opportunities
theozarks.score.org Not hampered by previous image or technologies Can choose location, name, logo, relationships Can explore new markets and directions See your dreams come true No base, must build all new Greater risk No track record = difficulty in financing See your dream become a nightmare ADVANTAGESDISADVANTAGES Starting a New Business
theozarks.score.org Established clientele, suppliers, location Known quantity, proven formula/name Help in starting and running business Can review records Easier to obtain financing Potential hidden issues: debts, poor reputation, loyalty to owner, out-of- date inventory or transfer issues No guarantee that success will continue ADVANTAGESDISADVANTAGES Buying a Business
theozarks.score.org Proven image and product/service Marketing/Sales power Limited experience Training, professional guidance Continued consulting relationship Access to other franchisees for help Loss of control - not always your own boss Franchise = royalty and other fees Operational boundaries and limited choices Binding contract Franchisor problems are your problems Buying a FranchiseADVANTAGES DISADVANTAGES
theozarks.score.org Convenient work location Less expensive Flexible schedule Tax Advantages - Sq. Ft of total home - Percentage of utilities Zoning or deed restrictions Isolation from others Difficult financing Family distractions IRS scrutiny Home Based BusinessADVANTAGESDISADVANTAGES
theozarks.score.org Allows operation in a not-for- profit status – no owners May qualify for government or foundation grants Protection from liability for directors and employees Can pay salaries to employees and consulting fees for contractors Focus on educational or charitable purposes and cannot profit those who created the organization All profits remain within the organization Must apply and qualify for 501c3 status or sales tax exemption Non-ProfitADVANTAGESDISADVANTAGES
theozarks.score.org Online BusinessADVANTAGES DISADVANTAGES Lower startup costs Expanded geographic reach Convenience & accessibility Flexibility Low conversion rates Low barriers to entry = higher competition Visitor expectations No personal contact/ limited sensory info
theozarks.score.org Assessing Your Entrepreneurial Journey
theozarks.score.org Self-starter Resourceful Responsible Organized Hard worker Persistent Decisive Healthy Supportive family Entrepreneur Characteristics
theozarks.score.org How Many Hats Will You Wear?
theozarks.score.org Strategy used to create a desire to purchase Creates your company image Anything you do to get and keep a customer Your product or service will not sell itself Marketing
theozarks.score.org Customer contact work Finding prospects Making presentations Preparing bids Closing deals Processing orders Sales
theozarks.score.org Definition of offering Functionality and packaging Quality Differentiation Product and/or Service
theozarks.score.org Position Location, Location, Location Niche / target market Competition Distribution Merchandising
theozarks.score.org Name recognition Qualification of product/service Market identity Advertising Branding
theozarks.score.org Competition Size of operation and number of employees Price and quality Services provided Reputation: strengths and weaknesses Personal visits and observations Suppliers & contractors Other businesses in area
theozarks.score.org Naming your business Selecting form of ownership/Legal structure Obtaining legal registrations, tax numbers, licenses, permits, etc.. Taking Care of Basics
theozarks.score.org Naming your business – whats in a name? –Name should be unique –Name should describe your business or brand –Name should not be too restrictive/consider future aspects of the business (sale of business, merger. expanded market, expanded products/services, etc.). Taking Care of Basics
theozarks.score.org Naming your business - Considerations –Business name includes description of type of business (example: Acme Heating and Air) –Using your family name in business name (example: John Smith Realty) – consider pros and cons of using your name in the business name –Location used as part of the name (Camdenton Book Store) –Unique made up name Taking Care of Basics In all cases, check with the secretary of state to ensure name is not already in use
theozarks.score.org Sole Proprietorship Partnership Limited Liability Company (LLC) C Corporation (Conventional) S Corporation (Sub-chapter) Business Organization Forms
theozarks.score.org 38 Sole Proprietorship Advantages Disadvantages All profits to owner Profits only taxed once Owner makes all decisions Low cost organize Few legal restrictions Simple to organize Unlimited liability Limited in raising funds No separate legal status
theozarks.score.org 39 Partnership Advantages Disadvantages Easy to organize Separate legal status Profits taxed only once Taxed at partners rate Unlimited liability to general partners Divided decision making Transferability of ownership
theozarks.score.org 40 Limited Liability Company Advantages Disadvantages Limits your personal liability Separate legal entity Low cost to form (vs. corporation) Usually taxed as a sole proprietorship Unlimited number of owners Capital is easy to raise More costly than forming sole proprietorship or partnership (but still low cost) Investors may prefer stock ownership Personal tax liability
theozarks.score.org 41 S-Corporation Advantages Disadvantages Limited liability Profits taxed only once Capital is easier to raise through sale of stock Transfer of ownership Can be costly to form S-corporation requirements More administrative duties Cannot provide company- paid fringe benefits
theozarks.score.org 42 C-Corporation Advantages Disadvantages Limited liability Transfer of ownership Capital is easier to raise through sale of stock Company-paid fringe benefits Tax benefits Double taxation Can be costly to form More administrative duties
theozarks.score.org Property Liability Motor Vehicles Umbrella Liability Workers Compensation Health Life Insurance Considerations
theozarks.score.org Business Licenses and Approvals Obtain various tax numbers Federal ID number State ID number State Retail Sales (Sales Tax) Others IRS and Social Security Withholding & Payments Taking Care of Basics
theozarks.score.org Register the name and form of ownership with the State of Missouri (How do I register my business) Research (How to start a business in MO) Maintain (On-going requirements for my business to include filing, licensing, & permits) Resources (What resources are available to you) Taking Care of Basics Missouri Business Portal
theozarks.score.org Banker Lawyer Accountant Insurance Agent Business Mentor(s) Every Business Owner Needs:
theozarks.score.org Funding and Cash Management
theozarks.score.org Total monthly cost of living Areas where you can cut back Outstanding debt Amount in savings Total amount needed to cover 6 to 12 months of expenses Personal Budget Considerations
theozarks.score.org Essential Considerations: Tools and equipment Leasehold improvements Licenses and permits Professional fees Initial inventory Working capital reserve fund Start-up Cash Needs
theozarks.score.org Equity Signifies Ownership Sources of Capital Personal savings Family and friends Partners contributions Profits retained in the business Banks and credit unions* Community Express Micro Loans* Credit cards (not recommended) * Can be guaranteed by SBA Debt Does NOT Signify Ownership
theozarks.score.org Lenders View of Borrower Character, Commitment Credit rating Cash flow Collateral Capital Industry knowledge Personal investment Financial history Financial projections Management skills Competition
theozarks.score.org Open a separate bank account for your business ASAP Deposit all receipts in tact Use a petty cash fund Separate sales tax receipts on your books Hang on to cash as long as possible Reconcile bank account monthly Cash: Most Important Asset
theozarks.score.org Business and Marketing Plans
theozarks.score.org Encourages an objective view Becomes foundation for planning Powerful management tool Communicates owners ideas Business Plan Importance
theozarks.score.org Table of Contents Executive Summary Section One: The Business Section Two: Financial Forecasts Section Three: Supporting Data Business Plan Contents
theozarks.score.org Next Steps
theozarks.score.org What do these businesses have in common? Disney Apple Nike Wal-mart eBay Amazon.com Starbucks Your local grocery store, bakery, gift shop, landscaper… Make Your Dream a Reality