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Welcome and Introduction

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2 Welcome and Introduction
Welcome the staff members to the session State the subject of the session Describe the overall goals of the session

3 Course Overview Session 1 Preparing for Success Session 2 Researching Your Business Idea Session 3 Business Planning Session 4 The Marketing Plan Session 5 Laws, Regulations and Taxes Session 6 Managing Your Microbusiness Session 7 Analyzing Your Market Session 8 Product and Price Session 9 Placement and Promotion Session 10 E-Commerce Session 11 Selling Success Session 12 Cash Flow Management Session 13 Keeping Books and Records Session 14 Financial Tips and Tools Session 15 Bringing It All Together

4 Participant Materials
Session Outlines Session-by-session course outline Text Business Plan Basics: NxLeveL® Guide for Micro-Entrepreneurs Worksheets NxLeveL® Micro-Entrepreneur Business Plan Worksheets Resource Guide NxLeveL® Business Resource Guide Other Class handouts, supplemental materials

5 Class Agenda Class Opener Instructor Topics and Worksheet Time
Worksheet Activities and Discussion Business Plan Sections Guest Speaker Break Refreshments Networking Activity Writing and Reading Assignments

6 Expectations and Ground Rules
Attendance Assignments Absenteeism Reading Punctuality Worksheets Written business plan sections Participation Format Discussion Confidentiality General Listening Safe environment to test ideas Ask questions Add ground rules as needed

7 Traits of Successful Entrepreneurs
Passion. Enjoying what you do is a big part of doing it well! Risk-taking. Entrepreneurs take calculated risks to reach worthwhile goals. Persistence. Entrepreneurs don’t give up when facing challenges. Willingness to work hard. Entrepreneurs are achievement- oriented people who take pride in overcoming obstacles. Self-confidence. Entrepreneurs have confidence in themselves. Optimism. Entrepreneurs believe their hard work and planning are likely to pay off. Cooperation. Smart entrepreneurs know when to seek help. Communication skills. Marketing your business is an ongoing process of communicating the things that make it special. Critical thinking. Smart entrepreneurs look at situations as they are, not as they want or imagine them to be. Fairness. Successful entrepreneurs earn a good reputation through fair dealing and personal integrity. Creativity. This is the main factor that determines whether an entrepreneur will succeed or fail. Staying healthy. Entrepreneurs know that taking care of business requires taking care of themselves.

8 Risks of Business Ownership
Stress. Starting a business is stressful at the best of times. The more you have at stake, the more stressful it is. Failure. The emotional effects of business failure can be hard to handle, especially if you don’t have strong support from friends and family. Financial hardship. You may have your own money or other assets at risk. Also, your income may be irregular during the first year. Long hours. You may have to work 50 hours or more per week. This could mean giving up activities you currently enjoy. Debt. If your business fails, you may end up with serious debt, credit problems and other financial troubles that make it hard to get back on your feet. Family problems. If your family members don’t understand and accept the risks of your new business— including long hours and new financial stress—serious conflicts are likely.

9 Rewards of Business Ownership
Independence. You’re in charge of your own life and work. Helping your community. Successful businesses help communities grow and thrive. Job security. These days, a microbusiness may offer more stability than a traditional job would. Learning new skills. Launching a business is a powerful learning experience that can transform many areas of your life. No matter what happens, you’ll gain new valuable skills and experience. Money. The financial rewards of running a microbusiness can go far beyond what you would earn at a normal job. Excitement. Running your own business offers opportunities for excitement, creativity and recognition that most traditional jobs can’t match. Pride. Running a successful business can earn recognition and build pride and self-respect.

10 Personal and Business Goals
Common personal goals Use your creativity or talent. Move to a bigger home. Put money aside for your child’s education. Get off welfare or Section 8. Sponsor community events (concerts, lectures, afterschool programs). Spend plenty of time with your family. Help to solve a social or environmental problem. Common business goals Grow your business by 10 to 15 percent each year. Grow the business to a certain size and sell it. Grow the business and open a second location. Hire two employees in your first year. Be the greenest business in your industry. Capture a certain percentage of your market. Revitalize a struggling community or neighborhood.

11 Why Do Microbusinesses Fail?
Lack of a well-researched business plan Failing to plan ahead and prepare for contingencies, including: natural disasters, theft, illness and growth Not identifying their target customers Poor accounting practices Poor inventory management Not understanding what their target customers need and want Poor cash flow management Not setting the right price for products and services Owner’s salary is too high Failing to comply with laws, regulations and taxes Choosing the wrong distribution method Poor customer service Failing to seek help from mentors and other small- business experts

12 Why Do Microbusinesses Succeed?
Careful research and planning at every business stage Taking steps to minimize or avoid problems that affect business operations A clear understanding of who their customers are, where they live and what they need Good accounting and bookkeeping Good inventory management A unique product that meets customer needs, offered at the right place, the right time and the right price Careful budgeting Effective promotions Good organization and management skills Excellent service based on an ongoing dialogue with customers Asking for help when necessary

13 Bootstrapping Ideas Ease yourself into business by selling at flea markets, farmers’ markets, street fairs and “pop-up retail” options. Share a rental space with another business. Hire workers for one-time tasks through a website like Craigslist. Look for Local Exchange Trading Systems (LETS) whose members trade goods and services. Participate in a small-business incubator. Barter to procure supplies, or trade expertise you have for expertise you need. Look for a local nonprofit that provides microbusiness owners with free or low-cost computers. Use free or low-cost online faxing, database and accounting programs. Look for free supplies on and similar sites. Get funding through online tools like Kickstarter. Find an existing business that will let you rent equipment or facilities. Increase your visibility and reach with Twitter, Facebook and other social networking sites. Test-market your product online with sites like Etsy or eBay. Send marketing materials and catalogs electronically instead of printing and mailing them.

14 Networking Tips Think ahead! List all the people you know, and think about how they could help you launch your business. Consider family, friends, neighbors, work contacts, school contacts, online contacts and interest groups. Be sincere! Most business people are good at spotting insincere networking attempts. Stand out in a crowd! Wear something unusual to spur conversation (e.g., a unique pin, watch or ring). Keep your network warm! Set up a system to stay in touch with your contacts. Be clear! Come up with a simple, compelling way to introduce yourself and your business idea. Be reliable! Always follow through on your promises. Be prepared! Always carry business cards. Be helpful! Networking is a two-way street. The more you give, the more you get! Be confident! Learn and practice positive body language and conversation skills. If necessary, get help from a pro.

15 Professionalism in Business
ALWAYS be on time for meetings and other appointments. ALWAYS dress appropriately. ALWAYS speak and act politely and respectfully. ALWAYS respond promptly to phone calls and s. ALWAYS maintain a clean, orderly workspace or office. ALWAYS do your best to exceed expectations. NEVER make promises you can’t keep. NEVER hire employees who don’t meet your standards for professionalism. NEVER argue with customers.

16 Verbal Communication Tips
Speak at a clear, comfortable pace—not too fast, and not too slow. Listen! Good communication requires careful listening. Don’t use jargon or technical terms without defining them. Speak at a moderate volume—not too loud, and not too quiet. Stay positive and steer clear of controversy. Use business terms correctly and appropriately. Avoid vulgarity, slang and swear words. Never interrupt people. Record yourself speaking and listen back to identify areas for improvement.

17 Listening Skills Stop whatever you’re doing. When other people speak, give them your full attention. Be engaged. Look alert and maintain eye contact. Show interest. Encourage the speaker to continue by nodding, laughing where appropriate and showing other signs of interest and attention. Prove that you’re listening. Summarize points and ask questions to make sure you understand what’s being said. Think before you respond. Listen carefully, judge calmly and then react.

18 What Are Your Time Wasters?
Watching TV Other people make too many demands on your time Talking on the telephone Feeling overwhelmed; not knowing where to start Spending time online Disorganization Lack of clear goals Looking for information Worrying Procrastination Frequent interruptions Failure to prioritize Long lines Oversleeping Unreliable transportation Negative attitude Misplacing things

19 Time Saver Tips Use a calendar or planner every day
Always put tools and equipment away Prioritize your tasks Look for online alternatives (e.g., buying postage online instead of waiting in line at the post office) Ask family for more help with household chores Set clear boundaries between family time and business time Use timers or clocks to manage your time Complete difficult tasks when you’re at your daily peak Schedule regular breaks Plan shopping trips carefully to avoid making multiple runs Learn to say no Keep all business papers filed neatly Get help with tasks you’re not good at

20 Coping With Stress Take a break! Getting some distance clears your head and helps you make better decisions. Find support! No matter what you’re going through, someone can help you cope. Slow down! Set aside some quiet time every day to reflect and relax. Get some exercise! Research shows that exercise reduces stress and eases depression and anxiety. Stay motivated! Carry an inspirational quote. Eat well! A microbusiness is only as healthy as its owner. Get help! If you have a hard time overcoming negative thoughts and worry, cognitive behavior therapy (CBT) is proven to reduce anxiety and depression. Get enough sleep! The combination of high stress and little sleep is very dangerous! Think positively! You may not have control over stressful events, but you can control how you react to them.

21 Personal Budgeting Worksheet

22 Understanding Net Worth
ASSETS (What you own) LIABILITIES (What you owe) NET WORTH (What’s left) - =

23 Personal Financial Statement Worksheet

24 What You Must Know About Credit
Whenever you buy something on credit or apply for credit, it’s reported to national credit bureaus that track your credit and payment history. Creditors and lenders use credit scores to make decisions about your application. Your personal credit score affects your startup business’s ability to get credit. The main three credit bureaus are Equifax, TransUnion and Experian. If you are denied credit, you are entitled to a free copy of your credit report. When you apply for credit, credit bureaus generate a credit report based on your name and Social Security number. You can get a free credit report annually from each of the three credit bureaus by visiting A credit score is assigned to you based on your credit history.

25 How to Protect Your Credit
Get copies of your Equifax, TransUnion and Experian credit reports annually. For best results, order a free copy from one of the bureaus every four months. Create or sign up for payment reminders to avoid late payments. Protect your Social Security number, credit card number and other private information to avoid identity theft and other forms of fraud. Note any incorrect information on your credit reports, and alert the credit bureaus in writing. Check your monthly credit card bill for unauthorized or incorrect charges. Don’t apply for credit accounts unless absolutely necessary.

26 Overcoming Credit Problems
Create a personal budget and stick to it. If you are making payments on multiple credit accounts, prioritize them. Make the largest payments toward the debt with the highest interest rate while maintaining minimum payments on other credit accounts. Once the most expensive account is paid off, move on to the next. Do not apply for more credit or incur more debt. Contact creditors and make arrangements to pay back old debt. Try to get monthly payments reduced, if possible. Beware of ads and s that promise quick fixes. Credit repair is possible, but it takes time and patience. Fix any errors on your credit report. Pay your bills on time! Get help from a reputable credit counseling or debt management service.

27 NxLeveL® Micro-Entrepreneur Business Plan Outline - 1
Section Worksheet Pages Cover Page Table of Contents 14-9 Section I. Executive Summary Section II. Business Concept A. General Description of the Business to 3-6 B. Business Goals and Objectives and 3-2 C. Industry Information Industry Background 4-5 Current and Future Trends and 4-7 Business Fit in the Industry 4-8 Section III. Business Organization & Operations A. Business Structure, Management and Personnel Business Structure 5-1 Personal Background Information and 1-9 Management Team to 6-3 Outside Services and Advisors and 6-5 Personnel to 6-11 B. Operations Plan Site and Equipment to 6-14 Purchasing and Inventory Risk Management to 6-19 Laws, Regulations and Taxes to 5-4 Contracts and Leases and 5-6 C. Managing Books and Records to 13-6 NxLeveL® Micro-Entrepreneur Business Plan Outline - 1

28 NxLeveL® Micro-Entrepreneur Business Plan Outline - 2
Section Worksheet Pages Section IV. Marketing Plan A. Products and Services Product Description to 7-3 Features and Benefits B. Market Analysis Customer Analysis to 7-7 Competitive Analysis to 7-11 Market Potential and 7-13 C. Marketing Objectives, Strategies and Tactics Product Strategy to 8-5 Pricing Strategy and 8-7 Placement Strategy Promotional Strategy to 9-8 D. Sales and Customer Service Sales Strategy to 11-5 Customer Service Strategy to 11-8 Section V. Financial Plan A. Capital Requirements Startup Costs Loans, Grants and Self-Financing to 14-3 B. Sales Forecasts C. Cash Flow Projections Monthly Cash Flow Projections–Year to 12-9 Notes to Cash Flow Projections Annual Cash Flow Projections—Years 2 & and 12-12 D. Financial Statements Sources and Uses Statement to 14-3 Personal Financial Statement to 1-16 Income Statement [Optional] Balance Sheet [Optional] Attachments to 14-11 NxLeveL® Micro-Entrepreneur Business Plan Outline - 2

29 Where Do Business Ideas Come From?
Prior job 56% Hobbies and interests 18% Chance 10% Someone else’s suggestion 8% Education 6% Other 2%

30 Comparison of ManufacturingService and Retail Businesses

31 How to Identify Business Opportunities
Take stock of your skills and experience. What are your strengths? What can you offer? Find new uses for old things. There are hundreds of potential uses for old and discarded goods and materials. Keep an eye out for unmet or underserved needs identified by friends and relatives. Find a new way to deliver an old product. Many entrepreneurs make their fortunes by changing where and how people buy an existing product. Meet temporary needs. Rental businesses are springing up for tools, college textbooks and even baby clothes! Stay informed! Stay on top of business ideas and trends by reading newspapers, trade journals and magazines. Look for green opportunities. Can you make an existing product better for the environment?

32 Evaluating Your Business Idea
Is my business idea safe and legal? How often will they buy? How much will they buy? How much will they pay? Is there enough customer demand to support my business? Can I meet this demand? How many competitors do I have locally, regionally, nationally and internationally? Is anyone else offering my product? If so, can I do it better? If not, why not? Where will I get the capital I need to start this business? Can I run this business by myself? What kind of workspace do I need? Can I work from home? What is my maximum possible financial loss? When will I start earning a profit? How will I cover my personal expenses and debts until then? Where will I get the materials and equipment I need? How much will they cost? How do I know my business will become profitable? Will the profit be enough to cover my personal expenses and debts? Who are my customers? Where are they? Where will my customers buy? At a store? Online? How and when will I grow my business? Why will they buy? Why do they need my product?

33 What to Look For in a Niche Market
Clearly defined and measurable (skateboarders in your area, aged 12 to 25). Growth rate (stable or expanding). Presence and strength of competition, locally and online. Accessibility (how will you communicate with them? How will you deliver products?). Percentage of the market you can realistically target, given your budget, capabilities and competitors. Worthwhile size and sales potential (how many customers are there, and how much do they spend each year on skateboard parts?). Percentage of the market you must capture to earn a profit. Unmet needs (no parts shop in the area).

34 Segmenting Your Customers
Demographic segmentation Age Gender Income level Marital status Occupation Education level Kids at home? Ethnicity Psychographic segmentation Lifestyle Needs and values Attitudes Beliefs / opinions Buying styles Interests / hobbies Recreational choices Entertainment choices Geographic segmentation Country, state, city Rural, urban, suburban Population density Climate / weather Terrain (coast, prairie) Access to Internet Infrastructure (roads, rail) Natural hazards

35 What Makes Your Business Idea Unique?
New invention or service Personal story (a family tradition; your skills or accomplishments; a personal or social commitment) One-of-a-kind product (e.g., arts and crafts) Benefits other products lack (comfort, ease of use, color, shape, durability) Faster and better customer service Special materials or processes (handmade, recycled, green, organic, local) Customization or personalization Unique distribution channel (house calls, online service) Location (convenient for customers; near a local attraction; region has historical or social interest) Special add-ons or extras Supports a cause or philosophy (community redevelopment, social justice, green living)

36 Sources of Business Information
U.S. Census Bureau Local nonprofit foundations Small Business Development Centers (SBDC) Local or state office of economic development Small Business Administration (SBA) Local credit union or community bank Women’s Business Centers (WBCs) Magazines and newspapers Minority Business Centers (MBCs) Business websites and expert blogs University and community libraries Talking with potential customers SCORE Talking with competitors Association for Enterprise Opportunity (AEO) Microlenders Business Information Center (BIC) Trade associations Suppliers and vendors Local business mentoring groups Local chamber of commerce

37 Questions About Business Planning
Is a business plan really necessary for a tiny microbusiness like mine? Do I have to get everything right the first time? What happens if I learn new things or change my business idea? How will planning affect my bottom line? Can’t I just start my business now, and deal with management issues as they come up? What’s the connection between a business plan and management skills? How often is planning necessary? Why do lenders and investors care about business plans? Who can help me complete my plan? How can I make plans when everything’s so uncertain? What if I don’t complete my plan?

38 The Benefits of Planning
Seeing the big picture. Planning helps you sort through your business issues and identify the ones that cause most of your problems. Continuous improvement. Comparing planned to actual results is a terrific way to improve your business operations. Clear communication. A good business plan clearly explains your goals to employees, partners, lenders and investors. Being prepared. A business plan helps you avoid, minimize or recover from disasters. Assessing financial performance. Preparing a financial plan helps you measure and improve your business’s financial performance. New opportunities. Change brings opportunities. Careful planning helps you make the most of them. Surviving economic downturns. Microbusinesses are vulnerable to changes in the economy. Owners who plan are more likely to stay in business.

39 The Planning Cycle

40 Keys to Successful Planning
As the owner, you must take the lead role. The plan should include contingency plans for worst-case scenarios. Everyone in your family and your business should have input. The plan should be flexible. Review your plan often and revise it as necessary. Goals and objectives must be clear, realistic and include a deadline.

41 Business Goals and Objectives
Goals are things you want your business to accomplish over a specific time period. Short-term goals are things you want to accomplish within one year. Long-term goals are things you want to accomplish within two to three years. Objectives are specific steps you will take to reach your goals.

42 Characteristics of a Good Mission Statement
Reflects the core purpose and direction of the company Embodies the basic values of the owners and employees Short, specific and focused Written in plain English, without trendy jargon and buzzwords

43 Setting Exit Limits Exit limits are a safety net against personal and professional loss. Your exit limits might look something like this: If my business experiences the following, I will call it quits: Overdue bills exceeding $10,000 If my business experiences the following, I will seriously consider calling it quits: Annual sales below $20,000 More than $75,000 in long- term debt Overdue bills exceeding $5,000 Profit margins below 10 percent over six consecutive quarters Annual sales below $30,000 More than $50,000 in long- term debt A buyout offer of $75,000 or more Profit margins below 12 percent over four consecutive quarters A buyout offer of $50,000 or more

44 Elements of Marketing Market Research Market Analysis
Gather primary and secondary data about your industry. Gather primary and secondary data about your customer, competition and market potential. Market Analysis Analyze the data you gathered about your industry, customer, competition and market potential. Identify your target customer. Identify your competitive advantage. Marketing Objectives, Strategies and Tactics Determine the best methods of getting your goods and services to your customers, based on your market analysis. Create a marketing mix using the Four Ps: Product, Price, Placement, Promotion.

45 Contents of the Marketing Plan
A. Products and Services Pricing Strategy. What is your pricing strategy? How have you calculated costs and profitability? Product Description. What is your product? What needs does it meet? Placement Strategy. How will you get your products to your customers? Why is this the right choice for them and for you? Features and Benefits. What are your product’s features and benefits? B. Market Analysis Promotional Strategy. How will you promote your business? What media will you use? How much will this cost? How will you measure success? Customer Analysis. Who and where are your target customers? Competitive Analysis. Who and where are your competitors? What are their strengths and weaknesses? D. Sales and Customer Service Sales strategy. How will you sell to your target customers? Why did you choose this method? Market Potential. How big is your target market? What percentage can you capture? What trends affect it? What barriers to entry exist? Customer service strategy. What are your quality control policies? How will you track and measure customer satisfaction? What is your refund and return policy? How will you communicate with customers, and what steps will you take to resolve problems? C. Marketing Objectives, Strategies and Tactics Product Strategy. What is your product line? What is your product positioning strategy? What is your brand identity?

46 Sales Forecasting Methods
Breakdown Forecasting Start with the largest population and break it down to estimate sales from target customers. Buildup Forecasting Estimate the size of each market segment, and add them to get a total. Indirect Forecasting Find possible indications of demand and sales when specific market data are missing.

47 Sources of Industry Data
Federal, state and local government offices and websites Standard & Poor’s Industry Surveys (available through library) U.S. Census Bureau Economic Stats ( Standard & Poor’s Statistical Service (available through library) Encyclopedia of American Industries (available through library) Encyclopedia of Emerging Industries (available through library) International Trade Administration’s Office of Industry Analysis ( ProQuest Statistical Insight (available through library) Small Business Administration’s Business Data and Statistics page (accessible from Join online industry forums and sites Follow industry leaders and experts on social media Small Business Development Centers (SBDCs) Professional research firms Women’s and Minority Business Centers (WBCs and MBCs) Follow competitors on social media Business Information Centers (BICs) U.S. Business Reporter Industry Research ( Local, state and national trade and industry associations Conduct your own interviews and surveys with key industry contacts and experts Business and industry magazines and websites National Association of Manufacturers: Manufacturing & Trade Data By State ( Local, state and national nonprofit foundations Local newspapers and magazines Chambers of commerce

48 Ways to Gather Primary Data
Face-to-face interviews Phone interviews or mail interviews or mail surveys Phone surveys Online surveys Post research questions on social media (e.g., blogs, Twitter, Facebook)

49 Drawing Industry Conclusions
How has the industry developed? What niche markets are hot? How do microbusinesses operate within this industry? How does international trade affect the industry? How will new and emerging technology affect the industry? What are the industry’s current growth patterns? How will current and new regulations affect the industry? What is the industry’s current size? Is it expected to grow or shrink over the next three years?

50 Sole Proprietorship Pros
The simplest way of doing business. Easy to form and dissolve. You have complete control over the business and receive all its income. Filing income taxes is relatively easy. Cons You are personally responsible for every act and debt of the business, so creditors can legally come after your house, car and personal savings. You can’t expand your business through new owners and their capital. Sole proprietorships end when the owner dies or is unable to work. This can cause serious problems for the owner’s family.

51 General Partnership Pros Fairly simple to set up.
Partners may bring new expertise or additional funding to the business. Business profit and loss pass through to each partner’s personal income tax return. Cons Partners are jointly and individually liable for business debts. Creditors will go after whoever has enough assets to cover the debt. Each partner usually has the right to sign contracts that are binding on the other partners. General partnerships usually end if one partner dies or withdraws. Partners pay tax on their share of profit even if they don’t withdraw it from the business.

52 Limited Partnership Pros
Limited partners are only liable for debts to the extent of their investment. Partners can provide additional funding for the business. Cons More expensive to form. General partners are jointly and severally liable for debts. If limited partners get too involved in the business, they can also be held liable for losses that exceed their investment. It may be hard to find a partner who’s willing to invest without having the authority to make decisions.

53 Corporation Pros A corporation can shield owners from debts and liabilities. You can raise money by selling stock. The business continues even if the owner dies or sells to a new owner. You may be able to deduct employee health insurance and benefits. Cons If corporate rules aren’t followed, the owners can be held responsible for debts and liabilities. Time-consuming and expensive to form. More regulations, paperwork and recordkeeping. Risk of double taxation. The corporation pays tax on its income, and you pay tax on any dividends you receive as a shareholder. (An accountant can help you avoid this problem.)

54 S Corporation Pros Profit or loss is passed back to the shareholders like a partnership. Cons: Limited number of shareholders. Limited to one class of stock. Must file their tax return on a calendar year basis.

55 Limited Liability Company (LLC)
Pros Limited liability, like a corporation. No double taxation, like a partnership. If one partner can utilize tax losses better than another, the LLC allows beneficial allocation of that tax benefit. Cons Can be expensive and complicated to form, depending on where you live. Some states don’t allow LLCs to have only one owner.

56 Low-Profit Limited Liability Company (L3C)
Pros Limited liability, like an LLC. Operating as an L3C makes you eligible for investment and grant money from nonprofits. Cons Can only be formed for charitable purposes. Many states don’t have L3C laws, so you have to form it in a state that does.

57 Cooperative Pros Members own and control the business.
Potential for collective efforts to improve marketing and add value to products. Shared expertise in operation is a potential benefit. Cons Lengthy process by members to set up (bylaws, major policy issues, direction, board). Effectiveness depends on members’ long-term dedication. Group decision- making and shared ownership may be cumbersome.

58 Government Regulations
Business Registry Consumer Protection Laws Business licenses Consumer privacy laws Filing requirements Do-Not-Call Act Business name registration Direct s (CAN-SPAM) Zoning Laws FTC mail or phone order rule Signage restrictions Refunds and returns Parking restrictions False advertising No manufacturing or sales Labeling laws No deliveries or storage Public health and food safety No noise or pollution Shipping Regulations Business Taxation Certification and licenses State income tax Hazardous materials laws Sales tax Export controls and customs Property tax Environmental Regulations Federal income tax Hazardous materials storage Employee Regulations Clean Water Act / Clean Air Act Payroll taxes / withholding Waste disposal Independent contractors Underground storage tanks Wage and hour regulations Bankruptcy Laws Equal Pay Act Immigration laws Limitations on protection OSHA regulations Civil rights laws Child labor laws

59 IRS 20-Point Checklist: Independent Contractor or Employee?
Primary Factors Does the service recipient have the right to require compliance with significant instructions? Does the service recipient have the right to set the hours of work? Does the service recipient have the right to set the order or sequence of services to be performed? Does the service recipient have the right to discharge the service provider? Does the service provider have the right to hire, pay and supervise assistants as the nature of the work requires? Does the service provider have no ability to realize a profit or loss? Does the service provider have no investment in significant tools, materials and other equipment when such items are necessary to accomplish the task and are customarily provided by the service provider? Does the service provider have no significant investment in facilities when they are necessary to accomplish the task and they are customarily provided? Secondary Factors Does the service recipient train the service provider? Does the service recipient have the right to require oral or written reports? Does the service recipient pay by the hour, week or month? Does the service recipient pay for business and/or travel expenses? Does the service recipient have the right to require personal service? Does the service provider usually not work for more than one firm at a time? Does the service provider maintain a continuing relationship with the service recipient? Does the service provider devote substantially full time to the service recipient? Does the service provider have the right to terminate the relationship at any time without incurring liability? Is the service provider integrated into the service recipient’s business? Does the service provider not make his or her services available to the public on a regular and consistent basis? Does the service provider work only on the service recipient’s property or designated location? YES suggests employee status. NO suggests independent contractor status.

60 Basic Contract Terms Performance Price Place of delivery
What actions must you complete? Price How much, in what currency? Place of delivery Where, by what method? Who’s liable while goods are in transit? Time to perform When are the goods or services due? When is payment due? Quality What quality standards must be met? Legal remedies How will the contract be enforced?

61 What’s in a Lease? What are you leasing? Exclusivity
Triple Net Lease (tenant pays taxes, insurance, utilities, maintenance in addition to rent) True cost of the lease Payment escalators Permitted uses Common Area Maintenance (often added to the lease in malls or shopping centers) Tenant rights Renewal options Purchase rights Right of first refusal

62 Protecting Intellectual Property
Trademarks protect your business and product name and logo. Patents protect eligible new processes, designs and inventions. Trade secret laws protect private business information, methods and processes. Copyright protects creative work in tangible form (e.g., writing, music, art, photographs, recipes, patterns, etc.).

63 Pros and Cons of Working at Home
Advantages Flexibility in scheduling Lower startup costs and overhead More time with family Increased job satisfaction Tax advantages No commute Disadvantages Isolation Loss of privacy Credibility issues Zoning problems Space

64 Home-Based Business Tips
Set clear boundaries between work and personal life Make time for family! Set up a functional office Project a professional business image Understand zoning regulations and taxes Understand insurance needs Stay connected!

65 Managing Business Communications
Written communication Be reliable! Smart business owners never say anything they wouldn’t be willing to put in writing. Be clear and concise. Always type your business letters. Be organized! Set an agenda, and be clear and brief. Check spelling and grammar carefully. Phone etiquette Answer with a friendly greeting that identifies yourself and your business. Keep duplicates or backups of all communication. Develop a secure and effective filing system. Sound confident and enthusiastic! Remember that putting things in writing may form a contract. Always keep a duplicate message pad handy. Verbal communication Say thank you! Be honest! Always stick to the facts, and never make promises you can’t keep.

66 Traditional Organizational Chart

67 Optional Organizational Chart

68 Key Management Goals Learn to delegate
Develop your internal team and your external team Develop management goals and strategies Create efficient processes and structures Assign responsibilities and authority Ensure clear communication Lead by example Get advice when needed Accept constructive criticism Have fun!

69 Guidelines for Successful Outsourcing
Understand your core competencies What expertise do you have in-house? What expertise must you seek elsewhere? Figure out what you do best, and consider delegating the rest. Can you manage the new relationships that outsourcing will involve? Are there structures in place to make it work? What matters to customers? Will outsourcing affect their perception of your business, or your core competencies? Look at long-term viability, not short-term savings Don’t assume that decreasing labor costs will always provide big savings! Weigh efficiency against effectiveness. Seeking greater efficiency is a bad idea if it lowers your ability to meet customer service and quality standards!

70 Basic Employee Management Practices
Identifying policies, tasks and job descriptions Interviewing, selecting and hiring, and training Setting performance goals Evaluating and measuring performance Creating compensation and incentive strategies Facilitating communication and continuous learning

71 Expanding Your Network
Join a formal networking group. Local chambers of commerce and similar groups usually offer regular networking sessions and business seminars. On behalf of your business, get involved with a local charity. As you give to the organization, you’ll also have an opportunity to let others know about your business. Add contacts to a mailing list you can use to advertise your products. Become active in local business organizations, and get to know people with similar interests. Use social networking tools like Twitter and LinkedIn to increase your visibility and grow your network. Start an informal support group. Meet with other microbusiness owners to discuss common business issues. Remember that networking is a two-way street. You must give in order to receive!

72 Types of Insurance Property and liability insurance
General liability Business property Business interruption Business crime Fire and flood Key person Commercial auto Electronic data processing Website Home office Life and health insurance Workers’ compensation Life insurance Health insurance Self-insurance Social Security Pension plans

73 Tips for Lowering Insurance Costs
Secure all doors and windows! Adequate lighting, barred windows and secure doors greatly reduce the risk of theft. Fire safety is one of the biggest factors in insurance costs! Install smoke alarms and test them every month. Avoid dangerous electrical connections. Keep the perimeter and interior of your building free of debris and clutter. Store hazardous chemical properly. Keep fire extinguishers fully charged. Keep your business site safe for visitors! Walkways should be clean and dry, and steps should be sturdy and well maintained. Keep your office area free of clutter. Keep your business safe for employees! Provide adequate safety gear, and avoid unsafe working conditions. Replace hazardous chemicals with safer alternatives wherever possible. Create a written safety policy and hold regular safety meetings.

74 Business Continuity Planning
List all necessary business functions, who performs them, and what equipment and supplies they require. Distribute the finished plan to employees. Every member of your team should have a copy of the plan at work and at home. Compile contact information for key employees and assign recovery tasks. Revise the plan as necessary. When things change, your plan needs to change with them. Identify threats, and the business functions they threaten. Try to minimize the damage they can do to infrastructure, equipment and data. Test the plan regularly. It’s better to learn about mistakes during a practice run than during a crisis! Get contact information for all essential outside partners (lawyers, suppliers, etc.). Identify and make copies of essential documents. Create duplicates of all the documents you need to run your business. Designate a secondary work site to use until your primary site is restored or replaced. Get employee input. Seek employee comments before finalizing the plan.

75 Requirements for Successful Business Growth
A profitable business model A stable or growing market demand for your products Proven operating procedures that have been set down in writing The ability to provide additional training to your employees, if needed A clear understanding of your current and future customers Openness to change Access to growth capital

76 Surviving Economic Downturns
Revisit your budget and your business plan. Expenses that aren’t crucial may need to be cut, scaled back or postponed. Form partnerships and alliances. Other struggling businesses may be looking for ways to weather the storm. Work together to find win-win solutions! Don’t stop advertising. In tough times, the last thing you want to do is reduce your visibility. Offer incentives. Special offers, free services and added value can attract customers who are worried about their finances. Innovate. Consumers may welcome new tactics and offerings. Don’t ignore payroll taxes and other payments that are due to the government. These agencies can impose fines, place a lien on your property, or even shut down your business altogether. Reduce inventory. This can free up space, time and money! Keep employees informed and inspired. They may have good ideas for cutting costs or boosting sales. If they stand by you, reward their loyalty when things get better. Keep your creditors informed. If you’re having trouble paying your bills, stay in contact with your creditors and vendors, and offer them a realistic payment schedule. Keep an eye on your supply chain. If vendors, customers or partners are having financial problems, it may affect your ability to fill orders or get paid.

77 The Purpose of Market Research
Your goal is to identify: Customers. Who will buy your product? Market niche. Who’s your competition, and where do you fit into the market? Price. What price will make your product competitive? Competitive edge. What makes you better than or different from the competition? Location. Where will you sell your product to reach your target customer?

78 Market Research Tips Identify your research problem. Set clear objectives for data gathering. Always document your sources thoroughly (e.g., book title, author, year of publication, page number). Create a budget and a timetable. Placing limits on the research process will keep it from spiraling out of control. If you create a survey, include a space for open-ended comments. Prioritize your research tasks. Identify the most and least important research questions. Ask permission to record interviews to ensure that you don’t miss any important details. Prioritize your data sources. Which ones are most likely to have the information you need? Keep your surveys and interviews short, clear and neutral. Keep an open mind and seek viewpoints that differ from your own. Don’t let wishful thinking or beliefs affect how you gather or interpret data. Organize and analyze the data. Make sure it addresses the research problem you identified.

79 Where to Find Market Data
Surveys. Interview groups or individuals by mail, online, in person or on the telephone. Government publications and statistics FedStats ( Economics and Statistics Administration’s Economic Indicators ( State government websites Libraries. Information from libraries is usually free, except for the cost of printing or copying documents. Internet. Most public libraries offer free Internet access to subscription-based industry sites and journals. Universities, technical schools and Small Business Development Centers may provide free or low-cost information. Census banks. These “banks” store information rather than money. To find them, check at the library or visit Chambers of commerce and trade associations and publications. Industry and business groups offer information and support. Competitors. Visit them, review their advertising and customer reviews, buy and test their products.

80 The Product Life Cycle Introduction Maturity Growth Decline
The product is new and entering the market for the first time. Many competing products are on the market. Businesses increasingly vie for market share though branding, redesign, packaging improvements, new colors or flavors and other marketing strategies. Customers are generally unaware of the product. Sales are low and there is little competition. Growth Sales and prices tend to peak or decline. Sales and profits begin to increase as public awareness increases. Decline The market is saturated. Sales, profits and prices are low enough that many businesses are forced to discontinue the product. New competitors take note of the product’s growing popularity and enter the market.

81 People buy benefits, not features!
Features vs. Benefits Features Size, color and shape Quality Varieties Types Materials Benefits Time savings Convenience Status Security Safety Fun People buy benefits, not features!

82 Goals of Market Analysis
Identify your customer profile (demographics, psychographics, access to and attitudes toward technology). Identify your trade area (geographic boundaries and size). Determine the number of people (or businesses) in your trade area who potentially match your customer profile. Determine the market potential for your business in your trade area.

83 Demographics Gender. Men and women have different buying habits.
Marital status. Customers’ needs and desires vary based on whether they’re single or married. Age. Different age ranges have different buying habits. Children. Households with children have different buying habits than those with no children. Income. This tells you whether a customer or household can afford your product, especially if it’s a nonessential item (e.g., jewelry). Education. Education may be an indicator of reading comprehension, use of technology, income, etc. Occupation. This relates to age, income and education, and may indicate ability to buy. Ethnic origin. People from different cultures may have different values and needs that influence buying habits. Location. This includes how near the customer is to your business, as well as regional or national location, geography, climate and weather.

84 Psychographics Beliefs and values. Cultural, religious and political beliefs and values can have a strong influence on buying decisions. Behavior. What are your target customers’ spending patterns and buying behavior? Interests. How do your customers’ hobbies, pastimes and social causes affect buying behavior? Media choices. These provide a clue to buying decisions, income and education, as well as what promotions are most likely to succeed. Recreation. People who like outdoor activities such as camping or hiking may have different needs than people who prefer indoor activities such as videogames or scrapbooking. Transportation. People who have a car, bicycle, motorcycle, RV or boat may have very different buying patterns. Entertainment choices. Music, movie, book and art preferences tell marketers a lot about lifestyles and attitudes.

85 Gathering Customer Data
If you sell something to eat, ask people to taste it. If you offer a service, ask people to use it. If you sell something to wear, ask people to try it on. −THEN− If people hate it, ask them WHY. If people love it, ask them WHY. Ask them questions about themselves (demographics, psychographics, needs, wants, motivations).

86 Things You Should Know About Your Competition
Who are they? List current competitors and research any that may enter the market over the next year. Location. Are they local, regional, national or international? Is their location convenient for their customers? Is it convenient for yours? Can you offer greater convenience? Where are they? Are they in your city, county, region, state? Are they national or international? Company image. What’s their reputation? What are people saying about them online? Do they have lots of goodwill, or are people looking for an alternative? Customers. Who are their customers? Don’t assume they’re the same as yours. Two companies selling the same basic product can have very different target markets. Weaknesses and strengths. What things do they do best? In what ways are they weak? Compare the way they represent their service to the service you actually get as a customer. How will you take advantage of their weaknesses? How will you compete with their strengths? Product. What do they really sell? What features and benefits make their product unique? What’s their niche? How do they back the product up with customer service? Price. Is their price in line with customer expectations? How do they compare with competing brands? Goals. What are their stated goals? What are their long-term plans? What strategies and tactics are they using to achieve those goals? Online “About Us” and “FAQ” pages can be good sources for this information, as can interviews, articles and annual reports. Placement. Where and how do they sell their product? Do they sell online, offline or both? Differentiators. What features, benefits and messages make the competitor stand out in the marketplace? What aspects of their business do they emphasize most strongly? Promotion. What type of promotions do they run? In what media, and to what audience? Are they effective?

87 The Four Ps vs. SIVA FOUR Ps SIVA
Product is what you offer your customers. Your product is a solution for your customers’ problem. Promotion is how you tell customers about your product. Promotion gives customers information about your solution. Price is the amount you charge customers to buy your product. Customers buy based on how much they value your solution. Placement is how you deliver your product to your customer. Placement gives customers access to your solution.

88 Product Strategies Understand your features and benefits!
Consider how each stage of the product life cycle affects marketing strategies Define product lines (depth and width) Define your product’s position in the marketplace Write a positioning statement Define your brand identity Write a branding statement Plan for brand management Make packaging decisions that reinforce your positioning and brand Define service enhancements

89 Product Life Cycle Introduction Maturity Growth Decline
High startup and marketing costs. Widespread competition and slower sales. Poor distribution and sluggish sales. Competitive pressure to lower prices. Competition is usually at a minimum. Features, benefits and branding become more important as consumers look for reasons to choose your product. Product strategy focuses on raising awareness. Growth Improvements to product may be necessary to attract new customers, recapture old ones and outflank competitors. Product is accepted by target market. More sales, but also more competition. Decline Market is saturated. Competition is high; prices and sales are low. Product strategies: Expand distribution; defeat new competitors by building brand. Product strategies include discontinuing the product, cutting production levels, or selling or leasing it.

90 Positioning Statement Tips
State real, lasting benefits. Vague benefits like “great taste,” and variable ones like “low prices,” aren’t adequate. Lots of businesses can legitimately offer “great taste,” and lots of businesses with low prices are forced to raise them. Your positioning statement must get at the heart of your product’s specific value to customers. As a rule of thumb, try putting your competitor’s product name into your positioning statement. If it’s just as accurate, your statement needs more work.  Pinpoint your differentiator. Businesses often throw terms like “unique” around, but these words don’t mean anything unless there’s a real difference. And if there is a real difference, you should describe it clearly instead of using buzzwords. In other words, don’t say you’re unique; explain why you’re unique. Keep your customers’ needs in mind. If your statement doesn’t give them a strong, obvious reason to buy from you instead of a competitor, you need to go back to the drawing board. 

91 What Makes a Good Brand Name?
Establishes or reinforces your brand identity Eligible for trademark protection Suggests product benefits (e.g., Mr. Clean, Krispy Kreme or Beautyrest mattresses) Suggests product benefits Easy to pronounce, recognize and remember Fits the brand identity and attitude Sets you apart from your competitors Doesn’t limit your ability to grow, change or sell your business No double or hidden meanings Reflects the scope of your business (local, national, international) Creative, but not too cute or weird

92 Brand Management Basics
Make sure your brand promises something customers want. Be consistent. Remember that every interaction with a customer or client is an opportunity to communicate your brand identity. Involve your employees. Get them excited about your brand, and they’ll communicate that excitement to others. Keep it simple! Focus on communicating a few basic points. Whatever your brand promises, exceed it!

93 Basic Pricing Terms Cost is what you spend to produce your product.
Price is the amount you charge customers for the product. Value is what your customer believes the product is worth. Revenue is the amount of money your business receives from sales over a specific period. Profit is what’s left over after you subtract costs from revenue.

94 Pricing Considerations
What are your costs? What will your customer pay? What brand identity do you want to convey? What does the competition charge? What will the market bear? How will your price affect demand? How does a service provider determine price? What other pricing challenges does your business face?

95 The Four Cs of Pricing Customers. Knowing your target customers’ income level, lifestyle and concept of value is central to setting a realistic price. Competition. In the last session, you identified your direct and indirect competition, and you compared their prices, features, benefits, strengths and weaknesses to yours. You must take all these things into account when setting your price. Company position. If you provide better service and higher quality than your competitors, that means you offer greater value. This appeals to customers who place a higher importance on service and quality. Costs. To set a price that will earn a profit, you must know your total variable and fixed costs (including taxes).

96 Understanding Your Costs - 1
Variable expenses are costs that go up or down in relation to sales volume. Example: Suppose you sell custom T-shirts for $10.00 each. Selling Price $10.00 Variable Expenses Raw material (T-shirt) 3.00 Hourly labor 1.00 Sales commission (10%) Shipping charge 0.50 Total Variable Expenses $ 5.50 Price – Variable Expenses $ 4.50 The $4.50 is called the contribution margin, because it represents how much each unit of sales “contributes” toward paying for fixed costs and profits.

97 Understanding Your Costs - 2
Fixed expenses are costs that don’t change, regardless of sales volume. Example: Fixed expenses (per month) Rent $ 800 Telephone 100 Insurance 50 Bookkeeping Loan payments 300 Total fixed expenses $1,350 QUESTION: How many T-shirts do you have to sell each month to pay for your variable and fixed expenses?

98 Break-Even Analysis

99 Your Break-Even Point How many T-shirts must you sell each month to pay for your variable and fixed expenses and start making a profit? Break-Even Units Volume = Fixed Costs Price - Variable Costs Example: Selling Price $10.00 per unit Variable Costs $ 5.50 per unit Contribution Margin $ 4.50 per unit Fixed Costs $1, per mont h Break-Even Point In Units: $1,350 ÷ $4.50 = 300 T-shirts When you sell your 301st T-shirt, you will start making a profit for that month: 300 T-shirts x $10 = $3,000

100 Can you sell 500 T-shirts per month?
Planning for Profit Can you sell 300 T-shirts per month? How much profit do you want to make? If it takes 300 T-shirts per month to break even, how many more shirts must you sell to earn the amount of profit you want? Example You want to make $900 in profit per month. How many more T- shirts do you need to sell? It took 300 T-shirts just to break even. After the first 300 shirts sell, $4.50 per T-shirt contributes to profits. $ ÷ $4.50 = 200 more shirts must sell to earn desired profit of $900. Can you sell 500 T-shirts per month?

101 Pricing Strategies Loss leader pricing offers a low price on one product to attract customers who will then buy additional products at the normal price. Cost-plus pricing means totaling your fixed and variable costs and adding a target return percentage to arrive at your sale price. Competitor-based pricing involves basing your price on your competitors’ price for a similar product. Multiple pricing offers a discount for buying more than one of an item. Penetration pricing sets an artificially low price in order to enter a new market and encourage customers to try your wares. Value-based pricing. The goal is to charge an above-average price while leaving customers with the feeling that they’ve gotten a good deal. Premium pricing usually indicates high quality, customization, rarity or a one-of-a-kind item. Retail pricing. To get a retail price, you multiply the wholesale price by a certain percentage (called a markup), and add that to the wholesale price. Price skimming sets a higher price in the short term. As demand drops, prices are gradually reduced.

102 Things to Consider When Choosing a Location
Proximity to customers Size/floor plan requirements Neighborhood Lease or own Convenience Zoning restrictions Safety (lighting, off- street parking, etc.) Landlord restrictions Costs (property, amenities, required improvements, common area maintenance) Accessibility (ADA) Visibility Foot traffic, vehicle traffic Other complementary businesses nearby

103 Distribution Basics Questions you need to answer: Personal delivery
My home or office Where will I distribute my product? Their home or office Retail location Will I need someone to help me sell? Wholesalers Customer’s site In-house sales team Online Sales representatives How will I deliver my product? Agents Distributors UPS, express mail services, USPS

104 Distribution Considerations
Product Competition Perishable or fragile products may require direct sales to avoid spoilage or breakage. How and where do your competitors sell? Will your products be handled by the same stores, wholesalers, distributors or agents? There may be shipping restrictions on certain products, based on weight, size, materials, destination or purpose. If an online retailer offers lower prices and free shipping, what can you offer to outweigh those advantages? Profit The more intermediaries you have, the more units you must sell. Confidence Can you trust your intermediaries? Selling direct may distract you from core business tasks. Can you afford to have all your eggs in one basket? Customers Technology Distribution strategies must reflect customer lifestyle. Your distribution methods must reflect your customers’ access to and attitude toward current technology.

105 Distribution Strategies
Direct marketing (to customers or to other businesses) Manufacturer to retailers through intermediaries (sales reps, agents, brokers, wholesalers) Consignment Mail-order catalogs Classified ads Home shopping networks Piggyback with other products Internet

106 Elements of Effective Advertising
WHO? WHEN? Right Audience Right Time WHY? WHERE? Right Benefits Right Place WHAT? HOW MUCH? Right Message Right Budget

107 Common Promotional Tools
Print Newspapers Magazines Catalogs / brochures Newsletters Fliers Business cards Classified ads Yellow Pages Other Direct mail / Telemarketing Signage Word of mouth Networking Novelty advertising (e.g., pens, hats) Sign spinners Online Paid ads Web directories Business directories Craigslist Online Yellow Pages Social media YouTube videos SEO Broadcast Radio Internet radio Broadcast TV Cable TV

108 The ABCs of Signage Attracting new customers Branding your business
Because a certain number of your customers will move out of the area, change their buying habits or switch to competitors, your business must constantly restock its customers, just like it restocks its inventory. Branding your business A sign that’s visible every day may do more to communicate your brand identity than all your other marketing efforts combined. Creating impulse sales Studies show that 68 percent of all U.S. sales are impulse sales. Your job is to attract your share of these impulse buyers and turn them into regular customers.

109 Public Relations Ideas
Send your business story to your local newspaper or trade association. Donate money or time to clean up highways, parks or beaches. Help improve a piece of local land. Write or contribute to a blog or industry-related website. Get involved in historic preservation efforts. Use Twitter, Facebook or YouTube to attract a community of followers for your company. Install a new, cleaner energy system and offer public tours. Donate prizes or time to local fundraisers. Cosponsor local sporting, arts or charity events. Be sure to put up posters or banners announcing your support. Join service organizations or clubs. Attend trade shows as an exhibitor or observer. Hold contests and giveaways. Give lectures to trade organizations or chambers of commerce. Offer to be a guest speaker on a radio show to discuss elements of your business, or offer how-to advice that relates to your business.

110 Benefits of Being Online
Provides business and product info to global markets Gives prospective customers one more way to contact you Increases consumer awareness of your product (note that even if your target customers aren’t online, people who are may recommend your product) Helps you keep track of what your competitors are doing Online interaction with customers can build your brand or improve your products Networking, partnering and bootstrapping opportunities Improves customer service by providing online product tips, instructions and links

111 Online vs. Offline Buying
Why people buy online Speed and convenience Vast product selection Special deals and coupons It’s easy to compare prices and save money Search capabilities No driving, parking or crowds Why people don’t buy online Product is easily available locally Shipping costs are too high Security, fraud and privacy issues (trust) Inability to sample, try on, taste, or test the product (trust) Return and warranty issues (trust)

112 Building Your Own Website: Pros and Cons
Advantages You may be able to get a site online quickly You learn site-building skills You can update your site as needed Site maintenance costs may be lower Disadvantages Time spent learning skills distracts from core business tasks Time spent maintaining site distracts from core business tasks Site-building tools may lack features you need The appearance and function of the site may be limited by your design and tech skills Site may not be able to grow with your business

113 Selling Through an E-Commerce Host: Pros and Cons
Advantages Setup is usually very easy and fast E-commerce functions already in place, usually with appropriate security Some hosts may have consumer trust, and offer problem-resolution services Professional look and function Host may include useful promotional tools, social media capabilities, etc. Disadvantages Higher charges (per month, per transaction, by traffic volume, etc.) Hosts may have uniform look and few or no opportunities for building your brand “One size fits all” format may not suit your business

114 Hiring a Web Designer: Pros and Cons
Advantages You don’t have to waste time on site- building You have more control over features, appearance and function Costs are upfront and known Professional look and function Disadvantages You must rely on outside help Updating and maintaining the site may be slow, difficult or expensive if you don’t have adequate tech skills Higher cost Site maintenance costs may be higher in the long run

115 Issues to Address When Planning Your Site
What business tasks do you need to do online? How much can you budget for site creation and maintenance? How will you market your site? Do your customers buy online? Are you prepared to sell internationally, or will you only sell in the USA? What information do your customers need? How quickly do you need a functioning site? How often will you need to update your site?

116 Website Design Tips Avoid site features that are distracting, irritating or hard to use, such as animation, soundtrack music or horizontal scrolling. Support your promotional messaging with facts anyone can understand and verify, like reviews and awards from credible sources. Don’t clutter your site with slow-loading images. Every second your customer must wait for content increases the likelihood that she will give up and go elsewhere. Ensure consumer privacy with secure socket layer (SSL) protection. Use professional, high-resolution photography to display products. Use a cross-selling application to suggest products that go with whatever product the customer is looking at. Display your contact information clearly on every page. Answer questions and concerns. Features that build customer trust include a “Frequently Asked Questions” page, video explanations or tutorials, and a clearly stated return policy. Include helpful tools where needed (e.g., rulers and calculators). Include all relevant product information (e.g., height, weight, color, size, ingredients, sourcing). Don’t ask users for personal information unless you’re making a sale or giving them something in return. Include customer reviews and recommendations. Consumers trust other consumers more than they trust businesses! Check your site regularly to ensure that links and other site features work properly.

117 Site Organization

118 Social Media Basics They feature user-generated content.
They allow networking and collaboration between friends, family, associates, clubs, product users and interest groups. They are based on dialogue, rather than monologue. Users can give and receive feedback on information, content and ideas. They are increasingly integrated (e.g., you can tweet about the podcast available on your blog). They are usually free, and easy to set up and maintain. Social media account for 22 percent of all time spent online, according to the Nielsen Company.

119 Types of Social Media Blogs are online journals containing text, graphics, photos, audio and video content. This category also includes microblogging formats like Twitter and Tumblr. Social bookmarking sites allow users to gather, rate and recommend websites, news stories and other content. Examples include StumbleUpon and Reddit. Social networking sites like Facebook create connections and build trust-based communities. Geosocial networks like Foursquare allow interaction with individuals and businesses in a specific location Multimedia sites like YouTube and SlideShare allow users to share multimedia content like videos and slideshows. Consumer review sites like Yelp and Epinions allow users to find, rate and review businesses and products.

120 Rules for Social Media DO YOUR HOMEWORK. Different social media have different demographics. Research sites to make sure they reach your target customers. BE HELPFUL. Answer questions, provide advice, seek out and link to worthwhile content. BE RESPECTFUL. Don’t spam users or sites with marketing messages, or use social media as a vehicle for shameless self-promotion. Help yourself by helping others. TAKE YOUR TIME. Get to know the format, the site and the community before participating. BE HONEST. Don’t pretend to be someone you’re not. BE ENGAGED. Keep your content fresh and current. Post regularly, even if it’s just a link to someone else’s article. Respond promptly and courteously to comments and requests. BE CONSISTENT. Whenever possible, use the same name, colors, images and other elements in each account. HAVE FUN! The more you enjoy what you’re doing, the more likely you are to earn friends and followers! BE PREPARED. Don’t launch a specific channel until you’ve prepared content and created a posting schedule. BE RELIABLE. Don’t make promises you can’t keep. Don’t promote upcoming content and features unless they’re actually ready to launch.

121 Search Engine Optimization Features
A domain name that describes your brand, products or business (e.g.,, Descriptive keywords in your site headlines, body copy and links. Alternative text tags for graphics. This is descriptive text that appears if an image doesn’t display. Flat site architecture. The fewer clicks a visitor has to make, the more likely you are to convert that visit to a sale. Fast loading time. Pages that load slowly or incorrectly are hard for search engines to index, and frustrating for human users, so they tend to get a lower page rank. A descriptive title for each page of your site. The title tag for each page should be unique to that page; using the same title on multiple pages will undercut your efforts.

122 Tips for Writing Online Content
Write about what you know. The Internet is full of ill-informed speculation and opinion. Sticking to practical, helpful facts will make your content stand out. Stay focused. Your content should flow logically from one paragraph to the next. Don’t try to cover too much ground at once. If content doesn’t seem to fit, use it for another article. Quality is more important than quantity. It’s better to have less content than to fill space with material that lacks usefulness, credibility or interest. Format text carefully. Short paragraphs, clear punctuation and informative headings are usually best for online text. Don’t use quotes unless you’re quoting someone. Many inexperienced writers put quotes around everything from “figures of speech” to “product names.” This is “unnecessary” and “distracting.”  Don’t overuse exclamation points!!!!! Use them only when absolutely necessary, and never use more than one at a time. Multiple exclamation points communicate inexperience and desperation.  Avoid clichés and buzzwords. Don’t try to promote innovation or originality with worn-out phrases like out of the box or pushing the envelope. And don’t use business or industry jargon that your readers may not understand. 

123 Traits of Successful Sellers
Empathy. Good sellers can relate to each customer’s unique situation. They don’t try to force a one-size-fits- all solution on them, or pressure them to spend more than they can afford. Technical knowledge. Sellers should understand everything about their product. Good communication skills. The best sellers make their points clearly, briefly and respectfully. Personal drive. Good sellers have a strong personal desire to make the sale and satisfy customers’ needs. Respect for the customer. Remember: Without customers, you have no business! Persistence. Good sellers don’t get discouraged by rejection. Confidence. Good sellers believe in their products and know how to get other people excited about them. Flexibility. Customers vary, so the ability to adapt to different buying styles is essential. Quick thinking. Sellers need to be able to think on their feet to answer objections and assess counteroffers. Excellent listening skills. Smart sellers ask relevant questions and listen respectfully while customers answer.

124 Understanding Buyers Most buyers respond to stories.
Instead of describing features, explain how those features solved a problem for a previous customer. Be prepared to back up your stories with references. Most buyers like to talk about themselves Being a curious, engaged listener is vital to building a relationship, and building a relationship is vital to earning loyal customers. Business buyers are usually more cautious than everyday consumers. Business buyers usually want to see strong evidence of value, technical expertise, reliability and professionalism. Behind every buying decision, there’s a desire or a fear. What are you really selling? Fun? Beauty? Youth? Security? Status? Unless you understand the hidden motivations that guide buying decisions, you’ll find it hard to get customers to buy in.

125 Eight Steps to Selling Success
Step 1: Prioritize Prospects Step 2: Prepare to Sell Step 3: First Contact Step 4: Make the Presentation Step 5: Overcome Objections Step 6: Close the Deal Step 7: Reflect and Adapt Step 8: Follow Up

126 Common Closing Techniques
Basic close by using a sales form. Begin by asking the customer a question from the form. Write in the answer. Proceed to the next item. If the customer doesn’t stop you, you’ve made a sale. Close by offering choices. “Do you prefer green or blue?” When a prospect makes a minor decision, the major decision is near. Close by making a balance sheet. Take a sheet of paper, draw a line down the center and help the prospect list the reasons for and against buying. Close by asking clarifying questions. If you have a prospect who seems interested but won’t commit, ask questions: “Is there anything I didn’t make clear?” Close with a confirming question. If a prospect asks whether it’s possible to get what you’re selling in a particular size, format or color, ask the prospect if that’s the way he wants it. If the answer is “yes,” the prospect has bought. Close by setting a date to do the work. If you run a lawn care business, for example, you might offer to cut their lawn and trim their hedges next Thursday.

127 Selling Tips Be honest. Tell the truth about your product. Don’t hype attributes or downplay problems. Keep learning. Become an expert in your field so that customers see you as a valuable resource. Stay in touch. Check in with customers regularly and always bring something of value to the conversation. Don’t procrastinate. Take on tough clients now, not later. Study your competitors. Knowing their strengths and weakness will help your sales presentation. Practice active listening. Work to improve listening skills and develop interactive sales presentations. Referrals build sales. Always ask for referrals. Satisfied customers will usually be happy to help. Be patient. Building long- term relationships takes time and care. Be positive and have fun! A positive attitude will carry you through tough times.

128 What Customers Want Availability. Customers want you to be available, responsive and engaged at every stage of the selling process. Understanding. Customers want to feel that you are listening to them and making an effort to understand and satisfy their needs. Consistency. Customers want the same level of service and quality every time they deal with you. Attention. Customers want to feel that you’re alert, interested and ready to help. They want to feel that you’re willing to do what it takes to meet their needs. Confidence. Customers want to feel they can trust you. They don’t necessarily expect perfection, but they do expect you to make things right when they go wrong. Comfort. Customers want to feel comfortable, welcome and secure. They don’t want to feel rushed or pressured. They prefer businesses to be clean, attractive and organized.

129 Why Businesses Lose Customers
1% die 3% move away 4% drift to another business 5% change on a friend’s recommendation 9% buy it cheaper somewhere else 10% have a service problem that is not resolved 68% leave because they feel they’re not getting good service

130 The Benefits of Customer Loyalty
Loyal customers: Show less sensitivity to price changes Generate referrals and word of mouth Buy add-ons more often Make it harder for competitors to enter your market Need less handling, education and selling time Are easier and more cost-effective to sell to than new customers

131 Your Customer Service Plan
Every business should have a customer service plan within its marketing plan. This should include: Customer service goals Customer service benchmarks (how you’ll measure success or failure) How you will gather, store and use customer data After-sales service practices Return, exchange and customer complaint policies Special order or custom service policies How different areas of your business deliver service A formal system for customer feedback (e.g., questionnaires, report cards, online surveys or forums, complaint forms)

132 Resolving Customer Complaints
Step 1: Listen! Step 2: Recognize the customer’s feelings. Step 3: Apologize! Step 4: Thank the customer for bringing the problem to your attention. Step 5: Explain your solution.

133 Customer Service Essentials
Greet customers immediately and pleasantly. Memorize the names of frequent customers. Always answer the phone within three rings. Don’t automatically dump customers on hold. If you must, ask if you can put them on hold, or call them back within five minutes. Always make an extra effort to help customers find what they need. When you make a mistake, fix it! Follow up on all customer contacts. Always record the customer’s name, phone number and order type. After customers call for product information or service assistance, follow up within two days to check on satisfaction.  Answer s promptly, and proofread them before you hit “send.” 

134 Cash Flow Projection Worksheet Sections
(A) Beginning Cash Balance (B) Cash In From Operations (C) Operating Cash Out (C1) Variable Expenses (Cost of Goods Sold) (C2) Operating Expenses (D) Net Operating Cash (B - C1 - C2) (E) Cash From Investment or Loan Activities (E1) Other Cash In (E2) Other Cash Out (F) Net Monthly Cash (D + E1 - E2) (G) Ending Cash Balance (A + F)

135 Sample Chart of Accounts - 1
Asset accounts: Capital accounts: 100 Cash on Hand 300 Owner’s Equity 101 Cash in the Bank 310 Owner’s Draw 102 Petty Cash Revenue accounts: 105 Inventory 400 Sales 110 Equipment (Net) 401 Product 1 Sales 111 Accum. Depreciation - Equipment 402 Product 2 Sales Liability accounts: 403 Service 1 Sales 200 Accounts Payable 410 Interest Income 210 Payroll Taxes Payable 420 Other Income

136 Sample Chart of Accounts - 2
Expense accounts: 500 Inventory 670 Miscellaneous 600 Advertising 700 Payroll Taxes 610 Auto 710 Professional Services 620 Bank Charges 720 Rent 630 Dues and Subscriptions 730 Supplies 640 Insurance 740 Telephone 650 Licenses 750 Travel 660 Office Expense 760 Utilities

137 Startup Expenses Worksheet

138 Operating Cash Out Worksheet

139 Operating Cash In Worksheet

140 Michele’s Photo Studio− Blank Worksheet

141 Michele’s Photo Studio— Startup Expenses

142 Michele’s Photo Studio− Completed Worksheet

143 Michele’s Photo Studio— What If I Borrow $2,000?

144 Michele’s Photo Studio— What If No Wedding Sales?

145 Sample Income Statement

146 Sample Balance Sheet

147 Developing a Professional Mindset
Set clear, achievable goals Do business on the books Keep personal and business accounts separate Develop a code of ethics for your business, and stick to it Make tax payments on time Commit to making budgets and comparing them to your actual expenses Keep accurate books and records

148 Why Separate Business and Personal Finances?
Taxes. The IRS lets you deduct expenses for a business, but not for a hobby. If you mix business and personal income, the IRS is more likely to decide that your microbusiness is a hobby. But even if it doesn’t, mixing funds will make your taxes harder to calculate and pay. The cost and effort of keeping your accounts separate is minimal compared to the problems sloppy accounting can cause.  Loans. If you need a business loan, you normally must show your financial records. Mixing funds makes it hard for lenders to know how profitable your business is.  Professionalism. Having separate accounts shows customers, suppliers and clients that you’re serious about your business.  Management. If you don’t separate your funds, it’s harder to make good business decisions.

149 Why Do You Need Records? Producing financial statements
Managing cash flow Setting and measuring progress toward business goals Preparing tax returns (including deductions) Tracking and managing costs Providing information to lenders and investors Preventing theft Providing compliance with laws Paying and collecting bills when due Supporting your case in a lawsuit Budgeting and planning Applying for loans

150 Record Retention Guidelines
Type of Record Retention Period Bank statements 7 years Business licenses Until expired Cash register tapes 3 years Check registers Permanent Canceled checks Financial statements General ledger Inventory records Invoices (A/P) Invoices (A/R) Phone/utility bills 3-6 years Property/plant records Purchase orders Receiving reports Tax returns 10 years minimum Time cards or tickets Travel expense records Property deeds/titles Keep while you own

151 Common Business Forms

152 Computerized Accounting Systems
Before buying a program, do some research! Security. Is it secure? Does it prevent unauthorized access to your data? Compatibility. Will your computer be able to run this program? What are its hardware requirements? Add-ons. Will you have to make multiple upgrades as you grow? If you’re planning for a certain level of growth within a year or two, will the system still meet your needs? Ease of use. Can you figure out how to use the program out without getting a Ph.D. in math? Always factor learning and training costs into the price of the system! Help. What type of training is available? Does the program have a reliable help utility or online user forum? Is the manufacturer popular enough that it’s likely to stay in business? Range. What modules or tools does it offer? Do you actually need them? Flexibility. Can you easily customize the program? Does it mesh with other business applications, as well as and word processing programs?

153 Tips for Keeping Books and Records
Keep your records daily.  Deal with your bookkeeping on a regular basis, and it could take as little as 20 minutes a day.  Create an audit trail. Keep checks in numeric order. Never skip a number, and always record voided checks.  Keep invoices filed sequentially and/or alphabetically.  Make everything easy to find and track.  Request a bank statement with a “month-end” cut-off date.  It’s easier to reconcile your records when they all end at the same time.  Keep withholding taxes withheld.  Don’t spend this money−it’s not yours! Don’t panic if you find a mistake.  Everything can be fixed, as long as you’ve kept up with your recordkeeping chores. 

154 Twelve Check-Writing Tips
Always write checks in ink, or type them. Always write clearly and check your spelling. Date the check correctly. Write the payee’s name after the printed words “Pay to the order of.” Write the amount of the check in numbers close to the printed dollar sign ($), so that other numbers can’t be inserted. Write the amount of the check in words starting as far to the left as possible, leaving no room for the amount to be changed. Draw a wavy line to fill any blank space left after you write the amount. Do not sign a blank or partially complete check. Always sign your checks just as you signed your bank’s signature card. Use the memo line to help keep records of your spending. Record each check you write— and each deposit you make— immediately in your check register. Don’t forget to record automatic deposits and withdrawals in your check register.

155 Sources of Capital Self-Financing. Most lenders and investors want to see that you’ve committed personal funds to your business. Investor shares in profits or losses Not a debt (unless you agree to pay the money back even if the business fails) Personal funds Angel Money Savings or investments Money received from family, friends or interested third party Outside salary Home equity Can be debt or equity financing Debt Capital Always formally document angel money as you would traditional debt or equity financing Money that you borrow Interest is usually charged for use of the loan Equity Capital Money provided by an investor

156 Fitting the Loan to the Need
Short-Term Debt Used to meet short-term needs, such as seasonal inventory or short-term liquidity problems. Repayment time: One year. Intermediate Debt Used for permanent working capital or equipment acquisition. Repayment time: Three to seven years. Long-Term Debt Used for real-estate purchases or the initial purchase of a business. Repayment time: Seven years or more.

157 Debt or Equity Financing Considerations
Change in ownership Personal factors/preferences Lender and investor reactions Obligation to repay Tax considerations Capital structure Time required Cost of obtaining the funds

158 Debt Financing Sources
Banks SBA programs Credit unions State and local loan programs Microlenders Business incubators Peer-to-peer lending / crowdfunding Leasing Consumer finance companies Commercial finance companies

159 Leasing vs. Purchasing Advantages Usually no down payment
Often over a longer time period than a loan May allow upgrade to current equipment models May allow “off balance sheet” financing Increases possible sources of financing Disadvantages May cost more if tax advantages lost May not own asset at end of the lease Is still a long-term legal obligation Terms and conditions may limit flexibility of use

160 Other Financing Sources
Suppliers Customers Factoring Grants Credit cards

161 Financing Factors The growth potential of your business
The amount of interest you can afford to pay (debt) or the amount of ownership you’re willing to give up (equity) The riskiness of your business The length of time you need the money The profit potential of your business The kind of money you need (debt or equity)

162 Preparing for the Loan Process
Before you apply for a loan: Find a lending institution that regularly lends to microbusinesses What size businesses do they normally lend to? Do they avoid making loans within certain industries? Check your credit history Are there credit problems you need to clear up? Do you know how to repair your credit? Are there credit problems you don’t know about? Get your business records in order Have your business plan ready. Be able to describe your recordkeeping procedures and accounting system. Find out what books and records the lender will want to see, and gather them.

163 What Lenders Require Business loan application form
Personal tax returns (2 to 3 years) Complete business plan Other documentation (optional) Cash flow projections (monthly for 12 months, quarterly or annual for years 2 and 3) Accounts payable aging Accounts receivable aging Inventory status reports Personal financial statement Appraisals

164 The Cs of Credit Credit history Character Capacity Collateral

165 Tips for Working with Your Banker
Deal with a local bank when possible Develop a long-term relationship Make an appointment Know your needs Select a banker you trust Present a complete proposal Select a banker familiar with your type of business Explain uses of the loan Be flexible Dress appropriately Be patient Ask for advice or clarification of anything you do not understand Tell the truth Recommend your banker to others

166 Ratio Analysis: Understanding the Financial Health of Your Business
Current Ratio =  current assets ÷ current liabilities  Example: $1,000 ÷ $500 = 2 (or 2:1)  Debt to Equity Ratio =  long-term liabilities ÷ owner’s equity  Example: $5,000 ÷ $10,000 = .5 (or 1:2)  Net Profit Margin =  net profit ÷ gross revenue from sales  Example: $1,000 ÷ $10,000 = .10 or 10%  What do ratios tell you about the health of your business?  How are ratios used by lending institutions? 

167 Warning Signs of Credit Card Fraud
If an order shows two or more of these warning signs, take extra steps to confirm that the buyer is for real before you ship! Vague contact information, such as a private box address, an unlisted phone number or a free, Web- based address. Orders for multiple expensive items or large amounts of cheaper items. Large orders from “businesses” that don’t appear when you search for their names online. Multiple large orders within a short time frame, especially from buyers in Russia, Eastern Europe or Southeast Asia. A shipping address that doesn’t match the credit card billing address. Asking the delivery person to leave the package at the door. To avoid fraud, require the person who receives the package to sign for it. Overnight shipping, especially to foreign countries.

168 Check Acceptance Guidelines
Call the bank that issued the check and ask if there are sufficient funds in the account to cover it. Use a company that verifies checks. The verifying company assumes the risk if a check doesn’t clear the bank. Ask for personal identification, such as a driver’s license. Look closely at the picture and signature on the license, and jot down the license number on the check. Never accept a check written for more than your selling price. Some crooks will write bad checks for more than the selling price of an item, and then ask the merchant to return the amount they overpaid. Decide what checks you will take beforehand. The SBA recommends never accepting checks that are undated, postdated or more than 30 days old. You should also avoid third-party checks. Never issue a refund before the check clears. If you refund money you haven’t actually gotten yet, you run the risk of an even bigger loss!

169 Smart Credit Policies Expect to achieve your ideal credit policy only through trial and error. You’re bound to make some errors about who’s a good credit risk and who isn’t. Base your credit decisions on the individual customer’s creditworthiness. Realize that the credit terms you offer might differ from one customer to the next. Your best customers deserve more generous terms. (The reverse is also true: Your worst customers deserve less generous credit terms.) Consider your policy in relation to your cash flow. Your policy should not endanger the cash flow you need to operate your business. Remember that your credit policy will change over time, along with your business’s growth and economic conditions. Reevaluate it at least once a year to make sure it still meets your needs. If a customer is late on payments, you may have to reduce or eliminate the credit terms you offer that customer until he or she re-establishes a good payment record.

170 Five Basics of Negotiation
There would be no negotiation unless both sides expected a benefit. The goal of negotiation is to create a new situation that’s better than the old one. Unfair deals last only while one party feels weaker than the other. Win-win negotiation delivers the best, most enduring deals. Like any other skill, negotiation can be learned and practiced.

171 Negotiation Strategies
Soft Negotiators Avoid conflict at any cost Usually don’t stand up for their best interests Hard Negotiators Aggressive and competitive May use threats or bluffs Not trusting or trustworthy Win-Win Negotiators Work toward the best outcome for all Flexible, but can be firm when it’s appropriate Attack problems, not people

172 Stages of Negotiation Setting an Agenda Voicing Demands and Offers
Why are you negotiating? What are the issues? What are the goals? Voicing Demands and Offers What are your interests and positions? What do you want, and what are you willing to give in return? Working to Minimize Differences Where do interests overlap? Where is the common ground? Closing the Deal “Win-win” means both sides are better off than when they started.

173 Traits of Effective Negotiators
Good negotiators: Understand their counterparts’ interests and perspectives Understand the difference between positions and interests Understand the difference between real power and perceived power Know their settlement range Know their BATNA (Best Alternative To a Negotiated Agreement) Know when to walk away from negotiations

174 Overcoming Negotiation Problems
Recognize manipulative tactics such as stonewalling, bullying and deception. Open your ears and listen. Being a careful listener is the best advantage you can have. Get in the other person’s shoes. Understanding your counterpart’s point of view will help you find common ground. Slow down and regroup. When things get stressful, taking time out will clear your head. Get off the hot seat! Don’t make important decisions on the spot. Go to a safe location to consider your options. Know when to walk away. Knowing your limits ahead of time gives you more control over the situation.

175 Key Contract Management Tasks
Create processes and practices Review timeframe Evaluate benchmarks and measures Define the responsibilities of each partner Identify contingency plans Establish regular meeting times Resolve conflicts and problems Review performance and improve where necessary

176 Dangers of Unmanaged Growth
Failing to manage growth can affect every area of your business’s performance. Major pitfalls include:  Inability to maintain consistent performance standards Low employee morale, and high employee turnover Loss of profitability Loss of customer loyalty Lower quality and professionalism Slowdown in business learning and competitiveness Inability of overworked leadership to provide direction Cash flow problems Inefficient use of resources Stress and burnout Loss of focus on core objectives Poor communication among employees

177 Moving to the Next Level
Celebrate what you’ve accomplished! Organize what you’ve learned! Fill in the blanks! Ask for help! Finish your business plan! Check and double-check! Polish your presentation! Don’t stop planning! Take advantage of the NxLeveL® Training Network!

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