1. Entrepreneurial Essentials

2. Northeast Minnesota’s Small Business Development Center
Presented by:
Northeast Minnesota’s Small Business Development Center
HELPING BUSINESSES GROW AND SUCCEED
A member of the Minnesota Small Business Development Center Network

3. What we will cover today:
Am I an Entrepreneur?
Feasibility
Business Plan
Business Financing
Basic Legal Requirements for Start-Up

4. Questions to ask yourself…
Are YOU… ?
Self-starter
Positive thinker
Lifelong learner
Well-disciplined
Willing to put in long hours
People-person
Have family support
Willing to make sacrifices
Face challenges

5. Resources Small Business Administration (SBA) www.sba.gov
Assessment tools
Sample business plans
Online workshops and seminars
Library of resources

6. Myths Fact: There are no grants or easy money
Myth: There are grants to help start
your business
Fact: There are no grants or easy money
Myth: You can set your own hours
Fact: Your hours depend upon the business
and the work that needs to be done
Myth: You are your own boss
Fact: Your customers are your boss

7. More Reality Plan on long hours every day, every week
Consider the financial investment risks
Meeting normal family expenses
Funding for the business
Financial commitment
Loss of investment
Don’t underestimate the amount of time and investment needed in the beginning and growing stages of your business

8. Feasibility Start with your idea Identify your market(s)
What is the business you want to start or buy
Does fit with your lifestyle
Do you have the necessary skills to manage this type of business
Identify your market(s)
What is the businesses market and where is it located

9. Feasibility Identify your competition Can you make a profit
What products/services are competitive to yours
Who and where is your competition your competition and do they compete for the same market share
Can you make a profit
Is the business financially feasible
Will it provide enough profit to meet your personal needs and lifestyle

10. Your Skills
Your Idea
Your Market
Your Finances

11. Experience as a manager/supervisor Knowledge of the industry
Your Skills
Experience as a manager/supervisor
Knowledge of the industry
Basic business knowledge
Basic financial knowledge
Willingness and ability to hire someone
to fill gaps in knowledge

12. Does it offer something not currently available or being offered
Your Idea
Does it offer something not currently
available or being offered
Can it serve an existing market in which
demand exceeds supply
Can it be competitive based on quality,
selection, price, or convenience

13. Who are your target customers? What do they ‘look’ like?
Your Market
Who are your target customers?
What do they ‘look’ like?
age, sex, education, nationality, income, etc.
Where do they live and shop?
What are their needs, wants, hobbies,
interest?
Will you offer a product or service they will
use and benefit from?

14. What will it cost you (product vs. service)? cost units purchased
Your Finances
What are your monthly sales estimates?
price
units sold
What will it cost you (product vs. service)?
cost
units purchased

15. What will it cost you (product vs. service)? cost units purchased
Your Finances
What are your monthly sales estimates?
price
units sold
What will it cost you (product vs. service)?
cost
units purchased

16. Start with national trends Use demographic information
Your Finances
How do you make good revenue projections?
Start with national trends
Use demographic information
Decide how much you need to spend on initial marketing.
cost
Where will you spend it?

17. What are your one-time start-up costs?
Your Finances
What are your one-time start-up costs?
equipment
building or renovation
down payments
legal fees
Supplies
Computers
Software
Website

18. What are the on-going monthly expenses?
Your Finances
What are the on-going monthly expenses?
lease – building/equipment
wages
utilities/telephone
Supplies
Payroll
Website (internet marketing)

19. Seasonal trends (cash flow) Monthly personal income needs
Your Finances
Financial literacy
Credit score
Lender possibilities
Seasonal trends (cash flow)
Monthly personal income needs
Expansion plans
Receivables/collections
Written business plan

20. Where do we go from here?
Business Plan
Financing
Legal Issues

21. The importance of your Business Plan
Failing to Plan is
Planning to Fail……
The importance of your Business Plan

22. Do I really need a business plan?
A business plan is a powerful business document
A well thought-out plan tells the story of the business
Where is it now…
Where is it going...
How it will get there!

23. The business plan is vital because…
Maps the
future
Provides
Insight
Provides A
System
Explains In
Detail

24. Business Plan - Narrative
Executive Summary
Written last – Placed first
Considered most important
A lender will often read only the Executive Summary when making a preliminary decision to finance a business.
This is a summary of the complete business plan from what product or service you will offer to the proposed financial structure.
Identify any business risks and the steps you will take to eliminate them

25. Business Description Detailed outline of the business Business name
Owners
Business history
Location
Description of the legal structure
Mission Statement
Company objectives and the strategy that will enable the business to meet them
Qualification of the business success within its industry

26. Amway Independent Business Owner
Goals and Objectives
Define short and long term goals of the business
Use the SMART approach
Specific
Measurable
Achievable
Relevant
Time bound
“I will achieve one million in annual sales revenues within 3 years by selling household cleaning products and providing personal business opportunities to motivated entrepreneurs through the community.”
Amway Independent Business Owner
Company objectives and the strategy that will enable the business to meet them
Qualification of the business success within its industry

27. Industry Analysis What is scope of the businesses industry?
What are its current trends?
Is the industry growing? Stable? Declining?
How does your business fit into the existing industry?
It is important to identify the expert resources you used to draw your conclusionsss

28. Products and Services What is your product or service? Describe each
In detail.
What is the benefit to your customer?
How will the product or service be
produced or
delivered to the end user?

29. Marketing Analysis and Strategy
Who or what is the market you will serve?
How will you reach them?
Who or what is your competition?
What sets you apart from your competition?
What are your promotional strategies?
What distribution channels will you use?
What is your price point?
What technology will you use?
Will you have a website?
Known as a plan within a plan
What type of communication methods will you use?
How did you arrive at your price point?

30. Operational Plan How will your business operate?
What facilities will the business require?
Where will the business be located?
Will the location meet the immediate and future needs of the business?
What is your exit strategy – retirement, merger, buyout, go public, low performance, etc.?
This section should provide an overview of the strategy you will use to implement the business plan.

31. Management and Organization
What are the personnel requirements of the business?
Who are the key people that will manage the business?
What are their responsibilities?
Describe their experience, document their education and background.
Why are they are best-suited for the position within the business?
Organizational charts are very helpful
If you do not have specific people in mind, describe the attributes needed to fill the position

32. Financials
Your opportunity to persuade the investor/reader that the business makes “cents” (aka money)
Must reflect what is included in the plan
Must be conservative and realistic
The process of thinking through the financial plan will improve your insight into the inner workings of your company
Together, these spreadsheets constitute a reasonable estimate of your company’s financial future

33. Financial Plan Equipment and Supply List Sources and Uses of Funds
Details purchases of substantial property such as land, facilities, vehicles and equipment
Sources and Uses of Funds
Verify where the business funds will come from and where they will be spent
Loan Application
Application specific to the lender you are approaching

34. Financial Plan Breakeven Calculation/Analysis Cash Flow Projections
Estimates how much you need to make in sales each month before you begin to turn a profit
Cash Flow Projections
Shows how money will flow in and out of your business
Indicates whether you will earn enough money to pay your bills

35. Financial Plan Balance Sheet Profit and Loss (P&L) Projections
The value of the company
States the business’s assets, liabilities & net worth
Profit and Loss (P&L) Projections
Indicates when and if your business will be profitable
Three years of projections – first 12 months must be more detailed

36. Financial Plan Assumptions
The financial part of the business plan is based upon these assumptions
Any part of the financials that are not obvious to the reader should be explained in this section

37. Appendix Owner’s financial statements
Brochures and advertising materials
Industry studies
Magazine or other articles relating to your business
Letters of support from future customers
Will vary from business to business
Blueprints, building plans, maps and photos of location
Copies of any patents, trademarks or copyrights
Future orders in hand
What are other materials the client may need to support the assumptions in the plan?

38. Understanding Business Financing

39. Where do I get the money to start a business?
Sources of Funding
Where do I get the money to start a business?
Guarantee to pay back an obligation at a
certain rate (or variable rate), usually over a
time period or at some point in time.
Debt
No guarantee of repayment, often management
control, share in profits, and expected residual
value when sold or closed.
Equity

40. Sources of Debt Capital
Bank
Family
&
Friends
Debt
Suppliers or
Trade Credit
Non-bank
Lenders
Private
Investors

41. Sources of Equity Capital
Savings
Sale of
Assets
Equity
Personal
Credit
Resources
Family
and
Friends
Investors or
Partners

42. How do I get money from a lender?
Capacity
Conditions
5 C’s of
Credit
Collateral
Character
Commitment

43. What does a lender want from me?
Business Plan
Legal
Documents
Funding
Request
Personal
Financials
Proposed
Collateral
Financial
Projections

44. Selecting a Legal Structure
Main Considerations
Liability
Taxes
Level of Liability
Income Tax
Liability Insurance
Self Employment Tax

45. Basic Legal Requirements

46. Four Levels of Government
Federal Government
State of Minnesota
County Government
City Government

47. THANK YOU