palmbeach.score.org 1 So You REALLY Want to Start Your OWN Business?

palmbeach.score.org What We’ll Talk About Today Do You Have What It Takes? Why…Why…Why? Reality or Myth? Business Planning What Will It Take? Your Next Steps? How Can SCORE Help You?

palmbeach.score.org Why…Why…Why? I want to get rich I’m bored with my job I’ll get to do what I love I can be my own boss I have an amazing idea “Everyone” tells me I should I will get more “free” time I’ll show ‘em I can do it! How important is this to you?

palmbeach.score.org From a Job or Hobby to a Business Your Job –Support of others –Regular paycheck –Product experience –Defined responsibilities –May love it / may not Your Hobby –Product knowledge –Done in spare time –No revenue –It’s not work –Love doing it

palmbeach.score.org You’re Going to Miss … Credibility and clout Contacts and camaraderie Coffee and gossip Tech support Vacation and sick time Health insurance

palmbeach.score.org Reality or Myth?

palmbeach.score.org Reality or Myth #1? If I start a small business, I’ll be able to write off all of my expenses. Mostly Reality! –You can deduct all legitimate business expenses – even from before you start your business

palmbeach.score.org Reality or Myth #2? I don’t have to register my business if it’s really small. Myth! –You need to register your business. State, county, city Other agencies, depending upon business type

palmbeach.score.org Registration References United States – Employed/Apply-for-an-Employer-Identification-Number-(EIN)- Onlinehttp:// Employed/Apply-for-an-Employer-Identification-Number-(EIN)- Online State of Florida – Florida Department of Revenue – sales tax – Business Tax Receipts –Application Requirement Guide & Application –Contact your city or search online for instructions

palmbeach.score.org Reality or Myth #3? If I’m not selling much, it doesn’t count as a “real” business. Myth! –All businesses are “real”, except … If you don’t sell much for several years, the IRS may treat it like a hobby, not a business.

palmbeach.score.org Reality or Myth #4? I don’t have to collect and remit sales taxes if I’m selling online. Both Reality & Myth! –If your business is registered in Florida You must collect sales tax on shipments to Florida addresses You likely don’t have to on shipments to other states –Expect this to change!

palmbeach.score.org Reality or Myth #5? There are all kinds of special tax breaks for home-based businesses. Reality! –You can write off a portion of your home expenses – if it is used exclusively for business –Speak with your accountant! Many articles describe this as an IRS audit flag.

palmbeach.score.org Reality or Myth #6? There are all kinds of government grants to help start a small business. Myth! –There are few government grants available. Difficult to get, but not impossible. Perhaps some for veterans & disabled veterans. –Some private sector grants may be possible.

palmbeach.score.org Reality or Myth #7? Starting a small business will let me live the lifestyle of my dreams. Perhaps Reality, Perhaps Myth! –It will depend upon what the lifestyle of your dreams is. –But owning your own business can be very rewarding financially and emotionally.

palmbeach.score.org Critical Steps to Jumpstart Your Planning Clearly define your business idea Examine your motives Be willing to commit to hours needed Have discipline Cope with learning & frustrations common to owning a business Conduct competitive analysis in your market – products, services, prices Be aware of outside influences Seek help – other businesses, professionals, vendors, agencies

palmbeach.score.org Create a Business Plan Executive summary Business description Market & competition Products and/or services offered Marketing & selling plan Management & personnel Financial data –Cash flow analysis –Balance sheets –Income statements (P&L) –Break-even chart Investment Appendices

palmbeach.score.org So Are You Ready? Do you have a product or service That is needed That people will pay for Again and again?

palmbeach.score.org Guy Kawasaki Method Find ONE customer/client Make an offer they can’t refuse Modify elements from feedback Find ONE more customer Repeat for ten years Easy, isn’t it?

palmbeach.score.org $$$$$$$$$$ It’s all about cash Do you have it? How much comes in? How much goes out?

palmbeach.score.org The Revenue & Expense Streams … Revenue –0-90 days after the sale –Usually overestimated Expenses –0-120 days before the sale Start up costs, paying vendors, selling expenses –Usually underestimated You Need Money to Get Money

palmbeach.score.org What Will It Take to be Successful? Do you have a product or service that is wanted? Do you have the right kind of business experience? Can you prepare a credible business plan? Can you take responsibility? Can you organize yourself and others? Are you ready to put in the long hours? Can you stick to it in rough times?

palmbeach.score.org What Else Will It Take? Do you have family support? Do you have enough resources & credit? Is your health up to it? Do you know your market? Have you done your research? Can you create the demand?

palmbeach.score.org Can You Qualify for a Loan? Lenders Will Ask … What kind of business do you plan to start? Do you have the right kind of business experience? Is it a new or ongoing business? How long in business? How large a loan will you need? How will you spend it? Do you have savings/collateral equal to 1/3 of the loan? Is your credit good? Bankruptcies? Debts? Have you made a Business Plan complete with financial projections? If not, can you do it? Do you have a realistic idea of expected income vs. your personal and business expenses? Can you repay a loan from realistic projected earnings?

palmbeach.score.org Possible Funding Sources – Debt Funds Your savings, bonds, stocks Cash value life insurance Your home equity Loans from family or friends Banks, credit unions, finance companies Credit cards (not a long-term plan) Customer prepayments Credit from suppliers Equipment leases

palmbeach.score.org Can You Qualify For…? SBA loans – guaranteed or direct Veterans Administration – G.I. loans Department of Commerce – Export Department of Energy Federal Housing Administration

palmbeach.score.org Possible Funding Sources – Equity Funds Family/friends ownership participation Small Business Investment Companies Venture capital Angel investors Limited partnerships Sale of stock to public or friends Crowdfunding

palmbeach.score.org How Much Money Will You Need? Start-up expenses –Legal, accounting, training, … Initial capital purchases & improvements –Computers, vehicle, build-out, … Ongoing monthly expenses until breakeven is reached –Rent, utilities, salaries, benefits, … Personal living expenses –If you have no other income coming in

palmbeach.score.org Do Your Research & Planning Business won’t succeed just because you want it to succeed Research your market Know your competition Understand important industry data

palmbeach.score.org Know Yourself & Be Honest with Yourself Compare your skills & expertise Know what particular capabilities made other companies profitable Can you duplicate/surpass? Unique skills or edge that you have Level of capitalization that you can provide Technical skills Energy & passion

palmbeach.score.org Homework! Do You Have What It Takes?

palmbeach.score.org How May We Assist You? Palm Beach SCORE has 45+ volunteers available for free one-on-one mentoring –Huge diversity of experience & expertise –Sign up at palmbeach.score.orgpalmbeach.score.org –In person, phone, Attend other workshops that we offer –Wide variety of topics –Schedule & registration at palmbeach.score.orgpalmbeach.score.org

32 So You REALLY Want to Start Your OWN Business? Palm Beach SCORE 500 Australian Avenue South, Suite 115 West Palm Beach, FL Tel: (561) Fax: (561)