Simple Steps for Starting Your Business Start-up Overview

Today’s Agenda SCORE – Who we are Business and you Your business idea Finances of business Next steps

SCORE Ft Lauderdale Our Mission is to help start new businesses and grow existing businesses in the Broward County community

About BrowardSCORE 50+ experienced executives Will mentor 900 in Workshops each month For 2000 attendees Turnaround Team SCOREboard Radio program on 880theBiz broward.score.org

Simple Steps Process Roadmap Session 1: Start-Up Basics “Go or No-go” decision & next steps with mentor Mentoring/Build Business Plan Session 5: Funding Sources Session 2: Business Concept Session 3: Marketing Plan Session 4: Financial Projections

Start-up Myths All I need is a good idea. Won’t have to work as hard as I do as an employee. Will do only the work I want to do. Working alone limits my achievement capabilities.

Critical Success Factors Adequate capital. Ability to manage and multi-task. Education / experience in field. Strong work ethic. Effective time management. Willingness to ask for input from others.

Entrepreneur Characteristics Self-starter Resourceful Responsible Organized Hard worker Persistent Decisive Healthy Supportive family

The Many Hats Will You Wear

Different Starting Options Start a New Business Buy an Existing Business Buy a Franchise Be a Home-Based Business Be a Non-Profit Organization Run and Online Business

Simple Steps for Starting Your Business Your Business Idea

Why did you select your business?

What do investors want to know? Is there a market for the idea? –A problem needing a solution Have a unique solution to the problem? –To capture a share of that market? Can that share make a profit? –30% - 50%+ Net Simple Profit Can that profit produce a nice return? –Can that profit pay back a loan?

The Business Idea Process Who are your Customers? What desperate Need/Problem do they have? What Features/Services do they expect? What does your Competition provide? Where your Industry is going? Your Unique….Solution? Your Business Differentiation Strategy? Your Marketing Plan? Your Management Team?

Who are your customers? How many revenue streams do you have? Demographically, who are they? How do they want to get your service…. –Determines your market size

What desperate need do they have? Improve their quality of life? Save time or money? Solution to a problem? Help to be successful? Protection from something bad? Something that makes them feel good?

Features/Services they expect? Pre-sale services? Basic features? Special / quality features? Price ranges? Post-sale services?

Your competition? How many direct competitors are there? Is there indirect competition? What customer needs are not satisfied? What customer required features/services are not provided.

Where is the Industry going? Targeting a niche in a growing market? Do you understand the current industry standards? Service Quality Price Is your’s a breakthrough idea? Changes looming on the horizon? Barriers to entry?

What is your Unique Solution? A Solution to your customer’s problem With Features your customer wants And Services your customer expects Including some: –Not provided by your competitors An unequaled Experience

Your Business Differentiation Strategy Clearly define how you will exceed the industry and competitor norms –Pre-after sale services –Exceed in product quality –Quality comes with price –Overall experience you will provide

Your Marketing Plan The best coverage of your target market With the best response rates At the lowest cost –Tell them you are in business –Have solutions to their needs –That the competition does not have

Your Management Team Industry-specific knowledge and experience Management skills and experience Experience delivering earnings Experience managing cashflow Business function skills Required technical skills

Your Storyline This is what we’re offering…. We’re operating in this environment…. We’ll gain market share by solving these needs…. With these service and quality features…. We’ll be more profitable than our competitors… We’ll exploit these changes expected in the industry… We’ll market using this message and mix of channels…. The census-based target market size we can afford to address…. With a ….% response rate and ….% Sales conversion rate…. We expect to make #…. Sales annually and $…. Revenue After Operating Expenses, expect a ….% Net Profit This team will execute and manage the business….

Your Critical Numbers Model

Simple Steps for Starting Your Business The Finances of Business

Total monthly cost of living Outstanding debt Amount in savings Total amount needed to cover 12 to24 months of expenses Budget Considerations

How much do you need to… Live for a year…..……………………..$ RoT x 3………………..…………………$ Selling Price/ Unit…..…………...…….$ Average # of purchases per year.…..# # Purchases x Selling Price…………$ # Customers needed………… ……….#

How much do you need to… Live for a year…..……………………..$.30,000 RoT x 3………………..…………………$ Selling Price/ Unit…..…………...…….$ Average # of purchases per year.…..# # Purchases x Selling Price…………$ # Customers needed………… ……….#

How much do you need to… Live for a year…..……………………..$30,000 RoT x 3………………..…………………$90,000 Selling Price/ Unit…..…………...…….$ Average # of purchases per year.…..# # Purchases x Selling Price…………$ # Customers needed………… ……….#

How much do you need to… Live for a year…..……………………..$30,000 RoT x 3………………..…………………$90,000 Selling Price per unit………………….$100 Average # of purchases per year.…..# # Purchases x Selling Price…………$ # Customers needed………… ……….#

How much do you need to… Live for a year…..……………………..$30,000 RoT x 3………………..…………………$90,000 Selling Price/ Unit…..…………...…….$100 Average # of purchases per year.…..# 5 # Purchases x Selling Price…………$ # Customers needed………… ……….#

How much do you need to… Live for a year…..……………………..$30,000 RoT x 3………………..…………………$90,000 Selling Price/ Unit…..…………...…….$100 Average # of purchases per year.…..# 5 # Purchases x Selling Price…………$ # Customers needed………… ……….#

How much do you need to… Live for a year…..……………………..$30,000 RoT x 3………………..…………………$90,000 Selling Price/ Unit…..…………...…….$100.. Average # of purchases per year.…..# 5 # Purchases x Selling Price…………$ 500 # of Customers Needed……………….# 180

Funding Opportunities Debt –Decision based mostly on your credit report. And on your personal financial situation. –Partially on your business plan. –You keep 100% ownership. Equity –Decision based totally on your business plan. –You trade funds for ownership.

Lender’s View of Borrower Character, Commitment Credit rating Cash flow Collateral, Capital Industry knowledge Personal investment Financial history Financial projections Management skills Competition

Your Funding Situation Your past financial decisions affect: –Your funds available to start your business –Your credit score for getting a loan The business you choose affects: –Your revenue possibilities –Your net profit opportunity affects: Your start-up funding needs Whether the business can fund the business

Your Credit Report A report of past performance: –An indicator of future performance. Uncovers: civil judgments, unpaid taxes, liens, bankruptcies. Credit Scores use data in the credit report. – Credit Score is the major decision factor Credit Score is workable.

Your Credit SCORE 35% based on payment history. 30% based on amount owed. 15% based on length of credit history. 10% for new credit. 10% for types of credit used.

Have a Walk-Away Strategy Avoid signing contracts / leases. Don’t take-on a loan – (or only a 1 year loan for start-up exp). Finance only inventory and working capital. Don’t purchase unnecessary equipment.

Don’t….Don’t…..Don’t Spend money you don’t have On things you don’t need To please people you don’t like That includes……. rents / leases capital equipment future expenses

Simple Steps for Starting Your Business Next Steps

Legal Structure Considerations Owner’s personal financial exposure: –If business involves risk –If owner has substantial assets Control, if more than 1 owner Ease of ownership Transferability Costs: –To organize –To comply with reporting requirements Note….Business Insurance still needed: –Fire&Theft - Business Interruption - General liability

Typical Legal Structures Sole Proprietorship –Simple to create and operate –Profit / Loss on personal tax return –Personally liable for business debts Partnership - 2 or more owners required C Corporation –Limited personal liability on business debts –Double taxation because C corp is a separate entity S Corporation –Can use S corp losses to offset personal income Limited Liability Company –Limited liability for business debts –P&L can be allocated differently than ownership interest

Licenses, Insurance, Taxes Decide on your business structure; Get your Accountant, Banker, and Insurance agent Get your state licenses, if necessary: Get your Broward county Business tax license: es/LocalBusinessTaxes.aspx es/LocalBusinessTaxes.aspx Register your Fictitious D/B/A Name: Get your Federal Tax EIN (Form SS-4): And, if you do a taxable transaction:

Process Roadmap Session 1: Start-Up Basics “Go or No-go” decision & next steps with mentor Mentoring/Build Business Plan Session 5: Funding Sources Session 2: Business Concept Session 3: Marketing Plan Session 4: Financial Projections

Now What…..? Simple Steps for Starting Your Business series. Four three hour sessions …Wednesdays 6-9 pm English Details at broward.score.org Test the feasibility of your idea Get you to GO or NOGO decision

If it is GO…….then Complete business plan Start small and grow Get a SCORE Mentor Watch the Money

If it is NO GO…….then Revisit concept Revisit Marketing Revisit Cash Flow New decision

Thank You