GETTING STARTED Yes You Can! Built by Stambaugh/2009 Jeff Stambaugh Dillard College of Business/Rm 257A

Motivation Built by Stambaugh/2009 ■ Hot off the Press … BW’s 2008 Top Entrepreneurs Under 25 Link Link

Entrepreneurial Resources Built by Stambaugh/2009 ■ Your Opportunity ■ Your Hard Work ■ Now, leverage OPT and OPM ■ Resources for you, the DCOBA student ■ Internship Program ■ SBDC ■ Incubator Center ■ Network of interested persons

Easing into Entrepreneurship Built by Stambaugh/2009 ■ Lack Resources ■ Gain experience (uncertainty reduction) ■ What personalities does this fit ■ Narrow window of opportunity (seasonal) What are some businesses that are well- suited to part-time entrepreneurship?

Benefits of Part-time E-Ship Built by Stambaugh/2009  Continued income from “day job”  Health benefits from work  Able to cut losses easier?

Challenges of Part-time E-Ship Built by Stambaugh/2009  All work and no play  Boundaries in home life (time allocation)  Settling for “good enough”  Conflicts with “Day Job”  Professional / business  Time / energy  Aggrandizement  Delegation / employees

Bootstrapping Built by Stambaugh/2009  Makin’ do with what you got!  Initial sources of money  Personal savings  Second Mortgages / Home Equity  Friends and family  Credit cards  Scrimping  Work for free  Essentials only  Buy used  Barter  Get it free (web, resources previously discussed) Link Link  Offer equity

Specific Tips to Enhance Success Built by Stambaugh/2009 ■ Experience / Help ■ Incubator ■ Advisory Board ■ Learn industry first ■ Have experience in SBM / startups ■ Multiple founders ■ Better chance of strong consumer response ■ Pre-sell / pilot test / existing customers ■ Imitate successful models (proven demand with high margins) ■ Build and pitch your business plan (obtain outside investors) ■ Build trust / legitimacy

Buying a Business Built by Stambaugh/2009 ■ How to find what’s for sale? ■ Magazines / trade publications ■ Bankers ■ SBDCs ■ Ask others ■ Ask directly! ■ Key due diligence questions ■ WHY IS IT FOR SALE? ■ Accuracy of “the numbers” (review financial statements carefully) ■ Ask specific and detailed questions of seller ■ Will key customers / suppliers stick with you? ■ Will key employees stay?

Buying a Business (cont) Built by Stambaugh/2009 ■ Key due diligence questions (cont) ■ Condition of equipment / facilities ■ Unexpected liabilities Can you match or exceed the owner’s claimed profitability?

And Now the Hard Part … The Price! Built by Stambaugh/2009  More art than science  Value cash flows  Value assets  Comparable sales  Earnings multiple  Industry heuristics

Franchises Link Link Built by Stambaugh/2009 ■ Facilities / Location: Guidelines / assistance ■ Equipment: Guidelines / purchasing “help” ■ Business Model: Proven / known, ongoing support ■ Product: Standardized ■ Employees: Training (for you too) ■ Procedures: May be set ■ Reputation: Hopefully a strong brand ■ Customers: Come from brand, marketing support ■ Suppliers: more powerful ■ Legal Structure: FDD ■ Investors/Debts: Guidance

Buying a Franchise Built by Stambaugh/2009  Due diligence  Interview several other franchisees  Stability of franchisor  Integrity / ethical behavior  The deal (love the FDD)  Initial fees ($35K average but wide variance)  Royalties (5-6% of revenue)  Marketing fees (1-4% of revenue)  Competitiveness of required purchases  Misc  ROT: 33% of pretax profits to franchisor (before franchisor fees or franchisee salary deducted)

Building a Franchise! Built by Stambaugh/2009  Write a BP  Inventory / protect IP  Prepare UFOC / franchise agreement  Prepare manuals/program  Solicit franchisees  Assist new franchisees

Building a Franchise! Built by Stambaugh/2009  Pro’s  Lower-cost expansion mode  Revenue stream  Motivation of franchisees  New ideas  Con’s  Sharing profits  Less control  Increased “people” hassle  Legal expenses  Different business skills required

Class Takeaways Built by Stambaugh/2009 ■ Yes you can! ■ There ARE many businesses in Wichita Falls that probably could be bought!