Presentation on theme: "March 3, 2014. ORGANIZING TO MAKE A PROFIT OBJECTIVES By the end of the session, participants should be able to: Appreciate the need for planning before."— Presentation transcript:
OBJECTIVES By the end of the session, participants should be able to: Appreciate the need for planning before embarking on a new business. Describe the steps involved in starting a business successfully.
Overview Introduction What is a Small Business? Characteristics of a Successful Small Business Characteristics of Successful Entrepreneurs Steps to Starting a Successful Small Business Summary & Conclusions
INTRODUCTION Small Businesses are said to be the driving force of the economy. Statistics state that over 80% of small entrepreneurs fail within the first 3 years due to the lack of proper planning, inexpérience, poor location, and lack of cashflow.
Definitions Entrepreneur- A person who has a vision and a plan ready to take the risks associated with setting up a business. SWOT- Strengths, Weaknesses, Opportunities, and Threats. Tool for analyzing aspects of a business.
What is a Small Business? A business which employs 10 or less people. All businesses typically fall into one of the following 4 categories: – Retailing – Wholesaling – Manufacturing – Service Providers
Self Assessment Questions to ask yourself………… – Have I evaluated my own aptitude for small business ownership and understand the responsibilities? What’s involved? What roles will I play if I own a business? Have I set my goals? – What do I want out of the business? Do I have what it takes? – Estimate the impact on your everyday life. – Do I need to invest more in myself?
Summarize Your Idea – Always be on the lookout for ideas. Clearly define your business idea. – Identify a niche. – Learn everything you can about the business you want to start and the marketplace that you will be operating in. – Conduct a competitive analysis in your market. – Seek help from other small businesses, professionals, government agencies, etc.
Characteristics of a Successful Small Business A successful business is one that is based on: – A product or service that customers want. – A product or service you can sell at a price that customers can afford and which will give you a profit. – The knowledge or skill that you have or can get. – The resources or money that you can obtain or able to invest.
Characteristics of Successful Entrepreneurs Willingness to Sacrifice Strong Interpersonal Skills Strong Leadership Skills Strong Organizational Skills Intelligence (Anticipate Problems) Management Abilities Business Experience Optimism
Prepare a Business Plan Contents of the Business Plan include the following: – Executive Summary – The Business Concept – Industry & Competition – Management and Personnel – Financials
Focus on Funding What is your financial plan? – What will you need for start-up costs? – What will you need for ongoing working capital? – Equipment and other fixed assets? – Inventory and supplies – Sustained Growth Managing Cash and Securing Capital are the Two Biggest Challenges. – Business Credit Card – Bank Account – Business Credit Line
Focus on Funding Cont. Managing Cash and Securing Capital are the Two Biggest Challenges. – Business Credit Card – Bank Account – Business Credit Line – Bank Loans, Venture Capital, or SBA Loans – Plug into a local network, including the following: » U.S. Small Business Administration » Nearest Small Business Development Center » Chamber of Commerce
Take Your Company’s Pulse Which numbers should you keep an eye on to monitor your business’s financial health? – Weekly Updates » Current cash position (how much cash was received, when and from whom?) » Cash disbursements (e.g. payroll, materials, supplies, inventory, etc.) » New sales » Accounts Receivable » Accounts Payable (Obtain W-9s on all vendors) » Order Backlog » Number of Employees (need metrics-sales per employee)
Take Your Company’s Pulse Which numbers should you keep an eye on to monitor your business’s financial health? – Monthly Updates » Inventory (with accounting or physical tests of accuracy) » Age your receivables Calculate your collection period (30 days, 40 days) Identify slow-paying customers Pursue delinquent accounts. Identify fast-paying accounts and try to increase their number. » Accounts payable obligations (with aging breakdown)
Take Your Company’s Pulse Manage and control your sales and inventory. Project your cashflow. Review and prepare monthly financial statements
Record Keeping See Record Retention Handout: Permanent – Contracts – Corporate stock records – Financial Statements – Minutes (Life of Business) – Journal & General Ledger (Life of Business Plus 7) Temporary – 7 Years