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brought to you by
A Personal Touch
Member
FDIC
Joel K. Bopp Senior Commercial
Lender
Vandalia Loan
Production Office
6450 Poe Ave., Ste 101
Dayton, OH 45414
937-898-3380 [email protected]
We believe the key distinction between banks is the way they serve their customers. Through honesty, hard work and quality customer service, our knowledgeable, friendly staff is ready and willing to assist you. Whether you are banking as an individual, a family or a business, you’ll benefit from sound, strategic advice, flexibility and locally made decisions from people who truly understand your needs.
MinsterBank.com
Entrepreneur Bootcamp Series
Today’s Presenters
Donerik Black, MBA
Small Business Development
Center at WSU
937.775.4761
3640 Colonel Glenn Hwy, Rike Hall
Dayton, Ohio 45435
www.SBDCWSU.com
RoShawn Winburn, MBA
Minority Business Assistance
Center at HRC
937.333.1033
371 W. 2nd St., Suite 100
Dayton Ohio 45402
www.DaytonMBAC.org
Business Basics:
The Business Concept
• Myths and realities of
entrepreneurship
• Critical success factors
• Know your options
• Components of business
ownership
• Making it legal
• Funding and cash
management
• Business plan basics
Business Basics
Briefly tell us a bit about you in
one minute or less:
• Your name
• Your business or idea
• Why you came today
A few volunteers…
Myth 1: All I need is a good idea to be a successful
entrepreneur.
Myth 2: If you go out on your own, you won’t have to work so hard or such long hours.
Myth 3: You’ll be able to deduct everything, so you don’t
have to pay taxes.
Myths and Realities of Entrepreneurship
Myth 4: If you work independently, you won’t have to report to
a boss.
Myth 5: Business owners get to do the work they want to do and only what they find interesting.
Myth 6: If you choose to be self-employed, you’ll be limited in
what you can achieve, since you’ll be working alone.
Myths and Realities of Entrepreneurship
76%
24% Successful
Failed
Percent of
New Businesses
(2+ employees)
After 2 Years
Reality: Proper Planning is Key
Source: Bureau of Labor Statistics,
Business Employment Dynamics,
Entrepreneurship and the U.S. Economy
62%38%
Successful
Failed
Percent of
New Businesses
(2+ employees)
After 3 Years
Source: Bureau of Labor Statistics,
Business Employment Dynamics,
Entrepreneurship and the U.S. Economy
Reality: Proper Planning is Key
50%
50%
Successful
Failed
Percent of
New Businesses
(2+ employees) Source: SBA Office of Advocacy,
Frequently Asked Questions about Small
Business, March 2014
After 5 Years
Reality: Proper Planning is Key
• Good choice of time and location
• 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
Do you have what it takes?
Critical Success Factors
Know your options
ADVANTAGES Not hampered by previous
image or technologies
Can choose location, name, logo, relationships
Can explore new markets and directions
See your dreams come true
DISADVANTAGES
No base, must build all new
Greater risk
No track record = difficulty in financing
See your dream become a nightmare
Starting a New Business
ADVANTAGES
Established clientele, suppliers, location
Known quantity, proven formula/name
Help in starting and running business
Can review records
Easier to obtain financing
DISADVANTAGES
Potential hidden issues: debts, poor reputation, loyalty to owner, out-of-date inventory or transfer issues
No guarantee that success will continue
Buying a Business
ADVANTAGES
Proven image and product/service
Marketing/Sales power
Limited experience
Training, professional guidance
Continued consulting relationship
Access to other franchisees for help
DISADVANTAGES
Loss of control - not always your own boss
Franchise = royalty and other fees
Operational boundaries and limited choices
Binding contract
Franchisor problems are your problems
Buying a Franchise
ADVANTAGES
Convenient work location
Less expensive
Flexible schedule
Tax Advantages - Sq. Ft of total home - Percentage of utilities
DISADVANTAGES
Zoning or deed restrictions
Isolation from others
Difficult financing
Family distractions
IRS scrutiny
Home Based Business
• Definition of offering
• Functionality and packaging
• Quality
• Differentiation
• Who needs it?
• Why do they need it?
• How is it different or better
than the competition?
Product and/or Service
• Location, Location, Location
• Niche / target market
• Competition
• Distribution
• Merchandising
Position
Making it legal
Sole Proprietorship
Partnership
Limited Liability Company
(LLC)
“C” Corporation
Business Organization Forms
• Business Licenses and
Approvals
• Labor Laws
• Immigration Laws
• IRS and Social Security
Withholding & Payments
Government Regulations
Banker
Accountant
Insurance Agent
Lawyer
Business Mentor
Every Business Owner Needs…
FUNDING AND CASH
MANAGEMENT
Total monthly cost of living
Outstanding debt
Amount in savings
Total amount needed to
cover 6 to 12 months of
expenses
Hold cash as long as you can
Keep separate accounts
Considerations
Essential Considerations:
Tools and equipment
Leasehold improvements
Licenses and permits
Professional fees
Initial inventory
Working capital reserve fund
Startup Cash Needs
Salaries
Rent
Insurance
Taxes and fees
Advertising
Loan interest/principal
Utilities
Maintenance
Operating Cash Needs
Equity
Signifies Ownership
• Personal savings
• Family and friends
• Partners’ contributions
• Profits retained in the
business
• Banks and credit unions*
• Community Express Micro
Loans*
• Credit cards (not
recommended)
* Usually guaranteed by SBA
Debt
Does NOT Signify Ownership
Sources of Capital
• Character, Commitment
• Credit rating
• Cash flow
• Collateral, Capital
• Industry knowledge
• Personal investment
• Financial history
• Financial projections
• Management skills
• Competition
Lender’s View of Borrower
Small business readiness self-
assessment
Total score should not be more than 10. Assign more points to indicate agreement, less if
you do not agree.
Topic Question Points
Idea Feasibility
My product/service is servicing an unmet need.
My product/service could be expanded to gain
additional customer groups.
Market
Identification
I know who my potential buyers are.
I have a clear value proposition for my potential
buyers.
Implementation I know what it will take to start my business.
I know what it will take to run my business.
Funding I understand what it will take to obtain funding.
I have a plan to fund my business start.
Personal Readiness I am ready to work hard to achieve my business
goals.
I understand the challenges ahead and have a plan
to tackle them.
Total Points:
Small Business Readiness
Self-Assessment
Business plan basics
Encourages an objective view
Becomes foundation for
planning
Powerful management tool
Communicates owner’s ideas
Business Plan Importance
Table of Contents
Executive Summary
Section One:
The Business
Section Two:
Financial Forecasts
Section Three:
Supporting Data
Business Plan Contents
• Capture Your Dream
• Feasibility Plan Draft
• Industry Profile Data
• Customer Data
• Competitive Data
• Resources for Collecting
Data
The Business Concept
• Steve Jobs
• Bill Gates
• Richard Branson
• Mary Kay Ash
• Walt Disney
• Steven Spielberg
• Oprah Winfrey
• Ray Kroc
• Sam Walton
They all started with a dream!
What is your dream? If there were no obstacles in your way, what
would be your ideal business?
Capture Your Dream
• Provides you with the information
to help make a Go/No-Go
decision for your business idea.
• Has the core information to
create a complete business plan
for bankers and investors.
• Gives you direction to get started.
Feasibility Plan Draft
Defining a Market Need
Need fulfilled or problem
solved
Product/service features
and benefits
Competitive advantage
Business model
Business Idea
Your Experience
Skills that fit idea
Personal risk tolerance that fits idea
Personal Battleground
How many hats will you wear?
Defining Your Business
• Description: North American
Industry Classification System
(NAICS)
• Profitability: Risk Management
Association (RMA) Annual
Statement Studies
• National Trade and Professional
Association (NTPA) Directory
• Growth/Life Cycle
• Profitability: RMA
• Trends
Industry Profile
2012 NAICS Definitions
111421 Nursery and Tree Production
This U.S. industry comprises establishments
primarily engaged in (1) growing nursery products,
nursery stock, shrubbery, bulbs, fruit stock, sod, and
so forth, under cover or in open fields and/or (2)
growing short rotation woody trees with a growth
and harvest cycle of 10 years or less for pulp or
tree stock.
NAICS Definition
Start-up
Rapid Growth
Maturity
Industry Life Cycle
Reinvention
Slow decline
Rapid decline
The Industry Life Cycle
Who do you serve?
Type: retailer, consumer, etc.
Number
Income level/ability to pay
Demographics
Lifestyle
Habits
Target Markets
Competition
size
product/service features
Suppliers
availability
reliability
Business Risk
product longevity
legal/environmental
Other Key Factors
Industry
Customer
Competitor
Market Trends
Collecting Critical
Information
Know Your Market
Demographics
Habits and patterns
Customer Data Sources
Internet
Census data/government websites
Trade associations
Civic/community organizations
Library reference sections
Customer Data
Understand What They Offer Price Features Annual Sales Size/profitability Market strategy
Competitor Data Sources Competitor Suppliers Trade associations RMA D&B (Dun and Bradstreet)
Competitor Data
NAICS: www.census.gov/eos/naics
American Community Survey: www.census.gov/acs
Small Business Administration: www.sba.gov
Bureau of Economic Analysis: www.bea.gov
Securities and Exchange Commission: www.sec.gov
Bureau of Labor and Statistics: www.bls.gov
SCORE’s website: www.score.org
Key Data Websites
Web-based searches for
information (e.g., Reference
USA)
Reference library tools most
commonly used by SCORE
clients
Reference books display and
typical information
Your Local Librarian
Important Considerations
Political
Social
Environmental
Trend Sources
Newspapers
Periodicals
Television
Internet
Other Market Trends
• Ask directly, usually a distant
competitor
• Ask mutual suppliers
• Ask competitors’ (your future)
customers
• Be a customer
• Join a trade association
• Check competitor websites
Collecting Critical
Information
Please give us feedback by…
1. Completing a survey
2. Sending an email to
Registration is live for the next
bootcamp on March 14th.
Reserve your spot & tell a friend!
Help Us, Help You
Contact Us
Member
FDIC
Vandalia Loan Production
Office
6450 Poe Ave., Suite
101
Dayton, OH 45414
937-898-3380 [email protected]
MinsterBank.com
Joel K. Bopp Senior Commercial Lender