simple steps for starting your business | entrepreneur road map | score
DESCRIPTION
Walter Abbott, Director of the SCORE DC Speaker Bureau, gives entrepreneurs tips on how to start their business at the Washington, DC Economic Partnership's Entrepreneur Road Map seminar (1/15/14).TRANSCRIPT
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Simple Stepsfor Starting Your Business
Start-up Basics
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Simple Steps for Starting Your Business
Session 1:Start-up Basics
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About SCORE
• Successful and experienced executives acting as volunteers
• Seminars and workshops• Free Mentoring
– One-on-one– E-mail
• Resources for small business: washingtondc.score.org
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Mentoring Locations
• SCORE DC has locations in DC, No. Va. And Montgomery County, Md.
• I have copies of our exact locations on my desk.
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Myth #6
Myth: If you choose to be self-employed, you’ll be limited in what you can achieve, since you’ll be working alone.
Reality: The limitations are created mostly by the space between your ears. Be realistic, but don’t trap yourself with self-imposed limitations. You can make a difference.
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Percent ofNew Businesses (2+ employees)
Source: U.S Dept. of Commerce, Bureau of the Census, Business Dynamics Statistics
Reality: Business Success
After 5 Years
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Critical Success Factors
• 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
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Simple Steps for Starting Your Business
Business Opportunities
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Starting a New Business
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
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Buying a 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
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Buying a Franchise
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
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Home Based Business
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
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Online Business
ADVANTAGES• Lower startup costs• Expanded geographic
reach• Convenience &
accessibility• Flexibility
DISADVANTAGES• Low conversion
rates• Low barriers to entry
= higher competition
• Visitor expectations• No personal contact/
limited sensory info
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Entrepreneur Characteristics
• Self-starter• Resourceful• Responsible• Organized• Hard worker• Persistent• Decisive• Healthy• Supportive family
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How Many Hats Will You Wear?
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Marketing
• Strategy used to create a desire to purchase
• Creates your company image
• Anything you do to get and keep a customer
• Your product or service will not sell itself
• *Covered in detail in Workshop 3 – Marketing Plan
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Sales
• Customer contact work• Finding prospects• Making presentations• Preparing bids• Closing deals• Processing orders
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Product and/or Service
• 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?
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Position
• Location, Location, Location
• Niche / target market• Competition• Distribution• Merchandising
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Branding
• Name recognition• Qualification of
product/service• Market identity• Advertising
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Price
• Consumer reaction
• Cost• Competition• Credit terms and
discount
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Competition
• Size of operation and number of employees
• Price and quality • Services provided • Reputation: strengths and
weaknesses• Personal visits and
observations• Suppliers & contractors• Other businesses in area
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Business Organization Forms
• Sole Proprietorship• Partnership• Limited Liability
Company (LLC)• “C” Corporation
(Conventional)• “S” Corporation (Sub-
chapter)
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Recommendations for Start-ups
Keep It Simple• Sole proprietorship
or partnership• If liability and/or
taxation is a concern, an LLC or S-corporation
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Insurance Considerations
• Property• Liability• Motor Vehicles• Umbrella Liability• Worker’s
Compensation• Health• Life• Business
Interruption
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Government Regulations
• Business Licenses
and Approvals• Labor Laws• Immigration Laws• IRS and Social
Security Withholding & Payments
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Every Business Owner Needs:
• Banker• Lawyer• Accountant• Insurance
Agent• Business
Mentor
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Simple Steps for Starting Your Business
Funding andCash Management
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• Total monthly cost of living
• Areas where you can cut back
• Outstanding debt• Amount in savings• Total amount needed to
cover 6 to 12 months of expenses
Personal Budget Considerations
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Start-up Cash Needs
Essential Considerations:• Tools and equipment• Leasehold improvements• Licenses and permits• Professional fees• Initial inventory• Working capital reserve
fund
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Operating Cash Needs
• Salaries• Rent• Insurance• Taxes and fees• Advertising• Loan interest/ principal• Utilities• Maintenance
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Sources of Capital
EquitySignifies Ownership• Personal savings• Family and friends• Partners’ contributions• Profits retained in the
business
DebtDoes NOT Signify Ownership• Banks and credit
unions*• Community Express
Micro Loans*• Credit cards (not
recommended)
* Usually guaranteed by SBA
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Lender’s View of Borrower
• Character, Commitment• Credit rating• Cash flow• Collateral, Capital• Industry knowledge• Personal investment• Financial history• Financial projections• Management skills• Competition
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Cash: Most Important Asset
• Open a separate bank account for your business
• Deposit all receipts “intact”• Use a petty cash fund• Separate sales tax receipts on
your books• Hang on to cash as long as
possible• Reconcile bank account monthly• Have adequate cash and a
reserve fund at the start of the business
• Prepare and maintain a cash forecast for at least six months into the future