indianapolis.score.org About SCORE Start-Up Basics
3/26/2018
Indianapolis SCORE
About SCORE
SESSION 1: Start-Up Basics
Successful and experienced executives acting as volunteers Seminars and workshops No-Charge Mentoring • One-on-one • E-mail Resources for small business:
indianapolis.score.org
Beginner’s Guide To Business Success 1
2
Sign Up For Mentoring SESSI O
N
Start-Up Basics
1 :S t a r t- U p B a s ic s
SCORE Offices- 8500 Keystone Crossing, Suite 401, Indianapolis or One Zone Offices - 10305 Allisonville Rd. Fishers Call 317-226-7264 for an appointment in either location
•
Greenwood, Call 317-888-4856 For An Appointment In Greenwood
• • • • •
•
Or at www.Indianapolis.score.org Or Request An Appointment Today
SESSION 1: Start-Up Basics
Myths and realities of entrepreneurship Different ways to start a business Entrepreneurial characteristics Different parts of marketing Making it legal Funding and cash management Business planning basics
4
1
3/26/2018
Nice to Meet You!
SESSION 1: Start-Up Basics
SESSI O
N
1 :S t a r t- U p B a s ic s
Stand up and briefly, but loudly, tell us:
MYTHS AND REALITIES OF ENTREPRENEURSHIP
• Your name • Your Business idea(s) • What you want to learn today
5
6
Myths and Realities of Entrepreneurship
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.
7
Myths and Realities of Entrepreneurship
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
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.
8
2
3/26/2018
Reality: Business Success
Starting a Business
SESSION 1: Start-Up Basics SESSI O
After 2 Years
N
1 :S t a r t- U p B a s ic s
After 5 Years
SESSI O
N
1 :S t a r t- U p B a s ic s
WAYS TO START A BUSINESS • Start a Brand New Business • Buy an Existing Business • Buy a Franchise Location: • Home Based Business • On-Line Business • Brick and Mortar Business
Source: U.S Dept. of Commerce, Bureau of the Census, Business Dynamics Statistics
10
Start a Brand 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.
11
Buy an Existing Business
SESSION 1: Start-Up Basics SESSION 1 : Sta rt-Up Ba si cs
DISADVANTAGES • No base, must build all new • Greater risk • No track record = difficulty in financing • See your dream become a nightmare.
SESSION 1: Start-Up Basics SESSION 1 : Sta rt-Up Ba si cs
DISADVANTAGES ADVANTAGES • Potential hidden issues: • Established clientele, debts, poor reputation, suppliers, location loyalty to owner, out-of• Known quantity, proven date inventory or transfer formula/name issues • Help in starting and • No guarantee that running business success will continue. • Can review records • Easier to obtain financing.
12
3
3/26/2018
Buy 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.
SESSION 1 : Sta rt-Up Ba si cs
DISADVANTAGES • Loss of control - not always your own boss • Franchise = franchise fee and royalty payments ($) • Operational boundaries and limited choices • Binding contract • Franchisor problems are your problems.
13
ADVANTAGES • Convenient work location • Less expensive • Flexible schedule • Tax Advantages - Sq. Ft of total home - Percentage of utilities. – Or Safe Harbor
SESSION 1: Start-Up Basics SESSION 1 : Sta rt-Up Ba si cs
DISADVANTAGES • Zoning or deed restrictions • Isolation from others • Difficult financing • Family distractions
14
Online Business ADVANTAGES • Lower startup costs • Expanded geographic reach • Convenience & accessibility • Flexibility.
15
Home Based Business
SESSION 1: Start-Up Basics
Brick and Mortar Business
SESSION 1: Start-Up Basics SESSION 1 : Sta rt-Up Ba si cs
DISADVANTAGES • Need an excellent web site • Low conversion rates • Low barriers to entry = higher competition • Severe price pressure • No personal contact/ limited sensory info.
ADVANTAGES • You, the products and the customers meet face-toface • Potential customers see your business • Convenience & accessibility • Traditional.
SESSION 1: Start-Up Basics SESSION 1 : Sta rt-Up Ba si cs
DISADVANTAGES • High startup costs • Ongoing overhead expenses • Bad location? • Lack of flexibility..
16
4
3/26/2018
Entrepreneurs
SESSI O
N
Entrepreneur Characteristics
1 :S t a r t- U p B a s ic s
• • • • • • • • •
ENTREPRENEUR CHARACTERISTICS
17
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
Self-starter Resourceful Responsible Organized Hard worker Persistent Decisive Healthy Supportive family
18
Successful Entrepreneurs Have all This
How many hats will you wear?
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
• Adequate capital • Ability to manage and multitask • Education/experience in field • Strong work ethic • Effective time management • Willingness to ask for input from others 19
20
5
3/26/2018
Marketing
SESSI O
N
Marketing in General
1 :S t a r t- U p B a s ic s
SESSI O
N
1 :S t a r -t U p B a s ic s
• 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.
DIFFERENT PARTS OF MARKETING
21
22
Branding
Product and/or Service
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
• Definition of offering • Functionality and packaging • Differentiation • Value Proposition
• Name recognition • Qualification of product/service • Market identity • Advertising • Creating Trust.
23
SESSION 1: Start-Up Basics
• Who needs it? • Why do they need it? • How is it different or better than the competition? 24
6
3/26/2018
Price
Place: Where will your product be?
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
N
1 :S t a r t- U p B a s ic s
26
Sales
• Customer contact work • Finding prospects • Managing Prospect Pool • Making presentations • Preparing bids • Closing deals • Processing orders. 27
SESSI O
• Location, Location, Location • Niche / target market • Competition • Distribution • Merchandising • Is it a service? • Where will you go?
• Pricing Strategy is part of Marketing • Consumer Reaction (demand) • Cost • Competition • Credit Terms and Discount. 25
SESSION 1: Start-Up Basics
Know Your Competition
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
• Size of operation and number of employees • Price and quality • Services provided • Reputation: strengths and weaknesses • Personal visits and observations • Inspect their Website • Talk to suppliers & contractors. 28
7
3/26/2018
The Law & Your Business SESSI O
N
Business Entities
1 :S t a r t- U p B a s ic s
• Sole Proprietorship • Partnership • Limited Liability Company (LLC) • “C” Corporation (Conventional) • “S” Corporation (Subchapter S)
MAKING IT LEGAL
29
30
Recommendations
Insurance Considerations SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
• • • • • • •
Keep It Simple • Sole proprietorship or partnership • If liability is a concern, an LLC or S-corporation • Multiple Owners increases complexity
31
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
Property Liability Motor Vehicles Umbrella Liability Worker’s Compensation Health Life
32
8
3/26/2018
Government Regulations
Every Business Owner Needs…
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
• • • • •
• Business Licenses and Approvals • Labor Laws • Immigration Laws (Form I 9) • IRS and Social Security Withholding & Payments • State Sales Tax requirements
33
Banker Lawyer Accountant Insurance Agent Business Mentor
34
Money
SESSI O
N
Considerations
1 :S t a r t- U p B a s ic s
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
• 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
FUNDING AND CASH MANAGEMENT
35
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
36
9
3/26/2018
Start-Up Cash Needs
Operating Cash Needs
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
Essential Considerations: • Professional fees • Web site • Tools and equipment • Leasehold improvements • Licenses and permits • Initial inventory • Working capital reserve fund
• • • • • • • •
37
Equity Signifies Ownership Personal savings Family and friends Partners’ contributions Profits retained in the business
Lender’s View of Borrower
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
Debt Does NOT Signify Ownership • • • •
• • • • • • • • • •
Banks and credit unions* Family and Friends Micro Loans Credit cards (not recommended)
* Might be guaranteed by SBA
39
SESSION 1: Start-Up Basics
Salaries Rent Insurance Taxes and fees Marketing Loan interest/ principal Utilities Maintenance
38
Sources of Capital
• • • •
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
Character, Commitment Credit score Cash flow Collateral, Capital Industry knowledge Personal investment (%) Financial history Financial projections Management skills Competition
40
10
3/26/2018
Cash: Most Important Asset Tips
SESSION 1: Start-Up Basics
• Open a separate bank account for your business • Deposit all receipts “in total” • Separate sales tax receipts on your books • Hang on to cash as long as possible • Aggressively collect your receivables • 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
SESSI O
N
1 :S t a r t- U p B a s ic s
BUSINESS PLANNING BASICS
41
42
Business Planning
• Determine whether your value proposition matches the customer segment it targets • Do enough people really care about the problem for this to be a viable business? • Prove the concept in the marketplace
Proof of Concept and Business Planning
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
• Clearly articulate the founder’s vision
43
Business Planning
SESSION 1: Start-Up Basics
• • • • • • • • •
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
Value Proposition Customer Segments Channels Customer Relationships Key Resources Partnerships Key Activities Cost Structure Revenue Streams
44
11
3/26/2018
Exercise 1: Small Business Readiness Self-Assessment
Self -Assessment SESSI O
N
1 :S t a r t- U p B a s ic s
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
• A quick self-assessment will indicate strengths and areas to work on with your mentor and other associates.
SMALL BUSINESS READINESS SELF-ASSESSMENT
• 5 minutes to fill-in and score – form in folder
45
46
Homework
Help Us, Help You
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
Please complete our workshop survey:
1. Write a vision statement for your business
idea(s). Template in folder. It should contain:
• Feedback Survey is in your folder • Please complete before leaving • Free Mentoring Request On Survey
a) The overall purpose of your business: What are you trying to achieve? Why are you in business? b) Describe the products and services your business provides. c) Explain what is important to your business—the values your business lives by.
47
SESSION 1: Start-Up Basics
48
12
Indianapolis SCORE
About SCORE
SESSION 1: Start-Up Basics
Successful and experienced executives acting as volunteers Seminars and workshops No-Charge Mentoring • One-on-one • E-mail Resources for small business:
indianapolis.score.org
Beginner’s Guide To Business Success 1
2
Sign Up For Mentoring SESSI O
N
Start-Up Basics
1 :S t a r t- U p B a s ic s
SCORE Offices- 8500 Keystone Crossing, Suite 401, Indianapolis or One Zone Offices - 10305 Allisonville Rd. Fishers Call 317-226-7264 for an appointment in either location
•
Greenwood, Call 317-888-4856 For An Appointment In Greenwood
• • • • •
•
Or at www.Indianapolis.score.org Or Request An Appointment Today
SESSION 1: Start-Up Basics
Myths and realities of entrepreneurship Different ways to start a business Entrepreneurial characteristics Different parts of marketing Making it legal Funding and cash management Business planning basics
4
1
3/26/2018
Nice to Meet You!
SESSION 1: Start-Up Basics
SESSI O
N
1 :S t a r t- U p B a s ic s
Stand up and briefly, but loudly, tell us:
MYTHS AND REALITIES OF ENTREPRENEURSHIP
• Your name • Your Business idea(s) • What you want to learn today
5
6
Myths and Realities of Entrepreneurship
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.
7
Myths and Realities of Entrepreneurship
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
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.
8
2
3/26/2018
Reality: Business Success
Starting a Business
SESSION 1: Start-Up Basics SESSI O
After 2 Years
N
1 :S t a r t- U p B a s ic s
After 5 Years
SESSI O
N
1 :S t a r t- U p B a s ic s
WAYS TO START A BUSINESS • Start a Brand New Business • Buy an Existing Business • Buy a Franchise Location: • Home Based Business • On-Line Business • Brick and Mortar Business
Source: U.S Dept. of Commerce, Bureau of the Census, Business Dynamics Statistics
10
Start a Brand 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.
11
Buy an Existing Business
SESSION 1: Start-Up Basics SESSION 1 : Sta rt-Up Ba si cs
DISADVANTAGES • No base, must build all new • Greater risk • No track record = difficulty in financing • See your dream become a nightmare.
SESSION 1: Start-Up Basics SESSION 1 : Sta rt-Up Ba si cs
DISADVANTAGES ADVANTAGES • Potential hidden issues: • Established clientele, debts, poor reputation, suppliers, location loyalty to owner, out-of• Known quantity, proven date inventory or transfer formula/name issues • Help in starting and • No guarantee that running business success will continue. • Can review records • Easier to obtain financing.
12
3
3/26/2018
Buy 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.
SESSION 1 : Sta rt-Up Ba si cs
DISADVANTAGES • Loss of control - not always your own boss • Franchise = franchise fee and royalty payments ($) • Operational boundaries and limited choices • Binding contract • Franchisor problems are your problems.
13
ADVANTAGES • Convenient work location • Less expensive • Flexible schedule • Tax Advantages - Sq. Ft of total home - Percentage of utilities. – Or Safe Harbor
SESSION 1: Start-Up Basics SESSION 1 : Sta rt-Up Ba si cs
DISADVANTAGES • Zoning or deed restrictions • Isolation from others • Difficult financing • Family distractions
14
Online Business ADVANTAGES • Lower startup costs • Expanded geographic reach • Convenience & accessibility • Flexibility.
15
Home Based Business
SESSION 1: Start-Up Basics
Brick and Mortar Business
SESSION 1: Start-Up Basics SESSION 1 : Sta rt-Up Ba si cs
DISADVANTAGES • Need an excellent web site • Low conversion rates • Low barriers to entry = higher competition • Severe price pressure • No personal contact/ limited sensory info.
ADVANTAGES • You, the products and the customers meet face-toface • Potential customers see your business • Convenience & accessibility • Traditional.
SESSION 1: Start-Up Basics SESSION 1 : Sta rt-Up Ba si cs
DISADVANTAGES • High startup costs • Ongoing overhead expenses • Bad location? • Lack of flexibility..
16
4
3/26/2018
Entrepreneurs
SESSI O
N
Entrepreneur Characteristics
1 :S t a r t- U p B a s ic s
• • • • • • • • •
ENTREPRENEUR CHARACTERISTICS
17
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
Self-starter Resourceful Responsible Organized Hard worker Persistent Decisive Healthy Supportive family
18
Successful Entrepreneurs Have all This
How many hats will you wear?
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
• Adequate capital • Ability to manage and multitask • Education/experience in field • Strong work ethic • Effective time management • Willingness to ask for input from others 19
20
5
3/26/2018
Marketing
SESSI O
N
Marketing in General
1 :S t a r t- U p B a s ic s
SESSI O
N
1 :S t a r -t U p B a s ic s
• 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.
DIFFERENT PARTS OF MARKETING
21
22
Branding
Product and/or Service
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
• Definition of offering • Functionality and packaging • Differentiation • Value Proposition
• Name recognition • Qualification of product/service • Market identity • Advertising • Creating Trust.
23
SESSION 1: Start-Up Basics
• Who needs it? • Why do they need it? • How is it different or better than the competition? 24
6
3/26/2018
Price
Place: Where will your product be?
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
N
1 :S t a r t- U p B a s ic s
26
Sales
• Customer contact work • Finding prospects • Managing Prospect Pool • Making presentations • Preparing bids • Closing deals • Processing orders. 27
SESSI O
• Location, Location, Location • Niche / target market • Competition • Distribution • Merchandising • Is it a service? • Where will you go?
• Pricing Strategy is part of Marketing • Consumer Reaction (demand) • Cost • Competition • Credit Terms and Discount. 25
SESSION 1: Start-Up Basics
Know Your Competition
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
SESSION 1: Start-Up Basics SESSI O
N
1 :S t a r t- U p B a s ic s
• Size of operation and number of employees • Price and quality • Services provided • Reputation: strengths and weaknesses • Personal visits and observations • Inspect their Website • Talk to suppliers & contractors. 28
7
3/26/2018
The Law & Your Business SESSI O
N
Business Entities
1 :S t a r t- U p B a s ic s
• Sole Proprietorship • Partnership • Limited Liability Company (LLC) • “C” Corporation (Conventional) • “S” Corporation (Subchapter S)
MAKING IT LEGAL
29
30
Recommendations
Insurance Considerations SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
• • • • • • •
Keep It Simple • Sole proprietorship or partnership • If liability is a concern, an LLC or S-corporation • Multiple Owners increases complexity
31
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
Property Liability Motor Vehicles Umbrella Liability Worker’s Compensation Health Life
32
8
3/26/2018
Government Regulations
Every Business Owner Needs…
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
• • • • •
• Business Licenses and Approvals • Labor Laws • Immigration Laws (Form I 9) • IRS and Social Security Withholding & Payments • State Sales Tax requirements
33
Banker Lawyer Accountant Insurance Agent Business Mentor
34
Money
SESSI O
N
Considerations
1 :S t a r t- U p B a s ic s
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
• 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
FUNDING AND CASH MANAGEMENT
35
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
36
9
3/26/2018
Start-Up Cash Needs
Operating Cash Needs
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
Essential Considerations: • Professional fees • Web site • Tools and equipment • Leasehold improvements • Licenses and permits • Initial inventory • Working capital reserve fund
• • • • • • • •
37
Equity Signifies Ownership Personal savings Family and friends Partners’ contributions Profits retained in the business
Lender’s View of Borrower
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
Debt Does NOT Signify Ownership • • • •
• • • • • • • • • •
Banks and credit unions* Family and Friends Micro Loans Credit cards (not recommended)
* Might be guaranteed by SBA
39
SESSION 1: Start-Up Basics
Salaries Rent Insurance Taxes and fees Marketing Loan interest/ principal Utilities Maintenance
38
Sources of Capital
• • • •
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
Character, Commitment Credit score Cash flow Collateral, Capital Industry knowledge Personal investment (%) Financial history Financial projections Management skills Competition
40
10
3/26/2018
Cash: Most Important Asset Tips
SESSION 1: Start-Up Basics
• Open a separate bank account for your business • Deposit all receipts “in total” • Separate sales tax receipts on your books • Hang on to cash as long as possible • Aggressively collect your receivables • 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
SESSI O
N
1 :S t a r t- U p B a s ic s
BUSINESS PLANNING BASICS
41
42
Business Planning
• Determine whether your value proposition matches the customer segment it targets • Do enough people really care about the problem for this to be a viable business? • Prove the concept in the marketplace
Proof of Concept and Business Planning
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
• Clearly articulate the founder’s vision
43
Business Planning
SESSION 1: Start-Up Basics
• • • • • • • • •
SESSION 1: Start-Up Basics SESSION 1: Start-Up Basics
Value Proposition Customer Segments Channels Customer Relationships Key Resources Partnerships Key Activities Cost Structure Revenue Streams
44
11
3/26/2018
Exercise 1: Small Business Readiness Self-Assessment
Self -Assessment SESSI O
N
1 :S t a r t- U p B a s ic s
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
• A quick self-assessment will indicate strengths and areas to work on with your mentor and other associates.
SMALL BUSINESS READINESS SELF-ASSESSMENT
• 5 minutes to fill-in and score – form in folder
45
46
Homework
Help Us, Help You
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
SESSION 1: Start-Up Basics
Please complete our workshop survey:
1. Write a vision statement for your business
idea(s). Template in folder. It should contain:
• Feedback Survey is in your folder • Please complete before leaving • Free Mentoring Request On Survey
a) The overall purpose of your business: What are you trying to achieve? Why are you in business? b) Describe the products and services your business provides. c) Explain what is important to your business—the values your business lives by.
47
SESSION 1: Start-Up Basics
48
12
