Empowering Business Spirit Welcome to the Empowering Business Spirit Seminar Empowering Business Spirit Seminar Presenter: To Be Announced Entrepreneurial Spirit Seminar Schedule EDC, EBS, SBDC, and partners (who we are and what we do) Entrepreneurial Spirit (statistics and reality) Feasibility Study Process (Will I have customers?) 10 Minute Break Business Plan (overview) Legal Issues/Business Structure (pros & cons) Financing (you and the bank) Questions & Answers (Evaluation) EDC EBS MainStreet SBA C of C EBS, Partners, and Entrepreneur LCC NMEDD NMHU SBDC Others Overview of our Common Goals Goal: To Grow Businesses and Create Jobs Designed: To maximize business success by coupling financial programs, managerial and technical assistance What drives the EBS Project: Seeing Small business succeed by Planning (a well developed business plan) and Seeking Professional Advisors, while avoiding the problems of staffing and understanding that years of education do not necessarily correlate with success Empowering Business Spirit •20 Major EBS Partners • Referral system resources • One on One Business Counseling • Seminars • Resources (software, stats & advice) CLIENT FLOW CHART Client EDS Presentation Business Plan Workshop Resource Referrals EDC 20 EBS SBDC SBA Others Completed Business Plan Entrepreneurial Spirit Seminar Every 30 seconds of every day, someone somewhere in the United States starts a new business. Every 30 seconds someone stakes their money, their labor, their good name on the unshakable belief that they can make or provide something bigger, better, faster, or cheaper than the other person. Entrepreneurial Spirit Seminar In America today, smaller businesses, Companies with fewer than 20 employees, create 98% of all new jobs. Entrepreneurial Spirit Seminar There are more than 21,000,000 small business in the U.S. 16,000,000 have the owner as the sole employee. 5,000,000 have between 1 and 500 employees. It is estimated that between 800,000 and 1,000,000 business are begun every year. Entrepreneurial Spirit Seminar Small businesses… – employ 53% of the private workforce. – provide 47% of all sales receipts. – provide 55% of innovations. – account for 35% of federal contract dollars. – account for 28% of jobs in high technology sectors. – account for 51% of private sector output. Entrepreneurial Spirit Seminar US Patent Office currently reviews more than 10,000 patent applications monthly. Over 500,000 new firms have emerged in the US every year since the mid eighties, around 1,500 daily. Entrepreneurial Spirit Seminar During the 1950’s only 100,000 new business were incorporated annually. During the 1970’s the number was over 200,000 new businesses yearly. During the 1990’s the number is up to 600,000. During 2000’s number continues strong Add the increasing competition from US and foreign corporations. Business Dissolution Rates (%) all firms franchises 1-4 jobs 5 or more employees after 2 yrs. 23.7 25.4 8.3 6 after 4 yrs. 52.7 59.2 19.6 13.1 after 6 yrs. 62.2 61.6 23.5 21.1 after 8 yrs. 70.9 72.5 46.5 30 80 70 60 50 after 2 yrs. 40 after 4 yrs. after 6 yrs. 30 after 8 yrs. 20 10 0 all firms franchises 1-4 jobs 5 or more Source: Dun and Bradstreet Corp. and U.S. Department of Labor How many small businesses opened? Incorporate 647,675 768,180 790,569 New Firms 769,124 819,477 842,357 900,000 800,000 700,000 600,000 500,000 Incorporate 400,000 New Firms 300,000 200,000 100,000 0 Source: Dun and Bradstreet Corp. and U.S. Department of Labor How many small businesses closed? Bankruptcies 63,912 50,516 53,214 Failures 60,746 71,194 71,811 (125,025) Terminations 837,511 863,699 849,839 900,000 800,000 700,000 600,000 Bankruptcies 500,000 Failures 400,000 Terminations 300,000 200,000 100,000 0 Source: Dun and Bradstreet Corp. and U.S. Department of Labor Entrepreneurial Spirit ORGANIZED + CREATOR + IMPROVER + MANAGER (Plan, Staff, organize, and decision-making) [Administer, maintain, control, short-term view, ask how and when, initiate, accept the status quo, do things right.] + LEADER (control, motivate, charismatic) [Innovate, develop, inspire, long-term view, ask what and why, originate, challenge the status quo, do the right things.] --------------------- = ENTREPRENEUR ! ! ! Entrepreneurial Spirit Seminar Owning your business can be a wonderful opportunity: To be your own boss. To take charge of your financial future. To work 7 days a week, 24 hours a day, with no pay check at the end. Entrepreneurial Spirit Seminar Expect to work an average number of about 64 hours per week 84% of Entrepreneurs polled love the type of work that they do every week! Myths of Business Ownership 1. I can start living off the business immediately. 2. I’ll be my own boss. 3. I’ll get rich overnight. 4. I have nothing to lose (OPM). 5. Will give me independence. More Myths…. Will allow me time off any time I want. Will let me control the business. Will make a lot of money. Will be easy to do. Will be easy to get funding for my great idea. Feasibility Study It is a Planning Process That Helps you: Determine if your business idea is a true opportunity or an unrealistic idea that will take your time, money and energy? Determine if your idea is “do-able”. Assess personal and financial resources necessary for success. Become familiar with Business Plan concept. Feasibility Study DOES YOUR BUSINESS IDEA HAVE THE THREE-WAY FIT? Market Fit Financial Fit Personal Fit The Feasibility Process IDEA Definition Objectives The Feasibility Process IDEA MARKET ANALYSIS INDUSTRY MARKET COMPETITION (price, differentiation, and focus) The Feasibility Process IDEA MARKET REQUIREMENTS ANALYSIS EXPERIENCE TIME LEGAL FINANCING The Feasibility Process IDEA MARKET ANALYSIS REQUIREMENTS DECISION The Feasibility Process IDEA MARKET REQUIREMENTS DECISION GO ANALYSIS NO RE- EVALUATE The Feasibility Process IDEA MARKET REQUIREMENTS DECISION GO BUSINESS ANALYSIS PLAN Defining Your Objectives Define your short and long term goals Personal Goals – Why are you starting this business? – What do you want to accomplish? Business Goals – More detailed, SMART targets of performance Specific Measurable Assignable Realistic Timely Why are you going into business? Source: Maslow, 1943; French and Raven, 1959 Independence Personal Fulfillment Lifestyle Change Self Actualization Respect Esteem needs Money Power Affection needs – Socialized Power – Personalized Power Reward Safety Coercive legitimate Expert Physiological Referent Goals The World has a funny habit of making room for those who know where they are going. Write them down Follow through Defining Your Business Idea 1. What specific products/services will you sell? 2. Who will be your main customers? 3. What is the real or perceived need for your product or service? 4. Do you know your market? (demographics) Defining Your Business Idea 5. How is that need being met currently? (Competitive Analysis) 6. In what way will your business better meet that need? (differentiation) 7. What additional products/services could be offered as your business grows? What is a Business Plan? It is a document that convincingly demonstrates that your business can sell enough of its product or service to make a satisfactory profit and be attractive to potential backers. What is a Business Plan? It is a selling document. It sells your business and its executives to potential backers, from bankers to investors to partners to employees. A short written document that serves as a guide to your future, provides direction and focus, and helps you model your business and avoid problems. Why Bother ? A Business Plan, should attract YOU to the business. A Business Plan, should attract others into the business. A Business Plan gives you confidence. A Business Plan improves your chances of success. A Business Plan Provides a road map for your business. What About The Real World? Obtaining bank financing. Seeking investment funds. Arranging strategic alliances. Obtaining large contracts. Attracting key employees. Completing mergers and acquisitions. Motivating your management team. Press the flesh The Business Plan-- What Does It Do? Helps conceptualize business and set reasonable and achievable goals. Attracts lenders and investors. Provides an organized view of your business. Details research from the feasibility study, management, sales, marketing, finances, etc... The Business Plan “If you aim at nothing, you will hit it everytime” -Theodore Roosevelt Key Elements of any Business Plan 1. Executive Summary/Introduction 2. Description of Products/Services 3. Manufacturing & Operations Plan 4. Marketing Strategy and Competitor Analysis 5. Sales Plan 6. Management Plan 7. Financial Analysis Attachments to the Business Plan Tax Returns (Business & Personal) Resumes Written Estimates Personal Financial Statements Contracts / Agreements Org. Charts / Job Descriptions Appraisals / Blue Prints / Floor Plans Other Relevant Information Basics of the Business Plan 1. There is no single right format. 2. Be creative. 3. Be as concise and focused as possible. 4. The plan should reflect the company’s personality. 5. Include negatives as well as positives. 6. Write it over a period of weeks. Guidelines for Preparing a Business Plan Remember: No one can create your plan for you. Lenders are interested in the strategies for reaching financial projections. Show how you plan to set your business apart from competitors. Identify your market, offer evidence that customers for your product or service exist. Develop realistic financial forecasts (be sure to explain how they were derived) Ways to Organize your Business Sole Proprietorship General Partnership Limited Partnership Regular Corporation S Corporation Limited Liability Company When to see an Attorney Business Start-up – Incorporation – Partnerships Leases / Real Estate / Contracts Debt Collection Patents, Inventions, Copyrights, Trademarks Unemployment Hearings Bankruptcy and Reorganization Buying/Selling/Merging a Business Compliance with Environmental Laws Compliance with Employment Discrimination Laws Licensing Formal Written Opinions Legal Checkup Places To Go Before Starting Your Business City Community Development Office (Register/License Business, $35 annually) Planning and Zoning (Zoning approvals) Secretary of the State (Incorporate) NM State Comptroller (Tax Permit) Internal Revenue Service (EIN #) City Offices Fire Department See Handout for More details The 5 C’s of Credit Character Capacity Conditions Collateral Capital $ources of Capital, From Most Common to Least Common Personal Savings, Insurance, Retirement (0%) Family or Friends (2-7%) Suppliers Personal Loans Banks (10-16%) Private Investors (18-25%) Public Sources Venture Capital (20-40+%) Secondary Sources of Financing Small Business Administration Farmers Home Administration Federal, State, and Local Programs How to Lower the Risk? Get experience in management and in your business. Plan ahead (save). Have support from your family! Be ready to persevere. Use only facts in decision-making. Follow your strengths and interests. Never be too proud to quit. Survival Strategies Focus completely on satisfying the customer. Study the success of others. Gather and analyze management information regularly. The Kaizen strategy (continuous improvement involving everyone - TQM). Embrace change with a positive attitude. Source: Dan Taylor, Pres. Data Star Communications Final Comments Plan Your Work… ...And Work Your Plan ! ! THANK YOU ALL ! !