NUTS & BOLTS of STARTING A BUSINESS
Debbie Neuman Target Technology Incubator Student Innovation Center
University of Maine targetincubator.com umaine.edu/innovation dneuman@maine.edu 207-866-6535
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Top 3 Reasons Companies Fail…
1. Inadequate planning 2. Inadequate planning 3. Inadequate planning
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THIS WORKSHOP WILL COVER:
Business Plans:
What are they? Why do you need one? What should they include? How to write one? How to get assistance?
Resources for your business:
Where can you get assistance to complete your business plan? Where can you get assistance to grow your business?
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BUSINESS PLANS
What is a business plan?
A business plan is a written document that describes your business start-up or expansion.
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Why do you need to write a business plan? Your business plan is your greatest asset in successfully managing your business…. ….refer to it often…..update it regularly….
The better you plan, the better your chances for success.
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Business Plans have Internal and External Value:
Internal Value:
Management:
• • • As a day-to-day management tool As a road map for running your business Reduces risk: • Do your due diligence!
Provide mission for staff Educate staff about the company’s past, present, and future goals Identify strengths, weaknesses, opportunities, threats and trends Communicate expectations and priorities Provide basis for measuring milestones Provide framework for management and financial decisions
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Operations:
• • • • • •
External Value:
• Represent business opportunity to potential investors. • Demonstrate the likelihood of reasonable return on investment. • Lenders/investors/advisors/partners will require a plan.
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What should your business plan demonstrate?
Your business plan should demonstrate that your business idea is: 1. Feasible 2. Viable
3. Desirable
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Feasibility means…
Capable of being done, possible, likely, reasonable, probable and suitable; • There is a market for the product and service. • The plan presents a structure adequate for entering and serving the market. • The resources (money, marketing and management) exist or are accessible for entering and serving the market.
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Viability means…
The stage of development that will permit the business to live and/or grow;
• The plan presents feasibility. • The plan presents opportunities for an ongoing relationship with the market, or ... • The plan presents a specific relationship with the market that depicts a profitable interaction with the market.
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Desirability means…
Desirability means…. Worth wanting, pleasing; • The business will produce the income the company/investor is seeking. • The owner understands the reality of the work environment he/she will be involved in. • The owner understands the business environment, responsibilities and duties involved with operating the business.
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It’s all about Due Diligence!
Perform your own due diligence… • You need to prove it to yourself, before you can prove it to others…
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The process…
• Business planning is on-going… …you are never done! • Expect changes in
– – – – – – – Product/service concept Definition of market Pricing Assessment of competition Understanding of costs Commercialization strategy Development of the “team”
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“Plans are nothing. Planning is everything.”
-Dwight D. Eisenhower
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Develop a plan around…
• • • • • • Products, technology Markets Customers Competitors Management Money
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Perform your SWOT Analysis
• • • • Strengths Weaknesses Opportunities Threats
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Business Plans and Business Planning
• Business plans are only as good as the research which precedes it! • Rigorous business research is necessary • It is not a writing exercise but a research endeavor
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Business Plan Contents
• Executive Summary • Describe Company & Product/Technology
– – – – Mission Location, size, history Company capabilities Customers & past performance
• Customers
– Description & end-users – How need is currently filled
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Contents Continued…
• Markets: Market Definition
– Primary and secondary markets – Market size/trends
• Industry Analysis
– Trends/new products
• Competitors
– Direct and Indirect
• Who are they? • Strengths and weaknesses • Market share of competitors
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Marketing/Sales Plan
– Marketing/sales objectives – Current customers (if any) – Potential customers – Potential teaming partners – Pricing strategy – Sales Plan – Advertising/PR plan – Sales/Marketing budget
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• “An idea is never given to you without you being given the power to make it reality. You must, nevertheless, suffer for it.”
- Richard Bach
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Human Resource Plan
• Staffing objectives • Organizational structure
– Describe management team – Recruitment plan – Board of directors/ advisors
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Management Plan and Capacity
• Describe the skills/experience of your team that will allow you to successfully operate this business. • Who will be responsible for what? • Will you need to hire employees? If so, what will their responsibilities be? • Will you use outside advisors, such as accountants, attorneys? If so, what role will they play in helping you manage your business?
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Contingencies
• Assess the potential risks/threats to your success? • Discuss impact and planned responses:
– – – – May include management issues Industry issues R&D/ production issues Access to adequate capital
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“Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.” Steve Jobs
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Financials
• Financial Objectives
– Sources and uses of funds – Terms/conditions of existing financing agreements • Profit and loss statement • Cash flow projections • Balance sheet
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Cash Flow
• Understand your cash flow • Be aware of the “Valley of Death” Ask yourself…How long will it take to generate
income from sales… in the meantime… how am I going to pay the bills?
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Executive Summary
• Briefly sum up why you believe (from the information presented) that your business plans will be: Successful… Feasible… Viable… Desirable…
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Other information to include in your Business Plan (if available):
• • • • Copies of contracts for your services Copies of partnering/licensing agreements Patent information Letters of support from members of the community. • Letters of reference from customers/contacts. • Copies of marketing materials…brochures, business cards, etc.
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Sample Business Plans
Maine Small Business Development Centers www.mainesbdc.gov Small Business Administration www.sba.gov
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General Business Information Tax Forms/Licenses
Business Answers Location: Dept. of Economic and Community Development, Augusta, Maine Phone: 1-800-872-3838 Order: “A Guide to Doing Business in Maine” Small Business Administration Phone: 207-622-8376 www.sba.gov Order: “Small Business Resource Guide”
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Know these Organizations!
• UMaine’s Target Technology Center (@) targetincubator.com 207.866.6500 • UMaine’s Student Innovation Center (@) umaine.edu/innovation • Libra Future Fund ($) librafuturefund.org • Back To Business Radio Show (@) bizbuzzradio.com
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…and these…
• Maine Technology Institute ($@) mainetechnology.org 207-582-4790 • Small Business Development Centers (@) mainesbdc.org 207-780-4420 • Maine Manufacturing Extension Partnership ($@) mainemep.org 207-623-0680
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… and these
• Finance Authority of Maine ($) famemaine.com 800-228-3734 • Maine Procurement Technical Assistance Center (@) maineptac.org 800-339-6389 • Maine International Trade Center (@) mitc.com 207-942-6389
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…and these
• Eastern Maine Development Corporation ($@) emdc.org 207-942-6389
• Coastal Enterprises, Inc./CEI Ventures, Inc. ($@) ceimaine.org/venturecapital 207-772-5356
• Maine Patent Program (@) mainepatent.org 207-874-6521
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Find them all at…
mainebusinessworks.org
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A final thought…
“It is better to know some of the questions than all of the answers.”
- James Thurber Don’t be afraid to ask for help!!!
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