This document provides an overview of a seminar on starting a business. The seminar covers developing a business idea, selecting a business structure, managing cash flow, creating a business plan, and getting started on the right foot. It includes workshops on creating an elevator pitch, understanding cash flow, and components of a business plan. The goal is to help attendees understand the key considerations for starting a successful business.

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Welcome toWelcome to
Business SeminarsBusiness Seminars
How toHow to ReallyReally StartStart
Your Own BusinessYour Own Business

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WhatWhat isis SCORE?SCORE?
• A Non-Profit OrganizationA Non-Profit Organization
 SBA SponsoredSBA Sponsored
• Experienced VolunteersExperienced Volunteers
 All facets of businessAll facets of business
• Personal Counseling & MentoringPersonal Counseling & Mentoring
 Face-to FaceFace-to Face
• On Line Cyber CounselingOn Line Cyber Counseling
www.score.orgwww.score.org
Counselors to America’s Small BusinessCounselors to America’s Small Business

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Today’s AgendaToday’s Agenda
1.1. A Small Dose of Reality TherapyA Small Dose of Reality Therapy
2.2. Developing the Idea…Developing the Idea…
3.3. Structuring Your BusinessStructuring Your Business
4.4. Understanding Money & CashUnderstanding Money & Cash
FlowFlow
5.5. The Business PlanThe Business Plan
6.6. Starting Out on the Right FootStarting Out on the Right Foot
7.7. Q&A - Counselors RoundtableQ&A - Counselors Roundtable

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Reality TherapyReality Therapy
The taste is terrible…The taste is terrible…
but it works!but it works!

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Reality TherapyReality Therapy
• Advancing technologyAdvancing technology
• Corporate subcontractingCorporate subcontracting
• Accessible marketing informationAccessible marketing information
• E-commerce, InternetE-commerce, Internet
This can be a DeceptionThis can be a Deception
Perhaps you think…Perhaps you think…
““It’s easy to start a new business”It’s easy to start a new business”

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Reality TherapyReality Therapy
• Intense competitionIntense competition
• Fickle customersFickle customers
• Difficulty raising capitalDifficulty raising capital
• Difficulty finding good peopleDifficulty finding good people
These can be Land Mines…These can be Land Mines…
Have you noticed how fastHave you noticed how fast
business conditions change?business conditions change?

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Reality TherapyReality Therapy
 Difficulty raising capitalDifficulty raising capital
 Difficulty finding good peopleDifficulty finding good people
 Finding the right marketplaceFinding the right marketplace
The Land Mines!The Land Mines!

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Reality TherapyReality Therapy
• FamilyFamily
• LocationLocation
• Income – now or laterIncome – now or later
• TalentsTalents
YourYour PersonalPersonal GoalsGoals……
the most important issuesthe most important issues

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The IdeaThe Idea
How to look atHow to look at youryour
ideaidea…… objectivelyobjectively

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The IdeaThe Idea
• Personal goalsPersonal goals
• Prior work experiencePrior work experience
• Knowledge baseKnowledge base
• Solving a problemSolving a problem
• The right attitudeThe right attitude
Where does it come from?Where does it come from?

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Evaluate the IdeaEvaluate the Idea
1.1. Has theHas the IdeaIdea passed thepassed the Time TestTime Test??
2.2. Are you ready to commitAre you ready to commit 55 years?years?
3.3. Is thisIs this IdeaIdea reallyreally for you?for you?
4.4. What is theWhat is the rewardreward potential?potential?
5.5. Are you plugged into theAre you plugged into the rightright
networksnetworks??

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Test the IdeaTest the Idea
• Gather your factsGather your facts
Get more than you needGet more than you need
• Talk to prospective customersTalk to prospective customers
Express your Idea…listen carefully!Express your Idea…listen carefully!
• Assess the CompetitionAssess the Competition
Strengths & WeaknessesStrengths & Weaknesses
Pricing & DistributionPricing & Distribution
Startup market researchStartup market research

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Protect the IdeaProtect the Idea
• Theft?Theft?
Much less danger than you think!Much less danger than you think!
• Protect what is proprietaryProtect what is proprietary
Patents & AgreementsPatents & Agreements
• Understand reality…Understand reality…
Copyright & TrademarksCopyright & Trademarks

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A New TechniqueA New Technique
TheThe Elevator Talk:
It’s a well-practiced answer to the questionIt’s a well-practiced answer to the question
Tell me, what’sTell me, what’s youryour business?business?
Brevity and content are what countBrevity and content are what count
Your mother would understand in theYour mother would understand in the
time it takes to ride an elevator up totime it takes to ride an elevator up to
the second floor.the second floor.
Experts say, “Be ready to sell your businessExperts say, “Be ready to sell your business
whenever the opportunity arises.”whenever the opportunity arises.”

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WorkshopWorkshop
How to createHow to create
youryour
“Elevator Talk”“Elevator Talk”

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Put the Idea in WordsPut the Idea in Words
1.1. State your business conceptState your business concept
What is itWhat is it you doyou do for Customers?for Customers?
1.1. How does the Customer benefit?How does the Customer benefit?
What’sWhat’s in itin it for the Customer?for the Customer?
1.1. Who is in your Target Market?Who is in your Target Market?
How can Prospects beHow can Prospects be identifiedidentified? Separate from others?? Separate from others?
1.1. How doHow do youyou want customers towant customers to
perceiveperceive your business?your business?
Write yourWrite your Idea’sIdea’s components…components…
(each in(each in 2525 words or less)words or less)

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Your Elevator TalkYour Elevator Talk
Now…Now…
Boil down all 4 answers to just…Boil down all 4 answers to just…
2525 toto 3030
wordswords

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Select yourSelect your
Business StructureBusiness Structure
ExamineExamine 44 AlternativesAlternatives

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Business StructureBusiness Structure
4 choices…4 choices…
• Sole ProprietorshipSole Proprietorship
• PartnershipPartnership
• IncorporationIncorporation
• Limited LiabilityLimited Liability

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Business StructureBusiness Structure
• Most used – 70% of 20 millionMost used – 70% of 20 million
businessesbusinesses
• Easy and inexpensiveEasy and inexpensive
• You own the liabilityYou own the liability
Sole ProprietorshipSole Proprietorship

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Business StructureBusiness Structure
• Group gains Tax benefitsGroup gains Tax benefits
• Easy, inexpensive & flexibleEasy, inexpensive & flexible
• You still own the liabilityYou still own the liability
PartnershipPartnership

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Business StructureBusiness Structure
• Separates personal from businessSeparates personal from business
• CredibilityCredibility
• FlexibilityFlexibility
CapitalizationCapitalization
Health & Insurance benefitsHealth & Insurance benefits
• S-CorporationS-Corporation
 Tax benefitsTax benefits
IncorporationIncorporation

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Business StructureBusiness Structure
• A Hybrid – Corporate & PartnershipA Hybrid – Corporate & Partnership
• Professional servicesProfessional services
• Income and Tax benefitsIncome and Tax benefits
Limited Liability CompanyLimited Liability Company

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Managing your MoneyManaging your Money
Cash FlowCash Flow is the mostis the most
important processimportant process
you have to masteryou have to master

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Cash FlowCash Flow
Cash FlowCash Flow helps you knowhelps you know how muchhow much
cashcash you’ll needyou’ll need beforebefore the businessthe business
supports itself.supports itself.
Cash FlowCash Flow isis notnot the same asthe same as
Profit & Loss.Profit & Loss.
Cash FlowCash Flow is the movement of moneyis the movement of money
into and out of the business overinto and out of the business over
a specified period of time.a specified period of time.

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Stretch Your CashStretch Your Cash
• WatchWatch overheadoverhead costscosts
• AlwaysAlways negotiatenegotiate on priceon price
• Give creditGive credit veryvery carefullycarefully
• Collect veryCollect very aggressivelyaggressively
Spend & Collect with care…Spend & Collect with care…

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WorkshopWorkshop
Understanding Cash FlowUnderstanding Cash Flow

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Cash Flow CriteriaCash Flow Criteria
• Cash Sales -Cash Sales - Begin at $5,000 monthly andBegin at $5,000 monthly and
increase by $3,000 in month 3 and $2,000increase by $3,000 in month 3 and $2,000
thereafter.thereafter.
• CollectionsCollections -- Are $1,000 each in monthsAre $1,000 each in months
2 and 3 and increase by $1,000 monthly2 and 3 and increase by $1,000 monthly
thereafter.thereafter.
CASH IN…CASH IN…

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Cash Flow TerminologyCash Flow Terminology
• The amount of cash you have on hand atThe amount of cash you have on hand at
the start of the month. Starting cash is thethe start of the month. Starting cash is the
same number as the previous month’ssame number as the previous month’s
ending balance.ending balance.
Cash In:Cash In:
• Sources of cash – sales, paid receivables,Sources of cash – sales, paid receivables,
interest and others.interest and others.
Starting Cash:Starting Cash:

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Cash Flow TerminologyCash Flow Terminology
• Fixed expensesFixed expenses – regular and not– regular and not
easily eliminated (rent, etc).easily eliminated (rent, etc).
• Variable expensesVariable expenses – Can change– Can change
from month to month (advertising,from month to month (advertising,
supplies, promotion, services.supplies, promotion, services.
Cash Out:Cash Out:

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Cash Flow TerminologyCash Flow Terminology
Ending Balance:Ending Balance:
How much cash is left at the end of theHow much cash is left at the end of the
month. (Cash In less Cash Out)month. (Cash In less Cash Out)
Cash Flow:Cash Flow:
The amount of cash that has flowedThe amount of cash that has flowed
through the business. It is a measure ofthrough the business. It is a measure of
change for that month.change for that month.

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Cash Flow CriteriaCash Flow Criteria
Rent is $3,000 a month.Rent is $3,000 a month.
Two employees are hired at salariesTwo employees are hired at salaries
of $24,000 a year each, paid on aof $24,000 a year each, paid on a
monthly basis.monthly basis.
Supplies cost $2,000 the first month andSupplies cost $2,000 the first month and
increase $1,000 a month until month 3,increase $1,000 a month until month 3,
then stay the same.then stay the same.
CASH OUT…CASH OUT…

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Cash Flow Month 1
Starting Cash $0
Cash IN
Cash Sales $1,000
Collections $0
Other
Total Cash IN $1,000
Cash OUT
Rent $700
Payroll $1,000
Other $300
Total Cash OUT $2,000
Ending BALANCE ($1,000)
Change (CASH FLOW) ($1,000)
Determining Cash Flow

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Determining Cash Flow
Cash Flow Month 1 Month 2
Starting Cash $0 ($1,000)
Cash IN
Cash Sales $1,000 $1,500
Collections $0 $500
Other
Total Cash IN $1,000 $2,000
Cash OUT
Rent $700 $700
Payroll $1,000 $2,500
Other $300 $300
Total Cash OUT $2,000 $3,500
Ending BALANCE ($1,000) ($2,500)
Change (CASH FLOW) ($1,000) ($1,500)

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Determining Cash FlowDetermining Cash Flow
Cash Flow Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Starting Cash $0 ($1,000) ($2,500) ($2,200) ($400) $2,900
Cash IN
Cash Sales $1,000 $1,500 $3,000 $4,000 $5,000 $5,000
Collections $0 $500 $1,000 $1,500 $2,500 $2,500
Other
Total Cash IN $1,000 $2,000 $4,000 $5,500 $7,500 $7,500
Cash OUT
Rent $700 $700 $700 $700 $700 $700
Payroll $1,000 $2,500 $2,500 $2,500 $2,500 $2,500
Other $300 $300 $500 $500 $1,000 $1,500
Total Cash OUT $2,000 $3,500 $3,700 $3,700 $4,200 $4,700
Ending BALANCE ($1,000) ($2,500) ($2,200) ($400) $2,900 $5,700
Change (CASH FLOW) ($1,000) ($1,500) $300 $1,800 $3,300 $2,800
Start Up Cash Required

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Determining Cash Flow
Cash Flow Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Starting Cash $2,500 $1,500 $0 $300 $2,100 $5,400
Cash IN
Cash Sales $1,000 $1,500 $3,000 $4,000 $5,000 $5,000
Collections $0 $500 $1,000 $1,500 $2,500 $2,500
Other
Total Cash IN $1,000 $2,000 $4,000 $5,500 $7,500 $7,500
Cash OUT
Rent $700 $700 $700 $700 $700 $700
Payroll $1,000 $2,500 $2,500 $2,500 $2,500 $2,500
Other $300 $300 $500 $500 $1,000 $1,500
Total Cash OUT $2,000 $3,500 $3,700 $3,700 $4,200 $4,700
Ending BALANCE $1,500 $0 $300 $2,100 $5,400 $8,200
Change (CASH FLOW) $1,500 ($1,500) $300 $1,800 $3,300 $2,800
Start Up Cash Invested

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The Business PlanThe Business Plan
 JustJust whatwhat is a businessis a business
plan?plan?
 Do IDo I reallyreally need it?need it?
 Do IDo I reallyreally have tohave to writewrite it?it?

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The Business PlanThe Business Plan
Discussing future plansDiscussing future plans
Demonstrating achievabilityDemonstrating achievability
Satisfying reader’s needsSatisfying reader’s needs
A selling document that sells by:A selling document that sells by:

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The Business PlanThe Business Plan
• Bank FinancingBank Financing
• Investment FundsInvestment Funds
• Strategic AlliancesStrategic Alliances
• Mergers & AcquisitionsMergers & Acquisitions
• Customer & Distributor RelationsCustomer & Distributor Relations
Using the Plan – Outside the CompanyUsing the Plan – Outside the Company

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The Business PlanThe Business Plan
A “Sanity Check”A “Sanity Check”
Force a thinking processForce a thinking process
Set specific, achievable goalsSet specific, achievable goals
Oblige management commitmentOblige management commitment
Using the Plan – Inside the CompanyUsing the Plan – Inside the Company

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The Business PlanThe Business Plan
• CompanyCompany
• PeoplePeople
• MarketMarket
• AccomplishmentsAccomplishments
• ProductionProduction
The data you’ll need:The data you’ll need:
Information about…Information about…

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The Business PlanThe Business Plan
• Summary PlanSummary Plan – 10 to 15 pages– 10 to 15 pages
Startup, bank funding, investmentStartup, bank funding, investment
• Full PlanFull Plan – 20 to 40 pages– 20 to 40 pages
Major financingMajor financing
• Operational PlanOperational Plan
Used internally to guide the companyUsed internally to guide the company
and its management.and its management.
How big a Business Plan?How big a Business Plan?

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Business Plan ContentsBusiness Plan Contents
• SummarySummary
• The CompanyThe Company
• Markets &Markets &
CompetitionCompetition
• Product/ServiceProduct/Service
DescriptionDescription
• MarketingMarketing
• ManufacturingManufacturing
• FinancialFinancial
InformationInformation
• Timetables &Timetables &
BenchmarksBenchmarks

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Starting OutStarting Out has a Dual Focus:has a Dual Focus:
All these business issuesAll these business issues
plusplus
Your own state of mindYour own state of mind

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Put your right foot first…Put your right foot first…
Make aMake a TOTALTOTAL CommitmentCommitment
SellSell yourselfyourself
BeBe single-mindedsingle-minded in seeking customersin seeking customers
Prepare yourself mentally to…Prepare yourself mentally to…

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Setup your first appointmentSetup your first appointment
for a 1-on-1 Counseling Meeting:for a 1-on-1 Counseling Meeting:
Go toGo to www.scoreworks.orgwww.scoreworks.org,,
Press the “Counseling” buttonPress the “Counseling” button
Ask for dates and subjects for upcoming…Ask for dates and subjects for upcoming…
SCORE Business SeminarsSCORE Business Seminars
Go toGo to www.scoreworks.orgwww.scoreworks.org,,
Press the “Seminars” buttonPress the “Seminars” button

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