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Simple Steps for Starting Your Business | Entrepreneur Road Map | SCORE

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).

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Simple Steps for Starting Your Business | Entrepreneur Road Map | SCORE

  1. 1. Simple Steps for Starting Your Business Start-up Basics
  2. 2. Simple Steps for Starting Your Business Session 1: Start-up Basics
  3. 3. 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
  4. 4. Mentoring Locations • SCORE DC has locations in DC, No. Va. And Montgomery County, Md. • I have copies of our exact locations on my desk.
  5. 5. Myth #6 Myth: If you choose to be selfemployed, 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.
  6. 6. Reality: Business Success After 5 Years Percent of New Businesses (2+ employees) Source: U.S Dept. of Commerce, Bureau of the Census, Business Dynamics Statistics
  7. 7. Critical Success Factors • Good choice of time and location • Adequate capital • Ability to manage and multitask • Education/experience in field • Strong work ethic • Effective time management • Willingness to ask for input from others
  8. 8. Simple Steps for Starting Your Business Business Opportunities
  9. 9. Starting a New Business ADVANTAGES • Not hampered by previous image or technologies • Can choose location, name, logo, relat ionships • 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
  10. 10. Buying a Business ADVANTAGES • Established clientele, suppliers, locati on • 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records • Easier to obtain financing DISADVANTAGES • Potential hidden issues: debts, poor reputation, loyalty to owner, out-of-date inventory or transfer issues • No guarantee that success will continue
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. Entrepreneur Characteristics • • • • • • • • • Self-starter Resourceful Responsible Organized Hard worker Persistent Decisive Healthy Supportive family
  15. 15. How Many Hats Will You Wear?
  16. 16. 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
  17. 17. Sales • • • • • • Customer contact work Finding prospects Making presentations Preparing bids Closing deals Processing orders
  18. 18. 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?
  19. 19. Position • Location, Location, Locatio n • Niche / target market • Competition • Distribution • Merchandising
  20. 20. Branding • Name recognition • Qualification of product/service • Market identity • Advertising
  21. 21. Price • • • • Consumer reaction Cost Competition Credit terms and discount
  22. 22. 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
  23. 23. Business Organization Forms • Sole Proprietorship • Partnership • Limited Liability Company (LLC) • “C” Corporation (Conventional) • “S” Corporation (Subchapter)
  24. 24. Recommendations for Start-ups Keep It Simple • Sole proprietorship or partnership • If liability and/or taxation is a concern, an LLC or Scorporation
  25. 25. Insurance Considerations • • • • • Property Liability Motor Vehicles Umbrella Liability Worker’s Compensation • Health • Life • Business Interruption
  26. 26. Government Regulations • Business Licenses and Approvals • Labor Laws • Immigration Laws • IRS and Social Security Withholding & Payments
  27. 27. Every Business Owner Needs: • • • • Banker Lawyer Accountant Insurance Agent • Business Mentor
  28. 28. Simple Steps for Starting Your Business Funding and Cash Management
  29. 29. Personal Budget Considerations • 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
  30. 30. Start-up Cash Needs Essential Considerations: • Tools and equipment • Leasehold improvements • Licenses and permits • Professional fees • Initial inventory • Working capital reserve fund
  31. 31. Operating Cash Needs • • • • • • • • Salaries Rent Insurance Taxes and fees Advertising Loan interest/ principal Utilities Maintenance
  32. 32. Sources of Capital Equity Debt Signifies Ownership • Personal savings • Family and friends • Partners’ contributions • Profits retained in the business Does NOT Signify Ownership • Banks and credit unions* • Community Express Micro Loans* • Credit cards (not recommended) * Usually guaranteed by SBA
  33. 33. Lender’s View of Borrower • • • • • • • • • • Character, Commitment Credit rating Cash flow Collateral, Capital Industry knowledge Personal investment Financial history Financial projections Management skills Competition
  34. 34. 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

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