Financial Considerations  for Your  Small Business
<ul><li>Front door to the land-grant system </li></ul><ul><li>Research-based education </li></ul><ul><li>107 county office...
Financial Plan:  By the numbers <ul><li>Elements of a Business Plan </li></ul><ul><ul><li>Executive Summary </li></ul></ul...
Be Prepared: Financial Questions . . . <ul><li>How much money do you need? </li></ul><ul><ul><li>When will you need it?  <...
Your Capital Portfolio <ul><li>Start-up Capital </li></ul><ul><li>Working Capital </li></ul><ul><li>Cash Reserve </li></ul...
Be Prepared: Think Numbers . . .  <ul><li>Raw product </li></ul><ul><li>Labor </li></ul><ul><li>Facility costs / rent </li...
Where Do Business Funds Come From?  <ul><li>Your $$  (Savings, Friends and Family, Credit Cards, Assets, etc.) </li></ul><...
Your Resources / Sources of Capital   <ul><li>Commercial lenders </li></ul><ul><li>SBA-guaranteed loans </li></ul><ul><li>...
Loans <ul><li>Types </li></ul><ul><ul><li>Real estate & Equipment </li></ul></ul><ul><ul><li>Working capital </li></ul></u...
The Bank Wants to Know… <ul><li>How much money do you need? </li></ul><ul><li>How will you use the money? Describe the ben...
Questions for your banker… <ul><li>Bank’s policy on small-business lending? </li></ul><ul><li>Restrictions or covenants? <...
Financial Stewardship <ul><li>Be able to diagnose what is happening with your business and respond appropriately. </li></u...
Track your Bottom-line <ul><li>Build a basic knowledge of business finance </li></ul><ul><li>Measure it – then manage it <...
Bottom-line . . .Trends <ul><li>Current cash position </li></ul><ul><li>Cash disbursements </li></ul><ul><li>New sales </l...
Be Creative and Adaptable <ul><li>… but  stay true to your vision and mission </li></ul><ul><li>View setbacks as learning ...
The Economy : Trends are Mixed <ul><li>Tougher to get credit but banks have money </li></ul><ul><li>Loans to start-ups dec...
Selected Financial Resources
Financial Resources . . . <ul><li>U.S. Small Business Administration   </li></ul><ul><li>Richmond District Office </li></u...
Financial Resources . . . <ul><li>SBA </li></ul><ul><ul><li>Basic 7(a) Loan Program </li></ul></ul><ul><ul><ul><li>Lenders...
<ul><li>SBA </li></ul><ul><ul><li>Micro-Loans </li></ul></ul><ul><ul><ul><li>Small loans to start-up, newly established, o...
<ul><li>SBA  Startup Guide </li></ul><ul><ul><li>http://www.sba.gov/smallbusinessplanner/plan/getready/serv_sbplanner_stgu...
<ul><li>SCORE   http://www.score.org </li></ul><ul><li>Business Funding Directory   http://www.businessfinance.com </li></...
<ul><li>National Federation of Independent Business, Business Toolbox   http://www.nfib.com/page/toolsHome </li></ul><ul><...
<ul><li>Active Capital   (angel investor network) </li></ul><ul><li>http://www.activecapital.com </li></ul><ul><li>Busines...
<ul><li>Energy-related business </li></ul><ul><ul><li>USDA Rural Development </li></ul></ul><ul><ul><ul><li>Renewable Ener...
<ul><li>Southside Virginia </li></ul><ul><ul><li>Southside Region Tobacco Capital Access Program (TCAP)   </li></ul></ul><...
<ul><li>Virginia Tobacco Revitalization & Indemnification Commission </li></ul><ul><ul><li>http://www.vatobaccocommission....
Jonah Fogel, Ph.D. Community Viability Specialist Virginia Cooperative Extension 804-527-4234 [email_address]
Upcoming SlideShare
Loading in...5
×

Entrepreneur Express, Jonah Fogel 09

365

Published on

Entrepreneur Express powerpoint on "Financing" by Dr. Jonah Fogel

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
365
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Entrepreneur Express, Jonah Fogel 09

  1. 1. Financial Considerations for Your Small Business
  2. 2. <ul><li>Front door to the land-grant system </li></ul><ul><li>Research-based education </li></ul><ul><li>107 county offices </li></ul><ul><li>6 4-H Education Centers </li></ul><ul><li>4 ARECs </li></ul><ul><li>Four Program Areas: ANR, FCS, 4-H, CV </li></ul><ul><li>Inventing the Future </li></ul><ul><li>http://www.ext.vt.edu </li></ul>
  3. 3. Financial Plan: By the numbers <ul><li>Elements of a Business Plan </li></ul><ul><ul><li>Executive Summary </li></ul></ul><ul><ul><li>Business Description </li></ul></ul><ul><ul><li>Marketing Strategies </li></ul></ul><ul><ul><li>Competitive Analysis </li></ul></ul><ul><ul><li>Design and Development Plan </li></ul></ul><ul><ul><li>Operations and Management Plans </li></ul></ul><ul><ul><li>Financial Plan </li></ul></ul><ul><ul><ul><li>Test assumptions </li></ul></ul></ul><ul><ul><ul><li>Develop funding strategies </li></ul></ul></ul><ul><ul><ul><li>Communicate risk </li></ul></ul></ul>
  4. 4. Be Prepared: Financial Questions . . . <ul><li>How much money do you need? </li></ul><ul><ul><li>When will you need it? </li></ul></ul><ul><ul><li>Have you identified least-cost alternatives? </li></ul></ul><ul><li>How much do you expect to make? </li></ul><ul><ul><li>What are your profit goals? </li></ul></ul><ul><ul><li>How much can you charge for it? How much is customer willing to pay for it? </li></ul></ul><ul><ul><li>How many customers will you need in order to cover expenses? </li></ul></ul>
  5. 5. Your Capital Portfolio <ul><li>Start-up Capital </li></ul><ul><li>Working Capital </li></ul><ul><li>Cash Reserve </li></ul><ul><li>Look for ways to conserve capital needs </li></ul>
  6. 6. Be Prepared: Think Numbers . . . <ul><li>Raw product </li></ul><ul><li>Labor </li></ul><ul><li>Facility costs / rent </li></ul><ul><li>Utilities </li></ul><ul><li>Transportation </li></ul><ul><li>Insurance (property loss, liability loss, product liability, business interruption, disability, loss of key employees) </li></ul><ul><li>Licenses </li></ul><ul><li>Accounting & legal </li></ul><ul><li>Advertising </li></ul><ul><li>Equipment (leasing / purchasing), technology, infrastructure </li></ul><ul><li>Office expenses </li></ul><ul><li>Loan interest </li></ul>Start-up / Ongoing Expenses
  7. 7. Where Do Business Funds Come From? <ul><li>Your $$ (Savings, Friends and Family, Credit Cards, Assets, etc.) </li></ul><ul><li>Equity Financing (investors who provide cash in exchange for ownership stake) </li></ul><ul><li>Debt Financing (repayable loans – such as from commercial lenders, special category loans/government loans, etc.) </li></ul>
  8. 8. Your Resources / Sources of Capital <ul><li>Commercial lenders </li></ul><ul><li>SBA-guaranteed loans </li></ul><ul><li>Private loans </li></ul><ul><li>Vendor credit </li></ul><ul><li>Other Government </li></ul><ul><li>Friends and Family </li></ul><ul><li>Leasing </li></ul><ul><li>Credit Cards </li></ul><ul><li>Angel Investors </li></ul><ul><li>Venture Capital </li></ul><ul><li>Savings </li></ul><ul><li>Other </li></ul>
  9. 9. Loans <ul><li>Types </li></ul><ul><ul><li>Real estate & Equipment </li></ul></ul><ul><ul><li>Working capital </li></ul></ul><ul><ul><li>Business expansion & acquisition </li></ul></ul><ul><ul><li>Cash flow management (long-term financing) </li></ul></ul><ul><ul><li>Receivables financing </li></ul></ul><ul><ul><li>Lines of credit (emergency funds) </li></ul></ul><ul><li>Bank Department </li></ul><ul><ul><li>Personal </li></ul></ul><ul><ul><li>Business </li></ul></ul>
  10. 10. The Bank Wants to Know… <ul><li>How much money do you need? </li></ul><ul><li>How will you use the money? Describe the benefit to your business. </li></ul><ul><li>How & when will you pay it back? </li></ul><ul><li>Are you credit worthy? </li></ul><ul><li>What is your experience, training, and business management skill? </li></ul><ul><li>What is your collateral? </li></ul><ul><li>What is your back up (contingency) plan? </li></ul>
  11. 11. Questions for your banker… <ul><li>Bank’s policy on small-business lending? </li></ul><ul><li>Restrictions or covenants? </li></ul><ul><li>Terms and interest rate options? </li></ul><ul><li>Flexibility/tailor loan to needs? </li></ul><ul><li>Exit strategies? </li></ul><ul><li>Loan officer? </li></ul><ul><li>Specialty areas? </li></ul><ul><li>Names of existing customers? </li></ul>SCORE, 1997. How to choose the best bank for your business , Inc. Magazine.
  12. 12. Financial Stewardship <ul><li>Be able to diagnose what is happening with your business and respond appropriately. </li></ul><ul><li>Exercise your creativity by constantly </li></ul><ul><ul><li>Conserve capital </li></ul></ul><ul><ul><li>Add value </li></ul></ul><ul><ul><li>Increase revenue </li></ul></ul><ul><ul><li>“ Human creativity is the ultimate economic resource.” </li></ul></ul><ul><ul><li>-Richard Florida </li></ul></ul>
  13. 13. Track your Bottom-line <ul><li>Build a basic knowledge of business finance </li></ul><ul><li>Measure it – then manage it </li></ul><ul><ul><li>Develop Effective Record-keeping, Accounting, and Financial Management systems </li></ul></ul><ul><li>Look for patterns over time </li></ul><ul><li>Use software </li></ul><ul><ul><li>www.quickbooks.com </li></ul></ul><ul><ul><li>www.peachtree.com </li></ul></ul>
  14. 14. Bottom-line . . .Trends <ul><li>Current cash position </li></ul><ul><li>Cash disbursements </li></ul><ul><li>New sales </li></ul><ul><li>Accounts receivable (beginning balances, outstanding credit, cash receivables) </li></ul><ul><li>Accounts-payable payments </li></ul><ul><li>Order backlog </li></ul><ul><li>Productivity (sales per employee, etc.) </li></ul>
  15. 15. Be Creative and Adaptable <ul><li>… but stay true to your vision and mission </li></ul><ul><li>View setbacks as learning opportunities </li></ul><ul><li>Are risks acceptable? </li></ul>
  16. 16. The Economy : Trends are Mixed <ul><li>Tougher to get credit but banks have money </li></ul><ul><li>Loans to start-ups declining </li></ul><ul><li>Retail and building materials sales are mixed </li></ul><ul><li>Housing market is declining slower </li></ul><ul><li>Unemployment is high but stabilizing </li></ul><ul><li>Stock market is doing better </li></ul><ul><li>ARRA monies are available </li></ul><ul><ul><li>http://www.stimulus.virginia.gov/ </li></ul></ul>
  17. 17. Selected Financial Resources
  18. 18. Financial Resources . . . <ul><li>U.S. Small Business Administration </li></ul><ul><li>Richmond District Office </li></ul><ul><li>The Federal Building </li></ul><ul><li>400 North 8th Street, Suite 1150 </li></ul><ul><li>Richmond, VA 23219-4829 </li></ul><ul><li>(804) 771-2400 Fax 771-2764 </li></ul><ul><li>E-mail:   richmond.va@sba.gov </li></ul><ul><li>Ronald E. Bew, District Director  </li></ul><ul><li>http://www.sba.gov/financing </li></ul>
  19. 19. Financial Resources . . . <ul><li>SBA </li></ul><ul><ul><li>Basic 7(a) Loan Program </li></ul></ul><ul><ul><ul><li>Lenders participate with SBA in 7(a) program. </li></ul></ul></ul><ul><ul><ul><li>Up to $2 million with 90% guaranty. </li></ul></ul></ul><ul><ul><ul><li>Business applies to a lender for financing. </li></ul></ul></ul><ul><ul><ul><li>Repayment ability from cash flow of business is primary consideration in loan decision process but good character, management capability, collateral, and owner's equity contribution are also important. </li></ul></ul></ul>
  20. 20. <ul><li>SBA </li></ul><ul><ul><li>Micro-Loans </li></ul></ul><ul><ul><ul><li>Small loans to start-up, newly established, or growing small business concerns. </li></ul></ul></ul><ul><ul><ul><li>Maximum of $35,000 ($13,000 average). </li></ul></ul></ul><ul><ul><ul><li>Maximum term is 6 years. </li></ul></ul></ul><ul><ul><ul><li>Interest rates range between 8 to 13%. </li></ul></ul></ul><ul><ul><ul><li>Apply through Microlending Intermediaries </li></ul></ul></ul>Financial Resources . . .
  21. 21. <ul><li>SBA Startup Guide </li></ul><ul><ul><li>http://www.sba.gov/smallbusinessplanner/plan/getready/serv_sbplanner_stguide.html </li></ul></ul><ul><li>How to Write a Loan Proposal </li></ul>Financial Resources . . .
  22. 22. <ul><li>SCORE http://www.score.org </li></ul><ul><li>Business Funding Directory http://www.businessfinance.com </li></ul><ul><li>Venture Capital Information Guide </li></ul><ul><li>http://www.capital-connection.com </li></ul><ul><li>Virginia Department of Business Assistance </li></ul><ul><li>Virginia Small Business Financing Authority http://www.dba.virginia.gov/financing </li></ul><ul><li>1-866-248-8814 </li></ul>Financial Resources . . .
  23. 23. <ul><li>National Federation of Independent Business, Business Toolbox http://www.nfib.com/page/toolsHome </li></ul><ul><li>Virginia Business Information Center http://www.dba.virginia.gov/virginia/default.asp </li></ul><ul><li>804-371-0438, toll-free at 1-866-248-8814 </li></ul>Financial Resources . . .
  24. 24. <ul><li>Active Capital (angel investor network) </li></ul><ul><li>http://www.activecapital.com </li></ul><ul><li>Business statistics http://www.bizstats.com </li></ul><ul><li>Entrepreneur.com, Money and Financing </li></ul><ul><li>http://www.entrepreneur.com/money/finance/index.html </li></ul><ul><li>Fintel Scorecard Industry Benchmarking http://www.fintel.us/cms/DesktopDefault.aspx </li></ul>Financial Resources . . .
  25. 25. <ul><li>Energy-related business </li></ul><ul><ul><li>USDA Rural Development </li></ul></ul><ul><ul><ul><li>Renewable Energy and Energy Efficiency Grand and Guaranteed Loan (Section 9006) Program www.rurdev.usda.gov/rbs/farmbill </li></ul></ul></ul><ul><ul><ul><ul><li>Application: www.rurdev.usda.gov.rbs.farmbill/tools.html </li></ul></ul></ul></ul><ul><ul><ul><ul><li>http://www.meeteetsecd-wy.gov/page22.html </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Contact: Ms. Laurette Tucker, USDA Rural Development, Culpeper Building, Suite 238, 1606 Santa Rosa Road, Richmond, VA 23229, (804) 287–1594. </li></ul></ul></ul></ul>Financial Resources . . .
  26. 26. <ul><li>Southside Virginia </li></ul><ul><ul><li>Southside Region Tobacco Capital Access Program (TCAP) </li></ul></ul><ul><ul><ul><li>A business located in the Southside Tobacco Region makes application to a bank in Virginia participating in the Southside Region Tobacco Capital Access Program. http://www.dba.state.va.us/financing/programs/TCAP.asp </li></ul></ul></ul>Financial Resources . . .
  27. 27. <ul><li>Virginia Tobacco Revitalization & Indemnification Commission </li></ul><ul><ul><li>http://www.vatobaccocommission.org/SmallBusFinancing.htm </li></ul></ul><ul><li>Food-based business </li></ul><ul><ul><li>VCE publication </li></ul></ul><ul><ul><ul><li>Starting a Food Processing Business in Virginia http://www.ext.vt.edu/pubs/foods/348-963/348-963.html </li></ul></ul></ul>Financial Resources . . .
  28. 28. Jonah Fogel, Ph.D. Community Viability Specialist Virginia Cooperative Extension 804-527-4234 [email_address]
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×