RDIA 2010 Annual Meeting Presentation by SCORE Las Vegas - Replanning Your Business.

1. After Start Up…
Replanning Your
Business
October, 2010
Prepared for Real Diaper
Business Seminars

2. Welcome…
Bob Cushman
SCORE Business Counselor
SCORE Southern Nevada Chapter 243 1

3. The Perks of the Small Business Owner:

4. The Perks of the Real Diaper Owner:

5. About SCORE ®
 National Association formed in 1964; now with
over 12,000 volunteers in 360 + chapters providing
500,000 counseling hours annually
 SBA Resource Partner
 Non-profit – all counselors donate their time – so all
consultations are free and confidential
SCORE Southern Nevada Chapter 243 4

6. About SCORE ®
 Largest business Consulting organization in
the World
 Average Chapter provides free face-to-face
counseling, free e-mail business counseling,
and offers regular seminars
 Find the office nearest you at score.org or use
the site to find one of 1,100 online mentors
SCORE Southern Nevada Chapter 243 5

7. FIRST - do you need to
re-organize
Your Legal Business Structure?
SCORE Southern Nevada Chapter 243 6

8. What are the Choices?
 Proprietorship
 Partnership
 Corporation
 Limited Liability Company
SCORE Southern Nevada Chapter 243 7

9. Proprietorship
• Advantages
•Easy to organize
•Less reporting
•One level of tax
• Disadvantages
•Unlimited personal liability
•Termination on death of owner
•Difficult to raise capital
SCORE Southern Nevada Chapter 243 8

10. Partnership
•Advantages
•Pooling of resources & talents
•State registration normally not required
•Disadvantages
•Unlimited personal liability
•Partner conflict
•Death of a partner causes dissolution
SCORE Southern Nevada Chapter 243 9

11. Limited Liability Partnership
•Advantages
•Pooling of resources & talents
•Limited personal liability
•Disadvantages
•Partner conflict
•Death of a partner causes dissolution
SCORE Southern Nevada Chapter 243 10

12. C-Corporation (Federal Registration)
•Advantages
•Limited liability of shareholders
•Survives shareholders
•Transfer of ownership
•Disadvantages
•More complex
•More reporting
•Possible double taxation
SCORE Southern Nevada Chapter 243 11

13. S-Corporation (Federal Registration)
Advantages
•Same as C-Corporation except one level of tax
Disadvantages
•No double taxation but no retention of profits
•Generally only people can be owners
•Limited to one class of stock
SCORE Southern Nevada Chapter 243 12

14. Limited Liability Company
•Advantages
•Flexible ownership and capital structure
•Limited personal liability
•Tax choices complex
•Losses may offset other income (new)
•Disadvantages
•No retention of profits
•Complex Operating Agreement
SCORE Southern Nevada Chapter 243 13

15. But they don’t stay the same…
PAUL D. GARNETT AND ALICIA GARNETT, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE
Filed June 30, 2009.
The Garnett’s owned interests in L.L.P.s, L.L.C.s, and
tenancies in common. The parties request a ruling as
to whether their interests are subject to the rule of
sec. 469(h)(2), I.R.C., which treats losses from an
“interest in a limited partnership as a limited
partner” as presumptively passive.
Held: Because they did not hold their interests in
the L.L.P.s or L.L.C.s as “limited partners”, these
interests are not subject to the rule of sec.
469(h)(2), I.R.C.
SCORE Southern Nevada Chapter 243 14

16. BUT THEY DON’T STAY THE SAME…
The Small Business Jobs and Credit Act
provides an opportunity to avoid taxes.
Individuals who acquire stock in small businesses after
October 1 pay NO capital gains if they hold the stock
for more than five years. However, it only applies to C
corporations and stock has to be acquired by January
1, 2011 — so act fast.
SCORE Southern Nevada Chapter 243 15

17. Practical Differences
 Proprietorship $14,000 13.3%
 Partnership $82,500 23.6%
 Corporation $28,600 17.5%
 S-Corp $51,200 26.9%
Limited Liability Company
SCORE Southern Nevada Chapter 243 16

18. Outline of other considerations:
1. Government
2. Facility
3. Personnel
4. Legal
5. Accounting
6. Banking
7. Risk Management
8. Computer and Telephone
9. Public Relations
10. Suppliers
SCORE Southern Nevada Chapter 243 17

19. Government
Legal Structure of Business
 Government Relations
 New Hire advantages
 Independent Contractors
SCORE Southern Nevada Chapter 243 18

20. Facility (physical location)
 Stay at
Location with rent reduction?
 Move to get lower rent?
 Lease Restrictions
 Build-out Allowances
 Signage
 Lease Options
SCORE Southern Nevada Chapter 243 19

21. Facility (Internet Presence)
 Stay at
One Website with upgrades?
 Move to Multiple Websites?
 Traffic studies (Alexa, etc.)
 SEO studies
 Content Restrictions
 Competitors
SCORE Southern Nevada Chapter 243 20

22. Personnel
 Contracts and Agreements
 Leased Personnel
 Upgrading Job Descriptions
 Policy & Procedure Manuals
 Personnel Training
Performance of the process
Marketing and Sales
SCORE Southern Nevada Chapter 243 21

23. Legal and Lawyers
 Business Structure
 Contracts, Guarantees and Agreements
 Intellectual Property
 Tax Law
 Leases
SCORE Southern Nevada Chapter 243 22

24. Accounting and CPA’s
CASH versus ACCRUAL
 Amortization & Depreciation
 Business Structure
 Tax changes
 Accounting system
 Bookkeeping
 Tax strategy/Return preparation
SCORE Southern Nevada Chapter 243 23

25. Banking and Loan Officers
 Establish relationship with a Second Bank
– Payroll and Payroll Tax Account
 SBA approved program lender
– Preferred lender
 Credit Card processing
 Lines of Credit
SCORE Southern Nevada Chapter 243 24

26. Risk Management and Insurance
 Premises - property and liability
 Directors & Officers
 Product Liability
 Errors and Omissions
 Contents - self and others
 Automotive
 Employee
 Bonding
SCORE Southern Nevada Chapter 243 25

27. Computers and Telephones
 Domain and Website
 Website Maintenance
 Backup
 Social Networking
 Phone Landlines
 Cell
Phones and Smart Phones
 Answering Systems
SCORE Southern Nevada Chapter 243 26

28. Public and Press Relations
 Disposable Diaper problems
 Landfill problems
 Diaper Rash problems
 Social Networking
 Local Press
 Units of larger papers
SCORE Southern Nevada Chapter 243 27

29. Suppliers
NEW SUPPLIERS
Credit terms/Discounts
Assured prices
Time line
Business plan
SCORE Southern Nevada Chapter 243 28

30. A Resource to MOVE FORWARD…
A NEW
BUSINESS PLAN
SCORE Southern Nevada Chapter 243 29

31. The Business Plan:
Your Roadmap to Change
• Do I really need it?
• Do I really have to write it?

32. The Business Plan is a:
 Document that sells and explains
 Discussion of future plans
 Demonstration ofachievability
 Benchmark for measuring progress
SCORE Southern Nevada Chapter 243 31

33. Using The Plan: External
Bankfinancing
Non-bank financing
 Investors
 Landlords
 Suppliers
SCORE Southern Nevada Chapter 243 32

34. Using The Plan: Internal
 A “Sanity” check
 Forces critical thinking
 Allows goals to be set
 Commits participants
 Basis for course correction
SCORE Southern Nevada Chapter 243 33

35. Required Plan Information
 Company Basics
 Personnel Resume’s
 Marketing Plans
 Product/Service Description
 Production/Logistics
 Forecast in Units/Dollars
SCORE Southern Nevada Chapter 243 34

36. Plan Length
Narrative:
Five to fifteen pages of text
Financials:
 Longer than the text
SCORE Southern Nevada Chapter 243 35

37. Sample Table of Contents
 Executive Summary (Write this last)
 Company History
 Market
 Competition
 Marketing
 Processing
 Financials
 Appendices
SCORE Southern Nevada Chapter 243 36

38. Valuable Plan Contents
 Market
Overall Demographics – population trends
Internet Demographics – usage trends
County and Zip Code Demographics
 Competition
How are parents deciding now?
Where are they buying now?
Include Competitor Information
SCORE Southern Nevada Chapter 243 37

39. Marketing Plan
• Sales Projections (by month for years 1-2)
• Advertising and its cycles
• Promotion Programs and seasonality
SCORE Southern Nevada Chapter 243 38

40. A BUSINESS PLAN TOOL:
ULTIMATE BUSINESS PLANNER ®
SCORE evaluated many and choose this
because of ease of use and for the
sample plans that are included.
Because SCORE is a non-profit, we can sell it for less.
Because SCORE is a non-profit, we aren’t required to
charge sales tax.
SCORE Southern Nevada Chapter 243 39

41. Resources
 Chamber(s) of Commerce
 County and Municipal Offices
 Trade Associations
 Data bases -D&B, List Brokers
 Bureau of Census, Bureau of Labor Statistics
 Non-competitors (Mentors, Colleagues, Coaches)
 Public Library
SCORE Southern Nevada Chapter 243 40

42. SOME USEFUL WEBSITES
 SCORE National www.score.org
 SBA www.sba.gov
 US Government www.firstgov.gov
 Business Plan www.scorelv.org
 Legal advice www.businesslaw.com
 IRS www.irs.gov
 Intuit www.quicken.com
SCORE Southern Nevada Chapter 243 41

43. Next Steps
•Focus on your current needs
•Develop your Business Plan
•Use FREE SCORE Counseling
SCORE Southern Nevada Chapter 243 42

44. GOOD LUCK!
SCORE Southern Nevada Chapter 243 43