Owning Your Own Business

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Owning Your own business

Exploring Yours Options

There are 3 popular ways to own your own business

1st Option: Start your own business

2nd Option: Buy an existing business

3rd Option: Buy a Franchise

1 st Option

Start Your Own Business

Should I or shouldn’t I?

Financial Issues

Do your homework

Talk to professionals

Setting up your own business

Start your own business

What Skills Do I Need?

Business experience

Management skills

Sales skills

People skills

Ability to work independently

Work well under stress

Discipline

Tenacity

Optimism

Ability to work with people

What personal traits do I need?

Loss of money

Loss of your home

Unreliable income

Business could fail

Loss of your current job

Personal liability

What are the Risks?

Financial Independence

Freedom to come and go as you please

Implementing your own ideas

Can’t be fired or laid off

Personal satisfaction

You can sell the business or cash out

Being your own boss

What are the Rewards?

Security

Benefits

Regular hours

Less stress

Regular paycheck

Less responsibility

Am I Better Off Working a Job?

Cash

Insurance cash value

Home equity

Savings

401 (k)

Saleable personal property

Friends and Family

Financial Issues?

Determine How Much Capital You Have Available

Lease deposits

Insurance

Furniture & fixtures

Inventory

Office equipment

Supplies

Website

Licenses & permits

Working capital

Computers

Financial Issues?

What Capital Do I need?

Identify several similar companies

Observe space elements

See how they advertise

Talk to sales staff and managers

Observe their sales methods

systems & procedures

Visit their websites

Go in as customer

Do Your Homework

Visit Similar Businesses

Do local and national searches of specific companies

Google searches on the category of business

Obtain information from sites’ business opportunities or franchises

Obtain “Owning a Business” materials by web-search

Find out if they have “Brick and Click” strategies

Visit SBA Internet site - WWW.SBA.GOV

Obtain information on financing availabilities for starting a business.

Do Your Homework

Search The Internet

Find out if it’s what you thought it would be

Learn the ideal layout

Learn how the business works

Learn the marketing and advertising

Learn the product technology

Learn the identity of vendors and suppliers

Do Your Homework

Work for Someone in the same business

Identify how your business would be

similar and how you would differentiate

Work there part-time while you

continue to retain your present job

After working there, you may decide

you don’t like it

Understand the start-up cost

Do Your Homework

Work for Someone in the same business

Do this prior to making the decision to own your own business

Read everything possible on business ownership

You need as much education on business as possible

Running a business incorporates

concept development, finance,

management, marketing, sales,

negotiating, legal; all important to success

Do Your Homework

Attend business classes

Break even analysis

Create the roadmap

Identify your capital needs to start up

Lay out your plans

Bankers or investors will want to see it

Why you need it

Create a three (3) year cash flow analysis

What is a business plan?

Do Your Homework

Create a Business plan

Do Your Homework

Do a Three (3) Year Cash Flow Analysis

Estimate operating costs

Determine return on investment

Determine amount of loss to “break even”

Estimate Labor Cost

Estimate monthly profit or losses

Estimate cost of goods

Estimate Sales

Legal issues

Review leases and contracts

Trademark protection

Licenses and permits

Form a corporation

Talk To Professionals

Lawyer

Set up accounting system

Review monthly sales tax

Monthly financial statements

Annual financial statements

Advise on payroll services

Accountant

Advise on payroll services

Payroll taxes

Tax returns

Financial advice

Set up bank accounts

Obtain line of credit

Set up credit card process

Financial advice

Banker

Expertise in the business

Assist in negotiations

Recommend supplies, vendors

Assist in start-up

Assist in overall analysis

Consultant

Someone who owns a business, any business

Someone who owns a business in that field

An entrepreneur

Someone who owns and operates

a franchise

A business broker

Someone in Business

Start-up

Working capital

Start your own business Talk To Professionals

Equity investor

Cash, plus borrow the rest

Borrow all needed capital

None, use only your own cash

Determine How Much Capital Will Be Needed Determine How Much Capital You’ll Need to Borrow

Vehicle Loans

SBA www.SBA.gov

Family

Equipment Financing

Real Estate

Private Lender

Friends

Bank Loan

Exploring Financing Sources

Co-investor

Compliments your skills

More motivated than employee

Assumes part of risk

Shares workload and hours

Splits responsibilities

Advantages Start your own business

Determine IF You Want or Need An Investor or Partner

Someone you have to answer to

Financial and personal goals often differ

Disadvantages

One often works harder

Partners often disagree

Determine IF You Want or Need An Investor or Partner

Play Golf At their Country Club ! Start your own business Talk To Professionals

Check www.uspto.gov to determine that name is not already federally registered

Select a name that you like that is descriptive but not limiting

Setting Up Your Own Business

Name Protection

Check with your state to determine that name is not already registered in your state.

Retain a patent trademark or Intellectual Property lawyer

Name Protection

New Company Name Signature

Obtain an Employer Identification Number (EIN)

You will need this to obtain vendors

You will need this if you have employees

You will need this for just about anything!

Tax ID Number

State

Federal

Local

Municipal

Professional

Special

Permits and Licenses

Public liability

Vehicle

Inventory

Health and Medical

Errors and Omissions

Building and Contents

Comprehensive fire and theft

Worker’s Compensation

Insurance

Start your own business Setting Up Your Own Business

Location, location, location

Demographics

Lease or buy

Home-based

Zoning

Parking and accessibility

Location

Do detailed layout

Analyze applicability

Analyze interim traffic patterns

Solicit bids

Access available utilities

Draw schematic

Acquire necessary permits

Leasehold Improvements

Select an accountant

Set up accounting system

Receive and review monthly statements

Keep all records up-to-date

Meet with accountant regularly

Store all records

Accounting

Select a lawyer

Define legal issues

Utilize lawyers in negotiations

Discuss your proposed business

Don’t sign anything without your lawyer

Legal

Identify needs

Install expandable equipment

Shop around, systems, price

Internet sales consultants

Computers / Phones / Faxes

Network and connect all

communications equipment

Internet capability

Analyze applicability

Develop website

E-commerce

Internet service provider

On-line marketing

Computers / Phones / Faxes

Negotiate rates

Arrange for online credit

card processing

Establish credit card

company relationships

Credit Card Processing

Establish goals

Develop budget

Establish products,

services and pricing

Develop collateral materials

Advertising and Marketing

You are the trainer

Train, train, train

Set and maintain high

performance standards

Minimal staffing

Hire and Train Staff

2 nd Option

Buying an Existing Business

Getting the details

Hands on experience

Buying an existing business Get the details

Get audited financials for

last three (3) years

Review bank records

Reconcile invoices with

sales

Do search for litigation

Non-compete Agreement..

Talk to employees…

Review lease……

Verify what you are getting....

Get seller to finance….

Is the price worth it?

Is the business name

Do a three (3) year cash

www.ispto.gov Yes or No: flow with debt services protected?

Talk to customers

Training by seller

Work there first

Can you do it?

Would you be better

off starting your own?

Buying an existing business Hands on experience

3 rd Option

Buy a Franchise

What are the first steps after buying a franchise?

Top 10 Reasons for buying a Franchise

Frequently Asked Questions

Franchise Financing Sources

Advantages from A to Z

Reason # 1 Step 1 Step 2 Step 3

Buy a Franchise Business

Top reasons for buying a franchise

Training Programs

Ongoing Operational Support

Marketing Assistance

Strong Brand

Track Record of Success

Success Success Success Success Reason # 1

Top reasons for buying a franchise

Real Estate Assistance

Construction Assistance

Purchasing Power

Risk Avoidance

Reason # 1

How long will it take my new franchise to

reach break even?

How much of my total investment (including capital reserves) do I need to have in cash?

What are the ranges in financial performance of the existing franchisees?

How much is needed in operating capital reserves to cover loses after opening the franchise until the break even point?

How financially strong is the franchise company

What standard and alternative financing options exist for me?

How much total investment will this franchise require?

How much money can I make in this franchise?

a. Proven system of operation b. Brand identity c. Training d. Assistance in obtaining location e. Advertising – national and local f. Own boss g. Turnkey business Advantages Buy a Franchise From A-Z

h. Collective buying power i. Operating manual j. Planning and forecasting assistance k. Better prices on equipment m. Resale ability n. Financial and accounting systems From A-Z Advantages Buy a Franchise l. Better prices on inventory

p. New ideas q. New products r. Sources of products s. Complete business system t. Financing u. Lower risk From A-Z Advantages Buy a Franchise o. Ongoing support and consulting

w. Sales and marketing techniques x. Start the business with less capital y. No previous experience necessary z. We don’t succeed unless you do From A-Z Advantages Buy a Franchise v. Assistance in site selection

Franchise Financing Sources Buy a Franchise Franchise Funding Specialists Veteran Programs Investors 401k Cash is King Next Franchisee exit... Funding