Talal Althefery How To Start A Small Business

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How to start a small business by Talal Althefery, financial entrepreneurial consultant.

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Talal Althefery How To Start A Small Business

  1. 1. Essentials of Starting a Small Business<br />1<br />presented by<br />Talalalthefery<br />T Althefery<br />
  2. 2. Goal of Attending Workshop<br />What is your goal from this workshop?<br />What would you like to walk away with?<br />2<br />T Althefery<br />
  3. 3. Purpose of the Workshop<br /><ul><li>The purpose of this workshop is to:
  4. 4. Provide some insights into the planning process.
  5. 5. Illustrate the steps towards starting a small business.
  6. 6. Serve as a simple guide to the would be entrepreneur.</li></ul>3<br />T Althefery<br />
  7. 7. What is a Small Business?<br /><ul><li>Definition of Small Business:
  8. 8. “An independently owned & operated business, whose owners exercises close control over operations & decisions. Typically, it employs fewer than 50 employees and has revenues of less than 100 million SR.”</li></ul>4<br />T Althefery<br />
  9. 9. Getting Started<br />Is business ownership right for you?<br />An “entrepreneur” one who starts own business<br />Self-assessment questions:<br />Are you a self-starter?<br />How well do you plan and organize?<br />Can you work long hours?<br />How will the business affect your family?<br />5<br />T Althefery<br />
  10. 10. What Type of Business Do You Want?<br />A startup:<br />Follow your own dream<br />Buying an existing business:<br />You will have current customers and a known track record of performance<br />Franchising: <br />Brand recognition reduces marketing costs<br />6<br />T Althefery<br />
  11. 11. Questions?? New Business<br />Does the idea suit your personality and interests?<br />Will you use your own name to brand the business?<br />Will it be financially viable?<br />Do you have startup money to invest?<br />What will your monthly expenses be?<br />Is there a current need in the marketplace?<br />Who are you competing with?<br />7<br />T Althefery<br />
  12. 12. The Importance of Small Businesses<br />Help Boost the Local Economy<br />Alleviate Social Problems, namely Unemployment<br />Provide Jobs<br />Employee Training<br />8<br />T Althefery<br />
  13. 13. Reasons to Start a Small Business<br />9<br />T Althefery<br />
  14. 14. Do You Have the Passion?<br />When it comes to your business idea, do you have PASSION for it?<br />Do you have enough PASSION to not let anyone change your mind or discourage you about your idea?<br />10<br />T Althefery<br />
  15. 15. What are the Potential Benefits?<br />11<br />T Althefery<br />
  16. 16. What are the Potential Benefits?<br />Reach your full potential<br />Reap impressive profits<br />Contribute to society<br />Contribute to the economy<br />Do what you enjoy & have fun at it<br />Be Your Own Boss<br />12<br />T Althefery<br />
  17. 17. What are the Potential Drawbacks?<br />13<br />T Althefery<br />
  18. 18. What are the Potential Drawbacks?<br /><ul><li>Uncertainty of Income
  19. 19. Risk of losing your entire investment
  20. 20. Long hours
  21. 21. Hard work
  22. 22. Lower quality of life (until business gets established)
  23. 23. High levels of stress
  24. 24. Complete responsibility</li></ul>14<br />T Althefery<br />
  25. 25. Step 1: Networking, Social Skills, & Information<br />15<br />T Althefery<br />
  26. 26. STEP 2: Your Business Idea<br />16<br />T Althefery<br />
  27. 27. Generating a Business Idea<br />You want to start a new business, but are not sure of a business idea, it helps to consider the following:<br />What do you like to do?<br />What are you good at doing?<br />What would you like to learn to do?<br />What do you want or need to get out of the business?<br />17<br />T Althefery<br />
  28. 28. Options<br />For the new entrepreneur, there are some options:<br />Buying a franchise<br />Buying an existing business<br />Finding a partner<br />Finding more than one partner<br />18<br />T Althefery<br />
  29. 29. Buying a Franchise<br />19<br />T Althefery<br />
  30. 30. Franchise Benefits<br />Benefits:<br />Already Established<br />Management Training & Support<br />Brand-Name Appeal<br />Standardized Quality of Goods & Services<br />Advertising Programs<br />Greater Chance Of Success<br />20<br />T Althefery<br />
  31. 31. Franchise Drawbacks<br />Drawbacks:<br />Franchise fee & profit sharing<br />Strict rules to follow standardized operations<br />Restrictions on purchasing supplies<br />Limited product line<br />Feeling of having a “boss”<br />21<br />T Althefery<br />
  32. 32. Buying an Existing Business<br />22<br />T Althefery<br />
  33. 33. Benefits of Buying Existing Business<br /><ul><li>Benefits:
  34. 34. A successful existing business may continue to be successful
  35. 35. May already have the best location
  36. 36. Employees and suppliers are established
  37. 37. Equipment is already installed
  38. 38. Save time, costs, & energy required to launch a brand-new business
  39. 39. Seller might need to sell fast Low Price</li></ul>23<br />T Althefery<br />
  40. 40. Drawbacks of Buying Existing Business<br /><ul><li>Drawbacks:
  41. 41. Previous owner created “ill-will” with customers, supplier, and/or even employees
  42. 42. Employees that come with business may not be suitable for your business
  43. 43. The location may have become unsatisfactory
  44. 44. Equipment not inefficient
  45. 45. Business maybe overpriced
  46. 46. Never been profitable</li></ul>24<br />T Althefery<br />
  47. 47. Finding a Partner (s)<br />25<br />T Althefery<br />
  48. 48. Benefits of Business w/ a Partner (s)<br />Benefits:<br />Easy to establish once good partners are found<br />Many, different skills<br />Larger capital<br />Attract more investors<br />26<br />T Althefery<br />
  49. 49. Drawbacks of Business w/ a Partner (s)<br />Drawbacks:<br />Not easy to find good quality partners<br />Conflict between the partners<br />Different personalities<br />Profits are divided between the partners<br />27<br />T Althefery<br />
  50. 50. Choosing a Business Structure<br />Different legal structures protect you in different ways and offer varying tax advantages:<br />Sole Proprietorships<br />General Partnerships and Joint Ventures<br />Corporations <br />Limited Liability Company (LLCs)<br />28<br />T Althefery<br />
  51. 51. STEP 3: Market Research<br />29<br />T Althefery<br />
  52. 52. Market Research<br />Before starting a business, it is highly recommended to conduct a market research to determine the following:<br />30<br />T Althefery<br />
  53. 53. Market Research<br /><ul><li>The Need: Is your product/service needed?
  54. 54. How Much: How much of it is needed?
  55. 55. Competition: What is the level of competition?
  56. 56. Price: What is the price to charge?
  57. 57. Target Market: Who is your Target Market?</li></ul>31<br />T Althefery<br />
  58. 58. Conducting Market Research<br />Obtaining this information maybe be done by using any of the following methods:<br />Your own personal insight or background<br />Primary Research <br />Secondary Research<br />32<br />T Althefery<br />
  59. 59. STEP 4: Calculate Startup Costs <br />33<br />T Althefery<br />
  60. 60. Start Up Cost<br />Before you take off, you need to know how much money it will cost to get started<br />34<br />T Althefery<br />
  61. 61. Ask Around<br /><ul><li>People in the business
  62. 62. Not your immediate competitors
  63. 63. Sources of supplies
  64. 64. They're usually looking for business
  65. 65. Business consultants
  66. 66. Can offer excellent advice
  67. 67. Franchise organizations
  68. 68. A franchiser will give plenty of data </li></ul>35<br />T Althefery<br />
  69. 69. STEP 5: Business Plan<br />36<br />T Althefery<br />
  70. 70. Business Plan (BP)<br />Simply put, a BP is nothing more than putting your plans and the steps you intend to follow in building your business in WRITING!<br />37<br />T Althefery<br />
  71. 71. Working the Business Plan<br />"No matter how small or large your business, you've got to aggressively plan the work-<br />and then work the plan!" <br />38<br />T Althefery<br />
  72. 72. Importance of a Business Plan<br />Serves as a guide for you to follow<br />39<br />T Althefery<br />
  73. 73. Importance of a Business Plan<br />Will help you evaluate your business & develop sound business strategies <br />40<br />T Althefery<br />
  74. 74. Importance of a Business Plan<br />Investors and/or lenders will want to read the plan before supplying you with funds<br />41<br />T Althefery<br />
  75. 75. Importance of a Business Plan<br />Informs sales personnel, suppliers, and others about your operation and goals<br />42<br />T Althefery<br />
  76. 76. Business Plan<br />As an owner of a potential new business, you have to:<br />Formulate a plan<br />Answer all questions<br />Write everything down<br />43<br />T Althefery<br />
  77. 77. Formulate a plan<br /><ul><li>Serves as a road map on the journey towards building a successful business</li></ul>44<br />T Althefery<br />
  78. 78. Answer All Questions<br />What, Why, When, Where, Who?<br />45<br />T Althefery<br />
  79. 79. Write Everything Down<br />Ideas<br />Options<br />Plans<br />46<br />T Althefery<br />
  80. 80. Business Plan Quote<br />“A good plan serves as an entrepreneurial compass that keeps a business on course as it travels into an uncertain future”<br />47<br />T Althefery<br />
  81. 81. STEP 6: Choosing a Location<br />48<br />T Althefery<br />
  82. 82. Choosing a Location<br />When considering an office or storefront, there are a few important things to look for:<br />49<br />T Althefery<br />
  83. 83. Consider Rental Costs<br />How much is it?<br />Will it fit my budget?<br />Is it affordable?<br />If not, do I have other options?<br />50<br />T Althefery<br />
  84. 84. Parking<br />Do I have enough parking for my customers?<br />Is it hard to find?<br />Is it accessible?<br />Is it convenient?<br />51<br />T Althefery<br />
  85. 85. Accessibility<br />Is my business easy to find?<br />Is it on a busy street?<br />Is it on a main street?<br />What is it near?<br />52<br />T Althefery<br />
  86. 86. Strength of Surrounding Business Community<br />How strong is your business community?<br />Will your business benefit from being there?<br />Does it have many customers?<br />53<br />T Althefery<br />
  87. 87. Size of the Location<br />Is the size suitable for your business?<br />Will there be room for expansion?<br />54<br />T Althefery<br />
  88. 88. STEP 7: Naming Your Company<br />55<br />T Althefery<br />
  89. 89. Recognition<br /><ul><li>The name might include a reference to:
  90. 90. Your personal name
  91. 91. Location
  92. 92. Product or service
  93. 93. Let’s customers know what your company’s about</li></ul>56<br />T Althefery<br />
  94. 94. Unique<br /><ul><li>The name should be unique enough to avoid infringing on someone else's name </li></ul>57<br />T Althefery<br />
  95. 95. STEP 8: Financing<br />58<br />T Althefery<br />
  96. 96. What is Financing?<br />Financing is one of the most important aspects of starting a new business.<br />Your ability to provide and raise adequate capital will determine the fate of the business venture.  <br />59<br />T Althefery<br />
  97. 97. Financing <br /><ul><li>Now that you have your business idea and your business plan, you need to find some CAPITAL.
  98. 98. Start-up capital
  99. 99. Working capital</li></ul>60<br />T Althefery<br />
  100. 100. Start-Up Capital<br />Start-up capital is the money you need to get the business ready before the grand opening<br />The type of start-up capital and the amount that you need depends on the type of business you are starting. <br />61<br />T Althefery<br />
  101. 101. Working Capital <br />Working capital is the money you need for the day-to-day operation of your business<br />You must have adequate working capital in reserve at all times to keep the business going<br />62<br />T Althefery<br />
  102. 102. The Five “C’s” of Credit<br /><ul><li>How banks determine whether to loan you money:
  103. 103. Character: Credit history is very important!
  104. 104. Capacity: What is your track record of debt repayment?
  105. 105. Capital: How long will personal resources support both you and the business?
  106. 106. Conditions: Current economic conditions
  107. 107. Collateral: Assets the company pledges as a source of repayment for the loan</li></ul>63<br />T Althefery<br />
  108. 108. STEP 9: Marketing<br />64<br />T Althefery<br />
  109. 109. What is Marketing?<br /><ul><li>It’s the process of creating and delivering desired goods and services to customers
  110. 110. It also involves all of the activities associated with winning and retaining loyal customers</li></ul>65<br />T Althefery<br />
  111. 111. Marketing<br /><ul><li>4P’s :
  112. 112. Product
  113. 113. Price
  114. 114. Promotion
  115. 115. Place</li></ul>66<br />T Althefery<br />
  116. 116. Marketing #1: Product<br />Any item or service that satisfies the need of a customer<br />What is it that you’re offering?<br />67<br />T Althefery<br />
  117. 117. Marketing #2: Price<br />The monetary value of a product or service in the marketplace<br />Price affects both sales volume and profits<br />It is an important factor in the relationship with customers<br />Price communicates important information about the business’s overall image to customers<br />68<br />T Althefery<br />
  118. 118. Final Price<br />The factors to consider when determining the final price for goods and services include the following:<br />Product/Service Costs<br />Supply and Demand<br />Sales Volume<br />Competitor’s Prices<br />Economic Conditions<br />Seasonal Fluctuations<br />Desired Image<br />69<br />T Althefery<br />
  119. 119. Marketing #3: Promotion<br /><ul><li>The goal of promotion is to inform and persuade consumers
  120. 120. It involves:</li></ul>70<br />T Althefery<br />
  121. 121. Advertising <br />Advertising is any sales presentation that is paid for by an identified sponsor<br />71<br />T Althefery<br />
  122. 122. Advertising<br />Constructed on a strong, positive, and well-researched product or service<br />72<br />T Althefery<br />
  123. 123. Advertising<br /><ul><li>Communicates to potential customers the benefits of your product and business
  124. 124. Right on Target!</li></ul>73<br />T Althefery<br />
  125. 125. A Successful Advertisement<br /><ul><li>A good advertisement should:
  126. 126. Attract attention
  127. 127. Communicate the business’s unique selling proposition (USP)
  128. 128. Emphasize a key benefit of the product or business to the customer</li></ul>74<br />T Althefery<br />
  129. 129. A Successful Advertisement<br /><ul><li>It should prove the benefits to the customer with facts, statistics, or testimonials
  130. 130. It should motivate customers to take action immediately!</li></ul>75<br />T Althefery<br />
  131. 131. Personal Selling<br />Involves the art of persuasive sales on a one-to-one basis<br />76<br />T Althefery<br />
  132. 132. Personal Selling<br /><ul><li>It’s the personal contact between sales people and potential customers
  133. 133. It should create a feeling of personal attention</li></ul>77<br />T Althefery<br />
  134. 134. Personal Selling<br />Must have a great deal of information, knowledge, and passion about your product in order to sell effectively<br />78<br />T Althefery<br />
  135. 135. Publicity<br />Publicity:<br />Any commercial news covered by the media that boosts sales<br />The business doest not pay for it<br />Positive<br />More objective than advertising<br />Other people’s point of view and opinion<br />79<br />T Althefery<br />
  136. 136. Marketing #4: Place<br /><ul><li>The place is the method of distribution
  137. 137. This has grown in importance as customers expect greater service and more convenience from businesses
  138. 138. Fast
  139. 139. Reliable
  140. 140. Available</li></ul>80<br />T Althefery<br />
  141. 141. Channels of Distribution<br />For consumer goods, there are four common channels of distribution:<br />Manufacturer to Consumer<br />Manufacturer to Retailer to Consumer<br />Manufacturer to Wholesale to Retailer to Consumer<br />81<br />T Althefery<br />
  142. 142. Manufacturer to Consumer<br />Businesses that sell their goods or services directly to consumers<br />Business that offer “services” are in this category<br />82<br />T Althefery<br />
  143. 143. Manufacturer to Retailer to Consumer<br />This way involves the retailer as a “middle-man”<br />Retailer purchases products from manufacturer and sells them directly to customers<br />83<br />T Althefery<br />
  144. 144. Manufacturer to Wholesale to Retailer to Consumer<br />This is the most common channel of distribution<br />Wholesalers purchase products in very large amounts and in turn sells them to retailers<br />They have large warehouses to store supplies for retailers to purchase only what they need<br />84<br />T Althefery<br />
  145. 145. STEP 10: Time to Open Business<br />85<br />T Althefery<br />
  146. 146. Key to Success<br />Always read and gain information<br />Follow the steps<br />Keeping in mind, there still will be many obstacles to face and overcome.<br />86<br />T Althefery<br />
  147. 147. Successful Businesses<br />Executives with different backgrounds<br />Highly educated management<br />Consultations before and after starting a business<br />Use of professional mentors<br />Use of budgets and controls for committing funds<br />Establishment early on of definite, realistic objectives<br />87<br />T Althefery<br />
  148. 148. Unsuccessful Businesses<br />Failure was most often caused by:<br />Inadequate training, experience, and management ability<br />Strong competition<br />Poor marketing techniques<br />Shortage of start-up or working capital<br />88<br />T Althefery<br />
  149. 149. Steps to Starting a Small Business<br /><ul><li>STEP 1: Networking, Information, & Social Skills
  150. 150. STEP 2: Business Idea
  151. 151. STEP 3: Market Research
  152. 152. STEP 4: Calculate Startup Costs
  153. 153. STEP 5: Business Plan
  154. 154. STEP 6: Choosing a Location
  155. 155. STEP 7: Naming your Business
  156. 156. STEP 8: Financing
  157. 157. STEP 9: Marketing
  158. 158. STEP 10: Open Business</li></ul>89<br />T Althefery<br />
  159. 159. THANK YOU FOR YOUR ATTENTION<br />TalalAlthefery<br />90<br />T Althefery<br />

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