Starting Your Own Business?

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10 Questions to Consider BEFORE Investing Another Dime in the Costs of Starting a Business

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  • My new book asks: Starting Your Own Business? I wrote this because many are and they could use some encouragement and guidance. To lead the reader through the struggle, I offer 10 Questions to Consider Before Investing a Dime.  This book is “must reading” for anyone thinking of moving from being employed by others to being self-employed. First, you will find encouraging advice, good news, and hope in a world otherwise full of bad news. Second, discover practical and tangible ways to assess your skills, aptitudes, and passion; then learn how to maximize them in order to improve your business start-up success.  Third, you’ll discover exactly what it takes to deal with the struggles businesses often face starting in a tough economy.
  • What kinds of costs do you think there might be?
  • Summary OverviewBreak-even analysis evaluates whether you are able to cover all its costs at a particular price level.1stdetermine is the fixed-cost (FC) contribution per unit: Selling price/unit minus the variable cost per unit. To find the BEP in units, divide the total fixed costs (TFC) by the contribution per unit.break-even analysis does not factor in the effect of price on demand.
  • Understanding the role each plays is important. Journaling helps bring clarity.
  • Nothing drains your personal energy as much as feeling pinched financially, emotionally and spiritually.Your business is a family - motivating and inspiringDon’t succumb to “ I know this generally is the right thing, but in this instance…”
  • Starting Your Own Business?

    1. 1. Welcome to the Portland chapter of SCOREStarting Your Own Business?10 Questions to ConsiderBefore Investing a Dime. Your Counselor… Griff Lindell www.scorepdx.org 503-326-3441
    2. 2. What is SCORE? SCORE provides professional guidance and information to maximize the success of America‟s existing and emerging small businesses. www.scorepdx.org 503-326-3441
    3. 3. What is SCORE?A Non-Profit Organization – Over 390 chapters, 800 offices,Experienced Volunteers – 10,500+…all facets of businessPersonal Counseling & Mentoring - FREE – Face-to-Face, Telephone, On-LineWorkshops & Seminars – About 7,000 workshops reaching >120,000 clients www.scorepdx.org 503-326-3441
    4. 4. Counseling & Learning Effective personal counseling plus Powerful learning resources. Helping make success happen “For The Life Of Your Business!” www.scorepdx.org 503-326-3441
    5. 5. This Workshop is for those who are: Contemplating the “Big Step” of… RISKING SAVINGS, LIFESTYLES AND RELATIONSHIPS… …pursuing the dream of working for yourself. www.scorepdx.org 503-326-3441
    6. 6. HOUSEKEEPING• Facilitates• Introductions• Why this workshop?• Kind of business you are considering www.scorepdx.org 503-326-3441
    7. 7. Resources OfferingEncouragement and Guidance• Practical material• Personal and instant feedback• Performance journaling www.scorepdx.org 503-326-3441
    8. 8. Entrepreneur: One who organizes, manages, and assumes the risks of a business enterprise. www.scorepdx.org 503-326-3441
    9. 9. www.scorepdx.org 503-326-3441
    10. 10. www.scorepdx.org 503-326-3441
    11. 11. www.scorepdx.org 503-326-3441
    12. 12. www.scorepdx.org 503-326-3441
    13. 13. www.scorepdx.org 503-326-3441
    14. 14. www.scorepdx.org 503-326-3441
    15. 15. Three Foundational QuestionsWhat are yours?• Why do you want to move from being employed to Self-employed?• Are you suited to be an entrepreneur?• What should you do next? www.scorepdx.org 503-326-3441
    16. 16. B A5 Shapes: Select the one that isdifferent from the others C D E www.scorepdx.org 503-326-3441
    17. 17. AA: the only one with no points! www.scorepdx.org 503-326-3441
    18. 18. BB: the only one that has all straightlines! www.scorepdx.org 503-326-3441
    19. 19. C: the only one that isasymmetrical. C www.scorepdx.org 503-326-3441
    20. 20. D: the only one with both a straight line and a curved line.D www.scorepdx.org 503-326-3441
    21. 21. E: the only one that looks like a projectionof a non-Euclidean triangle into Euclideanspace. E www.scorepdx.org 503-326-3441
    22. 22. Do You Know the “Shape” of……your risk ofstarting abusiness? www.scorepdx.org 503-326-3441
    23. 23. Starting Your Own Business?• A business idea that recognizes: – A need in the marketplace – A product or solution – A real value to the customer www.scorepdx.org 503-326-3441
    24. 24. The 10 QuestionsHave you counted the costs?Are you ready, willing and able for a change in your lifestyle?Is your support team on board?Do you enjoy the business of business?Are you comfortable making tough decisions on the fly?Whats your track record of making stuff happen?How well do you communicate?Is this new business something about which you are passionate?Are you a person that gives others energy – a self-starter? www.scorepdx.orgDo you have a “partner”? 503-326-3441
    25. 25. Question 1Have you counted the costs? www.scorepdx.org 503-326-3441
    26. 26. Kinds of Costs What kinds of costs?• Start-up costs• Investor costs• Business costs• Personal costs www.scorepdx.org 503-326-3441
    27. 27. QUESTION 1:Have You Counted the Costs?• Have you penciled the numbers? – Start-up costs – Business Capital• Do you know your Break Even point? – Fixed costs – Variable costs www.scorepdx.org 503-326-3441
    28. 28. Counting the Costs• Start-Up Expenses• Cash Considerations• The Funding Plan  People you know  Bank Loan (good credit)  Government programs www.scorepdx.org 503-326-3441
    29. 29. Some Start-Up Expensessecond & third month’s rent Legal Structure Stock reorders salariesfixtures setting up books Rent advertisingDeposits merchandisefurniture licenses equipment living expenses during start-up... www.scorepdx.org 503-326-3441
    30. 30. Choosing A Legal StructureThe four (4) legal structures are: Sole Proprietorship Partnership Incorporate  S Corporation  C Corporation Limited Liability www.scorepdx.org 503-326-3441
    31. 31. Local, State & Federal Business Regulations• Legal Structure • Insurance• Licenses • IRS - Employer• Procedures Identification Number – Fictitious Name Act (866) 816-2065• Business Tax • Federal Self- Information Employment Tax www.scorepdx.org 503-326-3441
    32. 32. Counting the Costs• Start-Up Expenses• Cash Considerations• The Funding Plan  People you know  Bank Loan (good credit)  Government programs www.scorepdx.org 503-326-3441
    33. 33. QUESTION 1:Have You Counted the Costs?• Have you penciled the numbers? – Start-up costs – Business Capital• Do you know your Break Even point? – Fixed costs – Variable costs www.scorepdx.org 503-326-3441
    34. 34. Break-even Analysis $900/75 = $12.00 www.scorepdx.org 503-326-3441
    35. 35. Information is Power What do you want to know about your business? How much am I putting on the books? RevenueHow much of this can I turn into money? Cash How much am I spending? Expenses Is my business making any money? Revenue –Expenses What’s the value of what my Assets business owns? How much does my business owe Liabilities to others? What is my business worth? Equity www.scorepdx.org 503-326-3441
    36. 36. Dashboard Dials www.scorepdx.org 503-326-3441
    37. 37. Cash Flow defined…1. Cash Flow is the flow of cash INTO and OUT OF a business over a selected time period2. Cash Flow is:  Positive when cash receipts exceed cash payments – YOU CAN PAY YOUR BILLS!  Negative when cash payments exceed cash receipts – YOU HAVE TO BORROW TO PAY BILL www.scorepdx.org 503-326-3441
    38. 38. Cash Flow Rules• Rule Nº 1: Cash is the most important resource you have… – More cash is better than less cash – Collect Cash now is better than later – Pay out Cash later is better than now• Rule Nº 2: – Focus on Cash Flow rather than Operating Statement (P&L) profits www.scorepdx.org 503-326-3441
    39. 39. Cash Flow Projection• Plot anticipated cash flow positions• Anticipate shortfalls• Help you spot sales trends• Tell if your customers are slow pay• Help you plan for major asset purchases www.scorepdx.org 503-326-3441
    40. 40. Cash Flow Flow Forecast Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week of: Beginning Cash Balance 0 0 0 0 0 Cash Receipts: Estimated Cash in from A/R Estimated Cash in from Sales Counter Decrease (Increase) in Savings Miscellaneous Borrowing from Line of Credit Sub total 0 0 0 0 0 0 Total Cash Available 0 0 0 0 0 0 Disbursements: Payroll (Net)Must Pay Payroll Taxes Sales Tax Rent Purchases for Resale Utilities Total Cash Out 0 0 0 0 0 0 Balance Forward 0 0 0 0 0 0 www.scorepdx.org 503-326-3441
    41. 41. Mar Apr May Jun Jul Aug Beginning Cash $ - $ (2,861) $ (549) $ 3,769 $ 5,089 $ (573) Loans from Founder $ 5,000 $ 3,000 $ 5,000 $ 2,000 $ - OUTFLOWS Cash available Beginning $ 5,000 $ 139 $ 4,451 $ 5,769 $ 5,089 $ (573) THAILAND Program Services $ 1,208 $ 534 $ 597 $ 368 $ 1,319 $ 1,319 Administrative $ 94 $ 145 $ 105 $ 109 $ 144 $ 144 Fund Raising $ 2,625 $ - $ - $ 193 $ 107 $ 108 Total Thailand Project ExpensesCORPORATE $ 3,927 $ 679 $ 702 $ 670 $ 1,570 $ 1,570 Payroll $ - $ - $ - $ - $ - $ - 0.16 Payroll burden $ - $ - $ - $ - $ - $ - Minus Allocated Payroll MARKETING $ 57 $ - $ - $ - $ - $ - Travel $ - $ - $ - $ - $ 3,500 $ - Phones $ - $ - $ - $ - $ - $ - WEB $ 3,500 $ - $ - $ - $ - Insurance $ - $ - $ - $ - $ - $ - Training/conferrences $ 352 $ - $ - $ - $ - OTHER $ 25 $ 10 $ 10 $ 10 $ 10 $ 10 Total corporate expenses $ 3,934 $ 10 $ 10 $ 10 $ 3,510 $ 10 Total Expenses $ 7,861 $ 689 $ 712 $ 680 $ 5,080 $ 1,580 Capital expenses $ 1,000 $ 6,000Total outflow $ 7,861 $ 689 $ 712 $ 680 $ 6,080 $ 7,580 Mar Apr May Jun Jul Aug Estimated Revenue by source Loans from Directors $ 5,000 $ 3,000 $ 5,000 $ 2,000 $ - $ - Corporate Donations $0 $0 $0 $0 $0 $0 Foundation Grants $0 $0 $0 $0 $0 $0 Special Events $0 $0 $0 $0 $0 $0 Public Donations $0 $0 $30 $0 $0 $0 Web DONATIONS $0 $0 $0 $0 $418 $427 Interest Income $0 $0 $0 $0 $0 $0 Other Income $0 $0 $0 $0 $0 $0 Total est revenue $0 $0 $30 www.scorepdx.org $0 $418 $427 Cash available in period $5,000 $139 $4,481 $5,769 $5,507 ($147) Cash balance ($2,861) ($549) $3,769 $5,089503-326-3441 ($573) ($7,727)
    42. 42. CASH FLOW$10,000 $5,000 $5 ,0 $3 89 ,7 Mar 69 Apr $0 Mar May ($Apr May Jun ($ Jul Aug Sep Oct Nov Dec 54 57 Jun 9) 3) ($ Jul ($5,000) 2, 86 1) Aug Sep ($ Oct($10,000) 7, ($ ($ 72 8, 8, 7) 50 61 Nov 8) 4) Dec($15,000) ($ ($ 17 16 ,9 ,6($20,000) 20 69 ) ) www.scorepdx.org 503-326-3441
    43. 43. CASH FLOW$16,000 $15,000 investment from Founders$14,000 $1 4, 42 7$12,000 Mar$10,000 Apr May $8,000 Jun $7 Jul $6,000 ,2 73 $6 $6 Aug ,4 ,3 92 86 $5 Sep $4,000 ,0 89 Oct $3 ,7 Nov $2,000 69 Dec $0 Mar Apr May Jun Jul Aug Sep Oct Nov Dec ($($2,000) 54 9) ($ ($ ($ 1, 2, 2, 66 86 92 9)($4,000) 1) 0) www.scorepdx.org 503-326-3441
    44. 44. SCORE Planner• Software that will help you manage your cash. www.scorepdx.org 503-326-3441
    45. 45. Simple.Easy to use. www.scorepdx.org 503-326-3441
    46. 46. Question 2Are you ready, willing and ablefor a change in your lifestyle? www.scorepdx.org 503-326-3441
    47. 47. Lifestyle Change• New hours• New pressure• Less family time• Less play time• More work calls• More financial pressure www.scorepdx.org 503-326-3441
    48. 48. Can you pay current bills without drawing funds from the newHave you prepared yourself and business? for a change in your family www.scorepdx.org 503-326-3441 lifestyle?
    49. 49. Question 3Is your support team on board? www.scorepdx.org 503-326-3441
    50. 50. Just WHO is the Support Team? www.scorepdx.org 503-326-3441
    51. 51. Just WHO is the Support Team? Journal!!! www.scorepdx.org 503-326-3441
    52. 52. Support Team Have you written a business plan; has your S.O. read it; does your S.O understand the impact on your current RELATIONSHIPS ?Have your talked about your hopes, www.scorepdx.org dreams, fears, finances – and how they can best support you? 503-326-3441
    53. 53. Question 4Do you enjoy the business of business? www.scorepdx.org 503-326-3441
    54. 54. Business of Business• Business Plan• Business tools• Market research• Competitive Analysis• Sales Skills• Elevator Pitch• Book-keeping• Negotiating www.scorepdx.org 503-326-3441
    55. 55. BUSINESS PLAN www.scorepdx.org 503-326-3441
    56. 56. The Plan Parts• Executive Summary The Company Products and Services Market Analysis Competition Business Strategy and Implementation Operations Organization Financial Analysis• Supporting Documentation www.scorepdx.org 503-326-3441
    57. 57. Planning Process 1 Plan Evaluate 6 Prepare for the futureexplain variances from the plan Act implement the plan 2 5 Analyzecompare results to the plan Results something happens Record 3 measure the results 4 www.scorepdx.org 503-326-3441
    58. 58. Planning Process 1 Plan Evaluate 6 Prepare for the futureexplain variances from the plan Act Success implement the plan 2 5 Analyzecompare results to the plan Results something happens Record 3 measure the results 4 FAILURE www.scorepdx.org 503-326-3441
    59. 59. YOU ALWAYS SUCCEEDIN PRODUCING A RESULT ! www.scorepdx.org 503-326-3441
    60. 60. Planning Process 1 Plan Evaluate 6 Prepare for the futureexplain variances from the plan Act implement the plan 2 5 Analyzecompare results to the plan Results something happens Record 3 measure the results 4 www.scorepdx.org 503-326-3441
    61. 61. Planning Process 1 Plan Evaluate 6 Prepare for the futureexplain variances from the plan Act implement the plan 2 5 Analyzecompare results to the plan Results Record something happens measure the results 3 4 www.scorepdx.org 503-326-3441
    62. 62. Planning Process 1 Plan Evaluate 6 Prepare for the futureexplain variances from the plan Act implement the plan 2 5 Analyzecompare results to the plan Results Record something happens measure the results 3 4 www.scorepdx.org 503-326-3441
    63. 63. Planning Process 1 Plan future Evaluate 6 Prepare for theexplain variances from the plan Act implement the plan 2 5 Analyzecompare results to the plan Results Record something happens measure the results 3 4 www.scorepdx.org 503-326-3441
    64. 64. Planning Process 1 6 Plan Evaluateexplain variances from the plan Prepare for the future 2 Act implement the plan 5 Analyze 3compare results to the plan Results 4 something happens Record measure the results www.scorepdx.org 503-326-3441
    65. 65. Help in Writing Your Plan• Community groups• SCORE• SBDCs• Free templates online www.scorepdx.org 503-326-3441
    66. 66. Persistence• Plan carefully• Execute vigorously.• Persist continuously. www.scorepdx.org 503-326-3441
    67. 67. Plan You always must be planning. www.scorepdx.org 503-326-3441
    68. 68. BUSINESS OF BUSINESSUNDERSTANDING THECOMPETITIVE LANDSCAPEMarket Research &Competitive Analysis www.scorepdx.org 503-326-3441
    69. 69. Understand the Competitive Topography• Who is in YOUR market?• What do they offer?• How different?• What is unique?• Why do people use them?• What do they communicate? – Copies of brochures, Web, Ads, etc. www.scorepdx.org 503-326-3441
    70. 70. War-wall Collection of competitiveMarketing Communications www.scorepdx.org 503-326-3441
    71. 71. What To Look For• Battles chosen• Comparisons made• Claims made• Areas ignored www.scorepdx.org 503-326-3441
    72. 72. Business of Business CompetitorsKeep your friends close and your competitors closer. www.scorepdx.org 503-326-3441
    73. 73. Question 5Are you comfortable making tough decisions on the fly? www.scorepdx.org 503-326-3441
    74. 74. Mountain Climbing www.scorepdx.org 503-326-3441
    75. 75. Frozen Falls Climbing www.scorepdx.org 503-326-3441
    76. 76. A New Boss• YOU make the decisions• No “team” to turn to• You don’t report to anyone who could guide or help• The buck stops with you. www.scorepdx.org 503-326-3441
    77. 77. How Well Do You Handle Just a little uncertainty… www.scorepdx.org 503-326-3441
    78. 78. Question 6Whats your track record of making stuff happen? www.scorepdx.org 503-326-3441
    79. 79. Getting Stuff Done www.scorepdx.org 503-326-3441
    80. 80. GOALS• S.M.A.R.T.• Specific• Measurable• Accountable• Realistic• Timely www.scorepdx.org 503-326-3441
    81. 81. Ideas Have Power www.scorepdx.org 503-326-3441
    82. 82. Question 7How well do you communicate? www.scorepdx.org 503-326-3441
    83. 83. Communicating to People in Ways They Prefer High Phlegmatic Choleric AccommodatingAssertiveness Dominant Adapting-dealing Driver Amiable Controlling-Taking Steadiness Competing Melancholic Sanguine Compliant Influencer Analytical Excelling Conserving/Holding Supporting-giving Avoiding Expressive LowAssertiveness Low High www.scorepdx.org Responsiveness Responsiveness 503-326-3441
    84. 84. Communicating to People in Ways They Prefer Phlegmatic Choleric Accommodating Dominant Adapting-dealing Driver Amiable Controlling-Taking Steadiness Competing Melancholic Influencer Compliant Excelling Analytical Sanguine Conserving/Holding Expressive Avoiding Supporting-giving www.scorepdx.org 503-326-3441
    85. 85. Communicating to People in Ways They Prefer Phlegmatic Choleric Accommodating Dominant Adapting-dealing Driver Amiable Controlling-Taking Steadiness Competing Melancholic Influencer Compliant Excelling Analytical Sanguine Conserving/Holding Expressive Avoiding Supporting-giving www.scorepdx.org 503-326-3441
    86. 86. Communicating to People in Ways They Prefer Phlegmatic Choleric Accommodating Dominant Adapting-dealing Driver Amiable Controlling-Taking Steadiness Competing Melancholic Influencer Compliant Excelling Analytical Sanguine Conserving/Holding Expressive Avoiding Supporting-giving www.scorepdx.org 503-326-3441
    87. 87. If you want to learn more… …contact me after the class for my LIFO® (life orientations) offer. www.scorepdx.org 503-326-3441
    88. 88. Question 8Is this new business something about which you are passionate? www.scorepdx.org 503-326-3441
    89. 89. “Each of us has a fire in ourheart for something. It’s our goalin life to find it and keep it lit.” - Mary Louwww.scorepdx.org Retton 503-326-3441
    90. 90. Passion is not a substitute……for business understanding…for market intelligence…for product knowledge…for positioning strategy…for planning excellence www.scorepdx.org 503-326-3441
    91. 91. What is positioning? www.scorepdx.org 503-326-3441
    92. 92. Do You Have the Passion toDiscover the Dominant Paradigm?• Core Beliefs – Dominant Paradigm – Cotton is cooler than wool – All sugar is the same• What are the Core Beliefs that must be managed in your market? www.scorepdx.org 503-326-3441
    93. 93. Reason to Buy• What is unique about your offering? – Location? – People? – Other characteristics? – Service? –??? www.scorepdx.org 503-326-3441
    94. 94. Passion to Position Your Value What is unique about your offering? www.scorepdx.org 503-326-3441
    95. 95. Passion Drives the Discipline toLearn, Grow and Produce Great Results! Passion is a choice! A daily choice. www.scorepdx.org 503-326-3441
    96. 96. Question 9 Are you a person that givesothers energy – a self-starter? www.scorepdx.org 503-326-3441
    97. 97. Self-starter Tips• Do you know your purpose?• Why are you on earth?• How does this business help you fulfill your purpose? www.scorepdx.org 503-326-3441
    98. 98. Business / Happiness5 Paths to Giving Others Energy February 2011 Reader’s Digest1. “Use your resources wisely”2. “Create a family culture”3. “Avoid „just this once‟”4. “Remember to be humble”5. “Choose the right yardstick” www.scorepdx.org 503-326-3441
    99. 99. Question 10Do you have a “partner”? www.scorepdx.org 503-326-3441
    100. 100. Advisory Board – Why?• Networking Potential• Industry Trends• Educated Opinion-makers• Business Advice• Emotional Support www.scorepdx.org 503-326-3441
    101. 101. Advisory Boards - Who• Suppliers• Retailers• Wholesalers• Lawyers / CPA• Retired Small Business People• Professors www.scorepdx.org 503-326-3441
    102. 102. Advisory Boards In the counsel ofmany there is wisdom. www.scorepdx.org 503-326-3441
    103. 103. ARE YOU READY TO CHANGE? www.scorepdx.org 503-326-3441
    104. 104. www.scorepdx.org 503-326-3441
    105. 105. Today’s offer Any 3 eBooks$14.95 $4.95 $4.95 $4.95$29.80 www.scorepdx.org 503-326-3441
    106. 106. Today’s offerBook + 3 www.scorepdx.org 503-326-3441
    107. 107. www.scorepdx.org 503-326-3441

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