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Intro to business and small business startup for bulgaria
- 2. Goals for Today Understand business Understand where ideas for business come from Learn the basics of starting a business Write a draft business plan, on your own
- 3. Types of Business Businesses fall into 3 categories Services (Most business start here…) Product ( Most businesses want to be here) Highly profitable business end up here: Combination Services and Product
- 4. Ideas for Business Business starts with an idea. Ideas for business come from thinking about: Needs Wants Desires These are the Foundation of a Business. Ideas come from lots of different places…….
- 5. Service ideas • • • • • • • • • • Tutoring Day Care Washing Windows/Cars/Specialty Cleaning Cleaning Homes Delivery Service Waste removal Landscaping Website design Telemarketing Transcriptionist
- 6. Product Ideas • Bakery • Agriculture • Distribution – Food – Charcoal – Teaching supplies • Restaurant • Souvenirs
- 7. Combination Service/Product Ideas • Tutoring that sells math calculators to children • Bakery that also specializes in catering • Washing (Car, Windows, etc.) that also sells cleaning solution. • House Cleaning that sells mops, brushes, rags, buckets.
- 8. Ideas • Look around… • Imagine… • See the potential…
- 9. Starting a small business
- 10. What is SMALL • Micro • Small
- 11. Why is small business important? • In U.S. – more than 22 million small business. • Nearly 50% of all U.S. payrolls. • Lifeblood of most economies in the capitalist countries.
- 12. Start with an Idea • Research • Develop Business Plan – Mission – Goals and Objectives – Marketing Plan – Employees and Management – Financial Plan
- 13. Idea – House Cleaning • RESEARCH??? – What are we looking for?
- 15. Write a Business Plan • • • • • • Formal Business Description Mission Statement Goals and Objectives Marketing Plan Employees & Managing Financial Plan
- 16. Description vs Mission Statement • Business Description – A house cleaning service. • Mission Statement – Provide immaculate cleaning services for double income couples who don’t have time to maintain their homes.
- 17. Objectives vs Goals • Objectives – Improve homes appearance and cleanliness – Relieve burden of household cleaning duties • Goals – Clean 10 homes first month – 3 home cleaning jobs per day after 6 months • Goals must be measurable-
- 18. Marketing Plan • Who are your customers • How will you make your product /service known to them • Competition – who are they and how are you better – Differentiation by price, quality, service… • Distribution Channels • Trends
- 19. Employees and Management • What makes a good employee • Avoiding Problems • Employ Fair Values – Fair wage – Fair treatment – Equal Opportunity – Safety
- 20. Financial Plan • • • • Start up Costs (Capital Requirement) Cash Flow Analysis Operating Budget Break Even Analysis • TAXES
- 21. Capital Requirements What happens if you start a business and you have a loss for the first few months? - You need to “fund” this loss - Through Savings - Through Investors - Payback? - Through Debt - Payback?
- 22. Cash Flow Analysis CASH FLOW ANALYSIS Units Sold Gross Month 1 Revenue Product A Units Sold Gross Month 2 Revenue Units Sold Gross Month 3 Revenue Units Sold Gross Month 4 Revenue Cost per Unit = Gross Revenue CASH FLOW ANALYSIS Example for Home Cleaning Home Month 1 1 home Revenue per = Gross Home Gross Homes Gross Homes Gross Revenue Month 2 Revenue Month 3 Revenue Month 4 Revenue 10 400,000 20 800,000 30 1,200,000 40 1,600,000 500 Sq Meters Gross Revenue 12,000 24,000 36,000 48,000
- 23. Operating Budget OPERATING BUDGET Expense Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Cost of Product Sold Cleaning Supplies Labor Loan Repayment Other Expenses Other Expenses Other Expenses TOTAL EXPENSES House Cleaning Example OPERATING BUDGET Expense Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Cleaning Supplies 100000 50000 50000 50000 50000 Labor 200000 Fuel Costs 50000 50000 50000 50000 50000 Advertising 20000 20000 20000 20000 20000 Mobile Phone 30000 6000 6000 6000 6000 Taxes 50000 50000 50000 50000 50000 Business License 100000 Other Expenses 50000 50000 50000 50000 50000 TOTAL EXPENSES 400000 226000 226000 226000 426000 50000 200000 50000 20000 6000 50000 50000 426000 TOTALS 400000 600000 350000 140000 66000 350000 100000 350000 2356000
- 24. BREAK EVEN ANALYSIS : FROM YOUR BUDGET REPORT ENTER FIXED COSTS = _______ Shilling VARIABLE COSTS = _______ Shilling A) Total Cost PER Home = ___ Shilling per home B) Price charged per home = ___ Shilling per home TARGET PROFIT (6 MONTHS) = _______ Shilling (goal) (B – A = PROFIT) Projected net loss without any profit goal for 6 months = (______) In this scenario - either needs to lower costs or raise prices to break even.
- 25. Summary • Research • Plan! – Mission – Goals and Objectives – Marketing Plan – Financial Plan • Success!