Invention to Venture

Enterprise Formation
• Pro-Forma Sales Forecasting
• Using Your Pro-Forma Sales Forecast to Determine
Units Sold Per Hour
• Resources:
• Personnel
• Space
• Equipment
• Legal Structure
• Small Business vs Entrepreneur
• Financial
• Debt vs Equity Financing
• Typical Resources for Financing Small
Businesses
• Entrepreneurial Funding vs Stage of Venture
• Entrepreneurial Financing

Pro-Forma Sales Forecast
JAN FEB MARCH APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC TOTALS
Competitor #1 $15,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $50,000 $45,000 $40,000 $35,000 $465,000
Competitor #2 $10,000 $20,000 $25,000 $30,000 $35,000 $45,000 $55,000 $52,500 $50,000 $45,000 $35,000 $18,000 $420,500
Competitor #3 $30,000 $45,000 $55,000 $65,000 $75,000 $85,000 $95,000 $85,000 $75,000 $65,000 $50,000 $45,000 $770,000
AVERAGES: $18,333 $30,000 $36,667 $43,333 $50,000 $58,333 $66,667 $64,167 $58,333 $51,667 $41,667 $32,667 $551,833
YOUR SALES FORECAST $5,000 $8,000 $9,000 $10,000 $12,000 $14,000 $16,000 $18,000 $18,000 $14,000 $15,000 $10,000 $149,000
CAPTURE RATIO:
% of Competitor's Sales 27% 27% 25% 23% 24% 24% 24% 28% 31% 27% 36% 31% 27%

Your Sales Forecast $5,000 $8,000 $9,000 $10,000 $12,000 $14,000 $16,000 $18,000 $18,000 $14,000 $15,000 $10,000 $149,000
Days in the Month 31 28 31 30 31 30 31 31 30 31 30 31 365
Average Sales Per Day $161 $286 $290 $333 $387 $467 $516 $581 $600 $452 $500 $323
Average Hours Per Day 8 8 8 8 8 8 8 8 8 8 8 8
Average Sales Per Hour $20 $36 $36 $42 $48 $58 $65 $73 $75 $56 $63 $40
Average Price Per Unit $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 $5
Average # of Units Sold Per Hour 4 7 7 8 10 12 13 15 15 11 13 8
Use Your Pro-Forma Sales Forecast to Determine Units Sold Per Hour

Resources - Personnel
Resources based upon sales
levels, break down your
monthly pro-forma sales
forecast into units per hour to
determine your needs.
• Personnel
• manufacturing or production
• sales staff
• office staff
• other staff, shipping, receiving,
janitorial, etc.

Days in the Month 31 28 31 30 31 30 31 31 30 31 30 31 365
PERSONNEL:
Production
Sales
Office
Staff
Supervisors or Managers
Resources – Personnel Per Hour

Resources - Space
Resources based upon sales levels, break
down your monthly pro-forma sales
forecast into units per hour to determine
your needs.
• Space
• How much room do you need for
• incoming supplies / inventory storage
• your production area
• outgoing / shipping
• retail / showroom area
• offices
• break room
• restrooms
• parking

Days in the Month 31 28 31 30 31 30 31 31 30 31 30 31 365
SPACE:
Production
Sales
Office
Staff
Resources - Space

Resources - Equipment
Resources based upon sales levels, break
down your monthly pro-forma sales forecast
into units per hour to determine your needs.
• Equipment
• List the equipment you will need for
• production
• equipment #1
• equipment #2
• vehicles
• shipping
• storage
• retail / showroom area
• offices
• break room

Days in the Month 31 28 31 30 31 30 31 31 30 31 30 31 365
EQUIPMENT:
Production
Sales
Office
Staff
Resources – Equipment Per Hour

Resources - Legal Forms of Your Venture
• Criteria for Deciding the Legal Form of Your Venture
• Limited Liability – the ability to protect yourself and your personal assets
from lawsuits in case of slip and fall, product/service liability, professional
omissions, malpractice, etc.
• Ownership – percent of the business you will actual own?
• Control – who can make decisions about the business?
• Fund Raising – the more people involved equals more potential capital raised.
• Life of the Business – a contract, the life of the owner, or indefinite?
• Taxation – do you want to get taxed once or twice on your income?

Limited
Liability Ownership Control Fund Raising
Life of the
Business Taxation
Sole Proprietor
NO TOTAL TOTAL OWNER OWNER ONCE
Partnership
NO PERCENTAGE PERCENTAGE OWNERS ANY CHANGE ONCE
Limited Liability Partnership (LLP)
YES & NO PERCENTAGE PERCENTAGE OWNERS ANY CHANGE ONCE
C Corporation
YES % SHARES MOST SHARES STOCK INDEFINITE TWICE
S Corporation
YES % SHARES MOST SHARES STOCK INDEFINITE ONCE
Limited Liability Corporation (LLC)
YES % UNITS MOST UNITS STOCK INDEFINITE ONCE
Legal Form of Ownership Comparison

Small Business vs Entrepreneur
A small business is replacement income for the
owner so they do not have to work for someone
else. These businesses are focused on local
opportunities, not national. These small
businesses account for 95% of all start-ups.
An entrepreneur has the intent of going national
with their product or service. True entrepreneurs
account for about 5% of all start-ups.
Most small business owners and entrepreneurs
start in the same place. It’s the long-term goals
that differ in the start-up stage.

Resources - Financial
Debt financing
• Pros
• Maintain ownership
• Certain % of debt helps return on equity
• Cons
• Monthly interest and principle payments
• Too much debt will limit ability to raise
more capital and hurt your credit rating
Equity financing
• Pros
• Raise capital with no monthly payments
• Attract investors and management skills
• Cons
• Gives up ownership in the business in
order to raise capital.

Typical funding sources for start-up or pre-seed to seed stage businesses:
• trade credit
• your bank accounts
• your home equity
• your IRA
• your credit cards
• your family and friends
• a line of credit at your local bank (how good is your credit rating?)
• social lending or crowd funding debt financing / loans
• micro loan (SBA)
• bank loan
• SBA Guaranteed Loan Programs at a participating bank
• a partner and their assets
• a partner’s family and friends.
Resources - Financial

Summary
• Pro-Forma Sales Forecasting
• Using Your Pro-Forma Sales Forecast to Determine
Units Sold Per Hour
• Resources:
• Personnel
• Space
• Equipment
• Legal Structure
• Small Business vs Entrepreneur
• Financial
• Debt vs Equity Financing
• Typical Resources for Financing Small
Businesses
• Entrepreneurial Funding vs Stage of
Venture
• Entrepreneurial Financing

For a copy of this PowerPoint presentation please go to:
http://businessinformationisu.wordpress.com
For a copy of The Experienced Entrepreneur please go to:
http://www.amazon.com/The-Experienced-Entrepreneur-Rick-
Paul/dp/0970020600
If I can be of further assistance, please start a conversation at:
https://www.facebook.com/experiencedentrepreneur
For the College of Technology Entrepreneurship class information please go
to: http://www.isu.edu/ctech/business_information/
For the College of Technology please go to:
http://www.isu.edu/ctech/index.shtml
Or visit the College of Technology at the Pocatello - Chubbuck Chamber of
Commerce Business After Hours on 2/20 from 5:00 to 7:00 pm at the Clarion
Inn, Pocatello, Idaho.
Additional Resources:

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