Uploaded byGeorgiaPinner
PPTX, PDF57 views

JWBC NFDO Quarterly Forum

The document provides information about a quarterly business forum featuring FranNet, ActionCoach, and SCORE. The forum agenda includes discussions on why business ownership, options for getting into business like franchising, myths and realities of franchising, and how to identify the best business option. Presenters include Marshall Reddy of FranNet, who will discuss franchise opportunities, Steve Goranson of ActionCoach, and Craig Linsky of SCORE Jacksonville, who will discuss understanding financial statements. The event aims to help attendees learn about business ownership and evaluate franchise and business coaching opportunities.

Embed presentation

Download to read offline
JWBC/NFDO QUARTERLYBUSINES FORUM August 12, 2021
JWBC/NFDO QUARTERLY BUSINESS FORUM FEATURING FRANNET, ACTIONCOACH, AND SCORE!
Over 27 Years experience in the Franchise Industry 39 years entrepreneur Featured in “Career Changers Manual” Samuel Greengard. Top 50 Advantage Business magazine Marshall Reddy President -- Franchise Network, Inc
New Year New You Your Dream of Business Ownership
AGENDA (60 MINUTES) • Why Business Ownership? • Options for Getting Into Business • Risks & Rewards of Business Ownership • Myths & Realities of Franchising • How to Identify the Best Business Option forYou • BuildingYour Personal Business Model
WHO IS FRANNET? • 30+ year old International Franchise Consulting firm • Over 100 locally-based consultants across North America • National partnerships with SCORE & SBDC. • We match people who want to be in business with a franchise that meets their needs. • Our services are always 100% free to you, the client
Elephant in the Room…
• Risk: • A job is safer than a business • I’ll wait until the economy is better • Money: • A business costs a lot of money to start and run • Knowledge: • I don’t know where to start or find what I’m looking for • Skills: • Running a business takes specific talents and skills SOME OFTHE CONCERNS
POINTS OF CONSIDERATION
NOT OUR FIRST RODEO … PAST: Dotcom bust, 9/11, Great Recession, SARS, H1N1…. PRESENT: COVID-19 FOCUS: • Create your own ladder • Recession-resistant industries • Reasonable overhead • Service-based businesses
ARE YOU SURPRISED? • A recent survey conducted by a major franchise trade group, revealed some surprising results on franchise activity in the near term, amidst this challenging backdrop. • 54% think that “now is a good time” to start a business. • 59% expect to start a business within the next three months, and another 17% within four-to-six months
HOW TO USE THIS TIME Hit the Brakes! • We get it • This isn’t for everyone Tap the Brakes • Proceed cautiously • Pull the trigger w/ clarity on COVID-19 • What IS clarity for you and is it realistic? Full Speed Ahead! • THIS is the time • Take advantage of opportunities (low interest rates, increased vacancies, lower costs, etc.) • Possible huge economic opportunity on the other side, I’ll be ready • Prepare now, take off when I want Searching for an opportunity is not the same as committing to a purchase.
Risk Time Job (Then) Job (Now) Risk Increases Is working for someone safe? Short term yes, but …  Can you be sure your job is safe?  Can performance determine security?  Will you meet your long-term financial goals of security and retirement? RISK PERCEPTION: JOB
Job Security Average Employment Tenure 2014: 4.6 years 2016: 4.2 years 2019: 4.6 years 2020: 4.1 years Source: US Bureau of Labor Statistics
Career Paths of Yesteryear
Career Paths Today
Motivation to Own a Business Source: Guidant Financial Small Business Trends survey Dissatisfaction with corporate America has been #1 for last 3 years 75% of small business owners rate their happiness at 8/10 or higher.
Small Business Source: SBA. Small Businesses are less than 500 employees.
What is it for YOU? Control Financial Security No More Layoffs Money Fulfillment Flexibility Independence SUCCESS WHY BUSINESS OWNERSHIP
BUSINESS OWNERSHIP OPTIONS Start a Business From Scratch Buy an Existing Business Buy a Franchise
START A BUSINESS ADVANTAGES Total Control Make all decisions Room for creativity No predetermined rules Large upside Build a business from your passion Start a Business From Scratch DISADVANTAGES Must create systems Limited financial options Slow ramp-up High failure rate
BUY AN EXISTING BUSINESS ADVANTAGES Cash flow Goodwill Actual financial results Attractive to lenders Market established Customer base Employees Systems may be in place Owner financing Buy an Existing Business DISADVANTAGES Cash flow Bad will May be overpriced Poor training and support Hidden seller motives Employee defection Higher debt service
BUY A FRANCHISE ADVANTAGES Name recognition/ Licensed trademark Proven business system Training and support Lower failure rate Lower cost Financing options Disclosure Franchise family Buy a Franchise DISADVANTAGES Fewer industry options Structured operating system (in some franchises) Territory restrictions Can only sell their products Ongoing royalty payments
A FRANCHISE IS…
Why Do People Choose Franchising?
Owners come from all backgrounds *Based on FranNet placements Who Buys Franchises?
Franchise Owners In the Past 5 Years • MoreWomen • Female owners: +22% • Younger • 20-29 years old: +100% • 30-39 years old: +53% • Veterans • Owners that are veterans: +3% Source: FranNet placement data
Proven, systematic approach to starting and staying in business • Experience • Simplicity • Initial Training & Ongoing Support • Name Recognition • Sales, Marketing & Operational Systems • Culture of Teamwork HOW FRANCHISING WORKS
• Many Units vs. Fewer Units • Well-established vs. Newer • Structured Systems vs. Flexible Systems • Expensive vs. Inexpensive • Remember: There is no automatic correlation between the between the cost of the franchise and the potential return. return. FRANCHISES ARE NOT ALLTHE SAME
Am I willing to follow the franchisor’s system? Is it affordable? Is the risk level acceptable? Will I enjoy my business? FINDINGYOUR PERFECT FIT
Separate the function of the business, from the function of the business owner! FINDINGYOUR PERFECT FIT
What is Right for YOU?
Use Your Transferable Business Skills
• Challenge, recognition, prestige • Build equity for retirement • Time for family and interests • Independence and control • Financial security WHAT IS IMPORTANTTOYOU?
Government Disclosure: FDD • “Franchise Disclosure Document” • Mandatory Information • Franchisor Info • Time in business, experience • Bankruptcies, Litigation • Franchise Contract
• Contact Info For: • Current franchisees • Past franchisees • Policies • Renewal,Termination &Transfer, Etc. • Financial • Earnings Claims • Investment • Franchise & other fees, capital • Royalties Government Disclosure: FDD
FRANCHISING MYTHS
MYTH #1: FRANCHISING IS ONLY FAST FOOD & RETAIL
FRANCHISING FACT FACT: • Over 3,600 different franchise companies • In more than 90 industries • With over 900,000 operating units Automotive Commercial & Residential Services Personal Services Business Services Retail Products & Services Other
MYTH #2: FRANCHISES SUCCEED BECAUSE OFTHE QUALITY OF THE PRODUCT
Can you make a hamburger? Is your hamburger better than McDonald’s? If it is not the product, then what is it? FRANCHISING FACT
FACT: It is all about the Business System • Marketing • Sales • Operations • Accounting FRANCHISING FACT
SUCCESSFUL FRANCHISES EMERGE IN NEW INDUSTRIES WITH NO NEW COMPETITORS MYTH #3:
FACT: It’s the SYSTEM! • McDonald’s started when there was a burger joint every corner. • More recent examples are in Consumer and Business Services. FRANCHISING FACT
FRANCHISES ARE EXPENSIVE MYTH #4:
There is no automatic correlation between the cost of the franchise and the potential return. Source: FRAN data 11% under $50K 27% are under $100K 55% are under $250K Many Investment Levels
HOW MUCH DO I NEED? TOTAL INVESTMENT Your Money: 25-30% Financing: 70-75%
FINANCING SOURCES Financing Sources: • Personal savings • Friends, relatives or partner • Home equity line of credit • Seller financing – resale • 401K, IRA, etc.
HIGH RETURN REQUIRES A HIGH INVESTMENT MYTH #5:
FACT: There is no automatic correlation between the cost of franchise and the potential FRANCHISING FACTS FACT: Service businesses require far less capital investments and frequently yield higher returns.
INDUSTRY EXPERIENCE IS REQUIRED MYTH #6:
FRANCHISING FACT Franchisors want people who… • Will use their system • Will focus on being an owner • …with business and management skills • …with people and communication skills Proven Process • Franchisor trains the franchisee on how to use their system
ADDITIONAL RESOURCES Professional Advisors: • Franchise Attorney • Accountant Suggested Reading: • More Than Just French Fries • E-Myth Revisited, by Michael Gerber • Street Smart Franchising, by Joe Matthews
For Additional Information Marshall Reddy Marshall@Whatthefranchise.com Whatthefranchise.com 904.249.1820
STEVE GORANSON: ACTIONCOAC H • Steve Goranson, has owned and operated the North Florida office of ActionCOACH Business Coaching since 2004 • Established in 1993, ActionCOACH is the world’s largest coaching franchise with over 1000 offices in 70+ different countries. • They coach over 15,000 businesses each week across the Globe • ActionCOACH offers more than just coaching. It offers a change of lifestyle the opportunity to make more money and an improve work-life balance. Helping Business owners Work Smarter Not Harder! • ActionCOACH doesn’t offer the quick fix. It promises a change of lifestyle for those that use and embrace its systems and culture • Steve has lived in Jacksonville for over 30 years with his wife Shari and 4 kids. Over the years he has worked with small business owners in the areas of sales, advertising, marketing & marketing research. • Steve’s vision is to bring Success & Prosperity to Northeast Florida thru Business Re-Education. • He is committed to helping business owners make a better life for themselves and their families
CRAIG LINSKY: SCORE JACKSONVILLE MENTOR & CLIENT EDUCATION COMMITTEE CHAIRMAN Craig Linsky is a SCORE mentor and Chairman of the Client Education Committee at SCORE in Jacksonville. Craig worked in the financial services industry for nearly thirty years. For the past ten years, he has designed and taught marketing and other business topics both domestically through SCORE and internationally through the Financial Services Volunteer Corp.
CRAIG LINSKY: SCORE JACKSONVILLE MENTOR/CLIENT EDUCATION COMMITTEE CHAIRMAN
Understanding Financial Statements
Jacksonville.score.org What is SCORE? A nonprofit organization with the largest network of free business experts in the United States. • In association with the SBA, SCORE is dedicated to helping small businesses get started, grow and achieve their goals through education and mentorship. • Over 11,000 volunteers in over 250 chapters nationwide. • Dedicated to entrepreneur education, the formation, growth and success of small business. • Over 70 volunteers in the Northeast Florida chapter. Jacksonville Chapter
Jacksonville.score.org Sign Up With a Mentor Costs only $99 Sign up for a mentor Register for a workshop Find Templates & Webinars
Jacksonville.score.org Upcoming Workshops Date Start Topic Aug 11 1:00 pm Reach Customers Online With Google Aug 11 6:00 pm Tackle Quickbook Basics Aug 12 6:00 pm Tax Bootcamp for SB Owners Aug 14 10:00 am Automate Your Marketing Aug 23 5:30 pm Cottage Law - How to Start a Home Based Food Business Aug 28 9:30 am You, Your Business Idea and How SCORE Can Help Aug 30 5:30 pm How to Manage Your Business with KPIs Aug 31 5:30 pm Internet Market Series – Pt 1 of 5, Creating a Connected Brand Sep 7 5:30 pm Internet Market Series – Pt 2 of 5, Websites That Convert Sep 8 5:30 pm Free Resources for Entrepreneurs at the St. John’s Library Sep 13 5:30 pm How Do I Develop a Product or Service to Sell? Sep 14 5:30 pm Internet Market Series – Pt 3 of 5, Create Six Months of Social Media in One Day
Jacksonville.score.org Understanding Financial Statements
Jacksonville.score.org The Ultimate Goals  The business has to make a profit to survive.  Revenues (sales) must exceed expenses to make a profit.  Cash flow (cash in minus cash out) must be positive.  When you are out of cash, you are out of business! Here are some key points to remember about your business’s finances.
Jacksonville.score.org The General Ledger The general ledger is the initial accounting tool used to record business transactions. • The general ledger usually has two columns used to record offsetting transactions. - The left column represents debits - The right column represents credits • A transaction is recorded based on two factors: 1. The type of account affected. 2. Whether the transaction increases or decreases the balance in that account. Type of Account Debit Credit Asset Increases Decreases Liability Decreases Increases Income/Sales Decreases Increases Expense Increases Decreases Equity/Capital Decreases Increases • The general ledger holds the account information needed to prepare the company's financial statements.
Jacksonville.score.org Cash vs. Accrual Accounting The main difference between the two is in the timing of when revenue and expenses are recognized. Cash Accounting Accrual Accounting Usually easier to do; better tracks cash flow. Can require two entries for one transaction. Entries take place when cash actually changes hands. Recognizes revenue and expenses when they occur, whether or not cash changes hands. May overstate the income of a business that is cash-rich but has large accounts payables. Smooths out earnings over time. Available to businesses under $26 million in gross receipts (based on three year average). Available to any size business. Cannot be used by C corporations. Can be used by any type of legal entity.
Jacksonville.score.org Cash vs. Accrual - Revenue A sales contract for $10,000 in signed on Dec. 10, 2020 with delivery on Dec. 20. The customer has 30 days from delivery to pay. (Jan. 19, 2021) Dec. 10 Dec. 10 No Entries No Entries Dec. 20 Dec. 20 Debit Credit No Entries Accts Receivable $10,000 Sales Revenue $10,000 Jan, 19 Debit Credit Jan. 19 Debit Credit Cash $10,000 Cash $10,000 Sale Revenue $10,000 Accts Receivable $10,000 Under accrual accounting, the sale is recognized in 2020, but under cash accounting, the sale isn’t recognized until the following year. Cash Accounting Accrual Accounting
Jacksonville.score.org Cash vs. Accrual - Expenses A monthly utility bill for $100 for the period ending on Dec. 15, 2020 is received on Dec. 20, with payment due by Jan. 10, 2021. Dec. 20 Dec. 15 No Entries No Entries Dec. 20 Dec. 20 Debit Credit No Entries Utility Expense $100 Accts Payable $100 Jan, 10 Debit Credit Jan. 10 Debit Credit Utility Expense $100 Accts Payable $100 Cash $100 Cash $100 Under accrual accounting, the expense is recognized in 2020, but under cash accounting, the expense isn’t recognized until the following year. Cash Accounting Accrual Accounting
Jacksonville.score.org The Three Financial Statements 1. Income statement: Did I make a profit or loss? What expenses did I spend money on? 2. Cash flow statement: Do I have enough sources of funds to operate, sustain & grow the business? How many months to reach positive cash flow (more money coming in than going out)? 3. Balance sheet: What are my assets & liabilities? How much is the business worth? The three statements tell you different things about the business.
Jacksonville.score.org Balance Sheet Basics Liabilities: Accounts Payable $22,000 Accrued Expenses $ 4,000 Current Portion of Loans $18,000 Other Current $ 3,000 Current Liabilities $47,000 Long-Term Loans $38,000 Long-Term Liabilities $38,000 Total Liabilities $85,000 Owner’s Equity: Capital Stock $20,000 Retained Earnings $50,000 Total Owner’s Equity $70,000 Assets = Liabilities + Equity (as of a specific date) Assets: Cash $20,000 Accounts Receivable $40,000 Inventory $12,000 Other Current Assets $ 3,000 Current Assets $75,000 Equipment $55,000 Delivery Vehicles $20,000 Other Fixed Assets $ 5,000 Fixed Assets $80,000 Total Assets $155,000
Jacksonville.score.org Income Statement Basics Calculations: Net Sales = Gross Sales - Refunds $520,000 - $20,000 = $500,000 COGS = Direct Labor + Direct Materials $100,000 + $140,000 = $240,000 Sales & Marketing = Sales Salaries + Advertising $45,000 + $20,000 = $65,000 General & Administrative Expense = Manager/Owner Salaries $35,000 Office Staff Salaries $22,000 Rent $12,000 Utilities $ 4,000 Insurance $ 2,000 $75,000 Profit = Revenues - Expenses (for a given time period ) Income Statement: Net Sales (Net Revenue) $500,000 Less: Cost of Good Sold (COGS) $240,000 Gross Margin (Gross Profit) $260,000 Sales & Marketing Expenses $ 65,000 General & Administrative Exp. $ 75,000 Depreciation of Equipment $ 20,000 Less: Operating Expenses $160,000 Income From Operations $100,000 Less: Interest Expense $ 4,000 Net Income Before Taxes (NIBT) $ 96,000 Less: Income Tax Owed (“C” Corp) $ 21,000 After Tax Net Income $ 75,000
Jacksonville.score.org Cash Flow Statement Basics Notes:  A CFS covers a specified period of time (month/quarter/year).  This CFS shows a net increase of $10,000 ($10,000 + $120,000 – $110,000 = $20,000)  Ending Cash of $20,000 should equal Cash shown on the Balance Sheet (same end date)  Ending Cash should never fall below zero! (If it does, you need to inject more equity or borrow more money to correct the situation.)  Depreciation is considered an expense on the income statement, but it is not cash out. It should be added to the Income From Operations. Cash Flow = Starting Cash + Cash In – Cash Out Cash Flow Statement: Beginning Cash $ 10,000 Cash Receipts (In-Flows) Income from Operations $100,000 Depreciation of Equipment $ 20,000 Total Cash Receipts $120,000 Cash Disbursements (Out-Flows) Purchase of New Equipment $ 75,000 Interest Payments $ 4,000 Loan Repayment $ 15,000 Income Tax Paid $ 16,000 Total Cash Disbursements $110,000 Ending Cash $ 20,000
Jacksonville.score.org Determining Sales Units What unit categories make sense for your business? Determine if you’re selling:  Products  Services (hours or fixed price)  Combination (packages) Determine what makes up a “unit of sale” Determine direct cost per unit Determine price per unit
Jacksonville.score.org Estimating Sales Volume  How long will it take you to sell the product or perform the service?  New customers take longer to find when getting started, so expect lower sales in early months.  You will become more efficient over time with product or service. How many items or services will sell in a day/week/month?
Jacksonville.score.org Estimating Dollars of Sales • Is your product or service seasonal? If yes, then you may sell 80% from Black Friday to New Year’s day or during the summer months. • Multiply by average selling price, not list price. Take into account discounts, credits, returns. • Multiply by average 22 working days per month. 60 units/day X $20.00 X 22 days = $26,400/month
Jacksonville.score.org Types of Expenses Variable (Direct) Costs Fixed (Indirect) Costs Raw (product) materials Rent/mortgage Manufacturing labor wages Manager & staff salaries Production supplies Office supplies Sales staff commissions Sales staff salaries Delivery costs Insurance & legal expenses Product packaging Utilities Product marketing/advertising Equipment depreciation • Variable expenses – Costs directly incurred in production. • Fixed expenses – Costs incurred regardless of production.
Jacksonville.score.org Depreciation Expense - Example Assume the purchase of a $33,000 delivery van. • It’s expected to have a useful life of five years. • It has a salvage value of $3,000 at the end of its life. • Straight line depreciation is used here, but there are many other methods. • The depreciation expense used for tax purposes may differ from what is reflected on the Income Statement and the Balance Sheet. Year 1 Year 2 Year 3 Year 4 Year 5 Cash Flow ($33,000) 0 0 0 $3,000 Dep. Expense ($6,000) ($6,000) ($6,000) ($6,000) ($6,000)
Jacksonville.score.org (Variable) Cost of Materials Materials depend on your business. • Bakery materials  Flour, sugar, salt, yeast, chocolate, bags, etc. • Music CDs  Blank discs, jewel cases, printed inserts, plastic wrap, etc. • Kitchen remodeling Cabinets, granite, faucets, doorknobs, caulk, sinks, etc. • Lawn service  Fertilizer, weed treatment, gasoline for truck & mower, etc. Determine the cost of all materials for your product, including packaging.
Jacksonville.score.org What is Gross Profit Margin (GPM)? Direct Costs  Materials & packaging in the product  Labor to make the product  Sales commissions Why is it important? Requires you to cost out what you’re selling. Helps determine adequacy of gross price for what you’re selling. Track the trend in GPM over time. GPM = Net Sales dollars minus direct cost of sales (COGS + sales commissions).
Jacksonville.score.org Gross Profit Margin Calculation Gross Profit Margin is often viewed as a dollar amount and a percentage. Products and Services Dollars Percent Local Nursery Plant mix Price Per Unit $ 2,000.00 100% Variable Cost Per Unit $ 1,100.00 55% Gross Margin Per Unit $ 900.00 45%
Jacksonville.score.org Required Start-Up Funds Ann wants to start a plant nursery business. • Her estimated costs are $172,000 + $51,800 = $223,800. Fixed Assets Needed Amount Real Estate/Land $100,000 Building 30,000 Leasehold Improvements 15,000 Equipment 5,000 Furniture & Fixtures 2,000 Vehicles 20,000 Other Fixed Assets 0 Total Fixed Assets $172,000 Operating Capital Needed Amount Pre-Opening Salaries and Wages $10,000 Prepaid Insurance Premiums 2,500 Inventory 30,000 Legal and Accounting Fees 3,000 Utility Deposits 300 Supplies 1,000 Advertising and Promotions 2,000 Working Capital (Cash on Hand) 3,000 Total Operating Capital $51,800
Jacksonville.score.org Sources of Funding Here is how Ann plans to raise the funds to get started. Funding Needed Amount Percent Mo. Payment Owner’s Equity $115,000 51% $0 Loans from friends/family $0 0% $0 Commercial Term Loan $33,800 15% $543.81 Commercial Mortgage Loan $60,000 27% $539.83 Business Credit Card $0 0% $0 Vehicle Term Loan $15,000 7% $252.28 Commercial Line of Credit $0 0% $0 Total Operating Capital $223,800 100% $1,335.92
Jacksonville.score.org Breakeven Analysis Breakeven is when: Total Gross Profit = Total Expenses OR Sales Volume results in Zero Profit Fixed Costs Unit Sales The blue line shows that fixed costs remain unchanged regardless of unit sales. The purple line shows that total revenues increase as unit sales increase. The point at which the lines cross is where unit sales cover all the fixed costs and profit = zero.
Jacksonville.score.org Breakeven Calculation How many cups of coffee must be sold to break even? 1. Fixed Expenses/Month: Rent $1,000 Salaries $2,000 Payroll Taxes $200 Insurance $100 Advertising $ 50 Telephone $100 Utilities $100 Total Fixed Expenses $3,550 2. Gross Profit per Cup: Sale price for cup of coffee: $3.00 Direct cost for cup of coffee: - $1.00 Gross Profit: $2.00 3. Cups of Coffee to Break Even: Fixed Expenses / Gross Profit = $3,550 / $2.00 = 1,775 Cups per Mo.
Jacksonville.score.org
Jacksonville.score.org Funded in part through a cooperative agreement with the U.S. Small Business Administration. All opinions, conclusions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.
JWBC NFDO Quarterly Forum

More Related Content

PDF
Chap 6 Management by Richard Draft
byMari-Ann Benigno-Bringas
 
PDF
5 Biggest Business Challenges Entrepreneurs Face
byerickjones014
 
PDF
How to Pitch: An insiders guide
by23rd & 5th
 
PDF
Emmas's parlor - Entrepreneurship Management
byMari-Ann Benigno-Bringas
 
PPTX
Presentation1
byJudy Contreras, SPHR
 
PPT
Salary negotiation
byCharles Pinion, GCDF
 
PPT
Entrepreneurship Is It For Me
byventureneer
 
PPTX
Bus106 wk6 ch6 entrepreneurship
byBhupesh Shah
 
Chap 6 Management by Richard Draft
byMari-Ann Benigno-Bringas
 
5 Biggest Business Challenges Entrepreneurs Face
byerickjones014
 
How to Pitch: An insiders guide
by23rd & 5th
 
Emmas's parlor - Entrepreneurship Management
byMari-Ann Benigno-Bringas
 
Presentation1
byJudy Contreras, SPHR
 
Salary negotiation
byCharles Pinion, GCDF
 
Entrepreneurship Is It For Me
byventureneer
 
Bus106 wk6 ch6 entrepreneurship
byBhupesh Shah
 

What's hot

PPTX
How to Maximise the Value of Your Business
bydavidguest11
 
PPTX
SL - Core Purpose, Mission & Values
byAshleigh Burns
 
PDF
BB_NZ_April-July2016_FOR WEB (1)
byZahria La Varis
 
PDF
7 Critical Points_Richmond
byMike Metzger
 
PPTX
How to Manage Employee Turnover
byBambooHR
 
PDF
My Money Story Series: Credit Karma Talks Finances, Credit, and Debt
byKabbage
 
PDF
Focusing Your Spark — Tips for Growth From the Inc. 5000
byThe Starr Conspiracy
 
PPTX
5 mistakes business owners make
byElsa Groenewald
 
PDF
People and Profitability: The Open-Book Solution
bykcwelles
 
PPS
Ken Loyd
bykenloyd
 
PDF
Practical Law Firm Business Development
byDavid Teten
 
PDF
2012 Small Business Toolkit
byBrent McCoy, IOM
 
PPT
Corporate partnerships strategy IoF 2011
bySimon Burne
 
PDF
Adventure Tourism EE Presentation, April 9, 2010
bySandy Ratliff
 
PDF
Final presentation 071510
byAFlamingo78
 
PDF
Corporate fundraising
byNatalie Blackburn
 
PDF
New River Valley Presentation, March 11, 2010
bySandy Ratliff
 
KEY
Pcb business preso copy
byWhitney Hoffman
 
PPT
Entrep
byMich Saplada
 
PPT
Corporate Fundraising Toolkit
byAidan Stacey
 
How to Maximise the Value of Your Business
bydavidguest11
 
SL - Core Purpose, Mission & Values
byAshleigh Burns
 
BB_NZ_April-July2016_FOR WEB (1)
byZahria La Varis
 
7 Critical Points_Richmond
byMike Metzger
 
How to Manage Employee Turnover
byBambooHR
 
My Money Story Series: Credit Karma Talks Finances, Credit, and Debt
byKabbage
 
Focusing Your Spark — Tips for Growth From the Inc. 5000
byThe Starr Conspiracy
 
5 mistakes business owners make
byElsa Groenewald
 
People and Profitability: The Open-Book Solution
bykcwelles
 
Ken Loyd
bykenloyd
 
Practical Law Firm Business Development
byDavid Teten
 
2012 Small Business Toolkit
byBrent McCoy, IOM
 
Corporate partnerships strategy IoF 2011
bySimon Burne
 
Adventure Tourism EE Presentation, April 9, 2010
bySandy Ratliff
 
Final presentation 071510
byAFlamingo78
 
Corporate fundraising
byNatalie Blackburn
 
New River Valley Presentation, March 11, 2010
bySandy Ratliff
 
Pcb business preso copy
byWhitney Hoffman
 
Entrep
byMich Saplada
 
Corporate Fundraising Toolkit
byAidan Stacey
 

Similar to JWBC NFDO Quarterly Forum

PPT
Franchising right lmb_april_2014
byLinda Belford
 
PPT
Find Your Franchise Pp
byfindyourfranchise
 
PPT
Be Your Own Boss
byguestcbfbb7
 
PPT
Let ABC Help You to Be Your Own Boss
bybadamo
 
PPTX
Franchising is More Than Just French Fries
byDenver Metro Small Business Development Center
 
PPS
Franchising Smart W Matchpoint
byWarren_R
 
PDF
How To Choose Right Biz 4 U
bymkellye22
 
PPTX
Is franchising a fit for you?
byBrandon Clifford
 
PPT
Intro To Franchising Fq 0209
byFranchise Quest
 
PPT
Be Corporate Presentation (1)
byVikrant Chhabra
 
PPT
Becorporatepresentation
byVikrant Chhabra
 
PPT
Building entreprenures corporate website
byVikrant Chhabra
 
PPTX
Is Franchising A Fit For You
bymjmontilino
 
PPTX
Is Franchising A Fit For You
bymjmontilino
 
PPT
How to franchise your business
byHatch
 
PPT
Franchising-101
byglwofford
 
PPTX
Franchise concept, How to sale a franchise
byInam Abbas
 
PDF
Buy A Business Begin A Dream
bybzstephens
 
PPTX
How to choose the right franchise for you
byJerry Pollio
 
PDF
Franchising is it right for you
byBlue Skies Franchising
 
Franchising right lmb_april_2014
byLinda Belford
 
Find Your Franchise Pp
byfindyourfranchise
 
Be Your Own Boss
byguestcbfbb7
 
Let ABC Help You to Be Your Own Boss
bybadamo
 
Franchising is More Than Just French Fries
byDenver Metro Small Business Development Center
 
Franchising Smart W Matchpoint
byWarren_R
 
How To Choose Right Biz 4 U
bymkellye22
 
Is franchising a fit for you?
byBrandon Clifford
 
Intro To Franchising Fq 0209
byFranchise Quest
 
Be Corporate Presentation (1)
byVikrant Chhabra
 
Becorporatepresentation
byVikrant Chhabra
 
Building entreprenures corporate website
byVikrant Chhabra
 
Is Franchising A Fit For You
bymjmontilino
 
Is Franchising A Fit For You
bymjmontilino
 
How to franchise your business
byHatch
 
Franchising-101
byglwofford
 
Franchise concept, How to sale a franchise
byInam Abbas
 
Buy A Business Begin A Dream
bybzstephens
 
How to choose the right franchise for you
byJerry Pollio
 
Franchising is it right for you
byBlue Skies Franchising
 

More from GeorgiaPinner

PPTX
VL Session 5
byGeorgiaPinner
 
PPTX
Venture Leadership Session 3
byGeorgiaPinner
 
PPTX
LinkedIn Pitch Factory June 2023.pptx
byGeorgiaPinner
 
PPTX
FM Session 1 - 6.6.2023
byGeorgiaPinner
 
PPTX
Part 2 of 4.SLIDES.Building a Stronger Business.External Relationships.pptx
byGeorgiaPinner
 
PPTX
Part 1 of 4.SLIDES.Building a Stronger Business.Govt Regs.pptx
byGeorgiaPinner
 
PPTX
Customer Development Session 3 2023.pptx
byGeorgiaPinner
 
PPTX
Customer Development Session 2 2023
byGeorgiaPinner
 
PDF
Intro to Google Analytics
byGeorgiaPinner
 
PPTX
Legal Matters Session 2 of 4
byGeorgiaPinner
 
PDF
Grow with Google - Youtube
byGeorgiaPinner
 
PPTX
Pitch Factory Session 5
byGeorgiaPinner
 
PPTX
Pitch Factory #4
byGeorgiaPinner
 
PPTX
Legal Matters - Session 1
byGeorgiaPinner
 
PPTX
St. Johns Pitch Factory - Session 4.pptx
byGeorgiaPinner
 
PPTX
LinkedIn Pitch Factory Session 3.pptx
byGeorgiaPinner
 
PPTX
Pitch Factory #2
byGeorgiaPinner
 
PPTX
Pitch Factory #1
byGeorgiaPinner
 
PPTX
Venture Leadership
byGeorgiaPinner
 
PPTX
Venture Leadership
byGeorgiaPinner
 
VL Session 5
byGeorgiaPinner
 
Venture Leadership Session 3
byGeorgiaPinner
 
LinkedIn Pitch Factory June 2023.pptx
byGeorgiaPinner
 
FM Session 1 - 6.6.2023
byGeorgiaPinner
 
Part 2 of 4.SLIDES.Building a Stronger Business.External Relationships.pptx
byGeorgiaPinner
 
Part 1 of 4.SLIDES.Building a Stronger Business.Govt Regs.pptx
byGeorgiaPinner
 
Customer Development Session 3 2023.pptx
byGeorgiaPinner
 
Customer Development Session 2 2023
byGeorgiaPinner
 
Intro to Google Analytics
byGeorgiaPinner
 
Legal Matters Session 2 of 4
byGeorgiaPinner
 
Grow with Google - Youtube
byGeorgiaPinner
 
Pitch Factory Session 5
byGeorgiaPinner
 
Pitch Factory #4
byGeorgiaPinner
 
Legal Matters - Session 1
byGeorgiaPinner
 
St. Johns Pitch Factory - Session 4.pptx
byGeorgiaPinner
 
LinkedIn Pitch Factory Session 3.pptx
byGeorgiaPinner
 
Pitch Factory #2
byGeorgiaPinner
 
Pitch Factory #1
byGeorgiaPinner
 
Venture Leadership
byGeorgiaPinner
 
Venture Leadership
byGeorgiaPinner
 

Recently uploaded

PPTX
5, Money Number Tax and Wages 19072017.pptx
byAdrian Hawkes
 
PDF
Impact of Earnings Surprises on Short Term Asset Prices.pdf
bybharadwajduggarajupr
 
PDF
On Demand Service Provider App Development
byV3CUBE TECHNOLABS
 
PDF
Your presence tells your story in real time
byPatrice Bisiot
 
PPTX
Retail Location and Site Selection .pptx
byChristineJoySebuano
 
PDF
Precision Agriculture 2026: Using Drones for Targeted Insecticide and Herbici...
byDhanuka Agritech Limited
 
PDF
Keppel Ltd. 2H & FY 2025 Results Presentation Slides
byKeppelCorporation
 
PDF
Iryna Rudenko: Follow the Money: How Investment Trends Define IT Niches (UA)
byLviv Startup Club
 
PDF
Ultra Map Section II Multifaceted Second Edition.pdf
byBrij Consulting, LLC
 
DOCX
Best Place to Learn Old or Aged Verified Square Accounts in WWW.docx
byTopSelleriT
 
PDF
What Is Setup for Decoration | Machine Reality Explained
byInkdnylon
 
PDF
Safe Ways to Purchase Gmail Accounts (PVA & Aged) for Your Team.pdf
bypvaisback
 
DOCX
8 Best Places to Buy Facebook Accounts at Wholesale Prices.docx
byFacebook Accounts
 
DOCX
Buy Old Gmail Accounts_ Top Benefits and Legal Considerations.docx
bypvasmmpath
 
PDF
What Is the Fastest Way to Buy Facebook Accounts.pdf
byFacebook Accounts
 
PDF
Best Place to Learn Old or Aged Verified Paysera Accounts in WWW.pdf
byTopSelleriT
 
PDF
Kirill Klip GEM Royalty TNR Gold Presentation
byKirill Klip
 
PDF
MTD for Landlords – a closer look at the impact, requirements and software (H...
byFelixPerez547899
 
PPTX
Sewage Treatment Plant in Bangalore |Best STP Plant Manufacturers in Tamilna...
byKemproPumps
 
PDF
Contract_Costing_Introduction and Basics
byANEESHA252224
 
5, Money Number Tax and Wages 19072017.pptx
byAdrian Hawkes
 
Impact of Earnings Surprises on Short Term Asset Prices.pdf
bybharadwajduggarajupr
 
On Demand Service Provider App Development
byV3CUBE TECHNOLABS
 
Your presence tells your story in real time
byPatrice Bisiot
 
Retail Location and Site Selection .pptx
byChristineJoySebuano
 
Precision Agriculture 2026: Using Drones for Targeted Insecticide and Herbici...
byDhanuka Agritech Limited
 
Keppel Ltd. 2H & FY 2025 Results Presentation Slides
byKeppelCorporation
 
Iryna Rudenko: Follow the Money: How Investment Trends Define IT Niches (UA)
byLviv Startup Club
 
Ultra Map Section II Multifaceted Second Edition.pdf
byBrij Consulting, LLC
 
Best Place to Learn Old or Aged Verified Square Accounts in WWW.docx
byTopSelleriT
 
What Is Setup for Decoration | Machine Reality Explained
byInkdnylon
 
Safe Ways to Purchase Gmail Accounts (PVA & Aged) for Your Team.pdf
bypvaisback
 
8 Best Places to Buy Facebook Accounts at Wholesale Prices.docx
byFacebook Accounts
 
Buy Old Gmail Accounts_ Top Benefits and Legal Considerations.docx
bypvasmmpath
 
What Is the Fastest Way to Buy Facebook Accounts.pdf
byFacebook Accounts
 
Best Place to Learn Old or Aged Verified Paysera Accounts in WWW.pdf
byTopSelleriT
 
Kirill Klip GEM Royalty TNR Gold Presentation
byKirill Klip
 
MTD for Landlords – a closer look at the impact, requirements and software (H...
byFelixPerez547899
 
Sewage Treatment Plant in Bangalore |Best STP Plant Manufacturers in Tamilna...
byKemproPumps
 
Contract_Costing_Introduction and Basics
byANEESHA252224
 

JWBC NFDO Quarterly Forum

  • 1.
  • 3.
  • 5.
    Over 27 Yearsexperience in the Franchise Industry 39 years entrepreneur Featured in “Career Changers Manual” Samuel Greengard. Top 50 Advantage Business magazine Marshall Reddy President -- Franchise Network, Inc
  • 6.
    New Year NewYou Your Dream of Business Ownership
  • 7.
    AGENDA (60 MINUTES) •Why Business Ownership? • Options for Getting Into Business • Risks & Rewards of Business Ownership • Myths & Realities of Franchising • How to Identify the Best Business Option forYou • BuildingYour Personal Business Model
  • 8.
    WHO IS FRANNET? •30+ year old International Franchise Consulting firm • Over 100 locally-based consultants across North America • National partnerships with SCORE & SBDC. • We match people who want to be in business with a franchise that meets their needs. • Our services are always 100% free to you, the client
  • 9.
  • 10.
    • Risk: • Ajob is safer than a business • I’ll wait until the economy is better • Money: • A business costs a lot of money to start and run • Knowledge: • I don’t know where to start or find what I’m looking for • Skills: • Running a business takes specific talents and skills SOME OFTHE CONCERNS
  • 11.
  • 12.
    NOT OUR FIRSTRODEO … PAST: Dotcom bust, 9/11, Great Recession, SARS, H1N1…. PRESENT: COVID-19 FOCUS: • Create your own ladder • Recession-resistant industries • Reasonable overhead • Service-based businesses
  • 13.
    ARE YOU SURPRISED? •A recent survey conducted by a major franchise trade group, revealed some surprising results on franchise activity in the near term, amidst this challenging backdrop. • 54% think that “now is a good time” to start a business. • 59% expect to start a business within the next three months, and another 17% within four-to-six months
  • 14.
    HOW TO USETHIS TIME Hit the Brakes! • We get it • This isn’t for everyone Tap the Brakes • Proceed cautiously • Pull the trigger w/ clarity on COVID-19 • What IS clarity for you and is it realistic? Full Speed Ahead! • THIS is the time • Take advantage of opportunities (low interest rates, increased vacancies, lower costs, etc.) • Possible huge economic opportunity on the other side, I’ll be ready • Prepare now, take off when I want Searching for an opportunity is not the same as committing to a purchase.
  • 15.
    Risk Time Job (Then) Job(Now) Risk Increases Is working for someone safe? Short term yes, but …  Can you be sure your job is safe?  Can performance determine security?  Will you meet your long-term financial goals of security and retirement? RISK PERCEPTION: JOB
  • 16.
    Job Security Average Employment Tenure 2014: 4.6years 2016: 4.2 years 2019: 4.6 years 2020: 4.1 years Source: US Bureau of Labor Statistics
  • 17.
    Career Paths ofYesteryear
  • 18.
  • 19.
    Motivation to Owna Business Source: Guidant Financial Small Business Trends survey Dissatisfaction with corporate America has been #1 for last 3 years 75% of small business owners rate their happiness at 8/10 or higher.
  • 20.
    Small Business Source: SBA.Small Businesses are less than 500 employees.
  • 21.
    What is itfor YOU? Control Financial Security No More Layoffs Money Fulfillment Flexibility Independence SUCCESS WHY BUSINESS OWNERSHIP
  • 22.
    BUSINESS OWNERSHIP OPTIONS Starta Business From Scratch Buy an Existing Business Buy a Franchise
  • 23.
    START A BUSINESS ADVANTAGES TotalControl Make all decisions Room for creativity No predetermined rules Large upside Build a business from your passion Start a Business From Scratch DISADVANTAGES Must create systems Limited financial options Slow ramp-up High failure rate
  • 24.
    BUY AN EXISTINGBUSINESS ADVANTAGES Cash flow Goodwill Actual financial results Attractive to lenders Market established Customer base Employees Systems may be in place Owner financing Buy an Existing Business DISADVANTAGES Cash flow Bad will May be overpriced Poor training and support Hidden seller motives Employee defection Higher debt service
  • 25.
    BUY A FRANCHISE ADVANTAGES Namerecognition/ Licensed trademark Proven business system Training and support Lower failure rate Lower cost Financing options Disclosure Franchise family Buy a Franchise DISADVANTAGES Fewer industry options Structured operating system (in some franchises) Territory restrictions Can only sell their products Ongoing royalty payments
  • 26.
  • 27.
    Why Do PeopleChoose Franchising?
  • 28.
    Owners come fromall backgrounds *Based on FranNet placements Who Buys Franchises?
  • 29.
    Franchise Owners Inthe Past 5 Years • MoreWomen • Female owners: +22% • Younger • 20-29 years old: +100% • 30-39 years old: +53% • Veterans • Owners that are veterans: +3% Source: FranNet placement data
  • 31.
    Proven, systematic approachto starting and staying in business • Experience • Simplicity • Initial Training & Ongoing Support • Name Recognition • Sales, Marketing & Operational Systems • Culture of Teamwork HOW FRANCHISING WORKS
  • 32.
    • Many Unitsvs. Fewer Units • Well-established vs. Newer • Structured Systems vs. Flexible Systems • Expensive vs. Inexpensive • Remember: There is no automatic correlation between the between the cost of the franchise and the potential return. return. FRANCHISES ARE NOT ALLTHE SAME
  • 33.
    Am I willingto follow the franchisor’s system? Is it affordable? Is the risk level acceptable? Will I enjoy my business? FINDINGYOUR PERFECT FIT
  • 34.
    Separate the functionof the business, from the function of the business owner! FINDINGYOUR PERFECT FIT
  • 35.
    What is Rightfor YOU?
  • 36.
    Use Your TransferableBusiness Skills
  • 37.
    • Challenge, recognition, prestige •Build equity for retirement • Time for family and interests • Independence and control • Financial security WHAT IS IMPORTANTTOYOU?
  • 38.
    Government Disclosure: FDD •“Franchise Disclosure Document” • Mandatory Information • Franchisor Info • Time in business, experience • Bankruptcies, Litigation • Franchise Contract
  • 39.
    • Contact InfoFor: • Current franchisees • Past franchisees • Policies • Renewal,Termination &Transfer, Etc. • Financial • Earnings Claims • Investment • Franchise & other fees, capital • Royalties Government Disclosure: FDD
  • 40.
  • 41.
    MYTH #1: FRANCHISING IS ONLYFAST FOOD & RETAIL
  • 42.
    FRANCHISING FACT FACT: • Over3,600 different franchise companies • In more than 90 industries • With over 900,000 operating units Automotive Commercial & Residential Services Personal Services Business Services Retail Products & Services Other
  • 43.
    MYTH #2: FRANCHISES SUCCEED BECAUSEOFTHE QUALITY OF THE PRODUCT
  • 44.
    Can you makea hamburger? Is your hamburger better than McDonald’s? If it is not the product, then what is it? FRANCHISING FACT
  • 45.
    FACT: It isall about the Business System • Marketing • Sales • Operations • Accounting FRANCHISING FACT
  • 46.
    SUCCESSFUL FRANCHISES EMERGE INNEW INDUSTRIES WITH NO NEW COMPETITORS MYTH #3:
  • 47.
    FACT: It’s theSYSTEM! • McDonald’s started when there was a burger joint every corner. • More recent examples are in Consumer and Business Services. FRANCHISING FACT
  • 48.
  • 49.
    There is noautomatic correlation between the cost of the franchise and the potential return. Source: FRAN data 11% under $50K 27% are under $100K 55% are under $250K Many Investment Levels
  • 50.
    HOW MUCH DOI NEED? TOTAL INVESTMENT Your Money: 25-30% Financing: 70-75%
  • 51.
    FINANCING SOURCES Financing Sources: •Personal savings • Friends, relatives or partner • Home equity line of credit • Seller financing – resale • 401K, IRA, etc.
  • 52.
    HIGH RETURN REQUIRES AHIGH INVESTMENT MYTH #5:
  • 53.
    FACT: There isno automatic correlation between the cost of franchise and the potential FRANCHISING FACTS FACT: Service businesses require far less capital investments and frequently yield higher returns.
  • 54.
  • 55.
    FRANCHISING FACT Franchisors wantpeople who… • Will use their system • Will focus on being an owner • …with business and management skills • …with people and communication skills Proven Process • Franchisor trains the franchisee on how to use their system
  • 56.
    ADDITIONAL RESOURCES Professional Advisors: •Franchise Attorney • Accountant Suggested Reading: • More Than Just French Fries • E-Myth Revisited, by Michael Gerber • Street Smart Franchising, by Joe Matthews
  • 57.
    For Additional Information MarshallReddy Marshall@Whatthefranchise.com Whatthefranchise.com 904.249.1820
  • 59.
    STEVE GORANSON: ACTIONCOAC H • Steve Goranson,has owned and operated the North Florida office of ActionCOACH Business Coaching since 2004 • Established in 1993, ActionCOACH is the world’s largest coaching franchise with over 1000 offices in 70+ different countries. • They coach over 15,000 businesses each week across the Globe • ActionCOACH offers more than just coaching. It offers a change of lifestyle the opportunity to make more money and an improve work-life balance. Helping Business owners Work Smarter Not Harder! • ActionCOACH doesn’t offer the quick fix. It promises a change of lifestyle for those that use and embrace its systems and culture • Steve has lived in Jacksonville for over 30 years with his wife Shari and 4 kids. Over the years he has worked with small business owners in the areas of sales, advertising, marketing & marketing research. • Steve’s vision is to bring Success & Prosperity to Northeast Florida thru Business Re-Education. • He is committed to helping business owners make a better life for themselves and their families
  • 61.
    CRAIG LINSKY: SCORE JACKSONVILLE MENTOR &CLIENT EDUCATION COMMITTEE CHAIRMAN Craig Linsky is a SCORE mentor and Chairman of the Client Education Committee at SCORE in Jacksonville. Craig worked in the financial services industry for nearly thirty years. For the past ten years, he has designed and taught marketing and other business topics both domestically through SCORE and internationally through the Financial Services Volunteer Corp.
  • 62.
  • 63.
  • 64.
    Jacksonville.score.org What is SCORE? Anonprofit organization with the largest network of free business experts in the United States. • In association with the SBA, SCORE is dedicated to helping small businesses get started, grow and achieve their goals through education and mentorship. • Over 11,000 volunteers in over 250 chapters nationwide. • Dedicated to entrepreneur education, the formation, growth and success of small business. • Over 70 volunteers in the Northeast Florida chapter. Jacksonville Chapter
  • 65.
    Jacksonville.score.org Sign Up Witha Mentor Costs only $99 Sign up for a mentor Register for a workshop Find Templates & Webinars
  • 66.
    Jacksonville.score.org Upcoming Workshops Date StartTopic Aug 11 1:00 pm Reach Customers Online With Google Aug 11 6:00 pm Tackle Quickbook Basics Aug 12 6:00 pm Tax Bootcamp for SB Owners Aug 14 10:00 am Automate Your Marketing Aug 23 5:30 pm Cottage Law - How to Start a Home Based Food Business Aug 28 9:30 am You, Your Business Idea and How SCORE Can Help Aug 30 5:30 pm How to Manage Your Business with KPIs Aug 31 5:30 pm Internet Market Series – Pt 1 of 5, Creating a Connected Brand Sep 7 5:30 pm Internet Market Series – Pt 2 of 5, Websites That Convert Sep 8 5:30 pm Free Resources for Entrepreneurs at the St. John’s Library Sep 13 5:30 pm How Do I Develop a Product or Service to Sell? Sep 14 5:30 pm Internet Market Series – Pt 3 of 5, Create Six Months of Social Media in One Day
  • 67.
  • 68.
    Jacksonville.score.org The Ultimate Goals The business has to make a profit to survive.  Revenues (sales) must exceed expenses to make a profit.  Cash flow (cash in minus cash out) must be positive.  When you are out of cash, you are out of business! Here are some key points to remember about your business’s finances.
  • 69.
    Jacksonville.score.org The General Ledger Thegeneral ledger is the initial accounting tool used to record business transactions. • The general ledger usually has two columns used to record offsetting transactions. - The left column represents debits - The right column represents credits • A transaction is recorded based on two factors: 1. The type of account affected. 2. Whether the transaction increases or decreases the balance in that account. Type of Account Debit Credit Asset Increases Decreases Liability Decreases Increases Income/Sales Decreases Increases Expense Increases Decreases Equity/Capital Decreases Increases • The general ledger holds the account information needed to prepare the company's financial statements.
  • 70.
    Jacksonville.score.org Cash vs. AccrualAccounting The main difference between the two is in the timing of when revenue and expenses are recognized. Cash Accounting Accrual Accounting Usually easier to do; better tracks cash flow. Can require two entries for one transaction. Entries take place when cash actually changes hands. Recognizes revenue and expenses when they occur, whether or not cash changes hands. May overstate the income of a business that is cash-rich but has large accounts payables. Smooths out earnings over time. Available to businesses under $26 million in gross receipts (based on three year average). Available to any size business. Cannot be used by C corporations. Can be used by any type of legal entity.
  • 71.
    Jacksonville.score.org Cash vs. Accrual- Revenue A sales contract for $10,000 in signed on Dec. 10, 2020 with delivery on Dec. 20. The customer has 30 days from delivery to pay. (Jan. 19, 2021) Dec. 10 Dec. 10 No Entries No Entries Dec. 20 Dec. 20 Debit Credit No Entries Accts Receivable $10,000 Sales Revenue $10,000 Jan, 19 Debit Credit Jan. 19 Debit Credit Cash $10,000 Cash $10,000 Sale Revenue $10,000 Accts Receivable $10,000 Under accrual accounting, the sale is recognized in 2020, but under cash accounting, the sale isn’t recognized until the following year. Cash Accounting Accrual Accounting
  • 72.
    Jacksonville.score.org Cash vs. Accrual- Expenses A monthly utility bill for $100 for the period ending on Dec. 15, 2020 is received on Dec. 20, with payment due by Jan. 10, 2021. Dec. 20 Dec. 15 No Entries No Entries Dec. 20 Dec. 20 Debit Credit No Entries Utility Expense $100 Accts Payable $100 Jan, 10 Debit Credit Jan. 10 Debit Credit Utility Expense $100 Accts Payable $100 Cash $100 Cash $100 Under accrual accounting, the expense is recognized in 2020, but under cash accounting, the expense isn’t recognized until the following year. Cash Accounting Accrual Accounting
  • 73.
    Jacksonville.score.org The Three FinancialStatements 1. Income statement: Did I make a profit or loss? What expenses did I spend money on? 2. Cash flow statement: Do I have enough sources of funds to operate, sustain & grow the business? How many months to reach positive cash flow (more money coming in than going out)? 3. Balance sheet: What are my assets & liabilities? How much is the business worth? The three statements tell you different things about the business.
  • 74.
    Jacksonville.score.org Balance Sheet Basics Liabilities: AccountsPayable $22,000 Accrued Expenses $ 4,000 Current Portion of Loans $18,000 Other Current $ 3,000 Current Liabilities $47,000 Long-Term Loans $38,000 Long-Term Liabilities $38,000 Total Liabilities $85,000 Owner’s Equity: Capital Stock $20,000 Retained Earnings $50,000 Total Owner’s Equity $70,000 Assets = Liabilities + Equity (as of a specific date) Assets: Cash $20,000 Accounts Receivable $40,000 Inventory $12,000 Other Current Assets $ 3,000 Current Assets $75,000 Equipment $55,000 Delivery Vehicles $20,000 Other Fixed Assets $ 5,000 Fixed Assets $80,000 Total Assets $155,000
  • 75.
    Jacksonville.score.org Income Statement Basics Calculations: NetSales = Gross Sales - Refunds $520,000 - $20,000 = $500,000 COGS = Direct Labor + Direct Materials $100,000 + $140,000 = $240,000 Sales & Marketing = Sales Salaries + Advertising $45,000 + $20,000 = $65,000 General & Administrative Expense = Manager/Owner Salaries $35,000 Office Staff Salaries $22,000 Rent $12,000 Utilities $ 4,000 Insurance $ 2,000 $75,000 Profit = Revenues - Expenses (for a given time period ) Income Statement: Net Sales (Net Revenue) $500,000 Less: Cost of Good Sold (COGS) $240,000 Gross Margin (Gross Profit) $260,000 Sales & Marketing Expenses $ 65,000 General & Administrative Exp. $ 75,000 Depreciation of Equipment $ 20,000 Less: Operating Expenses $160,000 Income From Operations $100,000 Less: Interest Expense $ 4,000 Net Income Before Taxes (NIBT) $ 96,000 Less: Income Tax Owed (“C” Corp) $ 21,000 After Tax Net Income $ 75,000
  • 76.
    Jacksonville.score.org Cash Flow StatementBasics Notes:  A CFS covers a specified period of time (month/quarter/year).  This CFS shows a net increase of $10,000 ($10,000 + $120,000 – $110,000 = $20,000)  Ending Cash of $20,000 should equal Cash shown on the Balance Sheet (same end date)  Ending Cash should never fall below zero! (If it does, you need to inject more equity or borrow more money to correct the situation.)  Depreciation is considered an expense on the income statement, but it is not cash out. It should be added to the Income From Operations. Cash Flow = Starting Cash + Cash In – Cash Out Cash Flow Statement: Beginning Cash $ 10,000 Cash Receipts (In-Flows) Income from Operations $100,000 Depreciation of Equipment $ 20,000 Total Cash Receipts $120,000 Cash Disbursements (Out-Flows) Purchase of New Equipment $ 75,000 Interest Payments $ 4,000 Loan Repayment $ 15,000 Income Tax Paid $ 16,000 Total Cash Disbursements $110,000 Ending Cash $ 20,000
  • 77.
    Jacksonville.score.org Determining Sales Units Whatunit categories make sense for your business? Determine if you’re selling:  Products  Services (hours or fixed price)  Combination (packages) Determine what makes up a “unit of sale” Determine direct cost per unit Determine price per unit
  • 78.
    Jacksonville.score.org Estimating Sales Volume How long will it take you to sell the product or perform the service?  New customers take longer to find when getting started, so expect lower sales in early months.  You will become more efficient over time with product or service. How many items or services will sell in a day/week/month?
  • 79.
    Jacksonville.score.org Estimating Dollars ofSales • Is your product or service seasonal? If yes, then you may sell 80% from Black Friday to New Year’s day or during the summer months. • Multiply by average selling price, not list price. Take into account discounts, credits, returns. • Multiply by average 22 working days per month. 60 units/day X $20.00 X 22 days = $26,400/month
  • 80.
    Jacksonville.score.org Types of Expenses Variable(Direct) Costs Fixed (Indirect) Costs Raw (product) materials Rent/mortgage Manufacturing labor wages Manager & staff salaries Production supplies Office supplies Sales staff commissions Sales staff salaries Delivery costs Insurance & legal expenses Product packaging Utilities Product marketing/advertising Equipment depreciation • Variable expenses – Costs directly incurred in production. • Fixed expenses – Costs incurred regardless of production.
  • 81.
    Jacksonville.score.org Depreciation Expense -Example Assume the purchase of a $33,000 delivery van. • It’s expected to have a useful life of five years. • It has a salvage value of $3,000 at the end of its life. • Straight line depreciation is used here, but there are many other methods. • The depreciation expense used for tax purposes may differ from what is reflected on the Income Statement and the Balance Sheet. Year 1 Year 2 Year 3 Year 4 Year 5 Cash Flow ($33,000) 0 0 0 $3,000 Dep. Expense ($6,000) ($6,000) ($6,000) ($6,000) ($6,000)
  • 82.
    Jacksonville.score.org (Variable) Cost ofMaterials Materials depend on your business. • Bakery materials  Flour, sugar, salt, yeast, chocolate, bags, etc. • Music CDs  Blank discs, jewel cases, printed inserts, plastic wrap, etc. • Kitchen remodeling Cabinets, granite, faucets, doorknobs, caulk, sinks, etc. • Lawn service  Fertilizer, weed treatment, gasoline for truck & mower, etc. Determine the cost of all materials for your product, including packaging.
  • 83.
    Jacksonville.score.org What is GrossProfit Margin (GPM)? Direct Costs  Materials & packaging in the product  Labor to make the product  Sales commissions Why is it important? Requires you to cost out what you’re selling. Helps determine adequacy of gross price for what you’re selling. Track the trend in GPM over time. GPM = Net Sales dollars minus direct cost of sales (COGS + sales commissions).
  • 84.
    Jacksonville.score.org Gross Profit MarginCalculation Gross Profit Margin is often viewed as a dollar amount and a percentage. Products and Services Dollars Percent Local Nursery Plant mix Price Per Unit $ 2,000.00 100% Variable Cost Per Unit $ 1,100.00 55% Gross Margin Per Unit $ 900.00 45%
  • 85.
    Jacksonville.score.org Required Start-Up Funds Annwants to start a plant nursery business. • Her estimated costs are $172,000 + $51,800 = $223,800. Fixed Assets Needed Amount Real Estate/Land $100,000 Building 30,000 Leasehold Improvements 15,000 Equipment 5,000 Furniture & Fixtures 2,000 Vehicles 20,000 Other Fixed Assets 0 Total Fixed Assets $172,000 Operating Capital Needed Amount Pre-Opening Salaries and Wages $10,000 Prepaid Insurance Premiums 2,500 Inventory 30,000 Legal and Accounting Fees 3,000 Utility Deposits 300 Supplies 1,000 Advertising and Promotions 2,000 Working Capital (Cash on Hand) 3,000 Total Operating Capital $51,800
  • 86.
    Jacksonville.score.org Sources of Funding Hereis how Ann plans to raise the funds to get started. Funding Needed Amount Percent Mo. Payment Owner’s Equity $115,000 51% $0 Loans from friends/family $0 0% $0 Commercial Term Loan $33,800 15% $543.81 Commercial Mortgage Loan $60,000 27% $539.83 Business Credit Card $0 0% $0 Vehicle Term Loan $15,000 7% $252.28 Commercial Line of Credit $0 0% $0 Total Operating Capital $223,800 100% $1,335.92
  • 87.
    Jacksonville.score.org Breakeven Analysis Breakeven iswhen: Total Gross Profit = Total Expenses OR Sales Volume results in Zero Profit Fixed Costs Unit Sales The blue line shows that fixed costs remain unchanged regardless of unit sales. The purple line shows that total revenues increase as unit sales increase. The point at which the lines cross is where unit sales cover all the fixed costs and profit = zero.
  • 88.
    Jacksonville.score.org Breakeven Calculation How manycups of coffee must be sold to break even? 1. Fixed Expenses/Month: Rent $1,000 Salaries $2,000 Payroll Taxes $200 Insurance $100 Advertising $ 50 Telephone $100 Utilities $100 Total Fixed Expenses $3,550 2. Gross Profit per Cup: Sale price for cup of coffee: $3.00 Direct cost for cup of coffee: - $1.00 Gross Profit: $2.00 3. Cups of Coffee to Break Even: Fixed Expenses / Gross Profit = $3,550 / $2.00 = 1,775 Cups per Mo.
  • 89.
  • 90.
    Jacksonville.score.org Funded in partthrough a cooperative agreement with the U.S. Small Business Administration. All opinions, conclusions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.