Business Start-Up Business Start-Up FundamentalsFundamentals

Entrepreneurial Workshop I Entrepreneurial Workshop I

AGENDAThe Planning Process

Assessing personal and business needs The importance of a business plan Understanding business plan

components

• What banks look for when assessing a loan request• How to complete a loan application

The Reality of Obtaining Financing

Cash Flow Credit Collateral Contribution (or capacity) Character (industry / references) Condition

What Banks Look For

What Banks Look For

1. Do you have children? 2. Do you have savings? 3. Is your spouse employed? 4. What do you do with your free time? 5. Are you accustomed to working long hours? 6. Are you a morning or night person?

Lifestyle Assessment

• Marketing• Advertising• Sales• Tax Knowledge• Insurance

Business Assistance Areas

• Business Finances• Presentation Skills• Communication Skills• Legal Aspects• Banking Services

Business Assistance Areas (con’t.)

• Selecting a Business Name• Business Identification Numbers• Licenses and Permits• Taxes• Accounting System

Other Considerations

• Sole Proprietorship • Partnership• S Corporation • C Corporation• LLC – Limited Liability Co

Structural Forms of Business

Internal Revenue Service -www.irs.gov

MA Department of Revenue - www.dor.state.ma.us

Inc.com - Where to start and grow your business.www.inc.com

Entreworld - A World of Resources for Entrepreneurswww.eventuring.org

Official Website of the State of MA -www.mass.gov

Official Website of the State of RI - www.ri.gov

All Business - Champions of Small Businesswww.allbusiness.com

MA Assoc. of Community Development Corporations -www.macdc.org

U.S. Small Business Administration (SBA) -www.sba.gov

e Podunk - www.epodunk.com

Useful Web Sites

• A plan gives you a path to follow• Planning forces you to examine all aspects of your business• Planning is ESSENTIAL to raising capital• Your plan is a management tool• Your plan is a communications tool

Why Write a Business Plan?

• Neatness Counts!• Use Simple Language• Keep Your Points Concise• Make Use of Tables and/or Graphs

Business Plan Format

Effective Formatting includes:

• Headings• Paragraphs• Bold/Italics/Underline• Bullets

Business Plan Format (con’t.)

A. Mission Statement/Statement of Purpose

B. Table of Contents / Cover PageC. Business DescriptionD. Marketing PlanE. Financial Plan

Business Plan Outline

This is the doorway to your plan. Keep it short, but illustrate the main points.

Main Points: State purpose/structure of your business State purpose/amount of financing sought State any key operational expectations

Statement of Purpose

a) Type/Industryb) Status (e.g. start-up, existing)c) Form (e.g. proprietorship, corporation)d) Location/Hours of operatione) Market descriptionf) Description of competitiong) Management/Personnel

Business Description

MARKETING Generates interest and leads.

SALESGenerates orders and accounts receivable and/or cash receipts.

Marketing vs. Sales

Describe Your Customers Industry Trends and Characteristics List and Description of Your Competition Description of Your Niche and Competitive Plan Market Segmentation

MARKETING PLANYour Customer are the Market!

• Product – good or service• Pricing – mark-up and break-even analysis• Promotion – advertising• Place – channels of distribution

Marketing Mix

• How many employees needed?• What kind of skills required?• Experienced or trainable?• Management/People skills?

Management and Personnel

• Balance Sheet• Projected Income Statement – 2 years• Sources and Uses of Funds• Projected Cash Flow by Month – 1st year

Financial Plan

• Historical Financial Statements of Business – 3 Years• Personal Financial Statement• IRS tax returns(personal & business) –

3 Years

Financial Plan (con’t.)

• The more the person reviewing your request can know about you AND your business, the better.• Neatness and conciseness count• Be honest.

Reminders for Completing Loan Application

• Emphasize your strengths and state your weaknesses.

Let the loan officer know that YOU recognize areas for improvement.

• If you have questions, CALL! Don’t submit an incomplete application.

Loan Application (con’t.)

Business Assistance Business Support Center Loan Programs:

Micro Loan/Mini Micro Loan Revolving Loan Fund (RLF) SBA 7A Packaging SBA 504

Services Offered by SEED