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Start-up Basics

Date post: 25-Feb-2016
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Start-up Basics. Simple Steps for Starting Your Business. Simple Steps for Starting Your Business. Session 1: Start-up Basics. About SCORE. Successful and experienced executives acting as volunteers Seminars and workshops Free Mentoring One-on-one E-mail - PowerPoint PPT Presentation
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Simple Steps for Starting Your Business Start-up Basics
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Page 1: Start-up Basics

Simple Stepsfor Starting Your Business

Start-up Basics

Page 2: Start-up Basics

Simple Steps for Starting Your Business

Session 1:Start-up Basics

Page 3: Start-up Basics

About SCORE• Successful and experienced

executives acting as volunteers

• Seminars and workshops• Free Mentoring

– One-on-one– E-mail

• Resources for small business: washingtondc.score.org

Page 4: Start-up Basics

Mentoring Locations• SCORE DC has locations in

DC, No. Va. And Montgomery County, Md.

• I have copies of our exact locations on my desk.

Page 5: Start-up Basics

Myth #6

Myth: If you choose to be self-employed, you’ll be limited in what you can achieve, since you’ll be working alone.

Reality: The limitations are created mostly by the space between your ears. Be realistic, but don’t trap yourself with self-imposed limitations. You can make a difference.

Page 6: Start-up Basics

Percent ofNew Businesses (2+ employees)

Source: U.S Dept. of Commerce, Bureau of the Census, Business Dynamics Statistics

Reality: Business Success

After 5 Years

Page 7: Start-up Basics

Critical Success Factors• Good choice of time and

location• Adequate capital• Ability to manage and

multi-task• Education/experience in

field• Strong work ethic• Effective time management• Willingness to ask for input

from others

Page 8: Start-up Basics

Simple Steps for Starting Your Business

Business Opportunities

Page 9: Start-up Basics

Starting a New BusinessADVANTAGES• Not hampered by

previous image or technologies

• Can choose location, name, logo, relationships

• Can explore new markets and directions

• See your dreams come true

DISADVANTAGES• No base, must build all

new• Greater risk• No track record =

difficulty in financing• See your dream

become a nightmare

Page 10: Start-up Basics

Buying a BusinessADVANTAGES• Established clientele,

suppliers, location• Known quantity,

proven formula/name• Help in starting and

running business• Can review records• Easier to obtain

financing

DISADVANTAGES• Potential hidden

issues: debts, poor reputation, loyalty to owner, out-of-date inventory or transfer issues

• No guarantee that success will continue

Page 11: Start-up Basics

Buying a FranchiseADVANTAGES• Proven image and

product/service• Marketing/Sales power• Limited experience• Training, professional

guidance• Continued consulting

relationship• Access to other

franchisees for help

DISADVANTAGES• Loss of control - not

always your own boss• Franchise = royalty

and other fees• Operational

boundaries and limited choices

• Binding contract• Franchisor problems

are your problems

Page 12: Start-up Basics

Home Based Business

ADVANTAGES• Convenient work

location• Less expensive • Flexible schedule• Tax Advantages

- Sq. Ft of total home - Percentage of utilities

DISADVANTAGES• Zoning or deed

restrictions• Isolation from

others• Difficult financing• Family distractions• IRS scrutiny

Page 13: Start-up Basics

Online BusinessADVANTAGES• Lower startup costs• Expanded geographic

reach• Convenience &

accessibility• Flexibility

DISADVANTAGES• Low conversion

rates• Low barriers to entry

= higher competition

• Visitor expectations• No personal contact/

limited sensory info

Page 14: Start-up Basics

Entrepreneur Characteristics

• Self-starter• Resourceful• Responsible• Organized• Hard worker• Persistent• Decisive• Healthy• Supportive family

Page 15: Start-up Basics

How Many Hats Will You Wear?

Page 16: Start-up Basics

Marketing• Strategy used to create a

desire to purchase• Creates your company

image• Anything you do to get and

keep a customer• Your product or service will

not sell itself

• *Covered in detail in Workshop 3 – Marketing Plan

Page 17: Start-up Basics

Sales

• Customer contact work• Finding prospects• Making presentations• Preparing bids• Closing deals• Processing orders

Page 18: Start-up Basics

Product and/or Service• Definition of offering• Functionality and packaging• Quality• Differentiation

• Who needs it?• Why do they need it?• How is it different or

better than the competition?

Page 19: Start-up Basics

Position

• Location, Location, Location

• Niche / target market• Competition• Distribution• Merchandising

Page 20: Start-up Basics

Branding• Name recognition• Qualification of

product/service• Market identity• Advertising

Page 21: Start-up Basics

Price

• Consumer reaction

• Cost• Competition• Credit terms and

discount

Page 22: Start-up Basics

Competition• Size of operation and

number of employees • Price and quality • Services provided • Reputation: strengths and

weaknesses• Personal visits and

observations• Suppliers & contractors• Other businesses in area

Page 23: Start-up Basics

Business Organization Forms

• Sole Proprietorship• Partnership• Limited Liability

Company (LLC)• “C” Corporation

(Conventional)• “S” Corporation (Sub-

chapter)

Page 24: Start-up Basics

Recommendations for Start-ups

Keep It Simple• Sole proprietorship

or partnership• If liability and/or

taxation is a concern, an LLC or S-corporation

Page 25: Start-up Basics

Insurance Considerations

• Property• Liability• Motor Vehicles• Umbrella Liability• Worker’s

Compensation• Health• Life• Business

Interruption

Page 26: Start-up Basics

Government Regulations

• Business Licenses

and Approvals• Labor Laws• Immigration Laws• IRS and Social

Security Withholding & Payments

Page 27: Start-up Basics

Every Business Owner Needs:

• Banker• Lawyer• Accountant• Insurance

Agent• Business

Mentor

Page 28: Start-up Basics

Simple Steps for Starting Your Business

Funding andCash Management

Page 29: Start-up Basics

• Total monthly cost of living

• Areas where you can cut back

• Outstanding debt• Amount in savings• Total amount needed to

cover 6 to 12 months of expenses

Personal Budget Considerations

Page 30: Start-up Basics

Start-up Cash Needs

Essential Considerations:• Tools and equipment• Leasehold improvements• Licenses and permits• Professional fees• Initial inventory• Working capital reserve

fund

Page 31: Start-up Basics

Operating Cash Needs

• Salaries• Rent• Insurance• Taxes and fees• Advertising• Loan interest/ principal• Utilities• Maintenance

Page 32: Start-up Basics

Sources of CapitalEquitySignifies Ownership• Personal savings• Family and friends• Partners’ contributions• Profits retained in the

business

DebtDoes NOT Signify Ownership• Banks and credit

unions*• Community Express

Micro Loans*• Credit cards (not

recommended)

* Usually guaranteed by SBA

Page 33: Start-up Basics

Lender’s View of Borrower • Character, Commitment• Credit rating• Cash flow• Collateral, Capital• Industry knowledge• Personal investment• Financial history• Financial projections• Management skills• Competition

Page 34: Start-up Basics

Cash: Most Important Asset

• Open a separate bank account for your business

• Deposit all receipts “intact”• Use a petty cash fund• Separate sales tax receipts on

your books• Hang on to cash as long as

possible• Reconcile bank account monthly• Have adequate cash and a

reserve fund at the start of the business

• Prepare and maintain a cash forecast for at least six months into the future


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