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STARTING & FINANCINGSTARTING & FINANCINGA SMALL BUSINESSA SMALL BUSINESS
Sponsored by:Sponsored by:
Small Business Development CenterSmall Business Development CenterAccion TexasAccion Texas
U.S. Small Business AdministrationU.S. Small Business AdministrationJ.P. Morgan Chase BankJ.P. Morgan Chase Bank
Thursday, January 5, 2006Thursday, January 5, 2006
About the About the SBDCSBDC
Roque R. Segura, BBA, MARoque R. Segura, BBA, MA
DirectorDirectorThe Small Business DevelopmentThe Small Business Development CenterCenter
El Paso Community College
Regional SBDC ProgramRegional SBDC ProgramRegional & Field OfficesRegional & Field Offices
• San Antonio• El Paso• Edinburg• Victoria• Laredo• Corpus Christi• San Angelo
• San Marcos/Austin• Alpine• Eagle Pass
Specialty Centers• Technology• International Trade• SBDCNet
SBDC Program ServicesSBDC Program Services
• Confidential Advising
• Technical Assistance
• Training
• Resource Information
• Research
• Website
AssistanceAssistance• Project Feasibility• New Business Start-up• Business Planning• SBA Financing & Loan Packaging• Minority Enterprise Certification• Marketing & Sales Development• Business Analysis and Forecasting• Management & Problem-solving
Small Business Small Business Management InstituteManagement Institute((48-hour Training Program)48-hour Training Program)
• Strategic Planning
• Marketing
• Administration & Personnel
• Finance & Accounting
• Business & Contract Law
• Business Resources
ESSENTIALS IN STARTING ESSENTIALS IN STARTING A BUSINESSA BUSINESS
Ms. Olga M. TavMs. Olga M. Tavárez, MBA, CBAárez, MBA, CBA
Certified Business AdvisorCertified Business Advisor
Small Business Development CenterSmall Business Development Center
Thursday, January 5, 2006Thursday, January 5, 2006
AGENDAAGENDA
• Business formation (determine the legal structure)• Business permits and registrations• Market research • Market planning & location of the business• Start-up costs and owner investment• Bookkeeping system & taxes• Financial Statements• Business plan• SBA Financing• Meeting with an SBDC advisor
Business FormationBusiness FormationSelecting a Business StructureSelecting a Business Structure
• Sole Proprietorship (One owner)
• Partnership (Two or more owners)
• Corporation (Stockholders)
• Limited Liability Company (One or more owners)
Registrations & PermitsRegistrations & Permits
• Assumed Name Registration
• Employer Identification Number (E.I.N.)
• Texas Sales & Use Tax Permit
• State Unemployment Tax Registration
• I-9 Employee Eligibility Verification
• Business Personal Property Tax – CAD
• Other Business Specific Permits
Other Business SpecificOther Business SpecificPermit TypesPermit Types
• Home Occupation Permit – EP County• Child Care Business Licensing - Texas• Beer, Wine/Alcohol Beverages - Texas• Food Handler’s Permit – EP County• Texas Motor Carrier Licensing - Texas• Environmental Compliance – Texas• Nursery/Floral – EP County• Others
Market ResearchMarket Research
Market Research can help you identify:Market Research can help you identify:
Industry trendsIndustry trendsTarget marketsTarget markets
Needs and wants of customersNeeds and wants of customersPurchasing behavior Purchasing behavior
Strengths and weakness of competitorsStrengths and weakness of competitorsLevels of customer satisfactionLevels of customer satisfaction
Kinds of ResearchKinds of Research
• Primary Research (surveys)
• Secondary Research (secondary sources)
Secondary Sources
Industry & trade associations
Government publications
Universities & Libraries
Research bureaus
Internet
Purpose of Market PlanningPurpose of Market Planning
• Know your potential customers
• Determine your market share
• Determine who your major competitors are
• Determine your sales promotion
• Determine your business location
• Develop your overall marketing strategy and budget
Start-up CostsStart-up Costs
• Merchandise Inventory• Wages• Rent• Equipment and furniture• Tools • Vehicles• Licenses & permits• Insurance• Supplies • Advertising & promotion • Deposits (Telephone & Utilities)• Initial Working Capital
Bookkeeping SystemBookkeeping System
A bookkeeping system is vital to A bookkeeping system is vital to tracking the financial activities of the tracking the financial activities of the
business and complying with tax business and complying with tax obligations to governmental entities.obligations to governmental entities.
Recommended:
Dome Simplified Monthly Bookkeeping Record
Cost: $8.99
Recommended:
Intuit’s QuickBooks Simple Start Edition
$99.95QuickBooks: Pro 2006
$199.95
Financial StatementsFinancial Statements• Profit or Loss Statement
• Balance Sheet
• Cash Flow Statement
Financial statements are designed to show both how your business has performed over a specific period of time and what the status of your business is at a given point.
For financial statements to be beneficial to you in managing your business, they must be produced on a monthly basis.
Profit or Loss StatementProfit or Loss Statement
• Sales
• Cost of goods sold
• Gross profit margin
• Expenses
• Net Income (Profit or loss)
Refer to Handout
Balance SheetBalance Sheet
• Assets
• Liabilities
• Capital (Net Worth)
Assets = Liabilities + Capital
Refer to Handout
Cash Flow StatementCash Flow Statement
The cash flow statement is the most important financial The cash flow statement is the most important financial tool for evaluating your business. It informs you about tool for evaluating your business. It informs you about where the cash in your business where the cash in your business came fromcame from and and where where
it wentit went. .
Over time, a company’s profits are of little value if they Over time, a company’s profits are of little value if they are not accompanied by positive net cash flow.are not accompanied by positive net cash flow.
Refer to Handout
Importance of Business PlanningImportance of Business Planning
• Provides a road map for your future
• Determines priorities for allocating resources
• Helps attract and keep key employees
• Helps obtain financing
• Helps obtain large contracts and strategic alliances and customers
Business Plan ContentsBusiness Plan Contents
• Title Page• Executive Summary• Description of the Business• Market Analysis• Sales Strategy• Production Plan• Management• Financial Plan (Forecast)• Appendices/Exhibits
Establishing a Relationship with Establishing a Relationship with Your LenderYour Lender
• Get to know your banker
• Invite the banker to your business
• Be prepared to meet with the banker
• Keep the banker informed about your business
• Be responsible with your credit
Types of FinancingTypes of Financing
• Debt Financing – loans
• Equity Financing – owner investment or other equity investment
What the lender reviewWhat the lender review
• Credit – credit history
• Character – commitment, education, exp.
• Cash flow - repayment ability
• Collateral – security for the loan
• Conditions – state of economy, timing, preparation, past history of business, business type
OWNER INVESTMENTOWNER INVESTMENT
25% OF Total Project25% OF Total Project
Example
Total Project: $100,000
Borrower 25,000 (25%)
SBA/Bank Loan 75,000 (75%)
To SummarizeTo Summarize
• Business Formation (Legal Structure)• Business Registrations and Permits• Research your market (customer base)• Develop a Business Plan • Finance the Capital Requirement of the
Business:Owner Investment 25%Bank/SBA Loan 75%
Three Major ReasonsThree Major Reasons Why Businesses Fail Why Businesses Fail
• Poor Planning
• Poor Management
• Undercapitalization
Don’t let this happen to you!
Small Businesses don’t plan to fail,
they just fail to plan.
Meeting with SBDC AdvisorMeeting with SBDC Advisor
• Setting the Appointment
• Request for Counseling (SBA 641)
The initial session one-on-one with an SBDC Advisor is between one and two hours. Some initial sessions may take longer depending on the client project. Other sessions as needed may be scheduled with
the advisor.
For projects that require more than 5 hours, a project action agreement will prepared regarding technical assistance and related
services.
For Appointments call: 915.831.7743
SBDCSBDC
Main OfficeMain Office359 Lomaland Drive, 359 Lomaland Drive,
Suite 535Suite 535El Paso, TX El Paso, TX
Voice: 915.831.7743Voice: 915.831.7743
Downtown Office Greater El Paso
Chamber of Commerce 10 Civic Center Plaza El Paso, TX Vocie: 915.534-0511
Website: www.elpasosbdc.biz
Financing the BusinessFinancing the Business--
Commercial LendingCommercial Lending
Pedro GaliciaPedro Galicia
Vice President of LendingVice President of Lending
JP Morgan Chase BankJP Morgan Chase Bank
ACCION TEXASACCION TEXASEl PasoEl Paso
Elvira VallesElvira VallesLoan OfficerLoan Officer
915.629.7729915.629.7729Fax: 915.598.5307Fax: 915.598.5307