Unit 11 New Business

7/29/2019 Unit 11 New Business

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New Business

Unit 11


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Navigare necesse est ...

Navigare

necesse est,

vivere non estnecesse (To sail

is necessary; to

live is notnecessary).


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Odysseus/Ulysses

He was one of the most famous seafarers

and travellers of the Ancient world. Ulysses

had been equally famous for his wit,

cunning and ability to find solutions in themost difficult situations.

In many ways he had set up an example for

future generations of adventurers ready toenter in the unknown.


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Many pitfalls on the path to success

Entering the business world of today might seem

to many unskilled and unexperienced persons both

an easy task, but also a venture full of risks. In the

UK alone more than half of all start-ups in newcompanies go out of business within the first 12

months of operation.

While the fundamental principles of starting a

business are not complex, in practice there aremany pitfalls on the path to success.


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How can one become a successful

entrepreneur?

Many people are attracted to the idea of

running their own business. However,

there is no blueprint for becoming a

successful entrepreneur without severalfeatures any such person must have:

1. A drive and determination to succeed,

2. Thinking quickly

3. Making good judgments and decisions


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Entrepreneur in English is ...

a person who is willing to launch a new

venture or enterprise and accept full

responsibility for the outcome.

Jean-Baptiste Say, a French economist, is

believed to have coined the word

"entrepreneur" in the 19th century - he

defined an entrepreneur as "one whoundertakes an enterprise, especially a

contractor, acting as intermediatory between

capital and labour".[


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A broader definition by the same FrenchEconomist J.B. Say (1800): "The

entrepreneur shifts economic resources out

of lower and into higher productivity and

greater yield.

An entrepreneuris, therefore, a personwho has possession of:

a new enterprise, venture or ideaand is accountable for the inherent risks and

the outcome


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Anyone can learn how to be an

entrepreneur

Entrepreneurs often have similar traits

and characteristics. Here are some of

the qualities that can go a long way inbolstering business success.

If you don't have all of these traits,

don't worry. Most can be learned withpractice.


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Businesses are built on ideas. In fact, the first

step to starting a business is to come up with

an original idea. Therefore, entrepreneursmust be open to thinking creatively. Are you

able to think of new ideas? Can you imagine

new ways to solve problems? Do you have

insights on how to take advantage of new

opportunities?

Many people believe that some individuals are

just born with creative minds, while others are

not. This might be true, but one can learnto

be more creative if s/he wants to become an

entrepreneur!


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The world is not enough


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The necessary qualities

Creative

Inquisitive

Driven

Goal-oriented

Independent

Confident

Calculated risk taker

Committed


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And other characteristics

Avid learner

Self-starter

Hard worker Resilient (able to grow from

failure or change)

High-energy level Integrity

Problem solving skills

Strong management and organizational skills


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Thinking About Starting

If youre thinking about starting a

small business, you should start by

weighing thepros and cons, so thatyou can make a wise decision.

Starting a business involvesplanning,

making key financial decisions andcompleting a series of legal activities.


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Consultant or mentor?

Once you're ready to start a business, you'llhave many important decisions to make. Thisis especially true in the first months of opening

your business. You might worry that you'll have to make every

decision on your own. Ultimately, you areresponsible for the decisions you make, but you

can always consult others to get guidance. Aconsultant or mentor could be an invaluableresource to you.


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A business mentor has

more entrepreneurial

and domain expertisethan you and can help in

improvingproductivity,

streamlining marketing

initiatives, build betterbusiness relationships

and in retaining key

human capital for your

Startup.


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Mentors can be the key tounlocking a network of

business contacts and tospread word of mouth thatyour business is up andrunning and ready to

perform for customers. Mentors can also provide

knowledge, expertise, andsupport for your business.A

mentor is more than just acontact in your networkamentor is a coach making along term commitment to

you.


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A mentor

A mentor is someone who has been down thesame path you're taking. A mentor is experienced,successful and willing to provide advice andguidancefor no real personal gain.

In Greek mythology, Mentor (Greek: gen.:)was the son of Alcumus. In hisold age Mentor was a friend of Odysseus whohad placed Mentor and Odysseus' foster-brother Eumaeus in charge of hisson Telemachus, and of Odysseus' palace,when Odysseus left for the Trojan War.


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A father-like teacher


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Near-paternal relationship with

aprotg When Athena visited Telemachus she took the

disguise of Mentor to hide herself from the suitorsof Telemachus' mother Penelope. As Mentor, thegoddess encourages Telemachus to stand up

against the suitors and go abroad to find out whathappened to his father. hen Odysseus returnsto Ithaca, Athena appears briefly in the form ofMentor again at Odysseus' palace.

Because of Mentor's and Eumaeus' near-paternalrelationship with Telemachus, the personalname Mentorhas been adopted in English as aterm meaning a father-like teacher.


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The student of a mentor

The student of a mentor is called a protg.More accurately, the protg would be called a

telemachus(pl. telemachusesor telemachi).

Sometimes, the protg is also called a mentee.

The -or ending of the original name Mentor

does not have the meaning of "the one who

does something", as in other English words

such as contractoror actor. The derivation ofmenteefrom mentoris a kind

of backformation (cf. employerand employee).


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Identify your weak spots

One of the first things you need to do when

seeking out a mentor is to identify your weak

spots. And, then, start sking questions:

What things do you need to improve? Where arethe blind spots in your life that you know can be

changed? Where do you often fail? Think about the

things you needdo you often fail in your

finances? Find a numbers expert. Do you lackinternational experience? Seek out a global thinker.

Do you need to grow a small business?


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A few first steps

Find a successful CEO of a medium size

business. Matching the right mentor to

your needs is the first step to finding the

right mentor.

1. Find someone you trust.

2. Search your network of contacts to find a

mentor.


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3. Check with your company, school alumniassociation, or local group you are associated

with to see if they have a structured mentoringprogramme in place. These structured mentoringprogrammes often have years of trial and errorpresenting an opportunity for you to enter into asmooth running program.

4. These types of coaching programmes oftenperform personality and goal assessments tomatch you with a compatible mentor.Compatible could be someone with similar

personalitiesor could be someone who is verydifferent. Some mentoring programmes find thatdissimilar mentor/mentee relationships are bestfor success.


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Some tips about mentoring:

Be organized, prepared and consistent. No onewants to waste their time. Time is precious.

Planyour mentoring sessions in advance. Thesecould be as simple as having a one-on-one

consultation or lunch meeting once a month todiscuss where you are against your business goals,how best to tackle business obstacles, getting adviceon business processes or regulatory requirements

that you dont understand, and so on. Casual one-on-one sessions are good, but also have

more structured sessions that address differentaspects of starting, running, managing and growing

your business.


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Your personal attitude

Take notes, own action items and review

progress against these in your next session.

Be respectfulof your mentors time. Use

their insight and apply as you best see fit.

And last but not least, be thankful and

communicative about the value they bring.

This is about being in a mutually beneficialrelationship, after all.


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20 Questions Before Starting a

Business

1. Am I prepared to spend the time, money

and resources needed to get my business

started?

2. What kind of business do I want?

3. What products/services will my business

provide?

4. Why am I starting a business?

5. What is my target market?


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More questions ...

6. Who is my competition?

7. What is unique about my business ideaand the products/services I will provide?

8. How soon will it take before myproducts/services are available?

9. How much money do I need to get my

business set up?10. How long can I have to finance the

company until I start making a profit?

11. Will I need to get a loan?


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More questions ...

12. How will I price my product compared to

my competition?

13. How will I market my business?

14. How will I set up the legal structure of my

business?

15. How will I manage my business?

16. Where will I house my business?


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More questions ...

17. How many employees will I need to start

up?

18. What types of suppliers do I need to

contact?

19. What kind of insurance do I need to invest

in?

20. What do I need to do to ensure I am

paying my taxes correctly?


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Other questions Before Starting a

Business

1. Are you ready to start a business?

2. Is Entrepreneurship For You?

3. What are the Small Business SizeStandards?

4. Green Guide for New Businesses

5. Conducting Market Research


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Think and understand

6. Think about thepossibility of anunexpected

disaster7. Understand Your

Market and

EconomicConditions


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Every entrepreniural venture needs to have a

few fundamentals in place:

1. a superior product or

service that has been

rigorously tested,2. extensive market research,

3. an efficient supply chain,

4. a motivated team,

5. an adequate funding


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10 Steps to Starting a Business

1. Create a Business Plan

2. Get Business Assistance and Training

3. Choose a Business Location4. Finance Your Business

5. Determine the Legal Structure of Your

Business


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And other five ...

6. Register a Business Name ("Doing

Business As")

7. Get a Tax Identification Number8. Register for State, Entity/District and

Local Taxes

9. Obtain Business Licenses and Permits

10. Understand Employer Responsibilities


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Business Types

One of the first decisions youll make is thetype of business you will open. You haveseveral options to explore, including where

youll do business, how you will structureyour business, and how you will conductbusiness.

Additionally, you should exploreopportunities that exist for people withspecific characteristics.


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Possible choices of business types

Sole proprietorship,

Partnership,

Limited Liability Company (LLC), Corporation,

S corporation,

Nonprofit, or

Cooperative.


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Startups and High Growth

Businesses

In the world of business, the word "startup"

goes beyond a company just getting off the

ground. The term startup is also associated

with a business that is typically technologyoriented and has high growth potential.

Startups have some unique struggles,

especially in regard to financing. Thatsbecause investors are looking for the highest

potential return on investment, while

balancing the associated risks.


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Starting a Green Business

The explosion of organic and eco-friendly

products on retail store shelves is more than

just a passing fad. It's big business.

This reality presents opportunities for

environmentally minded entrepreneurs

ready to start their own company.

W O d B i fi


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Women Owned Businesses: five

barriers1. They dont know how to access finance,

2. A lot of business networks are set up and

dominated by men

3. They often display a lack of confidence,

4. Women are often not reaching high

positions in companies, so they often suffer

from the range of skills most men have

when starting a new business,

5. Slow to adopt new technologies.


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Nonprofit Organizations

A nonprofit organization uses its profit to

improve its services, rather than pay

dividends to investors.

If your organization is registered as a

nonprofit, you are eligible for certain

programmes including, in most developed

countries, grants, government surplus andother benefit for such a venture.


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Home Based Business

What doApple Computer, Hershey's, Mary KayCosmetics, and the Ford Motor Company have incommon? These well-known corporations all startedout as home based businesses. In fact, more than

half of all U.S. businesses are based out of an owner'shome.

If you have decided you are ready to start a homebased business, then you might already have an idea

and/or the products you want to market. If not, thinkabout your background, what you are good at, and

what experience you have. This exploration can getyou on your way to coming up with a sound idea.


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People with Disabilities

Starting a business can be a great opportunityfor many people with disabilities. In addition

to meeting career aspirations and goals,

owning your own business can provide

benefits such as work flexibility and financial

stability.

In countries, such as B&H, physical and

mentl disabilities are thought to be major

obstacles for new business due to the

traditional attitude to such persons.


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Minority Owned Businesses

A number of people that happen to be

outside the main social, ethnic or economic

groups often find hard to compete with tose

who belong to a certain interet group. Inmost European countries, Roma people fall

into this category, but there are a number of

other groups that can be clasified asminorities, so they deserve the equal chance

nder the law and social sensitivity.

V S i Di bl d V


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Veteran & Service-Disabled Veteran

Owned

A former war veteran or a service-disabled

veteran, should also have several options to

choose from when starting their business. As

a small business owner, they can be seen ascontinuing to serve themselves, their

respective family, or, in a larger context, the

whole local community, or society. Unfortuntley, in B&H this issue has not been

dealt with properly after the 1990s wars in the

region.


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A receptive business environment

Entrepreneurs also need a receptive

business environment.

Many small and medium-size business(SME) owners complain that

government regulations, commonly

known as red tape procedures, is one oftheir biggest headache.


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Writing a Business Plan

Now that youve decided that youd like to

open a small business, you should put your

thoughts down on paper. This way, your

business idea is expressed in a planaliving document that outlines every critical

aspect of its operation.

This step might sound intimidating, but itshighly important.

Do you really need to make


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Do you really need to make

a business plan?

The answer isyes !!!!The importance ofa

comprehensive,thoughtful business

plan is huge. Many

factors critical to

business success

de end u on our lan:


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Roadmap

Some people assume that if they are not

going to seek financial support from

lenders or investors to open their

business that they dont need to prepare

a business plan, but everybusiness

should have one.Writing a businessplan serves as a roadmap for your

venture when youre starting out.


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Think about your business objectively

Writingyour business plan also forces you to thinkabout your business objectively. When youredone, you will have a more realistic idea of theeffort it will require and whether it's a venture you

want to pursue at this time. Don't be intimidated. The process of sitting down

and writing out a business plan could spark yourcreativity and lead you to new business strategies

you may not have considered previously. You'll also find that having your business goals

written down enables you to refer to them at anytime. This will ensure you don't lose sight of your

original focus once you do start your business.


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El m nt f B in Pl n


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Elements of a Business Plan

Cover sheet Executive summary

(statement of the businesspurpose)

Table of contents Body of the document


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Financial data

Loan applications Capital equipment

and supply list Balance sheet

Breakeven analysis Profit and loss

statements


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Three-year summary

Detail by month, first

year

Detail by quarters,

second and third year Assumptions upon

which projections were

based Pro-forma cash flow


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9 elements for a solid Business Plan

Like many other planning activities for

starting your own business, a solid Business

Plan contains a number of important

elements a future entrepreneur must be fullyaware of in order to cover each step of the

way and enter the business world without

skipping any of them. There are nine basic elements present in

any solid Business Plan.

Part 1 : Business Plan Executive


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Part 1 :Business Plan Executive

Summary

It is the most important section of your plan.It provides a concise overview of the entireplan, along with a history of your company.

It tells your possible financierswhere yourcompany is and where you want to take it.It's the first thing they can see; therefore, itis the thing that will either grab their interestand make them want to keep reading ormake them want to put it down and forgetabout it. More than anything else, it tells thefinanciers why you think your business ideawill be successful.

Contents of the Executive Summary:


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Contents of the Executive Summary:

The Mission Statement

The mission statement briefly explainsthe thrust of your business. It could betwo words, two sentences, a paragraph, or

even a single image. It should be as direct and focused as

possible, and it should leave the reader

with a clear picture of what your businessis all about.


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Time & Human factor

Date the business began

Names of the foundersand the functions they

performNumber of employees


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The company growth &


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The company growth &

management's future plans

Summary of company growth including financialor market highlights (for example, your companydoubled its worth in a 12-month period; youbecame the first company in your industry to

provide a certain service) Summary of management's future plans. With the

exception of the Mission Statement, all of theinformation in the Executive Summary should be

highlighted in a brief, even bulleted, fashion.Remember, these facts are laid out in-depth withinthe plan itself.


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When defining the nature of your

business (or why you're in business), be

sure to list the marketplace needs that you

are trying to satisfy.

This should include the ways in which

you plan to satisfy these needs using your

products or services.

Finally, list the specific individuals

and/or organizations that you have

identified as having these needs.


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S l


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Sales strategy

A sales force strategy

If you are going to have a sales force, do

you plan to use internal or independentrepresentatives? How many salespeople

will you recruit for your sales force?

What type of recruitment strategies willyou use? How will you train your sales

force? What about compensation for

your sales force?


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Your current funding requirement, your future


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Your current funding requirement, your future

funding requirements over the next five years, how

you will use the funds you receive, and any long-

range financial strategies that you are planning that

would have any type of impact on your funding

request.

When you are outlining your current and futurefunding requirements, be sure to include the amount

you want now and the amount you want in the future,

the time period that each request will cover, the type

of funding you would like to have (i.e., equity, debt),and the terms that you would like to have applied.


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P rt 8 Fin n i l


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Part 8: Financials

The financials usually need to include:

1. Historical Financial

Data

2.Prospective FinancialData

If you own an established business, you will be


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If you own an established business, you will be

requested to supply historical data related to your

company's performance. Most creditors request

data for the last three to five years, depending on

the length of time you have been in business.

The historical financial data you would want to

include would beyour company's incomestatements, balance sheets, and cash flow

statements for each year you have been in business

(usually for up to three to five years).

Often creditors are also interested in any collateralthat you may have that could be used to ensure

your loan, regardless of the stage of your business.

Prospective Financial Data


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p

All businesses, whether startup or growing, will be

required to supply prospective financial data. Mostof the time, creditors will want to seewhat you

expect your company to be able to do within the

next five years. Each year's documents should

include forecasted income statements, balancesheets, cash flow statements, and capital

expenditure budgets.

For the first year, you should supply monthly orquarterly projections. After that, you can stretch it

to quarterly and/or yearly projections for years two

through five.


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Part 9: The Appendix


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Part 9: The Appendix

This section should be provided to readers on anas-needed basis. In other words, it should not be

included with the main body of your business plan.

Your plan is your communication tool; as such, it

will be seen by a lot of people. Some of the

information in the business section you will not

want everyone to see, but, specific individuals

(such as creditors) may want access to thisinformation in order to make lending decisions.

Therefore, it is important to have the appendix

within easy reach.


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And other paperwork


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And other paperwork

Legal documents

Copies of leases

Building permits

Contracts

List of business consultants, including

attorney and accountant


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Venture Capital


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Venture capital is a type of equity financingthat addresses the funding needs of

entrepreneurial companies that for reasons

of size, assets, and stage of developmentcannot seek capital from more traditional

sources, such as public markets and banks.

Venture capital investments are generallymade as cash in exchange for shares and an

active role in the invested company.


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Still interesed in new business?


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Still interesed in new business?


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Unit 11 New Business

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