A Personal Touch. Joel K. Bopp Senior Commercial Lender

Transcription

1 brought to you by

2 A Personal Touch We believe the key distinction between banks is the way they serve their customers. Through honesty, hard work and quality customer service, our knowledgeable, friendly staff is ready and willing to assist you. Whether you are banking as an individual, a family or a business, you ll benefit from sound, strategic advice, flexibility and locally made decisions from people who truly understand your needs. Joel K. Bopp Senior Commercial Lender Vandalia Loan Production Office 6450 Poe Ave., Ste 101 Dayton, OH jbopp@minsterbank.com Member FDIC MinsterBank.com

3 Entrepreneur Bootcamp Series

4 Today s Presenters Donerik Black, MBA Small Business Development Center at WSU Colonel Glenn Hwy, Rike Hall Dayton, Ohio donerik.black@wright.edu RoShawn Winburn, MBA Minority Business Assistance Center at HRC W. 2 nd St., Suite 100 Dayton Ohio roshawn.winburn@daytonohio.gov

5 Business Basics: The Business Concept

6 Business Basics Myths and realities of entrepreneurship Critical success factors Know your options Components of business ownership Making it legal Funding and cash management Business plan basics

7 A few volunteers Briefly tell us a bit about you in one minute or less: Your name Your business or idea Why you came today

8 Myths and Realities of Entrepreneurship Myth 1: All I need is a good idea to be a successful entrepreneur. Myth 2: If you go out on your own, you won t have to work so hard or such long hours. Myth 3: You ll be able to deduct everything, so you don t have to pay taxes.

9 Myths and Realities of Entrepreneurship Myth 4: If you work independently, you won t have to report to a boss. Myth 5: Business owners get to do the work they want to do and only what they find interesting. Myth 6: If you choose to be self-employed, you ll be limited in what you can achieve, since you ll be working alone.

10 Reality: Proper Planning is Key After 2 Years 24% Successful Failed Percent of New Businesses (2+ employees) 76% Source: Bureau of Labor Statistics, Business Employment Dynamics, Entrepreneurship and the U.S. Economy

11 Reality: Proper Planning is Key After 3 Years Successful 38% 62% Failed Percent of New Businesses (2+ employees) Source: Bureau of Labor Statistics, Business Employment Dynamics, Entrepreneurship and the U.S. Economy

12 Reality: Proper Planning is Key After 5 Years 50% Successful Failed 50% Percent of New Businesses (2+ employees) Source: SBA Office of Advocacy, Frequently Asked Questions about Small Business, March 2014

13 Do you have what it takes? 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

14 Know your options

15 Starting a New Business ADVANTAGES 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

16 Buying a Business ADVANTAGES 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

17 Buying a Franchise ADVANTAGES 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

18 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

19 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?

20 Location, Location, Location Niche / target market Competition Distribution Merchandising Position

21 Making it legal

22 Business Organization Forms Sole Proprietorship Partnership Limited Liability Company (LLC) C Corporation

23 Government Regulations Business Licenses and Approvals Labor Laws Immigration Laws IRS and Social Security Withholding & Payments

24 Every Business Owner Needs Banker Accountant Insurance Agent Lawyer Business Mentor

25 FUNDING AND CASH MANAGEMENT

26 Considerations Total monthly cost of living Outstanding debt Amount in savings Total amount needed to cover 6 to 12 months of expenses Hold cash as long as you can Keep separate accounts

27 Startup Cash Needs Essential Considerations: Tools and equipment Leasehold improvements Licenses and permits Professional fees Initial inventory Working capital reserve fund

28 Operating Cash Needs Salaries Rent Insurance Taxes and fees Advertising Loan interest/principal Utilities Maintenance

29 Sources of Capital Equity Signifies Ownership Personal savings Family and friends Partners contributions Profits retained in the business Debt Does NOT Signify Ownership Banks and credit unions* Community Express Micro Loans* Credit cards (not recommended) * Usually guaranteed by SBA

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

31 Small business readiness selfassessment

32 Small Business Readiness Self-Assessment Total score should not be more than 10. Assign more points to indicate agreement, less if you do not agree. Topic Question Points Idea Feasibility Market Identification Implementation My product/service is servicing an unmet need. My product/service could be expanded to gain additional customer groups. I know who my potential buyers are. I have a clear value proposition for my potential buyers. I know what it will take to start my business. I know what it will take to run my business. Funding I understand what it will take to obtain funding. I have a plan to fund my business start. Personal Readiness I am ready to work hard to achieve my business goals. I understand the challenges ahead and have a plan to tackle them. Total Points:

33 Business plan basics

34 Business Plan Importance Encourages an objective view Becomes foundation for planning Powerful management tool Communicates owner s ideas

35 Business Plan Contents Table of Contents Executive Summary Section One: The Business Section Two: Financial Forecasts Section Three: Supporting Data

36 The Business Concept Capture Your Dream Feasibility Plan Draft Industry Profile Data Customer Data Competitive Data Resources for Collecting Data

37 Capture Your Dream They all started with a dream! Steve Jobs Bill Gates Richard Branson Mary Kay Ash Walt Disney Steven Spielberg Oprah Winfrey Ray Kroc Sam Walton What is your dream? If there were no obstacles in your way, what would be your ideal business?

38 Feasibility Plan Draft Provides you with the information to help make a Go/No-Go decision for your business idea. Has the core information to create a complete business plan for bankers and investors. Gives you direction to get started.

39 Business Idea Defining a Market Need Need fulfilled or problem solved Product/service features and benefits Competitive advantage Business model

40 Personal Battleground Your Experience Skills that fit idea Personal risk tolerance that fits idea

41 How many hats will you wear?

42 Industry Profile Defining Your Business Description: North American Industry Classification System (NAICS) Profitability: Risk Management Association (RMA) Annual Statement Studies National Trade and Professional Association (NTPA) Directory Growth/Life Cycle Profitability: RMA Trends

43 NAICS Definition 2012 NAICS Definitions Nursery and Tree Production This U.S. industry comprises establishments primarily engaged in (1) growing nursery products, nursery stock, shrubbery, bulbs, fruit stock, sod, and so forth, under cover or in open fields and/or (2) growing short rotation woody trees with a growth and harvest cycle of 10 years or less for pulp or tree stock.

44 The Industry Life Cycle Maturity Reinvention Rapid Growth Slow decline Rapid decline Start-up Industry Life Cycle

45 Target Markets Who do you serve? Type: retailer, consumer, etc. Number Income level/ability to pay Demographics Lifestyle Habits

46 Other Key Factors Competition size product/service features Suppliers availability reliability Business Risk product longevity legal/environmental

47 Collecting Critical Information Industry Customer Competitor Market Trends

48 Customer Data Know Your Market Demographics Habits and patterns Customer Data Sources Internet Census data/government websites Trade associations Civic/community organizations Library reference sections

49 Competitor Data Understand What They Offer Price Features Annual Sales Size/profitability Market strategy Competitor Data Sources Competitor Suppliers Trade associations RMA D&B (Dun and Bradstreet)

50 Key Data Websites NAICS: American Community Survey: Small Business Administration: Bureau of Economic Analysis: Securities and Exchange Commission: Bureau of Labor and Statistics: SCORE s website:

51 Your Local Librarian Web-based searches for information (e.g., Reference USA) Reference library tools most commonly used by SCORE clients Reference books display and typical information

52 Other Market Trends Important Considerations Political Social Environmental Trend Sources Newspapers Periodicals Television Internet

53 Collecting Critical Information Ask directly, usually a distant competitor Ask mutual suppliers Ask competitors (your future) customers Be a customer Join a trade association Check competitor websites

54 Help Us, Help You Please give us feedback by 1. Completing a survey 2. Sending an to bootcamp@jasperbrowne.com Registration is live for the next bootcamp on March 14 th. Reserve your spot & tell a friend!

55 Contact Us Vandalia Loan Production Office 6450 Poe Ave., Suite 101 Dayton, OH Joel K. Bopp Senior Commercial Lender Member FDIC MinsterBank.com