Presentation

WSU, Small Business PolicyFebruary 3rd, 2010

Carlos E. GonzalezSCORE, Fort Vancouver Chapter

AVAILABLE RESOURCES FOR AVAILABLE RESOURCES FOR

SMALL BUSINESS PLANNINGSMALL BUSINESS PLANNING

02/03/2010 Resources for small business planning - CEG 2

“In preparing for battle, I have found that plans are useless, but planning is indispensable”

Dwight Eisenhower


Adverse oddsAdverse odds

100

66

4439.5

0

10

20

30

40

50

60

70

80

90

100

Start up 2nd Year 4th Year 6th YearSource: SBA Office of Advocacy

Business survival vs. years in operation

To prepare a good business To prepare a good business plan….plan….

You should know the businessYou should know the businessWhat if you don’t? [it’s your case!] Ask the right questions to the person

who knows: your clientThen balance your objectiveness with

your client knowledge and emotions to formulate a good plan



A [good] business plan…A [good] business plan… Is a formal, substantiated document Prepares the entrepreneur to start, improve or

expand a business Explains the business and its viability to outside

parties Spells the business goals in clear and SMART terms Outlines a program to achieve those goals Complies with the KISS principle!

Its value is to influence decisions to Its value is to influence decisions to beat the odds!beat the odds!


A Business Plan must answer…A Business Plan must answer…

What are the market needs and market? – (What, who, how, where, when, how often, how much, why, trends, sensitivity to economic

cycles)

How are those needs presently satisfied? – (Who, what, location, share, comparison)

What are the strengths and weaknesses of the present suppliers/offerings?

– (SWOT analysis)

What does the company need to offer to become a preferred supplier?

How is the company going to structure, staff and manage the business?


A Business Plan must answer…A Business Plan must answer…

What are the financial needs? When are they needed? [start-up expenses, capital, working capital]

How are those needs going to be financed?

Is the business going to make money? How much? When?

Is the company sufficiently capitalized until breakeven point is reached?

Is the forecasted cash flow consistently positive (liquidity)?

How the company will fill temporary cash flow gaps?

Are the financial ratios within industry benchmarks?


Key issues to addressKey issues to address

Market need [product and/or service]

Market [buyers and sellers of need]

The offering unfair advantage [must have some to win]

Marketing plan [how to make the target market buy the offering… without

needing to sell]

Financial plan [need & source of funds, income/cash flow/balance sheet forecast]


Resources for business planning Resources for business planning

YOUR CLIENT, THE MARKETYOUR CLIENT, THE MARKET

On-line & libraries– General business information– Specific [related to business plan components]

Professional, free consulting– Face to face and cyber


On-line generic informationOn-line generic information Business libraries: articles, how-to, business

tools, guides, on-line courses, etc.– SCORE

– SBA

– Business

– Entrepreneur Organization

– Entrepreneurship (E. M. Kauffman Foundation)

– Free Management Library

– CCH Business owner’s tool kit


Specific InformationSpecific Information

1. Business plan guides2. Financing the business3. Market research4. Marketing5. Business Financial Model6. Business Benchmarking7. Legal business structure8. Licenses and registrations9. Protecting intellectual property


1. Business plan guides1. Business plan guides

The Ernst & Young Business Plan Guide

All “Generic information” websites

Interactive Business Planner (free, web based)

“Ultimate Business Planner” (Atlas Business Solutions – software package)

2. Financing the business2. Financing the business

Equity financing– Savings– Partner– Stockholders– Venture capital

Debt financing– Commercial bank loans [requires 30% equity]

– Private [family, friends] loans



Commercial bank loansCommercial bank loans

“If you want to know the value of money, go and try to borrow some” B. Franklin

– Existing companies: possible but difficult– New companies: highly difficult

Information sources– SCORE, SBA, SBDC and Business [The Official

Business Link to the U.S. Government]

– Bank of America website– Financing a business [SCORE, Fort Vancouver brochure]


Conditions for commercial loansConditions for commercial loans

Business Plan with substantiated financial forecast

Capital: Equity = 20% to 25% of the total capital

Collateral: 100% of the loan request (exceptions: SBA guarantee)

Character: of the borrower (including business knowledge) and guarantors

Capacity: of the business to be profitable and cash flow positive

Credit: of applicant and guarantors must be good

Conditions: state of the economy, industry, etc.


3. Market Research3. Market Research Perhaps the most critical [and difficult]

element of a business plan Many sources

– Your client (if not a good source, then he/she Your client (if not a good source, then he/she shouldn’t be in business)shouldn’t be in business)

– Competitors– Industry associations– Trade journals & trade shows– Demographics– Chambers of commerce (Greater Vancouver, Clark County)– Bureau of Labor Statistics– US Commercial service (export markets only)– Bureau of economic analysis


Market Research (cont.)Market Research (cont.)

Many fee-based services – Reference USA (Data base for libraries, educational

institutions and government agencies)

– Plunkett Research (industry-specific research)

– Forrester Research (technology markets)

– Research Info (market research resources)

– American Demographics (consumer trends database)

– Rand McNally Commercial Atlas & Marketing Guide (library)

– Dun &Bradstreet Reports


Industry/Market AnalysisIndustry/Market AnalysisAll MarketsAll Markets

What Industry?What Industry? Describe your industry. The less well known the industry, the more description necessary.

State of the industry?State of the industry? New industry, growth industry, competitive industry, or stable and mature?

Industry trends?Industry trends? Sales, number of customers, number of units sold, trends in related industries. On a world or national size, as needed.

Industry accelerators and Industry accelerators and decelerators?decelerators?

National or international economic indicators that encourage (or not) the health of your industry

Risks to the industry?Risks to the industry? Caused by legislation, technological change, liability or any threat to the industry as a whole


Customer analysisCustomer analysis

Consumer Markets Business Markets

Who is the customer? Age, Gender, Income, Family StatusBe sure to include how many customers there are in each grouping

Industry Type, Size of Customer, Annual SalesEstimate the number of companies using directories or Yellow Pages

Where is the customer? Target the geographic radius of your customer base by City, region, State or Country

The geography of business to business (B2B) markets tends to be larger than consumer markets

When do they buy? Is there a particular busy season for your product or service, i.e. summer, winter, Christmas?

If you are selling to seasonal businesses, the timing can be everything, i.e. whole selling

What do they buy? Necessity, Luxury item, High involvement/Big ticket, Low involvement/consumable, Capital Item

Inventory ItemConsumable Item

Why do they buy? How does your product or service help the consumer?

How does your product enhance the performance of this business?

How much do they buy? Determine how much is spent on your product by your customers

Estimate the commercial expenditure by the industries in your target area


Competition AnalysisCompetition Analysis

Direct CompetitorsDirect CompetitorsFirms who offer exactly the same you Firms who offer exactly the same you offeroffer

Indirect competitorsIndirect competitorsFirms who offer substitute productsFirms who offer substitute products

In existence now List, size and competitive position List, size and competitive position

In existence for the past three years List, size and competitive position List, size and competitive position

Gone out of business in the past List and why List and why

Choose best competitor (the one to emulate)

Identify and explain why Identify and explain why

My firm competitive edge vs. competitionWhat products/services/company attributes to the eyes of the beholder could/would make it a preferred supplier?

Edge vs. general competitionService, credit, inventory (product readily available), price, location, advertising, product mix, product knowledge, store lay out, display, parking, etc.

Edge vs. general competitionService, product quality, credit, inventory, price, location, advertising, product mix, product knowledge, store lay out, display, parking, etc.

My firm position vs. best competitorWhat products/services/company attributes to the eyes of the beholder could/would make it a preferred supplier?

Pros and cons. Edge if existing or what is needed to catch up and / or beat/

Pros and cons. What is needed to catch up and / or beat/

Risks to entrance or to more aggressive competitive stance

Possible competitive reaction, i.e. cut down prices.

Possible competitive reaction, i.e. cut down prices.


4. Marketing4. Marketing

If you do marketing well you don’t need to sell

– Define target

– Outline strategy for attracting and keeping customers

– Identify and anticipate change

General Market InformationGeneral Market Information

– Simmons Market Research Bureau (consumer behavior)

– Zaptdata (D&B) (custom target lists)

– Hoover’s Online (free info on companies)

– Insight Express (market intelligence and consumer feedback)

– SCORE, Fort Vancouver Counselors



5. Business financial model…5. Business financial model…

Software driven, interactive financial planProduces linked Financial Statements [P&L,

Balance Sheet, Cash Flow] and Calculates financial ratios (business’ scores)

Allows “What if”Cash flow planning tool *Presentation to lenders

*CCH Business Owner’s toolkit: “Managing your cash flow”


Financial model softwareFinancial model software

Interactive Business Planner (free-Web based-Canada)

“Light” Forecaster (up to operational breakeven – free)

“Financial Forecast” (by ActivePlans –free)

“Ultimate Business Planner” (by Atlas Business Solutions*)

*Software sold by SCORE, Fort Vancouver Chapter


6. Business Benchmarking6. Business Benchmarking

Benchmarking: plan financial ratios vs. industry standards

Lenders decision tool

Benchmarking resources:

– RMA Annual Statement Studies (The Risk Management Association, formerly Robert Morris Associates) – Check Vancouver Library

– Integra Information (fee-based business benchmarking)


7. Legal business structure7. Legal business structure

Affects taxes, liability, financing, future

Selecting an adequate structure

– SBA or Business [Link to the U.S. Government]

– Attorney or CPA

– SCORE, Fort Vancouver Chapter Counselors


8. Licenses and registrations8. Licenses and registrations

State of Washington Master Licensing service– “one-stop” licensing program– (WALI) expert system guide you

through the steps


9. Protecting Intellectual property9. Protecting Intellectual property

United States Patent and Trademark Office – Step by step guide– On-line application

Patent attorneys


Professional, free consultingProfessional, free consulting

SCORE, Fort Vancouver Chapter– Non-profit, national association. SBA resource partner– 11,000 volunteers – 390 Chapters– Services: free and confidential small business

counseling, training, assessment

Washington SBDC (Vancouver SBDC)– Services: Counseling, Training, Research, Innovation

assessment


Final wordsFinal words

Use the resources: they don’t guarantee success, but they surely help to beat the odds !

Build your own business toolkit

Focus on the key issues


Key issues to addressKey issues to address

Market need [product and/or service]

Market [buyers and sellers of need]

The offering unfair advantage [must have some to win]

Marketing plan [how to make buyers buy the offering]

Financial plan [need & source of funds, income/cash flow/balance sheet forecast]

Presentation

Documents

business knowledge

business tools

managethe business

small business policy

good business plan

official business link

ernst young business

good plan