Starting and Nurturing Your Business

Starting & Nurturing Your Business – Ten Steps

SCORE Chapter 34Greater Cincinnati Area

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Workshop Objectives

• Learn the ten steps to start a business

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Workshop Objectives


• Learn some tips to do each step

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Workshop Objectives


• Learn some tips to do each step• Get to know key Resources

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Workshop Objectives


• Learn some tips to do each step• Get to know key Resources• Learn tools/techniques to build

plan

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Workshop Objectives


• Learn some tips to do each step• Get to know key Resources• Learn tools/techniques to build plan• Know where to start

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Background - SCORE

Purpose of SCORE Provide counseling/training

- small business owners

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Background - SCORE

Purpose of SCORE Provide counseling/training

- small business owners

SCORE helps small business owners:Start-upGrow their businessSometimes helping them

avoid failure8

Background - SCORE

Background: National Organization

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Background - SCORE

Background: National Organization

Over 11,000 volunteers750 Counseling locationsNon-Profit OrganizationAffiliated with Small Business

Administration

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Background - SCORE

Background: Cincinnati Chapter

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Background - SCORE

Background: Cincinnati Chapter

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•65 Counselors - various business backgrounds•Provides 25+ workshops per year over 400 students•Provides “one-on-one counseling; over 2200 Sessions last year•“No cost to You”•Sign up form will be provided

Importance of Small Business to US Economy

• Number of Small Business that Are “in-business”

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• Number of Small Business that Are “in-business”

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•Small Businesses make-up 99% of all businesses (22 million in the US)

•Employ 51% of the private workforce.

•Historically, create over 60% of the NET jobs in the US.

•Comprise 96% of all exporters of goods & 51% of private sector output.

•Have a higher level of innovation than big Businesses; •“faster on their feet” than large companies.


• Number of Small Business Are Successful (Why)

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• Number of Small Business Are Successful (Why)

Are “in-business”70% businesses are operating after 2 years50% operating after 4 years40% operating after 6 years

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Number of Small Business Are Successful (Why)

Are Successful:Business Plan is used:

• To establish what to work on and when• To regularly track key results (sales, profits,

expenses)• Do the “hard stuff” when it is needed (reduce

expenses)• Have sufficient funding (good cash flow)• Understand the time demands of a business• Have support of family and friends

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Starting New Business Process Ten Steps

Step 1: Identify skills and experience YOU have to start a Business

• Determine the high level of skills and experience you will provide to YOUR business.

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Step 2: Perform risk assessment of YOUR business idea

• Document your idea then test with a person in a similar business, a SCORE Counselor and/or your commercial lender. Determine the likelihood of a successful business.

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Step 3: Determine the level of Financial Resources needed versus YOUR financial status

• Determine the level of financial skills and experience required versus YOUR financial knowledge.

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Step 4: Define who your target Customers are and your Product or Service

• Describe the target individual or group of people that you will focus your attention. Identify where your target audience is located. Describe YOUR product or service and the benefit it will provide your customers.

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Step 5: Identify the organizational structure and the operations to provide YOUR product or service

• Describe the how the product or service will be made and design of the organization with number of people and skill levels.

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Step 6: Learn the options for YOUR legal structure and key resources

• Learn the various legal options and the pros and cons of each.

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Step 7: Develop YOUR Marketing Plan• Describe the process for developing

the various methods and approaches and making best choices for an effective Marketing Plan.

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Step 8: Develop YOUR Financial Plan

• Develop a three year cash flow with actions steps as changes occur.

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Step 9: Integrate all of the pieces into an overall business plan

• Perform a quarterly check of the strategies status and the outcome measures, and then make adjustments to the strategies as required.

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Step 10: Work the Plan and learn to make Adjustments

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Now the Details – Are you ready????

289:35AM

Step 1: Identify skills and experience YOU have to start a BusinessDetermine the high level of skills and experience you will provide to YOUR

business.

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business.

Characteristics of Successful Business People• A burning desire to succeed

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business.

Characteristics of Successful Business People• A burning desire to succeed• Expertise

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business.

Characteristics of Successful Business People• A burning desire to succeed• Expertise• Management Skills

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business.

Characteristics of Successful Business People• A burning desire to succeed• Expertise• Management Skills• Tolerance for a long work week

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business.

Characteristics of Successful Business People• A burning desire to succeed• Expertise• Management Skills• Tolerance for a long work week• Adequate funding

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business.

Characteristics of Successful Business People• A burning desire to succeed• Expertise• Management Skills• Tolerance for a long work week• Adequate funding• Resilience and flexibility

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business.

Characteristics of Successful Business People• A burning desire to succeed• Expertise• Management Skills• Tolerance for a long work week• Adequate funding• Resilience and flexibility• An understanding of what’s required

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Step 1: Identify skills and experience YOU have to start a BusinessDetermine the high level of skills and experience you will provide to

YOUR business.

Characteristics of Successful Business People• A burning desire to succeed• Expertise• Management Skills• Tolerance for a long work week• Adequate funding• Resilience and flexibility• An understanding of what’s required

Do you have all of the characteristics to be successful?

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STEP 2

389:50AM

Step 2: Perform risk assessment of YOUR business idea Document your idea then test with a person in a similar business, a SCORE

Counselor and/or your commercial lender. Determine the likelihood of a

successful business.

• Lack of commitment

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Counselor and/or your commercial lender. Determine the likelihood of a successful business.


• Lack of vision, purpose, or principles

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• Lack of management systems

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• Lack of management systems • Poor market definition and strategy

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• Lack of management systems • Poor market definition and strategy • Competition

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• Lack of Cash

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• Lack of Cash

Please assess each element as to the level of risk to YOUR business (1 to 10) (1 is the lowest level of risk)

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STEP 3

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Determine the level of financial skills and experience required versus YOUR financial knowledge.

• Required:– Daily tracking of income/expenses and balancing the cash

drawer– Making deposits and writing checks– Prepare all of the personnel checks and reserve the taxes– Document all income and expenses by day for the month– Balance the check book with the Bank Statement

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• Required:– Daily tracking of income/expenses and balancing the cash drawer– Making deposits and writing checks– Prepare all of the personnel checks and reserve the taxes– Document all income and expenses by day for the month– Balance the check book with the Bank Statement– Prepare a formal Profit and Loss statement each month– Prepare a formal Balance Sheet each month– Do a detailed analysis of the financial information

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• Required:– Daily tracking of income/expenses and balancing the cash drawer– Making deposits and writing checks– Prepare all of the personnel checks and reserve the taxes– Document all income and expenses by day for the month– Balance the check book with the Bank Statement– Prepare a formal Profit and Loss statement each month– Prepare a formal Balance Sheet each month– Do a detailed analysis of the financial information– Prepare a forecast of the income and expenses for balance of year– Compare the forecast to the budget by line item– Make required adjustments to achieve the budget– Prepare quarterly documents– File and pay quarterly taxes– Prepare annual budget– Prepare and file Federal/State Taxes

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• Check YOUR skills versus the Required Activities!

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STEP 4

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Step 4: Define who your target Customers are and your Product or Services business.

Describe the target individual or group of people that you will focus your attention. Identify where your target audience is located. Describe YOUR product

or service and the benefit it will provide your customers.

• Identify your Customers:RetailBusiness to Business

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Describe the target individual or group of people that you will focus your attention. Identify where your target audience is located. Describe YOUR product or service and

the benefit it will provide your customers

• Define your Customer’s Profile:AgeSexIncome LevelsEthnicityHomeowner / RenterLocationOther

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the benefit it will provide your customers.

• Define your Customer’s wantsFeatures, Benefits, and Advantages

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the benefit it will provide your customers.

You have defined your customer or client AND what you think they want!

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Describe the target individual or group of people that you will focus your

attention. Identify where your target audience is located. Describe YOUR product or service and the benefit it will provide your customers

• Define each of your Service or Product:FeaturesBenefitsUniquenessDoes it fill a “Niche”?

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Describe the target individual or group of people that you will focus your attention. Identify where your target audience is located. Describe YOUR product or service

and the benefit it will provide your customers

Do your target customers wants MATCH your product or service???????

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the benefit it will provide your customers

• Compare your Service or Product with yourCompetition against the same criteria:

FeaturesBenefitsUniqueness “Niche”

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Describe the target individual or group of people that you will focus your attention. Identify where your target audience is located. Describe YOUR product or service

and the benefit it will provide your customers.

Does your target customer want your product or service OR your competitor’s??????

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Step 4: Define who your target Customers are and your Product or ServiceDescribe the target individual or group of people that you will focus your attention. Identify where your target audience is located. Describe YOUR

product or service and the benefit it will provide your customers.

Elevator Pitch• Your mother would understand in the

time it takes to ride an elevator up to the second floor

• Now…Boil it all down to just…30-35 seconds

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Step 4: Define who your target Customers are and your Product or ServiceDescribe the target individual or group of people that you will focus your attention. Identify where your target audience is located. Describe YOUR

product or service and the benefit it will provide your customers.

Elevator Pitch• Your mother would understand in the time it takes to ride

an elevator up to the second floor• Put the Idea in Words

– State your business concept– What is it you do for Customers?– How does the Customer benefit?– What’s in it for the Customer?– Who is in your Target Market?– How can Prospects be identified? Separate from others?– How do you want customers to perceive your business?

• Now…Boil it all down to just…30-35 seconds

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Financial Skills Required, Target Customer and

product/service defined

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STEP 5

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Describe the how the product or service will be made and design of the organization with number of people and skill levels.

Organization Chart• Key Positions• Responsibilities and duties• Who• Qualifications• Employees/Subcontractors/Independent Contractors• When

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Describe the how the product or service will be made and design of theorganization with number of people and skill levels.

Organization Chart• Key Positions• Responsibilities and duties• Who• Qualifications• Employees/Subcontractors/Independent Contractors• When• Other Factors to consider

• Growth and Expansion Plan• Training• Who will handle payroll• Support - Help• Board of Directors – Required for Corporation• Advisory Board – Desirable for All (Who?, Qualifications?)• Legal• Accounting• Insurance• Technical• Business

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Operation Plan - Checklist• How will You obtain/make/provide the product/service?• Make it, Buy it? All or part?• Sell it wholesale or retail?• At your store/service center?• By mail, internet?• Using Salespersons, Yourself?

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Operation Plan - Checklist• How will You obtain/make/provide the product/service?• Make it, Buy it? All or part?• Sell it wholesale or retail?• At your store/service center?• By mail, internet?• Using Salespersons, Yourself?• Startup Capital Requirements• Any Plans for Growth?• When? How? Resources Needed?• Patents and Copyrights?• What are Your plans for Contingencies?• Identify most probable/possible contingencies• How will You Address Them

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Facilities Plan – Checklist• Location?• Rent/lease/buy• How?• When?• How much?• Amenities• Parking• Public transportation

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Facilities Plan – Checklist• Location?• Rent/lease/buy• How?• When?• How much?• Amenities• Parking• Public transportation• Distribution/Shipping channels• Accessibility• Required Adaptation to your Business• Zoning• Utilities• Modifications• Licenses & Permits• Equipment Requirements?• New or used

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STEP 6

7011:05AM


Learn the various legal options and the pros and cons of each.

• Select your Business Structure– Sole Proprietorship– Partnership – Limited Liability – Incorporation– C-Corp & S-Corp

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Sole Proprietorship– Most used – 70% of 20 million businesses– Maximum control and freedom of action– Simple and least costly to start – Less government regulation and reporting– Profits are taxed as income to the owner– Owner’s Social Security and Medicare are taxed from business

profit

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Partnership– Advantages are similar to sole proprietorship– Additional source of capital– Partners divide profit and loss– Two or more heads better than one

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Limited Liability Company– A Hybrid – Corporate & Partnership– State chartered – business name includes LLC – Professional Services– Income and Tax Benefits– More flexibility in allocating profit & loss – Avoids double taxation better than C-corp– Reduced Personal Liability

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Incorporation, C-Corp– Separates personal from business– Limited liability for stockholders– Flexibility– Easier to raise capital– Health & insurance benefits– Continuity– Change in ownership need not affect management

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Incorporation, S-Corp – Corporate Credibility– Created for Small Business– Small Business Tax Benefits– Avoids C-Corp double taxation– Flexibility

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Regulations - Licenses and Permits– YOU must assume that your

business requires them.

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Regulations - Licenses and Permits– YOU must assume that your business requires them.– The failure of government to organize or

centralize the obtaining of licenses and permits does not exonerate you if you fail to obtain those required for your business.

– SCORE Brief #10.03 provides phone numbers of agencies in various locales which can help your search. See your SCORE counselor to get a copy.

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STEP 7

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Step 7: Develop YOUR Marketing Plan.Describe the process for developing the various methods and approaches and

making best choices for an effective Marketing Plan.• Definition

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Step 7: Develop YOUR Marketing Plan.Definition

• The ENGINE that DRIVES your business

PriceProductPlacePromotion

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making best choices for an effective Marketing Plan.• Definition• Marketing Plan

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Step 7: Develop YOUR Marketing Plan.Marketing Plan

• Situation AnalysisTarget Customers

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• Situation AnalysisTarget CustomersCompetition

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• Situation AnalysisTarget CustomersCompetitionIndustry Trends

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• Situation AnalysisTarget CustomersCompetitionIndustry TrendsEconomic Trends

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• Situation AnalysisTarget CustomersCompetitionIndustry TrendsEconomic TrendsSocial Trends

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making best choices for an effective Marketing Plan.• Definition• Marketing Plan• Marketing Strategy

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Step 7: Develop YOUR Marketing Plan.Marketing Strategy

• Business Description

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• Business Description:Product or Services

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• Business Description:Product or ServicesCustomer Benefits

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• Business Description:Product or ServicesCustomer BenefitsManagement Organization

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• Business Description:Product or ServicesCustomer Benefits

Management OrganizationStrengths and Weaknesses“Niche”

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• Business Description• Financial Requirements

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• Financial Requirements:How much

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• Financial Requirements:How muchHow will you get it

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• Business Description• Financial Requirements• Target Market

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• Target Market:Target Customers

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• Target Market:Target CustomersMarket Segment

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• Target Market:Target CustomersMarket SegmentProduct / Services

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• Target Market:Target CustomersMarket SegmentProduct / ServicesCompetition

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• Business Description• Financial Requirements• Target Market• Competition

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• Competition:Major Competitors

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• Competition:Major CompetitorsTheir Strengths and

Weaknesses

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• Competition:Major CompetitorsTheir Strengths and WeaknessesTheir Marketing Strategies

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• Business Description• Financial Requirements• Target Market• Competition• Promotion /Advertising

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• Promotion /Advertising:Sales Style

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• Promotion /Advertising:Sales StyleMedia services

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• Promotion /Advertising:Sales StyleMedia servicesMeasurements

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• Promotion /Advertising:Sales StyleMedia servicesMeasurementsNetworking

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• Business Description• Financial Requirements• Target Market• Competition• Promotion / Advertising• Market Research

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• Market Research:Market Trends

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• Market Research:Market TrendsSales / Profitability

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• Market Research:Market TrendsSales / ProfitabilityEconomic Interests

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• Market Research:Market TrendsSales / ProfitabilityEconomic InterestsPopulation Shifts

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• Market Research:Market TrendsSales / ProfitabilityEconomic InterestsPopulation ShiftsCompetition

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making best choices for an effective Marketing Plan.• Definition• Marketing Plan• Marketing Strategy• Advertising

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Step 7: Develop YOUR Marketing Plan.Advertising

• Promotional Materials

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• Promotional Materials:Product LiteratureWeb SiteCatalogsBrochuresBusiness CardsNewslettersPoint-of-Sale Handouts

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• Promotional Materials• Public Relations

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• Public Relations:Press ReleasesNetworkingNewsletterCommunity InvolvementVolunteer InvolvementSpeakingSeminarsEvent SponsorshipsPublic Articles

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• Promotional Materials• Public Relations• Promotional Events

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• Promotional Events:Trade ShowsCertificatesSweepstakesOffersFrequent Buyer PointsCity/Township/Church Events

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• Promotional Materials• Public Relations• Promotional Events• Budget

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• Budget:Start-up FundsAllocate ½ of your Gross

Margin to Marketing

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making best choices for an effective Marketing Plan.• Definition• Marketing Plan• Marketing Strategy• Advertising• Customer Service

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making best choices for an effective Marketing Plan.• Customer Service

• Will you need a Customer Center• Will you need a Web Site• Will you need a 800 Number• Will you need a Receptionist• How will you handle returns• What about trade-ins• What about Warranties, Guaranties and

ServiceContracts• Analyze what your Competition does

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STEP 8

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Develop a three year cash flow with actions steps as changes occur.

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Year 1 Year 2 Year 3 Grand Total

# Services

Revenue per service

Income

# of employees

$ paid per employee

Personnel Costs

Total Expenses – using 50% rule

Income - Expenses

Startup costs

Total per year

Cum. Total

Amount you will invest

Amount you need to borrow

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How much equipment will you need for startup? (List)

How many products or services will you provide in the first year?

How much will you charge per product or service?



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How much equipment will you need for startup? (List)

How many products or services will you provide in the first year?

How much will you charge per product or service?

How many people will be on the payroll?

How much will you pay each person?

How much will your expenses be if payroll is 50% of the expenses?



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How much money do you need to startup?

How much will YOU invest?

Please complete the next page to get the answer!

Example Your Data

Year 1

Your Data

Year 2

Your Data

Year 3

Grand Total

# Services 500Revenue per

service150

Income 75,000# of employees 2

$ paid per employee

20,000

Personnel Costs 40,000Total Expenses –

using 50% rule60,000

Income - Expenses 15,000Startup costs 30,000Total per year (15,000)

Cum. Total (15,000)Amount you will

invest

Amount you need to borrow

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STEP 9

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Perform a quarterly check of the strategies status and the outcome measures, and then make adjustments to the strategies as required

Business Plan – WHY?WHAT IS A BUSINESS PLAN?– The business plan is a written

document that describes your business and your plan for running it…. This becomes your management “BLUEPRINT” throughout your business life.

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Why do I need a Business Plan?– A plan raises your odds of success. The

process forces you to take an objective, critical, unemotional look at your project.

– The plan communicates your ideas to others and provides the basis for your financial proposal.

– The finished plan becomes your operating tool and benchmark of progress. (Are you working the plan and is it working?)

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Why do I need a Business Plan?It answers questions such as:• Why do I want to go into business?• What business do I want to be in?• Who are my customers?

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Why do I need a Business Plan?It answers questions such as:• Why do I want to go into business?• What business do I want to be in?• Who are my customers?• What is the market condition?• How will I manage this business?• What are my financial needs?

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Business Plan – • HOW TO…

• Researching and writing a solid business plan takes time

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• Focus on the intended reader

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• Be honest and realistic

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• Use layman terms

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Business Plan – • HOW TO…– Substantiate your statements

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Business Plan – • HOW TO…– Remain flexible

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Perform a quarterly check of the strategies status and the outcome measures,

and then make adjustments to the strategies

BUSINESS PLAN – FORMAT and COMPOSITION• ESSENTIAL COMPONENTS

– Executive Summary– Description of Products and Services– The Market– Marketing Strategy– Competition– Organization and Operations– The Management Team– Personnel– Financial Information– Timetables & Benchmarks– Supporting Documentation

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Perform a quarterly check of the strategies status and the outcome measures, and then make adjustments to the strategies

EXECUTIVE SUMMARY - An overview of your business– Business Description–Market Niche–Management Expertise– Sales and Profit Forecast – five

years– Request for financing– Use of funds and repayment

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THE MARKET–Niche or target audience– Explanation of market demand–Market share– Growth potential– Product pricing

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MARKETING STRATEGY– Analyze competitors marketing

strategies– Integrate multiple media and

promotional strategies–Detail distribution strategy

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ORGANIZATION and OPERATIONS– Continuing Development– Staffing – Purchasing– Facilities– Equipment

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MANAGEMENT TEAM– Experience and Quality– Personal history of the principals–Work experience–Management experience– Responsibilities– Salaries and Benefits

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PERSONNEL– Current personnel needs– Future needs– Skill requirements– Job descriptions– Available labor pool– Salaries and benefit

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FINANCIAL Information– Sources of Capital– Balance Sheet– Break-even analysis– Income Statement– Cash Flow

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Step 9: Integrate all of the pieces into an overall business planPerform a quarterly check of the strategies status and the outcome measures,

and then make adjustments to the strategies

SUPPORTING DOCUMENTATION– Resumes– Credit Information– Quotes or estimates– Letters of intent from prospective

customers– Personal references– Leases or buy/sell agreements– Legal documents relevant to the business

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STEP 10

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Family Considerations (some things to think about)– You and Spouse in the same

business–How will business decisions be

made?–Who plays what role in the

business?– And at home?

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Family Considerations (some things to think about)– You and Spouse in the same business– How will business decisions be made?– Who plays what role in the business?– And at home?– You and Spouse have separate businesses– Which business has priority with family resources?– Who baby-sits while the other works over the weekend?– How will you coordinate travel and work schedules?– Only one is active in a business– You’re in different universes, how to avoid drifting

apart?– How to maintain a common vision of your financial and

family goals?

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How to Proceed –What Can SCORE Do?

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SCORE Counseling– CONFIDENTIAL

• Counselors abide by a code of ethics and honor confidentiality.

– FAST• Receive advice directly from an experienced executive.• Variety of Expertise available

– FREE• Offered free-of-charge, as a public service.• No limit on number of sessions• Available to all U.S. citizens & green card holders

– At downtown or satellite offices. Field counseling at your business' site.

– SCORE advice helps businesses succeed.– An application for personal counseling is included in

your workbook or you can apply on the web @scorechapter34.org

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• Honestly appraise your strengths and weaknesses

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• Do you have the Step 1 characteristics to succeed? Are there weaknesses you need to address? Do you know what to do next?

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• Do you have issues in the Step 2 risk assessment that you are not confident you can address? Do you know what to do next?

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What do You need to do?– SUCCESS in Small Business can be

yours. –When You Learn to Do It THE RIGHT

WAY!– The importance of doing it right…

(because the odds are against you)

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To beat the odds…• Select the right business [the one you know and have a passion for]• Know [research, learn] the market, customers and competition• Choose a viable market niche [avoid me-too and price cutting businesses]• Define your marketing strategy• Run a “back-of-the-envelope” break even assessment early in the game• DEVELOP A BUSINESS PLAN (A good business plan helps set you apart from

the crowd)• Develop credible [realistic and substantiated] financial projections and a

financial model • Define the right legal business structure• Adequately capitalize the company [equity and debt financing]• Keep records and establish and accounting system from day 1• Hire develop & TRAIN good employees• Manage risk [insurance]• Effectively use cyberspace and conventional advertising• Attract and retain customers• Manage cash flow, manage cash flow, manage cash flow…daily!

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• Seek counseling, use mentors or sounding boards [leave pride at the door]

• Stay up-to-date, research, learn from your customers and competitors, continuously improve, develop an edge…

• Work on your business rather than just in your business

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Starting and Nurturing Your Business

Business

cash drawermaking

perform risk

major competitorstheir

marketing

marketing

make adjustmentsfamily

facilities

year cash