Palmbeach.score.org 1 So You REALLY Want to Start Your OWN Business?

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So You REALLY Want to Start Your OWN

Business?

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What We’ll Talk About Today

• Do You Have What It Takes?• Why…Why…Why?• Reality or Myth?• Business Planning• What Will It Take?• Your Next Steps?• How Can SCORE Help You?

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Why…Why…Why?

• I want to get rich• I’m bored with my job• I’ll get to do what I love• I can be my own boss• I have an amazing idea• “Everyone” tells me I should• I will get more “free” time• I’ll show ‘em• I can do it!

How important is this to you?

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From a Job or Hobby to a Business

• Your Job– Support of others– Regular paycheck– Product experience– Defined

responsibilities– May love it / may not

• Your Hobby– Product knowledge– Done in spare time– No revenue– It’s not work– Love doing it

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You’re Going to Miss …

• Credibility and clout• Contacts and camaraderie• Coffee and gossip• Tech support• Vacation and sick time• Health insurance

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Reality or Myth?

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Reality or Myth #1?

• If I start a small business, I’ll be able to write off all of my expenses.

• Mostly Reality!– You can deduct all legitimate business

expenses – even from before you start your business

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Reality or Myth #2?

• I don’t have to register my business if it’s really small.

• Myth!– You need to register your business.• State, county, city• Other agencies, depending upon business

type

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Registration References

• United States– http://www.irs.gov/Businesses/Small-Businesses-&-Self-Em

ployed/Apply-for-an-Employer-Identification-Number-(EIN)-Online

• State of Florida– www.sunbiz.org

• Florida Department of Revenue – sales tax– http://dor.myflorida.com/dor/

• Business Tax Receipts– Application Requirement Guide & Application

https://www.pbctax.com/sites/default/files/pdf/PBCTC_65.pdf

– Contact your city or search online for instructions

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Reality or Myth #3?

• If I’m not selling much, it doesn’t count as a “real” business.

• Myth!– All businesses are “real”, except …• If you don’t sell much for several years, the

IRS may treat it like a hobby, not a business.

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Reality or Myth #4?

• I don’t have to collect and remit sales taxes if I’m selling online.

• Both Reality & Myth!– If your business is registered in Florida

• You must collect sales tax on shipments to Florida addresses

• You likely don’t have to on shipments to other states

– Expect this to change!

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Reality or Myth #5?

• There are all kinds of special tax breaks for home-based businesses.

• Reality!– You can write off a portion of your home

expenses – if it is used exclusively for business

– Speak with your accountant!• Many articles describe this as an IRS audit

flag.

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Reality or Myth #6?

• There are all kinds of government grants to help start a small business.

• Myth!– There are few government grants

available.• Difficult to get, but not impossible.• Perhaps some for veterans & disabled

veterans.

– Some private sector grants may be possible.

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Reality or Myth #7?

• Starting a small business will let me live the lifestyle of my dreams.

• Perhaps Reality, Perhaps Myth!– It will depend upon what the lifestyle of

your dreams is.– But owning your own business can be

very rewarding financially and emotionally.

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Critical Steps to Jumpstart Your Planning

• Clearly define your business idea• Examine your motives• Be willing to commit to hours needed• Have discipline• Cope with learning & frustrations common to owning a

business• Conduct competitive analysis in your market – products,

services, prices• Be aware of outside influences• Seek help – other businesses, professionals, vendors,

agencies

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Create a Business Plan

• Executive summary• Business description• Market & competition• Products and/or services offered• Marketing & selling plan• Management & personnel• Financial data

– Cash flow analysis– Balance sheets– Income statements (P&L)– Break-even chart

• Investment• Appendices

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So Are You Ready?

• Do you have a product or service• That is needed• That people will pay for• Again and again?

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Guy Kawasaki Method

• Find ONE customer/client• Make an offer they can’t refuse• Modify elements from feedback• Find ONE more customer• Repeat for ten years

Easy, isn’t it?

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$$$$$$$$$$

• It’s all about cash• Do you have it?• How much comes in?• How much goes out?

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The Revenue & Expense Streams …

• Revenue– 0-90 days after the sale– Usually overestimated

• Expenses– 0-120 days before the sale• Start up costs, paying vendors, selling

expenses

– Usually underestimatedYou Need Money to Get Money

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What Will It Take to be Successful?

• Do you have a product or service that is wanted?

• Do you have the right kind of business experience?

• Can you prepare a credible business plan?• Can you take responsibility?• Can you organize yourself and others?• Are you ready to put in the long hours?• Can you stick to it in rough times?

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What Else Will It Take?

• Do you have family support?• Do you have enough resources &

credit?• Is your health up to it?• Do you know your market?• Have you done your research?• Can you create the demand?

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Can You Qualify for a Loan? Lenders Will Ask …

• What kind of business do you plan to start?• Do you have the right kind of business experience?• Is it a new or ongoing business? How long in

business?• How large a loan will you need? How will you spend

it?• Do you have savings/collateral equal to 1/3 of the

loan?• Is your credit good? Bankruptcies? Debts?• Have you made a Business Plan complete with

financial projections? If not, can you do it?• Do you have a realistic idea of expected income vs.

your personal and business expenses?• Can you repay a loan from realistic projected

earnings?

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Possible Funding Sources – Debt Funds

• Your savings, bonds, stocks• Cash value life insurance• Your home equity• Loans from family or friends• Banks, credit unions, finance companies• Credit cards (not a long-term plan)• Customer prepayments• Credit from suppliers• Equipment leases

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Can You Qualify For…?

• SBA loans – guaranteed or direct• Veterans Administration – G.I. loans• Department of Commerce – Export• Department of Energy• Federal Housing Administration

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Possible Funding Sources – Equity Funds

• Family/friends ownership participation• Small Business Investment Companies• Venture capital• Angel investors• Limited partnerships• Sale of stock to public or friends• Crowdfunding

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How Much Money Will You Need?

• Start-up expenses– Legal, accounting, training, …

• Initial capital purchases & improvements– Computers, vehicle, build-out, …

• Ongoing monthly expenses until breakeven is reached– Rent, utilities, salaries, benefits, …

• Personal living expenses – If you have no other income coming in

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Do Your Research & Planning

• Business won’t succeed just because you want it to succeed

• Research your market• Know your competition• Understand important industry data

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Know Yourself & Be Honest with Yourself

• Compare your skills & expertise• Know what particular capabilities made

other companies profitable• Can you duplicate/surpass?• Unique skills or edge that you have• Level of capitalization that you can provide• Technical skills• Energy & passion

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Homework!

Do You Have What It Takes?

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How May We Assist You?

• Palm Beach SCORE has 45+ volunteers available for free one-on-one mentoring– Huge diversity of experience & expertise– Sign up at palmbeach.score.org– In person, phone, email

• Attend other workshops that we offer–Wide variety of topics– Schedule & registration at

palmbeach.score.org

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So You REALLY Want to Start Your OWN Business?

Palm Beach SCORE

500 Australian Avenue South, Suite 115West Palm Beach, FL 33401

Tel: (561) 833-1672Fax: (561) 833-1470