Going into Business: Going into Business: Evaluate Yourself and Evaluate Yourself and Take the First StepsTake the First Steps

Presented By:Presented By:

SCORE-CHICAGOSCORE-CHICAGO

Your presenterYour presenter

Mark LiebermanMark Lieberman

SCORESCORE

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choosechoose

If You Have to Leave Now …If You Have to Leave Now …

4 Links You Should Have4 Links You Should HaveMe:Mark.Lieberman01@gmail.comMe:Mark.Lieberman01@gmail.comMyLinkedin:linkedin.com/in/liebermanmarkMyLinkedin:linkedin.com/in/liebermanmarkSCORE Local: SCORE Local: www.scorechicago.orgSCORE National: www.score.orgSCORE National: www.score.org

Myth #1Myth #1MythMyth: All I need is a good : All I need is a good

idea to be a successful idea to be a successful entrepreneur.entrepreneur.

Reality: A good idea is a Reality: A good idea is a great start, but it takes great start, but it takes hard work, research, hard work, research, and planning and planning plusplus successful successful implementation implementation strategies to turn your strategies to turn your idea into a profitable idea into a profitable enterprise.enterprise.

Myth #2Myth #2MythMyth: If you go out on : If you go out on

your own, you won’t your own, you won’t have to work so hard or have to work so hard or such long hours.such long hours.

Reality: You’ll probably Reality: You’ll probably work harder and longer work harder and longer than you’ve ever than you’ve ever worked before, but worked before, but you’ll enjoy it more. you’ll enjoy it more. Exhaustion fades at the Exhaustion fades at the moment you proudly moment you proudly say, “I did this!”say, “I did this!”

Myth #3Myth #3

MythMyth: You’ll be able to : You’ll be able to deduct everything so you deduct everything so you don’t have to pay taxes.don’t have to pay taxes.

Reality: Taxes are based on Reality: Taxes are based on netnet income, which can be income, which can be lowered by subtracting lowered by subtracting expenses related to the expenses related to the business from business from grossgross income. Strict income. Strict regulations apply, so regulations apply, so keep good records and keep good records and learn how to make the learn how to make the tax system work for you.tax system work for you.

Myth #4Myth #4

MythMyth: If you work : If you work independently, you independently, you won’t have to report to won’t have to report to a boss.a boss.

Reality: You don’t have a Reality: You don’t have a single boss, you have single boss, you have many. These are your many. These are your clients and customers, clients and customers, each of whom have each of whom have specific needs and specific needs and demands. Your demands. Your challenge is to keep all challenge is to keep all of them happy.of them happy.

Myth #5Myth #5

MythMyth: Business owners : Business owners get to do the work they get to do the work they want to do and only want to do and only what they find what they find interesting.interesting.

Reality: Think again. You Reality: Think again. You will have to wear many will have to wear many hats and juggle many hats and juggle many skills, some of which skills, some of which may bore you or be may bore you or be downright challenging. downright challenging.

Choice is yoursChoice is yours

► You can follow your own You can follow your own dream… or work for someone dream… or work for someone who did!who did!

► You can start your business You can start your business and succeed; or… become and succeed; or… become one of the statistics!one of the statistics!

► Choice is yoursChoice is yours► Our advise, take some Our advise, take some

precautions, how? precautions, how? Learn! Learn! Learn all you can.Learn all you can.

What Not To Worry AboutWhat Not To Worry About

►What type of corporation What type of corporation should I have?should I have?

►Do I need an FEIN Do I need an FEIN number?number?

►What if someone steals What if someone steals my idea?my idea?

►Are my expenses tax Are my expenses tax deductible?deductible?

►How do I get a grant?How do I get a grant?►Which logo should I pick?Which logo should I pick?

What to Worry AboutWhat to Worry About

► Figure out what problem you Figure out what problem you are going to solveare going to solve

► Figure out who has that Figure out who has that problemproblem..

2 Things You Need2 Things You Need

How Will You Get These?How Will You Get These?

4 Steps to Those 2 Things4 Steps to Those 2 Things►What’s Your Annual Income Goal?What’s Your Annual Income Goal?

► How Much? ($)How Much? ($)► When?When?

►What’s Your Average Transaction PriceWhat’s Your Average Transaction Price►How Many =Goal / Average Transaction How Many =Goal / Average Transaction

PricePrice►How Will You Achieve “How Many”?How Will You Achieve “How Many”?►Why Would Someone Want to Do Why Would Someone Want to Do

Business With You?Business With You?

S.W.O.T. Analysis gridS.W.O.T. Analysis grid

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

Common mistakes we make Common mistakes we make ……

► Product relatedProduct related We think every one wants it!We think every one wants it!

► Market relatedMarket related We assume there is an We assume there is an

unlimited market!unlimited market!► Capital and cost relatedCapital and cost related

We underestimate cost, over We underestimate cost, over estimate revenueestimate revenue

► Experience relatedExperience related We assumeWe assume experience may experience may

not be necessarynot be necessary► Organizational relatedOrganizational related

No business skillsNo business skills► Legal relatedLegal related

No company structure, ignore No company structure, ignore patents and copyrightspatents and copyrights

Preliminary researchPreliminary research

► Your productYour product• Need for itNeed for it• How much?How much?• Demand profileDemand profile

► Your competitionYour competition• Competitive productsCompetitive products• How do they operate?How do they operate?

► Why your product?Why your product?• Features and benefitsFeatures and benefits

► Barriers to entryBarriers to entry Cost? Competition? Regulations?Cost? Competition? Regulations?

Who are your customers?Who are your customers?

►DemographicsDemographics• Who are they?Who are they?• AgeAge• EducationEducation• IncomeIncome

►GeographicGeographic• Where are they?Where are they?• Where are you?Where are you?• LogisticsLogistics

Develop your ideaDevelop your idea

► Build your business modelBuild your business model• It may be only a conceptIt may be only a concept• It may haphazard at bestIt may haphazard at best• It can be improvedIt can be improved• It is a solutionIt is a solution

► Identify your customersIdentify your customers Target marketTarget market

► Define valueDefine value Cost to your customerCost to your customer Profit to youProfit to you

► Make it available, how?Make it available, how?• ProductionProduction• DistributionDistribution• OrganizationOrganization

Check your financial healthCheck your financial health

► What can you afford?What can you afford?► How are your finances?How are your finances?

Good, bad or ugly? How Good, bad or ugly? How do you know?do you know?

Do you have your Do you have your personal financial personal financial statement?statement?

► Why do you have to Why do you have to maintain your personal maintain your personal financial statement?financial statement?

► How to prepare one?How to prepare one?

Get Some Basic Financial Get Some Basic Financial LiteracyLiteracy

ASSETSASSETS

CashCash $ $ 8,000 8,000

Stocks, Stocks, bondsbonds

45,00045,000

Real estateReal estate 325,000325,000

IRA, 401kIRA, 401k 48,00048,000

AutomobilesAutomobiles 18,00018,000

Life ins, cashLife ins, cash 12,00012,000

MiscellaneouMiscellaneouss

10,00010,000

Total AssetsTotal Assets $466,00$466,0000

LIABILITIESLIABILITIES

Credit cardsCredit cards $ $ 6,3006,300

Personal Personal loansloans

4,5004,500

MortgageMortgage 292,000292,000

Car loansCar loans 14,50014,500

Student Student loansloans

23,00023,000

Total Total liabilitiesliabilities

340,300340,300

Net worthNet worth $ $ 126,00126,00

Total Total Liabilities Liabilities +Net worth+Net worth

$466,00$466,0000

How Much Money Will I How Much Money Will I Need?Need?

► Determine what you need.Determine what you need. Estimate all costs related to your Estimate all costs related to your

start upsstart ups Estimate the operating costsEstimate the operating costs Put them all together as a Put them all together as a

projected cash flow statementprojected cash flow statement► From your personal financial From your personal financial

statement see how much cash statement see how much cash you haveyou have

► What is the difference?What is the difference?► Can you make up the shortage, Can you make up the shortage,

if any?if any?► Now let us estimate the start up Now let us estimate the start up

costs …costs …

Start up costsStart up costs

►How much capacity you How much capacity you need?need? To meet your sales To meet your sales

volumevolume

►How much they cost?How much they cost? FacilitiesFacilities EquipmentEquipment Personnel trainingPersonnel training

►How much you can How much you can afford?afford?

How Much Can I Sell?How Much Can I Sell?

►Market for your Market for your product/serviceproduct/service Do you know the Do you know the

demand?demand?

►What is What is youryour share? share? Very difficult to Very difficult to

estimateestimate

► Realistically, what is Realistically, what is your capability?your capability? Assume it is your Assume it is your

market sharemarket share For next three years?For next three years?

Operating costsOperating costs

►Wages and salariesWages and salaries Don’t forget your salary!Don’t forget your salary!

►Materials and suppliesMaterials and supplies► Sub-contractsSub-contracts

Contract workersContract workers

►UtilitiesUtilities► Interest paymentsInterest payments► InsuranceInsurance► Contingencies, just in Contingencies, just in

case!case!

Cash flow …Cash flow …

► Don’t proceed any further Don’t proceed any further with out this!with out this!

► Project your revenuesProject your revenues Know your price and volumeKnow your price and volume Revenue=Price x VolumeRevenue=Price x Volume

► Compile your start up and Compile your start up and operating costs: this is your operating costs: this is your cash flow statementcash flow statement

► Calculate your profitCalculate your profit Is it positive or negative?Is it positive or negative?

► Add all Add all negativenegative profits – profits – this is your start up costthis is your start up cost

Show me the money!Show me the money!

► How much capital you need? How much capital you need? From your cash flow analysis, From your cash flow analysis,

what you needwhat you need From your personal financial From your personal financial

statement, what you havestatement, what you have Calculate the differenceCalculate the difference

► Can you raise capital?Can you raise capital?► 5-Cs of borrowing5-Cs of borrowing

• CharacterCharacter• CreditCredit• CapitalCapital• CollateralCollateral• ConditionsConditions

Fine-tune your business Fine-tune your business modelmodel

► You have a viable productYou have a viable product► You have a good teamYou have a good team► You know how to raise capitalYou know how to raise capital► You know the marketYou know the market► You know how to make the You know how to make the

product availableproduct available► Your prices are competitive Your prices are competitive ► You have good business skills You have good business skills

to operate your businessto operate your business► You know how to monitor and You know how to monitor and

measuremeasure

Your business plan please!Your business plan please!

►What is it?What is it?►Why it is important?Why it is important?►What does it What does it

include?include?• Executive summaryExecutive summary• Your companyYour company• Marketing planMarketing plan• Financial projectionsFinancial projections• Operating planOperating plan• Risk managementRisk management• AppendixAppendix

Don’t Reinvent the WheelDon’t Reinvent the Wheel

Templates available at Templates available at Score.org/resourcesScore.org/resources

Business Plan for Business Plan for Start-Up BusinessStart-Up Business

Finance TemplatesFinance Templates• Excel Cash Flow, Excel Cash Flow,

P&L, and Balance P&L, and Balance SheetSheet

Sales TemplateSales Template

Follow SCORE’S 21 hour planFollow SCORE’S 21 hour plan

► The current workshopThe current workshop►Marketing and sellingMarketing and selling► Financials and cash Financials and cash

flowflow► Accounting and risk Accounting and risk

managementmanagement► Business planBusiness plan►How to get financingHow to get financing

4 Links You Should Have4 Links You Should HaveMe:Mark.Lieberman01@gmail.comMe:Mark.Lieberman01@gmail.comMyLinkedin:linkedin.com/in/liebermanmarkMyLinkedin:linkedin.com/in/liebermanmarkSCORE Local: SCORE Local: www.scorechicago.orgSCORE National: www.score.orgSCORE National: www.score.org

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