William Paterson University Small Business Development Center

Transcription

1 COMMUNITY TECHNOLOGY CENTER PASSAIC COUNTY COMMUNITY COLLEGE Work Al. Izzi / 131 Ellison Street / Paterson / / BUSINESS START UP Pages: 32 William Paterson University Small Business Development Center Business Basics 2008 Business Basics Al. Izzi Page1 of 32

2 Business Basics SBDC-? SBDC Network Our Role in Small Business Counseling/Education William Paterson University Rutgers SBDC SBA Lending Institutions Business Basics Page 2 of 32

3 Purpose of Tonight s Session Understand the preparation process to start a small business The assessment process required to start your own business Starting a Business (Business Entities, etc.) What do lenders (Banks, Venture Capitalists, Angels, Family, etc.) look for? Business Plan Overview Key Websites Business Basics Page 3 of 32

4 Small Business Facts About 30% of the companies in the US have 19 employees or less Economy growth is and will continue to grow and come from Small Business Approximately 20 million people are running home businesses (Zoning) Every year over three million people start a new business Bad News- Small Business Failure Rate First year..40% Fifth year % Business Basics Page 4 of 32

5 Why do Businesses Fail? No Business Plan No Board of Advisors Insufficient Working Capital No Exit Strategy Personality Conflict Time Management Business Basics Page 5 of 32

6 Bad Reasons to Start a Business Don t want to work hard Hate your boss Spend more time with your kids Want to do something different Fear of being laid off from your job Get rich fast and retire Business Basics Page 6 of 32

7 Why Start a Business? You identify a need in the marketplace You identify a means and a way to capitalize on your skills You are in a unique position to do something You are ready to commit your time, energy and passion Business Basics Page 7 of 32

8 Vision/Goals How much money are you earning? What kind of lifestyle are you and your family enjoying? How big is your business? How does the business reflect you and your values? Imagine your customers. What are they like? How many? Where is your business located? What do the premises look like? What are you doing in business? Do you like it? Business Basics Page 8 of 32

9 Small Business Owner Responsibilities Owner/CEO Human Resources Manager Finance/Accounting Manager Product/Service Manager Marketing Manager Sales Manager Operations Manager Business Basics Page 9 of 32

10 Assessment Process Personal Business Assessment Market Business Basics Page 10 of 32

11 Personal Assessment Income expectations Credit (Credit Report), Collateral Hours Support Level Commitment to family, community, personal activities Can I afford the personal financial risk? How much money can I invest? Can(and should) I attract other investors What do I do well and what do I like to do? What would I like to be doing five years from now? Exit Strategy? Business Basics Page 11 of 32

12 Experian Trans Union Corp Equifax Credit Bureaus Business Basics Page 12 of 32

13 Business Assessment Does my business idea excite me? Do I have business experience in this business? Have I researched my idea? Do I have business experience in a related field? Is the product or service well-defined and well-focused? Business Basics Page13 of 32

14 Market Assessment Who will my customers be? Do I know how to reach the Market? What s happening in the Industry? What are the trends and outlook for my industry? Is the idea: Simple? Personalized? Customized? Or Specialized? Will I have a competitive edge when I am in the market? My competitors? Business Basics Page14 of 32

15 Starting a Business Administration Registering Business Tax ID Bank Account Federal/State Tax Insurance Accountant Attorney Personal Credit Check up Operations Research Space/Zoning Start Up Cost Working Capital Product/Service Management Team Business Network Business Plan Obtain Financing Business Basics Page15 of 32

16 Factors in Choosing the Type of Business Entity Your need for capital Your type of business Your ability to finance your business Number of people involved in the business The liability and risks you are willing to assume Your personal tax situation Your plan for taking money out of the business Your plan for continuing the business if something happens Your long-range business plan Business Basics Page16 of 32

17 Sole Proprietorship Advantages Ease of Formation Least Expensive Fewer Records Taxed as Individual Total Control Disadvantages Unlimited Liability Less Available Funds Limited Growth Potential Heavy Responsibility Business Basics Page17 of 32

18 Ease of formation Partnership Advantages Shared Responsibility Increased growth Potential Ease of Operation and less Government Control Business Basics Page18 of 32

19 Partnership Disadvantages Unlimited Personal Liability Lack of Continuity Difficult to obtain large sums of Capital Difficult to dispose of Partnership Interest Distribution of Responsibility in Bankruptcy Partner s Responsibility Profits Business Basics Page19 of 32

20 Corporation Advantages Ownership is transferable Increased options for growth and fundraising The corporation is a separate legal entity Authority can be delegated Business Basics Page20 of 32

21 Corporation Disadvantages Extensive Government Regulations Expensive to Form and Maintain Increase Tax Load Business Basics Page21 of 32

22 Limited Liability Company Advantages More liberal loss deductions More stock options Less restrictions on participation Business Basics Page22 of 32

23 Limited Liability Company Disadvantages Difficulty in expansion of business out of state. Transferability restriction test Lack of uniform code Restriction on type of business Business Basics Page23 of 32

24 S Corporation No double taxes 75 or fewer shareholders All shareholder consent to S corporation election Only one class of outstanding stock There are no non-resident shareholders Business Basics Page24 of 32

25 Choosing the Right Source for Financing Bank Loans.Personal, Business, Home Equity SBA Guarantee Program City/Town Loan Sponsored Programs.Economic Development, Community Development Venture Capital, Angels Small Business Investment Corps (SBIC s) Family, Friends and Personal Savings Credit Cards Barter Suppliers, Customers Grants Existing Businesses Business Basics Page25 of 32

26 What do Lenders Look For? Character Your Background Credit History (Credit Report) Tax Returns(Earnings History) Collateral Business Plan Lending Climate (Economic, Local) Business Basics Page26 of 32

27 Business Plan Overview Executive Summary Organization Marketing Financial Additional Info Business Basics Page27 of 32

28 Business Plan Considerations Assumptions (Pricing/Costs Written documents support Financials No set number of pages Have it reviewed by a credible resource Executive Summary Your commercial Supporting Documents Business Basics Page28 of 32

29 Review Assessment Process Personal Financial Check up Steps to Starting a Business Business Plan Select Multiple Lenders Go for It!!!!!!!!! Business Basics Page29 of 32

30 Internet Resources SBDC S (njsbdc.com) State of New Jersey (nj.gov/njbiz) SBA (sba.gov) IRS (irs.gov) Export/ import (customs.gov) SBE Certification (njsbdc.com/sbe Business Filing Services (bizfilings.com or mycorporation.com) Franchise (entrepreneur.com or bison.com Business Basics Page30 of 32

31 Websites Myfico.com Americanfactfinder.com Business Basics Page31 of 32

32 Upcoming Seminars Call our for a Complete schedule and to Register Business Basics Page32 of 32