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?
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?
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
You’re Going to Miss … • Credibility and clout • Contacts and camaraderie • Coffee and gossip • Tech support • Vacation and sick time • Health insurance
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
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
Registration References • United States • http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/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
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.
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!
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.
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.
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.
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
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
So Are You Ready? • Do you have a product or service • That is needed • That people will pay for • Again and again?
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?
$$$$$$$$$$ • It’s all about cash • Do you have it? • How much comes in? • How much goes out?
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 underestimated You Need Money to Get Money
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?
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?
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?
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
Can You Qualify For…? • SBA loans – guaranteed or direct • Veterans Administration – G.I. loans • Department of Commerce – Export • Department of Energy • Federal Housing Administration
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
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
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
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
Homework! Do You Have What It Takes?
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
So You REALLY Want to Start Your OWN Business? Palm Beach SCORE 500 Australian Avenue South, Suite 115West Palm Beach, FL 33401Tel: (561) 833-1672Fax: (561) 833-1470