So You Want To Be an Entrepreneur

2. So You Want To Be an Entrepreneur Are You REALLY Ready?

3. So you want to be an Entrepreneur Developed by To provide you a brief overview to help you determine if you want to start your own business

4. ABOUT THIS WORKSHOP Today, we will challenge your thinking about being an entrepreneur. There are critical questions youneed to answer, BEFORE you go into business. Today, our focus is on four key areas, not on the technical aspects of business. SCORE has lots of additional workshops and handouts on those topics that you may wish to investigate.

5. Four Critical Questions Do you have an entrepreneurial personality? Do you have adequate resources to start a business? Do you have a viable business idea? Is your partner/family committed?

6. So you want to be an Entrepreneur Five Steps before opening your doors... Complete a thorough self-assessment Identify your financial resources Define your business objectives Research the market for your “idea” Develop a Business Plan

7. Assessing yourself and your idea 10 Questions to Ask Yourself • What initial steps have you taken • Will you work full time or part time • Who are your partners • What are your assets • What kind of help do you need

8. Assessing yourself and your idea 10 Questions to Ask Yourself • What is your experience in business • What is your market? • Who is your customer • Who is your competition • Can you give a 10 second elevator talk

9. The Entrepreneurial Personality Self-Assessment is Difficult! SCORE 10 for “Absolutely” and a 7 for “Probably” • Are you a self-starter? ___ • Do you enjoy competition? ___ • Do you have will power and self-discipline? ___ • Do you enjoy making decisions? ___ • Are you a good planner? ___ • Do you manage your finances well? ___ • Are you willing to work 12-14 hour days? ___ • Are you physically and emotionally strong? ___ • Is your family supportive of your proposal? ___ • Do you easily interact with other people? ___

10. So you want to be an Entrepreneur DID YOU SCORE A 90ORMORE? 49% work more than 46 hours If so, your decision to Begin Business is off to THE RIGHT START! But, there are more questions! 34% more than 56 hours

11. Homework! More to do and read... Do the Princeton Check List Handout See Feb 2009 WSJ article “So, You Want to Be an Entrepreneur” SBA Readiness Assessment Tool https://eweb1.sba.gov/cams/training/business_primer/assessment.htm Here Here

12. What about Money? Assuming you are comfortable with your answers in the self-assessment . . . The next task IDENTIFY YOUR FINANCIAL RESOURCES

13. Lack of cash leads to disaster CASH TRULY IS KING! • 70% of 1st year business failures caused by poor cash flow. • Majority of small businesses are under capitalized

14. So you want to be an Entrepreneur $ Cash needs before launch $ Average time to Launch ?? 1500 hours 3/4 of a year

15. So you want to be an Entrepreneur Launch Fund • Have a Cash Cushion at Start Up • Six months family living expenses • Six months business expenses This is minimum***12 months better

16. So you want to be an Entrepreneur Fill in the Blanks How much cash and savings do you have? $ --------- What is the value of your real estate? $ --------- Do you have life insurance? If so, what is it’s cash value? $ --------- What is the value of your vehicles? $ --------- How much money do you owe: On accounts? $ --------- On credit cards? $ --------- On real estate loans? $ --------- On taxes? $ --------- To family members? $ --------- Do you have any other liabilities? Amount? $ --------- Prepare a current PFS Know your current credit score

17. So you want to be an Entrepreneur What are Start Up Costs? • Equipment, supplies and inventory • Rent, utilities, licenses, deposits • Insurance premiums and security costs • Promotional costs and office supplies • Professional fees (accountants & lawyers) • Payroll & payroll taxes for the start-up period • Your own compensation (living expenses)

18. So you want to be an Entrepreneur 59% start up $ less than $ 25,000 16% above $ 100,000

19. Create a Business Plan Define your Business Objectives (a new concept, an invention, a better product or more efficient service, that satisfies customer needs or wants) an organized and realistic approach to a new business venture. Answer the following questions: Translate your “idea” into

20. Define Your Business What need or want will your business satisfy? What services or products will you sell? Are you considering a franchising operation? What will make your product or service unique in the marketplace? Is your proposed product or service capable of being priced at least equal to or above the competition? How will you sell your product or service?

21. Structure, Staff, and Resources What will be the legal structure . . Proprietorship, Partnership, Corporation or LLC? How will your business records be maintained? What insurance coverage will you need? How will you hire, train and motivate employees? How will you compensate yourself? What will you name your business and where will it be located? What are the applicable Federal, state and local laws and licensing requirements?

22. Business Forms • Sole Proprietorship • Partnership • Limited Liability Company (LLC) • “C” Corporation (Conventional) • “S” Corporation (Sub-chapter “S”)

23. LLC or Sole Proprietor are common LLC Sole Proprietor • Not difficult or expensive to form • Limited liability protection for owners • Fewer rules and restrictions than corporations • Profits taxed only once at owner’s level • Simple & easy to start • Low start-up expenses • Owner is sole manager • Profits are not shared • Income taxed on owner’s individual return • Unlimited personal risk

24. Is there really a demand for your idea ? Evaluate the MARKET A CRITICAL step in finalizing your decision to begin business is . . . EVALUATING THE MARKET Perform sufficient research to be able to answer the following questions:

25. Evaluating the Market ? Can you make a living ? • Will your business be VIABLE ?? • Big enough idea • Profitable • Survey SurveyMonkey.com • Market Research Leads to Answers

26. Research Questions • Who are your customers, how many are there and where are they located? • Who are your competitors and what are their strengths and weaknesses? • How will you advertise and/or promote your business? • Will you source your product? • How will you deliver your product or service? • Can you price your product/service to make an adequate profit?

27. Research Help Knox County Public Library Catherine Moirai Business Reference Manager cmoirai@knoxlib.org Greater SCORE Web Site Article “Before You Start a Business” http://scoreknox.org/before-you-start-a-business/

28. More Help Library References • Small Business Sourcebookprofiles providing • Start-up information • Associations • Licensinginformation • Reference works • Trade periodicals • Reference USA • Find your competitors • Find your prospective customers • Other Business Books • How to Start a Business. How to Make a Business Plan • Misc InformationDemographic Data, Business Name Research

29. Develop a BUSINESS PLAN Contrary to popular belief, a Business Plan is not only a primary tool with which to seek financing . . . It is YOUR PLAN for the SUCCESSFUL BEGINNING and CONTINUED MANAGING OF YOUR BUSINESS!

30. Business Plan Essential Elements • Company Description • Market Analysis • Price Analysis • Marketing Plan • Sourcing & distribution • Business Team • Funding & Financials

31. So you want to be an Entrepreneur ADVISORS • CPA • Lawyer (business law) • Insurance provider • Mentors

32. A Final Essential Element Family Commitment and Support You are in this together Lack of family commitment is usually fatal Your family is a source of support, advice, and ideas

33. The Next Step is Yours SCORE can help you With most of the ESSENTIALS NO Complete a thorough self-assessment YES Identify your financial resources YES Define your business objectives YES Research the market for your “idea” YES Develop a Business Plan

34. The Next Step is Yours SCORE’s Online Resources http://www.score.org/online_workshops.html Specific workshops on starting, structuring, marketing, growing a business, and managing cash flow, finances, and partners, with featured webinars you can take anytime. A special startup seminar with Steve Forbes! A 2-minute readiness assessment workshop from e-myth Access to SCORE counselors via social media

35. Who is SCORE Counselors to America’s Small Business • History • SCORE Is Part Of The Small Business Administration • Established By Act Of Congress in 1964 • Over 389 Chapters Throughout The United States • Over 10,500 Volunteers Nationwide • SCORE Knoxville Chapter • Provides Service To 18 Counties • 3,000 Counseling Sessions Per Year (#25 out of 389) • www.scoreknox.org Has 16,000 Unique Visitors Per Month • Purpose • To Help Entrepreneurs Start A Business • To Help Small Business Improve Operations

36. Free Services for America’s Small Business Greater Knoxville SCORE provides: • Personal counseling for start ups • Educational Workshops • Personal counseling for existing businesses • Mentoring for owners and managers • Profit improvement program planning • Company guidance for strategic planning

37. Available from SCORE A GUIDE FOR STARTING A BUSINESS IN TENNESSEE A detailed discussion of what’s needed to get started • Entrepreneurship • Pitfalls • Startup Business Plan example • 50+ pages, written by Knoxville SCORE, includes additional materials and financial spreadsheet examples • Order on web at http://scoreknox.org/ebook/

38. 1. KNOW YOURSELF: DO YOU HAVE WHAT IT TAKES TO BECOME AN ENTREPRENEUR? …...Page 4 Entrepreneurship – An Alternate Career Choice …………..………………………………….…….....Page 4 Let the Countdown Begin: A Six-Month Plan for Transitioning from Employee to Entrepreneur….Page 6 Entrepreneur Self Assessment Tests ………………………………………..………………………….Page 7 Princeton Entrepreneurial Evaluation Checklist ……………………………..…………………………Page 8 So, You Want To Be An Entrepreneur ……………………………………..……………….…………..Page 13 2. SEEK PROFESSIONAL HELP BEFORE YOU SCREW UP YOUR NEW BUSINESS! …………..…Page 17 Business Owners Should Take A Lesson From The Pros …………..……….……..………………..Page 17 What Are You Worth? ………………………………………………………………………………….…Page 20 The Seven Pitfalls of Business Failure and How To Avoid Them ..………………..……………..….Page 21 Assessing Your Business Idea ………………………………………..…………………………………Page 24 The 10 Second Elevator Pitch ……………………………………………………………….……..……Page 25 3. I’VE GOT WHAT IT TAKES? NOW IT’S TIME TO DO A BUSINESS PLAN …………………..…….Page 27 Business Plan for A Startup Business ………………………..………….……………..………………Page 27 What Pitfalls Should I Avoid For A Business Plan? …………………………………………….……..Page 43 4. DO I NEED TO SEE A LAWYER TO FORM MY COMPANY? ..………………………………….……..Page 45 Selecting The Legal Structure For Your Business …………………………...………….……………..Page 45 Tab le 1 – Comparison of Legal Structures for a Business ……………………………………………Page 49 5. HELPFUL INFORMATION TOIMPROVE YOUR CHANCES FOR A SUCCESSFUL LAUNCH…..… Page 50 A GUIDE FOR STARTING A BUSINESS IN TENNESSEE TABLE OF CONTENTS

39. Free Services for America’s Small Business For FREE mentoring Register at www.scoreknox.org or Email counseling@scoreknox.org

40. So you want to be an Entrepreneur INFORMATION SOURCES for this presentation • Statistics Data • The Kaufmann Foundation of Entrepreneurship • Funding Data • SBA • Website Data • Gartner Inc.