Small Business Startup, Growth and Development

 

Small Business Startup, Growth and Development

 

Class #2 – Small Business Startup, Growth and Development. Start with a review of day 1.

1.    Motivation – why are you here – what did you hope to accomplish

2.    Mission Statement

a.     the purpose of the company

b.    its relationship with customers, vendors, employees and the community

c.     should define specific product or service offering

d.    who does this go to – customers, vendors, employees, funding sources i.e. bank, VC company

3.    Defining the specific product or service to be sold or marketed

4.    Defining the specific market or customer to be served

a.     specifically the type of company

b.    more specifically the individual to be called on

c.     market segment

d.    identify potential customers

e.     Identify specific individual to call on within the organization.

That was our first class – we will get more in depth on the ways to identify the specific product or service and company individual later in the class.

End of Day 1 review.

Beginning of Day Two

Now we should have identified our motivation, our mission statement, our product and our customer, what is next in the identification process?

1.    Where are we going to get the product or services we intend to offer, identifying potential suppliers or labor force necessary to market our product, we will go in depth on vendor relationships later in the class.

a.     Selling a product

1.         Identifying potential supplier

2.         How do we go about doing this

a.     Industry specific trade magazines

b.    Internet

c.     Vendor Database

d.    Yellow Pages

e.     Word of mouth, personal or professional referrals, drive-by's

b.    Selling a service and need labor – where do you find labor

1.    Advertise

2.    Technical college

3.    referrals, personal or professional

4.    Job fairs

5.    Employment agency or head hunter

So now we are ready to start our business with one exception in most cases we need funding or money, financial banker.

Potential sources of money.

1.    Bank – loan – will need collateral or revolving line of credit

2.    Credit card company – small line

3.    Loan from a friend or secondary income – spouse - Sign a personal guarantee as to repayment – note payable

4.    Venture capital companies

5.    Wealthy relative – donation or gift

6.    Corporation – issuance of stock which could be given to stockholders – what is your company worth when it is first formed?? Probably nothing buyback programs, be specific

Why would someone want to invest in your company – what reasons – business plan? A determination needs to be made as to the amount of money needed to start up a venture; a projection of expenses along with potential cost of goods sold will need to be calculated. Things to keep in mind:

1.    Salaries

2.    Cost of goods sold

3.    Expenses

a.     Rent

b.    Shipping

c.     Insurance

4.    Taxes

5.    Startup costs, assets

Biggest killer of a company – Cash Flow – Key to starting a small company – Cash in – cash out = Net cash available

Accounts Receivable – Accounts Payable. How quickly will cash be coming in, how quickly will cash be going out. How soon until the company is operating on a positive cash flow. Take a sample business – e.g. startup of a small computer company – Decisions need to be made –

1.    Where will the company be located – home or rent, lease

2.    What equipment is necessary just to open the doors

3.    Where will I get my customer and vendor database list

4.    How will I fund my inventory that I will be selling

Next part of day two is discuss the basic in starting up a business – setting up your business – see course outline in syllabus for more details. That should do it for day two, that is definitely enough for 1 hour.

Two other means of money

7.    Factoring companies – factor your accounts receivable

8.    Credit from vendors who supply the equipment. A little more discussion on vendor financing. They may be willing to fund you until you get paid, works similar to a factor. 1. You will have to give up several points of profit, 2. You may have to identify the customer, 3. You should have this put in writing in the form of a contract so that they feel assured of getting paid even though you may not, 4. Advantage, they make more money, they carry a bit more risk.

9.    Brokering deals – you simply are the middle man, you put buyers and sellers together and collect a fee, an example of this is a personnel company or a computer company. An agreement is reached between either the buyer or seller and maybe both for a specific fee for the transaction; definitely make sure you get this in writing.

That is 9 different ways to fund a business actually there is a tenth way.

10. No money needed to start up your business, only labor and you bill out your labor or I guess there is one more and that is

11. Contract, you perform a service or sell a product based upon a contract where you get the money in various stages of completion. Example 1. Building a house, sports court 2. Selling computer equipment 50% / 50%. Other examples? The key to this is to get money in advance of the work to be performed. You may charge the customer

a.     cash in advance

b.    cash on delivery

c.     partial payments – contract specific

All these methods should be put in writing.

 

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Small business Administration Startup, Growth and Development

Day #3 – review day #2 – the last thing we went over was funding or financing. We covered 1. Bank, 2. Credit card companies, 3. Loans from friends, 4. Venture capital companies, 5. Factoring companies. Still left to cover.

1.    Gift from a personal friend, relative or acquaintance.

2.    Corporation issuance of stock.

3.    Credit from vendors who supply the equipment

4.    Brokering deals

5.    No money needed

6.    Contract

Actually I want to start preparing for day 4. Day three would go over the rest of the 1. Methods of funding, 2. Determination or projection of the amount of money needed which would lead into a discussion of 3. Cash flow, 4. Decisions that need to be made about the company, 5. Setting up the corporation from a bookkeeping, tax, city, state ID sense, etc. After all that is done the next step in the process is to discuss various methods of marketing your business or service.

1.    Basic marketing materials

a.     Introductory letter to clients covering

1.    Who you are

2.    who is your company

3.    what product or service you offer

4.    a few benefit statements regarding dealing with you and your company

5.    a summary statement

This letter would go out to customers as an introductory letter.

b.    Introductory sheet describing the products and services you offer with or without a price list and/or a benefits statement – more of a blanket this is what we do in detail.

c.     Some type of folder to put your letter and product and services brochure in.

d.    Follow up letters for example

1.    thank you for your time

2.    thank you for your review of my material

3.    Thank you for allowing me to bid etc. - form letters you can crank out quickly.

Methods of marketing

1.    Telephone – telemarketing

a.     need database of customers, phone numbers, company or individual name if you can get fax number, email address, address, brief description of company – you may buy list from database companies

b.    direct mail piece

c.     door to door sales

d.    yellow page ads

e.     classified ads or newspaper ads, magazine ads, specific trade journals

f.     internet web site

g.    email, mass email, specific email, get everyone's email address

h.    word of mouth

i.      flyers, posters, things posted on bulletin boards at various locations

j.      referrals / kickbacks / incentives

k.    trade shows, trade fairs

l.      drive by

m.  Bill boards, signs on freeway exits, etc.

Need to talk about the advantages and disadvantages of each of these forms of marketing.

2.    Contacting the customer what is the most cost effective means of contacting the customer. Every form of marketing has some type of cost associated with it, what makes the most sense for your business.

Making the sale

1.    How do we set the price of the product or service we are going to offer?

a.     Product – COGS + Expenses + Profit % = Price of the product Service – Cost of Labor + Expenses + Profit % = Price of Labor

b.    Very important to take into account all expenses which could be associated with this sale. You may want to come up with an overhead charge to tack onto the price of the product.

c.     Competition – law of supply and demand discussed.

2.    Customer finally says yes

a.     Do we use a contract

b.    Bill of Sale

c.     Invoice

d.    Is it a cash sale, C.O.D. credit card, cash in advance, contract sale, invoice sale, bill of sale

e.     Have to set up the appropriate accounting entry

f.     When do we invoice – after the goods are shipped or upon delivery

g.    How about labor, do we bill per job, by contract, partial payments, deposits, monthly, weekly, biweekly, then terms need to be discussed.

Key points to remember when making a sale.

1.    Terms

2.    Type of accounting

3.    Do we require a purchase or sale agreement, a purchase order from customer?

Inventory

What do we need to keep track of.

1.    When you buy inventory you should always issue a purchase order for the equipment which shows

a.     vendor

b.    date

c.     P.O. #

d.    Terms

e.     Freight method

f.     Quantity

g.    Description

h.    Unit price

i.      Extended price

This gives you an accounting of what you have purchased.

2.    When the equipment arrives you need to check the receipt of the equipment against the P.O. you may want a P.O. receiving document. Make sure to check for damage and report any damage immediately to the freight company or the vendor, also report missing items or incorrect items – immediately.

3.    Once inventory is inspected and determined to be good it should be warehoused. Talk about warehousing

a.     shelving

b.    Supplies – boxes, tape, tools, benches, shipping forms etc.

c.     incoming receiving area

d.    outgoing area

e.     work benches

Need to keep a running log of all incoming and outgoing inventory. I could discuss what type of information you would need to keep track of. Such as date purchased, vendor, P.O. #, quantity, price, date received, serial number, job #, etc.

 

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It is another beautiful day on our Heavenly Father's green earth. I am alive and well and not thinking about writing. It is around 7:00 p.m. and I just got done watching the Mariners game. I quite enjoyed the game. It has been a busy day. I finished teaching my third out of six classes for my small business administration class. They want me to make up questions relating to the class so here I go.

 

1.    Explain the law of supply and demand.

2.    Describe what a mission statement is and who would use it.

3.    Name 5 sources of funding for a new company.

4.    When starting a business what is the first decision one must make.

5.    Define cash flow, and why is it so important.

6.    Name three places we could go to identify potential suppliers or product we could use to purchase product that we could market.

7.    Name three places we could go to identify potential sources of labor we could hire.

8.    When deciding how much money we need to start up our company name four important criteria to consider.

9.    What does factoring mean?

10. Name five different methods of marketing your product or service.

11. How do you determine the price of the product or labor you are going to market.

12. Name four different types of terms you may offer a client when making a sale.

13. Name five things you need to keep track of when accounting for inventory.

14. What is the key benefit of setting up your company as a corporation.

15. Name two types of basic marketing materials you will need to send out to customers.

 

That is enough questions for now.

 

My boss told me I had to give a short quiz on the last day, something in the neighborhood of 10 to 15 questions.

 

I have been thinking lately that my mind has shut down as it relates to writing. Not too long ago I was in a good groove. My mind was very clear, I was spending a great deal of time reading the bible and even my focus on reading the bible was very clear. I am now reading the New Testament for the sixth time and I may start to experience some boredom. My level of interest is certainly not as high as it has been and my mind doesn’t seem to be as sharp. It also seems as though I don’t get to my writing until evening and my scripture reading as well. It appears that I am not quite as focused in the evening as I am first thing in the morning.

 

Oh well. I thank you Lord just the same. I want to thank you for this wonderful day, and for my health. I love you my Lord Jesus Christ. Praise to you Lord Jesus Christ. It is another wonderful day and I am very happy to be alive.

 

Amen.

 

More to follow……

 

Purchasing the product or service.

1.    Need to select a group of vendors to work with.

2.    Need to establish credit terms and conditions.

3.    Need to determine the price of the product, be sure to always ask for discounts.

4.    Need to determine product availability, freight cost, freight carrier, insurance, length of time from vendor to you.

5.    Need to establish the method of conducting business.

a.     Purchase orders, purchase contract

b.    Fax, email, verbal, mail

6.    Need to set up a vendor file, one file per vendor.

Hiring contractors to perform service / labor.

1.    Where do you find them?

2.    What will you pay them? Hour, contract, job

3.    How long will you need them?

4.    When will you need them, where will you need them,

Now we have made a sale to a customer and we have purchased a product from a vendor. As I said before it is important to keep a ledger or log of all your transactions so as to account for them at the end of a tax season. This transaction capturing process is an absolute must for anyone who wants to properly account for every penny of their business. Done – 1. setting up your office, warehouse, determining your needs and requirements, 2. law of supply and demand.

Marketing 101 – How do we contact our customers – what makes the most sense financially, what is the most cost effective? This will be different for every business.

Management 101 – Customer, employee, and vendor relationships, see sheet already created. That is about it for this 6 week course, some of this I am going to do on the fly. I only have about 1 1/2 more hours of material to present. I will be giving a test which should take anywhere from 15-20 minutes.

 

I want to thank you Lord for being with me on this experience. I could not have done it without you, I give you the honor and the glory, I take no pride, no ownership of the material. I know that I am on this earth because you brought me to earth and you allow me to stay on this earth. Thank you for my health both physically and my attitude. I remain strong and happy. I need to stop writing, my hand is hurting and my thoughts have stopped.

 

 

Sponsorship, what types of programs do you need – use your computer, telemarketing and use of the phone, use of the fax machine.

·      What types of programs do you need on your computer GL, AP, AR, PR, JC, SOE, INO, PO, you will also need a database systems to keep track of clients like ACT! or Telemagic. You will also need an email program, word processing, spreadsheet and any other pertinent database required by your business. You will also need to be able to connect to the Internet.

·      How do you use a fax machine. We use a fax machine for incoming and outgoing orders, contracts and correspondence. If you are going to send something of value print out the extra sheet which tells that the communication was complete.

·      Databases – it will be important to purchase a database of some sort. A database of clients is the lifeblood of your business. You want to capture as much information about the client as possible. That is why you see fish bowls at the checkout counter of restaurants for business cards. Every time anyone transacts business with you try to get from them pertinent information including email addressed so that you can contact them. What are some ways we can get this information? 1. specials, 2. fish bowls, 3. coupons, 4. purchase SIC codes for individuals or companies, 5. capture phone call information every time someone calls in, 6. tradeshows, 7. sign in book at door, 8. register for giveaway, 9. that's it. It is important to continue to build your customer database and have it readily accessible when you need it.

·      Telemarketing and use of the phone – you have about 5 seconds to introduce yourself before you let the other person respond to a question you pose. Remember to ask open ended questions that elicit positive responses. What information do we want to get across 1. name, 2. company, 3. brief description of company, 4. purpose of call, 5. opening question. Try to keep it light and offer them very quickly on the call a reason why they should stay on the call. Give some examples when telemarketing remember to 1. call people by their name, 2. use inflection in your voice, 3. say their name excitedly, 4. slow down, 5. speak clearly, 6. keep the initial calls short and to the point, 7. close, close, close, 8. assume they know who you are, 9. referrals are the best intro, 10. be polite, courteous and ask them if this is an appropriate time to talk, 11. listen for hesitations, 12. name drop if you feel it will be of benefit. People want to deal with people who know what they are talking about and who seem excited about their product or service. We all want to deal with people we feel we can trust and whom we perceive to be more knowledgeable on a specific subject than ourselves.

Day 5 – Review various methods of marketing then go over the section on 1. making the sale, 2. customer finally says yes and finally keeping track of inventory, 3. computer programs, 4. fax machine, 5. databases, 6. telemarketing. That should be enough for today.

 

I have one class to go and I am through teaching the subjects I set out to teach. I have about 1/2 hour left to fill and then I will give them my test which they will need to complete. I will give them 30 minutes to complete. This has been a good teaching experience. I have gone through a tremendous amount of material in 5 hours. Hopefully someone found some benefit out of my class. The last section I want to teach before they begin the test:

 

*Management 101 - * 1. Dealing with customers. Issues to consider a. customer support, presale, sale and post sale support issues – b. product returns – return policies need to be put in place and clearly identified to the customer so that there can be no confusion, c. engineering and or technical support – from within the company or contracted or referred out to another vendor, d. accounting handling billing questions, e. sales support – presale, sale and post sale support, f. where is my equipment, when did it ship, did you sign the contract, customer, you send me the wrong equipment, the equipment does not work, it arrived late. Have the class come up with several other complaint type issues. 2. Dealing with vendors – issues to consider a. product returns, missing product, incomplete product, wrong product, product failure – MRA, b. credit issues against billing, against freight charges, c. who initiates the return freight, who pays for it, who pays for the first freight, how does that get credited, who is responsible for contacting the vendor, when do they contact them – have a time line, let’s say three days after receipt, how will you contact them, vendor return form, telephone, fax, email, remember to let accounting know that they should not schedule payment of the invoice. D. drop ships, make sure the paper work appears as though the equipment came from you, fax a copy of packing slip with your company information to include with shipment, get shipping detail information from vendor, when was it shipped, what was the serial #, how many were shipped, how was it shipped, by whom, what is the tracking # or bill of lading #. Get as much information as possible. Get customers billing # (e.g. FedEx account #) to bill against if possible. Make sure if the vendor who ships the product invoices you for freight, you get a copy of the freight bill. Don't let them bill you without a freight bill. Dealing with employees 1. employee handbook, 2. employee agreement or non-compete agreement for salesmen, non-confidentiality agreement for non sales related jobs, 3. benefits – do you offer them medical, dental, vision, 401K, profit sharing, tuition reimbursement, bereavement, paid vacation, paid sick days. Question for the class. What other benefits should you offer, could you offer, do you need to offer to stay competitive? This will be unique and different for each industry and company. What benefits do you offer hourly help, full time help, part time help, contractors ç none – remember to 1099 them at the end of the year or you may be held responsible for payment of their taxes. You need to do this by the end of February, W2 forms for employees need to be to them by the end of January. 4. payroll, how often, weekly, semi-monthly, monthly, by contract. 5. how will you accrue vacation and sick days e.g. 10 vacation days accrue at .833 days per month, 5 sick days accrue at .4 days per month. Make sure people understand how sick and vacation days are calculated. 6. commissions – put everything in writing. Biggest headache for employers because every situation can be unique and different. How do you pay commissions, will vary by industry. If you are going to pay any kind of incentive, bonus, commission, spiff of any kind, put it in writing and have both parties sign off on their understanding. 7. make sure you have people fill out an application, it is a form of insurance, first you will have all their pertinent information, you can use it to fire someone if they are lying, 8. it doesn’t hurt to schedule yearly reviews with your employees to discuss their progress.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small business startup, growth and development

 

Class #1 – class will be between 1-1.25 hours in length.

 

-       Have students write an abstract so as to help them understand their motivation behind their desire to start a company.

-       State the purpose of the class – to help people understand and develop a startup strategy for whatever line of business they are in.

 

You basically can supply one of two types of products in order to generate revenue

 

1.    product which would include all kinds of hard goods, anything that you would need to inventory or pass through inventory

2.    Services – including anything surrounding labor, such as consulting, programming, lawn service, rug cleaning etc.

 

Motive – something, as a reason or desire, acting as a spur to action.

 

Purpose – an intended or desired result, goal. Determination, resolve.

 

2.    So the first thing I do is explain the purpose of the class.

3.    Explain to them the purpose of motivation, what is it and why is it important to have a motive behind why they are planning to start a new business, have them write out what motivates them for starting their new business. – Have people give examples; write them on the white board.

4.    Prior to that we want people to introduce themselves and share what type of business they would like to start – write these on the white board and put them either in the category of product or service.

5.    Discuss what a mission statement is, read my mission statement, discuss the elements of a mission statement and why having a mission statement is important. Mission – an assignment to be carried out. Statement – the act of stating or declaring. Something stated or declared. Need to help them write a mission statement.

6.    Defining a target product or service. What are you going to sell? Products – hard goods or service. Have the class discuss this; they should have an idea what they are going to sell since we asked them to provide this in the opening.

7.    Define the target market – who are our customers, where will you find them, how will you contact them. We should write down on the chalk board each of these three categories so that people can get ideas from one another.

That should finish day 1.

 

Day 2 then would include:

 

0.    A review of day 1.

 

1.    Define supply chain – where are we going to get the products or services we are going to market – again put this information down on the white board. – How do we select vendors that we are going to be dealing with? Where are we going to find the labor? How do we go about selecting and setting up the vendor relationships. How do we go about finding the labor we need?

 

2.    Setting up a business – see other sheet.

 

That should be it for day 2, the key to this is to have people openly discuss their ideas and experiences. I might also start at the beginning of the class to ask people what they expect to get out of the class. That way I will know what I need to focus on.

 

Heavenly Father I pray that you will be with me every step of the way as I teach this class. I pray that my words are your words. I have not taught a class like this before so it will be very good experience for me. I will get some experience standing up in front of a class teaching my material, from my thoughts and my experiences. I should also ask if anyone has had an experience starting up a small business and then ask if they would like to share that experience with the class. It is now Sunday early afternoon, I have written four letters today, read my scriptures, watched the Mariners and wrote in my journal

 

Praise to you Lord Jesus Christ, I love you Lord. Thank you for my life. I give you all the praise, honor and glory. I commit to loving you and to loving my neighbor as myself. I commit to pray continuously, finding joy in everything, and being content in every circumstance.