www.centerURL.com

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Alice: Would you tell me, please, which way I ought to go from here?

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• The Cat: That depends a good deal on where you want to get to

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• Alice: I don't much care where.

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• The Cat: Then it doesn't much matter which way you go.

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Business Bootcamp

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Business Bootcamp

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Business Bootcamp

Small Business Development Center

Hosted by Santa Monica College

www.smcsbdc.org

310-434-3566

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Agenda• 9am – 10am START

Permits, Licenses, employees, Banking and Business Entities.

• 10am – 11am FUNDSBA Loans and Financing

• 11am – 11:15am BREAK

• 11:30am – 12:30pm GROWMarketing, Networking & sales

• 12:30pm-1:00pm ANSWERS

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START

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Permitting

• Business or Hobby• DBA• City Business License• Home Occupancy • Sellers Permit• EDD Registration• FEIN• Industry Specific Permits

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Banking

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Bank Accounts

1 to 31

BusinessPersonal

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INFLOWS

BusinessPersonal

DEPOSITSCREDITS

INTEREST

EXPENSESFEESDRAW

OUTFLOWS

TRANSFERS

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INFLOWS

W2 PayGifts

Business1 to 31

Personal

DEPOSITS=

INCOME

DEBITS=

EXPENSES

OUTFLOWS

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Draw

Business1 to 31

Personal

Investment

TRANSFER

T

RANSFERIN

OUT

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Employees W2 or 1099• Primary test: Do you control the manner

or means by which the work is performed?

• Secondary test: The 14-point balancing

test.

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Employees

• 1. Do you tell the person how to do their job or can they do it their own way?

• •2. Can the worker quit or be fired at any time?• •3. Is the work they do part of your regular

business (e.g. selling shoes in a shoestore)?• 4. Does the worker have a separate business

doing the same work for others or his/her own employees?

• •5. Can the worker lose money on the job? • •6. Has the worker provided the tools for the job?• •7. Has the worker provided the raw materials

needed for the job?

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Employees• 8.Do you provide the workplace where the job is

done?• 9. Is the worker skilled (e.g. machinist or

accountant) or unskilled (e.g. laborer)?• 10. Do you provide training for the worker that is

required to do the job?• 11. Is the worker paid a fixed salary, an hourly

wage or a fixed price based on the job?• 12. Has the worker previously performed the

same function for you as an employee?• 13. Does the worker believe s/he is an employee?• 14.Do you have employees who do the same

work as the worker?

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Employees

• 1099 W9 Due Jan 31st• W2 W4• Workers Comp• Register with State• FEIN• Payroll taxes

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Entities

Default

One Person

Married Couple

Unlimited LiabilityPass

through taxes

Default

One Person

Married Couple

Unlimited LiabilityPass

through taxes

State Controlled

100 Owners

Liability Limited

Pass through taxes

G.P.S.P. LLC S-Corp C-Corp

State Controlled

Unlimited Owners

Liability Limited

Pass through taxes

State Controlled

Unlimited Owners

Liability Limited

Double Taxation

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Types of entities

• Sole Proprietorship ;• Partnership (General and Limited);• Corporations (“C” and “S” types); and• Limited Liability Company (LLC).

22

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Sole proprietorship• a. Default entity;• b. One person or husband and

wife;• c. no formalities;• d. unlimited liability;• e. pass through entity for tax

purposes;• f. pay taxes on your tax return at

your tax rate;• g. you die, it dies

23

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General partnership

• a. default entity;• b. unlimited number of people;• c. no formalities;• d. unlimited liability;• e. pass through entity for tax purposes;• f. information only tax return/forms (Form

1065 (tax return) and K-1(share of $));• g. pay taxes on your tax return at your tax

rate.

24

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Limited partnership

• a. formalities required (register with the state);

• b. unlimited number of people;• c. limited liability for limited

partners;• d. unlimited for general partners;• e. pass through entity for tax

purposes.

25

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“C” Corporation

• a. formalities required;• b. unlimited number of owners;• c. limited liability for all;• d. files a tax return and pays fed.

and state taxes on $ left in;• d. double taxation of $ paid to

shareholders (v. employees).

26

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“S” Corporation

• a. formalities required ;• b. limited number and type of

shareholder(100; green card holders or citizens);

• c. limited liability for all;• d. pass through entity (if elect to be

a partnership);• e. file tax return (Form 1120S) and

K-1 to shareholders;

27

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Limited Liability Company (LLC)• GOOD• a. unlimited number of owners;• b. non-citizen owners ok;• c. limited liability for all;• d. pass through entity (if elect to tax as

partnership v. corp.);• e. no separate tax return;

28

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Limited Liability Company (LLC), continued• NOT SO GOOD• 1. formalities required;• 2. limited tax on gross income on

Ca. tax return.• 3. newest form of entity • 1) California - 1994;• 2) least amount of law

on how it operates.

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Limited liability partnership (LLP)• a. formalities required (e.g. control

group; creation costs, etc.);• b. for licensed professionals;• c. lawyer requirement: $1,000,000

or more in professional liability insurance;

• d. pass through entity.

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Possible reference book

• Still have tax questions on which corporate form to choose or how to handle taxes as a small business?

• Tax Savvy for Small Business by Frederick Daily, 11th Edition, Nolo Press; 2007;

• This book is a useful reference.

31

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Possible alternative to a corporate form–Insurance• Commercial General Liability insurance: • 1. If sued, it generally pays the lawyer

and the judgment; • 2. Covers more than one business, you

and your property;• 3. Might be faster to get;• 4. Comparative cost to forming and

maintaining a corp. or LLC (generally).

32

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Other corporate formation issues– CA v. Other states• 1. Nevada Corp./LLC – • A. No income tax for Nevada

business income;• B. Lower incorporation fees; • C. What if you live in California, do

business in California, but register in Nevada?

• 2. Delaware Corp./LLC –• A. More favorable laws;• B. Lower incorporation fees.

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FUND

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McAuther Jeffrey-Francis

• Jeffrey-francis_mcau@smc.edu

• Phone: 310-434-3566• Fax: 310-434-3891• Mobile: 818-919-9664

www.smcsbdc.org

SBA Presentation

• The biggest challenges in starting and growing your business are: .

• No Money • No Collateral • No relevant experience

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Express Capital Loan Program

• $5,000 to $50,000 • Loan is fully amortized with no access fees per transactions • Automated process provides fast turn-around time

7 year term – Fully Amortized

Collateral may not be required

Variable Interest Rate based on Wall Street Journal Prime, adjusted calendar quarterly:

• Loans of $ 5,000 - $25,000 at Prime + 4.75% • Loans of $26,000 - $50,000 at Prime + 3.75% • Loans over $50,000 between Prime + 2.25% and +

2.75% depending upon term of loan

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Express Capital Loan Program

• $525 packaging fee – deducted from loan proceeds.

• SBA Guaranty fee of 2% of the guaranteed portion (85%) of the loan will be deducted from the loan proceeds

• Loan payments automatically drafted from the business checking account at your established financial institution

• No prepayment penalty – 21 day payoff notification required

• Technical Assistance Included – borrowers receive pre-and post loan closing management and technical assistance

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SBA 7(a) Loan Program

Inventory and Working Capital financing • SBA 7(a) Loan Features:• Size of Loans:

$100,000 to $2 Million

• Terms of Loans: • Real Estate - up to 25 years, fully amortizing • Business Acquisition – up to 10 years, fully

amortizing • Debt Refinance – 7 to 25 years fully amortizing

depending on the use of loan proceeds • Equipment, Inventory and Working Capital – 7 to 10

years fully amortizing

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SBA 7 (a) loan program

• Real Estate financing for acquisition, refinance, construction, improvements for owner occupied properties

• Business Acquisition financing • Business Start-Up financing • Equipment, Inventory and Working Capital financing • SBA 7(a) Loan Features:• Size of Loans: $100,000 to $2 Million • Terms of Loans:

Real Estate - up to 25 years, fully amortizing

Business Acquisition – up to 10 years, fully amortizing

Debt Refinance – 7 to 25 years fully amortizing depending on the use of loan proceeds

Equipment, Inventory and Working Capital – 7 to 10 years fully amortizing

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SBA 7(a) Loan Program

• Loan Advance Rates:

Real Estate – up to 90%

Business acquisition – up to 85%

Debt Refinance – up to 100%

Equipment, Inventory and Working Capital – up to 100% • Loan Costs:

SBA guaranty fees range from 2% to 3.75% depending on size of loan

Additional fees for loan packaging, appraisal, environmental, title/escrow, construction, etc.

• Loan Turnaround Times:

10 business days for Bank loan approval upon receipt of complete loan application package

30 to 60 business days for initial funding from receipt of complete loan application package

•  

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SBA Presentation

• What is a small business?• What is an SBA Loan?• For what purposes may an SBA

loan be used?• What purposes are ineligible? • Benefits to the borrower• Terms • Fees • Interest rates • 5 C’s of Credit

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What is a small business?

A small business is one that is:

• Independently owned and operated for profit• Not dominant in its field• Meets employment or sales standards developed by the SBA

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What is a small business?

• The maximum general size standards for a few major industry types are as follows:

• Manufacturing - varies by industry from 500-1500 employees

• Wholesaling - up to 100 employees

• Services - up to $14.5 million in annual receipts, depending on the type of business

• Retailing - up to $13.5 million in annual receipts, depending on the type of business

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What is a small business ?

• The maximum tangible net worth of the applicant is not more than $15,000,000

• The average net income after Federal

income taxes (excluding any carry-over losses) of the applicant for the 2 full fiscal years before the date of the application is not more than $5,000,000

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What is an SBA Loan?

• A loan issued by a commercial bank or other financial institution and guaranteed by the federal government.

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For What Purpose May an SBA Loan Be Used?

• SBA Real Estate Loans• SBA Non-Real Estate Loans • Real Estate Loans can be amortized up to

25 years • Heavy Equipment and Machinery Loans

can be amortized up to 15 years • SBA Business Loans can be amortized up

to 10 years

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SBA Real Estate Loans

• The borrower/buyer must be an owner-user occupying a minimum of:

• 51% of an existing structure• 60% of newly constructed buildings

• Maximum Loan-to-Value

• 90% for real estate

• 70% for businesses

 

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SBA Loan Program

Qualified properties include:

• Franchise specialty buildings LTV up to 85%

• Free standing industrial & commercial buildings 90%

• Gas Stations LTV up to 85% • Hotels & Motels LTV up to 85% • Office, medical and industrial

condominiums 90% • Restaurants LTV up to 85%• Warehouses LTV up to 90%

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SBA Non-Real Estate Loans

• Proceeds used for:• Inventory• Equipment• Business acquisition• 100% debt refinancing• Working capital• Furniture & fixtures • Tenants Improvements • Expansion  

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Ineligible Use of Proceeds

• To refinance existing debt where the lender is in a position to sustain a loss and the SBA would take over that loss through refinancing

• To effect a partial change of business ownership or a change that will not benefit the business

• To permit the reimbursement of funds owed to any owner.

• To repay delinquent state or federal withholding taxes or other funds that should be held in trust or escrow

• For a non-sound business purpose.

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Ineligible Businesses

• Real Estate Investment

• Other Speculative Activities

• Lending Activities

• Pyramid Sales Plans

• Illegal Activities

• Gambling Activities

• Charitable, Religious, or Other Non-Profit

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Benefits to Borrowers

• Longer Terms Business loans up to 10 years with 30%

injection in the business Real Estate loans up to 25 years

• No balloon payments on SBA business loans • Limited prepayment penalty on real estate 5%

the first year, 3% the second year, and 1% the third year

• Low down payments on real estate transaction 10 to15% down payment on real estate

transactions

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Terms

Use of Proceeds Maturity up to

• Real estate 25 years

• Business purposes 7 to 10 years

• Equipment & machinery 15 years

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Interest rates

• SBA loans may be variable or fixed rate ( 504)

• SBA variable loans adjust quarterly • SBA variable loans are tied to the

Wall Street Journal prime rate commonly called (Prime)

• Business loans are priced at • Prime + 1.5% to 2. • Real estate • Prime + 1% to 2.75%

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Fees – SBA Guarantee Fee

• The SBA charges a one-time fee of 2% to 3.5% for the guaranty. The fee is based on the guaranteed amount. There is an additional ¼% fee on loans over $1,000,000

Loan Amount $150,000 $300,000

Guaranteed % 85% 75%

Guaranteed Amount $112,500 $225,000

Guarantee Fee % 2% 3%

Guarantee Fee $2,250 $6,750

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Purchase price $5,000,000

• 75% of $5,000,000 Equals $3,750,000 • SBA Guaranty • $0 to 150,000 = 2%• $150,001 to $700,000= 3. 0%• 700,001 to $1,000,000 = 3.5% $35,000

1,000,000 to $5,000,000=3.75 $96,000 • Total SBA Guaranty $131,250

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Fees – 3rd Party Costs

• The borrower is responsible for costs associated with securing the loan

• Appraisal• Phase 1• Title insurance• Lender fees • UCC’S • Legal

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Prohibited Fees:

• Processing fees• Closing Fees • Origination fees• Application fees• Points• Brokerage fees, Paid by the Bank • Bonus points

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Prepayment Penalties

• Only for loans that have a maturity of 15 years or more

• Usually real estate or Heavy Machinery & Equipment

• The prepayment fee calculation is as follows: 5% the 1st Year3% the 2nd Year1% the 3rd Year

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Pre-Qualification • Items needed to furnish a Letter of interest• BUSINESS

• Previous Year's Business Tax Returns (2010,2009,2008)

• Current Profit & Loss Statement • Business Balance Sheet ( No later than

45 days)• Loan Request / Use of Loan proceeds • Aging of Accounts: Receivables and

Payables • Total Project Cost

• Personal

• Previous Year’s Personal Tax Returns (2010,2009,2008)

• Personal Financial Statement (No later than 45 days)

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SBA Loan Programs

• Question and Answer Session

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SMCSBDC

• Jeffrey Francis• Business Advisor and SBA Loan Specialist.

• (310) 434-3566 direct• (310) 434-3891 fax• (818) 919-9664 mobile• Jeffrey-francis_mcau@smc.edu

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GROW

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Sales and Marketing

Monica Rayes

http://www.youtube.com/watch?v=lFZ0z5Fm-Ng

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Objectives• Define Marketing• Review Preparing your

Marketing Plan• Prospecting Opportunities• Brand Creation and Identity

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What is Marketing?

• Techniques used to attract and persuade consumers to a product or service

• Identifying and responding to customers needs

• The art of getting the customer to come to the productEffective marketing strategies:

• Generate sales leads• Affect image• Increase product awareness • Enhance propensity to buy

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What is Marketing?

• Be able to define current and future customersTarget Audience

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Marketing Tactics• Direct Marketing

Direct MailingAdvertising

• Viral MarketingEncourages consumers to pass along messages

online to others in order to generate added exposure

• Affiliate MarketingA method of promoting your business in which

an affiliate is rewarded for every customer and/or sale provided through his/her platform

• Public RelationsMediaPartnershipsPublicity stunts

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Information Source Statistics

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Why implement social networking?

• Optimize search engine…Drive traffic.• Build Brand awareness.• Focus on direct selling.• Influence consumers purchasing

decisions.• Present information in real time. Current

and frequent.• Organizational tool for contacts.• Easy to update.• Archived information.• User friendly!!!!

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Video• http://www.youtube.com/watch?v=KV4PN

wpqsCc

• http://www.youtube.com/watch?v=ddO9idmax0o

• http://www.youtube.com/watch?v=J0xbjIE8cPM

• Content Management Systems: Wordpress, Drupal, Plone, www.MediaBirdy.com

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Marketing is satisfying the customer at a profit!

• Identifying and responding to customers needs.

• Art of getting the customer to come to the product.

• Be able to define current and future customers.

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What Does Selling Mean to You?• Group Exercise

http://www.youtube.com/watch?v=9QUT0tweX1M&feature=related

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Creating a Sales Plan

• Define your product• Analyze what the competition is doing• Look at existing, similar businesses• Differentiate from competition• Talk to potential customers• Know your customer• Establish competitive price points

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How to Build your Brand?

• Chose a business name that is easy to remember, describes your business and establishes “mind share.”

• Create a logo that symbolizes your business to the customer.

• Develop a good reputation.• Create brand personality.• Communicate your brand personality to

your target audience.

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Closing Comments

• Be passionate• Practice the 55-38-7 Rule• Listen and learn!• Follow those you are interested in• Be solution oriented• Remember why you want to start your

business in the first place• Acknowledge that resources are available

to assist you in your venture

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Questions/ Additional Business Counseling• Monica Rayes, Business Counselor,

Santa Monica College-Small Business Development Center

• E-mail: rayes_monica@smc.edu• Phone: (310) 434-3566• Please call the SBDC and schedule an

appointment!!!• Best of luck and thank you for your time!!!

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ANSWERS

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Thank You

Santa Monica

Small Business Development Center

310-434-3566

www.smcsbdc.org