Post on 05-Jan-2016
description
GETTING STARTEDYes You Can!
Built by Stambaugh/2009
Jeff StambaughDillard College of Business/Rm 257A
jeff.stambaugh@mwsu.eduhttp://faculty.mwsu.edu/business/jeff.stambaugh
Motivation
Built by Stambaugh/2009
■ Hot off the Press … BW’s 2008 Top Entrepreneurs Under 25 Link
Entrepreneurial Resources
Built by Stambaugh/2009
■ Your Opportunity■ Your Hard Work■ Now, leverage OPT and OPM■ Resources for you, the DCOBA student
■ Internship Program■ SBDC■ Incubator Center■ Network of interested persons
Easing into Entrepreneurship
Built by Stambaugh/2009
■ Lack Resources■ Gain experience (uncertainty reduction)
■ What personalities does this fit
■ Narrow window of opportunity (seasonal)
What are some businesses that are well-suited to part-time entrepreneurship?
Benefits of Part-time E-Ship
Built by Stambaugh/2009
Continued income from “day job”
Health benefits from work
Able to cut losses easier?
Challenges of Part-time E-Ship
Built by Stambaugh/2009
All work and no play Boundaries in home life (time allocation)
Settling for “good enough”
Conflicts with “Day Job” Professional / business
Time / energy
Aggrandizement
Delegation / employees
Bootstrapping
Built by Stambaugh/2009
Makin’ do with what you got! Initial sources of money
Personal savings Second Mortgages / Home Equity Friends and family Credit cards
Scrimping Work for free Essentials only Buy used Barter Get it free (web, resources previously discussed) Link
Offer equity
Specific Tips to Enhance Success
Built by Stambaugh/2009
■ Experience / Help■ Incubator■ Advisory Board■ Learn industry first■ Have experience in SBM / startups■ Multiple founders
■ Better chance of strong consumer response■ Pre-sell / pilot test / existing customers■ Imitate successful models (proven demand with high
margins)■ Build and pitch your business plan (obtain outside
investors)■ Build trust / legitimacy
Buying a Business
Built by Stambaugh/2009
■ How to find what’s for sale?■ Magazines / trade publications■ Bankers■ SBDCs■ Ask others■ Ask directly!
■ Key due diligence questions■ WHY IS IT FOR SALE?■ Accuracy of “the numbers” (review financial statements
carefully)■ Ask specific and detailed questions of seller■ Will key customers / suppliers stick with you?■ Will key employees stay?
Buying a Business (cont)
Built by Stambaugh/2009
■ Key due diligence questions (cont)■ Condition of equipment / facilities■ Unexpected liabilities
Can you match or exceed the owner’s claimed profitability?
And Now the Hard Part … The Price!
Built by Stambaugh/2009
More art than science Value cash flows
Value assets
Comparable sales
Earnings multiple
Industry heuristics
Franchises Link
Built by Stambaugh/2009
■ Facilities / Location: Guidelines / assistance■ Equipment: Guidelines / purchasing “help”■ Business Model: Proven / known, ongoing support■ Product: Standardized■ Employees: Training (for you too)■ Procedures: May be set■ Reputation: Hopefully a strong brand■ Customers: Come from brand, marketing support■ Suppliers: more powerful■ Legal Structure: FDD■ Investors/Debts: Guidance
Buying a Franchise
Built by Stambaugh/2009
Due diligence Interview several other franchisees Stability of franchisor Integrity / ethical behavior
The deal (love the FDD) Initial fees ($35K average but wide variance) Royalties (5-6% of revenue) Marketing fees (1-4% of revenue) Competitiveness of required purchases Misc
ROT: 33% of pretax profits to franchisor (before franchisor fees or franchisee salary deducted)
Building a Franchise!
Built by Stambaugh/2009
Write a BP http://www.sbtv.com/default.asp?segid=319
Inventory / protect IP Prepare UFOC / franchise agreement Prepare manuals/program Solicit franchisees Assist new franchisees
Building a Franchise!
Built by Stambaugh/2009
Pro’s Lower-cost expansion mode Revenue stream Motivation of franchisees New ideas
Con’s Sharing profits Less control Increased “people” hassle Legal expenses Different business skills required
Class Takeaways
Built by Stambaugh/2009
■ Yes you can!■ There ARE many businesses in Wichita Falls that probably
could be bought!