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Transcript of A Micro BUSINESS Welcome to MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP Build a solid...
a
MicroBUSINESS
Welcome to
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Build a solid foundation
© 2011
Micro Business Basics
MoneyWI$E
A joint financial education project of Consumer Action and Capital One.
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Topics we will cover:
What a micro business is.
How to anticipate the needs of a new business.
Business planning and bookkeeping.
Different ways that businesses are organized.
© 2009 Consumer Action
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Your expectations
What do you hope to get out of this seminar?
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Micro businesses
Micro businesses are very small companies run by their owners with few or no employees.
They are often home-based, with annual sales under $250,000.
Many micro businesses start with a hobby or a great idea.MoneyWI$E
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Growing micro businesses
Micro businesses can qualify for loans to help them grow into large regional, national or franchise businesses.
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Failure rate
The U.S. Small Business Administration says that more than half of small businesses fail in their first year.
Many businesses fail because they lack adequate funding.
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Ready for business?
Some people are better off as employees rather than as business owners.
What issues do you think people who are thinking about starting a business must consider?
A good businessperson has...
Discipline
Experience
Patience
People skills
Aptitude with numbers
• Can you think of other attributes you need to excel in business?
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Anticipating business needs Sound financial planning is
key to a successful business
Try to predict what it will cost to run your company
Prepare a budget that closely reflects your business plan**A written document that outlines your business idea and the steps you will take to make the venture succeed
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Business resources
SCORE, 800-634-0245 www.score.org
SBA, 800-827-5722 www.sba.gov
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Business vs. personal funds
Co-mingling personal and business transactions makes it hard to track business activity
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Business credit cards
Manage cash flow
Keep your business obligations separate from your personal obligations
Earn discounts on supplies, rental cars and other services
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Planning and bookkeeping
Keeping accurate, organized records is vital to the success of your business.
A lost receipt is a lost deduction
Lost deductions mean you pay more money in taxes.
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Business plan
One of the first documents you need to prepare
A business plan will help you focus your vision for your business
You can use your business plan to approach lenders and potential partners
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
In a business plan
Your business purpose
Products or services
The company’s structure (sole proprietorship, partnership or limited liability company, for instance)
Short bios of key personnel
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Help in writing your plan
Community groups
SCORE
SBA
Free templates online
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Business bookkeeping
Monitor your profits and losses
Know the value of your business
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Start up costs
Many fast-growing companies are started with the founder’s personal savings, in some cases no more than $10,000.
Start-up funding should cover operating expenses for at least one year.
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Typical start-up costs
Salary needs
Initial costs
Direct costs
Overhead
Recurring costs
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Topics for the next session
Business structure
Finding funds for your business
SBA Loans
Reading a projected profit and loss statement
Government requirements
Micro business mistakes
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Welcome to Session Two
We will cover:
• Business structure and organization
• Finding funds for your business
• SBA Loans
• Reading a projected profit and loss statement
• Government requirements
• Top five micro business mistakes MoneyWI$E
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Structure/organization
Businesses can be established legally in different ways
This is known as its business structure or organization
No one legal structure is best for all micro businessesMoneyWI$E
A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Sole proprietorships and partnerships
Sole proprietorships are one-person businesses
Partnerships are businesses formed by two or more owners
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Corporations
A corporation is a legal entity, organized under state or federal laws
It is legally separate from the people who own it
Corporation owners are usually protected from personal liability
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Limited liability companies
Known as LLCs
Combines features of sole proprietorships, partnerships and corporations
LLCs can help business owners protect their personal assets
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Finding funding
Use your own money
Find a partner or investor with cash to invest
Borrow funds
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Credit
A business loan or business line of credit can help you meet your business needs
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Business credit cards
Business credit cards can help:
• Manage your cash flow
• Keep your business and personal obligations separate
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
SBA Loans
The Small Business Administration (SBA) can help you prepare loan documents
It also guarantees loans
You pay for these services through fees when your loan is approved
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
SBA sponsored lending
Loan guaranty programs
Building and renovation loans
Loan pre-approval services
Start-up financing and technical assistance for start-ups, newly established micro businesses and growing micro businesses
Federal contracting assistance
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
SBA streamlines lending
Lower down payments
Longer terms
Lower interest rates
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Steps to an SBA loan
Ask the SBA for a list of banks in your area
Compare choices by contacting SBA lending officers at a few of the banks
Decide where you will apply
Compile the financial and business records required by the bank
The bank will submit your loan to the SBA for approval
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Government contracting
There are many opportunities for small business and minority- owned businesses to provide goods and services to the government.
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Class activity
Sample Projected Profit and Loss Statement
Take out the sample Projected Profit and Loss Statement worksheet
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Local and state requirements
Business licenses
Building permits
Health/occupational rules
Sales/income tax
Employee withholding
Workers’ compensation insurance
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Federal requirements
Verify your employees’ right to work in the U.S.
Withhold federal income taxes
Minimum wage, overtime and child labor laws
Make estimated income tax payments
Social Security and Medicare payments
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Micro business mistakes
Inadequate planning
Failure to discipline yourself financially
Insufficient cash reserves to sustain growth
Poor record-keeping
Excessive debt
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Questions and answers
We have reserved some time to answer your questions.
Please raise your hand if you have a question.
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Congratulations!
You have completed the MoneyWI$E seminar on Micro Business Basics
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Your feedback
Please fill out the Seminar Evaluation Form and leave it on your way out.
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
MoneyWI$EA CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Visit money-wise.org for additional information and
to access free financial education materials