Small Business Development Center Presentation for: Northwest - PowerPoint PPT Presentation

Small Business Development Center Presentation for: Northwest Agriculture Business Center November 6, 2007 Jennifer Shelton Traci Harstad

Overview  SBDC Program  Key Issues for Developing Business  Financing  Resources  Q & A

Small Business Development Centers  No-cost Advising Services  Business Plans  Start-up Assistance  Financial Analysis  Marketing  Demographic & Industry Data  SBDC Network  26 Offices around the state  Research Center in Bellingham

New Approach  A business that works not because of you, but without you – frees you up more to live  Go to work on your business not just in it!  Goal – Financial Independence

Start with the end in mind The human spirit does not invest itself in mediocrity! So far as success can be reduced to a formula, it consists of this: doing what you know you should do. ~Roger W. Babson ~Financier, Educator, Entrepreneur

Build Backwards Exercise What is our ASAP revenue goal?  How many customers does it take to reach the goal?  Describe what the business needs to look like?  Where do we find this many customers?  Describe what will attract them to us?  What additional resources do we need?  Where can we start right now? 

Purpose of Business Plan  Feasibility Analysis  Operating Guide  Financing Tool  Valuation

Seven Functions of Business  Management - Ownership  Production/Operations  Marketing & Sales  Accounting  Human Resources  Risk Management – Finance  Information Systems

Profitability  Price  Quantity - Marketing or Operations  Variable Expenses  Fixed Expenses  Bookkeeping Errors

Management Strategy  System for producing predictable, orderly, consistent service to customer  Your business must be alive, growing, committed to keeping promises no competitor would dare to make

Production/Operations 5S ’ s Seiri: Organization - elimination of waste  Seiton : Neatness - Arrange essential things in order for  quick & easy access and put them away Seiso: Cleaning - Machines and working environment  Seiketsu: Standardization - Routine cleaning and  checking Shitsuke : Discipline - Constantly improve the previous  four steps

Marketing Database Analysis Who are my most profitable customers? • How do I get more of them? • How should I segment my customers? • Who are my best prospects? • What is my ROI on marketing pieces? •

Marketing Decisions In order of increasing risk:  Same Products, Same Markets  Same Products, New Markets  New Products, Same Markets  New Products, New Markets

Accounting  A Sustainable Business:  Uses budgeting, cash flow projections, and other planning tools to predict needs and make preparations early  Plans for growth and the hire of additional professional management  Provides sustainable income & benefits to owner and employees, including retirement

Human Resources People Strategy  How we do it here  How we recruit, hire & train people to do it here  How we manage it here  How we change it here It ’ s what you believe in. Why people buy from you, work for you, trust you.

Finance Risk Management  Capability  Capacity to repay a loan  Collateral  Character/Credit  Commitment. Demonstrate your investment

Information Systems Strategy  Identification of each consumer decision point  Preparation to get through each one successfully  Promise you make  Sale you make  Delivery on promise  Customer follow up

Go to work on your business not just in it! Go to work on your business not just in it! So you have a business that works So you have a business that works not because of you, but without you not because of you, but without you To free you up more to live To free you up more to live

Expanding or Developing your Business Often Means FINANCING  What are lenders looking for?  What can you do to prepare?

Expanding or Developing your Business Often Means FINANCING WRITE A BUSINESS PLAN!

Why Write a Business Plan? o Tells the lender everything they need to know: • Why do you need a loan? • How much do you need? • How are you going to use the loan? • How are you going to repay the loan?

Why Write a Business Plan? o Tells the lender everything they need to know: • Why do you need a loan? • How much do you need? • How are you going to use the loan? • How are you going to pay the loan back? o Provides you with: o Strategic direction o Tool for benchmarking

FINANCING The 5 C ’ s of Credit CHARACTER  CAPACITY  CAPITAL  CONDITIONS  COLLATERAL 

FINANCING The 5 C ’ s of Credit CHARACTER   What is management ’ s reputation in Capacity  the industry and community?  Experience in business and in your Capital  industry will be important.  Do you have good credit? Are you Conditions  trustworthy? Collateral  Often, banks don ’ t differentiate  between the business and the business owner.

FINANCING The 5 C ’ s of Credit Character   Do you have the ability to repay the CAPACITY  loan?  How much debt can your company handle? Capital   Lender will look at:  Cash flow Conditions   Borrowing history  Track record for repayment Collateral   Probability of successful repayment  Past performance is a successful indicator of future performance.

FINANCING The 5 C ’ s of Credit Character   How much money have you invested Capacity  in the business?  Have you been willing to put yourself CAPITAL  at risk?  How prepared are you to use your Conditions  own personal resources to support the business?  Investors want to see that you have a Collateral  financial commitment to the business.

FINANCING The 5 C ’ s of Credit Character   What are the current economic Capacity  conditions? Capital   What are the trends for your industry? CONDITIONS   How does your business fit in? Collateral   Lenders will look at the overall climate and how it might affect your business.

FINANCING The 5 C ’ s of Credit Character   Bankers will look for a secondary Capacity  source of repayment Capital   Pledging assets such as equipment, real estate, A/R, inventory Conditions   Personal guarantees COLLATERAL   Typically 100% is expected

FINANCING Top Issues According to AG Lenders Unproven = risky  Is there an established market?  Do you have a realistic plan?  Won ’ t typically loan based on prospect  Do you understand all the different roles you have to play?  7 Functions of business  Experience is key  Financial/managerial experience?  Degree/classes/training to supplement  Do you understand your market?  How are you going to sell your product?  Can you dependably provide a quality product?  Sales/distribution can be challenge  Vendors ’ needs 

Resources – Grant/Loan Programs  U.S. Department of Agriculture  www.usda.gov  Mark Turner – Farm Service Agency • 360-354-5658  Melanie Drecksel – Rural Development; Area Director • 360-428-4322  Small Business Administration  www.sba.gov  7a & 504 Guarantee Loan Programs  Office of Minority & Women ’ s Business Enterprises  http://www.omwbe.wa.gov/  Linked Deposit Program

Resources WSBDC – www.wsbdc.org existing 2+ years, growing, financing SBA – www.sba.gov/wa/seattle any stage of entrepreneur NWWBC – http://www.seattleccd.com/wbcmain/ young businesses, micro loans SCORE – www.score.org new businesses – pre start up

Practical Marketing Management Reference USA http://search3.webfeat.org/kclsmain.html Proquest http://search3.webfeat.org/kclsmain.html Claritas & Melissadata http://www.melissadata.com/lookups/zipdemo2000.asp http://www.claritas.com/MyBestSegments/Default.jsp?I D=20

Where are some places to look?  Trade publications  Gartner Reports  Google Groups www.google.com  Blogs  Local, National news  Talking to customers, colleagues

More Resources Inc.  www.inc.com Entrepreneur.com  www.entrepreneur.com Wall Street Journal  http://www.startupjournal.com/ Edmonds CC - SBDC  www.the-btc.com/sbdc

Contact Information Jennifer Shelton Center Director Certified Business Advisor Edmonds Community College 728 134th St. SW, Suite 128 Everett, WA 98204 425-640-1435 jennifer.shelton@edcc.edu Traci Harstad Director of Business Development SBDC Business Advisor Economic Development Association of Skagit County 204 West Montgomery; PO Box 40 Mount Vernon, WA 98273 360-336-6114 traci@skagit.org

Questions?