intro to business and small business startup for bulgaria

Business- The beginning

Goals for Today

Understand business Understand where ideas for business come

fromLearn the basics of starting a businessWrite a draft business plan, on your own

Types of Business

Businesses fall into 3 categoriesServices (Most business start here…)

Product ( Most businesses want to be here)

Highly profitable business end up here:Combination Services and Product

Ideas for Business

Business starts with an idea. Ideas for business come from thinking about:

Needs

Wants

Desires

These are the Foundation of a Business. Ideas come from lots of different places…….

Service ideas

• Tutoring• Day Care• Washing Windows/Cars/Specialty Cleaning• Cleaning Homes• Delivery Service• Waste removal• Landscaping• Website design• Telemarketing• Transcriptionist

Product Ideas

• Bakery• Agriculture• Distribution

– Food– Charcoal– Teaching supplies

• Restaurant• Souvenirs

Combination Service/Product Ideas

• Tutoring that sells math calculators to children

• Bakery that also specializes in catering

• Washing (Car, Windows, etc.) that also sells cleaning solution.

• House Cleaning that sells mops, brushes, rags, buckets.

Ideas

• Look around…

• Imagine…

• See the potential…

Starting a small business

What is SMALL

• Micro

• Small

Why is small business important?

• In U.S. – more than 22 million small business.

• Nearly 50% of all U.S. payrolls.

• Lifeblood of most economies in the capitalist countries.

Start with an Idea

• Research• Develop Business Plan

– Mission– Goals and Objectives– Marketing Plan– Employees and Management– Financial Plan

Idea – House Cleaning

• RESEARCH???– What are we looking for?

Research

• Economic

• Demographic

• Competitive

• Market

Write a Business Plan

• Formal Business Description

• Mission Statement

• Goals and Objectives

• Marketing Plan

• Employees & Managing

• Financial Plan

Description vs Mission Statement

• Business Description– A house cleaning service.

• Mission Statement– Provide immaculate cleaning services for

double income couples who don’t have time to maintain their homes.

Objectives vs Goals

• Objectives– Improve homes appearance and cleanliness– Relieve burden of household cleaning duties

• Goals– Clean 10 homes first month– 3 home cleaning jobs per day after 6 months

• Goals must be measurable-

Marketing Plan

• Who are your customers

• How will you make your product /service known to them

• Competition – who are they and how are you better– Differentiation by price, quality, service…

• Distribution Channels

• Trends

Employees and Management

• What makes a good employee

• Avoiding Problems

• Employ Fair Values– Fair wage– Fair treatment– Equal Opportunity– Safety

Financial Plan

• Start up Costs (Capital Requirement)

• Cash Flow Analysis

• Operating Budget

• Break Even Analysis

• TAXES

Capital Requirements

What happens if you start a business and you have a loss for the first few months?

- You need to “fund” this loss- Through Savings- Through Investors

- Payback?

- Through Debt- Payback?

Cash Flow Analysis

CASH FLOW ANALYSIS

Units Sold Gross Units Sold Gross Units Sold Gross Units Sold GrossMonth 1 Revenue Month 2 Revenue Month 3 Revenue Month 4 Revenue

Product A Cost per Unit =

Gross Revenue

Example for Home Cleaning CASH FLOW ANALYSIS

Home Gross Home Gross Homes Gross Homes GrossMonth 1 Revenue Month 2 Revenue Month 3 Revenue Month 4 Revenue

1 home Revenue per = 10 400,000 20 800,000 30 1,200,000 40 1,600,000500 Sq Meters

Gross Revenue 12,000 24,000 36,000 48,000

Operating Budget

OPERATING BUDGET

Expense Month 1 Month 2 Month 3 Month 4 Month 5 Month 6

Cost of Product Sold

Cleaning Supplies

Labor

Loan Repayment

Other Expenses

Other Expenses

Other Expenses

TOTAL EXPENSES

House Cleaning Example

OPERATING BUDGET

Expense Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 TOTALS

Cleaning Supplies 100000 50000 50000 50000 50000 50000 400000Labor 200000 200000 600000Fuel Costs 50000 50000 50000 50000 50000 50000 350000Advertising 20000 20000 20000 20000 20000 20000 140000Mobile Phone 30000 6000 6000 6000 6000 6000 66000Taxes 50000 50000 50000 50000 50000 50000 350000Business License 100000 100000Other Expenses 50000 50000 50000 50000 50000 50000 350000 TOTAL EXPENSES400000 226000 226000 226000 426000 426000 2356000

BREAK EVEN ANALYSIS

FROM YOUR BUDGET REPORT ENTER:FIXED COSTS = _______ ShillingVARIABLE COSTS = _______ ShillingA) Total Cost PER Home = ___ Shilling per homeB) Price charged per home = ___ Shilling per homeTARGET PROFIT (6 MONTHS) = _______ Shilling (goal)

(B – A = PROFIT)Projected net loss without any profit goal for 6 months = (______)

In this scenario - either needs to lower costs or raise prices to break even.

Summary

• Research

• Plan!– Mission– Goals and Objectives– Marketing Plan– Financial Plan

• Success!