building a bankable business
TRANSCRIPT
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Julio C. Canas
Building a Bankable Business
@SCOREmiami / @jccanas
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What Lenders Look For…
@SCOREmiami / @jccanas
Character
Conditions
Collateral
Capacity
Capital
Cash Flow
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What Lenders Also Look For…
@SCOREmiami / @jccanas
Data is changing the way to get financing
Data Analytics
Behavior
Digital ID
Social Media Geography
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@SCOREmiami / @jccanas
First Steps1. Check Your Credit2. Ensure Your Records Are in Order3. Prepare a Business Plan4. Prepare a Financial Proposal5. Organize Your Digital Life
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@SCOREmiami / @jccanas
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@SCOREmiami / @jccanas
FICO Score• 3- Digit number ranging from 300-850
• Higher scores represent lower future risk of default
• FICO scores use multiple scorecard designs to segment population and increase predictability
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@SCOREmiami / @jccanas
Details Behind FICO ScoreNearly every major purchase is based on FICO:
• Home• Automobile• Revolving Credit
• Health Insurance• Career
Opportunities
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@SCOREmiami / @jccanas
Predictive InformationConsidered:• Accounts• Inquiries• Collections• Public Records
Not Considered:• Age• Address• Employment• Income• Gender
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@SCOREmiami / @jccanas
Components of Credit Score
35%
30%
15%
10%
10%
Payment HistoryCredit UtilizationLength of Credit HistoryCredit MixInquiries
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@SCOREmiami / @jccanas
Why is Credit Report Useful?Consumer Check accuracy of report
Identify fraud
Same as consumer, plusDetermine consumers’ credit worthiness
Credit reporting agencyCompile and store consumer credit information
Creditor
Marketing
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@SCOREmiami / @jccanas
Financial Records
• Orderly and accurate financial reports are essential
• Accounting Software (e.g. Quickbooks)• Hiring a Bookkeeper vs. DIY• Understand your own financial
statements
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@SCOREmiami / @jccanas
NotOK
Financial Records
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@SCOREmiami / @jccanas
Financial Records
OK
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@SCOREmiami / @jccanas
Business Plan
Quantity vs Quality Well-organized
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@SCOREmiami / @jccanas
Business Model Canvas
www.businessmodelgeneration.com
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BUSINESS PLAN
EXECUTIVE SUMMARY THE TEAMManagement ProfileWhy We Are a Winning Team THE BUSINESS MODEL Vision, Mission, and Values How Our Business Model Works Value Proposition Target Markets Marketing Plan Key Resources and Activities FINANCIAL ANALYSIS Breakeven Analysis Sales Scenarios and Projections Capital Spending Operating Costs Funding Requirements EXTERNAL ENVIRONMENT The Economy Market Analysis and Key Trends Competitor Analysis Competitive Advantages of Our Business Model IMPLEMENTATION ROADMAP Projects Milestones Roadmap RISK ANALYSIS Limiting Factors and Obstacles Critical Success Factors Specific Risks and Countermeasures CONCLUSIONS ANNEXES
financial spreadsheets
environmental analysis
implementation roadmap
SWOT and uncertainty analysis
www.businessmodelgeneration.com
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Financial Proposal
@SCOREmiami / @jccanas
• Personal financial statement
• Business financial statements
• Sources and uses of funds
• Cash forecast by month, for the first two years of operations after receiving new funding
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Personal Financial Statement
@SCOREmiami / @jccanas
Assets
Liabilities
Net Worth
What you have
How you
got it
Balance Sheet
Income
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Business Financial Statement
@SCOREmiami / @jccanas
P&L and Cash Flow
Revenues
Expenses
ProfitAssets
Liabilities
Equity
What you have
How you
got it
Balance Sheet
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@SCOREmiami / @jccanas
Sources and Uses of Funds Fixed Assets:• Land & Buildings• Leasehold Improvements• Equipment• Furniture & Fixtures• Vehicles• Other Fixed Assets
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@SCOREmiami / @jccanas
Sources and Uses of Funds Operating Capital:• Pre-opening Salaries and Wages• Prepaid Insurance• Rent and Utility Deposits• Supplies• License & Permits• Working Capital
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Sources and Uses of Funds
@SCOREmiami / @jccanas
Funding Available:• Owner’s Equity• Other Investors• Additional Loans or Debt:• Credit Card , Vehicle Loans, Commercial
Mortgage• Other Bank Loans
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@SCOREmiami / @jccanas
Funds NeededFixed Assets
+Operating Capital
-Funding Available
=Net Funds Needed
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@SCOREmiami / @jccanas
Cash Flow ForecastInflows:• Beginning balance• Cash sales• Account
receivables Payments
Outflows:• COGS/COS• Salaries and wages• Purchases• Rent and utilities• Marketing• Other
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@SCOREmiami / @jccanas
Net Cash FlowCash Inflows
-Cash Outflows
=Net Cash Flow
Beg. Cash Balance+
Net Cash Flow=
End. Cash Balance
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@SCOREmiami / @jccanas
Organize Your Digital Life• Avoid using 1st generation email addresses
• Use professional digital IDs & vanity url
• Think twice before posting on Social Media
• Develop your business digital presence
• Consistency across all digital spaces
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@SCOREmiami / @jccanas
Additional Considerations• Conventional and SBA (partially government
guaranteed)
• Line of credit or term loan
• Funds available for property purchase, construction, and fitting out space, as well as for working capital
• Special consideration for professional firms
• Minimum loan amounts set by bank
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• Bootstrapping• Investor capital, including friends and
family • Conventional financing from banks• Lines of credit• SBA 7a Loan program• EXIM’s Working Capital Loan
Guarantee• 504 loans (fixed assets)• Capital and Patriot Express Loans• Community programs • Peer to Peer lending• Crowdfunding@SCOREmiami / @jccanas
Funding Options
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@SCOREmiami / @jccanas
Small Dollar Loans Celtic Bank Small Loan Advantage Program• Start-Ups OK• Loans up to $150,000• Working capital loans to businesses• No: construction, location build out, business acquisition • Franchise must be on SBA approved Franchise Registry• Simplified application; faster processing• 7 year amortization• May be unsecured • Variable interest rate• No prepayment penalty
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@SCOREmiami / @jccanas
Miami Bayside Foundation• Goal is to provide access to funds for local minority and
women entrepreneurs • Business must be located in the City of Miami (as stated in
its occupational license)• If start-up (under one year), owners must put up a 20%
cash match• Must demonstrate that the loan will aid in the creation of
new jobs• Purpose of loan can be for working capital, cash flow,
inventory, and/or equipment
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@SCOREmiami / @jccanas
Accion USA• Provides micro-financing for small businesses• Loans for start-ups up to $30,000• Must have 6+ months in operation• Credit score requirement lower than banks – interest rates
somewhat higher• Free Webinars and online financial and business resources
offered• SCORE counselor can assist you with your application
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@SCOREmiami / @jccanas
Peer-to-Peer (P2P) Lending• Uses the internet to match individual borrowers and
lenders• Lending site (e.g. Prosper.com or LendingClub.com)
verifies borrower’s credit history• Interest rates reflect site’s own rating of borrower as well
as duration of loan.
Caveat Emptor – Buyer Beware• Interest rates can be very high.• P2P loans are considered personal debt, and will affect
your credit record in the future.
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@SCOREmiami / @jccanas
Crowdfunding• Crowdfunding is:– Individuals coming together to support, and directly
fund, projects by other entrepreneurs and businesses.
– There are several kinds of crowdfunding:• Rewards – trading funds for various types of
rewards.• Donations• Equity – trading funds for ownership in your
company – regulations being developed.• Example of crowdfunding site – Kickstarter.com
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@SCOREmiami / @jccanas
Angel Investor• Investment vs. financing vehicle
• You will have to give up a large slice of the business, at a discounted price.
• Investors will set milestones. Funding will be provided as you achieve milestones.
• Investors usually seek payback in five years.
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@SCOREmiami / @jccanas
Angel InvestorFlorida: • Emergent Growth Fund• New World Angels• Spring Board Capital• Winter Park Angels• Florida Growth Fund• Tamiami Angel Fund• Miami Innovation Fund• The Funding Post - Distributed to 8,000 angel and venture
investors
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@SCOREmiami / @jccanas
Startup America• Nation-wide networking site for small businesses.
• Offers advice and possible access to venture capital.
• Get-togethers in major cities for start-ups and investors.
• High tech companies with high growth potential preferred
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https://miamidade.score.org/
Julio C. Canas
www.jccanas.com
Thank you!