getting started yes you can!

GETTING STARTEDYes You Can!

Built by Stambaugh/2009

Jeff StambaughDillard College of Business/Rm 257A

[email protected]://faculty.mwsu.edu/business/jeff.stambaugh

Motivation


■ Hot off the Press … BW’s 2008 Top Entrepreneurs Under 25 Link

Entrepreneurial Resources


■ 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


■ 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


Continued income from “day job”

Health benefits from work

Able to cut losses easier?

Challenges of Part-time E-Ship


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


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


■ 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


■ 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)


■ 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!


More art than science Value cash flows

Value assets

Comparable sales

Earnings multiple

Industry heuristics

Franchises Link


■ 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


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!


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!


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


■ Yes you can!■ There ARE many businesses in Wichita Falls that probably

could be bought!

getting started yes you can!

Documents