1 of 36

SIMPLE STEPS FOR STARTING YOUR BUSINESS

1

Session 2: Business Concept

2 of 36

SIMPLE STEPS FOR STARTING YOUR BUSINESS

2

[insert local sponsorship information here if relevant, otherwise delete this slide]

3 of 36

ABOUT SCORE

SCORE volunteers are successful and experienced business executives

Seminars and workshops Free mentoring:

One-on-one
E-mail

Resources for small businesses:

[chaptername].score.org

3

Session 2: Business Concept

4 of 36

MENTORING LOCATIONS

4

[Local mentoring locations will be provided on this slide.]

Please make note of this information in your manual.

Session 2: Business Concept

5 of 36

PROCESS ROADMAP

5

One-on-One Mentoring

“Go or No-go” decision &�next steps with mentor

Mentoring/Build Business Plan

Session 1:�Startup Basics

Session 2:

Business Concept

Session 3: Marketing Plan

Session 4:�Financial Matters

Session 5:�Funding Options

Session 2: Business Concept

6 of 36

HOMEWORK REVIEW

Welcome!

Please take 1-2 minutes to share your:

Name
Business idea
Vision statement

Any questions about the vision statement?

6

Session 2: Business Concept

7 of 36

AGENDA

Capture Your Dream
Define a Market Need
Examine Your Personal Background
Feasibility Plan
Data Collection

Research Your Industry
Research Your Target Market
Research Your Competition
Types of Data

7

Session 2: Business Concept

8 of 36

CAPTURE YOUR DREAM

They all started with a dream!

What is your dream?

If there were no obstacles in your way, what would be your ideal business? Take 15 minutes to discuss.

8

Steve Jobs
Bill Gates
Richard Branson
Mary Kay Ash
Walt Disney

Steven Spielberg
Oprah Winfrey
Ray Kroc
Sam Walton

Session 2: Business Concept

The people listed here, along with many others, all started with a dream. These people are visionaries, and each of them faced struggles and challenges and failure at some point in their journey:

Steve Jobs started Apple when he was 20. He was later ousted from his own company. He acquired Pixar, sold it to Disney, and then returned to Apple to lead it out of turmoil. Apple regained its position as an innovative, powerful brand.
Mary Kay Ash launched Mary Kay Cosmetics and revolutionized skin care sales by empowering women to earn an income with her products.

Your dream is no different than theirs. While you may not yet be able to envision such large enterprises, you are embarking on the Simple Steps for Starting Your Business series so that you can plant seeds and cultivate them. These people weren’t just lucky. They were big thinkers with plans that evolved over time. You have that very same opportunity before you today.

Group Discussion: Ask Students: What is your dream? If there were no obstacles in your way, what would your ideal business look like?

Total Time: 15 minutes.

9 of 36

WORKSHOP BENEFITS

9

Helps you develop your feasibility plan
Takes you through the decision-making process
Provides you with the information to help make a “go or no-go” decision on your business idea
Has the core information to create a complete business plan for bankers and investors
Gives you the key directions you need to get started

Session 2: Business Concept

10 of 36

GETTING YOUR BUSINESS IDEA

11 of 36

DEFINE A MARKET NEED

11

Ask yourself:

What need does my product or service fill? What problem does it solve?
What are the features and benefits of my product or service?
What is my competitive advantage?
What is my business model?

Session 2: Business Concept

A good business idea fills a need that exists in the market. You may have come up

with your business idea because you, your

friends or your family saw a need for a product

or service you couldn’t find. Maybe the product or

service exists, but you think you can do it better.

Ask yourself:

What need does my product or service fill? What problem does it solve?

What are the features and benefits of

my product or service? (“Features” are the components of your product. For instance,

a bicycle’s features might include a high-tech

braking system and puncture-proof tires. The

“benefits” of those features are safety and a

smoother ride.)

● What is my competitive advantage? (How is your

idea different from or better than the competition?)

What is my business model? (How will you produce, deliver and market the product or service? How will you make money?

12 of 36

EXAMINE YOUR PERSONAL BACKGROUND

12

Consider:

How do my skills and experience fit with my idea?
How risk-tolerant am I?
How can I modify my idea to fit my experience?
Do I have the passion to sell this idea to others?

Session 2: Business Concept

If you don’t yet have a firm business idea in mind, assessing your life and work experience can help you come up with one. If you do have a business idea, review your past experience to see how well it supports your concept.

CONSIDER:

How do my skills and experience fit with my idea?

Suppose you want to open a bakery. If you have worked in food service or retailing, those skills will help you in running your new business. If you haven’t, you may need to learn more about these industries and gain experience before you move forward.

How risk-tolerant am I?

How does my experience affect my startup risk? Past experience can minimize the risk of starting a business. Many people dream of opening a food business, but this industry has a high failure rate. If you have no food industry experience, your risk will be even greater. Taking into account your experience and the potential risk of your startup, assess how comfortable you feel with moving forward.

How can i modify my idea to fit my experience?

If your idea seems too risky, consider an alternative. Using the example

above, for instance, a person with no food business experience might consider a lower-risk business such as an online gourmet food reseller.

Do I have the passion to sell this idea to others?

You need to be able to convince customers, investors and potential partners your business idea is worthwhile.

13 of 36

BUILD YOUR PLAN

Feasibility Plan Draft/Business Concept Worksheet

Provides you with the information to help make a Go/No-Go decision for your business idea.

Has the core information to create a complete business plan for bankers and investors.

Gives you direction to get started.

13

Session 2: Business Concept

14 of 36

IS YOUR IDEA FEASIBLE?

14

Total score should not be more than 10. Assign more points to indicate agreement, less if you do not agree.
Topic	Question	Points
Idea Feasibility	My product/service is servicing an unmet need.
Idea Feasibility	My product/service could be expanded to gain additional customer groups.
Market Identification	I know who my potential buyers are.
Market Identification	I have a clear value proposition for my potential buyers.
Implementation	I know what it will take to start my business.
Implementation	I know what it will take to run my business.
Funding	I understand what it will take to obtain funding.
Funding	I have a plan to fund my business start.
Personal Readiness	I am ready to work hard to achieve my business goals.
Personal Readiness	I understand the challenges ahead and have a plan to tackle them.
Total Points:

Session 2: Defining Business Concepts

15 of 36

RESEARCH & DATA COLLECTION

16 of 36

COLLECTING CRITICAL INFORMATION

Data to collect:

Industry
Customer
Competitor
Market Trends

16

Session 2: Business Concept

17 of 36

RESEARCH YOUR INDUSTRY

Another way to fine-tune your business idea is by researching the industry you want to enter.

You’ll want to know:

Growth trends: How fast can a business in this industry expect to grow?

Profitability: What kind of profit can you expect to make? What are average margins in the industry?

Trends: What current and future trends (demographic, economic, global) are affecting the industry?

Life cycle: The chart below illustrates the concept of a business life cycle. Ideally, you want to choose an industry that’s either at an early stage in its life cycle or in the reinvention stage. Choosing an industry in the mature or declining stages makes it harder to compete.

17

Session 2: Business Concept

18 of 36

INDUSTRY LIFE CYCLE

18

Start-up

Rapid Growth

Maturity

Encouraging

Discouraging

Reinvention

Slow decline

Rapid decline

Session 2: Business Concept

19 of 36

RESEARCH YOUR INDUSTR5Y

19

Defining Your Business:

Description: North American Industry Classification System (NAICS)
Profitability: Risk Management Association (RMA) Annual Statement Studies
National Trade and Professional Association (NTPA) Directory
Growth/Life Cycle
Profitability: RMA
Trends

Session 2: Business Concept

Part of your homework this week will be to research your industry:

- Search Google to find NAICS (The North American Industry Classification System), which is the standard used by Federal statistical agencies in classifying business establishments. They can find their industry description here or from an appropriate trade association. Or write the following link out on the white board: http://www.census.gov/eos/www/naics/

- NTPA (National Trade and Professionals Association) directory is available at the business reference desk of most libraries.

- RMA – Risk Management Association Annual Statement Studies

Organized by industry code
Provides benchmark industry ratios for large, medium, and small-sized firms, including private companies
Offers ratios for the current year as well as past years
Reports financial ratios for over 370 industry groups collected from annual financial statements of firms

20 of 36

RESEARCH YOUR TARGET MARKETS

20

Who do you serve?

Type: retailer, consumer, etc.
Number
Income level/ability to pay
Demographics
Lifestyle
Habits

Session 2: Business Concept

21 of 36

DATA TO COLLECT & WHERE TO GET IT

Know Your Market

Demographics
Habits and patterns

Customer Data Sources

Internet
Census data/government websites
Trade associations
Civic/community organizations
Library reference sections

21

Session 2: Business Concept

22 of 36

RESEARCH YOUR COMPETITION

Understand What They Offer

Price
Features
Annual Sales

22

Size/profitability
Market strategy

Competitor Data Sources

Competitor
Suppliers
Trade associations

RMA
D&B (Dun and Bradstreet)

Session 2: Business Concept

65464

23 of 36

RESEARCH YOUR COMPETITION

Competition

Size
Product/service features

Who are their suppliers?

Availability
Reliability

What’s their business risk?

Product longevity
Legal/environmental

23

Session 2: Business Concept

Discuss the importance of understanding competition, any suppliers that are involved, and the amount of risk for your business.

Competition for Ann’s Nursery indicates that about half of the retail nurseries also produce some version of the plants offered by Ann. However, most nurseries profit from purchasing plants at wholesale and marking them up by 150%, so assuming plants are priced competitively, they will purchase from Ann’s. Due to low costs of shipping locally, Ann’s Nursery will have an advantage over distant competition since she is able to keep prices low. Ann is her own primary supplier and has adequate insurance to minimize risk.

The client should briefly discuss key competition and any other factors. Again, the client should pick the key factors from this slide and this section should be about a paragraph long. This will complete the business concept which should be in total about one to two pages long.

Group Exercise: Briefly describe the target market or customers for the business concept section, as well as the Other Key Factors Section for your business idea.

Total Time: 10 minutes

24 of 36

RESEARCH YOUR COMPETITION

Ask directly, usually a distant competitor
Ask mutual suppliers
Ask competitors’ (your future) customers
Be a customer
Join a trade association
Check competitor websites

24

Session 2: Business Concept

Discuss the importance of understanding competition, any suppliers that are involved, and the amount of risk for your business.

Competition for Ann’s Nursery indicates that about half of the retail nurseries also produce some version of the plants offered by Ann. However, most nurseries profit from purchasing plants at wholesale and marking them up by 150%, so assuming plants are priced competitively, they will purchase from Ann’s. Due to low costs of shipping locally, Ann’s Nursery will have an advantage over distant competition since she is able to keep prices low. Ann is her own primary supplier and has adequate insurance to minimize risk.

The client should briefly discuss key competition and any other factors. Again, the client should pick the key factors from this slide and this section should be about a paragraph long. This will complete the business concept which should be in total about one to two pages long.

Group Exercise: Briefly describe the target market or customers for the business concept section, as well as the Other Key Factors Section for your business idea.

Total Time: 10 minutes

25 of 36

TYPES OF DATA: INCOME DEMOGRAPHICS

25

Income Demographics for Zip Code 17601

Household Income	Less than $15,000	$15,000 - $24,999	$25,000 - $34,999	$35,000 - $49,999	$50,000 - $74,999	$75,000 - $99,999	$100,000 - $140,000	$150,000 and over
Number of Households	779	1,508	1,833	3,047	4,385	2,798	2,152	1,442

Source: https://www.census.gov

Total Households: 17,944

Session 2: Business Concept

26 of 36

TYPES OF DATA: COMPETITIVE DATA

Example:

Hoovers

26

Income Demographics for Zip Code 17601

Source: www.hoovers.com

Session 2: Business Concept

27 of 36

TYPES OF DATA: COMPETITIVE DATA

Example:

RMA

27

Income Demographics for Zip Code 17601

Session 2: Business Concept

28 of 36

GENERAL, AMERICAN COMMUNITY SURVEY

The American Community Survey (ACS) from the Census Bureau is an annual survey.

28

Income Demographics for Zip Code 17601

Session 2: Business Concept

29 of 36

TYPES OF DATA: WEBSITES

NAICS: www.census.gov/eos/naics

American Community Survey: www.census.gov/acs

Small Business Administration: www.sba.gov

Bureau of Economic Analysis: www.bea.gov

Securities and Exchange Commission: www.sec.gov

Bureau of Labor and Statistics: www.bls.gov

SCORE’s website: www.score.org

29

Session 2: Business Concept

30 of 36

TYPES OF DATA: LOCAL LIBRARIAN

Web-based searches for information (e.g., Reference USA)
Reference library tools most-commonly used by SCORE clients
Reference books display and typical information

30

Session 2: Business Concept

31 of 36

GROUP EXERCISE: DATA COLLECTION

31

Gather competitive information

Price and pricing strategy
Product features
Estimate of annual sales
Marketing strategies

Pair up and share plans

What did you learn from this discussion?
How will you use that knowledge in the future?

Time: 5 minutes to write; 15 minutes for discussion.

Session 2: Business Concept

Group Exercise: Distribute the Competitor Data Collection Plan handout. This exercise is to give the client time to develop a plan to get competitive information that they need and will use in the next session. For those with multiple ideas, ask them to choose one idea for the purpose of this exercise, but to complete the work for each idea. 5 minutes to write and 15 minutes for a class discussion.

Total Time: 20 minutes

This is a major part of their homework and they need to be encouraged to go get the information and, “if you plan it, you are more likely to do it.”

During the open discussion, continue to take notes on what others have written that may apply to your competitors – to get a head start on your homework.

NOTE: discuss several plans (for those that will volunteer to talk). This exercise is to give the client time to develop a plan to get competitive information that they need and will use in the next session.

32 of 36

SIMPLE STEPS FOR STARTNG YOUR BUSINESS

32

Session 1: Startup Basics

Testing Your Business Ideas

Session 1 🡪 Startup Basics

Session 2 🡪 Business Concept

Session 3 🡪 Marketing Plan

Session 4 🡪 Financial Matters

Session 5 🡪 Funding Options

SIMPLE STEPS FOR STARTING YOUR BUSINESS

Session 2: Business Concept

33 of 36

YOUR OWN SCORE MENTOR

Take advantage of this free service in order to make the best possible decision.

http://www.score.org/mentors

33

Session 2: Business Concept

34 of 36

HELP US, HELP YOU

Please complete our workshop survey:

On a scale of 0 - 10, how likely is it that you would recommend this workshop to your friends and colleagues?
What is the primary reason for the answer you just gave us?
What is the most important improvement that would make you rate us closer to a 10?

34

Session 2: Business Concept

35 of 36

HOMEWORK

35

Finish your Business Concept Feasibility Plan(s).
Fill out your worksheets
Collect key competitive information. This data will be used in the next session.

See you at the next session on Marketing.

Session 2: Business Concept

36 of 36

SIGN-UP

Sign up for the remaining workshops!

[Insert chapter registration information here, including website and costs]

36

Session 2: Business Concept