Business Start Up

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• Business Start Up
• And
• Expansion
• Presentation

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• Comparatively, Jamaica is considered to be very
  entrepreneurial. Approximately 17 of the
  population had an interest in conducting some
  form of business according to a Global
  Entrepreneurship Monitoring (GEM) report. The
  report further highlighted that, Jamaicas
  overall rate of entrepreneurial activity compares
  favorably with countries such as New Zealand,
  (2005 28.26) considered among the worlds
  most entrepreneurial countries. Further
  comparison with nations with similar economic
  structure, showed Jamaica ahead of nations like
  Argentina, Chile, Mexico, South Africa, and
  Venezuela based on the number of nascent
  entrepreneurs who continued on to operate
  sustainable enterprises 1.

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• Entrepreneurship is one of the core pillars of
  developed economies, particularly due to the fact
  that it enables positive contribution to economic
  growth and is essential in driving community
  sustainable livelihood.
• Studies have pointed to the fact that the
  establishment of new and small business is an
  engine for job creation and not necessarily the
  mega-corporations. Comparatively, countries with
  greater entrepreneurship impetus experience
  significant reduction in unemployment rates 5.
  Therefore, it is important that Jamaica take the
  corrective actions to nurture this great
  potential to creating culture of entrepreneurs.
  
• When one considering the Jamaican scenario, it
  becomes more crucial to focus on the development
  of a culture where young people are enthusiastic
  about creating wealth and their own employment.
  It is evident that young people are faced with
  several challenges. The rate of unemployment for
  young persons is three times higher than that of
  adults 6. Skill levels among youth entering the
  labour force are significantly low over 70, 7.
  Additionally, the youth cohort dominates those
  most affected by poverty 8.

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• Create trust fund and finance programs for young
  entrepreneurs
• One of the greatest challenges for young people
  in their quest to start a business is the
  deprived access to start-up funds. That is one of
  the primary reasons saving is a positive behavior
  which should be vigorously promoted. However, if
  Jamaican youth are to excel in the field of
  entrepreneurship, access to start-up capital is a
  fundamental prerequisite. With the risks and high
  failure rate in business, it is being proposed
  that special funds be put in place that reduce
  the requirement to access loans and also provide
  grants for solid business ideas.

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• Simple Business Ethics and Research
• Decide if you really want to be in business
• You will be putting some (not all, hopefully) of
  your net worth at risk. You will run the
  risk of becoming eccentric, meaning creating a
  life that is out of balance, with working hours
  taking
• away from other family or pleasurable activities.
  There may be levels of stress you have not
  experienced as an employee.
• Decide what business and where
• Once you have decided you have the
  characteristics of a successful entrepreneur and
  that you definitely want to be in business, then
  you must decide which business is best for you
  and where to locate that business.
• Decide whether to start full-time or moonlight
• There are some interesting advantages and some
  pitfalls in starting as a moonlight business.
  (That is, a business you start in your off hours
  while still working at your current job.) More
  often than not, the advantages of starting as a
  moonlighter outweigh the risks
• You avoid burning your bridges of earnings,
  including retirement, health and fringe benefits
  and vacations.
• Your full-time job won't suffer if you maintain
  certain conflict of interest disciplines,
  including

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• compartmentalizing your job and business into
  completely separate worlds.
• You can avoid conflict of interest with your job
  by choosing a business that is appropriate for
  moonlighting, such as single products, real
  estate, specialized food, e-commerce, direct
  marketing or family-run operations.
• There are great advantages for operating a family
  business. The family can run the business while
  you are at work. You have a built-in
  organizational structure. You can teach your kids
  the benefits of being in business.
• But there are also some pitfalls to consider in
  starting a moonlight business
• There is a temptation to spend time at your job
  working on your moonlight business. That is
  unfair to your employer and should not be done
  under any circumstances. (You may need a family
  member or some trusted person to cover
  emergencies when you are at your job.)
• Another problem may be competing with your
  employer, which, again, is not right. Think of
  how you would feel or handle this employee if you
  were the boss.
• Any kind of conflict with your regular work can
  jeopardize your job and your moonlight business.
• Overwork and mental and physical exhaustion can
  also become a very real problem for moonlight
  entrepreneurs.

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• Selection
  Strategy
• Selecting the wrong business is the most frequent
  mistake that start-up entrepreneurs make. Here is
  a checklist to help you select a successful one
• Take your time and wait for the business that is
  just right for you. You will not be penalized for
  missing opportunities. The selection process
  takes a lot of planning and your experience and
  complete knowledge is vital for your success.
• Don't tackle businesses that may be too
  challenging. It is better to identify a one-foot
  hurdle than try to jump a seven-footer.
• Try to identify a business that has long-term
  economic potential. Follow Wayne Gretzky's
  advice, "Go to where the puck is going, not to
  where it is."
• A big mistake can be an error of omission. This
  means you may fail to see an opportunity that is
  right in front of you.
• Look for a business that will grow in today's and
  tomorrow's markets. Many small retail stores are
  no longer in business because huge stores provide
  more choices to the customer and often at a
  cheaper price.
• Businesses to avoid are "commodity" businesses
  where you must compete entirely on price and in
  which you must have the lowest cost to survive.
  As Mr. Buffett has said, "In a commodity type
  business you're only as smart as your dumbest
  competitor."
• Most service businesses have pricing power.

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• If you intend to manufacture a product, consider
  the pros and cons of contracting out production
  to a low-cost supplier. In other words, operate a
  "hollow corporation." A "hollow corporation" is a
  company that subcontracts manufacturing and
  packaging.
• Things to Watch Out For
•  
• Impatience
• Do not let overconfidence short-circuit you from
  analyzing your selection of businesses carefully.
  You must not fear of hearing the negative
  aspects it is much better to be aware of them
  and face them early on.
• Be realistic. Do not become lured by high
  rewards. They will come if you choose the right
  business and if you understand every aspect of
  the business before you open its doors.
• Required Activities
• It is worth repeating again The most common
  mistake and the most costly one is not picking
  the right business to begin with. This is the
  time for soul searching.
• How to Evaluate a Specific Business you have in
  mind.
• Here are some questions to help clarify your
  thoughts

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• Is it something I will enjoy doing?My favorite
  activities are __________________________I like
  to serve people by ______________________________
  __
• Will it serve an expanding need for which there
  is no close substitute?
• Can I be so good at a specialized, targeted need
  that customers will think there is no close
  substitute?
• Can I handle the capital requirements?
• Can I learn the business by working for someone
  else first?
• Could I operate as a hollow corporation, without
  a factory and with a minimum number of employees?
  ("Hollow corporation" refers to a business where
  everything is "outsourced," meaning you would
  subcontract manufacturing and packaging to
  outside sources. )

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• Is this a product or service that I can test
  first?
• Should I consider a partner who has complementary
  skills to mine or who could help finance the
  business?
• Before you start, get completely qualified
• The best way to become qualified is to go to work
  for someone in the same business.
• Attend all classes you can on the subjects you
  need, for example accounting, computer and
  selling.
• Read all the appropriate "how-to" books you can.
• Don't be afraid to ask questions or seek help
  from the most successful people in your intended
  business.
• FOUR AREAS OF INTEREST IN STARTING A BUSINESS
• Research
• Investment/startup
• Marketing
• Savings/expansion

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• Research ideas when Starting a
  business
• What service or product does my business provide
  and what needs does it fill?
• Who are the potential customers for my product or
  service and why will they purchase it from me?
• How will I reach my potential customers?
• Where will I get the financial resources to start
  my business?
• Self-ConfidenceEntrepreneurs are self-confident
  when they are in control of what they're doing
  and working alone. They tackle problems
  immediately with confidence and are persistent in
  their pursuit of their objectives. Most are at
  their best in the face of adversity, since they
  thrive on their own self-confidence.
• Sense of UrgencyEntrepreneurs have a
  never-ending sense of urgency to develop their
  ideas. Inactivity makes them impatient, tense,
  and uneasy. They thrive on activity and are not
  likely to be found sitting on a bank fishing
  unless the fish are biting. When they are in the
  entrepreneurial mode, they are more likely to be
  found getting things done instead of fishing.

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• Comprehensive AwarenessSuccessful entrepreneurs
  can comprehend complex situations that may
  include planning, making strategic decisions, and
  working on multiple business ideas
  simultaneously. They are farsighted and aware of
  important details, and they will continuously
  review all possibilities to achieve their
  business objectives. At the same time, they
  devote their energy to completing the tasks
  immediately before them.
• Status RequirementsEntrepreneurs find
  satisfaction in symbols of success that are
  external to themselves. They like the business
  they have built to be praised, but they are often
  embarrassed by praise directed at them
  personally. Their egos do not prevent them from
  seeking facts, data, and guidance. When they need
  help, they will not hesitate to admit it
  especially in areas that are outside of their
  expertise. During tough business periods,
  entrepreneurs will concentrate their resources
  and energies on essential business operations.
  They want to be where the action is and will not
  stay in the office for extended periods of time.
• Symbols of achievement such as position have
  little relevance to them. Successful
  entrepreneurs find their satisfaction of status
  needs in the performance of their business, not
  in the appearance they present to their peers and
  to the public. They will postpone acquiring
  status items like a luxury car until they are
  certain that their business is stable.
• Interpersonal RelationshipsEntrepreneurs are
  more concerned with people's accomplishments than
  with their feelings. They generally avoid
  becoming personally involved and will not
  hesitate to sever relationships that could hinder
  the progress of their business. During the
  business-building period, when resources are
  scarce, they seldom devote time to dealing with
  satisfying people's feelings beyond what is
  essential to achieving their goals.

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• General Start-Up Activities
• Determine the business you want to start and
  determine
• Your qualifications for the business.
• The feasibility of making that business
  profitable.
• Conduct research on your industry, target market
  and
• competition.
• Select a location and analyze it for traffic,
  parking, and customer
• and delivery access.
• Investigate all start-up procedures specific to
  your industry.
• There is a lot to think about when you are
  starting your own business.
• The following checklist will help guide you on
• Checklist for Business Start-Up
• 1
• www.paopen4business.state.pa.us
• Write a business plan that includes your
  strategies for
• management, marketing, production and financial
  contingencies.
• Develop a list of all potential monthly expenses.
• Determine potential sources of financing for your
  type of
• business.

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• Business
  Start-Up Costs
• Business start-up costs are the expenses you
  incur before you
• actually begin business operations. Your business
  start-up costs
• will depend on the type of business you are
  starting. They may
• include advertising, travel, surveys, and
  training. These costs
• are capital expenses, which are expenses you
  deduct over a
• number of years. However, if you never begin
  business operations,
• you cannot deduct start-up costs.

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A business plan is a tool with three essential
purposes planning, communication and management.
Use the advice here to create or update your
business plan. Gather additional advice from
fellow entrepreneurs and experienced business
owners on our business Forums.Planning. The
business plan guides you through the various
phases of your business. Preparing a business
plan requires that you look realistically at
almost every phase of business because you must
show that you have worked out all the problems
and decided on potential alternatives before
actually launching your business. A thoughtful
plan will help identify roadblocks and obstacles
to avoid and help you to establish alternatives.

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• Communication. As a tool for communication, the
  business plan is used to attract investment
  capital, secure loans, convince workers to hire
  on and assist in attracting strategic business
  partners. A comprehensive, clearly-written
  business plan shows whether or not a business has
  the potential to make a profit. Many business
  owners share their business plans with their
  employees to foster a broader understanding of
  where the business is going.
• Management. As a management tool, the business
  plan helps you track, monitor and evaluate your
  progress. It is a living document that you will
  modify as you gain knowledge and experience. By
  using your business plan to establish timelines
  and milestones, you can gauge your progress and
  compare your projections to actual
  accomplishments.

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• A business must have a business plan. If there is
  no plan, then there is no business.".
• The importance of a comprehensive, thoughtful
  business plan cannot be overemphasized. Much
  hinges on it outside funding, credit from
  suppliers, effective management of your operation
  and finances, promotion and marketing of your
  business, and achievement of your goals and
  objectives.

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• to persuade someone to buy them. When you write
  your business plan, consider yourself a
  salesperson. The product you're trying to sell is
  your business idea. Your customers are potential
  investors and employees. Since you want your
  customers to believe in you, you must be able to
  convince them that you know what you are talking
  about when it comes to your business.
• Before you begin writing your business plan,
  consider four core questions
• What service or product does my business provide
  and what needs does it fill?
• Who are the potential customers for my product or
  service and why will they purchase it from me?
• How will I reach my potential customers?
• Where will I get the financial resources to start
  my business?

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• In order to answer these questions, you must
  become an expert about your own business (or to
  fine-tune your knowledge if you already believe
  you are one). You must be willing to roll up your
  sleeves and begin digging through information.
  Since not all information that you gather will be
  relevant to the development of your business
  plan, it will help you to know what you are
  looking for before you get started.
• What part does you business plan play?
• The business plan often is called the blueprint
  for success.  Without a good business plan, you
  will find it nearly impossible to obtain
  capital.  The business plan starkly exposes your
  business knowledge (or lack of it) to lenders or
  investors.  Preparing a business plan forces you
  to think through your ideas and helps you
  communicate

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• them clearly.  Not only does this help you obtain
  financing, it is vital for successfully
  establishing your goals and managing your
  business and employees.Much of the information
  requested in other portions of this booklet is
  necessary for completing the business plan.  The
  business plan ties together this and much more
  information into a document explaining most
  things an investor or lender would want to know
  about your business.Preparing a business plan
  isn't easy.  It takes time and money to collect
  the necessary information, to analyze that
  information, and to properly communicate your
  findings.  This cannot be done overnight. 
  Successful entrepreneurs usually spend six to 10
  months researching and preparing their ventures. 
  Ninety percent of them utilize professional
  advisers, such as lawyers or accountants, while
  almost 70 percent attend business seminars and
  regularly read business material.

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• Business Plan Outline
• Executive summary (to be completed last) A
  broad overview of your company's activities,
  management and objectives Distinguishing
  features of your products/services
  Attractiveness of your market Summary of
  historical financial results and financial
  projections Amount of money you seek, in what
  form and for what specific purposesDescription
  of your business and industry Your business
  The industry, its history and its anticipated
  futureFeatures and advantages of your
  products/services Description Competitive
  advantage and market niche

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• Proprietary position Future potential
• You should consider including some products or
  sales literature as exhibits. Market research
  and analysis Existing and potential customers
  and markets Critical customers (over 10 of
  sales) Market size and trends Competition
  and strategy for competingEstimated market
  share and sales Marketing plan Marketing
  strategy Pricing Sales tactics Service and
  warranty policies Advertising, public relations
  and promotionProduct design and development
  plans Development status and tasks
  Difficulties and risks Costs

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• Operations plans Production or service delivery
  process (flow charts may be helpful)
  Geographic location Existing facilities and
  projected improvements for future needs
  Strategy and plans Labor force
  Product/service distribution Availability of
  material and supplies Dependence on critical
  suppliers Unique or novel processes
  usedManagement team Organization and
  ownership (charts are helpful) Key management
  personnel (credentials) Management strengths
  and weaknesses Management compensation Board
  of directors Key business advisers
  Professionals retained (accountant and attorney)
• Include personal financial statements of
  principal owners as exhibits.

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• Overall schedule Timing of critical activities
  before opening (obtaining funds, incorporating
  the company, selecting the location, ordering
  supplies, hiring employees, starting operations)
  Timing of critical activities after opening
  (expansion, product/service extension)Response
  to critical risks and problems Working capital
  shortage Price cutting by competitors
  Unfavorable industry-wide trends
  Design/operating costs over estimates Low
  sales Difficulty obtaining supplies, raw
  materials Difficulty obtaining credit High
  inflation Lack of trained labor
  RecessionFinancial statements and projections
  Five years of annual historical financial
  statements (or from the period the business has
  been  in operation, whichever is shorter)
  Profit and loss forecasts for each month of the
  first full year and for each of the first three
  years of operation

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• Cash flow projections and an operating budget for
  each month of the first full year and for each of
  the first three years of operation Pro forma
  balance sheet at start-up, monthly balance sheets
  for the first year and at the end of each of the
  first three years Financial controls to be
  implemented Person responsible for finance and
  accounting matters Outside accountant or
  bookkeeper who will audit, review or compile the
  company's financial statements
• Ownership structure Owners and how much they
  are investing Shareholder agreements Which
  owners are making personal guaranteesProposed
  company financing sought Desired amount and
  terms of financing and form (equity, grant or
  loan) Timing of required financing Proposed
  use of funds, scheduling

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• Simpler Outline
• ??Executive Summary - summarizing key
• points of the plan in one or two pages.
• ??Overview - introducing the reader to your
• company and the industry.
• ??Description of products and services.
• ??Analysis of the market in which your
• business will compete.
• ??Marketing strategy - summarizing the
• product, promotion, pricing, and distribution
• strategies of the business.
• ??Operations plan.
• ??Description of the experience, training,
• and talent of your staff.
• ??Schedule of activities outlining your
• timeline.
• ??Analysis of critical risks and problems.
• ??Financial plan - including pro-forma
• balance sheets, income statements and cash

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• Once you have worked through your business plan
  and have a good product, you should work on your
  personal presentation.  Remember, your ability to
  effectively manage is being judged, as is your
  business plan itself.  Preparing key visual aids,
  developing responses for likely questions and
  repeated practice are good strategies.
• What are some sources of investment capital?
• Many people interested in starting a business
  immediately look to commercial banks for
  financing. This is understandable because of the
  important financial role banks play in our
  society.  However, banks are only one source of
  possible financing often a business combines
  several sources.  The following list of potential
  financing sources is presented for your
  consideration. YourselfIn addition to
  contributing your own sweat equity, you have to
  be willing to put up a good share of the money. 
  No lender will give you money if you are not at
  personal financial risk.  You may be asked to
  personally guarantee repayment of any loans made
  to your business. As well as indicating your
  commitment to the business, personal investment
  is one of your easiest sells.  If you can't
  convince yourself to invest, who can you
  convince? Savings, mortgages, personal
  possessions and life insurance policies are just
  a few sources of money that can get you started.
  Relatives and friendsAgain, these are people
  you should have a good chance of

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• convincing to loan you money.  They know you
  better than any potential outside lender. 
  However, be careful.  Make sure your relatives
  and friends know the risk involved and formalize
  the lending arrangement with a promissory note or
  loan agreement.  Many personal relationships have
  been ruined by small business failure.

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• Government-sponsored financing programsState and
  local governments offer financing options for
  your company, as well.  Many have subsidized loan
  pools that provide fixed-rate, below-market
  business loans or grant programs.  JBDC.
• Small business investment companies are private
  companies that offer financing JNBS.  Licensed by
  the Small Business Administration, they provide
  debt and equity capital to many small
  businesses.  They will undertake more risks but
  also demand greater rewards through either higher
  interest rates or equity positions. Commercial
  banksBanks operate on a small margin of error
  and are extremely wary of investing in a risky
  business.  Collateral to more than fully secure
  the loan - including personal guarantees - is
  necessary to convince a bank to lend you money.

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• THE END