How to Start a Business

1
How to Start a Business
2
What Does It Take?

• Confidence in your abilities. People who are
  afraid of failing often dont even try. You must
  believe in yourself.

3

• Research.
• You must learn all you can about the type of
  business you want to own.

4

• Planning
• Dont just think
• about a week
• from now, but a
• year from now.

Calendar Year 2001
5

• Capital
• Every business
• needs some
• start-up money.

6
Starting a new business is not a sure thing.
There are risks.

• Your business might fail.
• You might lose all your money.

7
Is success possible?

• Yes! People have started out in small businesses
  and have worked hard to make them grow.

8
To be successful, you must

• Choose your goals.
• Buy or make things and sell them to customers

9

• Provide services for your customers

10
Why start a business?

• Be your own boss.
• Earn profits based on your skills.
• Make your own decisions

11
You must decide

• What would I like to do with my time?
• What can I sell?
• What are my talents?
• How much time do I have to run a business?

12

• Will my idea work?
• What is my competition?
• What are my advantages?
• Can I give good service?

13
Legal Structure

• Three types of
• legal structures
• are
• Sole Proprietorship
• Partnership
• Corporation

14
Legal Structure

• Sole
• Proprietorship
• A company owned by only one person. He gets all
  the profits and all the losses.

15

• Partnership
• A company that has two or more owners, who share
  profits and losses with each other.

16

• Corporation
• A company owned by shareholders who invest in the
  company when they buy stock. Some shareholders
  own more stock than other shareholders.

17

• The owners of a
• corporation
• receive some of
• the profits.
• These are called
• dividends.

18
Types of Plans

• Business Plan
• Marketing Plan
• Financial Management Plan
• Operating Plan

19
Marketing Plan Shows

• Type of product.
• Market size location.
• Type of advertising.
• What price you will charge.

20
Type of Product

• What type of product or service can you provide?
• What does the customer really want?

21
Market Size Location

• Take a survey to
• determine
• How many customers are in the market?
• Where will they shop?

22
Ways to Advertise

• Advertise through
• Newspapers
• Telephone
• Mail

23
What Price to Charge?

• A price too high
• will scare away
• customers.
• A price too low
• will make you
• lose money.

24
Law of Demand

• At low prices, customers will buy many items.
• At high prices, they will buy few items.

25
Law of Demand

• At a price of 8, customers will buy zero units.
• At a price of 6, they will buy 5 units.

26
Law of Demand

• At a price of 4, customers will buy 10 units.
• At a price of 2, they will buy 15 units.

27
Law of Demand

• Customers will demand 20 units, but only if they
  dont have to pay for them.

28
Revenues

• Revenues ( often
• called Sales)
• are the amount of
• money you get
• when you sell to
• customers.

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Revenues Price x Units

• If you sell zero
• units at a price
• of 8 per unit,
• you get Zero
• revenues.

30
Revenues Price x Units

• If you sell 5
• units at a price
• of 6 per unit,
• you get 30
• revenues.

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Revenues Price x Units

• If you sell 10
• units at a price
• of 4 per unit,
• you get 40
• revenues.

32
Revenues Price x Units

• But, if you sell
• 15 units at a
• price of 2 per
• unit, you get 30
• revenues.

33
Revenues Price x Units

• But, if you sell
• 20 units at a
• price of 0 per
• unit, you get 0
• revenues.

34
Revenues Price x Units

• Notice the amount
• of money you will
• get will depend on
• how many units
• customers will
• buy at what price.

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Revenues Price x Units

• Notice
• 8 x 0 0
• 6 x 5 30
• 4 x 10 40
• 2 x 15 30
• 0 x 20 0

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Revenues Price x Units

• Which
• combination
• would give you
• the most
• revenues?

• 8 x 0 units sold?
• 6 x 5 units sold?
• 4 x 10 units sold
• 2 x 15 units sold
• 0 x 20 units sold

37
Law of Supply

• The Law of
• Supply shows
• what price you,
• the seller, will
• be willing to
• accept.

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Law of Supply

• At a price of 0,
• You wont sell
• Any units. You
• wont make any
• money.

39
Law of Supply

• At a price of 2,
• You would be
• willing to sell 5
• units to your
• customers.

40
Law of Supply

• At a price of 4,
• you would be
• willing to sell 10
• units to your
• customers.

41
Law of Supply

• At a price of 6,
• you would be
• willing to sell 15
• units to your
• customers.

42
Law of Supply

• At a price of 8,
• You would be
• willing to sell 20
• units to your
• customers.

43
Law of Supply

• Under the Law
• of Supply, the
• higher the price,
• the more units
• you will be
• willing to sell.

44
Market Price

• In the Market,
• buyers and
• sellers get
• together to
• negotiate price
• and quantity.

45
Market Price

• When Supply
• and Demand
• Curves meet, that
• indicates the
• market price and
• quantity.

46
Market Price

• At that point
• customers will
• buy 10 units at a
• price of 4 per
• unit.

47
Market Price

• At that point
• sellers will
• sell10 units
• at a price
• of 4 per
• unit.

48
Financial Management Plan

• A Financial
• Management
• Plan is very
• important.

49
Financial Management Plan

• It shows
• Source of capital.
• Operating budget.
• How you will pay yourself.

50
Sources of Capital

• Some ways to
• get capital are
• Borrow money.
• Invest your own money.
• Get others to invest with you.

51
Operating Budget

• An Operating
• Budget shows
• Expected revenues.
• Expected expenses.
• Expected profit.

52
Pay Yourself

• You must pay
• yourself out of
• any profits that
• you earn from
• your business.

53
Operating Plan

• An Operating
• Plan tells you
• Who will manage the business.
• How many employees.
• How much equipment.

54
The End

• Owning your
• own business
• offers rewards
• risks and
• takes hard
• work.