Class 1

Class 2

Class 3

Class 4

Class 5

Class 6

Class 7

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Class 1 – Developing and Communicating the Business Concept

Handouts: Goal Setting Exercise, Support Team Exercise, Money Attitudes Assessment,

Extra Resources: Feasibility Questionnaire, Know Your Credit History, Financial Management Reading List

Class Summary:

Read Chapter 2:

Read Model Business and Reality Check (pages 31- 41 and pages 42-44)

• Review traits for a business on pages 31- 41. In an ideal world this is what it would look like.
• Fill out Model Business Reality Check form on pages 42-44 to see where you score.  We’ll be checking back as we go along—your score will change. Looking at your score, what were the big surprises? What are your weakest areas?

Business concept statement / Elevator speech

• Start with business concept (pg 45-47),
• Now turn your business concept into elevator speech (pg 48-51). An elevator speech is what you would say to explain your business to someone as you ride from one floor to another on an elevator. In sixty seconds or less, explain your concept. This is the most important exercise of the day!

What does it take to be a good business writer? (pg 52-59)

• Keep it simple
• Always use spell-check, but don’t rely on it
• Use a writer’s guide (ie. Strunk and White)
• Use active vs. passive construction
• Simplify, simplify, simplify

How do I meet the people I need to know (pg 60-68)

• Make contacts that count
• Network everywhere
• Remember names
• Be prepared to tell what you do- have your elevator speech ready.
• Types of networks

Read Chapter 3:

Read pages 81-82. Is managing money important?

Refer to the handout on goal setting. Choose three goals and outline steps you will take to accomplish them.

Tag lines: summarize your business in one line.

Complete the Reality Check Activity (pg 85, 86)

Testing my business concept through research (pg 87-89)

• Avoid a badly written business plan by:  doing research on your business plan; getting real information; using the library; make sure that internet resources are factual and current.

Homework:

• Talk with two people you identified for your support network (handout) about starting your own business
• Find a proofreader/grammar checkers
• Read ahead in Lessons 3 & 4
• Personal Financial Statement (we don’t want to see it, just recommending they practice preparing one for themselves).
• Read “The Man and the Dream: (under the Scenario tab)
• Read through “Feasibility Plan”
• Revise your Business Concept Statement using the feedback you got in class today.
• Work on Goal Action Plan.

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Class 2 – Gathering Information for Feasibility/ Products and Services

Handouts: Market Research Sources,  Identify Your Products or Services,  Favorite Websites

Extra Resources: Web Business Resources, Library Resources

Class Summary:

Review the “Man and the Dream” scenario and “Feasibility Plan.”

• What do you think about this business based on this plan?
• What products or services is he selling?
• Would you loan him money?

What am I selling. On page 115, review the difference between features and benefits

• What is a feature? What is a benefit? (pg 116)
• What makes your product/service unique? Fill out the bottom of page 116.
• Is there an advantage to unique?

Complete the activity on page 117: Products and Services with The Man

• How did The Man do?
• Did he have good products and services?

Model Business Reality Check on pages 118-119

• Go through each category and fill out the form. What were the score, weak areas, strong areas?

What am I selling? Read the example on page 120.

• Sam and Marla: how were their responses the same? How different?

Change your Definition (pg 121)

• What are you selling really?

Future products and services (pg 122)

• Why should you care? (markets change, you need to change with them; expanding your business;
• Rules of brainstorming
• Do the exercise: any surprises, extra cool ideas?

Read page 129: Opinions vs. Facts (refer also to pg 87)

• What are some opinions about your industry?
• What’s an example of a fact about your industry? (we want to focus on facts, not opinions)
• Look at relevant section of sample Feasibility Plan (pg 112.7)

Industry Overview (pg 130)

• Choose one of the examples and separate fact from opinion

Information Brainstorming (pg 131)

• What questions do you need to know about your industry; specific questions are best and easiest to answer;
• Where to find this information?
  • Where on Internet? What kinds of searches?
  • Come up with a  list of possibilities; how specifically would you go about using that resource (instead of “Government Agencies,” which government agencies would you approach? What would you ask them?);
  • Review market research handouts.

Homework

• Research your industry; be prepared to state some facts about your industry and how you found them out
• Complete the Market Analysis template on page 146. This is for the industry overview portion of your feasibility plan.

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Class 3 – Market Analysis: Competition/ Market Segments & Strategies

Handouts: SWOT Analysis, 100+ Marketing Ideas, Article: Three stages to help manage your market analysis, Identify your Customers

Class Summary:

Who are my competitors?

• Why do you care? What’s the importance of knowing your competitors? Is it the same for all industries?
• Some things to consider:  Their weaknesses can be your strengths; don’t play to their strengths; what areas have they overlooked that you can exploit?; adjusting your pricing-you may be too low! If you’re higher, you’ll need to be able to explain why.

Considering competition in The Scenario – The Man & the Dream. Complete the exercise on page 137.

Types of competition (pg 138 & 139)

Think of examples of direct and indirect competition

• Indirect: companies that serve the same need; services that can be eliminated when times are hard;

Do following expercises on page 140. Who are your:

• Direct competitors?
• Indirect competitors?
• Future competitors?

What do I know about my competitors?

• Go over the worksheet on pg 141-142; how to find out this information?
• Build a strategy to get this information (pg 143)—how can you find out?
• Complete a SWOT (Strengths, Weaknesses, Opportunites, Threats) analysis on your business and of your competitors

Market Segments

Read over the Market Analysis for “The Man and The Dream” on page 155

What do we mean “Market segments”? What are examples? Target markets? Refer to the information in the box on page 154 for clues to what we mean

Read the handout – news article by Jimmie Wilkins titled “Three Stages to manage your market analysis”

Activity: Demographic characteristics

• What do we mean by “demographic characteristics”? (e.g.: writes software; less than 25 employees; = type of business, size of business)
• Brainstorm a list of demographic characteristics that help create a customer profile

Activity: My customer demographics (Pg 156-157)

• Define “primary customer” = most likely to buy lots from you (and repeatedly); danger of “everybody is my customer!” thinking; do I care what age? What gender? Be specific.Who is McDonald’s primary customer? Who is WalMart’s primary customer?
• Who is your primary customer? Write it down.

Customer Motivation

Complete the Activity: Factors that Motivate Customers to Buy on page 159.

• Go through the list and define the terms
• Are there anyy factors left off this list? (e.g., image, environment)

Complete the Activity: Factors that Motivate My Customers to Buy on page 160

• Write down what will motivate your customer and why.

Customer Buying Patterns- read page 161

• What does that mean? Go through examples; don’t forget seasonal buying patterns;
• How frequently will customers buy from you?

Homework:

• Research two of your competitors and gather as much information as you can.
• Complete the Competition Profile template on pages 148-151.
• Work on the 1^st draft of your Market Analysis, you can use the computer template found at www.firststepfasttrac.org

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Class 4 – Pricing and Product/Service Cost

Handouts: Break-even Exercise, Website Basics,  Logos,  How I Survive as an Independent Artist

Class Summary:

Business Financials: read page 189.

• Read through each myth and answer them out loud. The focus of this section is to answer a couple of questions, “Will a customer pay me enough to make this business profitable, and can I prove it?”

Pricing strategies: read pages 190-193 and consider: why pricing matters, pricing strategies

• The Man & the Dream pricing strategy
• My Pricing Strategies
• What are my pricing strategies; what information will I need to know & how will I gather this information?
• What other ways are there to gather information about pricing?

Pricing My Product/Service: read pages 194-201

• Pricing My Service or Product: see pages 194 and 199
• Service businesses, read the discussion of billable (and non-billable) time on pages 195-196
• Do pricing exercise for the Man and the Dream business on page 197 and 200 (The Man’s price is slightly high).
• Do pricing exercise for your business. (pg 198 and/or 201)

What is the Cost of my Products and Services?

• Read pages 202 to 203: this section will introduce the concept of Cost of Products and Cost of Services. The cost of product/services is the total of the costs you incur to sell the product or service, not to operate the business. Make sure you understand the difference between variable and fixed expenses.
• Complete the activity on page 204.

Overview of Breakeven: read page 205. If you have questions, don’t worry- we will review this section next week.

• Important concepts: Sales do not equal profits. Profitability can be affected by controlling costs. There is a glossary of terms in the back of the book that you can refer to.
• Pg 206-208: Complete the exercises (one is a product exercise, the other is a service exercise)
• Complete your own breakeven exercise on page 209.

Homework:

• Price at least one of your products or services using the worksheet on pages 217-220. If you did one of these in class, please do at least one more using different amounts for operating expense, salary, or profit.
• Figure your breakeven point based on your estimates of operating costs and complete this part of your feasibility plan using the template on page 215-216.
• Gather as much information (real numbers/best estimates) as you can about your startup costs and operating costs. We will complete the pages in Section 8 in class, so you will need this information to do the work.

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Class 5 – Price and Profitability Analysis

Handouts: Financial Plan Questions

Class Summary:

Financial Terms you need to know: (pg 228-229)

• Define terms on page 229. You have a Glossary of terms in back on class handbook for future reference.

Review breakeven: Daniel’s key chain example: see handout.

Another exercise: Tim buys a candy bar from a machine for 50 cents. He then sells it to Bob for $1. But the rent on Tim’s room is $50 per month. What is Tim’s cost of goods? What is the gross profit? Gross margin? Does Tim get to keep the gross margin? How many candy bars does Tim need to sell to break even?

Income statement for three years “The Man and The Dream” (Pg 230 to 231)

• Go through first year line-by-line. Review the next two years.
• Answer questions on pg 231.

Cash Flow: Using the information on page 232 (and 230), finish filling out the form on page 233

What will it cost to start my business? (read page 234)

• What do we mean “Start-up costs”? What is the difference between start-up costs and operating costs?
• Why does this matter?
• Go through two or three of the basic questions: Where will your business be located? What will this space cost? What equipment will you need? Opening inventory?

Start-up costs worksheets (pages 235 through 256)

• Go through each heading, and list examples of what would go into that category
• Go through and fill out forms for your business.
• Did you notice any information you didn’t know? How will you find it out by next week? If you think this is hard, wait until you try to do this AND run your business.

What will it cost to operate my business? (pg 257-279)

• What do we mean “operating costs”? Go through questions on page 257.
• Go through each heading, and list examples of what would go into that category
• Go through and fill out forms for your business.
• Again, identify any information you didn’t know? How will you find it out by next week?

(Chapter 9) Cash Flow Report (Pg 300 & 301)

• Define the concept of cash flow. Go through the definitions on page 301
• Step through Cash Flow report form, pg 303 by section. Make sure you are comfortable with seeing information displayed this way.
• Fill out Start-up column on Cash Flow Report (pg 303) for your own business (refer to pages 236-256).

What are my projected sales? (pg 305)

• “Bottom Up” What do I need to make?
• Work through exercise on page 306 for both Best and Worst case scenarios
• “Top Down” Guessing at sales figures
• Work through exercise on page 307 for both Best and Worst case scenarios
• Calculations help you get started estimating sales. Remember, they are just estimates. Do you see a value in having best and worst case scenarios? Which scenario is most appropriate for a start-up?

Pulling it all together…

• Review PSU Financial Plan Outline handout

Homework:

• Fill out your start-up costs worksheet. If there’s costs you don’t know, bring those questions to class, and we’ll talk about how to find them out
• Fill out your operating costs worksheet. If there’s costs you don’t know, bring those questions to class, and we’ll talk about how to find them out.
• Using pages 308-309 consider your yearly sales (best and worst case)
• Gather information to fill out the Cash Flow report for next week (forms on pg 323). Also check out the cash flow worksheet under Student Resources at http://www.firststepfasttrac.org/ which may be an easier format for many.
• Next week we will discuss legal structure for your business. Read pages 287-298.

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Class 6 – Plan for Future Action

Handouts: Feasibility Presentations, Business Plan Elements, Business Start-up Checklist

Extra Resources: Choosing a Legal Structure, Risk Tolerance

Class Summary:

Review last week’s homework assignment: put start-up and operating cost projections onto a cash flow sheet.

• What costs have you easily been able to identify? What costs do you have problems with?  What level of sales will you need to support your operating costs?

What legal structure will I select for my business (pg 285-299)

• This is a very important decision. Read about each option. Many microenterprises choose to become a sole proprietorship. Those with more risk and liability may choose to form an LLCs.
• This decision will affect quarterly estimated tax payments & Schedule C
• If you do have a partner, you’ll want a legal agreement—it’s less about breaking up with your partner, and more about what if something happens to one of you.
• Refer to “How to Start a Business in Oregon” which is available at www.filinginoregon.com for more information about business legal structure. Another great place is the Oregon State Bar site http://www.osbar.org/public/legalinfo/business.html
• Seek advice from an accountant or attorney in deciding legal structure, particularly if you are not a sole proprietorship or have a business that creates risk.

About accounting (pg 317)

• Should you hire a bookkeeper? Accountant?
• What are the pros and cons of hiring these folks?

Cash Flow Report : on page 319, work on transferring amounts from worksheets to Cash Flow report.

Where Will I Get the Money I need? (Pg 335)

• Debt financing vs. equity financing
• Sources of money: On pages 336-338, go through each source, discuss pros and cons.
• What is collateral? Do you have any?
• Will you need to borrow money to get started?
• How will you know if you need to borrow money once you’re going?
• Collecting on your accounts receivable.
• Finding the right bank (339-340).

Capital Link loans- This is another program that MERIT has access to due to our membership in the Oregon MicroEnterprise Network (OMEN). MERIT clients can apply for microloans through CapitalLink for startup costs or for operating costs. Talk to Forrest if you are interested in applying.

Final reality

• On page 342, fill in your personal strengths and pitfalls as they relate to your business.
• Based on what you know, what is your next step? Is this a go/no go or get more information/revise my original plan?

Homework:

• Prepare for class presentation next week: Prepare a presentation about your business as if you were applying for a loan. Presentations will last for five minutes and be followed by five minutes of questions.   This is a fun opportunity to find out how everyone is progressing in developing their business concept. It’s also a great opportunity to share about your business and get feedback. Refer to the handout for more detailed information.

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Class 7 – Business Feasibility Presentations

Handouts: Next Steps, Client Action Sheet

What we covered in class: Feasibility presentations

Congratulations on completing the MERIT class. Be sure to visit our office any time you would like to meet with Forrest or another advisor, to use our resource center, or to take more advanced classes. Let us know about your questions and issues so we can help you. And don’t forget to let us know about your successes so we can celebrate them with you!

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The MERIT program is a part of the Chemeketa Small Business Development Center

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