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GETTING STARTED Yes You Can!

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  1. GETTING STARTEDYes You Can! Jeff Stambaugh Dillard College of Business/Rm 257A jeff.stambaugh@mwsu.edu http://faculty.mwsu.edu/business/jeff.stambaugh Built by Stambaugh/2009

  2. Motivation • Hot off the Press … BW’s 2008 Top Entrepreneurs Under 25 Link Built by Stambaugh/2009

  3. 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 Built by Stambaugh/2009

  4. 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? Built by Stambaugh/2009

  5. Benefits of Part-time E-Ship • Continued income from “day job” • Health benefits from work • Able to cut losses easier? Built by Stambaugh/2009

  6. 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 Built by Stambaugh/2009

  7. 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 Built by Stambaugh/2009

  8. 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 Built by Stambaugh/2009

  9. 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? Built by Stambaugh/2009

  10. 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? Built by Stambaugh/2009

  11. And Now the Hard Part … The Price! • More art than science • Value cash flows • Value assets • Comparable sales • Earnings multiple • Industry heuristics Built by Stambaugh/2009

  12. 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 Built by Stambaugh/2009

  13. 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) Built by Stambaugh/2009

  14. 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 Built by Stambaugh/2009

  15. 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 Built by Stambaugh/2009

  16. Class Takeaways • Yes you can! • There ARE many businesses in Wichita Falls that probably could be bought! Built by Stambaugh/2009