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started today's webinar is how to write a business plan and our panelist is Martha Lonnegan Martha joined the University of Arkansas Fayetteville Walton College a SBTDC in 2012 she has a bachelor's degree from the University of Arkansas and earned her Juris Doctor from the University of Arkansas School of Law Lonnegan and her husband have own automotive businesses for the past 10 years she practiced law in Arkansas and Oklahoma for more than 12 years primarily representing banks corporations and small businesses in the areas of collections foreclosure and bankruptcy martha organizes volunteer professional presenters for the eight-county region of northwestern arkansas to present affordable business seminars she works one-on-one with small business owners to develop social media and general marketing plans welcome Martha good morning Timothy and good morning to the attendees out there we of course based upon our attendee list have a lot of good folks from Arkansas but we're also covering the whole country we have an attendee from Maryland one from Arizona in Colorado so I'm speaking you to you today from the University of Arkansas flagship campus in Fayetteville it is absolutely as beautiful as it can be here today and just a second for those of you who are out of state which we have several attendees we are about 30 minutes from Bentonville Arkansas which is of course home to Walmart stores inc the world's largest seller of goods and largest employer of humans so because of that incredible opportunity and business growth we have a thriving entrepreneur community in Northwest Arkansas Fayetteville particularly Springdale and Bentonville have seen almost what you could term an explosion of small businesses in the last three years so we work with businesses every single type from service to brick-and-mortar stores so that's where a lot of our experience comes from as Timothy told you and both of our two full-time business consultants here Larry Bryan and Bill Fox all have extensive banking background and corporate backgrounds as well so when we're working and talking about the business plan one of the most important things I tell entrepreneurs is you have to take yourself seriously we have a lot of entrepreneurs who have retired or come out of Walmart vendor jobs jobs related to Walmart Tyson JB Hunt and actually don't even need financing to start their small business and sometimes we'll say well I don't need a loan from a bank so why do I need a business plan you need a business plan because you're a business owner and you have to take yourself seriously and operate it in that fashion plus if you experience what we have seen here which is potential explosive growth of a small business you will need financing to build your own manufacturing facility to open a new location so it's always good to have a business plan in your pocket ready to go and then I would say probably about 40% of our small business owners do have to apply for an SBA loan or an in-house loan or a loan from a micro lender so I really want to mention that here at the get-go that the business plan is absolutely vital if you plan to be a true business owner the next train talks about the ASB TDC we have seven centers in the state of Arkansas our lead Center is in Little Rock at UALR meeting that's where our federal monster SBA grant goes that has been distributed out to the seven centers most SBDCs are located on college campuses and our outreach centers of the college so like here we are half funded by the Walton College we are all full-time employees of the Walton College probably the most important thing we provide is free business consultant services we do have small charges for our seminars at the center so regardless of where you're located there is an SBDC near you there are over 900 excuse me 900 throughout the United States and in our territories so reach out to those business consultants here in Arkansas we're fortunate we over $100,000 a year of our federal grant to have market research subscriptions and we have those subscriptions to the same companies that major corporations use so instead of our small business owners running all over town trying to figure out how much to charge for a latte or how much to have a retail markup on a bicycle we can get them that market research and provide it to them the seminars are very important because we have volunteer speakers attorneys accountants who charge hundreds of dollars an hour who will volunteer and do these seminars and so you're basically getting four hundred dollars with a legal advice for 30 bucks so I really encourage all of you to get on the internet type in SBDC and find a small business center near you to go reach out and get those free services in regard to the business plan I've already told you it is an organized way of analyzing your business it's taking yourself seriously it's clarifying things it's setting benchmarks when should the business have a sufficient income that you can make yourself a full-time employee if you don't have the funding upfront it's a management tool for making decisions when you start a small business things will start to come in the door people will start to contact you about other services other products and you have to be able to go back to that business plan and decide is this why we went in business is this what our research showed us our target consumer our target market is looking for it is a living breathing document I tell people at minimum you should revisit your business plan every six months actually pull it up in the computer and read it and look at it and tweak it and see the great things you've achieved and see things that oh you know our market research initially showed we should be here and we're not there what's the issue what's going on you can go back to your business consultant look at the issues compare yourself to other competitors in the region and see why that's not happening it's also a great marketing tool in Northwest Arkansas because of the huge corporate environment we have true angel investors we have people who contact the sitter and say I just retired from Tyson I'm 52 years old I want to stay in business I'm interested in finding someone to go in with to have a business partner on our YouTube channel for our Center you can go on there and we have interviews with clients from the center and one of them bought a major company in Fort Smith and talks about in the interview that he is funded by a friend of his who retired from Walmart so having that business plan when you have that opportunity come up to show someone your business to look at forming that partnership is very important obviously the loan review committee at your bank is going to require a business plan to review sometimes landlords at strip malls at buildings you're gonna rent they want to see your your business plan because they need to know that you fit into the mix of their shopping center employees when you're trying to recruit an employee trying to bring in some new talent they're going to want to know what's the vision of the business and you want to present a professional attitude to them and show them here's my business plan here's why you should come to work for me here's the market research that shows the growth potential here so those are some of the many tools other than seeking financing I love this one this little cartoon it says the gentleman's presented a business plan it says me want to make money and he says that's an admirable plan but a bit short on detail and so the detail is important but not too much detail when I do this seminar at banks the loan officers always love it when I say no one wants to see a 50 page business plan no one needs to see the same chart in statistics five times so we're gonna talk in here about to the point business plans what I want you to number one be encouraged to do if you're going to seek a small business loan don't go to the drive-thru at the bank and ask for a commercial loan application and go home and fill it out and drop it back off go to your bank if your bank doesn't make commercial loans or doesn't is not involved in the SBA program contact an spdc ask other business owners what banks in the area are actively pursuing SBA loans and you need to go make an appointment with the commercial lending officer at that bank and ask them what they want that's part of what our business consultants do here bill and Larry almost every major commercial loan officer in the region they know that this Bank likes this in their packets this Bank lights that will ask our customers and our clients to sign a release so that we can talk to the loan officers sometimes we'll be down to the wire getting ready to fund the loan and the loan review committee will come back and say we're a little worried about this issue can you get us some more market research to prove that you know this amount is needed for this equipment because this service or this product is needed so really make sure you've got a good relationship with a commercial lending officer before you even start the commercial loan process the to-the-point business plan this is the modern concept especially after the Oh a crash the banks are all about the facts they want basic good solid facts and figures to support the loan not a 55 business plan with a lot of fluff of I make the best ribs anybody's ever had so these are the basics that should be in every single business plan the summary in the middle is extremely important because that's your gateway that may be the only thing that the initial loan officer reads obviously it's very important but you're going to write last because as you start at the stop top of the star you're looking at the products and services you're gonna provide you're looking at your market the industry in general how you're gonna operate and manage the business and your budget as you go through that circle your business plan is going to change I'm an example i given the seminars is my husband and I owned a Chevrolet dealership and we sold out to our partner and so we wanted to start our own use car business and my husband was just gung-ho that we were gonna do wholesale and retail and when we started looking at the operations and management and having a retail site the insurance for people to take test drives on cars having to have an employee etc we cut that out and when we analyzed his contacts and the market for hotel only we completely changed our business plan by the time we got done and we got to the summary there was no more retail we had completely cut that out of our business plan so the summary comes last because a lot of things may change as you analyze your business so the to the point business plan is emphasizing the importance of the major steps its quality over quantity we don't need the same chart three times we don't need a two-page resume about your background we need the basics these are all of the things that should be in every single business plan some parts are longer than other parts obviously the first three are very typical you can read that and understand cover page table content summary financing proposal you have to do the legwork with a business consultant with someone who's helping you review it but you have to tell the bank how much money you need the bank doesn't do that analysis for you you decide these are my start-up costs based upon market research this is the salary I think that is acceptable in this area to pay myself you have to get that ready for the bank and over on the right-hand side where you have the financial plan and projections that will help you with the financing proposal most banks want to see at least a three year profit and loss projection a lot of times small business owners for the first time will say to us well how do I know what my profit loss projections are gonna be I've never had this business I've never owned a business that's fine and that's typical of course that's a fact it's pretty unlikely that no one in the region or no one in the United States has never opened a business like yours so it's completely acceptable to look at like businesses like competitors do to self reporting subscriptions such as dun & bradstreet you know for example we had a client that was opening a hair salon we were able to show her the top ten hair salons in Fayetteville Arkansas what their gross profits were we were able to break down what pricing they had for hair color for nails etc all that information is available through these market research descriptions so those financial plans and projections can be based upon other like businesses but the small business owner is going to have to all so do the footwork they're going to have to tell us we don't know how much you pay for that hair color who's your supplier how's it going to get here what's that basic cost so some of that you will have to do that for us but some of the things we can help you with we can do a survey in the town that you pick where you want to open your business of what the average commercial lease rates are and then I step in a lot of times at that point also when we start looking at marketing the business and we look at traffic counts if you're opening a small business that you want people to come in the door what we call a brick and mortar business then placing that business on a street that has 30,000 cars going by every day even though that facility cost you $200 more a month by having your sign on that street that's gold that's worth every bit of that $200 if you're opening a psychiatrist office think about in your town where the psychiatrists and psychologists are located they're not on very busy streets they're probably tucked away in a quiet section of town people really don't like everybody in town driving by and seeing that there's a psychiatrist office so it's a totally different idea about location and about marketing and how you do those things the market analysis is important sometimes being the first person to offer a service or a store is a great thing it gets a lot of attention everyone wants to see the new place sometimes there's a reason why no one's ever opened that business and when we do their market research it's because there aren't enough customers and clients available yet here's a good example of a cover page even if you're an artistic business the banks don't want to see flowers butterflies and purple paper it should be very basic so they can glance at it and contact you table of contents just very basic I saw people bankers like tabs you know put a tab here's the financing proposal a tab for the market research that we can provide to you a tab for the products and services you're gonna offer and a tab for whatever your marketing plan is the banks want to see how you're gonna get the word out about your small business now I will tell you that doesn't mean you have to go do all that I have worked with clients on marketing plans and it says I have interviewed the following three website development companies I have chosen this website development attached is a copy of the proposal to build my website and set up my basic social media plan so you don't have to go out and spend that money that the bank wants to see that you've done the footwork that you've decided where you're going to advertise and how you're gonna market your small business and you've got quotes for that and that that's in your financing proposal products and services obviously what do you want to sell how are you gonna sell it is it a product you can serve it sell online or you just kind of promote it online what's your pricing strategy are you gonna have sales are you gonna have giveaways is it one price only it's things like that what need or problem does your product or service address this is vital in Fayetteville Arkansas I know there are at least 50 Hair Salons why wouldn't you open your hair salon is someone going to leave the place they are currently getting their hair done that what is the new way that you're approaching it do you have a better location do you have a specialized stylist is it going to have something about the salon that's different and fun that's going to attract the college students what need or problem are you solving for people that others who are cu
rently your competitors are not solving target market target consumer I sit down with people all the time and I say who's your target customer who is the perfect customer you want to see walk in the door living breathing humans with money is not a target consumer unless you have about a hundred million dollar marketing budget we can do that you have to look realistically at what your target market is the age the gender where they live what their needs are and get that cemented before we can help you with any kind of marketing plan or you're just throwing money away you're throwing it here you're throwing it there for example I'll have clients who say I need a Facebook page I need Instagram I need a Twitter account and I need a LinkedIn and I'm like you're an accountant what are you gonna post on Instagram that's ridiculous insta gram is four beautiful pictures and beautiful images it's highly followed by women under the age of 40 so we have to really look you can't just say I'm gonna do all these things and until you look at your target market who is your target consumer location is very important in Fayetteville and starting to be in Bentonville we're having real issues with parking I can tell you there are people who don't come to one of the main entertainment districts of Northwest Arkansas because they don't want to pay to park and they don't want the headache of the parking so if you're a store where people have to constantly come in and go out parking is a huge issue we've already talked about marketing and sales strategy and then the market research to back all this up industry you have to look at your competitors that is one of the other than your target consumer looking at your competitors is the most important thing you absolutely must do and when I'm working with people on a marketing plan one of the first thing I do is I look at all the websites I look at the social media of all the competitors in the region and sometimes I'll have people say well I just feel like that spine will you better be spine it's called capitalism it's called public knowledge and I promise you as soon as you open your door your competitors are going to be looking at you they're gonna be sending their cousin into your store they're gonna have their sister call on the phone you've got to look at your competitors and see what they're doing well and what they're not doing well that you can move in and be the new product or service provider in the area I then we'll look at some towns that I think are somewhat comparable to Fayetteville for example I'll look at Austin I'll look in Kansas City oh look in Boulder I'll look in San Francisco and find some small businesses that are at a higher level that have been in business for a longer amount of time look at their websites look at their social media encourage my clients to follow them because a lot of those companies are paying someone a hundred thousand dollars a year to do their marketing my initial entrepreneurs can't afford a marketing person but we can sure look online and get good ideas for how to market our business based upon the public information that's out there and what's working for them business challenges what our issues that could stifle your business what are things that can happen that could interrupt your business we need to plan for those in advance here in Arkansas we get all four seasons in Northwest Arkansas on steroids there are times that we can get an ice storm here and because it's rare we don't have street clearing equipment and it can completely shut a business down for two to three days how are you gonna deal with that how are you gonna deal with that food in the freezer and going for days with your waiters and waitresses getting no tips no pay because your restaurants shut down industry opportunities and trends I'm an example here in Northwest Arkansas last weekend we just opened a 37 mile Greenway for bikers and and joggers and walkers and people businesses are popping up all along that Greenway restaurants pubs bicycle stores when I was growing up here in the 70s there was one bicycle shop in Northwest Arkansas there are now 16 look at the trends what's coming here what's going on in the region how can you feed into that and be a part of that trend operations you don't have to list and you may not even have employees hired but you have to show the bank especially if you're seeking a loan who's running the company who's gonna be there day in and day out who's gonna do the books you don't have to do all these things but you need to be able to tell the bank who's going to do them who've you talked to who have you planned to help you with your payroll it may just be your accountant I have an accountant I'm only gonna have two employees this is my accounting firm they're gonna do payroll for me they're gonna help me watch my sales and use tax so those are the things that the bank wants to see that you're planning ahead and you've got this ready to go budget once again you tell the bank how much money you need they don't tell you how much you need they'll tell you how much they're gonna give you but you tell them how much you need equipment is a big issue sometimes you need to look at leasing equipment you don't have to go out and buy an $80,000 bulldozer the first few years you can lease it until you build up more money suppliers dealers have you looked everywhere are you getting the best deal what about if you have an item that has to come into your store only comes from one supplier in South America what's going to happen if something happens and there's a strike I've been working with a bicycle store here in Northwest Arkansas and if you'll recall back in January there was a strike at the port in LA he could not get bicycles for six weeks they were sitting on ships in the LA Harbor how do you deal with that where else are you going to be able to go you've got to have a back-up plan utilities can be huge is it part of the lease if you have a pottery shop firing up kilns can be hundreds of dollars a day in utilities Internet are you gonna offer free Wi-Fi how much is that gonna cost how are your customers gonna access the free Wi-Fi do you even need free Wi-Fi in the type of business you have and then here's the executive summary this is what you write at the end and some people say it may be the only part that your initial commercial loan officer reads so it needs to be very well written this is the one that you have friends and family and a business consultant especially helped you read over and it covers all the areas that we've just talked about and it will be at the beginning of your business plan on the second or third page financing proposal like we said how much money do you want what are the terms of the one and that's gonna vary if you have a good credit rating and you can qualify for an SBA backed loan that's going to be a longer term so you have shorter monthly payments it's going to have around typically the SBA loans have been hovering around 6% but due to the growth in the economy and the solid economy we've been hearing about banks actually competing to get SBA loan applicants and going down into the 5% range but if you don't have a great credit rating and for some reason the SBA does not approve the loan that you requested through the bank don't be scared to look at in-house products from the bank to get you started they may be shorter term they may be a little higher interest rate but if they get you going and get your business open you can always go back later and look at possibly getting an SBA loan a lot of people don't realize the SBA does not loan the money it is a corporation set up by the federal government that basically provides an insurance policy and tells the banks if you have people fill out all these forms and we approve them and we give them our stamp then we will back you bank whatever you loan them right now it runs about seventy-five percent will be reimbursed to the bank if the business goes broke so when the bank has the SBA backing and they get ten to twenty percent down from you it's not such a risky loan and this is what the US government does for small business owners and for-profit businesses just like how the IRS gives not-for-profits tax incentives to donors they get a tax deduction for donating money this is how the SBA and the federal government helps small business owners they make banks more comfortable with making the loan because it's backed by the SBA and down at the bottom you'll see the collateral and owner's equity you're going to have to put some skin in the game you're going to have to put up a piece of equipment or pledge a CD or a pledge real estate or property that you own personally always know that even if the loan is in the business name and you're the business owner if you have a spouse your spouse is going to sign a personal guarantee on that loan you're going to sign a personal guarantee on that loan that is part of the investment and part of the risk of opening a small business most of the SBA main lenders in this area are down from 20% down a few years ago to only 10% down if you have good credit and you qualify for these SBA loans commercial lending decisions are made on management abilities repayment ability how much equity you put in and what collaterals their number to the repayment ability is most important after the o8 crash when many banks in this area became basically real estate companies for about three years I can tell you no bank wants to own your house they want you to make your monthly payment every single month on time that's why the profit loss projections and the cash flow analysis that you need to do or you need to have someone help you do or come to our SBDC and let us use our software to help you project that that's what's most important is the business gonna cash flow after you pay all your debts after you play your employees after you pay your rent is there money there to make that bank payment every month the company description is pretty obvious the name of the company what's your mission and this goes back to what are you giving the public that they don't already have what need are you meeting or what new product or service are you providing that they need and then legal status and ownership this is very important most small businesses in Arkansas are encouraged to set up LLC's there are a lot simpler to set up than an S Corp you don't have the issue with shares that can be bought and sold on the open market you don't have to keep the minute book etc the bank wants to see that you've investigated this you don't have to go set up your LLC hire an attorney file your articles before you even apply for the loan but you need to go meet with a small business attorney not your sister's divorce attorney who was great but a real small business attorney find out what that's gonna cost searching for the name online with regional Secretary of State's offices and many states is vital don't get attached to a name before you do the research because three months in after you've spent all this money you don't want to get a cease and desist letter from a business located 80 miles away that has the same name you do the name of the business is not the most important thing what's most important is keeping your doors open and not getting cease and desist letters from attorneys so do a lot of research either assisted by trademark attorneys assisted by business consultants but do a lot of research about the name also talk to people I've had clients who have come through and given us names for business and I just look at them and I'm like that's a goofy name I don't know what that means you have a serious business and that's a goofy name i I'm just gonna tell you honestly I don't think that's a good idea you need to talk to people who will not just say oh yeah that sounds great good idea do research look at the competitors what are the names used in the region in the area for businesses like yours industry analysis once again I keep going back to this and back to it look at the competitors in the area what are they doing well what needs are they not meeting what are what can you do to get a jump start and learn from their experience so far why why is the demand there where is the growth for what you're wanting to present who are the major players the niche issue is the best issue for small businesses this is how small business competes I'm about five blocks from the main entertainment district in Northwest Arkansas right off campus within two blocks two blocks there were until about four months ago six Mexican or South American restaurants six within two blocks now two of them are national chains Kadota and Chipotle national chain name attracts the college students cheap in and out go through the line there's one there that is has a giant sign on the front locally owned U of A alumni it's by a very very well-known and respected family their children have started that business most two of those are open until 3 a.m. after the bar is closed after the club's shut down they're wanting those college students they're wanting that late-night traffic another one is an icon it's the first restaurant open to the public Mexican restaurant in this Dickson Street area of ours open back in the 80s they have a patio they have history it's a big business it's well-known so they have that special place in the heart of people who have been going there for 20 years another one is a little business only open on Thursday Friday Saturday it is a family from Mexico they sell street tacos they got five stools in there they want you to pick them up and go outside and eat and then around the corner in a very large ten story building is what I would call the fancy Mexican restaurant and it was opened by some people who have a very successful Mexican restaurant up in Bentonville but up in Bentonville they didn't have a lot of competition and when they came here they're doing well and they were doing well but in January they rebranded and changed the name and although they still have a page of their menu that is South American and Mexican cuisine they have expanded to offer Italian food steaks etc so we now know the saturation point there was six so we're now down to five so you can have lots of competitors and lots of people who do what you do as long as you know what your niche is how you're gonna attract your target consumer products operations technology what's the mix you know if you have a yoga studio are you also gonna sell yoga clothes what percentage of revenue from each you know if these are the special most popular yoga clothes that's great but are they so expensive you're only making $5 a shirt you may need to look at bringing in another line that no one carries here that's less expensive that you can make $15 a shirt on how are you going to sell your products just in person online sales per employee per square foot floor space looking at different regions and areas and rental costs is very important obviously you've got to describe your products or services in your business plan how are you gonna position them to distinguish yourself is there something special you're doing we've had clients who have started food companies and instead of opening a store selling their food products they instead go out and get contracts with grocery chains natural food organic chains and start having their product in those stores building up a following building up target consumers then later they open their own restaurant or their own store once they've already got that following their pricing is very important you've got to look at competitors it's going to be part of your profit loss statement and part of your cash flow market analysis I know I keep harping on it but it's so important and I can't tell you how often I sit down with entrepreneurs who are ready to launch a business and they've never truly analyzed and made a picture of their target market consumer marketing and sales strategy we've discussed that supporting market research some of is demographics and psychographics about the area that's something at our SBTDC s in arkansas we're very fortunate we have enough grant money to have those subscriptions we can give you a snapshot of a neighborhood and
e can tell you on that street how many people have a college education how many children live on that street what the average household income is of each home what are the interests are the main interests of the people in that area are they interested in the arts are they interested in NASCAR are they interested in hunting this can all be very helpful not only for locating a store but for direct mail campaigns for reaching out with targeted marketing signage and promotions and newspaper ads etc so all that is very very important to know where your audience is instead of just spending thousands of dollars throwing a TV commercial out there throwing out Facebook posts that are obviously attractive to women but when we go in and look at your Facebook analytics 72% of the people who've liked your page are men and you're putting out these Facebook posts that are obviously targeted to women so you've got to do the work on the ground to really know not only who your target consumer is but where she or he lives and what are their interests and by looking at their interests you can bring in ideas for other services or products because you're listening to your customers you're researching them and you're like oh wow a lot of my customers like baths and beauty products a lot of my customers oh they're doing yoga even though I have a hair salon maybe there's some way to incorporate yoga because I've discovered that 62% of the women come into my hair so on do yoga so those are things that you really want to pay attention to and research continually once again this is what I was telling you about and you'll have a copy of these slides so you can look at this getting the demographic information of your area under the market segmentation we can actually give you maps that show you where all your competitors are located this depends on your industry like I've told you my husband's in the car business I remember the first time 1997 we took a trip to Las Vegas and they were moving all the car dealerships out to the major highway to be all lined up in Vegas and that was the first time we saw that because I grew up in a small town and my grandfather had a Chrysler dealership and back in those days the Chrysler dealer the Ford dealer the Chevy dealer or as far away as possible from each other because they once a they got you in their dealership they did not want you looking at other cars they didn't want you leaving they wanted to trap you there and sell you the car they wanted to sell that market concept is upside down now in the auto business where has that come in that's come in through market research and they determine if the person goes to the Toyota dealership and they don't have the van in the color they want and they look across the street and they see my Chevy van in that color even though they hadn't thought about getting a Chevy van they really really want that color and they might come over so where you're located whether you're with your competitors are away from your competitors is very very important here's an example of that map I was telling you about if you look at this map this is a map of Texarkana Arkansas we actually prepared this map for a client who was opening a specialty meat shop so think about that specialty me it's gonna be more expensive you want to one be in the highest income area to on a busy street where people can see your sign easy parking and three be on their route on the way home the dark purple up at the top is identified as the highest income area of Texarkana the numbers you see on this slide the 64 57 see the rural numbers they're all 42 s and 26 s we have a chart and when you look at 42 it will say this person is interested in agriculture this person has a high school diploma plus typically two years training this person has 2.3 children this person commutes this far to work generally and is in generally this line of work so these types of market research material girls are available for you once again the competitor look at your major competitors where are they research them look for that niche even though they're good at what they do even though they have a lot of followers what do you hear people complaining about them is the parking an issue there do they not deliver do they kind of have snobby sales associates do they not offer any lesser priced products they only offer the most expensive yoga clothes in their shop or the most expensive shoes investigate and listen to what's going on in your community and so this is an example for you have a map we can get you to show you existing businesses in the area and I worked recently with one of our business consultants for a lady who was opening a daycare obviously we needed a map of where all the schools were located especially the elementary schools in Bentonville Arkansas we use that map to help look for commercial lease spaces because she was going to offer after school and summer daycare programs so she wants to be very close to the school you don't want to be traveling the kids through Northwest Arkansas Walmart rush-hour traffic at 3:30 trying to get them six miles away to your daycare so these maps can be very helpful do you even need a physical facility we have people come in a lot who are planning to open a brick-and-mortar store they want to be in this area and when they start running the numbers when they start looking at how expensive that is when they start looking at the insurance and the very one-sided commercial leases that commercial lease companies put out they change their mind and they decide to put their products in stores and sell in that manner or they decide to go online or they decide to set up a booth at the farmers market or have a little booth inside of another store so sometimes those things change sometimes the smaller advertising budget like I told you in a better location especially if you're a high-traffic store getting traffic counts for the place you're looking at and having a good sign and buy a good sign I mean a sign that not only has your name on it that tells what you do you put a sign out that says doodlebugs what is doodlebugs people are not gonna stop and come in your store and ask you what is doodlebugs having some simple and that scientist doodlebugs a children's academy doodlebugs a children's toy store take advantage of that traffic count and the visibility of your sign another option is we have clients who want to start a small business and they've never thought about maybe buying an existing small business I truly don't know any small business owner whose business is not for sale at a price so sometimes you can enlist an experienced broker you can ask around you know those brokers are gonna have listings of businesses that are ready to go people who are ready to sell this makes the loan process a lot easier because you can go and get you've got profit loss statements for the past three years you've got cash flow analysis for the last three years so that's something to also consider if you want to open a certain type of business that's kind of more common is looking to buy one that's already in existence this is another example from that example I gave you from Texarkana of the seafood store and this one just shows the general area remember I showed you that little purple part that was the highest dollar neighborhood in Texarkana you still want to pull out and make sure and then this one's safe because that whole northern region is sometimes cities I'll give you an example Tulsa Oklahoma has pockets of wealthy neighborhoods the town is very old it's been there a long time so it actually has very separated pockets of wealthy neighborhoods they're not all just in one place whereas with a newer town a town that's only 50 60 years old all the wealthier families might be in one area because that's where it grew up and things haven't changed and the town hasn't grown management organization who's gone around the business who's going to be the marketing person who's gonna do the books how are you going to pay them it sounds nice to pay yourself a hundred thousand dollars a year to manage your little 500 square foot clothing boutique but no banks gonna approve that you're gonna have to get some market analysis see what an average manager of an average women's boutique with your projection profit and sales makes for their salary put that in the business plan and then the bank will be fine with whatever salary you're planning to pay yourself the effective team is key I'm sorry I will not even entertain a conversation about legalzoom.com the most important thing you can do is build your business foundation my father's in construction when I built my first home I could have taken a shovel and mixed cement and built the foundation for my house myself could have done it but I'm not gonna put a $200,000 investment on top of a foundation that I built I'm gonna pay a professional the $7,000 to build that foundation for me I might do some of the painting I might do some of the wallpapering myself I might do the landscaping myself but your foundation needs to be solid don't be scared to reach out and find small business attorneys and accountants in your area and website developers they're not gonna charge you a fortune if they charge a fortune they wouldn't have a lot of small business clients and no I don't know if all SBD sees to do this but we here at our Center we have a list of accountants attorneys and website developers that we consider to be small business friendly they're people we know they do seminars for us we have clients who have reported back to us oh this person had this LLC package it was very inexpensive they were so helpful legalzoom.com will give you documents but they're not going to walk you through the process they're not gonna say oh and by the way you have to do this in a year at the Arkansas Secretary of State's office or Oh in Colorado you have to file this every year they're not going to help you with that they're not gonna walk you through the process of setting up your bank accounts and how you sign contracts and how you sign checks build your base with a good small business accountant have a relationship with a commercial loan officer get a good business attorney if you're not if you're not able to build your website yourself and we have seminars we do it arts where when the websites not the most important thing about the business like all your sales aren't on the website it is perfectly acceptable to build your own website there are incredible tools our Center encourages our small business owners to look at Weebly w ee Bly dot-com the state of Arkansas did some research through the one of its main corporations that was set up to bring broadband service to the rural areas of Arkansas and they determined that Weebly was the most easy to use accessible small business website development company so you can do that yourself especially like I said if it's just to have the website out there and have that presence and absolutely you must have a website even if it's basic homepage about us contact us products and services if you don't have a website people do not believe you exist you can sit in a meeting and talk to them and tell them what you sell and when they go in to Google and you don't have a website you don't exist you absolutely must have a website presence insurance nobody likes to deal with this but this is what allows you to sleep at night ask other small business owners who do what you do where to get the insurance to cover that type of business you can go on our YouTube channel and see that we have a client who opened the first float therapy spa in Northwest Arkansas this was one of the biggest impediments and issues to her opening her float therapy spa float therapy is used to help people with chronic pain it's used by athletes for muscle recovery it's used just by people because it feels good it's used by people because they have migraines she actually had to change from these closed chamber float therapies to an open room one because she could not get insurance to cover the closed float therapy machine that she was planning to use initially so finding good insurance finding somewhere for example we have our car business in Oklahoma and there is a town in Ponca City Oklahoma little town listed 20,000 people there's an insurance company there that has created a niche and 80 percent of all car dealers in the state of Oklahoma have their insurance through these people because that's what they do every day and twice on Sunday they're pros at automobile dealership car insurance so find an insert don't just use the person that you you're homeowners through if their company does not regularly do business insurance in the area in which your business is out there to the public a SBTDC consultants like I said use use a business center the services are free there's 900 in the United States or find a business consultant that you pay work with other small business owners you know but you've got to get help from people who know about small business in your area the operational plan these are all the things that you're gonna have to cover and I don't like to go over this too much in detail because half of you may be doing a service business 20% of you may be doing online sales and 30% of you may be having a brick and mortar business but so facilities won't matter if you're doing the online sales but where you're gonna store your goods that may matter inventory how are you gonna track inventory how are you gonna get it to you you know if you have a Pio box and one of your suppliers sends everything FedEx that's not gonna work FedEx and the post office are not friends they don't deliver to each other legal issues if you are selling a product that goes on a human or in a human or providing a service that touches people or touches children you are going to have major legal issues that have to be addressed Financial Planner projections we've talked about this quite a bit already the pro forma documents are just all of these documents we've talked about that any commercial lender is going to want to see your balance sheet your cash flow statement we have a couple clients here at the center who do lawn care services cash flow is huge for them from March to October very rocking and rolling they're busy they got money coming in November December January February that income starts to go down so we've worked with them on looking at the 12 year cash flow and they've started one of them if you pay in advance for the whole year you get 10% off the lawn services for the whole year that helps their cash flow we have a client who added pest control to the lawn services that gets them the light fall fertilizing season it gets them the january/february season where you go out and spray the yard so the weeds don't even come up we've had lawn care clients you've had it hanging Christmas lights in November and December to help that cash flow so be looking at the whole year we have clients here that come May 10th lose 30% of their clients all the U of A students go home what are you gonna do for the summer when that college population is down you got to plan ahead for that typically if you're buying a business the bank wants to see the last three years historical statements if you're starting a business they want three year projections startup costs well we've already talked about this quite a bit you have to do some of the work on this you know our business consultants don't go out and shop for refrigerators for you so you're gonna need to go out and get the bids and costs and find out what those are and bring those to us and then we can enter it into the software program to help have it plugged into your business plan how much are once again we talked about utilities internet how much inventory you're going to keep on stock if you know Christmas season is coming up and you have a retail store where are you gonna store all that inventory getting ready for that so you've got it ready to go from your Christmas open house on the balance sheet this is just basic accounting principles your assets equal your liabilities and your equity assets being what you own what's already paid for what are all the debts and obligations and then how much equity how muc
cash have you put in the business or paid for equipment or do you have a partner who's an investor and know this there's no such thing as a silent partner if people give you money they want to know what's going on and you can't just tell the bank oh my brother's gonna loan me $20,000 that's not gonna cut it for the business plan your brother's gonna have to provide documentation of where that $20,000 is that it is segregated and set aside for you and there's gonna have to be a contract between you and your brother that your brother is going to give you that $20,000 if this loan gets approved because if you get a 5 the family reunion and he says forget it I'm not gonna give you a loan anymore you know the bank needs to be solid on that you have to have actual factual proof to back up any investment you're making revenue statement is going to be required these are some sales projection tools some software that we use here at the center to help you do that even if you've never been in business once again it is unlikely there is a business out there that you know that you're starting a business that's never been seen in this part of the country we can help you with those projections working capital and cash flow cash flow is king because cash flow means you make your loan payment every month cash flow means you pay your employees cash flow means you can buy your inventory and keep your shelves stocked the most important thing on this screen is the break-even analysis you need to have run how much money you have to bring in every single month to break-even and you divide that out over 12 months so for example with our car business we pay our insurance for the business every November so that's several thousand dollars I take that I divide it by 12 we have gas is a huge my husband's gas bills around $1,400 a month for all the cars and all the traveling so I divide that out i total it up and divide it by 12 and he knows every month this is how much money I have to bring in and he's in a really good mood when he's met that gross income goal by the 15th of the month and he starts getting nervous at the 25th of the month when we still haven't hit our break-even amount for the month now we know there are slow seasons there are times when we're not gonna have it but we can look back and oh yeah but three months ago we were $4,000 over our breakeven amount for gross income coming in that is something that every small business owner needs to be aware of and have projected out and know exactly how much money you've got to come have coming in every month so you can prepare for the next month if it's gonna be if you're down this month how are you gonna make up for that the next month contribution margin we start getting into some more financial technical terms total revenue less total variable cost helps you make decisions about pricing is it really worth it to bring this product in it may be worth it because it's gonna bring a lot of traffic in the store it's new it's something everybody wants and maybe they'll buy other things even though you're not making that much on that special you know in thing product so that's an analysis you need to make these are some more once again technical terms on the Financial Planner projections you don't have to be a professional on this but you need to consult someone who is because the banks are going on and see this what's the return on assets why are you spending so much money on this weight lifting equipment is it really worth it to have this big highbrow name well yes based on our market research we're putting this gym in the most expensive neighborhood in this town and having that name on that equipment is going to attract people okay back it up with the research show the bank why you need that collection collection collection not a big issue if you're a brick and mortar store I don't give you the shirt until you give me the credit card lawn care service cycle psychiatric services legal services where you're performing the service and sending people a bill at the end of the month how do you collect that money what's your plan are you gonna take credit cards do you know how to use a small claims court do you have a small business attorney that can send collection letters the bank just doesn't want to know that you potentially have this money in but how are you gonna get it if people don't pay marketing we've talked quite a bit about target consumer sometimes having repetition especially at the beginning is important it's got to be affordable social media is affordable yes and then it may not cost you very much cash but it will take time and you have to learn it social media is not free advertising it is a relationship it is our modern day coffee shop and if you're not comfortable with social media if you haven't researched it you need to come to one of my seminars on social media marketing or read up on it because it's a relationship if someone leaves a comment on a post of yours on your Facebook and you don't comment back it's rude you're going to lose them they're gonna lose interest in you so it's not just how much the marketing costs but how involved can you be and do you understand the concept behind the marketing these are all the things we've talked about must have a website even if it's basic you must be on social media but we need to know your target consumer we need to know your a personality in your business to decide what outlets broadcast media print media expensive but sometimes worth it depending on your target consumer Direct Mail has become very important again because the post office no longer just lets you pick a zip code you can actually pick delivery routes in the zip code zip code so you get the market research you say I only want it to go to these neighborhoods and that helps you with your marketing dollars lastly and to me most important for small business owners is networking join your local Chamber of Commerce join your downtown Business Association join a local entrepreneur group like BNI or a professional networking group that meets daily but just like a gym membership just because you buy the membership you've got to use it you've got to go there go to the morning events go to the golf tournaments go meet people spread the word about your small business I have seen small business owners absolutely grow their business tremendously the first year by these networking events getting out letting people know they're part of the community giving back to the community being a community partner supporting not-for-profits in the area being a part of the chamber it is absolutely vital to any small business owner for you to have a presence in your community so for the SBDC centers here all we ask is that you sketch out a business plan can be handwritten we have a one-page form that's accessible that we can give to you we just need an idea of what you're looking at because if you have no idea if you're going to open store or sell products online or offer a service you know you're gonna be in with the business consultant for five hours so we need some target if you're gonna open a store what towns are you looking at that may change you don't have to have it completely picked out but we need to know in general well I live in Bentonville so I don't really want to open a store in Fayetteville I don't want to make that terrible commute and rush-hour Walmart traffic you know for two hours a day so just have it narrowed down there are you gonna need financing are you self financing what's your credit rating just some of those basics to meet with one of our consultants and then we'll walk you through all these steps we've talked about help you develop that business plan work with your loan officer and we will be meeting with you helping you giving you comments and suggestions then take that business plan show your friends show your family show other like business owners and get their input so like I said in Arkansas we have seven centers throughout the state to help you on college campuses no matter where you're located I promise you there is an SBDC center within driving distance of your home now I'll admit I haven't looked in Montana so that's a pretty big state might have to drive a little ways but most of the time even here sometimes we'll have people that are moving in from out of state and you know we can do the initial consultations on the phone through email but reach out and get some help for someone who knows about the small business community that you're wanting to enter so that's all I have and like Timothy told you these um slides will be sent to you in the next two or three days and so you'll have them and it's got our phone number and you can always contact us for follow-up all right thank you very much Martha good job you managed to cram three hours information into just one which is very impressive yes this is normally a three hour seminar but we spent an hour that examining a real business plan in small groups and in the class but it is a lot to cram in alright and once again today's webinar is coming to you from the University of Arkansas at Fayetteville Sam Walton college business that's where Martha's located
