Section #3: Resource Management Human Resources & Financial Resources

The Business Plan 1)Executive Summary 2)Market Analysis 3)Resource Analysis 4)Operating Strategy 5)Financial Strategy 6)Contingency Plan

Resource Analysis 1)Financial Resources 2)Human Resources 3)Material Resources 4)Technological Resources

Financial Resources The money needed to start and open your business Unfortunately – money doesn’t grow on trees What do we need money for when opening a business?

Financial Resources Often – it can cost tens, if not hundreds of thousand of dollars to open a business Not Often – do entrepreneurs have tens of thousands of dollars hiding under their mattress

Financial Resources Financing – securing funds for your business Three options 1)Personal Funds 2)Bank Loans/Line-Of-Credit/Small-Business Loans – Getting money from a financial institution with the promise of paying them back + interest 3)Investors – Getting money from private investors & giving up a percentage of ownership – Example: Dragon’s Den and Shark Tank 4)Often a combination of all

Financing Your Business Type of FinancingAdvantagesDisadvantages Personal Funds Bank Loans/Line of Credit/ Small Business Loans Investors

Financing Your Business Type of FinancingAdvantagesDisadvantages Personal Funds All revenue goes right in your pocket Your money – Your responsibility risk of losing house/ children’s tuition more than likely not a large amount of money going to the poorhouse if the business fails Bank Loans/Line of Credit/ Small Business Loans Get funds you would not otherwise have access to ensures your business plan is together Often can get grants (free money) Risk of defaulting on payment/ bankruptcy have to pay money + interest Investors may get expertise do not have to worry about paying money back share in the responsibility/losses Have to share your profits Potential for conflict

Human Resources The people that are needed to make your business happen! Without the right people, the venture is unlikely to succeed 2 types of Human Resources – “Front-Line Employees” Direct interaction with the customers – Management In charge of the “behind the scenes” activities of the business – Depending on the size of the business – may be both

Human Resources You must look at what duties must be done within the business – Example: Restaurant Need people to cook the food Need people to serve the food Need people to sit people at tables Need managers

Human Resources What employees are needed for: VS

Human Resources Sure....it would be great to hire a different employee for every task that had to be done within your business – This would cost you a ton of $$$$$$$$ Must decide what an individual employee could handle realistically – And what duties they can do well More on deciding specific duties for specific employees in the operation section

Human Resources: Skills Needed Before deciding who to hire – What can you and/or your partner bring to the table, in terms of skills – Hire employees that can bring skills to the table that you do not possess Most small businesses employ less than 5 people. Example: Disc Jockey – One partner may handle the DJ duties & one the promotion/bookings – Need to hire an employee to handle money

Human Resources: Hiring Employees Must establish what characteristics/skills you want in an employee being the selection process You find these things out during the application/ interview process The more you pay – the more skills you will get in your employees – High School drop out vs. college graduate

HR Assignment