1. Evolution of Businesses Leslie Lum Bellevue College

2. The Business Universe

3. Businesses and Employment

4. Where are the jobs?

5. New Businesses

6. Growth in New Business Starts

8. Business Closings

9. Change in Business Closings

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13. 13

15. Case Study – Chesterfield Health

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17. 17 Making real business plans

18. 18 Sample Upfront and Variable Costs Year 2003200420052006 Upfront Costs Marketing5000 Site Development10000 Revenues5000075000100000 Cost of Goods (50%)250003750050000 Gross Margin250003750050000 ExpensesCosts by year Hosting300033003630 Advertising250050007500 Ongoing maintenance100011001210 Personnel100001100020000 Profit85001710017660

19. 19 Payback Period Year2003200420052006 Marketing5000 Site Development10000 Revenues5000075000100000 Cost of Goods (50%)250003750050000 Gross Margin250003750050000 Expenses Hosting300033003630 Advertising250050007500 Ongoing maintenance100011001210 Personnel100001100020000 Profit85001710017660 Calculation of Present Value8500/(1+0.08)^ 1 17100/(1+0.08)^217660/(1+0.08)^3 Present Value $ (15,000.00)$7,870.37$13,574.53$15,140.60 Payback occurs in 2005

20. 20 Breakeven Analysis

21. 21 Monthly Breakeven for Restaurant

22. 22 Do Breakeven Analysis for Your Business

23. The Steps What is your business? Product or service? Industry? What form of business ownership will you have? Developing a business plan –Market size – what will your sales $$$ be? –Marketing strategy – what makes you stand out? –How will you make your product or deliver your service? –How long will it take you to break even? –What are the risk? –How much money do you need to start?

24. Obtain Financing Debt (borrow money)? Bank Loans –Personal guarantees and collateral –2 - 3 points above prime rate –Factoring companies –SBA backed loans –Suppliers Equity (have investors)? –Private Investors –Venture Capitalists –Corporate Sources –State and Local Government Programs

25. Small Group Exercise Come up with a business Group presents it to class with capital requirements Class will vote yes or no