Should you go through the hassle of creating a business plan?
By Al Lopez, EGBI Executive Director, September 17, 2012
It has been interesting watching conversations and dialogue recently even amongst fellow business incubator directors on the pros and cons of having a formal business plan for your start-up business. Some of the dialogue has even been rather “animated”. While many would think it impossible to achieve any success without a complete and detailed business plan, some others argue that a rigid structure will constrain the creativity and flexibility of the entrepreneur and make it difficult to react when business conditions change.
Developing a business plan certainly shouldn’t be viewed as a hassle, on the contrary I believe that starting a business without some level of a business plan is pretty foolish.
If you are a business owner you are the “CEO” of your, albeit small, company. No CEO manages their business without some kind of plan. Writing or outlining a business plan can have significant impact on your odds of succeeding as small business owner. While we can be very committed and convinced that our business idea will succeed by the sheer determination of the entrepreneur, a good plan will ensure you have thought things through that are important to your business. For example:
- Allow you to make a true assessment of whether your business idea can really be profitable
- Gives you some specific focus on potential capital needed to start the business
- Requires you to really think about who your target customers are – not the whole market
- Identifies competition along with their strengths and your opportunities
- Increases odds of becoming profitable sooner – manage your costs and focused marketing
- Helps you to think about future problems BEFORE they become realities
Having critical and realistic financial projections are key. Knowing your start-up costs, sales required to break-even, when you will become profitable, and most importantly your cash flow projections should confirm to you that your business is even worth starting.
Rather than thinking that a business plan is needed to convince someone to invest in your business, in reality, it should serve to convince you that you are doing the right thing by going into business – or that you may need to change your idea or some of the things you have assumed for your business.
A business plan is not a static document and it doesn’t have to be ready for publication by a big time publisher. It should be simple yet complete and easy to change as the business develops.
There are a ton of resources available to develop business plans, including some online tools, such as the SMEToolkit, developed by IBM. The SMEToolkit is a great repository of information for small business owners and a supplement/continuing education to the training we provide our clients.
We are proud of the programs and services we have at EGBI that support our entrepreneurs with the tools and knowledge to start and grow their businesses with some key planning concepts. Our classroom training and mentoring keeps our clients on track and we always encourage entrepreneurs to make use of the technology available to their businesses. We strongly recommend that you check out the SMEToolkit and take advantage of the resources it offers. If you want to learn more about it and how to use it, register for our FREE seminar on Sept. 26th from noon to 1:30 pm at EGBI.
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EGBI Offers Unique Bilingual Entrepreneurial Training in Austin
In Partnership with Las Comadres para las Americas
By Nayeli Gallegos, EGBI Market Analyst, August 14, 2012
Economic Growth Business Incubator (EGBI) in partnership with Las Comadres para las Americas, are launching Curso Empresarial, a 12-week bilingual entrepreneurial training program for Spanish speaking individuals. With a cost of only $50, the program will run from August 28th through November 15th, and will be offered on Tuesdays and Thursdays from 11:00 am to 2:00 pm at Economic Growth Business Incubator (1144 Airport Blvd., Ste. 260, Austin, Texas 78702). Interested Individuals should register at www.egbi.org/CursoEmpresarial
Curso Empresarial program will review the complexities and challenges of owning a business by training on a variety of topics, including accounting, financing, marketing, business strategies and much more. The training is provided by subject matter experts who have several years of experience in dealing with small businesses. EGBI guides clients through the development of their business plan in order to clearly define their roadmap to success. In an effort to encourage clients to learn the business terms in English, classes are offered in a bilingual format. All content and instructors are bilingual, and class discussions are in both English and Spanish, as an encouragement to clients to practice the language.
“EGBI has historically only offered classes in English, however after a very successful pilot this past spring, we have decided to offer another cohort this fall” said Al Lopez, EGBI Executive Director. “We are truly excited about the expanded base of clients this program will give us.”
- Some of the women from the spring pilot program.
EGBI is a 501(c)(3) organization that equips mainly underserved individuals in the Greater Austin area with the educational toolset to establish their own businesses. EGBI has a unique approach to entrepreneurial incubation – all-inclusive training, pre-launch education, post-launch support, financial education, Spanish support, and office space. We strive to be a one-stop shop for emerging, growth-oriented enterprises.
Las Comadres para las Americas, is a 501(c)(3) organization with the mission of connecting and empowering Latinas everywhere through community building/networking, culture, learning, and technology. Under the name of Las Empresarias (the business women,) this program was piloted in the spring of 2012, and targeted stay-at home Spanish speaking moms with the vision of having their own business. The program successfully graduated nine women in May 2012. For the following sessions, we have decided to open the program to men and rename it Curso Empresarial (a business course,) a more inclusive term.
How to Raise Capital through Crowdfunding
By Al Lopez, EGBI Executive Director, August 6, 2012
An innovative way to raise capital Crowdfunding, is a collective effort of folks who network and pool their resources, usually via on-line, to support efforts started by other people or organizations. Crowdfunding is becoming more and more popular in our start-up entrepreneurial world.
It’s been exciting to see that two of EGBI’s alumni from our Building Success Program have entered the crowdfunding arena:
Nathan and Brent of Dynamo Innovations Group, Inc, recently introduced Stabil-I, a solution to a growing problem in the iPhone world, shake. With Stabil-I, video producers on the go can consistently record high-quality video on any terrain without compromising video quality and stability. I’ve even told my son, Mark Lopez, who is a Motion Designer, that as soon as their first product is available, I’ll be getting him one. Check it out and support them at: stabil-i-case-shake-free-video-for-iphone.
Our second client, Belinda Espinoza started SugarPOP Sweet Shop in 2002. Since last year, she has dedicated herself to take her business to the next level, in fact, she is preparing to open her first retail store front, The Sugar Circus. Belinda and her business partner, Megan combine the arts of baking and design into delicious masterpieces. From custom designed and expertly decorated cakes and couture cookies, to traditional apple pies, they have it all. We’ve loved having Belinda cater some of our EGBI events and enjoyed her exquisite desserts that melt in your mouth and the best butter cream you’ve ever had. Support Belinda and Megan at: The Sugar Circus.
No matter what industry you are in, if you have a current support base that is willing to invest in your business and help you spread the word, crowdfunding could be an option for you.
In fact, crowdfunding (or crowd financing) has been used in support of a wide variety of activities, including disaster relief, support of artists by fans, political campaigns, start-up company funding, movie or free software development and scientific research. Crowdfunding can also refer to the funding of a company by selling small amounts of equity to many investors.
The platform used by our graduates is Kickstarter, which to date, has launched over 60,000 projects and raised over $300 million. Kickstarter takes 5% of the funds raised. Amazon charges an additional 3–5%. Unlike many forums for fundraising or investment, Kickstarter claims no ownership over the projects and the work they produce. However, projects launched on the site are permanently archived and accessible to the public. After funding is completed, projects and uploaded media cannot be edited or removed from the site.
All projects must meet Kickstarter’s guidelines to launch — charity, cause, “fund-my-life” projects and open-ended fundraising are not permitted. Project creators choose a deadline and a minimum $ goal of funds to raise. If the chosen goal is not gathered by the deadline, no funds are collected. Money pledged by donors is collected very easily using Amazon Payments.
There is no guarantee that people who post projects on Kickstarter will use the money to implement their projects, or that the completed product will meet backers expectations. Kickstarter advises sponsors to use their own judgment on supporting a project.
We applaud Dynamo Innovations Group, Inc. and SugarPOP Sweet Shop’s efforts in raising capital for their business. We support them because we know them, and we are sure they will deliver on their project!
By Al Lopez, EGBI Executive Director, July 16, 2012
Customer Relationship Management (CRM) is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. Sounds almost intimidating, too “big business like”, right? Well, it is easier than it sounds.
Like many of our clients we run our organization on a bootstrap basis. With a small staff of three, all of our bandwidth is precious. We want to spend as much of our time as possible providing services to our clients and running our programs, which can be a challenge when you are also trying to maintain/manage the application process and keep your contact list current.
Shortly after joining EGBI, I discovered that Salesforce Foundation had a donation program for non-profits that needed a limited number of licenses. We set up our account last summer and it’s been a tremendous tool for us. We are integrating more and more of our back office activities and have an extremely robust application that will scale well beyond all of our future needs. I was able to share this with a couple of other directors of incubators in other parts of the country at the National Business Incubator Association conference in Atlanta last May.
As we’ve become more familiar with the application, we have learned that there are tons of new applications being developed for CRMs. In addition, there are “Salesforce user support groups” that have developed throughout the nation to provide free training on the use of the application. Not only that, there are new small businesses being formed that also provide consulting services on this topic. Interestingly enough, we have a client in our Building Success Program right now that is going to start a consulting business targeting non-profits in the use of Salesforce.
Small businesses are discovering that more and more technological capability is becoming available for them to run their businesses more efficiently and effectively, including CRM. These days, there’s no shortage of bargain-basement-priced CRM applications. Some CRM start-ups are offering small-to-medium-sized businesses a way to boost customer loyalty at a reasonable price point.
If you aren’t using some kind of CRM tool for your small business, you will not be as competitive as you could be. Check it out now and let us know what works best for you.
How A Low-Cost Incubator Can Help Your Business Grow
By Rachel Doyle, Marketing Director for CMN.com, July 13, 2012
Business incubators are networks that are designed to help businesses succeed. They are considered to be economic development tools that offer an array of support, resources and services. Incubators provide work space, support services, networking opportunities and training. Many entrepreneurs have considerable enthusiasm; however, they often lack the expertise to run their businesses. This makes training one of the most valuable resources of an incubator.
How Incubators Help Growing Businesses
Although training is a notable feature of an incubator, they also offer many other services that are beneficial to start-up companies. Client referrals and contacts are typically part of most business incubators. These features create new business, and entrepreneurs can experience continued business growth during the incubation period.
All business incubators have the same goal, yet each incubator is unique. Many specialize in developing businesses that are for specific areas or regions. For example, some incubators are created to help bring jobs to a certain area. The incubating businesses often increase the city’s sales tax collections, and they strengthen existing businesses.
Business incubators can be either public or private entities. Many of them are a combination of both. They are frequently funded by colleges, governments and civic groups. Because they are often used to increase community tax revenues, many incubators are non-profit organizations that are set up by municipalities.
Business incubators play an intricate role in long-term survival for start-up companies. Because small businesses pay a high price when entering the marketplace without the appropriate management skills, incubators are providing the necessary training for their survival. Studies have shown that incubators have a strong success rate. Approximately 87 percent of firms that graduate from incubator programs go on to enjoy long-term success.
In many cases, business incubators reap the benefits of having small businesses participating in their programs; however, small businesses reap the largest benefits of participation.
Finding an Incubator
Decide whether your business is right for an incubator. Some incubators house as many as 40 small businesses in spaces of approximately 1,000 square feet. Since space is limited, most manufacturing businesses would not be right for an incubator.
Search for incubators that are suitable for your business. Many incubators cater to specific industries. If you have a business that sells solar panels, you would want to avoid applying for acceptance to an incubator that specializes in software development.
To find a low-cost business incubator near you, call your local Chamber of Commerce or the Small Business Administration.
Carefully review the lease for the incubator. Many of them require new businesses to move out after two or three years.
Take advantage of the setting that incubators provide. Other budding entrepreneurs can be extremely helpful to your new business. They can be great sounding boards for your creative ideas.
Plan your departure from the incubator well in advance. You will have to prepare for the cost increases once you leave the incubator, and planning ahead of time will make the transition easier.
Find More Information on Entrepreneurship and Business Development.
EGBI Helps Client Obtain a Start-Up Loan
By Nayeli Gallegos, EGBI Market Analyst, July 16, 2012
Carlos Fernandez is an example of perseverance and hard work. A native of Mexico, he moved to the United States in 1998 in search of better opportunities for his family. 10 years ago, Carlos began working in the screen printing industry, where he had the opportunity to master different parts of the business as he held various positions, starting from Helper and working up to becoming Production Manager.
As many hard-working men, he had a dream of owning his own shop; and acknowledging the fact that he needed to develop business skills, he approached EGBI. Towards the end of 2011, he took our business training and graduated from our Building Success Program.
“I always wanted to open my own business, but I didn’t have the correct information about how to do it, until I came to EGBI,” Fernandez said.
Early this year, he began to work on the business plan for what would be “Tex-Mex Printing,” his own screen printing shop. With a draft of his business plan, he came back to EGBI for assistance with obtaining a start-up loan that would allow him to buy equipment and take care of his working capital needs.
Program Director, Barbra Boeta invested her time working with him on his financial projections and helping him improve and finalize his business plan. With a complete loan package, EGBI introduced him to the staff at PeopleFund, who in less than a month successfully approved his startup loan.
“Tex-Mex Printing is a great example of how EGBI and PeopleFund worked as a team to help a client. Barbra Boeta helped with training and the business plan. Then Ivette Benitez and Allie Cook at PeopleFund made sure that Tex-Mex received the necessary capital to help the business succeed…The bilingual capabilities of both EGBI and PeopleFund were essential to a successful outcome” said Gary Linder, PeopleFund President & CEO.
This start-up loan will allow Carlos Fernandez to open his business by the end of the summer.
“Barbra…we are in business! Thank you very much, without your help, my dream would have never come true, thank you, thank you very much…I will be in touch.”
For more information about Tex-Mex Printing, please email Texmexscreenprinting@gmail.com.
This is only one of many examples of how EGBI helps clients achieve their entrepreneurial dreams. Do you want to start or grow your small business? Please come to us. We want to help you succeed!
Lo que debes saber si quieres pedir un préstamo
By Nayeli Gallegos, EGBI Market Analyst, July 13 2012
Si eres dueño de una empresa o quieres empezar un negocio y estas pensando en pedir un préstamo, estas son algunas de las cosas que debes tener en cuenta:
Primero debes preguntarte si tienes la capacidad de generar ingresos para pagar tu préstamo. Como regla general, debes tener un ingreso de al menos $1.25 (después de impuestos) por cada $1.00 de deuda. Osea que si piensas pedir $1000, al menos debes de generar ingresos de $1250 (después de impuestos).
Debes revisar tu ratio de endeudamiento, el cual se calcula dividiendo tu deuda total entre los capitales propios. En otras palabras, que dividas lo que debes entre lo que posees. Lo ideal es que el ratio sea de un 50%. Así, si debes actualmente $1000, el monto de tu capital propio deberá ser de al menos $2000.
También deberás tener en cuenta que por lo general, los prestamistas te van a pedir un colateral o garantía para el préstamo. Esto es, cosas físicas con las que puedas garantizar el préstamo. Por ejemplo, inventario o equipo. Es muy importante que tengas una lista de todos los activos de tu negocio y del valor de cada uno de ellos a la hora que vayas con un prestamista. Algunos micro-prestamistas, incluso toman como colateral vehículos y hasta joyería en algunos casos.
Asimismo, deberás estar preparado para dar un enganche de un 20% (aunque esto varía dependiendo del prestamista). Así que si necesitas un préstamo de $50,000, deberás dar un enganche de $10,000.
Finalmente, deberás tener un plan de trabajo sólido que contenga proyecciones financieras claras. Estas proyecciones deben indicar cuanto vas a vender, cuáles van a ser tus gastos y deben dar la seguridad de que tendrás la liquidez para pagar el préstamo.
Desafortunadamente estamos en tiempos económicos difíciles. Y obtener un préstamo no es sencillo. Por eso es muy importante estar bien preparados. Pero no te desanimes, en Austin hay muchos lugares donde puedes recibir ayuda, y hay varias organizaciones que se especializan en apoyar a pequeñas empresas, como es el caso de la incubadora de negocios EGBI.
Si necesitas un préstamo o quieres empezar un negocio ¡nosotros te podemos ayudar a prepararte! Llámanos para una consulta gratuita o regístrate para nuestras clases de cómo empezar un negocio. Los siguientes ciclos empiezan el 30 de Julio y el 6 de Agosto. Visita www.egbi.org para mas información.
Bringing Up Business: Incubators Through the Eyes of the Entrepreneur
By Dustin Bass, Consumer Media Network, May 11, 2012
Consider it business parenting. That’s the easiest way to define the business incubation model, which seems to be the best way for a start-up company to become a success – or at least get off the ground.
Take a new company – rather, take an idea and mold it into something material like a company or a product. From the idea stage there is a maturation process that business incubators assist start-up companies with in order for them to reach the company or product stage… Read more
By EGBI, April 2012 Edition
EGBI Client Feature: A hairstylist since 1990, Brenda Carrera graduated from our Building Success Program in 2007 and began working on a business plan. She had to put her plans on hold, but her entrepreneurial spirit did not allow her to give up on her dream. At the end of 2010, she was offered the opportunity of taking over the hair salon where she was working. Read more…
2011 in Review
By Al Lopez, EGBI Executive Director, April 10, 2012
EGBI experienced a truly unprecedented year in 2011. The year began with some key challenges for our small team as we laid out our goals for the year. Although the organization is several years old, our theme for the year was for all intents and purposes “START-UP.” So, just like we advise our budding entrepreneurial clients, we set out to ‘re-start EGBI’ while driving to take our organization to the next level.
We revamped and improved our Building Success Program curriculum – Boot Camp, Tech Steps, and Biz Steps. In conjunction with that we were able to graduate 59 from our Biz Steps program – exceeding the total of prior three years. It has been inspiring to see our diverse clientele starting a variety of businesses bond together as a cohort as they progress through the program, become more motivated, confident, and an encouragement to each other as they share their ideas and challenges.
Our volunteers have been an awesome resource for EGBI. We are thrilled that of the 70 evening training sessions we held in 2011, 50 of them were facilitated by highly regarded “subject matter experts” in the areas of law, insurance, banking, accounting, and marketing. Their professional insight and experiences with small businesses has been invaluable for our clients.
We are developing new services that are relevant and important to our clients including building a small business financing process that we expect to become more important in the coming year.
Finally, we have ramped up our incubation usage to an all time high and have seen the next generation of clients “graduate” to their own space.
You should look for our first Annual Report to be published shortly.
In 2012 we are looking forward to growing the number of clients served by 20%. Additionally, we are very excited as we evaluate piloting at least a couple of new training programs. Our future success is dependent on a steady stream of passionate clients, dedicated volunteers, and an expanded base of investors to fuel our growth plans.
We look forward to your support and endorsement of EGBI!
Greetings and Announcement
By Al Lopez, EGBI Executive Director, April 1, 2012
Greetings everyone. It’s hard believe it’s already April. The first three months have zipped by and 2012 is rolling with quite a few new activities and one significant new face. I will be updating you from time to time via this blog.
In this first entry, I want to welcome Nayeli Gallegos who has joined EGBI as our first marketing analyst. With our growing network and expanding programs/services, we are fortunate to have someone with Nayeli’s experience join our team. As many of you know, Nayeli was previously at the Greater Austin Hispanic Chamber of Commerce for several years where she was a great asset. With her addition, you will see more frequent and complete communications and updates from EGBI. Her experience and network of connections will bring tremendous value to our organization and the clients we serve.
In my next post I will give you a snapshot of 2011 and a preview to what we are excited about working on this year.