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Do You Have the Characteristics of Successful Entrepreneurs?

Do you know what it takes to join the ranks of successful entrepreneurs?

Do You Have the Characteristics of Successful EntrepreneursAs Score Mentors we are often asked, “what does it take to be a successful entrepreneur”?

What is an Entrepreneur?

Entrepreneurship is traditionally defined as the process of designing, launching and running a new business. It typically begins as a small business, such as a startup company, offering a product, process or service for sale or hire. The people who do so are called ‘entrepreneurs‘. They are generally identified as having the…

“…capacity and willingness to develop, organize, and manage a business venture usually with considerable initiative and risk in order to make a profit.”

Twentieth century economists such as Joseph Schumpeter define an entrepreneur as an individual willing and able to convert a new idea or invention into a successful innovation.

Entrepreneurship employs what Schumpeter called “the gale of creative destruction” to replace in whole or in part, inferior offerings across markets and industries, simultaneously creating new products and new business models.

Entrepreneurs, therefore, are leaders willing to take risk and exercise initiative. They take advantage of market opportunities by planning, organizing, and deploying resources often by innovating to create new or improving existing products or services.

While entrepreneurship is often associated with new, small, for-profit start-ups, entrepreneurial behavior can be seen in new and established firms and in for-profit and not-for-profit organizations. These include voluntary sector groups, charitable organizations and government. For example, in the 2000s, the field of social entrepreneurship has been identified, in which entrepreneurs combine business activities with humanitarian, environmental or community goals. Entrepreneurship within an existing firm or large organization is referred to as intrapreneurship and may include corporate ventures where large entities “spin off” subsidiary organizations.

The most significant characteristic that differentiates entrepreneurs is that they are risk takers and they tolerate uncertainty. If that were all that is required for success, then it appears that you need nothing more than to be a gambler. Obviously, more is required.

While there is no simple answer, research indicates several characteristics in addition to tolerance for risk and uncertainty that are commonly found in the personalities of successful entrepreneurs.

Successful Entrepreneurs Have:

  • Self Motivation – have the ability to wake up in the morning and immediately start working. Entrepreneurs do not waste away the day doing things that have no benefit to their business. Bosses told you what needed to be done. Now as an entrepreneur, you must know what needs to be done and take action to get it done.
  • Self Confidence – be confident in yourself, your product and your business. You need to know that your product can truly help people and that you are charging prices that are both fair to you, and your clients.
  • Behave Ethically and Morally – decide what you stand for and how you will conduct your business on a daily basis. Know before you get tempted to cross some line that could jeopardize your business.
  • Manage Time – this goes hand-in-hand with Self Motivation. You need to schedule your day and stick to that schedule. Your time is valuable. Take time to educate yourself on ways to improve your business or products. [Related: Staying Productive]
  • Sales – every business needs to develop a way to handle sales. An entrepreneur’s job is to develop the types of sales that work best for your business Constant effort should be on improving your sales skills.
  • Understand Finance – this a must if you are in business for yourself. Knowing how to balance a checkbook and keeping track of numbered invoices is all most small businesses need to do when they first start out. Remember to schedule time for your financial management.
  • Study Strategies – of successful businesses already doing what you wish to do and incorporate the best strategies into your own.
  • Value Quality – quality drive sales, which leads to business growth.

 Successful Entrepreneurs also meet these Requirements:

  • Clear, succinctly stated value proposition specifying benefits
  • Know target market
  • Strategic business plan
  • Unified, connected product line or service line
  • Competition based on a dimension other than price (e.g., quality or service)
  • Early, frequent, intense and well-targeted marketing
  • Tight financial controls
  • Sufficient start-up and growth capital
  • Corporation or LLC model, not sole proprietorship
  • One or more unique competitive advantages
  • Work experience in the start-up industry
  • Full-time involvement in the new venture

A SCORE mentor can help your through this process FREE! Click here to schedule a mentoring session.

Greater Phoenix SCORE also has classes and workshops on how to a start a business. Click here for the schedule.

Here are some free resources SCORE and the SBA.

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

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The Ultimate checklist for starting a nonprofit. 19 Sep

The Ultimate Checklist for Starting a Nonprofit

This is the third and final post in the Starting a Nonprofit Organization series.

Consider the following information before starting a nonprofit:

  1. Do you really need to be a nonprofit – being nonprofit is not easy.
  2. You cannot exclude anyone as a client unless certain there is specific criteria such as Boy Scouts.
  3. You must have a representative board – i.e. get others beside yourself to buy in (AZ allows board of one – bad idea but useful to get started).
  4. Caveat competition – which incumbents will you replace – not all nonprofits want to grow – funders should know the marketplace.
  5. Remember board controls (mission, bylaws, governance) – once you have selected them they can fire you.
  6. Nonprofits are not for time limited events e.g. bake sales but these activities can be part of funding sources.

Arizona requires nonprofits file financials annually. This may not be true with for-profits. Remember if you donate equipment, etc. (vs. lease or loan) and take deduction, you cannot take things back without tax consequences. In Arizona, a nonprofit must be an Arizona corporation or LLC and file with both the IRS and the State of Arizona. Be sure articles of the nonprofit designate beneficiary if assets ever sold otherwise the county will do this for you. To provide a service, you do not need to be a nonprofit – for-profits can contract to provide service to nonprofits i.e. market themselves and their services including writing grant requests for the contract.

Please be that sure potential clients understand that success as a nonprofit requires adherence to principles for good governance and ethical practice.

These include:

  • Legal compliance and public disclosure
  • Effective governance
  • Strong financial oversight
  • Responsible fundraising

Additionally, be sure clients carefully follow the checklist:

  • Remember the board is the governing body and can be self perpetuating – be sure bylaws flexible and board is diverse. It also has all the liability – even though federal and state laws may protect board our society is litigious – carry board liability insurance – ideal board size 7-9.
  • Mission statement includes who you are, what you do, why you are doing it, who you serve, where you provide the service, how you provide the service – caveat you cannot be all things to all people’
  • Be sure your business plan designates goals and responsibilities in these four areas:
    •  administration / management
    • program (goals and responsibilities)
    • marketing (funders and clients)
    • fund raising strategies (research grant organizations, etc)
  • Organization structure begins with community that needs your service followed by board, board committees, executive director, staff.
  • Register your name, get application from and file articles with AZ Corp. Comm. [specifically use handout language added to state suggested wording to insure you get IRS 501c(3)] – remember you are a non- member organization.
  • Articles must be published three times – follow rules – most cost efficient is Capitol Times (cost +/- $400 to $850) – keep articles simple – model and good resource for articles and minutes of first meeting is AZ Bar Association – be sure first minutes state 501c(3) filing – best to create your own bylaws (terms of office, frequency of board and general meetings, method of election, etc.)
  • Develop budget (pro forma projections) – include income and expense – must be approved by board since raising money is board responsibility – budget for general and board / officers liability (Nat’l. Volunteering Immunity Act not a total defense) – in AZ no trustees, only directors – be sure you have an accountant who understands nonprofit accounting (no current software is adequate to follow grants, designated gifts, etc.) – plan for annual audit and monthly statements – major accounting firms will give advice / make recommendations
  • With application IRS wants projected income and expense – (990’s may not be required if revenue under $25K) – put EIN on every page of application – tax exempt status should be confirmed by letter (not number).
  • Hints on IRS 1023
    • all pages are in duplicate (one for you – one for IRS)
    • for activities give IRS lots of information – use key words like volunteers, etc. to show nonprofit status – where needed use attachments
    • submit 872-C in duplicate

More FAQ’s

  • IRS letter seldom expedited – normally takes as much as six months or longer, depending on the thoroughness of the1023. Usually IRS comes back with questions – when answer usually get letter. If no response in 10+ months call your senator
  • Caveat UBI (unrelated business income) – if compete with for profits income taxable – many nonprofits sustain selves with UBI (keep accounting separate) – if unique logo on tee shirts then not competing with for profits
  • In AZ raffles are donations – caveat tickets can be requested at no cost
  • Nonprofits are not sales tax exempt in AZ – currently are property tax exempt but must file annually
  • Must file IRS and AZ filings on time to avoid heavy penalties and interest
  • Form 990 due on the 15th day of the fifth month following end of fiscal year
  • Be sure letters for all donations over $250 with proper language
  • For in kind donations get appraisals
  • If use independent fund raisers be sure they are bonded – commissions frowned upon
  • Be sure you pay all payroll and other business taxes on time – funders will not fund your mistakes
  • Best defense for board against liability claims – show good faith by:
    1. attendance at board meetings / training sessions / quorums
    2. accurate minutes
    3. cannot profit from service on board (no conflict of interest)
    4. be in compliance with bylaws
    5. successors – bring best possible on board – screen in good faith and check them out

Check out the Non-Profit classes that SCORE holds on a regular basis.

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include nonprofits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

 

 

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Do You Really Want to Become a Nonprofit? 7 Sep

Do You Really Want to Become a Nonprofit?

This is the first of a 3-part article on starting a Nonprofit Organization by Roger Robinson, PhD. and Certified SCORE Mentor

As counselors we are often faced with clients requesting guidance in starting a nonprofit organization. Keep in mind that the impact of the Nonprofit Economic Sector nationally is significant. It provides over five percent of the nation’s entire GDP. Employees of nonprofits account for over ten percent of the nation’s private sector workforce and over nine percent of all wages paid. In addition as recently as 2013, 62 million Americans volunteered contributing almost eight billion hours for an estimated value of $173 billion. In Arizona alone there are over 21,000 registered nonprofit agencies. Their revenue totals over 26 Billion and their assets exceed $43 Billion. Competition for board members, staff, volunteers and money is overwhelming.

Some SCORE clients are truly altruistic; they genuinely feel that they have a concept that will benefit the larger society that will enhance all our lives. Others appear to have the erroneous idea that they can more effectively benefit themselves by creating a nonprofit rather then by going the route of developing a for-profit business.

As noted in the SCORE Business Planning Tools for Non-Profit Organizations – Second Edition…

“In our democratic society we ask non-profit organizations to fulfill several important responsibilities, from providing public benefit and serving the underprivileged to advancing education and science and reducing the burden of government. We also expect non-profits to operate on a higher more noble plane than other organizations, and we insist they focus on public good rather than private gain in accomplishing their goals.”

Do You Really Want to Become a Nonprofit?Successfully operating a non-profit, according to Tom Fraker, requires fire in your belly, a focus on whom you serve, i.e. your mission as well as the ability to take no’s upon no’s, support from others, commitment, connection, and a balanced personal life.

With the above standards in mind, initially at least, we should take our usual approach, have the clients carefully explain their concept. Remind them that operating a nonprofit is, in fact, operating a business. We should take them through a thorough examination of their organization’s business plan, including their business model, their mission, vision, values, the environment they will be operating in, both external and internal, their goals and action plans. We should make them think through their management plans and their leadership skills, their personnel plans, their marketing plans and their financial plans. We must not let clients overlook the challenge of finding sources for start-up and operating funding. We should make them think through the inputs, activities, outputs and outcomes required for success. Today’s funders want to see value, measurable impact for dollars contributed.

If initially, at least, we treat both nonprofits and for-profits in the same way, the question then becomes how do they differ? While making a profit is not their primary motivation, nonprofits must generate revenue in excess of expenses (in fact make a profit / surplus). This means that nonprofits do not exist to make money for owners or investors. Instead they are dedicated to a specific mission.

Check out the Non-Profit classes that SCORE holds on a regular basis.

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include nonprofits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

 

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19 Profit-Watching Tips for Restaurateurs

A Checklist for RestaurateursIn the last of our series on Starting Your Own Restaurant, especially for budding restaurateurs, we pull everything together in a checklist.

Making a profit is the most important some might say this is the only objective of a business. Profit measures success. It can be defined simply: revenues less expenses = profit. So, to increase profits, you must raise revenues, lower expenses, or both. To make improvements, you must know what’s going on financially at all times.

Secrets of Success for Restaurateurs

  • CONTROL (168 hrs./week)
  • KISS – keep it simple stupid (menu / concept / etc)
  • WORKING CAPITAL / CASH FLOW

Here’s the checklist:

  1. Plan no profit first year – caveat debt service
  2. Initially request credit – negotiate for 7-30 days
  3. Try to avoid signing personally – especially not for ongoing product and supplies
  4. Negotiate all prices –insist on credit for spoiled food not seen on delivery or goes bad
  5. Good accounting system important (QuickBooks – we hold regular classes on using Quickbooks. Check out the schedule here.)
  6. Sandwich shops belong in industrial / commercial area
  7. Take out food service important potential source of income.
  8. Caveat location / competition / competitive advantage
  9. Should change menu every three months if possible
  10. Permit / license consultants available
  11. County courses available for bar employees re. Dram Act responsibilities / liabilities
  12. Employee food – 50% discount (on selected items) or special separate food free
  13. Caveat theft and waste / use of leftovers
  14. Portion control (advanced preparation) particularly for sandwiches (Subway model)
  15. Request credit on bad food
  16. Weigh / check in all food delivery – especially produce (check bottom layer of box)
  17. Caveat Health Dept. (utilize former Health Dept. employee to ensure up to code)
  18. Remember food handler’s card
  19. Advertising Resources – ValPak, local/weekly papers, Guerilla Marketing, social media, videos

 

If you’re thinking of start a restaurant or any type of business, get FREE Business Mentoring at a convenient location in the Phoenix Valley.

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

 

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A Building Guide for a Successful New Restaurant

We at SCORE are dedicated to helping you get started and become successful business owners. As we continue with the “So You Want to Start a New Restaurant” series, we deal with construction. Construction is always a challenge — not matter what you’re building!

Building Your New Restaurant

Construction

Building your new restaurantIf you are going to build or remodel a restaurant, your general contractor will need a set of scaled construction documents, often called “working drawings” for submittal to your local building and health department.

Typical drawings

Here is a list of typical drawings you’ll need for your contractor:

  • Cover Sheet with site and project information
  • Demolition Plan, if applicable
  • Store Front Elevations, if applicable
  • Partition/Construction Plan
  • Floor Plan with FF&E (Furniture, fixtures and equipment)
  • Environmental Plans for Health Department
  • Finish Plans and Schedules
  • Kitchen Equipment Elevations
  • Wall Elevations
  • Exhaust and Make-up Air Plan
  • Refrigeration and Curb Plans
  • Plumbing and Electrical Rough in Plans
  • Detail Drawings for custom cabinetry and fixtures
  • Furniture and Equipment Specifications
  • Reflected Ceiling Plan
  • Electrical and Telephone plans
  • Mechanical Plan/ HVAC Plan
  • Door, Window and Ceiling Details
  • Other

Building Codes

All your plans, drawings and specifications must be in compliance with the building and health codes that are applicable to your location and be approved by the following regulatory agencies.

  • County Health Department
  • Department of Building and Safety
  • Fire Marshall

Most restaurants must comply with the “Americans with Disabilities Act” (Mossier)

Construction Costs

  • Build out cost for a new restaurant +/- $80-150 per sq.ft
  • Furniture, Fixtures, Equipment +/- $20-30 per sq.ft. , consider used.
  • New, hot location rents = $28-38 per sq.ft.
  • Tenant Improvement allowance (TI) allowance (negotiable) up to of 20% rent.
  • Build Cost should not exceed 25% projected sales
  • Caveat gray vs. vanilla shell (gray totally unfinished) as well as allowance issues.
  • Caveat concept impulse (requires high traffic) vs. destination.
  • To project income calculate number of seats ( 2800 sq. ft. -> 100 seats incl. kitchen – total build out costs & fixtures = +/-_ 450k or $160/ft. furniture & equipment = 20-22% of total)
  • Remember parking safety and accessibility.

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

 

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8 Aug

Menus to Pricing: What a Restaurant needs to be Successful

As we continue our series that started with “So You Want to Open a Restaurant?” — here we get into the nitty-gritty of the restaurant business.

Restaurant Processes and Checklists

Develop detailed process flows and checklists that document the steps of how you do business. This is the first step in building a restaurant capable of producing consistent products efficiently with the financial results expected. These processes and checklists should be designed to use as a guide in deciding what the restaurant should be doing in the following key operational areas:

  • Manager’s opening
  • Manager’s shift change
  • Manager’s closing
  • Customer Service
  • Purchasing
  • Receiving
  • Storage
  • Preparations
  • Cleaning
  • Training

Preparing Menus and Setting the Right Price

Menus to Pricing: What a restaurant needs to be successfulPlan your menu carefully.

Know what items your customers prefer and how they like them prepared. Provide variety while maintaining stable cost averages.

Menu prices are a combination of food costs and what is needed to meet expenses and realize a profit. Generally, the price of an item is approximately more then three times the food costs, depending on restaurant type, operating expenses and competitors’ prices.

To establish pricing:

  • Estimate your sales—counter-balance higher cost items tagged with lower mark-up, with higher mark-ups on lower cost items;
  • Maintain a desired overall food cost percentage including waste and shrinkage, usually 30% or less of gross sales to obtain a normal margin of profit;
  • Balance items ranging in popularity—monitor high demand items which can determine your success.

Cost Control

In the restaurant business, you must have procedures for controlling inventory and costs. Ask people in the industry for information about procedures for:

  • Purchasing and Inventory Control. Develop centralized control over all buying and physical inventory that is easily defined and integral to the profit and expense control process. Know exactly what minimum inventory exists and needs to be maintained. This capability can be obtained with QuickBooks and other equivalent software programs – but it must be kept current to be effective.
  • Most of the time, purchasing is done over the telephone, by fax, or online. Often no contract is signed between the purchaser and the supplier; therefore, it is essential that you choose your supplier carefully.
    Develop specifications on food brand names, size, quantity, grade/weight, delivery time/place, emergency deliveries, availability and policies for substitutes or damaged goods. Entertain bids from multiple sources and get the best product for the lowest price. Use a Purchasing and Receiving Form.
  • Receiving. Check all deliveries against the Purchasing and Receiving Form, focusing on three things: quantity, price and quality (i.e., temperature: frozen goods must be frozen); packaging should be intact. Make sure specifications are met. Careful recording will show short shipments, price variations and weight differences.
  • Budgeting and Projecting. Establish a cash budget and maintain cash flow projections on a continual basis.
  • Calculating Monthly Food Costs. Determine the actual cost of food consumed and the actual cost of food sold. This is a combination of opening inventories, purchases, adjustments and closing inventories. This ratio should remain relatively constant.
  • Calculating Beverage Costs. Record all bottle deliveries and purchases.
  • Preparing Food. Make sure staff understand portion sizes (photograph entrees or give written instructions) and set up a recipe reference file to list dishes, portions and supplies needed.
  • Ensure refrigerated and frozen products are quickly placed in a cold storage – storage temperature for dry goods (between 10-21 C) and frozen goods (-18 C or less).  Rotate your stock to ensure that oldest items are used first before the new stock.

Check our upcoming classes as we hold Quickbooks classes often

 Thinking of starting a business? How about running the idea by someone who’s been there and done that? A SCORE mentor can help you for free! There are over 70 mentors in the Greater Phoenix Valley. Schedule your free session now!

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

 

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