hi everyone this is David welcome to how to build a highly profitable business this is Session One introduction I am the senior account executive for consortia small business accountants so who should be here anyone who is considering starting or has started a small business why should you be here this series presents a proven highly profitable small business model if you plan to start or have started a small business you should attend the series will save you a lot of time and money as well as headaches what should you expect by the end of this series you'll know how to build a highly profitable business now as far as what we'll be addressing over the next seven sessions first of all we're going to of course have our introduction today kind of lay things out for you next session we'll talk about management or how to increase your financial condition profit cash flow and Equity the third session we'll talk about research and development or developing highly profitable services and products session four will'll talk about Marketing in sales or consistently generating customers and by the way I'll use the term customers in today's presentation but you may refer to them as clients or patients or jobs and then of course we'll talk about section five production how you perform services or provide products productively session six will talk about Finance or how to generate cash and increase cash flow and finally in session seven we'll talk about customer service or in other words how you retain customers how you increase customer revenue and how you increase customer referrals so let me stop here a second and have you just answer yourself this question why do you want to start your own business or for those who started your business why did you start your own business so again pause this take a moment and literally just jot down the first things that come to your mind hopefully you can think of three four or five things because we're going to talk about how we're going to help you accomplish those desires okay welcome back so what is a small business a business is a means to an end it's a vehicle that takes you where to want to go so that's exactly what a small business is you decide what you want you see that a small business is going to help you get there and therefore you take advantage of the small business to help you meet your desires now I also want to point out that there's basically four people or four segments that benefit from a business number one of course is the owners number two is the employes number three is the customers and number four is the community would hope that as you start or build your existing small business that you'll always remember that the business is a means to an end for each of these Shake shareholders or stakeholders now there's basically three types of small businesses one is a freelancer two is a sole proprietor three is a limited liability company or an LLC now that's the most common types of Incorporated types of organizations which we'll talk about in a moment you could also be an escorp for example or other business entities but today in small businesses the most common incorporated business is limited liability companies so let's talk about a freelancer a freelancer is a self-employed independent contractor who earns wages on a per job or per task basis typically for short-term work self-employment is earning income without being employed and paid by someone else self-employed individuals generally must pay self-employment tax as well as income tax now just to make sure we're on the same page here when you're employed and have an employer your employer is going to split with you in half your self- employ or your your employment tax in other your F Medicare and together it's 15.3% of your earnings however the employer will pay 7.65% and you of course withhold the other 7.65% but when you have your own business as a freelancer for example you'll be paying the full 15.3% there will be nobody there to match you and that's perhaps one of the biggest eye openers when someone starts a small business okay so self-employment is earning income without being employed and paid by someone else self-employed individuals generally must pay self-employment tax as well as income tax Freelancers don't have employees and they can subcontract their work to others as far as soulle Proprietors a sole proprietor is someone who owns an unincorporated business by themselves elves unincorporated businesses are sold proprietorships owned by a single individual and Partnerships owned by two or more individuals and once again back to the limited liability company the LLC an LLC is a corporate structure that protects its owners from being personally Su excuse me being personally pursued for repayment of the company's debts or liabilities and that's the reason why you become Incorporated for that protection now in a business if you look at the the overall business itself you should really look at it as a business system with components so a business system is a set of interconnected business processes that work together to achieve the company's primary business objectives each process has a defined set of objectives policies and procedures that are applied to achieve their respective results so it's a system so what are the primary Financial business objectives in other words what must take place in order for our business to become successful number one we have to monitor our financial condition and that's typically through a balance sheet what are our assets what are our liability ities if we take our the value of our assets less our liabilities then we have our equity and obviously we want our Equity to be as strong as it can be number two is profit which is communicated through the income statement or what's referred to as a profit and loss statement what was our profit for this month this quarter this year number three is cash flow now this is portrayed through the statement of cash flows the statement of cash flow shows you how much cash you had coming in what it was used for what was your beginning cash what was your ending cash and how much did you increase or decrease compared to the previous year so again information is extremely important number four owners Equity this is also referred to as a statement of changes in owner's equity so once again again you start with what was your Equity at the beginning of the year what changes occurred and what was your Equity at the end of the year the point being made is that you typically would State at the beginning of the year what you want to accomplish for this coming year how do I want my balance sheet to look at the end of the year compared to how it looked at the beginning of the year how does my profitability look at the end of the year compared to what it was the previous year how does my cash flow that is from our statement of cash flows how does it look or how do I want it to look at the end of the year compared to again last year and as far as our owner's equity again at the end of the year what do I Want My Equity to be as compared to what it is today at the beginning of the year so this is kind of like when you drive a car and you have a dashboard you look at certain instruments to tell you how the car is operating how fast are you going do you have enough gas so on and so forth and so the whole thing a small business needs to understand is they don't have to be an accountant they don't have to be a financial expert but they do need to be able to have this information to see how the business is performing and how it performs this year compared to last last year in the previous year so on and so forth so let's talk about these interconnected business process objectives how we reach th that business performance so there's six objectives and because there's six processes and so your objectives are number one you want to gain a Competitive Edge over your competition why should my market come to me over those people I I compete with number two we're always looking for ways to increase our profit and we're always wanting to have more profit each and every year number three I want to always look for ways to increase my customers how can I get more customers what do I need to be doing number five I always want to increase my cash flow number six I want to retain the customer customers I have I want to increase customer revenue from those existing customers and I want to increase customer referrals so these are some objectives that if you're doing these things you will have a successful company so how do we achieve those things well we talked about six vital objectives so we're going to talk about six vital Core Business Pro processes that needs to take place in every company so let's begin so the first thing is we need to do research and development so for example if I were to starting my business I should have done my research of the market I plan to serve and I need to have developed the products or Services I want to offer them and then of course once I've developed the products and services I'm going to offer to my Marketplace then I need need to communicate it the word marketing is synonymous with the word communicating so I'm going to communicate to my market that I have what they need and what they want and that's going to generate an interest and generate what we call Prospect or perspective clients in other words I hear your message tell me more I'm interested and so then what happens is the sales process Ki in so how do we take a person who's been brought to our door and how do we take them through the door convert a prospective client into a client or customer that's the job of sales now I've sold something either a service or a product and so therefore I must now produce that product or deliver that product or perform that service now once I've done these things I'd like to be paid for what I've delivered or what I've built or the service I performed and thus Finance kicks in and finance needs to do its job to make sure that we get paid for what we've delivered developed or sold and then of course I want to make sure that when I first pick up a client that client stays a client and not only that but they're also referring what it is I have to sell to others so that's what customer service does so it's a cycle and so in other words you never stop research and developing you're always looking to improve your products improve your services you're always looking to develop based on the research of your Marketplace and the trends what's Chang what's different what are they looking for okay and so then again you again Market it and then you sell it and then you produce it and then you finance it and then you provide customer service and so it's a continuous cycle over and over again and of course it needs to be managed okay and so that's the role of a manager is not to be working in the business doing R&D Marketing sales their job is to make sure that each of these processes is working and they're working together creating synergy so interconnected business process objectives so now you see how this ties in to those six objectives so once again management their job is to help us gain a Competitive Edge over our competition and make sure that all these other processes are taking place simultaneously two research and development we're always looking for ways to increase our profitability by again improving our products and services offering more products and services Etc three marketing and sales is how we increase our customers number four productivity is how we're again able to deliver our products and services or perform them or build them okay in the most efficient manner possible but yet still receiving or achieving that quality that we're looking for five Finance we're looking for ways to increase our cash flow okay so in other words it's not one thing just to get paid but we want to get paid as soon as we can now we'll talk about all of these things in the other sessions and finally number six customer service the reason we go the extra mile in perform customer service is because there's benefits you'll retain the customers you have you'll increase your customer Revenue because your existing customers will continuously buy from you and then of course you'll increase your customer referrals your customers will refer other people to you as long as you have good customer service the reason why you lose business is because you're not performing good customer service that's how you gain customers and keep them now let's talk about small company problems so if you were to talk to most small businesses especially in the early goinging they're going to have problems and you're going to find that their problems typically deal with one of these six things it's either because they're not competitive they're not profitable they don't have the customers they need they're not productive they don't have sufficient cash flow or they're not retaining the customers they have they're leaving us for our competitors okay and so that's the reason why the small business administration tells us that about 80% of small businesses will fail in the first five years it's not because they're not great at what they do it's because they can't do all these things by themselves and that's the problem so the reason for small business problems is that most Freelancers sole Proprietors and llc's that is the partners or owners or the single member owner don't Implement Core Business processes or Implement them effectively they're neglecting one or more of those processes and they're not working together simultaneously that's where problems occur so if I show you this you'll understand how these fit together so as far as core business process results if we perform research and development we're going to continuously increase our profit if we perform marketing we're going to continuously generate prospective clients if we're doing sales we're going to consistently generate customers if we're producing we're going to increase productivity if we're Finance or pertaining to finance the process of Finance we're going to looking for ways to increase our cash flow and finally customer service is going to enable us to retain our customers in increase customer revenue and increase customer referrals that's the whole point that's why these things are essential and must be done now think about this for a second think about the most successful companies so say for example if I were to say name a very successful company you might say apple which obviously is a very successful company why because they have a CEO who does not work in the company but they work on the company they're constantly managing these processes making sure that they're working in and of themselves and working together and so they make sure that research and development is happening especially of course at Apple they make sure the market and sales processes are happening they make sure the production that they're getting the quality they're looking for at the least amount of cost they're always looking for ways to finance these products they're always looking for ways to develop better customer service so any successful company that you can think of I absolutely guarantee you they're doing all of these things so in a small business structure we should be doing these things as well and so again you've heard the phrase in small business don't work on your business excuse me don't work in your business work on your business and that doesn't mean that you the business owner you have to be the manager in some cases you may want to Outsource or employ a manager if that's not your thing and you do your thing which may be for example research and development okay but the point is is that you want to be able to get to this point as soon as you can okay now I'm not saying that you're going to begin day one where you have the complete small business structure in place very few people do but you want to work towards this in other words this is a vision and the sooner you get to it the more successful you will be so how do you get it done business owners have three ways to get things done number one they can do it themselves number two they can hire an employee to do it for them and number three they can Outsource to an independent contractor and each of those are appropriate depending on your particular status now what I will say to you is that you should not be doing anything yourself except what you absolutely have to do nobody can do it as good as you can nobody's as good as you are that's what you love to do okay so you need to decide which of those six things you're going to do because you do it so well and you love doing it and you're good at it and then you're going to hire employees or Outsource to independent contractors that will do everything else that you're not able to do now again very few small business people can start on day one and have the financing to be able to do these things okay and so the idea is to get there as soon as you can so in essence that's our basic introduction and so next session we're going to talk about Management in more detail how do we increase Financial condition profit cash flow and Equity week three we'll talk about or I should say session three will talk about research and development how do we develop highly profit services or products lesson or session four we'll be talking about marketing and sales how do we consistently generate customers number five we're going to talk about production how do we perform our services or provide our products more productively number six we'll talk about Finance how do we generate cash and increase cash flow in session seven we'll talk about customer service how do we retain customers increase customer revenue and increase customer referrals now I understand this may be a little overwhelming I think in your mind it makes sense but how am I going to get there okay and so we're going to talk about those things as we talk about each session and so it can be done you can do it within the next five years for example if you know what needs to be done and how it should be done okay and then of course that's what this whole program is all about how to build a highly profitable business thanks for attending I hope this has been helpful looking forward to you attending our next session management increasing Financial condition profit cash and Equity thank you have a great day