Return to Main Office

• Introduction
• Idea Generation
• Market Research
• Marketing & Branding
• Financial Literacy
• Financial Literacy II
• The Pitch & Storytelling
• Business Planning
• Legal Considerations

1. List all your income sources and their amounts under the “Income” section. You can add more rows with a right click “insert row.”
2. List all your expenses and their amounts under the “Expenses” section. You can add more rows with a right click “insert row.”
3. Calculate the totals for both income and expenses by adding each of those categories together.
4. Subtract the total expenses from the total income to get your net income. This shows you how much money you have left after covering all your expenses.

Recordkeeping:

It is important to understand where your money is going. This can help you to plan for savings, see where money is mostly being spent, and plan for future issues, such as rising prices for certain business expenses.

Activity: Start a monthly expense tracker. Use a notebook or a spreadsheet to record all business-related expenses for a month. At the end of the month:

Review your spending to see where your money went. Where/ on what items did you spend the most money this month?

Are there any areas/items you can save money on next month? For example, if you ended up buying twice as many cups for your hot cocoa delivery business – maybe next month you see about buying cups in bulk quantities to save money over the next couple of months on cups.

Were there any surprises? How much money do you need to have in savings/back-up for surprise expenses? For example, we didn’t plan to have to deliver hot cocoa by bicycle on icy roads and the bicycle chain broke – had to buy a new one. It wasn’t a planned expense, but it was an expense and it’s a good thing we had $15 extra in our bank account to pay for that!

• Start a monthly income tracker. Keep track of every dollar you earn! This is not limited to profits from sales. You might get donations! There may be monthly interest earned on your savings or checking account in a bank. Did you receive any additional money this month from any investors?
• You can definitely start drafting monthly budgets with expected expenses and income before you even start! If you make a estimated budget, be sure to compare your estimates with actual expenses and income to see how close/far off you were with your estimation. Typically, when seeking investors (see unit 3 on funding strategies!) you’ll need to have this estimated budget well prepared.

Budget forecasting:

Activity: Now that you have a good idea of monthly expenses and income from your fantastic record keeping you are better able to predict – or, said differently, project or forecast– your business’s budget over the coming months.

Looking at your monthly recordkeeping for expenses and income, what is your first month’s total earnings? (Use the above budgeting example to determine total earnings).

Of your first month’s total earnings, how much of that do you need to re-invest in the business? How much do you need to put in savings for unplanned expenses?

Whatever is left over after savings and reinvestment is profit! Money in your pockets. Adjust your expenses, as needed, to achieve a savings or profit goal. Keep tracking your progress!

Cost management:

Activity: Cost management is about keeping costs in-line with projected expenses and reducing expenses to increase total earnings and, potentially, profit.

• Review your list of expenses – where can we save money on expenses? Can we buy hot cocoa cups in bulk? Is there a sale on marshmallows in August for camping season? Stock up for winter hot cocoa season!
• Similarly, review your list of income – where can we increase income? Are we seeing more income from interest on having a savings account with a specific bank? Are we able to use a credit card to purchase items that gives us money back on future purchases? Bonus income!

Problem-solving:

Activity: Even with solid budgeting, budget forecasting, and cost management, life is unpredictable, and businesses are no different. We have to plan for scenarios that might never occur! It’s important to plan for back-up solutions to potential problems. These plans are called contingencies.

Brainstorm a list of potential financial problems for your business (e.g., unexpected rise in the cost of hot cocoa ingredients, getting more snow than is safe to deliver on your bicycle and losing sales, or an egg shortage limiting the ability to make sugar cookies for sale). For each potential problem, brainstorm solutions and strategies to address these issues. It can be helpful to discuss these scenarios and solutions with friends, family, or fellow entrepreneurs. You might also seek additional support at a Worksource location for helping to plan contingencies.

Communication:

Activity: Once you have a pretty good idea of your budget, projections, and contingencies, you’re ready to take this business plan to investors.  As mentioned above, you’ll often need a draft budget and forecasted earnings to take to potential investors, including banks, if you are looking for loans or other start-up capital. In addition to the actual documents and numbers, you’ll need to be able to talk about the documents and numbers! Especially if this is a new part of the process to you, it is very recommended to talk it through with your friends, family members, or entrepreneur support communities.

Clearly explain your budget, forecast and contingencies, without using too many words that can confuse the listener. Ask for questions!  Remember to ask for their feedback on your presentation, overall, in addition to any specific feedback they might have about the budget plan.

Attention to detail:

Activity:  It is really important to double and maybe triple check your financial documents and budgets for errors and inconsistencies. Check for things like incorrect math calculations, missing information, or misplaced expenses.

• Are all the numbers recorded accurately? Especially if you’re using spreadsheets or electronic accounting tools, double-check the decimals and zeros are all in the right places! Mistakes are human.
• Was the math calculated correctly? Double-check additions, subtraction, and any other calculations you’ve made. Automating math, in programs like Excel or Google Sheets is helpful – it reduces the likelihood of errors. However, be sure to double-check that the cell formatting has all of the numbers rounding to the same number of decimals.
• If you’re using a pen and paper to do accounting, no shame in the game! Many of us learn and remember things better when we actually write them out. In this case, in addition to double-checking your calculations, take the first pass in pencil. Once you feel really good about the math and numbers being correct, then you can make a final draft in pen. You might even keep a separate notebook as your official “ledger” or accounting statements for income and expenses where you record final numbers in ink and keep a separate notebook for calculations and first drafts.

Goal: Understand different investment avenues and funding options available to entrepreneurs.

Topics: Types of financial streams including public, private, and crowdfunding.

You’re ready to turn your ideas into action and get the business going! I’m sure you’ve heard it said, “you got to have money to make money.” That is, to a certain extent, true. Even starting small means starting somewhere. There are several different kinds of “start-up” money to launch your business. In some cases, one approach will make the most sense. Other cases, you might want to blend a couple of different approaches to create what is called “diversified funding streams.” This just means you’re not relying only on one source of money and, that if something were to happen to that one source, you have some back-ups in place. Here are the primary start-up funding strategies:

Bootstrapping: Starting and growing a business using your own money with no additional, outside funding.

• Pros: Full ownership! All your profits are yours to keep. Also means you’re not in debt to anyone if something goes wrong.
• Cons: It can be harder to go bigger faster unless you have a lot of cash on hand. If something goes wrong, it is a personal loss and has a much higher financial risk.

Equity financing: Raising money by selling “shares” of the company. This usually means you’re also planning to share profits or “capital” with shareholders.

• Pros: Can provide a lot of “capital” without having to worry about debt/owing anyone money.
• Cons: It might mean that you don’t get to make decisions for your business without the input from your financers. You will likely have to share a portion of profits with your investors.

Debt financing: Obtaining loans or lines of credit from a bank or other lending partners.  Banks or CDFIs are offering what we call “private” funding. Government loans are called “public” funding, because these are paid for with taxpayer dollars.  Whether private or public, debt/loans mean that you owe the money back to the partner you borrowed it from, sometimes with interest. Microloans: Small loans (usually less than $5k, to very small businesses, typically through CDFIs or nonprofit organizations that may have more accessible interest rates/repayment plans.

• Pros: Can enable a quicker start to the business with more capital available to you up-front. Helps business owners to retain control over their business.
• Cons: Regular loan payments (typically monthly) will draw away from profits, which could limit flexibility. Also, if something goes sideways with the business, you will still owe the money back or have to go through defaulting on loans. This could negatively impact your credit score.

Grants and competitions: Applying for grants or participating in startup competitions. Grants can be private or public. Grants mean you do not owe anyone the money back; it is not a loan and there is no interest.

• Pros: Grants are essentially free money. Usually, there’s a specific limit on the grant – or in a competition, a specific dollar amount being awarded – but its yours to use how you want to.
• Cons: The limit on the available funds could limit your business growth/might not meet all your needs. Competitions/grants can be highly competitive and you may have to dedicate more time to applications, preparing for competitions, etc.

Crowdfunding: Raising funds from a large number of people online. Think GoFundMe type activities. Crowdfunding can also involve some of the above methods – using debt crowdfunding or equity crowdfunding.

• Pros: Not only are you gathering capital from a lot of different investors, but you’re also creating a buzz around your business at the same time.
• Cons: Can be time-consuming to stay on top of managing a crowdfunding strategy, communicating regularly with participants, and will require strong marketing/branding strategies to get the message out in an effective way.

Activities:

How do I decide which type of start-up funding is right for my business? Consider:

• How quickly do I think I will start making a profit with this business?
• How big of a profit will I make? How soon? Will profits grow over time?
• What is my plan if something happens, and I have to close my business? Would I be able to pay back anyone that I owe money to?
• How much time do I have to organize start-up money?
• How much money do I personally have to invest in this business?
• What industry and business model am I considering?
• What stage of “start-up” am I at?
• How much money do I need to start/grow my business?

Existing resources:

• Business Loans and Grants for Washington state businesses
• Small Business Flex Fund
• Washington Employee Ownership Program (WA-EOP) – Washington State Department of Commerce
• Business Loans and Grants for Washington state Businesses
  State Result | Community Development Financial Institutions Fund

The three key financial statements, and why they are necessary

Income statement (profit & loss statement:  A ledger tells you how much money you’ve earned and spent, but it doesn’t show profitability clearly. The income statement organizes revenue and expenses, making it easy to see if your business is actually making money.

Key components:

• Revenue (Sales): Total earnings from selling products/services.
• Cost of Goods Sold (COGS): Direct costs of producing goods/services.
• Gross Profit: Revenue minus COGS.
• Operating Expenses: Business costs such as rent, wages, and marketing.
• Net Profit (or Loss): What remains after all expenses.

For example:  HC/DC earns $5,000 in sales in the first year. The cost of inventory (ingredients, mugs, etc.) is $2,000, and rent for the kitchen where we cook it up, wages to my one employee, and marketing costs total $1,500.

Net Profit = $5,000 – ($2,000 + $1,500) = $1,500

• Here’s how we calculate Gross Profit Margin: ((Revenue-COGS)/Revenue) x 100
• So, gross profit margin for HC/DC is: ((5,000-3,500)/5,000) x 100 = 30
• A healthy gross profit margin for retail businesses is 30%-50%.

Bottom line: Is HC/DC in a healthy profit margin range? Yes! Just barely at 30%

Balance Sheet: A ledger tracks transactions, but a balance sheet shows the overall financial position of a business.

Key components:

• Assets: What the business owns (cash, inventory, equipment).
• Liabilities: What the business owes (loans, accounts payable).
• Equity: The owner’s investment in the business.

For example:  HC/DC has $3,000 in cash, $1,500 in kitchen equipment, and $1,000 in accounts receivable. It owes $2,000 on a loan and $500 in unpaid bills.

Assets – Liabilities = Equity

• ($3,000 + $1,500 + $1,000) – ($2,000 + $500) = $3,000
• A current ratio (assets ÷ liabilities) of 1.5 or higher is considered financially stable.
• Assets = $5,500 and Liabilities = $2,500. So, $5,500/$2,500

Flip tile: What is the ratio of assets to liabilities for HC/DC? 2.2

Cash Flow Statement: A ledger records money coming in and going out but doesn’t track when cash actually moves. A cash flow statement ensures a company has enough money to keep running.

Key financial calculations for small business owners

Net income formula: Revenue – total expenses = net income

• What it means: This tells you how much money your business actually made after all expenses are deducted. If your net income is low or negative, it might be time to adjust pricing, reduce costs, or boost sales.

Gross profit margin formula: ((Revenue – COGS) ÷ Revenue) × 100 = Gross Profit Margin

• What it means: This shows how efficiently your business is producing goods or services. A low margin means you might be paying too much for supplies or underpricing products.

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) formula: Net income + interest + taxes + depreciation + amortization = EBITDA

• What it means: This calculation gives a clearer picture of your business’s operational profitability before considering taxes or loans.

Current ratio (liquidity check) formula: Current assets ÷ current liabilities = current ratio

• What it means: This shows if your business has enough assets to cover short-term debts. A higher ratio means stronger financial health.

Debt-to-equity ratio formula: Total liabilities ÷ owner’s equity = debt-to-equity ratio

• What it means: This ratio compares what your business owes to what you own. A lower ratio means less financial risk.

Industry benchmarks:

• Retail gross profit margin: 30%-50%
• Food service gross profit margin: 55%-65%
• Service business net profit margin: 10%-20%
• Healthy Current Ratio: Above 1.5
• Manageable debt-to-equity ratio: Below

Final takeaway: Why businesses move beyond a ledger.

A ledger is great for tracking transactions, but financial statements turn that data into actionable insights. It helps small business owners:

• Understand profitability (Income Statement)
• Assess financial stability (Balance Sheet)
• Manage cash flow (Cash Flow Statement)
• Make informed decisions about pricing, costs, and expansion
• Provide financial data to investors, lenders, and tax authorities

By mastering these financial tools, small business owners can reduce financial risk, improve operations, and achieve long-term success.

Goal: Introduce modern financial tools and technologies that can aid in business finance management.

Topics: Financial software, online banking, mobile payments, and cybersecurity.

As soon as you start accepting or spending money as your business, you should open a business bank account. Common business accounts include a checking account, savings account, credit card account, and a merchant services account. Merchant services accounts allow you to accept credit and debit card transactions from your customers.

You can open a business bank account once you’ve gotten your federal EIN.

Most business bank accounts offer perks that don’t come with a standard personal bank account.

• Protection. Business banking offers limited personal liability protection by keeping your business funds separate from your personal funds. Merchant services also offer purchase protection for your customers and ensures that their personal information is secure.
• Professionalism. Customers will be able to pay you with credit cards and make checks out to your business instead of directly to you. Plus, you’ll be able to authorize employees to handle day-to-day banking tasks on behalf of the business.
• Preparedness. Business banking usually comes with the option for a line of credit for the company. This can be used in the event of an emergency, or if your business needs new equipment.
• Purchasing power. Credit card accounts can help your business make large startup purchases and help establish a credit history for your business.

Find an account with low fees and good benefits

Some business owners open a business account at the same bank they use for their personal accounts. Rates, fees, and options vary from bank to bank, so you should shop around to make sure you find the lowest fees and the best benefits.

Here are things to consider when you’re opening a business checking or savings account:

• Introductory offers
• Interest rates for savings and checking
• Interest rates for lines of credit
• Transaction fees
• Early termination fees
• Minimum account balance fees

Here are things to consider when you’re opening a merchant services account:

• Discount rate: The percentage charged for every transaction processed.
• Transaction fees: The amount charged for every credit card transaction.
• Address Verification Service (AVS) fees
• ACH daily batch fees: Fees charged when you settle credit card transactions for that day.
• Monthly minimum fees: Fees charged if your business doesn’t meet the minimum required transactions.

Payment processing companies are an increasingly popular alternative to traditional merchant services accounts. Payment processing companies sometimes provide extra functionality, like accessories that let you use your phone to accept credit card payments. The fee categories that you need to consider will be similar to merchant services account fees. If you find a payment processor that you like, remember that you’ll still need to connect it to a business checking account to receive payments.

Get documents you need to open a business bank account

Opening a business bank account is easy once you’ve picked your bank. Simply go online or to a local branch to begin the process. Here are some of the most common documents banks ask for when you open a business bank account. Some banks may ask for more.

• Employer Identification Number (EIN) (or a Social Security Number (SSN), if you’re a sole proprietorship)
• Business formation documents
• Ownership agreements
• Business license

Banks vs credit unions

When considering a bank versus a credit union, it’s essential to understand the key differences between the two.

• Banks: Typically, for-profit institutions owned by shareholders, offering a wide range of financial products and services, including savings accounts, certificates of deposit, and loans. They often have more branches and advanced technology but may have higher fees and lower interest rates. Banks are known for funding political initiatives and big corporations like the oil industry.
• Credit unions: Not-for-profit, member-owned cooperatives that provide similar financial products and services, but often with lower fees, better interest rates, and more personalized customer service. They tend to serve specific regions or communities and may have fewer online tools and less comprehensive mobile banking. Credit Unions are known to invest back into their local community, creating a circular economy.

In terms of ownership, banks are owned by shareholders who aim to make a profit, whereas credit unions are owned by their members, who share profits in the form of better rates and lower fees. Both banks and credit unions offer federally insured deposits up to $250,000, ensuring the safety of your money.

Ultimately, the choice between a bank and a credit union depends on your priorities and needs. If you value convenience, a wide range of financial products, and advanced technology, a bank might be the better choice. However, if you prefer personalized service, lower fees, and better interest rates, a credit union could be the way to go.

Mobile payments vs cash

Mobile payments and cash are two different methods of making transactions. Mobile payments refer to the use of a mobile device, such as a smartphone or tablet, to make payments for goods and services. This can be done through various mobile payment services, such as Apple Pay, Google Pay, or Samsung Pay, which store payment information and allow users to make transactions digitally.

On the other hand, cash is the traditional method of making payments using physical currency. While mobile payments are becoming increasingly popular, cash is still widely used, especially for small transactions or in areas where digital payment infrastructure is limited.

According to recent studies, the majority of Americans believe that mobile payments will eventually replace cash, but this change is not expected to happen immediately. Many consumers still prefer to use cash for certain transactions, and the demand for cash remains strong. Additionally, some segments of the population, such as low-income consumers or those in rural areas, may not have access to digital payment methods or may prefer to use cash due to various reasons.

The rise of mobile payments has also raised concerns about the potential for a “cashless society” and the impact it could have on certain groups of people. Some experts argue that a cashless society could exacerbate existing social and economic inequalities, as those who do not have access to digital payment methods may be left behind.

Overall, while mobile payments are becoming increasingly popular, cash is still a widely used and accepted method of payment. The choice between mobile payments and cash ultimately depends on individual preferences and circumstances.

• Mobile payments: A digital method of making transactions using a mobile device, offering convenience and security.
• Cash: A traditional method of making payments using physical currency, still widely used and accepted, especially for small transactions or in areas with limited digital payment infrastructure.

Cybersecurity

Check out this Ted Talk – Think your email’s Private? Think again.  to get a better idea of how cybersecurity matters and might impact your inbox. There are a couple of free or low-cost tools that are free to use that can help you create a more secure virtual environment. You can communicate with whomever you want, protect your data and identity, avoid having your data sold, and safeguard against cybercrime.

1. Proton was born out of a desire to build an internet that puts people before profits, create a world where everyone is in control of their digital lives, and make digital freedom a reality.
2. Vanta was founded in 2018, in the wake of several high-profile data breaches. Online security was only becoming more important, but we knew firsthand how hard it could be for fast-growing companies to invest the time and manpower it takes to build a solid security foundation. Vanta was inspired by a vision to restore trust in internet businesses by enabling companies to improve and prove their security.