CRP Accelerator Session 2 - Mastering Your Financial Game

Welcome to the National ACE Capital Readiness Accelerator Session 2

Mastering Your Financial Game Tuesday, January 30, 2024

Welcome Back 1.

2.

3.

Keys to Success - Be On Time, Be Open Minded, and Take Massive Action Power of Incremental Gains - Atomic Habits by James Clear Book Your Coaching Appointment

Biggest Question: What types of Capital are available?

Today’s Objectives

Session Two:

Mastering Your Financial Game

1.

Prepare for Financing and Capital Access

2.

Know your value

3.

Forecast your growth

4.

Easy way to forecast your business

Office Hours Every Friday 11am PST/1pm CST/2pm EST ● ● ●

Work on Application Ask Questions Meet Subject Matter Experts and Coaches

Before Getting Started…

1.

Starting with the toughest yet crucial aspect: The Numbers

2.

Understand numbers, unlock mastery in business

3.

Lifelong skills: Analyze, decide, apply universally

January 30th , 2024

BUSINESS FINANCIAL FOUNDATIONS Financial management for small businesses

U.S. Bank U.S. |Bank Public | Public

Managing business financials

6

Nice to meet you!

Cesar Hernandez

Vice President Business Access Advisor Lead U.S. Bank Los Angeles, CA

U.S. Bank | Public

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Agenda for today: • Tracking your money • The role of balance sheets

Open your participant guide to follow along.

U.S. Bank | Public

8

Tracking your money Understanding financial statements and the benefits of financial management

U.S. Bank U.S. |Bank Public | Public

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TRACKING YOUR MONEY

Reach your goals by making good decisions Benefits of financial management: • Know your value • Forecast your growth • Prepare for financing (loans)

U.S. Bank | Public

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TRACKING YOUR MONEY

Bookkeeping basics Reconcile accounts Pay yourself with owner’s draw (if applicable)

Make and track sales

Generate financial statements

Deposit sales into business account Pay expenses from business accounts

U.S. Bank | Public

Quick tip: You can link your QuickBooks bookkeeping software to your U.S. Bank account in online banking.

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TRACKING YOUR MONEY

Financial statements Financial reports are a compilation of statements about a business’s financial health and cash flows.

• There are three basic statements: ─ Cash flow projection - Sometimes called a

cash flow statement ─ Profit and loss statement - Also known as

a P&L or income statement ─ Balance sheet - View of how your business

looks at a point in time

U.S. Bank | Public

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TRACKING YOUR MONEY

Cash flow projection statement Pam’s Gift Shop

What is cash flow?

• Two primary purposes: ─ Identify the balance of cash

received less the amount of cash paid out over time

Beginning cash Cash sales

100

Collections on A/R

400

out of a business

Month 2 0

Sources of cash Add each row together for “Cash available”

Interest income Loan received Equity contribution

Cash available

1000

0

0

Contract labor

Operating costs (cash only)

200

Wages Payroll taxes

500

Rent

─ Review cash moving in or

Opening balances* Month 1 500 120

Phone Office supplies

Add each row together for “Operating costs”

Utilities 100

Travel Insurance Licenses Marketing Professional fees

Operating costs (

Subtotal (Net $)

)

800

0

0

200

0

0

Equipment purchases Self employment taxes Owner's draw

Subtract each row individually

80

Inventory purchases

Ending cash

U.S. Bank | Public

Subtract Op costs from Cash available

Non-operating costs (cash only)

Debt service

120

0

0

Interlinked to balance sheet

Cash flow projection spreadsheet

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TRACKING YOUR MONEY

Profit and loss statement (a.k.a. Income statement) • P&L statement ties to the balance sheet through the equity section in the form of retained earnings • This section is also called net worth

U.S. Bank | Public

The basic formula for a P&L statement:

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TRACKING YOUR MONEY

Balance sheet • Yields information regarding a company’s assets, liabilities, and equity • Provides a snapshot of the company at a point in time (e.g., Dec 31) • Reports assets at original cost, not appreciated costs • Takes into consideration all of the items that can be attributed to its purchase

U.S. Bank | Public

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TRACKING YOUR MONEY

Think about it…

Factors to consider when tracking your money.

Know your value

What are some of the ways you can use money tracking tools to project your business profitability?

Forecast your What are your goals for growth and what adjustments do you need to make to growth stay on track?

Potential lending opportunities

Will you need to ask for additional financing to achieve your goals? What obstacles might you potentially face?

Turn to page 8 in handout.

U.S. Bank | Public

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Working with balance sheets Understanding the role of a balance sheet while tracking your money

U.S. Bank U.S. |Bank Public | Public

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Why are balance sheets important?

Suppliers and customers

U.S. Bank | Public

Financial lending

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BALANCE SHEETS

Let's review a sample balance sheet:

More liquid

Due sooner

Due later

Less liquid

U.S. Bank | Public

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TRACKING YOUR MONEY

Think about it…

Factors to consider when working with balance sheets.

Assets

What assets can I make more liquid if I needed to?

Liabilities

Which liabilities do I need to pay down first?

Equity

Which ways can I demonstrate more equity in my business?

Growth

If I were to compare two dates, how would I identify growth?

Turn to page 18 in handout.

U.S. Bank | Public

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Summary • Track your money through financial statements • The role of balance sheets will help you understand the value of your business • A business owner needs to understand their own financial position • Separating your business accounts from personal will make it easier to see the financial health of your business.

Do you have any questions?

Do you have any questions?

U.S. Bank | Public

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THANK YOU Take advantage of our financial resources.

Visit usbank.com/business today!

Questions?

Schedule your appointment at usbank.com/book.

FINANCIAL FOUNDATIONS U.S. Bank | Public

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How to Prepare for Funding Scott Rogalski Lead Business Coach Sacramento, CA

Know Your Numbers

Forms of Capital Available

Capital Available

SSBCI - State Small Business Credit Initiative ● ● ● ● ● ●

Similar to SBA Loan Government backed to make underwriting easier for SEDI minority businesses.

Preferred Rates lower than most commercial loans.

Low levels of down payment requirements.

Terms and conditions such as collateral set by lenders.

Businesses must apply to lenders of the State they’re registered with.

What is a State Small Business Credit Initiative? (SSBCI) Similar to Small Business Administration (SBA) Loans

Government Backed

Preferred Rates

Makes underwriting easier AAPI-owned businesses.

Preferred Rates are lower than most commercial loans.

Down Payments

Collateral Terms

StateSpecific

Low levels of down payment requirements.

Terms and conditions such as collateral set by lenders.

Businesses must apply to lenders of the state they’re registered with.

A Couple SSBCI Lender Examples Start-ups

Established Businesses

Loan Limits

$5k to $5Mill

$5k to $5Mill

Downpayment

10% to 30% of loan amount

0% to 10% of loan amount

Rates

8% +

8% +

Payback Terms

5 to 10 Years

5 to 10 Years

Collateralization

Required if available

Asked if available

Additional Notes

Terms depend on lender case by case per business.

Business plan & projections very important

Terms depend on lender case by case per business.

Expansion plan & projections possibly needed

Tax Season Preparing to set yourself up to get a loan

Forecasting Using projections to apply for a loan

What to Know Before you Meet with your Business Coach

Before talking to your coach…

Be prepared to answer these 4 questions: 1.

2.

3.

4.

What is the project you’re working on?

How much money do you need?

How are you going to spend the money?

How fast do you need the money?

Make it Easy for Your Lender to Say Yes 1.

Come Prepared

2.

Be Specific

3.

Show It All

●

Bring 3 years of tax returns and P&L statements Ensure your accounting books are accurate and up-to-date Demonstrate a strong profit trend

●

Clearly articulate the loan amount needed Outline the intended use of funds Explain the impact on your business

● ● ●

Full financial disclosure is key Avoid underreporting income Accurate records reflect true business performance

●

●

● ●

What’s Next Session #3 Envisioning your Ideal Business ● ● ● ●

Visualizing the desired business model Defining personal success and growth objectives Exploring foundational roles and functions (Marketing, Sales, Operations, Finance) Developing an exit strategy

Meet your Business Coaches

Sign Up for Coaching

Scott Rogalski

Chettha Saetia

Allen Wu

Specialties: Find your lender match by telling your story, projections and forecasting models, maximizing financials for growth and qualifying for a loan

Specialties: Sales Strategy, Product or Service Marketing, and Business Plan Development

Specialties: Working Capital, Equipment Loan, Business Acquisition, Commercial real estate, acquisition, renovation or value added

Location: Sacramento, CA

Location: Chicago, IL

Location: Washington, D.C.

Thank you!

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