Rose Washington Rentie
Tulsa Economic Development Corp., dba TEDC Creative Capital
Focus on 2 hour drive area around Tulsa
Micro loans, FlexBiz Loan, SBA loans.
"We're in business to empower you and assist you."
"We are not a bank, but we do have lending standards." Sometimes they have to say no. Lending decisions will impact your life.
We do spend a lot of time getting familiar with you. If we think there is a real need for what you are attempting to do, or you're in trouble and we think we can help you turn the corner and survive. We still do due diligence. We really, really want to spend time getting to know you.
Many times we have clients who call and want to immediately know if they can help. Part of that comes with basic application and financials that are part of the inital review. Follow the process. Let's do it the right way so we both make the best use of each other's time. It's a get acquainted type of up front process.
"If we don't know you, we can't believe in you."
We will pull your credit report, but we will look at the story behind the report, too.
Can fund 70% of the amount needed.
Financial Services Director
Rural Enterprises Inc dba REI
Housing downpayment assistance
Special programs for Native Americans and women
Tax Credit programs
--Usually lends (as opposed to equity).
Are considered a non-conventional lender. has to be a good deal, has to meet standards. They know that startups will not have a history, like a tradtional lender will require.
At initial meeting, will go through the basics. What is the business, whether you've been to a bank and what they said.
Have a standard application that all borrows fill out, then decide which programs might be best for that business.
Majority of their direct loans are to startups, because banks shy away from them with no history.
Will not loan to restaurants, except franchises, and medical buildings. At one point had a 100% default rate on restaurants.
SBDC at UCO
General business consulting - we don't have funds ourselves to do the loans. But work with clients who are trying to write a business plan.
Services at no cost to you.
The differences between personal loan, mortgage loan, and commercial loan. Typically coach people to putting that idea into a document, into a business plan, just to make sense of that idea. It needs to make sense on paper for the bank to actually understand what you are trying to do.
It seems to be a big deal to folks, but it's really not. You can do it, one step at at time. OSBDC Business Plan guide.
Looking for angel investors, watch for all the scam artists out there.
"is a collaborative, non-profit, multi-bank-funded, community development, private equity and venture capital firm." Statewide
Equity or equity-like investor, statewide. Might lend, but as a convertible-to-stock thing.
CRA component required.
Most business plans he gets are full of grammar errors. WOuldn't pass 7th grade class standards.
One of your first questions if you're looking for funding, is whether you are looking for debt or looking for equity.
Your long term goal is to divorce the non-conventional lenders. Banks are the best source of cheap funding in your community.
If you haven't developed your idea, subjected it to some basic scrutiny, you're wasting everyone's time by seeking funding before you do the prep.
Looked at a personal financial statement, and saw the guy is way beyond his means on his house, his cars, everything. So we're going to turn him down instantly. I don't want to invest in him.
All of us want to see that you are willing to put skin in the game, that you have put your own funds at risk.
Pricing your Products and Services
OSU Center for Innovation and Economic Development
The key: "It Depends"
We're going to work through that.
This cup will teach us about pricing.
Lesson #1. If I fill it with coffee beans, the beans are worth 10cents.
#2. But if I grind and brew coffee, and sell it in a convenience store now it's up to 75cents.
#3. Put the coffee into a donut shop, we're up to $1.50
#4. PUt it in Starbucks, it's up to $4. Now it's an experience! And you even stand in line, and adapt a new vocabularly.
#5. I buy beans, I buy a machine, we brew fabulous stuff, invite people over to my house, and we have a great time talking about coffee. Now we pay hundreds for that same cup of coffee, because we have a culture.
If you think about it as a product, you will define it and price it differently than you do if you think about it as a service. See the above value chain.
One of the things that I have learned with eight companies. We ended up defining everything as a service or an experience. That forced us to focus on our customers, not our stuff. Your happiness and loyalty were everything. That it was memorable enough that you would bring other people into the fold.
Part of the It Depends depends on how YOU make decisions.
Head : Data driven
Heart : Emotional
Gut : visceral
Testosterone : By God, we're going to show the competition.
Balance between price and quality.
USA Today - fewer people are saying price is not important in purchasing groceries.
How do prices feel. Are they off putting, do weird prices work?
How elastic is the product? How do the dollar menus affect the sales of the $5 hamburgers, for you and for your competitors?
How do I get to the right price?
Changes: Netflix used to rent DVDs. Now do memberships. Not only changed prices, changed business models.
Charges: IKEA started charging 5 cents for shopping bags. In UK, use dropped 95%. In US, use dropped by only 60%. Added a price to a formerly free item.
Choices: Restaurants: buffet, a la carte, or pix fixe? People eat differently under each model. Consultants are similar: retainer, hourly, projects, or cost plus?
It's tough to set a price without some way of calculating.
Chances: iTunes: free app and per unit cost. Or give us the phone if we buy the service. It ain't free, they're going to get the money back.
Total Cost of Ownership: sports car: model+options+sales tax+property tax+road toll+licensing + gas + maintenance+ insurance + depreciation -- entire model of pricing autos is under review.
There is no such thing as a price that is stable forever.
How you treat people after the sale gets factored in to price as well.
By the Book:
1. Market Based pricing
2. Break-even plus: top down: (Total expenses - Total Revenues) + Profit
3. Cost Based : bottom up: DC + (IDC) + Profit
The better handle we have on our financial model, the more likely we are to come up with a pricing structure that is reasonable.
With only $75 and $100 collars, way more $75 sales. Added a new top of the line $150 collar, and the $100 sales sky rocketed. "The middle third"
Know your supply chain
How many and how fast they sale
Total Cost to sale and TCO
Match product and location
How many sales to stay alive.
Product example: ESI - started as a consulting company, and up being a disaster prevention company for schools, manufacturing products. Everyting was custom made for the customer. Ended up lowering the pricees for the product and added seriously well thought out services. "We weren't selling screens. We were selling peace of mind."
Service example: Strategic Foresight and Development - Dealt with problems that were 15 to 50 years out, and worked with really large companies, like Nestle. Really an interesting domain. We didn't know how to charge. By the project, by the hour?? We ended up charging by the project, and lost money hand over fist. Went with retainer, and added cost for special projects.
Internet example: Bouquets. "Model was simple: Men are idiots. and if that is not an eternal truth, I don't know what is." Hired really smart college students to help people make decisions about what to get, and then order for them. Started with a cost plus percentage. We ended up pulling the money from the other end. The people selling the flowers, department stores, etc, paid to get in.
Deciding prices on pottery business depends on what you focus on. We want to do everything, and have 50 different products, and 50 different prices for each of them. By and large, people really haven't thought through their product lines.
"Before I came to your session here, I thought products were easy to price." I've changed my mind on that.
"In practice, people will tell you what they are charging, but in reality, you don't know what they are really charging."
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