Yes. A business plan is the resume for your business. It provides information about your company and its industry, describes a marketing plan, details an operations plan and projects the financial needs of the business. It helps you allocate resources properly and make informed decisions. It provides specific and organized information about your company and how you will repay borrowed money. A thorough, well-written business plan is crucial to obtaining financing. Additionally, it can tell your sales personnel, suppliers and others about your operations and goals.
The business plan describes an entrepreneur’s idea or a company’s past and current operations and then demonstrates how the request for an investment or loan will enhance the company goals and reward the investor. However, the most important function of the business plan is to communicate your goals and guide your company.
No. The SBDC will assist you in developing and reviewing a business plan. However, it is important that you write your business plan yourself. Writing a business plan forces you to think through issues that you may not have considered otherwise. The SBDC does offer workshops and on-line training courses that will assist you in writing your business plan.
Grants to start a business are extremely rare. Ask business owners you know and odds are you won’t find one that started with a grant. As the old saying goes, “It takes money to make money.” This is particularly true when you are thinking about starting a business. You will need to identify how much money you’ll need to get started. Expect that you’ll have to provide 20-30% as your investment in the business because 100% financing is not available.
In order to get a loan, you will need at least three years worth of tax records (include tax records for the business if you are in operation); a personal financial statement, a credit report and copies of any outstanding contractual agreements (for example, your lease). Additionally, the lender will want to see a thorough business plan that includes financial projections, a market analysis and an operational plan.
No, the SBDC does not offer loans. Our services are technical and educational in nature. SBDCs will assist in developing business plans, calculating financial projections and packaging loan applications to adequately prepare clients for meetings with lenders.
Committing your own funds is often the first step in financing. It is certainly the best indicator of how serious you are about your business. Risking your own money gives confidence for others to invest in your business. You may want to consider family members or partners for additional financing.
Credit scores are becoming increasingly more important in a financial institution’s decision to lend money. Most financial institutions use a credit score as an indicator of how a person manages their personal finances. Prior to applying for a loan, you should obtain your credit score and credit report. The SBDC can assess the impact your credit score has on your ability to secure funding.
Unfortunately, traditional financing options are very limited and often nonexistent. At best an individual may try to work with a micro-lender like Community Ventures Corporation; however, the poor credit rating and bankruptcy will still be an issue in a micro-lender’s decision to provide financing. Other alternative financing options should be explored such as friends and family members as investors. As stated earlier traditional financing is not a realistic option given this scenario.
There are many different legal aspects that small business owners must consider. These include: zoning, permits, business structure, taxes, registration, worker’s compensation and many, many more. The SBDC can assist you in determining the appropriate steps necessary for starting or expanding a business. The SBDC also strongly recommends you consult with an attorney on legal issues.
Your choice of business structure impacts taxes, liability, owner succession and other areas of your business. The basic structures of business ownership are sole proprietorship, limited liability company (LLC), partnerships, c-corporations and sub chapter s-corporations.
Among other considerations, selection of a business structure depends on the level of control you desire, size and nature of the business and vulnerability to lawsuits.
It is advisable to consult with an attorney and an accountant to determine the structure that works for you.