What questions should you think about when planning a business?
Where can I go for help?
Do I have what it takes to own/manage a small business?
What business should I choose?
What is a business plan and why do I need one?
What do I need to succeed in the business?
Would a partner(s) make it easier to be successful?
How much money do I need to get started?
What are the alternatives in financing a business?
What do I have to do to get a loan?
What should I know about accounting and bookkeeping?
How do I set up a record-keeping system for my business?
What financial statements will I need?
What does a marketing strategy involve?
What about advertising/promotion?
How do I set price levels?
Are some locations better than others?
What questions should you think about when planning a business? top
In 2 minutes, how would you explain your business idea to a friend?
How does your business idea differ from those behind existing businesses?
What purpose does your business serve?
What is the state of the industry you are entering?
Who will your clients or customers be?
How will you market the firm’s goods or services?
How much will you charge?
How will you finance your business?
How will you measure your firm’s success or failures at specific time intervals?
What credentials qualify you to run this business?
Where can I go for help? top
Your local SBDC can assist you with critical business development issues. The Greater Sacramento Small Business Development Center has counselors and specialists with a myriad of expertise and knowledge. Clients will be assisted with any business issue by professionals that may include: management, marketing, finance and strategic planning as needed. SBDC service centers can also provide information for new and existing businesses. All counseling is confidential and the services are free to the public. We offer expert advice in critical areas of business growth and management to businesses that are experiencing growth spurts or growing pains, looking for expansion financing, hiring and training new employees and preparing to sell or go public.
Gain the knowledge needed to make your business excel by attending our training classes held throughout our training network. Classes are offered in specialized subjects for experienced business owners. If you need some support from colleagues that understand the demands of growing a business but who aren’t your competitors, let the LBBDC serve as one of your resources. We have lawyers, CPA’s, media, publicity and marketing experts, international trade and e-business advice and franchising and government procurement classes and one-on-one counseling. If you need help in an area not listed, give us a call, we probably have access to an expert who can help you - and our counseling services are FREE!
And, if you’re still at the stage of turning your great idea or your talents into a business that inspires you and contributes to the greater Long Beach economy, we can work for you, too. Introductory classes on evaluating your plan and preparing to open, marketing, and keeping your financial and tax records; and in-depth one-on-one counseling, a professional library, access to computers and a network of support, start-up colleagues and mature-business mentors will strengthen your ability to get your business off the ground. (Learn more below.)
Do I have what it takes to own/manage a small business? top
You will be your own most important asset, so an objective appraisal of your strengths and weaknesses is essential. To determine if you have what it takes you need to answer some questions about yourself: Am I a self starter? How well do I get along with a variety of personalities? How good am I at making decisions? Do I have the physical and emotional stamina to run a business? How well do I plan and organize? Are my attitude and drive strong enough to maintain motivation? How will the business affect my family? You are the person in the best position to analyze whether you have what it takes to own or manage a business.
What business should I choose? top
Usually, the best business for you is the one in which you are most skilled and interested. For example if you are trained as an auto mechanic you may want to consider opening a shop related to auto repair. As you review your options, it is advisable to consult local expert business persons about the growth potential of various businesses in your area. Matching your background with the local market characteristics will increase your chance of success.
What is a business plan and why do I need one? top
Because they provide specific, organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan package. A business plan precisely defines your business, identifies your goals and serves as your firm's résumé. Its basic components include a market study, marketing/promotional strategy, current balance sheet, and income statement and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications and make the right decisions. Additionally, it can tell your sales personnel, suppliers and others about your operations and goals.
What do I need to succeed in the business? top
There are four basic needs for success in small business:
o Sound Management Practices
o Industry Experience
o Technical Support
o Planning Ability
Few people start a business with all of these bases covered. Honestly assess your own experience and skills, and then look for partners like the SBDC or key employees to compensate for your challenging areas.
Would a partner(s) make it easier to be successful? top
A business partner does not guarantee success. If you require additional management skills or start-up capital, engaging a partner may be your best decision. Personality and character, as well as ability to give technical or financial assistance, determine the ultimate success of the partnership. A successful partnership usually occurs when partners complement each other so that one's weakness is another's strength. If you decide a partner is a good idea, make certain each of you has a clear, written understanding of your responsibilities and rights.
How much money do I need to get started? top
One of the leading causes of business failure is insufficient start-up capital. Once you've taken care of your building and equipment needs you must also have enough money on hand to cover operating expenses (see fixed and variable costs) for at least one year. These expenses include your salary, as the owner, and money to repay your loans. Consequently you should work closely with your SBDC to estimate your cash flow needs and writing a business plan which will provide you with accurate information on your needs for capital.
What are the alternatives in financing a business? top
Committing your own funds is often the first financing step. It is certainly the best indicator of how serious you are about your business. Risking your own money gives confidence to others who may invest in your business. You may want to consider family members or a partner for additional financing. Banks are an obvious source of funds. Other loan sources include commercial finance companies, venture-capital firms, and local development companies. Your SBDC can put you in touch with a wide variety of lending opportunities, help you evaluate their risk and opportunity, and work with you to prepare all necessary loan documents.
NOTE: a list of banks which frequently work with the SBDC/SBA in providing loans to small businesses can be found at your SBDC.
What do I have to do to get a loan? top
Initially, the lender will ask these sorts of questions:
o What is your credit score?
o How will you use the loan proceeds?
o How much do you need to borrow?
o How will you repay the loan?
o What sorts of assets do you have to contribute towards the business?
When you apply for a loan you will be asked to provide projected financial statements along with a cohesive, clear business plan which supplies the name of the firm, location, production facilities, legal structure, marketing and sales goals, financial analysis and operating plan. A clear description of your experience in management capabilities, as well as the expertise of other key personnel, will also be needed.
What should I know about accounting and bookkeeping? top
The importance of keeping adequate records cannot be stressed too much. Without financial records you cannot determine how well your business is doing or where it is going. At a minimum, records are needed to substantiate:
o Your tax returns under Federal and State laws, including income tax and Social Security laws;
o Your request for credit from vendors or a loan from a bank; and
o Your claims about the business, should you wish to sell it.
But most important, you need them to run your business successfully and to increase your profits.
How do I set up a record-keeping system for my business? top
The type of records and how many you need depend on your particular operation. The SBDC's resources in an account can provide you with many options. When deciding what is and is not necessary, keep in mind the following questions:
o How will this record be used?
o How important is this information likely to be?
o Is the information available elsewhere in an equally accessible form?
What financial statements will I need? top
You should prepare and understand three basic financial statements:
o The balance sheet, which is a record of assets, liabilities and capital in a specific point in time;
o The income (profit and loss) statement, which is a summary of your earnings, expenses and net profit (or loss) over a given period of time; and
o The cash flow projection, which shows the actual inflows in actual outflows of cash into account of your business.
The SBDC's bookkeeping and accounting programs and on staff CPA, can help you with these issues.
What does a marketing strategy involve? top
Marketing is your most important operational concern. There are four basic aspects of marketing, often called the "four P's":
o Product: a description of the item or service you provide.
o Price: what you charge for your product or service.
o Promotion: how you inform your market as to who, what and where you are.
o Place: the distribution channels you use to offer the product to the customer.
Your understanding and application of the answers to such questions play a major role in the success or failure of your business. As you can see, marketing encompasses much more than just advertising or contact local selling. In addition, while writing a business plan, a market analysis needs to be done to help the business owner decide the feasibility of their product in the available market. In addition, the major part of marketing involves researching your customers: What do they want? What can they afford? What do they think?
What about advertising/promotion? top
Your business growth will be influenced by how well you plan and execute an advertising program. Because it is one of the main creators of your business's image, it must be well-planned and well budgeted. Contact your local SBDC who can help you develop an understanding of your market potential and write your market plan, or put you in touch with advertising agencies to assist you in developing an effective advertising/promotional strategy.
How do I set price levels? top
The price of a service or item is based on three basic production costs: Direct Materials, Labor and Overhead (the share of facilities, utilities, taxes, insurance, security and other general operating costs of the business attributable to the product or service -- for example, if one product accounts for 10% of your business, 10% of your overhead is assigned to it). After these costs are determined -- the "break-even" cost -- you factor in the profit desired. Because pricing can be a complicated process and you must remain competitive as well as profitable you may wish to seek help from an expert at the SBDC.
Are some locations better than others? top
Time and effort devoted to selecting where to locate your business can mean the difference between success and failure. The kind of business you are in, the potential market, availability of employees, the number of competitive establishments and customer accessibility all determine where you should put your business.
Location is critical to small retailers where traffic flow spells the difference between success and failure. Home-based businesses initially operate out of the founder's home and, as they grow, the issue of location becomes vital to their continued success.
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