Starting a Small Business

Research Resources

Some questions you will be able to answer on your own. Others will require careful research. There are many sources available to help you find the answers and make informed decisions. The SBA's business information centers, located throughout the country, offer the latest in high-technology hardware, software and telecommunications to help you in your research. BICs offer electronic bulletin boards, computer databases, online information exchange, periodicals and brochures, counseling, videotapes, reference materials, texts, start-up guides, application software, computer tutorials and interactive media. One-to-one counseling with seasoned business veterans is available through SCORE members affiliated with the SBA.

Other sources include -

• trade association studies, journal articles and trade shows;

• regional planning organization studies on growth trends;

• banks, realtors and insurance companies; and

• customer surveys in your market area, which you can conduct on your own or which may already exist.

The Business Plan

Your business plan should cover the business basics from goals to management, from marketing to operations. A business plan is a blueprint for success, so don't scrimp on the details. A good business plan covers the following areas:

Executive Summary

• Describe in detail the business and its goals.

• Identify the business ownership and the legal structure.

• Discuss skills and experience you and your partners bring to the business.

• Identify advantages you and your business have over your competitors.

Operations

• Explain how the business will be managed on a day-to-day basis.

• Discuss hiring and personnel procedures.

• Discuss insurance, lease or rent agreements, and issues pertinent to your business.

• Account for the equipment necessary to produce your products or services.

• Account for production and delivery of products and services.

Marketing

• Describe your product or service.

• Identify the customer demand for your product or service.

• Identify your market, including its size, location and demographics.

• Explain how your product or service will be advertised and marketed.

• Explain your pricing strategy.

Financial Management

• Explain the source and amount of initial equity capital.

• Estimate start-up costs.

• Project operating expenses.

• Develop a monthly operating budget for the first year.

• Develop an expected return on investment and monthly cash flow for the first year.

• Provide projected income statements and balance sheets for a two-year period.

• Discuss your break-even point.

• Explain your personal balance sheet and method of compensation.

• Discuss who will maintain your accounting records and how the records will be kept.

• Provide "what if" statements that address alternative approaches to problems that may develop.

Legal Requirements

Small businesses must comply with federal, state and local laws and regulations. You need to know the legal requirements affecting your business.

Be sure to check with your state department of labor and county government. You may want to consult with an attorney for additional compliance assistance.

Registration and accounting requirements:

You may need a -

• work certificate or a license from the state (your business's name also may need to be registered with the state),

• sales tax number, and

• separate business bank account.

If your business has employees, you are responsible for -

• withholding income and social security taxes, and

• complying with laws covering employee health, safety and minimum wage.

The U.S. Business Advisor, a Web site found at www.business.gov, can help you identify and comply with federal regulations, and links you to the Internal Revenue Service, the Social Security Administration, the Occupational Safety and Health Administration, and numerous other federal agencies. You can also obtain federal tax information by calling the IRS at 1-800-TAX-FORM.

A home-based business is subject to many of the same laws and regulations affecting other businesses and some additional ones.

Zoning: Be aware of your city's zoning regulations. If your business operates in violation of them, you could be fined or closed down.

Restrictions on certain goods: Most states outlaw home production of fireworks, drugs, poisons, explosives, sanitary or medical products, and toys. Some states also prohibit home-based businesses from making food, drink or clothing.

Next Page:
Understanding Your Market
Pricing Your Product and Services

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