ENTREPRENEURS
FAQ
- What business should I choose?
- I’m eager to start my own business and have a good idea, but I’m not sure what my first step should be. Can you point me in the right direction?
- What is a business plan and why do I need one?
- What is vital to the success of a business?
- How much money will I need to get started?
- Where can I get money to get started?
- What to I do to get a business loan?
- What are some of the legal aspects that I need to consider?
- How do I know if I have been provided with a legitimate "business opportunity"?
- How can I insure my business?
- Where can I get assistance with tax related issues?
What business should I choose?
The best business for you is the one in which you are most skilled and interested. As you review your options, you may wish to consult local experts about the growth potential of various businesses in your area. Matching your background with the local market will increase your chance of success.
I’m eager to start my own business and have a good idea, but I’m not sure what my first step should be. Can you point me in the right direction?
The first thing you should do is take a deep breath and understand that starting a business is a serious venture and can involve substantial risk. Some call it a “blind leap of faith.”
Next, realize there are steps you can follow to reduce that risk and enhance your chances of success.
Education and experience
You should seek to acquire business knowledge through hands-on, work-related activities, research, educational courses, an analysis of market trends, and other industry information. Success comes through preparation, experience, and perseverance. Follow your strengths and interests; they will sustain your enthusiasm, as the business will have no built-in momentum in the start-up phase.
Planning
If you can anticipate the potential pitfalls that you will encounter, you can design plans to overcome them before they occur. As they say, “A failure to plan is a plan to fail.” Create a business plan to prove through studies, analysis and research that there is indeed a documented demand for your product or service.
Outside Advisors
One of the biggest advantages for people who want to start a small business in this market is the availability of professional assistance, resources and the pro-business attitude of Charlotte. Use outside advisors who can help you make decisions based upon fact, not wishful thinking.
Be patient
Take your time deciding. A legitimate opportunity will not disappear overnight. Think long-term and do your homework. A business needs a firm foundation, realistic expectations and a total commitment to succeed.
What is a business plan and why do I need one?
A business plan is a formal written document, which defines your business, Identifies your goals and serves as your firm's resume. 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. Its basic components include a current and pro forma balance sheet, an income statement and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make the right decisions. It provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan package. Additionally, it can tell your sales personnel, suppliers and others about your operations and goals. Remember to focus on the content, not the format.
What is vital to the success of a business?
· You must learn the importance of documentation
· Always be prepared and learn to anticipate
· You must have both organizational and industry experience
· Learn the art of delegation
· Don’t confuse excellence with perfection
· Understand what “personal guarantee” means
· Time is finite and a precious resource –make the best use of it
· The way to find customers is to make sure they find you
· People make businesses successful- businesses do not make people successful
· Owning a business could be a job for life. The man or woman in the mirror will always have your best interest in mind. You definitely have a chance to make more money, as you do not have a ceiling or grade level on your salary. Unlike a normal job, you are building equity and something of value along the way!
How much money will I need to get started?
Every business will be different but if you expect to borrow money to get started, you will need at least a 20% equity position (cash investment) in your business. (Some lenders may require more). This equity position is best described as your ownership in the business that is free and clear of debt.
You also must have enough money on hand to cover operating expenses for at least a year. These expenses include your salary as the owner and money to repay your loans. One of the leading causes of business failure is insufficient start-up capital. You should work closely with your accountant to estimate your cash flow needs.
Where can I get money to get started?
There are a number of sources from where you can obtain finance but the primary source will be from your own personal funds. Committing your own funds is the best indicator of how serious you are about your business. Risking your own money gives confidence for others to invest in your business. Other sources of finance include family, friends, taking a partner, banks, commercial finance companies, venture capital firms, local development companies and life insurance companies. Ask the SBRC office for information about the various sources.
What to I do to get a business loan?
The first step to a business loan is a business plan. A lender will not consider lending an individual any money unless he or she can prove in writing that they have done their research, developed a plan of action and can demonstrate that they have the knowledge and experience to operate the business. Your plan must provide projected financial statements, clear business plan which includes the name of the firm, location, production facilities, legal structure and your business goals. It should also include your experience and management capabilities as well as the expertise of the other key personnel (if applicable).
What are some of the legal aspects that I need to consider?
You need to decide about your form of organization (sole proprietorship, partnership or corporation) and also about the tax status.
You also need to consider the licenses required, zoning laws and other regulations, which vary from business to business and from state to state. You may need to consult an attorney for advice, specific to your business
How do I know if I have been provided with a legitimate "business opportunity"
The concerned person should ask a few questions before moving ahead with any business opportunity. Some basic questions like:
· Is this offer to good to be true
· Can I get any information about the company or the individual?
· Does the Better Business Bureau have any reports on the company?
· Am I being pressured in any way?
· Is there a chance of me losing all my investments?
The Federal Trade Commission has developed guidelines to help protect people from such scams. For more information refer http://www.ftc.gov
How can I insure my business?
Contact a person who is licensed to sell commercial insurance. You may contact either an insurance broker or an insurance sales representative. A Broker usually represents more than one insurance company whereas the sales representative works for one insurance company. When looking at the yellow pages search for companies listed under commercial or business insurance.
Where can I get assistance with tax related issues?
In this area a consultation with a tax attorney or a certified public accountant is highly recommended. The tax laws and their applicability differ from business to business.