This set of FAQ’s addresses the most frequent questions we receive about starting and planning a business. We hope you’ll find this section helpful, and as always, please contact us with ANY questions that YOU might have!
If I’m thinking of starting a business, what should I do first?
Before you quit your job or print business cards, it is wise to take stock of personal considerations. Ask yourself:
- Do I have what it takes to be an entrepreneur?
- Am I a risk-taker?
- Am I resourceful and organized?
- Can I support myself and my family financially when cash may be short?
- Will my family and friends be supportive during the start-up process?
- Am I knowledgeable and experienced enough in my chosen field?
If the answer to any of these questions is “no,” you may want to focus on self evaluation and development before proceeding. If most of your answers are “yes,” then it is time to do some research! Get as much information as you can on the feasibility of your idea and on the real experience of starting and managing any business. You can do this by:
- Accessing business publications and data from the library
- Taking seminars and workshops
- Speaking to trade or professional groups which represent your chosen industry
- Consulting with people who are already in the same or similar line of business
- Seeking advice from professional consultants like the SBDC
What SBDC services are available to new businesses?
Our experienced business consultants will sit down with you one-on-one to assist with:
- Business plan development
- Loan packages
- Financial analysis
- Sales strategy
- Business education & training
What form of business do you recommend for a new business?
Each form — sole proprietorship, partnership, corporation, or limited liability corporation — has its advantages and disadvantages. The one you should pick depends on your circumstances, including:
- Your financial condition
- The line of business you’re entering
- The number of employees
- The risk involved
- Your tax situation
What registration and licenses are generally required to start my business?
Obviously, there are specific requirements in each state, county and locality, but it is possible to list the kinds of basic licenses and registrations a new business will need:
- Local — A business license from city, town or county is usually necessary, in addition to meeting zoning laws, building codes and similar regulations.
- State — In most states, if your business isn’t a corporation and your full name isn’t in the name of the business, you’ll have to register under what’s called the fictitious name law, and you should also file for a sales and use tax number. In some lines of business specific licenses are needed.
- Federal — You will need to request from the Internal Revenue Service (IRS) an employer’s identification number (EIN). Also consider requesting a “Going Into Business Tax Kit”.
My business has been established for some time. How can the Longwood SBDC help me?
The Longwood SBDC provides one-on-one consulting in business planning, marketing and promotion, financial analysis, accounting, education and more. In addition, a procurement assistance program is available for companies that want to bid on state and federal government contracts. An international trade program is available for firms that want to enter into or expand in the global marketplace. We can help you:
- Conduct financial analysis and improve profitably
- Develop competitive strategies
- Cope with government regulations and taxes
- Design a marketing plan
- Hire and manage employees
- Understand & secure loans/other sources of capital
- Keep abreast with current technology
- Research suppliers & customer leads from a comprehensive business databank
- Seek capital for expansion or a line of credit
Does the SBDC Network provide financing?
The Longwood SBDC does not provide financing. Our assistance is technical and educational in nature. We work with banks and other lending agencies and organizations to assist in putting together financial projections, but the actual financing comes from outside sources. We have strong relationships with lending institutions that may benefit your chances of receiving funding. Having inside knowledge of these lending institutions, we can match your business, credit, and plan up with an appropriate lender, increasing your odds of getting financed.
How do I finance the start-up of a small business?
To determine financing needs, you should first prepare a business plan with a complete set of financial projections including a balance sheet, income statement, and cash flow statement. With a properly completed business plan, you will have identified your funding needs. A bank may lend to some business start-ups if they are satisfied with your business plan, your level of equity investment, the collateral you have to pledge to the loan, and your credit history and experience.
How do I get a business loan?
The kind of financing most entrepreneurs seek through commercial lenders is debt financing, and most banks provide debt financing for existing and start-up businesses. Banks vary substantially in their lending practices. While one bank may decline your loan application, another may be willing to take a higher risk or be interested in lending to small businesses. It is advisable to understand a bank’s lending guidelines before applying for a loan. The general guidelines that would enable a lending officer to at least make an informed decision regarding your loan proposal are as follows:
- Consideration of the business idea, usually explained in a business plan
- Collateral available to secure the loan
- Down payment (also known as equity in an ongoing business)
- Credit history and personal financial net worth
- Management ability
- Ability to repay the debt
- Conditions of the economy and/or market area
How important is my credit score when I am seeking a commercial loan?
A borrower’s credit score is very critical to the approval of a commercial loan. While there are occasional exceptions, most lenders want a credit score of 650 or better for a commercial loan. In addition, a recent bankruptcy (last seven years) is almost always a stumbling block.
Where can I find a grant to start my small business?
Grant monies are usually not available for profit seeking businesses, with a few exceptions. You can find grant information at:
What is a business plan?
A business plan precisely defines your business and serves as your firm’s resume by:
- Identifying your business goals
- Describing the products and services you will sell
- Defining the customers to whom you will sell your products/services
- Outlines the production, management and marketing activities needed to produce your product/service and deliver it to market
- Projects the profit or loss that will result from your efforts
Your business plan can also serve as a guide to make sure you stay on track with your goals and objectives. Writing your plan is an educational process in which you learn about your business and how you expect it to operate. It should reflect your goals, objectives, priorities, and management style.
A SBDC consultant will not write a business plan for you, but will assist in assessment of the plan. They may offer recommendations in order to make it a viable business plan to gain financing thru a lending institution.
What types of business issues do you help with?
The SBDC helps with a variety of business issues from basic start-up questions to assisting with financing issues, preparing business plans and marketing assistance. We do not provide specific legal or tax advice, but we can provide you with information to help you make a decision or provide referral sources if further help is required.
Why should you use our services?
There are multiple programs and services out there that can help you with your small business. However, there are important attributes of the SBDC network that set us apart:
The expertise of our staff. The Longwood SBDC team is comprised of professionals who are experts in the specialty fields they advise and teach. Our Business Advisors receive regular training on the latest tools and resources available to small business owners. All of our Advisors have owned or currently own one or more businesses.
Our Network. Even with our highly trained local team, we cannot be experts in every conceivable area of assistance that might be needed by your business. Therefore, we work closely with our large network of SBDC’s, federal, state and local agencies, local businesses and industry experts to help fill the gaps. Our Advisors will gladly introduce you to the right person that can give you the help you need. Put our well established network to work for you!
Market and Industry Research. Our SBDC has access to a number of large industry and market research databases that can help you better understand the trends and developments that shape your business environment. Our staff can provide you with reports and the tools needed to take advantage of a constantly changing business environment.
Long-term Focus. We want to see your business succeed in the long term. We work with clients at every stage of the business and will keep working with you as long as the meetings are beneficial.
Cost. It’s free! The Longwood SBDC business advisory services are at no direct cost to you. You can’t find a better deal!
Experiences and opinions vary among business advisors and writers. Also, the rules, laws and practices in different jurisdictions are subject to variation. It is therefore important that you verify the information presented here with local sources before you rely on it for important business decision making. Verification and further information can be obtained from your local SBDC, local accountants and attorneys, county and state business assistance agencies and offices, libraries, colleges and universities, and recently published materials.