Check List Forming a Small Business

Transcription

1 Frming a Small Business Intrductin: Each year, thusands f Americans catch the entrepreneurial spirit, launching small businesses t sell their prducts r services. The City f Auburn, Office f Ecnmic Develpment knws that this is a big step fr yu and yur family and we are available as a helpful resurce t yu. We als knw that while this shuld be a fun and exciting time, it can als be a time f great wrry and anxiety. Withut a dubt the mre yu knw and prepare the greater yu increase the chances fr a successful utcme. The advanced planning and preparatin yu invest nw will lead yu t a significantly increased likelihd that the rganizatin yu frm will develp int a satisfying and lasting surce f incme int the future. The fllwing checklist has been cmpiled by us as a guideline t assist business entrepreneurs wh are cnsidering the pursuit f a small business enterprise. This dcument is intended t be a guideline nly; and in n way is it represented t be a cmprehensive list f actins. At best, this dcument shuld be used in cnjunctin with extensive self help research. Clients custmers f the City are als advised t seek the prfessinal assistance f qualified business cnsultants as they deem necessary. Small Business Checklist: 1. Develp yur business idea. What are yur persnal talents and skills? Des the type f business suit yu? D yu pssess the drive, desire and passin t make this business a success? Is this business intended t be yur family s sle surce f incme? Use cautin in attempting t be t brad in yur business endeavr. Typically is better fr smaller businesses t identify manageable niche markets. Will yur business use a traditinal stre frnt frm f peratin; r will yur businesses gds/services be sld via the internet; r bth? 2. Evaluate yur business cncept. Is there a need fr yur prduct(s) r service(s)? Wh are yur cmpetitrs; and what distinguishes yur business frm theirs? Are the materials, equipment and/r wrk frce available t prvide yu adequate prductin resurces? Perfrm a break even analysis. (The pint where incme and expenses are equal. N net lss r net gain) When this analysis is cmpleted and the break even pint is established; it then enables yu t decide if yu shuld try t: Reduce fixed csts; Reduce variable csts; r Increase yur selling price f yur gds r services. 3. Identify yur basic marketing plan. Develpment f a marketing plan will ensure yu are spending yur marketing budget wisely. Understand yur target market; 1 City f Auburn, Office f Ecnmic Develpment

2 Frming a Small Business What is yur cmpetitive psitin within yur market? Are yu a minr player, majr player, r d yu cntrl yur market? What is yur tactic fr reaching yur market? Hw will yu differentiate yurself frm yur cmpetitrs? Establish yur marketing budget. Outline the csts f reaching yur market. Keep an eye n yur Return n Investment (ROI) and be willing t make adjustments t ensure yu are getting the mst fr yur dllars, and that yu are staying within yur budget. 4. Develp yur business plan. Keep in mind that yur business will evlve ver time and yur business plan shuld be cnsidered a living dcument that will be reviewed and mdified regularly as needed. While there is n set template, a sund business plan shuld prvide yur summary cncept and visin; a descriptin f marketing and business peratins; financial prjectins; and necessary supprting dcuments. Plan elements may include: Cver sheet; Executive summary r statement f purpse; Table f cntents; A descriptin f Business Operatins: Descriptin f business; Marketing plan; Cmpetitin; Operating prcedures; Persnnel mdel; Business insurance. Financial Infrmatin: Lan applicatins; Identificatin f cllateral r cash; Capital equipment and supply list; Break even analysis; Prfit and lss statement; Three year summary; Detail by mnth, first year; Detail by quarters, secnd and third year; Assumptin upn which prjectins were based; Pr frma cash flw. Supprting dcuments: City f Auburn, Office f Ecnmic Develpment Tax Returns f principals (partners in business) fr last three years, persnal financial statement (all banks have these frms); 2

3 Frming a Small Business Cpy f franchise cntract and all supprting dcuments prvided by the franchisr (as applicable); Cpy f prpsed lease r purchase agreement fr building space; Cpy f licenses, certificatins, r ther legal dcuments; Cpy f resumes fr all principals (partners); Cpies f letters f intent frm suppliers, etc. 5. Investigate and identify pssible surces f start up financing. There are numerus types f financing which can be fund in the market. Here is a list f sme types: Small business lans: SBA small business lans and funding, ecnmic develpment lans, start up lans; Wrking capital: merchant advances, micr lans, business credit cards, equity lans; Cmmercial Finance: asset lending, accunt receivable factring, purchase rder financing; Equipment Finance: equipment leasing, sftware financing, and cash ut sale leasebacks; Equity Investment: venture capital, investment banks, gvernment sbic investrs; Cmmercial Mrtgages: cmmercial real estate lenders, mrtgage bankers, cnstructin lans; 6. Develp the legal structure fr yur business. In depth self help research will be needed, OR cnsult with a prfessinal advisr(s): Are the business sle wnership, r identify the number f wners; Decide hw much prtectin frm persnal liability yu'll need (depends n the risks invlved in yur business); Hw will yu address yur taxes; D yu envisin that yur business will grw t a pint where yu may benefit frm stck sales? Identify the type f wnership structure yu will establish: Sle Prprietr Partnership LLC C Crpratin S Crpratin 7. Chse a name fr yur business: Write dwn the prduct r service yur business will prduce (underline it): Identify as many key wrds yu can think f t describe yur business; Use a Thesaurus t identify additinal wrks f the same r similar meaning; Cnsider what it is yu want yur business t accmplish. Hw d yu want peple t think f yur business? Write dwn a list f adverbs and adjectives; Write dwn yur wn name and yur lcatin; yur list shuld be getting lng. Frm yur list, begin identifying wrds that feel r sund like winners t yu. See if a pssible business name(s) surface; City f Auburn, Office f Ecnmic Develpment 3

4 Frming a Small Business Cnsider hw yu intend t market yur business. If using the internet, search the web fr similar businesses and their names, and cnsider these against yur wn. If yu intend t establish a web site, check n the availability f dmain names; Check with yur cunty clerk s ffice t see if yur prpsed name(s) are n the list f fictitius r assumed business names in yur cunty; If yur business will be incrprated, check the availability f yur prpsed name(s) with the Secretary f State. Perfrm a federal trademark search f the prpsed names still n yur list; Chse between the prpsed names that are still remaining n yur list. Register yur business name: Register with the cunty clerk as a fictitius r assumed name; Apply fr registratin as a federal trademark if yu intend d business natinally; Establish / Register yur dmain name if yu intend t market using the web. 8. Prepare yur rganizatinal paperwrk. (This step is nt applicable if yu are a sle prprietr) Partnership Partnership agreement; Buy sell agreement; LLC Articles f rganizatin; Operating agreement; Buy sell agreement; C Crpratin Pre incrpratin agreement; Articles f incrpratin; Crprate by laws; Buy sell agreement (stck agreement) S Crpratin Articles f incrpratin; Crprate by laws; Buy sell agreement (stck agreement) File IRS Frm 2553, Electin by a Small Business Crpratin. File fr an Emplyment Identificatin Number (EIN) using IRS Frm SS 4 (nt required if yu are a sle prprietr). 9. Find a business lcatin. Identify the physical features yur business will need. (Fixtures, Special Features, etc.); Set a rent/lease budget; Cntact a cmmercial real estate brker fr assistance; Identify a general lcatin r neighbrhd which wuld best suit yur business; Find ut the average lease csts within thse neighbrhds yu have selected; Select a few pssible lease spaces; Check with the lcal jurisdictin regarding zning regulatins and ensure yur selectins meet the requirements; City f Auburn, Office f Ecnmic Develpment 4

5 Frming a Small Business Negtiate (thrugh yur brker) the per ft price and ttal verhead (triple net) csts, utilities, taxes, upkeep, etc. Als identify if the wner is willing t make tenant imprvements as part f yur initial lease; 10. Obtain necessary Licenses and Permits. Identify the required state licenses. Obtain yur State Business License; Sellers License; Envirnmental Licenses, etc.; Obtain any necessary vcatin related licenses, certificatins, etc.; Obtain yur City Business License; Obtain any needed Use Permits, r ther Lcal Permits. 11. Obtain Insurance. Cntact a licensed Insurance Brker / Agent; Determine what business prperty requires cverage; Obtain liability insurance, vehicles, premises, general business, etc.; Obtain prduct liability insurance, as needed; Obtain Fire Insurance; Obtain cverage fr lss f business due t fire r catastrphic incident; If wrking frm hme, make sure yur hmewner s insurance cvers damage t r theft f yur business assets, as well as liability fr business related injuries; If yu are intending t hire emplyees, btain Wrkers Cmpensatin Insurance; Cnsider health and disability insurance fr yurself and yur emplyees. 12. Familiarize yurself with methds f prtectin against Lss Preventin fr yur type f business. 13. Set up a Tax Reprting and Accunting System. In depth self help research will be needed, OR cnsult with a prfessinal advisr(s): Familiarize yurself with the legal requirements, r tax scheme required fr yur type f business rganizatinal structure (partnership, LLC, etc.); Understand the cmmn business deductins and depreciatin which must be tracked; Obtain the fllwing IRS Publicatins: Tax Guide fr Small Business, Publicatin 334; Taxpayers Starting a Business, Publicatin 583; Tax calendar fr Small Businesses. Set up yur bkkeeping system. Decide whether t use cash r accrual system f accunting; Chse a fiscal year; if yur business cycle des nt fall n the calendar year; Set up yur Accunts Receivable recrds; Set up yur Accunts Payable recrds; Set up yur General Business Ledger. City f Auburn, Office f Ecnmic Develpment 5

6 Frming a Small Business Disclaimer: The fllwing checklist has been cmpiled by us as a guideline t assist business entrepreneurs wh are cnsidering the pursuit f a small business enterprise. This dcument is intended t be a guideline nly; and in n way is it represented t be a cmprehensive list f actins. At best, this dcument shuld be used in cnjunctin with extensive self help research. Client custmers f the City are als advised t seek the prfessinal assistance f qualified business cnsultants as they deem necessary. This handut is prvided t ur client custmers fr infrmatinal purpses nly. The City f Auburn des nt make any representatins r warranties (express r implied) as t the accuracy, currency r authenticity f the infrmatin, services and materials presented, ffered r therwise displayed. The City f Auburn, its emplyees and agents, d nt accept any liability r guarantee the accuracy f infrmatin, service, materials r advice (including the use f such infrmatin, services, r material r advice) which is prvided in this handut. The City f Auburn des nt endrse any prduct, persn, cmpany r rganizatin assciated with this infrmatin. Surces Dcuments: Surces f infrmatin fr the cmpiled list include: SBA, Small Business Administratin; Frbes.cm; NOLO; Wikipedia; Investpedia; Shari Waters; Abut.cm; Business Finance.cm; IRS Frms and Publicatins; City f Auburn, Office f Ecnmic Develpment 6