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I want free counseling for my small business. How do I get started?

For those who are not yet in business, sign up for our regularly scheduled seminar entitled, Starting Your Own Business.

If you are an existing business owner with a specific need, call 438-3610 and make an appointment – be sure to mention what you want to talk about so we can be best prepared to help you. You can download a copy of the request for counseling form on this site or sign up at the SBDC Request for Services form online at the ECenter Direct site.

Note: We DON’T individually discuss or brainstorm what type of business would be best for you (for example, if you’ve just started “thinking about the idea of going into business” or you’re new to the area and you want us to tell you what the newest trend in town will be). What kind of business you choose to begin is a very personal decision – we suggest that you choose something that you are intrinsically interested in. We can’t tell you what your passions are.

We recommend that you read small business periodicals, books and newspaper articles, carefully assess if your idea makes sense considering your personal readiness/capability, market potential of your proposed product/service, available financial resources, and current & projected economic climate.

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I’ve been in business for some time. How can the Illinois Small Business Development Center help me?

Although you may have been in business for a while, even years, you still may be able to run your business more efficiently. We can help with a thorough and confidential financial analysis of your company. Or by helping you measure your marketing plan’s effectiveness. Or by helping you grow safely through an expansion phase.

The Illinois SBDC can link an established business to resources in areas such as business planning, market research, marketing and sales, e-commerce, financial analysis, business valuation and accounting so that the owner can proactively and strategically address a variety of issues to sustain and grow the business.

Business owners who anticipate high growth or who are interested in government contracting, international trade, manufacturing competitiveness, or advanced technology may be referred to other programs within the Illinois Small Business Development Center Network.

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Do I have what it takes to own/manage a small business?

You will be your own most important employee, so an objective appraisal of your strengths and weaknesses is essential. Some questions to ask yourself are: 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 attitudes and drive strong enough to maintain motivation? How will the business affect my family?

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What business should I choose?

Usually, 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 and businesspersons about the growth potential of various businesses in your area. Matching your background with the local market will increase your chance of success.

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What legal aspects do I need to consider?

Licenses required, zoning laws and other regulations vary from business to business and from state to state. Your local Small Business Administration (SBA) office and/or chamber of commerce will provide you with general information, but you will need to consult your attorney for advice specific to your enterprise and area. You also must decide about your form of organization (corporation, partnership or sole proprietorship) or tax status (e.g., should you opt for a Subchapter S status?).

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What do I need to succeed in a business?

There are four basics of success in small business: *Sound management practices. *Industry experience. *Technical support. *Planning ability. Few people start a business with all of these bases covered. Honestly assess your own experience and skills; then look for partners or key employees to compensate for your deficiencies.

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Would a partner(s) make it easier to be successful?

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 a partnership.

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How can I find qualified employees?

Choose your employees carefully. Decide beforehand what you want them to do. Be specific. You may need flexible employees who can shift from task to task as required. Interview and screen applicants with care. Remember, good questions lead to good answers-the more you learn about each applicant's experience and skills, the better prepared you are to make your decision.

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How do I set wage levels?

Wage levels are calculated using position importance and skill required as criteria. Consult your trade association and accountant to learn the most current practices, cost ratios and profit margins in your business field. While there is a minimum wage set by federal law for most jobs, the actual wage paid is entirely between you and your prospective employee.

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What other financial responsibilities do I have for employees?

You must withhold federal and state income taxes, contribute to unemployment and workers compensation systems, and match Social Security contributions. You may also wish to inquire about key employee life or disability insurance.

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How much money do I need to get started?

Once you have taken care of your building and equipment needs 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. Consequently, you should work closely with your accountant to estimate your cash flow needs.

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What are the alternatives in financing a business?

Committing your own funds is often the first financing step. Similar to when you buy a house, your own money in the business is called equity or net worth. It is certainly the best indicator of how serious you are about your business. Risking your own money gives confidence for others to invest in your business. Besides, no bank or investor is going to finance your business 100%. 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, local development companies and life insurance companies. Trade credit, selling stock and equipment leasing offer alternatives to borrowing as well. Leasing, for example, can be an advantage because it does not tie up your cash.

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That guy in the funny coat with all the question marks on it says that there is free money to start a business. Where do I get that free money?

The short answer is no where. There is no “free money” for starting or expanding a small business. Although there are some “authors” who write books about how to find free money or grant dollars to start a new business, their main business is selling books, not finding free money for you. If you need more convincing, please visit the Small Business Administration website or read this article that discusses the scam selling materials that are “guaranteed” to help you get free money. There is money available to help you start a charitable or non-profit organization, and those grants are listed at the SBA website listed above. There are also a number of loan programs available from the SBA through local lenders – contact your local lender to find which programs you may qualify for.

Remember that if something seems too good to be true, it probably IS!

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What do I have to do to get a loan?

Initially, the lender will ask three questions: *How will you use the loan? *How much do you need to borrow? *How will you repay the loan? When you apply for the loan, you must provide projected financial statements and a cohesive, clear business plan which supplies the name of the firm, location, production facilities, legal structure and business goals. A clear description of your experience and management capabilities, as well as the expertise of other key personnel, will also be needed.

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What is a business plan and why do I have to write one?

A business plan is a map that tells others (and reminds you) where you are going and how you plan to get there. Banks and any potential investors will require one before lending you money, but it is a good idea to write a business plan anyway. It can be a way to communicate with your suppliers, your employees, and others to let educate them about your company and what is important to you.

At the Illinois Small Business Development Center at Illinois State University, we will refer you to many resources to help you compose your business plan (you can also click on resources and look through the business plan resources listed). We will also review your plan and make suggestions for improvement, and provide advice about the types of financing for which you might be eligible (based on these and other elements: completed business plan, sufficient equity injection, adequate collateral, credit-worthiness).

However, we don’t write the business plan for you, compile your financial statements for your business plan, guarantee that you will get a loan, or hand out any grant money (mostly because we don’t have any).

We recommend that you read qualified books and reliable web sites about business plans and the elements of business plans (click on the business plan resources page), carefully prepare your business plan including compiling your personal financial statements, and be forthright about any credit problems, tax problems, or previous bankruptcies.

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What kind of profits can I expect?

Not an easy question. However, there are standards of comparison called "industry ratios" which can help you estimate your profits. Return on Investment (ROl), for example, estimates the amount of profit gained on a given number of dollars invested in the business. These ratios are broken down by Standard Industrial Classification (SlC) code and size, so you can look up your type of business to see what the industry averages are. These figures are published by several groups, and can be found at your library. Help is also available through the trade associations that serve your industry.

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What should I know about accounting and bookkeeping?

The importance of keeping adequate records cannot be stressed too much. Without records, you cannot see how well your business is doing and where it is going. At a minimum, records are needed to substantiate: 1. Your tax returns under Federal and State laws, including income tax and Social Security laws; 2. Your request for credit from vendors or a loan from a bank; 3. 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. Remember, keep all basic transaction records for at least 7 years for tax purposes.

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How do I set up the right record keeping system for my business?

The kind of records and how many you need depend on your particular operation. A bookkeeper or an accountant can provide you with many options. We recommend using a software program where you enter expenses and income on a regular basis. Breaking down your expenses into as many categories as possible will allow you to analyze your business expenses better than if everything is lumped into a category called “bills”.

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What financial statements will I need?

You should prepare and understand two basic financial statements: (1) the balance sheet, which is a record of assets, liabilities and owners’ equity; and (2) the income (profit and loss) statement, a summary of your earnings and expenses over a given period of time.

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What is my market potential?

The principles of determining market share and market potential are the same for all geographic areas. First determine a customer profile (who) and the geographic size of the market (how many). This is the general market potential. Knowing the number and strength of your competitors (and then estimating the share of business you will take from them) will give you the market potential specific to your enterprise.

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How do I set price levels?

The price of a service or item is based on three basic production costs: Direct materials, Labor and Overhead. After these costs are determined, a price is then selected that will be both profitable and competitive. Because pricing can be a complicated process, you may wish to seek help from an expert.

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What about advertising?

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' image, it must be well planned and well budgeted. The Illinois Small Business Development Center at Illinois State University can help you create an overall plan. You may also want to work with a graphic designer or an advertising agency to create your print materials and advertisements.

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Are some locations better than others?

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 and the number of competitive establishments all determines where you should put your business.

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Is it better to lease or buy the store (plant) and equipment?

This is a good question and needs to be considered carefully. Leasing does not tie up your cash; a disadvantage is that the item then has no resale or salvage value since you do not own it. Careful weighing of alternatives and a cost analysis will help you make the best decision.

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Can I operate a business from my home?

Yes. In fact, experts estimate that as many as 20 percent of new small business enterprises are operated out of the owner's home. Visit the Home Savy website to read a number of articles on home-based businesses.

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How do I find out about suppliers/manufacturers/ distributors?

Most suppliers want new accounts. A prime source for finding suppliers is the Thomas Register, which lists manufacturers by categories and geographic area. Most libraries have a directory of manufacturers listed by state. If you know the product line manufacturers, a letter or phone call to the companies will get you the local distributor-wholesaler. In some lines, trade shows are good sources of getting suppliers and looking over competing products.

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What kind of security measures must I take?

Crimes ranging from armed robbery to embezzlement can destroy even the best businesses. You should install a good physical security system. Just as important, you must establish policies and safeguards to ensure awareness and honesty among your personnel. Because computer systems can be used to defraud as well as keep records, you should check into a computer security program. Consider taking seminars on how to spot and deter shoplifting and how to handle cash and merchandise; it is time and money well spent. Finally, careful screening when hiring can be your best ally against crime.

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What do I do when I'm ready?

You have done your homework: you have a complete business plan; you know where you want to operate; you know how much cash you will need; and you have specific information on employee, vendor and market possibilities. You now may want someone to look over your plans objectively. Contact the Illinois Small Business Development Center at Illinois State University to review your work and help with the fine-tuning. Then, when you have made the final decision to go ahead, it is time to call the bank and get going. Good luck!

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