How to Start a Business in the U.S. as a Foreign National
The U.S. prides itself on being a nation born of immigrants and entrepreneurs. Opening its doors to foreign nationals seeking to live the American dream is something that continues to this day.
But if you’re looking to start a business in the U.S. as a foreign national or alien, you’ll no doubt have questions. What are the immigration requirements? How do you get started? What tax obligations must you adhere to? Can you get financing from U.S. banks?
While it’s advisable to get the help from trusted experts including lawyers and accountants, here are some basic considerations to get you started.
Can I Start a Business in the U.S. as a Foreign National?
Aside from U.S. citizens or naturalized citizens, individuals with the following immigration status can start a business in this country:
- Green Card Holders – Also known as “permanent residents”, green card holders can work, live and study in the U.S. while maintaining their foreign citizenship. They can also join the armed forces and start a business.
- EB-5 Investor Green Cards – The EB-5 Immigrant Investor Program is administered by the U.S. Citizenship and Immigration Services (USACE) and enables entrepreneurs, their spouses, and unmarried children under 21 to apply for a green card. Up to 10,000 visas are issued each year. Applicants have to meet very specific criteria including making an investment in a commercial enterprise in the U.S. ($1,000,000, or at least $500,000 in a targeted employment area (high unemployment or rural area) and plan to create or preserve 10 permanent full-time jobs. The process is fraught with pros and cons. Consult an immigration lawyer to understand the full implications of an EB-5 green card. Learn more about getting a green card through investment.
- Other Immigrant and Non-Immigrants Visas – The USCIS’s Entrepreneur Visa Guide provides a menu of possible visa pathways for foreign entrepreneurs. Whether you are looking to explore or start a business, or are already in business and want to immigrate permanently, your options are extensive.
Once you’ve found the right visa pathway there are a number of steps to setting up a business in the U.S. If you’re a green card holder, you’ll take the same steps that an American citizen would (check out SBA’s Starting a Business Guide and don’t miss these 10 Steps to Starting a Business).
For everyone else, there are a number of key considerations you should be aware of:
Structuring your U.S. Business
One very important step in getting started is determining how to structure your business. You can choose to operate your business as a sole proprietorship, LLC, Corporation, partnership, or S Corporation.
While the process of incorporation is the same as it is for U.S. citizens and is handled at the state, not federal level, it’s important to understand and get advice about the ownership status and tax ramifications of your chosen entity. For example, an S Corporation is an increasingly popular choice for entrepreneurs, but its shares can only be held by U.S. citizens and resident aliens, while an LLC or C Corporation has no restrictions on non-U.S. citizen owners. This guide offers more insight into the main business entities operated in the U.S. and how to apply.
Establishing a U.S. Business Bank Account
Another key consideration is establishing a U.S. bank account. First and foremost, banks require valid ID. For a U.S. person that’s typically your social security number, driver’s license, passport, etc. For a non-U.S. national you’ll need a tax identification number (more on that below) and a government-issued document bearing a photograph. For a business account, you may also need to produce your articles of incorporation, U.S. business address, and more. Check with your bank to find out more as requirements vary.
Establishing an Online Retail Presence
Establishing an online retail presence in the U.S. is a popular choice for many foreign business owners. U.S. consumers are more likely to purchase from a U.S. ecommerce site than one that’s based overseas. You can read more about general resources for online businesses, including privacy and advertising regulations here, along with specific information on international sales.
Understanding U.S. Taxes
This is where you should most definitely get the advice on a tax practitioner who understands business tax law. Here’s a high level view of your key obligations:
- Business Tax Filing and Payments – All non-resident aliens must file and pay state and federal taxes on business income. You will be taxed at regular U.S. corporate rates but only on income from U.S. sources that is connected with that business, and at 30% on income not connected with that business (source). Much depends on the extent of the non-U.S. person’s presence in the U.S. The U.S. tax system is complex, so please consult an expert to determine your obligations.
Depending on the nature of your business, you are also obliged to pay sales tax, self-employment, social security, and Medicare taxes, make estimated tax payments, pay excise duties, etc.
The Internal Revenue Service (IRS) guide to Business Taxes can help introduce you to each of these. Check with your state and local government with regards your business tax obligations at that level, including sales tax, income tax, property tax, etc.
- Apply for a Tax Identification Number – Most U.S. business (including permanent residents or resident aliens) require an employer identification number (EIN) from the IRS to support tax filing and reporting. This identifies the business entity (think of it as the business equivalent of a social security number). For non-resident aliens, an Individual Taxpayer Identification Number (ITIN) will suffice. The IRS issues these 9-digit tax processing numbers to individuals who are required to pay U.S. taxes but who are ineligible for a SSN, including non-resident aliens.
Getting Access to Financing
Access to capital is essential for small business growth, regardless of the nationality or immigration status of the owner(s). Being a non-U.S. citizen doesn’t preclude anyone from getting capital, although banks may enforce more stringent eligibility requirements so they can be assured you are not a flight risk!
In fact, the SBA oversees a number of small business loan programs that alien-owned U.S. businesses may qualify for, most notably its most popular program – the 7(a) loan program. During the application process, legal permanent residents must evidence their immigration status (usually your valid card) and majority ownership; while non-immigrant aliens or foreign nationals, need to pass more requirements. This includes providing evidence that they have been in business for 12 months prior to submitting the application, assuring an eligible manager will be in place indefinitely, providing a personal guaranty, and sufficiently pledging U.S.-based collateral to ensure that the total value of the loan can be paid back in the event of liquidation for the life of the loan.
Disclaimer: None of the above constitutes legal or tax advice and is not guaranteed. Readers are cautioned not to rely on this information. Please consult a professional for the latest information on immigration, business, and tax law.
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Absenteeism in the Workplace: 7 Ways to Resolve this Bottom Line Killer
Employees are the lifeblood of a small business but they are also human and need time off to deal with sickness, manage family needs, and fulfill civic commitments like jury duty.
Personal time off is essential, but what happens when it becomes a problem? Persistent absenteeism (habitual and intentional time off) is a chronic problem for U.S. employees costing $3,600 per hourly employee per year, and $2,650 per salaried employee per year (source).
Not only does absenteeism effect your bottom line, it increases everyone’s workload leading to poor quality output and a sour atmosphere all round!
Absences occur for many reasons – burnout, stress, bullying, low morale, job hunting, etc. There’s also a generational element when it comes to absenteeism. Research suggests that millennials are more likely to skip a day when they feel anxious, whereas as baby boomers value showing up for work, even when they are under the weather.
Whatever form absenteeism takes, it’s bad for business. But here are seven ways to resolve persistent absenteeism:
1. Try to Identify the Root Cause
There’s often a good reason behind that call you just got from an absent employee excusing themselves from work and your gut instinct can guide you on this one. However, if you are noticing an excessive pattern and finding it hard to take your employee’s word for it, then it’s time to take action. If an employee is just not bothering to show up or giving you advance notice, then an intervention is essential. Start keeping a paper trail and records of absences.
2. Give Employees an Opportunity to Explain Themselves
The first thing you can do is give employees an opportunity to explain themselves. When they return to work, have a one-on-one discussion about their absence and express your concern. This is not a disciplinary discussion, but more of a fact-finding mission. Your goal is to understand what’s happening and try to solve the issue. For example, if stress is a factor, then you may need to discuss strategies that can help, such as shifting workloads, reducing responsibilities, etc.
Very often, employees are pleased that they have been given an opportunity to air their problems or grievances. But be warned, you may learn things that you don’t want to hear, particularly if it turns out that your management style is the problem. Try to remain objective during the discussion and use it as a platform to change things.
3. Put a Performance Improvement Plan in Place
If the tactic above doesn’t work, then you need to put a performance review plan in place that sets specific goals for improvement, attendance being one of them. Put the plan in writing and clearly explain the timeframe of the plan and the consequences of not fulfilling its requirements.
4. Develop and Communicate a Clear Leave Policy
A written policy won’t stop absenteeism, but it will help you deal with it more effectively. It will also demonstrate to all employees that you don’t tolerate absenteeism. Use the document to clearly explain paid and unpaid leave policies and the consequences of unexcused absences. If you have a company newsletter or intranet, use these to promote your policy.
Note that the law doesn’t require you to provide common leave benefits, but it does require employers to provide leave under the Family and Medical Leave Act (FMLA). Be sure you know what the law is. Read more about the FMLA leave entitlement qualifying medical events in SBA’s Employee Benefits Guide (scroll down to “Leave Benefits”).
5. Review your Management Style
It’s hard to acknowledge, but one of the more common reasons for employee dissatisfaction is management style. Could your style be encouraging employees to harbor grudges or lose morale? Step back and assess what you can do differently. Is your open door policy really that open? Do employees really feel valued? Plan on setting side more management time for your team, discuss their professional goals, and share your vision for the continued growth of your business and their role in it. For more inspiration read: Top Tips to Lead and Empower Employees.
6. Consider Introducing Incentive Plans
While they’re no guarantee you can control absenteeism, incentive plans and employee programs such as flex-time, wellness programs (by the way, the Affordable Care Act rewards employers who operate wellness programs), and project completion perks, are proven to increase morale and productivity. A survey by the business-to-business division of Staples, found that employees that participate in such programs have made them:
- Feel more valued (85%)
- Happier and more motivated (70%)
- More loyal to their employer (66%)
- More productive and results-driven (~60%)
7. Terminate Repeat Offenders
If you’ve exhausted all these intervention measures and aren’t seeing improvement, then termination may be your only option. Follow your HR policy to the letter on this one and refer to the law as it pertains to terminating employees, final pay checks, and more.
Absenteeism happens, but don’t ignore it. Find out why it’s happening, be empathetic to the needs of your team, and establish clear policies so that everyone understands what’s acceptable. Finally, be prepared to take the necessary action when required. It’s your bottom line that’s at stake after all.
How do you deal with employee absenteeism? Leave a comment below.
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Just Started a Business? Understand your Tax Obligations
If you’re new to business, then wrapping your arms around your tax obligations can seem like an uphill task. The first question you need to ask yourself is which tax laws impact your business from the get-go? It may be safe to assume that your tax obligations kick in once you start making a profit. Not necessarily. Each business is different.
If you hire employees, you’ll have payroll tax obligations. If you operate a retail business, there’s sales tax to deal with. Then there are quarterly estimated tax payments (the self-employed equivalent of withholding).
To help you navigate the business tax landscape, here’s a quick overview of key tax obligations that may impact you.
Understand how your Business Structure Impacts your Tax Obligations
How you legally structure your business will affect your tax situation. For example, if your business is an LLC, the LLC gets taxed separate from the owners. While sole proprietors report their personal and business income taxes on the same form (Form 1040).
At the state level, you will encounter several tax obligations – sales tax, property tax, income tax, unemployment insurance tax, and more. The SBA offers more information on how your business structure determines your tax obligations (plus links to the necessary forms and portals for registering your business with the right tax authority):
Get a Federal Tax ID
An Employer Identification Number (EIN) is the business equivalent of your social security number. It’s is required by businesses who have employees, operate as a corporation or partnership, and other obligations. For the most part sole proprietors don’t need and EIN and can operate using their social security number. Does your business need an EIN and how do you get it? Learn more.
Pay Estimated Taxes
This one is easily overlooked, especially if you are new to business and previously had all your income tax payments taken care of through withholding. Each quarter, self-employed business owners must estimate their federal and state income tax payment and send a check to the IRS and their state treasury. This “pay-as-you-go” model applies to sole proprietors, partners, and S Corporations who expect to pay $1,000 in income tax in one year. The threshold drops to $500 for Corporations.
To help you calculate your estimated tax, check out the IRS Estimated Tax guide. Consult your state’s treasury office (you’ll find website links for each U.S. state here) to get the appropriate tax voucher or pay online.
It’s very important that you set aside sufficient to meet your estimated tax payments or you risk a cash flow problem. And don’t forget to keep good records of your income and expenses. The latter can be used to offset how much estimated tax you pay.
Sales Taxes – Does It Apply to You?
Sales tax applies to certain retail products (rarely services) and if your business has a physical presence in a state, such as a store, office or warehouse, you must apply for a sales tax permit and collect applicable state and local sales tax from your customers. That tax is then passed on to your state revenue office on a monthly or quarterly basis. Determining whether your business qualifies as having physical presence in a particular state (say, if you own a warehouse in Virginia but sell your services in Pennsylvania) and the implications on sales tax collection can be confusing. Certain states are exempt from sales tax including Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon.
Employment Tax – Withholding and Matching
If you start your business and immediately have employees on payroll, you'll need to withhold Social Security (FICA), Medicare and federal and state income taxes from their salaries. You must also match your employees FICA and Medicare taxes and pay this matching along with your employee's tax.
The IRS Employment Taxes guide has all the information you need to understand how you deposit and report employment taxes, key due dates, and more. Take a look at this guide to hiring your first employee too.
Working with Freelancers and Independent Contractors? - Know your Tax Obligations
Bringing on a self-employed contractor brings with it additional tax ramifications, especially if your business accidentally or deliberately misclassifies that individual as an employee. Read more about why it’s important to know the difference and how it can impact your tax situation.
Bookmark Tax Reporting Season in Your Calendar
The new year brings with it several tax obligations for employers. While you’re busy thinking about getting your income tax return filed, don’t forget your wage reporting obligations (W2s must be filed) and 1099 forms must be filed and issued to independent contractors you’ve worked with during the tax year.
Your local government (town, city, or county) collects property tax for business assets such as vehicles, computer equipment, software, and more. Likewise, if you do business in a commercial real estate location, the state will collect property tax on it. Check with your local tax authority to find out what you need to do to register your property and the process for assessing and making payments.
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If Revenue isn’t the True Measure of Start-Up Success, What Is?
You’ve been in business for three months and have reached your first revenue goal – success! Unfortunately, revenue alone isn’t a true indicator of business success.
Why Revenue Isn’t King
Perhaps that early revenue was the result of a great sales team. And that’s fine. But if your product isn’t delivering the value it was promised to or truly solving a customer problem – how sustainable is that revenue? What about your potential market? If the business opportunity isn’t as you hoped, strong revenue now won’t help you down the line.
These are just a couple of examples, but already you can see that having more revenue than less, isn’t always a good success metric to shoot for, especially if you’re in start-up mode.
Profit Isn’t a Good KPI Either
Another problem with relying on revenue as an indicator of success is that revenue is only one half of the other equation – the other is profit. Yet, profit isn’t always an ideal indicator of success either. Consider this example. New start-up, XYZ Corporation has just broken even at the nine-month mark, and is finally making a profit. Yet XYZ is experiencing problems with late paying clients which is leading to a cash flow problem. As a result, XYZ is struggling to pay its bills on time and may even need to delay payroll. So, although the company’s P&L statement may indicate that the business is a success, the reality, as indicated by its cash flow statement, is quite different.
As you can see, revenues and profits aren’t always useful measures of success, so what is?
Measuring success begins with goals. Setting SMART goals (Specific, Measurable, Attainable, Relevant, Time-bound) early in your planning won’t just help steer your business towards success, it will help you understand when you’ve got there!
In the start-up phase one of your overarching goals and success metrics will be risk management. But that’s not specific enough, risk encompasses many things and can mean different things to different people.
One of the best ways to compensate for start-up risk is to take deliberate steps to ensure that your product or service is validated. This means knowing your market intimately, refining your product features, and fine-tuning your positioning.
As with any SMART goal, product validation must also be measurable and time-bound. For example, understanding when your product will break-even and you’re able to cover all your expenses and make a profit, is essential to managing risk.
Where do you start? Hopefully you’ve done a lot of market research already, and perhaps you’ve tweaked your product or service based on feedback, but how do you tie this all together to truly measure success? Immerse yourself in your market and quantify what you’ve learned. Then use this data to gauge whether your start-up has scale and is building a solid economic foundation on which to grow.
The following steps can help:
- Get to Know Your Market Extremely Well: Do your research. Know your target audience and understand their purchasing habits, influencers, etc. Who’s your competition? This is incredibly important in helping you position your product and talk to your customers in the right way. Here are some free sources of market data that may help.
- Understand your Costs: This is an essential metric that will help you understand the unit cost of doing business and how much money you’ll make per customer:
- Test your Product and Keep Refining It: Don’t lose sight of your product – keep refining it, testing new offerings, and making sure you always put product first, not the money it brings in.
The outcomes of this SMART goal isn’t revenue – but clear, empirical data that tells you that your business is making progress and on the right path. This data can come in many forms – website traffic data, social media engagement, acquisition and retention data, referrals, and other key indicators, including revenue, but just not revenue alone!
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6 Low Cost Ways to Test your Business Idea
So you’ve got a great idea for a new product or solution and you think it’ll be a sure-fire hit.
Not so fast. To find out if your idea has traction, you need to test it.
It’s an often-overlooked step that can help you refine your offering and ensure a successful go-to-market strategy. So before you put pen to paper and write your business plan, get out there and assess the validity of your product.
Here are six low cost tips on how to best test your business idea.
1. Find your Idea’s Fatal Flaw
SCORE offers some great tips on how to validate your idea. In this article, guest contributor, Daniel Kehrer, stresses the importance of banishing the idea that your product or solution is perfect. It isn’t. It may have one, two, or multiple flaws. Ask yourself:
“What am I missing? What possible pitfalls am I not seeing? How might my competitors respond? What…makes me think that my business or product idea will work when…others don’t?” Once its flaws have been identified, find a way to fix them.
2. Test Outside your Network
There’s a lot of advice out there about testing your idea on friends and family. Not always. Also writing for SCORE, Jeanne Rossomme, recommends that entrepreneurs refrain from soliciting input from their immediate network, including their team. Instead focus on those whose opinion matters – your target market.
One way to do this is to crowdsource your market research. Form a focus group. This can be done virtually or in-person. Simply advertise for volunteers (Craigslist is a good place to start). Then provide these people with free samples of your product to test. Alternatively, assemble your focus group in one place and have them try out your product, alongside the competition’s, and see what results you get.
If your idea is less tangible or you don’t have a prototype in place, walk the streets and find out what people want. What’s missing in their market? What is the competition not providing? If your solution was available to them, would they take advantage of it?
3. Tweak It, But Not Too Much
As you test your idea you’ll encounter lots of feedback. In many cases, it can be overwhelming. This is especially true if your trying to get investment or are pitching a concept or prototype to a new client (particularly one who promises to buy it in bulk). It can be tempting to edit your idea to the point where it becomes so customized to the needs of a single customer, that you rule yourself out of the rest of the market, or waste precious resources trying to check all boxes.
Instead focus on the must-haves that translate well across several markets or customer profiles. There’s plenty of time for customized flavors of your idea down the line once you make a profit and can start diversifying.
4. Perfect your Elevator Pitch
You see this all the time on TV show’s like Shark Tank. You need to pitch your idea in 30 seconds or less. What challenge does your product address, how? How is it different to the competition (what’s your differentiator?). And what is the outcome for the buying customer. People buy outcomes, not products. Your elevator pitch is something you will take with you for the lifetime of the idea – whether you’re pitching to investors, customers, manning a tradeshow booth, or briefing a marketing agency.
5. Create a Mini Version of your Idea
Creating a full-blown version of your idea can be expensive. Smart Passive Income’s Pat Flynn, has some great ideas for creating a mini-version of your idea to test the market. He uses the example of the food truck industry, which is often used as a platform to test an idea, concept, and menu before the owner commits to building a bricks and mortar restaurant. But the theory can be applied to other industries too. If you run a hair salon and want to start a massage therapy business at a new location, you could test demand by starting small by dedicating a small area of your current location to provide the new service on a part-time basis.
Likewise, if your product can be experienced without launching a full-fledged version, such as a piece of software, music, literature, and so on, test it as such.
6. Run Dummy Marketing Campaigns
This is an increasingly popular and effective way to gauge market demand. Promote your idea for a product or service as if it’s already available on the market.
One way to do this, suggests entrepreneur advisor Evelio Pereira of Epicster.com, is to create a landing page to promote your idea. This could be hosted on your website or on a new domain. Include sales information, product/solution features, etc. Be sure to include a “Buy Now” or “Learn More” button.
Obviously you have nothing to sell yet, so when the site visitor clicks through take them to a page featuring the message that the product isn’t available yet, but if they fill in the form they’ll be notified when it’s launched.
You can use various outlets to promote the page – run an email marketing campaign to your existing customers. Or, if you have the budget, invest in Facebook ads (targeted to your geo-location and demographic) or Google Adwords or Bing Ads. Your click through data will also provide valuable insight into whether your idea is in demand!
What low-cost tactics have you used to test your idea? Leave a message below.
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Top 10 Low Cost Start Up Business Ideas You Can Launch Today
Thousands of people all across America dream about starting their own business. No matter what your motivation is for being your own boss, you can start a business much sooner than you think and for far less. In fact, there are hundreds of enterprises waiting to be launched that don’t require a great deal of capital.
If owning your own business is your goal, the good news is, you can accomplish it with a solid idea and very hard work. But coming up with the right idea isn’t always the easiest thing. If you’re not confident where to start, here are 10 low cost, easy to start business ideas, spanning a variety of industries that you can launch quickly.
- Independent Sales Representative – Major direct selling companies such as Mary Kay, Avon, Herbalife, Pampered Chef, and Primerica all offer the opportunity for individuals to enroll as independent sales reps to get the word out to others about their products and/or services. In return sales reps can generate income from their own efforts on a part-time or full-time basis. In most cases you can get started for less than a $100.
- Online Content Production – If you write well and have a topic that your passionate about, why not start a content production business? The cost to launch your business includes a computer and an internet connection. You can easily promote your skills and services on sites such as Elance, Scriptlance, and oDesk where businesses look for contract workers.
- Online Retailer – Are there products that you want to sell? Do you have a passion for a specific industry such as health, sports or the great outdoors? If you love fishing, consider selling fishing supplies & equipment. Starting an online store is easy and costs are extremely low. For example, eBay, Etsy, and Amazon lets you open up an online storefront for as little as $20 a month.
- Social Media Management Services – Businesses of all sizes need help managing their social media profiles and activity. Major platforms such as Twitter, Facebook and YouTube are important networks that companies need in order to raise brand awareness and promote their products. If you already know how to use these platforms then the startup costs are extremely low and you can be up and running in no time.
- Virtual Assistant – For less than $100 you can start a virtual assistant business right from the convenience of your own home. All it takes is a phone, computer, and internet access to be up and running. The work will vary with each client, but may include researching, data entry, appointment setting, and managing social media accounts.
- Consulting Services – Is there a subject that you have extensive expertise on? Do you find that people are always asking your advice in a particular area? Why not put the value of your knowledge to work by launching a consulting business?
- Web Design Services – The majority of small businesses don’t have large budgets for website design. In fact, a 2013 survey conducted by Google and Lpsos found that 55% of small businesses don’t even have a website. That’s where you come in – if you know how to create websites you can start a web design business and start off by working with clients from your local community.
- Affiliate Marketing – An easy and fast way to start a business is to promote the products and service of other businesses as an affiliate marketer. Certain businesses will pay affiliates to promote their products through various methods such as banner advertising, text ads, email marketing, etc. To learn more about affiliate marketing check out sites such as Amazon Associates, Commission Junction, ShareASale, and ClickBank.
- Pet Sitting – Do you love working with animals? How about getting paid to play with pets? Pet sitting could be a great business to start as a part-time or full-time business. Pet sitters charge as much as $100 for overnight stays, and $20 for a 20-minute visit is typical in the industry.
- Driving Service – With platforms such as Uber, Lyft, and Sidecar, you can turn the car you currently own into a business without spending a single dollar. As a suggestion, instead of offering every type of driving service possible, specialize in a service to a target customer so you can stand out above the rest.
If you take a good idea and put into action, you can be well on your way to becoming your own boss. Remember, starting a business is within the reach of anyone who has a good idea, wants to take a risk, and put in the hard work necessary to make it happen.
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Starting a Halfway House or Transitional Housing Facility
Transitional housing provides people with a temporary place to live as they attempt to get back on their feet or make a major transition in their lives. Like any business, when you choose to start a transitional housing facility, you will need to thoroughly research your idea and create a solid business plan that addresses the legal and financial needs of the business.
Do Your Research
Assess your target audience and the services needed in your area. Popular resident audiences for transitional housing include former federal or local inmates, young mothers, at-risk teens, veterans, the homeless, people with disabilities, and substance abusers. If you are unsure about the needs in your community, your local social services department may be able to provide insight.
Learn about the specific population you plan to assist, including average age, the services they currently receive, and where they currently receive them. Some transitional housing facilities only offer housing, while others provide additional services like job support, counseling, and medical care.
In addition to identifying your resident audience, your business plan includes your business’ mission, goals, operations plan and projected financials.
Choose a Location
Once you determine your audience, begin to research potential locations for the housing facility. Now this may be an extremely challenging step for a number of reasons. First are the questions about the physical building itself. Do you plan to lease or own the building? Will you need to build a new structure, or is there an existing facility that you have in mind? If you have your eye on an existing facility, will you need to renovate it? Additionally there are the intangible questions like, do you have buy in from your neighbors in the community?
The US Department of Health and Human Services (HHS) highlights key questions that you should ask yourself when determining which housing model is best for you and your residents, and offers the following advice no matter the type of housing or lease you choose, aim for residences near the following:
Potential places of employment
High schools and community colleges
Health care clinics and hospitals
Once you identify an ideal location, familiarize yourself with the housing regulations and zoning laws in the area.
Register Your Business and Get Licenses
Typically, transitional housing facilities are registered as non-profit organizations, enabling eligibility for certain benefits including grants, government surplus, and tax exemptions.
You must obtain relevant business licenses and permits like any other business. Regulations vary by industry, state, and locality.
Assess Your Business Needs
Determine how many residents your facility can hold, keeping legal, funding, and safety restrictions in mind. Think about the staff you will need to keep your operations running. Assemble a development team, a group of professional consultants, service vendors and other non-profit organizations that collectively bring all of the skills, expertise, knowledge and experience to bear on the development and operation of the project. Non-profit facilities will need to establish a board of directors and governing bylaws.
Also consider the supplies and equipment you will need to not only run the business, but also to furnish the facility. If you receive donated goods, remember that IRS.gov provides guidance on the federal tax requirements for donated property. Consider your operating costs and determine how much rent, if any, you are going to charge residents.
Foster Community Ties
Know going into the process that it is common for a transitional housing facility to face opposition from potential neighbors. Talk with residents, local officials, and other business owners in the community about where you plan to operate, and solicit their support by explaining how your housing plan will benefit the community. For example, if your target audience is at-risk teens, you can explain how a transitional housing facility will provide a steady environment to combat homelessness, vandalism, and loitering.
Once you begin to gain traction in your community, begin to assemble a team of experts, including your local social services department, a realtor, and a lawyer, to help you move forward with your plans.
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Considerations for Buying a Small Business
Ever walked into a neighborhood business that was recently purchased? The new ownership might have changed the paint color, décor, and equipment in a flash -- maybe even overnight.
If you’ve ever dreamed of revamping a business you visit frequently, you might be a good match for buying a business. Rather than starting your own company from the ground up, buying an existing business means you can jump right in, get to work and focus on growth.
Before you sign on the dotted line, you may want to consider the following pros and cons of buying a business.
At the same time, many business owners decide to sell their companies because they no longer want to keep up with the day-to-day operations -- and they may have fallen out of good recordkeeping or organizational habits. Stepping in as a new owner is a great time to enact new policies and streamline the way a business runs. If you can enact change in a positive, encouraging manner, your leadership might be just what a business needs to get to the next level.
If you don’t have the capital to buy a business, bootstrapping a business from your own concept and bringing it to life can be just as rewarding as writing a check and settling down at your new desk. But if you have the capital to take over an existing operation, it may be a less stressful experience than starting from scratch. “All of the bugs of the business have probably been ironed out and all of the problems that the business has encountered at the early stage of their development have been resolved,” mentor Norm Silverstein explained on the SCORE Small Business Success Podcast. “Basically, most of the dirty work has been done when you buy an existing business. To me, that's the most advantageous way of doing it, and the least risky.”
If you’re thinking of buying a business, visit a SCORE mentor to learn more about the process and what to expect.
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7 Tips for Starting a Food Business
Starting a food business has to be one of the most challenging businesses to get into. The harsh reality is that most fail within the first year. The restaurant business in notoriously tough, but where there is a will there is often a way! While vision and ambitions are important, turning that ambition into success requires research, planning, capital, business acumen, and perseverance, more research and more planning. Here are some tips that can help entrepreneurs start, operate, and grow their fast food business successfully and within the law.
Do Your Research
The food industry in general is very competitive so it is imperative that you do your research before getting started. Business networking events (such as those operated by Small Business Development Centers, SCORE, and local Chambers of Commerce) offer a great venue for picking the brains of fellow business people. Try to find out what works, what doesn't, and what they would do differently. If you are aware of restaurants that have failed, try to identify why. Online community forums are a great way of gauging market need and customer opinion about local food service businesses.
Doing your research will help you to define your target market, niche opportunity, and identify your greatest risk factors, so that you can build a strong business case and move forward. Whether it's specializing in authentic Chicago deep dish or cupcakes - focus on providing a unique and quality product - don't try to be all things to all people. Be specific!
Consider Starting Small
You should consider testing your idea before you go all out with a pop up location. It will give you an opportunity to run through your idea without all the risk. Many food businesses start as a hobby at home and once they outgrew the space they moved on to something bigger. Going straight from a business plan to the opening a storefront is a big step; the idea is that you have an opportunity to get the kinks out. You can rent a food truck for a month or try a local market just to see how things go. When you do finally make the move to permanent location you can scale up.
Alternatively, fast-food franchises might be an option worth considering for entrepreneurs who are not quite ready to make the leap into full business ownership.
Build a Business Plan
A business plan doesn't have to be an overly formalized document, but going through the process of building and constantly tweaking your plan will help you match the strengths of your business to the opportunities the market presents. It can also help you better deal with threats as they emerge.
A business plan is also essential when it comes to communicating with others - such as customers, partners, and investors - if you want any of these to believe in you, you must be able to convince them that you know what you are talking about when it comes to your business.
Not all businesses need investors to get started, particularly if you start small. However, there are ranges of options from very small microloans that can help smaller fast food outlets get started, to more comprehensive small business loans such as the popular SBA 7(a) and 504 loan programs.
If you are seeking investment, plan it out. Use your business plan and the knowledge you’ve gained from your pop up test as the basis for a loan proposal or investment plan. Investors and lenders will want to know everything about your business idea or venture. Also, be realistic about how much money you need. You can save lots of capital just by buying local produce and purchasing surplus equipment.
Start Your Business the Right Way
Whatever your business type, you must take care of the fundamental regulatory and legal steps involved in starting a business. From tax ID numbers to licensing make sure everything is in order.
Know Your Food Laws and Regulations
This should be part of your research to begin with, but it’s worth making it a one off tip. Know what the laws and regulations are in your state! From labor laws to food safety laws understanding and achieving compliance with legal and regulatory requirements can have a big effect on the success of a food operation big or small.
Find a Business Mentor
Talk to your local SBA office, SCORE, or Small Business Development Center (SBDC). They can give you unrivalled, objective, and FREE advice about the local market and the process of starting a successful business.
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SBA Resource Partners Helped Over 1 Million Businesses Last Year – Are You Next?
If you are thinking about starting a business of your own, the SBA has the resources to help you plan, prepare and manage that business. The SBA helps aspiring entrepreneurs and small business owners just like you – over one million each year – to start and grow their businesses.
The SBA’s nationwide network of Resource Partners provides entrepreneurs with mentoring, training/counseling, business assistance and access to SBA’s programs and services. In fiscal year 2015, our collective efforts helped small businesses to get $4.7 billion in capital infusion, start over 19,000 new companies, and create and retain more than 55,000 jobs.
Under the direction of SBA’s Office of Entrepreneurial Development, more than one million small business owners receive business counseling and assistance through one or more of the SBA’s counseling and training programs. They include the Small Business Development Centers (SBDCs), Women’s Business Centers (WBCs), the national SCORE mentoring program, Emerging Leaders, Regional Innovation Clusters and ScaleUp America.
These dynamic SBA resource partners and entrepreneurial programs provide quality one-on-one consulting, training and counseling that can help you start, grow and compete in the marketplace.
The numbers speak for themselves:
- Small Business Development Centers counseled and trained nearly 500,000 clients.
- SCORE counseled and trained more than 349,000 clients.
- Women's Business Centers provided assistance to over 140,000 clients.
- Emerging Leaders initiative expanded to serve 48 communities and over 800 small businesses.
- Regional Innovation Clusters initiative served nearly 1,000 small businesses and adding three new Clusters.
- ScaleUp America initiative ended fiscal year 2015 with over 200 participating businesses in eight communities. ScaleUp has expanded to seven new communities in fiscal year 2016.
The SBA also helps target market audiences such as women, veterans, young entrepreneurs, growth-oriented businesses and those over age 50. We reached over 170,000 clients during our Encore Entrepreneurship campaign, including the National Summer of Encore Mentoring with AARP. During the campaign, more than 100 local sessions and workshops were hosted by SBA district offices, including webinars held nationwide with subject matter experts, industry professionals, successful entrepreneurs, and business coaches.
If you are looking for useful resources to start, grow or manage your small business, reach out today to one of our resource partners or consider an online e-course at our Small Business Learning Center.
We’ll help you connect with your nearest SBA District Office, SBDCs, SCORE Chapter or WBCs. Go to SBA’s Local Assistance map to get started. Here you can find useful counseling, training and mentoring from any of these partners for starting, growing and managing your small business.
You can also go to www.SBA.gov/ed for a complete menu of available programs and services.
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