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Need Help Building a Business Plan? SBA's Online Tool Can Help You Get Started

By Caron_Beesley, Contributor
Published: December 13, 2012 Updated: August 18, 2015

Having a business plan is a must for small business owners, but finding the time to put pen to paper often means putting them on hold until the very last minute, such as right before that big meeting with a loan officer or bank manager.

But business planning does not have to be that way.

Every smart entrepreneur and business owner should already have a firm grasp of key information about their business and on what will influence the path they take and decisions they make over the course of 1-3 years.

Putting this information together into a concrete plan is essential if you want to secure a business loan or outside financing, of course.  But the planning and mental exercise of writing it down is just as important to the success of your business. Writing a plan will not only help you succeed, but it will open your eyes to what it’s going to take to get there.

One of the big challenges for smaller businesses is actually building a business plan. What format should it take? What numbers should you pull together to demonstrate that you have a rock solid financial foundation?

SBA has just launched a new online tool that can help.

“Build a Business Plan” Online Tool

To simplify the process, SBA has just launched a new “Build a Business Plan” online tool that guides small business owners through the process of creating a basic, downloadable business plan. The great thing about this tool is you can build a plan in smaller bites, save your progress and return at your leisure.

The tool offers a tab-based step-by-step guide that lets you enter information into a template for each section of the business plan, including market analysis, company description and financial projections. The tool is secure and confidential and will keep your plan on record for up to six months. You can also save, download or email the plan at any time.

Business Plan Tool

Business Plan Tool

Business Plan Tool

Discuss Your Plan with a Small Business Advisor

Don’t forget: you can also use your completed business plan to discuss your next steps with a mentor or counselor from an SBA resource partner such as SCORE, a Small Business Development Center or a Women's Business Center.

Then be sure to keep your plan fresh, revisit it, and measure progress against it. As your business grows, your plan – and your benchmarks for success – will grow with it. 

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About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

How to Determine the Fundability of Your Business

By Marco Carbajo, Guest Blogger
Published: December 12, 2012

The definition of fundable is the capability of being funded or being bankable. A company’s fundability is crucial to obtaining the necessary funds needed to operate, develop and grow a business.

Unfortunately, the most common mistake business owners make is applying for financing before their company is even ready.

Why not know in advance if you qualify for funding before actually applying?

Instead of relying on personal credit, why not establish a fundable company that can get the financing it needs based on its own creditworthiness.

There are several different areas that contribute to how fundable a business will be for short-term or long-term financing.  The three main areas that impact a company’s fundability include:

1. Compliance – Lenders have specific guidelines that credit applicants must adhere to as part of the underwriting process. Meeting these standards is mandatory if you expect to qualify for credit. This includes, but is not limited to: corporate structure, business listing, commercial address, state filings, licenses, etc.

2. Business Credit Reports – Getting listed with the major business credit agencies such as Dun and Bradstreet, Experian and Small Business Equifax allows lenders to review your company’s credit profiles. Creditors rely on these particular agencies to assess the credit worthiness of a company. If you apply for credit with a lender or supplier and your company is not listed, then you may get denied credit or be required to allow a personal credit check and/or personal guarantee.

3. Business Bank Account – Another factor is a company’s bank account history. Bank credit consists of three main components a business owner should familiarize him or herself with prior to applying for funding. This includes, but is not limited to: account age, account history, balance rating, etc. In some instances, a lender may contact a business owner for bank references, so maintaining a positive banking relationship is vital to a company’s fundability.

4. Company Assets – Turning paper into cash is not a new strategy, but it is definitely an option worth considering if you have access to the types of paper that can be converted. This includes, but is not limited to: letters of credit, financial contracts, accounts receivable, inventory, real estate, promissory notes, etc.

All of these factors play an integral part in determining how fundable a business is. Lenders also take into consideration the age of a business and the type of industry involved.

These are just a few of the items that are regularly used by lenders, credit providers and even insurers to approve or decline an application. Now is the time to find out where your business stands.

About the Author:

Marco Carbajo
Marco Carbajo

Guest Blogger

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in 'Fox Small Business','American Express Small Business', 'Business Week', 'The Washington Post', 'The New York Times', 'The San Francisco Tribune',‘Alltop’, and ‘Entrepreneur Connect’.

Franchise Opportunities: Buying Into A Big-Name Brand

By FranchiseKing, Guest Blogger
Published: December 5, 2012 Updated: January 14, 2016

A significant number of the people that I’ve provided franchise advice to over the years have insisted on looking at franchises that have a recognizable brand name.

I understand why they start their franchise business searches with “the brand” in mind, but do you? You will if you read this post.

Definition of a brand

Legendary marketer Seth Godin* has a great definition:

A brand is the set of expectations, memories, stories and relationships that, taken together, account for a consumer’s decision to choose one product or service over another. If the consumer (whether it’s a business, a buyer, a voter or a donor) doesn’t pay a premium, make a selection or spread the word, then no brand value exists for that consumer.

Now that you have the definition, let’s look at the number one reason that prospective franchise owners are attracted to the “idea” of owning a well-branded franchise.

Risk

Most franchise buyers think that if they buy a big-name franchise, they’ll be entering the world of franchising at a much lower level of risk…financial risk. Is that true? No. Here are a few reasons why:

1.  Experience

Let’s say that you decide to buy a food franchise with huge brand recognition, but you do so knowing full well that you have zero food-service experience. Do you really think that the brand name of the franchise chain can prevent your business from closing if things get bad enough?

(I use a food franchise as an example because it’s one franchise type in which franchisees, in most cases, can increase their chances of success if they actually have food-service experience.) 

2.  Capital

If you buy a franchise—and do so with a miniscule financial cushion to help you get through the very challenging first 12 months or so—no brand in the world can help you print money.

One of the most important things you can do that can actually increase your chances of success as a franchise owner is to have your finances in order. To do that, you need to figure out how much you have to invest and how much you’ll have for working capital and living expenses as your franchise business ramps up.

You’ll also need to get the right type of small business loan. And, you’ll have to come up with a business plan.

3.  PR 

If you’re part of a big-name franchise brand, your local business can benefit from some the good things that corporate does, like charity-related events, for example. It gives you a chance to roll up your sleeves and really get involved in your community. For a good example, take a look at how College Hunks Hauling Junk has partnered with Habitat For Humanity*. 

Of course, getting publicity isn’t always a good thing. For example, it was revealed that several restaurants of a popular franchise chain were closed down for health reasons. In this case, the “brand” couldn’t prevent these franchisees from losing their business.

While it’s true that the franchises in that story were only located in NYC, it’s possible that other media outlets (from other areas of the country) picked up the story and reported on it. Sometimes consumers only hear or read part of a story and assume things. So, it’s possible that owners of this chain in other geographical areas were affected negatively by this news story.

Publicity can be good or bad, and most of time you don’t have very much control over it. And sometimes, bad publicity can affect your finances.

In franchising, it’s important that you don’t get enamored by the brand name alone.

If you make sure that you’re a good fit for the business type, have your finances in order and understand that you won’t be able to always control what is being said or written about your brand, you’ll increase your chances of success as a franchise owner.

About the Author:

FranchiseKing
Joel Libava

Guest Blogger

The Franchise King®, Joel Libava, is the author of Become a Franchise Owner! and recently launched Franchise Business University.

In Praise of the Lean Business Plan

By Tim Berry, Guest Blogger
Published: November 30, 2012

Confession: I wish I’d come up with the term lean startup. I love the term and, for that matter, the idea behind it. Credit for that goes to Eric Ries, author of the book The Lean Startup, and Steve Blank, blogger, entrepreneur, and sometimes professor (at Stanford and Berkeley both, no less, which I guess is also a feat) who’s adapted it and popularized it along with Eric.  If you’re curious, here is the Wikipedia definition:

“The Lean Startup … relies on validated learning, scientific experimentation, and iterative product releases to shorten product development cycles, measure progress, and gain valuable customer feedback. In this way, companies, especially startups, can design their products or services to meet the demands of their customer base without requiring large amounts of initial funding or expensive product launches.”

I also wish I’d named my last book The Lean Business Plan instead of The Plan-As-You-Go Business Plan. Jerry Calmes, then the publisher at Entrepreneur Press, and his marketing team and my marketing team at Palo Alto Software and I spent weeks trying to find a title that described my revised sense of business planning, which is very much in tune with the ideas behind the lean startup: keep it small, expect it to change, review and revise often, use it to steer and manage your business. Plan-as-you-go was the best we could come up with. We would have loved the lean business plan if it had occurred to us.

The sense of flexibility, rapid change and iteration in the lean startup makes perfect sense with business planning too. Both startups and business plans need to reflect the rapid change in business landscape as technology advances.

Regardless of the name or label, business planning has in fact changed in recent years. It has become leaner and more agile. The long-winded formal business plan is obsolete. Nobody should postpone business in the name of developing a business plan. No business plan should be long-winded or formal. And any realistic useful business plan is obsolete in a few weeks.

As military leader and former president Dwight Eisenhower once said: “The plan is useless. But planning is essential.”

Here are some tips for adopting lean business planning (even if I call it plan-as-you go) for your business. And this is for your business, regardless of whether or not you need a plan document to take to a bank or show potential investors. This is for running your business better:

  1. The first and most essential component of the plan is the review schedule. Set up a set day of the month for taking an hour or two and reviewing the plan, looking at actual results and comparing them to the plan, and revising as necessary.

  2. Always list assumptions. The best way to tell whether you need to change a plan or stick to a plan is to look at whether assumptions have changed. In today’s world, the assumptions change quickly. When assumptions change, the plan has to change.

  3. Keep it short, simple and just big enough. It’s not a text. It’s a loosely related collection of modules. Use bullets and don’t sweat the style, format or editing. It can live on your computer in different files for different components. Spreadsheets are great for financial projections, bullet points for strategy and focus, and lists for tasks and responsibilities and metrics and milestones.

  4. Keep it focused on its business purpose. For most of us, it’s about managing better, as in breaking long-term goals into meaningful steps and defining metrics and tracking results. In some special cases, it’s for communicating with outsiders. If it’s not a document for bankers or investors, don’t waste time making it pretty. Don’t waste time writing out what everybody in the company already knows.

  5. Always include milestones. Those are specific lists of what is supposed to happen and when, how much it costs or brings in, and who is responsible for it.

  6. Always include basic numbers. Cash flow is the life-blood of the business and you can’t afford not to plan and manage for cash. In practice, it takes projected sales, costs, expenses, assets, liabilities and capital to predict cash.

And that’s what you can call a lean business plan. Don’t ever expect to finish it, because when the plan’s finished, your business is finished.  And don’t expect it to be right, because management isn’t about guessing right, but rather knowing how and in what direction you guessed wrong and how to correct. 

About the Author:

Tim Berry
Tim Berry

Guest Blogger

Founder and Chairman of Palo Alto Software and bplans.com, on twitter as Timberry, blogging at timberry.bplans.com. His collected posts are at blog.timberry.com. Stanford MBA. Married 46 years, father of 5. Author of business plan software Business Plan Pro and www.liveplan.com and books including his latest, 'Lean Business Planning,' 2015, Motivational Press. Contents of that book are available for web browsing free at leanplan.com .

4 New SBA Online Tools That Can Take Your Small Business to New Levels

By Caron_Beesley, Contributor
Published: November 29, 2012 Updated: September 1, 2016

The old adage “time is money” is perhaps one of the most pertinent statements that you can apply to small business owners. Whether you’re starting a business or managing a growing one, entrepreneurs and business owners wear many hats and have many questions:

  • What laws and regulations apply to my business?
  • How do I start to write a business plan?
  • Where can I get help with X, Y and Z?

Many of us invariably turn to our networks and the Internet to find answers. But how can you trust that the information you are getting is truly applicable to your business and, let’s face it, even accurate?

As part of its mission to help business owners start, succeed and grow, SBA, through the SBA.gov website has developed numerous online tools and guides to help small businesses get information and answers they need quickly and efficiently. For example, these 10 Steps to Starting a Business and these 10 Steps to Hiring your First Employee guides are essential reading. SBA Direct is another useful tool that personalizes business owners’ experience on the SBA.gov website. Then there are the Licenses and Permits Search Tool and the Loans and Grants Search Tool.

New Online Tools to Help Business Owners Plan, Manage and Grow

Over the past couple of months, SBA has expanded its capacity and selection of tools and information business owners need by developing a whole range of new online features! Check them out:

1. Get to Know Your Market and Competition Better with the SizeUp Tool

Want to know how your business stacks up against the competition? Where your potential competitors are located? Where the best places are to advertise your business? These are all critical inputs for your business plan and can also help back up any financing applications.

Now with the new SizeUp tool you can crunch millions of data points and get customizable reports and statistics about your business and its competition. Just enter your industry, city, state and other details. SizeUp then runs various reports and provides maps and data related to your competition, suppliers and customers. It also highlights potential advertising opportunities.

2. Build a Business Plan Tool

Business planning can seem a daunting task, but it doesn’t have to be that way. To help you plan and steer your business, this new “Build a Business Plan” tool guides you through the process of creating a basic, downloadable business plan. The great thing about it is you can build a plan in smaller chunks of time, save your progress and return at your leisure.

To use the tool, simply log into SBA.gov (registration is free) and enter information into a template for each section of the business plan including, market analysis, company description and financial projections. The tool is secure and confidential and will keep your plan on record for up to six months. You can also save, download or email the plan at any time.

3. Size Standards Tool –Find Out Fast if You Qualify for Government Contracts

In order to be eligible to sell to the government and compete for small business “set-aside” contracts, business owners had to rummage through various rules and matrices to find out if their business is truly “small” according to SBA size standards. Now, with this new Size Standards Tool, you can follow three simple steps to cut through the guesswork and quickly find out if you qualify for government contracting opportunities. SBA also offers other resources including government contracting training courses, and guides to help you register as a contractor.

4. Events Calendar – Locate Business Training and Seminars

SBA and its partners, including Small Business Development Centers, Women’s Business Centers, and SCORE, hold hundreds of small business training seminars and workshops across the country. Until now, there was no single repository for these events. Now, with SBA’s Events Calendar, you can quickly find and sign up for training. Enter a date range and/or zip code to locate events in your area. Results are filtered by topic such as “starting a business,” “managing a business,” “business planning,” and “financing a business.”

Tell us what you think about the new tools below. You can also Tweet @SBAgov or post your feedback on the SBA Facebook page.

 

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

More Than Just a Seller – How to Start a Business on an Online Marketplace

By Caron_Beesley, Contributor
Published: November 28, 2012 Updated: September 23, 2016

Starting a small business enterprise on eBay, Amazon Webstore, Etsy or even Craig’s List has become an increasingly popular option for entrepreneurs looking to get instant visibility and access to a massive online marketplace.  

But how do you go about becoming a serious eBay seller and forming a business around your enterprise?  At what point does your enterprise become more than just a hobby? Will you need to get a business license, incorporate, and pay sales tax?

Here are some answers to these and other common questions about moving beyond just selling online to becoming a serious online business owner.

Do I Need to Form a Business to Sell on eBay, Amazon, etc.?

Actually, no – as long as you aren’t making a profit, you can buy and sell on these sites without formalizing a business entity. To the IRS, you are a hobbyist.

It might even be a good idea to test the waters this way to give you an idea of what you’re getting into before diving in head-first. But remember, once you start making a profit, the IRS will consider you a for-profit business and you’ll need to report any income you earn. Since neither eBay nor PayPal reports transactions to the IRS, it’s up to you to report your profits.

For more information check out IRS guidance on when your online marketplace activities are a considered a hobby and at what point they become a business.  

What Do I Have to Do to Make It Formal?

If you are serious about selling on eBay or Amazon, then you need to behave like a business: obtain a license and/or a permit, register with the local authorities, obtain a sales tax permit, and determine how you structure your business.

How? Follow SBA’s 10 Steps to Starting a Business for some great tips. Some things won’t apply to you. You may not have employees, for example, so skip the part about being an employer. Here are the steps to pay attention to:

- Write a business plan – A business model that relies 100 percent on another company for its revenues is risky. So plan your entry into the online marketplace carefully. When writing a plan for starting an eBay or Amazon business, think about what you’re selling. How will you position yourself? Will you concentrate on specific brands at a discount? How will you differentiate yourself from the competition? What kinds of margins are you shooting for and how will you achieve that with the inventory you have? Try to predict a profitability point where you’ll be able to extend your online marketplace business with your own online business.

- Finance your business – You may not need a business loan, but it’s useful to plan your options. Could you fund initial inventory with savings or credit? Could you borrow from friends or family? Would a microloan be a good fit?

- Register your business – Don’t overlook it; it’s not only the law, but it also affords several benefits. For instance, it will enable you to open a business bank account, write off business expenses, and help you leverage competitive pricing agreements with wholesalers. Registration involve several steps, not all of them necessary, but important to be aware of:

  1. Register a “Doing Business As” Name - If you are operating an online store under a name other than your own, you may need to register a “Doing Business As” name, also known as a DBA, trade name or assumed name. You can do this directly with your local government. If you’re not sure whether you need to register a DBA, check with your local government office.
  2. Choose a Business Structure – Many small businesses operate as sole proprietorships, meaning there is no legal difference between your business and you, as an individual. You’ll also file your business taxes on your personal income tax. No formal action is needed to form a sole proprietorship. Often, online marketplace business owners file for incorporation or become an LLC to help separate their business and personal finances and gain legal protection as a business entity. Consult a lawyer or legal expert to help you determine the pros and cons of incorporation and how to register.
  3. Obtain Licenses and Permits – These are a necessary part of doing business and are required by your state and local government. Even online and home-based businesses cannot operate legally without them. Use SBA’s License and Permit tool to find out what’s required.
  4. Get a Sales Tax ID or Permit – You’ll need a sales tax ID in order to collect and pay sales tax. The law about collecting sales tax online can be confusing and is explained here. Many online marketplaces offer tools to help you calculate sales tax, but as of now, it’s your responsibility to pay it. In order to collect sales tax, your state may require you to obtain a sales tax permit. You can find SBA’s links to state tax resources here.
  5. Get a Federal Tax ID – If you have employees or are structured as a partnership, corporation or other types of organization, you’ll need to get an Employer Identification Number (EIN) from the IRS. It’s the business equivalent of a social security number. You can apply for an EIN from the IRS online.

While these are some of the main legal steps you’ll need to follow, there are other important considerations, including:

 

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

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