NO. The first thing that needs to be said about funding options is that there is practically no grant money out there for ordinary small businesses. Somehow the fantasy persists that there is a ton of money available to for-profit businesses that doesn’t need to be paid back. The reality is that almost all grant money is awarded only to registered non-profit organizations or to businesses doing innovative research that is “in the national interest”. Ninety-five percent of new businesses are financed with personal funds (savings, family, and friends). Those who are eligible for financing still must invest in their own venture and provide collateral. So, if you are serious about starting or growing a viable business, you must be resourceful enough to capitalize it without “fantasy” money.
Two of the greatest challenges for any business are hiring the right people and keeping them. Employees, and more importantly their contributions, are a business’ most important assets. A vibrant economy and low unemployment makes the competition for top performers an imposing challenge. So how do you go about finding, selecting and retaining the best people?
Decide What You Want
Before beginning your hiring efforts, know what you want. One way to list the skills, experience, and other attributes you are looking for is in categories of:
must have – skills you do not have the time, money or desire to teach but which are absolutely necessary to the job.
should have – sets of skills in which the candidate should have some degree of knowledge or skill
nice to have – what you’d love to have but can live without
Search in the Right Places
Basically, the harder it is for you to find the skills you need, the wider the net you must cast. You may choose from local media, the District’s employment center, and using the Internet. View any employment ad as a marketing tool for your company, making it as appealing as possible. Put a headline on your ad that describes the absolutely best benefit you can offer. Be sure to add your must-have list of skills, experience, and education. To get qualified people without having to weed through a pile of applications, be specific about what you say and very selective about where you place the ad.
Don’t underestimate the value of networking. You may choose to ask your best employees if they know someone who would fit into your organization and might be interested in joining or use your network in the community to find employees.
Conduct a Thorough Interview
Give the applicant a complete and accurate picture of your business. In today’s tight job market, you have to sell both yourself and your company. Through your questions, cover the job’s must-haves, should-haves, and nice-to-haves and be sure to obtain a clear picture of where the candidate is in relation to these attributes. 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. If you find yourself talking as much or more than the candidate, stop – you only learn about the candidate when you are listening. Don’t be afraid to press a candidate for more information – it is then that you may learn important information.
Hire the Right Person
Some tips for choosing who to hire are:
The three critical elements in hiring the right people for the job are skills match, company fit, and job match. Be objective in determining which candidates have the best overall fit.
In terms of wages, try to be a leader in your market – think about the cost of paying a little more versus the cost of turnover (roughly 25% of salary and benefits).
Hang on to Good Employees
Retention of employees is as important as the initial hire. An individual’s suitability to a particular job is the single most important factor in job performance and retention. Be sure to provide people jobs that fit with their personality and then take the time for a proper orientation. Listen to them and continue to provide training and skills development opportunities. Set clear expectations, show concern for employees, and treat them fairly.
Your business’ reputation is a key element in retaining employees and attracting new ones. Make sure that you know how your business is perceived in the community and do whatever it takes to make that perception a positive one.
The best way to enhance your “asking” position is to do your homework. Before approaching a lender, get a copy of your credit report and make sure it is accurate. If there is anything amiss – correct it with the reporting agency. If there are blemishes – prepare explanations. Prepare a written business plan with credible financial and market data. If you are already established in business, be prepared to provide two to three years of financial statements and tax documents. Understand that if you have a poor credit record or cannot demonstrate a personal investment and/or the ability to repay a loan, you will not be considered a good risk. Instead of applying for a loan now, you should work at maintaining good credit (timely, consistent, payment of debt) for two years and then apply.
There are many types of loans your banker can discuss with you. One of the main types for small businesses is a SBA loan. The Small Business Administration does not make direct loans to businesses. To get an “SBA loan” a business owner must first contact a commercial loan officer of a bank. Even the programs for women, veterans, and the handicapped require that the business owner start with a bank.
The bank evaluates the needs of the business, determines whether the potential borrower is eligible for a loan, helps the borrower fill out application forms, and determines which of the many loan programs is most appropriate for the situation. If the loan needs a guarantee in order to be more attractive to the lender, the package is forwarded to the SBA.
The role of the SBA is limited to guaranteeing some portion of the loan that the bank makes to the borrower. This guarantee lowers the risk to the bank of making a loan, but not the amount of the loan. Many banks in the District of Columbia are SBA-approved lenders. However, some are more active in making small business loans than others. Start with your own bank to see if they make small business loans. Your District of Columbia SBDC business consultant can identify for you which banks are SBA-approved lenders.
For many of us, a home-based business seems like a solution to a host of problems. We can be home with the kids, sit at the computer in our sweats, avoid the cost of office or shop space, and have more control over our day.
Yet there are pitfalls that an unwary business owner can fall into.
District of Columbia planning and zoning regulations can throw a potential home-based business into a sea of unexpected costs and conflicts. Many of these regulations were developed long before personal computers changed the whole complexion of having a small business. These laws were meant to keep noisy, smelly, high-traffic activities out of residential neighborhoods. Yet today they are being applied across the board to quiet computer consultants as well as the noisy, smelly businesses.
If you are entertaining the idea of having a home-based business, contact your city or county planning and zoning department, depending upon whether you live within city limits or not. Contact them before you start the business, not after. They will tell you what the requirements are for a home-based business.
Having a home-based business can also bring you into contact with your county assessor’s office. They will assess a tax on your business furniture and equipment. This may be triggered by a number of actions on your part, such as the request for a business telephone number.
You may choose to use a commercial box rental service for your business address, rather than the home address, to give a professional impression while protecting the privacy of your home. Most rental companies will let you put the box number as “#100” rather than “Box 100”, implying that it might be an office suite. Make sure that the U. S. Postal Service and the box rental company will permit you to do this before getting your business stationery printed.
A special word of caution – if you are starting a home-based business in response to an advertisement about earning money at home, BEWARE!! Before you put any money on the line, contact the Federal Trade Commission for information on scams. Also, call your local Better Business Bureau. Please contact the DCSBDC for further information. To contact the DCSBDC please click here
There are four general reasons to have a website:
First decide if any of these reasons make sense for you. To sell products and services on the Internet, success involves:
E-Commerce is a six step process and all online businesses will go through the first three steps:
Businesses conducting online sales will need to continue through the final three steps:
Marketing is one of your most important organizing tools. There are four basic aspects of marketing, often called the “four P’s”:
As you can see, marketing encompasses much more than just advertising or selling. For example, a major part of marketing involves researching your customers: What do they want? What can they afford? What do they think? Your understanding and application of the answers to such questions play a major role in the success or failure of your business.
A business plan precisely defines your business, identifies your goals and serves as your firm’s resume. It describes the products and services you will sell; the customers to whom you will sell them; the production, management and marketing activities needed to produce your offerings; and the projected profit or loss that will result from your efforts.
The business plan allows you to apply your research to your decision-making. Although a plan is time consuming, it is important to business success. Completing the plan forces you to examine all decisions of management, marketing, personnel and finance in an objective and organized way. Another important benefit of the planning process is that you will project the amount of financing needed for start-up and the early stages of your business. Therefore, the business plan becomes a useful tool in securing capital before start-up. Then the plan becomes your owner’s manual guiding your daily operation and activities.
Business planning is an ongoing activity. Existing businesses, as well as start-up firms benefit from writing and updating their goals, plans and activities.
Please view a business plan format developed by the DCSBDC.
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.
Once you decide to establish a business, your first consideration will be the type of business organization to use. Your selection of a business structure is based on a number of factors. These may include:
You should carefully analyze the advantages and disadvantages of each type of structure, keeping in mind your particular business and personal needs. There are three principal kinds of business structures: the Sole Proprietorship, the Partnership and the Corporation. There are advantages and disadvantages to each legal form of business. A brief description of each type is provided below however we recommend that you go to the legal structures section for further information. It may be advantageous to seek professional advice from an attorney and/or tax specialist.
Sole Proprietorship
A sole proprietorship is probably the simplest business structure to organize. Because of this, most new businesses are started as sole proprietorships. A sole proprietorship business is owned by one individual (not a married couple) who has complete control of the business. Revenues are considered personal income and are taxed at the owner’s personal tax rate.
If a sole proprietorship is using a name other than the individual’s true name (the name on your social security card) a “Certificate of Assumed Business Name” must be filed with the Secretary of State’s office.
Partnerships
A partnership involves two or more people conducting a business together. This business structure is also fairly simple to organize, but may be more costly than a sole proprietorship because it requires a separate tax return for each partner.
It is strongly recommended that a written partnership agreement, prepared with an attorney’s assistance, be drawn up between the partners. Partners share in the profits and losses of the business according to the agreement, although profits are taxed as personal income. While a partnership is recognized as a separate legal entity from the individuals who are partners, their personal assets can still be used to satisfy the business’ creditors.
General partnerships must file a “Certificate of Assumed Business Name” with the Secretary of State’s office, if they do not operate under the full names of each partner.
A Limited Liability Partnership (LLP) is a fairly new type of partnership. In this type of partnership, the liability of each partner can be limited to exclude obligations resulting from professional mistakes made by other partners or malpractice actions against other partners. The partners do, however, continue to share liabilities resulting from all other activities of the partnership. Individuals or an existing general partnership may elect to become an LLP by filing an application for registration with the Secretary of State’s office.
A Limited Partnership is made up of two or more individuals who jointly own a business. This form of business allows for general partners and limited partners. Limited partners are generally financially liable for debts only to the extent of their investment. They have limited or no control over management of the company. The general partners manage the company and have the greatest potential risk/reward from the operations of the business.
Corporations
A corporation can be complex and expensive to organize. Legal assistance in setting up a corporation is strongly advised. The corporation is recognized as a completely separate legal entity from the owners. Because a corporation is a separate legal entity, the owners can implement pension, profit sharing, and other benefit programs as incentives for employees. There are several different types of corporations including C Corporation, S Corporation and Non-Profit Corporation. Depending on the form of incorporation, profits may be taxed twice – once to the corporation and once to the owners as income. Originals of a corporation’s Articles of Incorporation must be filed with the Secretary of State’s office.
A Limited Liability Company (LLC) can provide the liability protection of a corporation and the federal tax benefits of a partnership. It is formed in a similar manner as a corporation, although directors are called managers and shareholders are called members. The name of the company must include the words “Limited,” “LLC” or “Ltd.” In a LLC the individual members or managers are not personally liable for debts, obligations, or liabilities of the company. Articles of Organization must be filed with the Secretary of State’s office.
Before you quit your job or print business cards, it is wise to take stock of personal considerations. Ask yourself:
If the answer to any of these questions is “no,” you may want to focus on some form of self-improvement before proceeding. If most of your answers are ‘yes,’ then it is time to become a realist! Get as much information as you can on the feasibility of your idea and on the real experience of starting and managing any business. You can do this by:
Also, take the time to review the Starting A Business section of our website. Then, contact the DCSBDC.
DCSBDC is a partnership program nationally accredited by the Association of America’s SBDCs and funded in part by the U.S. Small Business Administration, Howard University, with Howard University serving as the network’s headquarters. DCSBDC services are extended to the public on a nondiscriminatory basis. Language assistance services are available for individuals with limited English proficiency.
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