business easy start up

Business Start-Up: The Basics Resource Guide 859.985.3554 2005-2006 Table of Contents I. SBA’s Checklist for Going into Business II. Small Business Assistance in Kentucky III. Business Assistance on the Web IV. Recommended Books for Starting your Business V. Business Legal Organization Options VI. Unconventional Ways of Getting $$$ for Start-Ups VII. 100 Guerilla Marketing Weapons Business Start-Up: Resource Guide 1 INTRODUCTION Owning a business is the dream of many Americans ... starting that business converts your dream into reality. But there is a gap between your dream and reality that can only be filled with careful planning. As a business owner, you will need a plan to avoid pitfalls, to achieve your goals and to build a profitable business. The Checklist for Going into Business is a guide to help you prepare a comprehensive business plan and determine if your idea is feasible, to identify questions and problems you will face in converting your idea into reality and to prepare for starting your business. Operating a successful small business will depend on 3. Do others turn to you for help in making decisions? _____ ____ 4. Do you enjoy competition? _____ _____ 5. Do you have will power and self-discipline? _____ _____ _____ _____ 6. Do you plan ahead? 7. Do you like people? _____ _____ 8. Do you get along well with others? _____ _____ Personal Conditions This next group of questions though brief is vitally important to the success of your plan. It covers the physical emotional and financial strains you will encounter in starting a new business. YES NO - a practical plan with a solid foundation; - dedication and willingness to sacrifice to reach your goal; - technical skills; and - basic knowledge of management, finance, record keeping and market analysis. As a new owner, you will need to master these skills and techniques if your business is to be successful. IDENTIFY YOUR REASONS As a first and often overlooked step, ask yourself why you want to own your own business. Check the reasons that apply to you. YES 1. Are you aware that running your own business may require working 12-16 hours a day six days a week and maybe even Sundays and _____ _____ holidays? 2. Do you have the physical stamina to handle the workload and schedule? 3. Do you have the emotional strength to withstand the strain? 4. Are you prepared if needed to temporarily lower your standard of living until your business is firmly established? 5. Is your family prepared to go along with the strains they too must bear? 6. Are you prepared to lose your savings? PERSONAL SKILLS AND EXPERIENCE _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ 1. Freedom from the 9-5 daily work routine. ______ 2. Being your own boss. ______ 3. Doing what you want when you want to do it. ______ 4. Improving your standard of living. ______ 5. Boredom with your present job. ______ ______ Certain skills and experience are critical to the success of a business. Since it is unlikely that you possess all the skills and experience needed, you will have to hire personnel to supply those you lack. There are some basic and special skills you will need for your particular business. By answering the following questions you can identify the skills you possess and those you lack (your strengths and weaknesses). YES NO 1. Do you know what basic skills you will need in order to have a successful business? 2. Do you possess those skills? 6. Having a product or service for which you feel there is a demand. _____ _____ _____ _____ Some reasons are better than others, none are wrong; however, be aware that there are tradeoffs. For example, you can escape the 9-5 daily routine, but you may replace it with a 6 a.m. to 8 p.m. routine. A SELF-ANALYSIS Going into business requires certain personal characteristics. This portion of the checklist deals with you, the individual. These questions require serious thought. Try to be objective. Remember, it is your future that is at stake! Personal Characteristics YES NO _____ _____ _____ _____ 3. When hiring personnel will you be able to determine if the applicants' skills meet the requirements for the positions you are filling? _____ _____ 4. Have you ever worked in a managerial or supervisory capacity? _____ _____ 5. Have you ever worked in a business similar to the one you want to start? _____ _____ 6. Have you had any business training in school? _____ _____ 1. Are you a leader? 2. Do you like to make your own decisions? Business Start-Up: Resource Guide 2 7. If you discover you don't have the basic skills needed for your business will you be willing to delay your plans until you've acquired the necessary skills? _____ _____ These questions will help you collect the information necessary to analyze your market and determine if your product or service will sell. YES NO 1. Do you know who your customers will be? _____ _____ FINDING A NICHE Small businesses range in size from a manufacturer with many employees and millions of dollars in equipment to the lone window washer with a bucket and a sponge. Obviously the knowledge and skills required for these two extremes are far apart but for success they have one thing in common: each has found a business niche and is filling it. The most critical problems you will face in your early planning will be to find your niche and determine the feasibility of your idea. Get into the right business at the right time is very good advice but following that advice may be difficult. Many entrepreneurs plunge into a business venture so blinded by the dream that they fail to thoroughly evaluate its potential. Before you invest time effort and money the following exercise will help you separate sound ideas from those bearing a high potential for failure. IS YOUR IDEA FEASIBLE? 1. Identify and briefly describe the business you plan to start. _____________________________________________________________________ _____________________________________________________________________ ________________________________ _____________________________________________ 2. Identify the product or service you plan to sell. _____________________________________________________________________ _______________________________________ 2. Do you understand their needs and desires? _____ _____ 3. Do you know where they live? _____ _____ 4. Will you be offering the kind of products or services that they will buy? _____ _____ 5. Will your prices be competitive in quality and value? 6. Will your promotional program be effective? _____ _____ _____ _____ _____ 7. Do you understand how your business compares with your competitors? _____ 8. Will your business be conveniently located for the people you plan to serve? _____ _____ 9. Will there be adequate parking facilities for the people you plan to serve? _____ _____ This brief exercise will give you a good idea of the kind of market planning you need to do. An answer of no indicates a weakness in your plan so do your research until you can answer each question with a yes. PLANNING YOUR START-UP So far this checklist has helped you identify questions and problems you will face converting your idea into reality and determining if your idea is feasible. Through self-analysis you have learned of your personal qualifications and deficiencies and through market analysis you have learned if there is a demand for your product or service. The following questions are grouped according to function. They are designed to help you prepare for "Opening Day." Name and Legal Structure YES NO 1. Have you chosen a name for your business? _____ _____ 2. Have you chosen to operate as sole proprietorship, partnership or corporation? _____ _____ Your Business and the Law A person in business is not expected to be a lawyer but each business owner should have a basic knowledge of laws affecting the business. Here are some of the legal matters you should be acquainted with: YES NO 1. Do you know which licenses and permits you may need to operate your business? _____ _____ 3. Does your product or service satisfy an unfilled need? Yes _____ No _____ 4. Will your product or service serve an existing market in which demand exceeds supply? Yes _____ No _____ 5. Will your product or service be competitive based on its quality, selection, price or location? Yes _____ No _____ Answering yes to any of these questions means you are on the right track; a negative answer means the road ahead could be rough. MARKET ANALYSIS For a small business to be successful the owner must know the market. To learn the market you must analyze it a process that takes time and effort. You don't have to be a trained statistician to analyze the marketplace nor does the analysis have to be costly. Analyzing the market is a way to gather facts about potential customers and to determine the demand for your product or service. The more information you gather the greater your chances of capturing a segment of the market. Know the market before investing your time and money in any business venture. Business Start-Up: Resource Guide 3 2. Do you know the business laws you will have to obey? _____ _____ FINANCES A large number of small businesses fail each year. There are a number of reasons for these failures but one of the main reasons is insufficient funds. Too many entrepreneurs try to start and operate a business without sufficient capital (money). To avoid this dilemma you can review your situation by analyzing these three questions: 1. How much money do you have? 2. How much money will you need to start your business? 3. How much money will you need to stay in business? 3. Do you have a lawyer who can advise you and help you with legal papers? _____ _____ 4. Are you aware of: -Occupational Safety and Health Administration (OSHA) requirements? _____ _____ -Regulations covering hazardous material? _____ _____ -Local ordinances covering signs snow removal etc.? _____ ____ -Federal Tax Code provisions pertaining to small business? _____ _____ -Federal regulations on withholding taxes and Social Security? _____ _____ -State Workmen's Compensation laws? _____ _____ Protecting Your Business It is becoming increasingly important that attention be given to security and insurance protection for your business. There are several areas that should be covered. Have you examined the following categories of risk protection? YES NO -Fire _____ _____ -Theft _____ ____ -Robbery _____ _____ -Vandalism _____ _____ -Accident liability _____ _____ Discuss the types of coverage you will need and make a careful comparison of the rates and coverage with several insurance agents before making a final decision. Business Premises and Location YES NO 1. Have you found a suitable building in a location convenient for your customers? _____ _____ 2. Can the building be modified for your needs at a reasonable cost? _____ _____ 3. Have you considered renting or leasing with an option to buy? _____ ______ 4. Will you have a lawyer check the zoning regulations and lease? _____ _____ Merchandise Use the following chart to answer the first question: CHART 1 PERSONAL FINANCIAL STATEMENT ____________, 20 ___ ASSETS Cash on hand Savings account Stocks, bonds, securities Accounts/notes receivable Real estate Life insurance (cash value) Automobile/other vehicles Other liquid assets TOTAL ASSETS __________ __________ __________ __________ __________ __________ __________ __________ __________ YES NO 1. Have you decided what items you will sell or produce or what service(s) you will provide? _____ _____ 2. Have you made a merchandise plan based upon estimated sales to determine the amount of inventory you will need to control purchases? _____ _____ 3. Have you found reliable suppliers who will assist you in the start-up? _____ _____ 4. Have you compared the prices quality and credit terms of suppliers? _____ _____ Business Records YES NO 1. Are you prepared to maintain complete records of sales income and expenses accounts payable and receivables? _____ _____ 2. Have you determined how to handle payroll records tax reports and payments? _____ _____ 3. Do you know what financial reports should be prepared and how to prepare them? _____ _____ LIABILITIES Accounts payable Notes payable Contracts payable Taxes Real estate loans Other liabilities TOTAL LIABILITIES __________ __________ __________ __________ __________ __________ __________ NET WORTH (Assets minus Liabilities __________ Business Start-Up: Resource Guide 4 Chart 2 will help you answer the second question: How much money will you need to start your business? The chart is for a retail business; items will vary for service construction and manufacturing firms. The answer to the third question (How much money will you need to stay in business?) must be divided into two parts: immediate costs and future costs. Taxes Maintenance Delivery/transportation Miscellaneous __________ __________ __________ __________ CHART 2 - START-UP COST ESTIMATES Decorating, remodeling Fixtures, equipment Installing fixtures, equipment Services, supplies Beginning inventory cost Legal, professional fees Licenses, permits Telephone utility deposits Insurance Signs Advertising for opening Unanticipated expenses TOTAL START-UP COSTS __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ TOTAL EXPENSES __________ Now multiply the total of Chart 3 by three. This is the amount of cash you will need to cover operating expenses for three months. Deposit this amount in a savings account before opening your business. Use it only for those purposes listed in the above chart because this money will ensure that you will be able to continue in business during the crucial early stages. By adding the total start-up costs (Chart 2) to the total expenses for three months (three times the total cost on Chart 3) you can learn what the estimated costs will be to start and operate your business for three months. By subtracting the totals of Charts 2 and 3 from the cash available (Chart 1) you can determine the amount of additional financing you may need if any. Now you will need to estimate your operating expenses for the first year after start-up. Use the Income Projection Statement (Appendix A) for this estimate. The first step in determining your annual expenses is to estimate your sales volume month by month. Be sure to consider seasonal trends that may affect your business. Information on seasonal sales patterns and typical operating ratios can be secured from your trade associations. NOTE: The relationships among amounts of capital that you invest levels of sales each of the cost categories the number of times that you will sell your inventory (turnover) and many other items form financial ratios. These ratios provide you with extremely valuable checkpoints before it's too late to make adjustments. In the reference section of your local library are publications such as The Almanac of Business and Industrial Financial Ratios to compare your performance with that of other similar businesses. For thorough explanations of these ratios and how to use them follow up on the sources of help and information mentioned at the end of this publication.) Next determine the cost of sales. The cost of sales is expressed in dollars. Fill out each month's column in dollars total them in the annual total column and then divide each item into the total net sales to produce the annual percentages. Examples of operating ratios include cost of sales to sales and rent to sales. AFTER START-UP The primary source of revenue in your business will be from sales but your sales will vary from month to month because of seasonal patterns and other factors. It is important to determine if your monthly sales will produce enough income to pay each month's bills. An estimated cash flow projection (Chart 4) will show if the monthly cash balance is going to be subject to such factors as - Failure to recognize seasonal trends; - Excessive cash taken from the business for living expenses; - Too rapid expansion; and - Slow collection of accounts if credit is extended to customers. Use the following chart to build a worksheet to help you with this problem. In this example all sales are made for cash. From the moment the door to your new business opens a certain amount of income will undoubtedly come in. However this income should not be projected in your operating expenses. You will need enough money available to cover costs for at least the first three months of operation. Chart 3 will help you project your operating expenses on a monthly basis. CHART 3 - EXPENSES FOR ONE MONTH Your living costs Employee wages Rent Advertising Supplies Utilities Insurance __________ __________ __________ __________ __________ __________ __________ Business Start-Up: Resource Guide 5 CHART 4 - ESTIMATED CASH FLOW FORECAST Jan Feb Mar Apr May Jun Cash in bank (1st of month ___ ___ ___ ___ ___ ___ ___ Petty cash (1st of month Anticipated cash sales Total receipts ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ Total cash & receipts ___ ___ ___ ___ ___ ___ ___ Disbursements for month (rent, loan payments, utilities, wages, etc. Cash balance (end of month CONCLUSION Beyond a doubt preparing an adequate business plan is the most important step in starting a new business. A comprehensive business plan will be your guide to managing a successful business. The business plan is paramount to your success. It must contain all the pertinent information about your business; it must be well written factual and organized in a logical sequence. Moreover it should not contain any statements that cannot be supported. If you have carefully answered all the questions on this checklist and completed all the worksheets you have seriously thought about your goal. But . . . there may be some things you may feel you need to know more about. Owning and running a business is a continuous learning process. Research your idea and do as much as you can yourself but don't hesitate to seek help from people who can tell you what you need to know. www.sba.gov/starting/checklist.html ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ Business Start-Up: Resource Guide 6 Small Business Assistance in Kentucky Berea College Library- Hutchins Library Berea College www.berea.edu/Library Berea, KY 40404 859.985.3000 Libraries are a free and easy way to conduct research or pick up a book about starting a business. Center for Economic Development, Entrepreneurship and Technology (CEDET) Eastern Kentucky University www.cbt.eku.edu/cedet 521 Lancaster Avenue 859.622.2334 (phone) Richmond, KY 40475 859.622.6274 (fax) The Center for Economic Development, Entrepreneurship and Technology (CEDET), located in EKU's College of Business and Technology, provides assistance to businesses, organizations, industries and communities to aid in their development. CEDET's work involves: new economy, rural business development, strategic planning, grant opportunity identification and writing, partnership and collaboration, meeting facilitation services, and entrepreneurship training. This website contains comprehensive list of web resources for Kentucky entrepreneurs. Kentucky Science and Technology Corporation 200 W. Vine St. www.kstc.com Lexington, KY 40588 859.233.3502 KSTC is an entrepreneurial company dedicated to enhancing the capacity of people, companies and organizations to develop and apply science and technology and compete responsibly in the global marketplace. Kentucky's Small Business Development Centers (KSBDC) University of Kentucky www.ksbdc.org 225 Gatton College of Business and Economics 888.475.SBDC Lexington, KY 40506 859.257.7668 Kentucky's Small Business Development Centers provide the Commonwealth of Kentucky's entrepreneurs and small businesses with the high quality one-on-one management consulting, environmental consulting, educational training, and business resources needed to maximize their growth in today's intensely competitive global economy. With 15 centers located throughout the state, every potential and existing entrepreneur has access to KSBDC's wide range of services. Centers are located in: Bowling Green, Hopkinsville, Owensboro, West Kentucky, Paducah, Greater Louisville, Elizabethtown, Lexington Area, South Central, Ashland, Morehead, Pikeville, Middlesboro, and Northern Kentucky. Lexington United Commerce Lexington www.lexingtonunited.com 330 East Main Street 859.225.5005 (phone) Lexington, KY 40507 859.225.5008 (fax) This organization provides easy-to-use information on setting up licenses and tax forms for your new business. In addition, this resource center provides a start-up packet to assist new entrepreneurs. This is your “first stop” when starting a small business in Kentucky. Madison County Public Library 319 Chestnut St www.madisonlibrary.org Berea, KY 40403 859.986.7112 Libraries are a free and easy way to conduct research or pick up a book about starting a business Business Start-Up: Resource Guide 7 SBA Start-Up Guide www.sba.gov/starting_ business This small business guide is intended to serve as a roadmap for starting a business. It is both comprehensive and easy to use. It also includes numerous electronic links for additional information. Use this powerful interactive tool, with many supporting resources to help you start a successful business. Service Corps of Retired Executives (SCORE) www.score.org E-mail: scorelex @pdgweb.com 859.231.9902 The Service Corps of Retired Executives (SCORE) is a partner of the Small Business Administration (SBA). The program provides immediate counseling via email, monthly highlights and stories, and seminars for new businesses. Lexington SCORE Think Kentucky- Kentucky Cabinet for Economic Development 500 Mero Street www.thinkkentucky.com Capital Plaza Tower 800.626.2930 Frankfort, Kentucky, 40601 502.564.7140 The Kentucky Cabinet for Economic Development will assist you through the maze of business start-up questions. Information is available on the basic federal and state licensing and tax requirements for a new business, as well as where to call to determine what you need at the city and county levels. Also included is a list of agencies and services that provide assistance in the areas of financing, business plan development and marketing, as well as resources that sponsor business workshops to help you. This website provides extensive information on the programs and services available to businesses including existing businesses, newly locating companies, start-ups, small and minority businesses, and many others. U.S. Small Business Administration www.sba.gov 502.582.5761 The U.S. Small Business Administration provides financial, technical, and management assistance to help entrepreneurs start, run, and grow their businesses. Each year the SBA offers management and technical assistance to more than one million small business owners. . Louisville, KY Micro-Enterprise Loans and Loan Programs Community Ventures Corporation (CVC) www.cvcky.org 859.231.0054 (phone) 859.231.0261 (fax) Founded in 1982, Community Ventures Corporation (CVC) is a community-based, non-profit organization that exists to improve the quality of life for urban and rural residents throughout central and northern Kentucky. CVC's central mission is to provide individuals and families with the skills, income, and assets they need to achieve financial independence. Their professional staff of business development specialists assists clients in all phases of business development with lending services and training to both new business owners and existing businesses wishing to expand. CVC has trained over 700 individuals through its business planning courses. 140 are now operating their own businesses in Central Kentucky. 1450 N. Broadway Lexington, KY 40505 Business Start-Up: Resource Guide 8 Kentucky Association of Micro-enterprise Practitioners (KAMEP) Louisville Central Development Corporation www.kamep.org 1407 West Jefferson Street, Suite 200 502.583.8821 (phone) Louisville, KY 40203 502.583.8824 (fax) This organization supports entrepreneurs by facilitating workshops on how to start or grow a business. Kentucky Highlands Investment Corporation (KHIC) London, KY www.khic.org 606.864.5175 This organization supports entrepreneurs by giving information on how to start a business. KHIC was formed in 1968 to stimulate growth and create employment opportunities in a nine-county region of Southeastern Kentucky, which included the counties of Bell, Clay, Clinton, Harlan, Jackson, McCreary, Rockcastle, Wayne and Whitley. MetaCyte Business Lab www.metacyte.biz 502.569.1020 (phone) 502.569.1021 (fax) If you're looking to create a life science or healthcare technology corporation, step into our laboratory. MetaCyte Business Lab can benefit scientists, physicians, inventors and entrepreneurs who are inexperienced at starting and growing a business. We can help you move from the mind to the marketplace 201 E. Jefferson St. Louisville, KY 40202 Mountain Association for Community Economic Development (MACED) www.maced.org 859.986.2373 (phone) 859.986.1299 (fax) MACED has built a large loan fund that finances business start-ups and expansions to create jobs and support local entrepreneurs. In the past 20 years MACED has lent and leveraged over $47.9 million, directly creating 3200 jobs. MACED's Business Development program complements the resources locally owned business’s need to prosper in today's business environment. MACED loan customers are typically unable to obtain sufficient financing from conventional sources but share MACED's commitment to building sustainable and vibrant local economies. MACED offers belowmarket rates and innovative financing options by packaging loans with both public and private sources. By maintaining flexible lending policies, MACED is able to more favorably negotiate interest rates, payment schedules, collateral, and other loan terms. 433 Chestnut Street Berea, KY 40403 Business Licenses Kentucky Secretary of State- One-Stop Business Licensing Program www.sos.state.ky.us/intranet/onestop.asp 502.564.3490 (phone) 502.564.5687 (fax) This site gives licensing information for state licenses only. Federal, city, and county licensing requirements are not included. However, useful links are offered below. 700 Capital Avenue Suite 152 Frankfort, KY 40601 Business Start-Up: Resource Guide 9 Appalachian Nonprofit Appalachian Center of Berea College www.berea.edu/ApCenter E-mail: gordon_mckinney@berea.edu 859.985.3140 (phone) 859.985.3903 (fax) The Appalachian Center, in association with other College departments, coordinates the development of various courses in Appalachian history, sociology, economics, literature, music and other subjects. Courses are taught in Appalachian culture and advice is provided for students who wish to study or pursue an independent major in Appalachian Studies. The center is also a non-profit that gives concentrated leadership to Berea's Appalachian workers to stimulate student and scholarly interest, bring together existing outreach programs, and serve the nation as a source of information about the Appalachian region. Berea College CPO 2166 Berea, KY 40404 Appalachian Center of the University of Kentucky 624 Maxwelton Ct. www.uky.edu/RGS/AppalCenter Lexington, KY 40506 859.257.4852 (phone) The Appalachian Center cooperates with government, nonprofit, and educational organizations to work for a positive, equitable, sustainable future in Appalachian communities. The Center coordinated the Kentucky Appalachian Task Force in 1994, which led to the creation of the Kentucky Appalachian Commission. The Center serves as a resource for policy makers, community leaders, and citizens concerned with the social, economic, and environmental health of the region Appalachian Regional Commission (ARC) 1666 Connecticut Avenue, NW www.arc.gov Suite 700 E-mail: info@arc.gov Washington, DC 20009 202.884.7799 (phone) The Appalachian Regional Commission's mission is to be an advocate for and partner with the people of Appalachia to create opportunities for selfsustaining economic development and improved quality of life. The Appalachian Regional Commission was established by Congress in 1965 to support economic and social development in the Appalachian Region. Bluegrass Tomorrow 100 East Vine Street, www.bluegrasstomorrow.org Suite 701 859.977.3792 (phone) Lexington, KY 40507 859.977.3795 (fax) Bluegrass Tomorrow is central Kentucky's regional planning organization. This regional coalition of business, farming, development and preservation groups are dedicated to promoting coordinated growth and preservation planning for the seven-county central Bluegrass region of Kentucky. Our goal is to maintain the highest quality of life and economic vitality that distinguishes the Bluegrass region. Brushy Fork Institute Berea College CPO 2164 Berea, KY 40404 www.berea.edu/BrushyFork E-mail tina_collins@berea.edu 859.985.3858 (phone) 859.985.3903 (fax) Since 1988, Brushy Fork Institute has worked to develop strong leadership in Appalachian communities throughout Kentucky, Tennessee, Virginia, and West Virginia. An outreach program of Berea College, the Institute offers leadership training, organizational development workshops and technical assistance to communities working for a better tomorrow. Business Start-Up: Resource Guide 10 Center for Rural Development 2292 South Highway 27 www.centertech.com Suite 300 606.677.6000 (phone) Somerset, KY 42501 606.677.6010 (fax) The Center for Rural Development is a non-profit organization whose primary mission is that no young person will need to leave home to find his or her future. Covering a forty-two county service area in Southern and Eastern Kentucky, the center strives to improve the quality of life for this region. In today's fast-paced and changing world, The Center for Rural Development has a plan for success. The center serves rural Kentucky through a variety of development programs including planning, training, cultural events and telecommunications technology and by providing meeting/convention space. This holistic approach to development offers rural Kentuckians the tools needed to be successful in the modern age. Madison E-Zone 535 Madison Avenue www.madisone-zone.com Covington, KY 41011 859.292.8444 A non-profit corporation, Madison E-Zone operates a rapid business accelerator in Northern Kentucky to attract and serve start-up, emerging and existing high technology businesses. The E-Zone seeks to enrich and strengthen the technology community in Northern Kentucky and the region as a whole by creating opportunities for technological innovation and economic development. Madison E-Zone has been declared the Regional Innovation and Commercialization Center (ICC) for Northern Kentucky by the state of Kentucky. Census/ Demographic Information Kentucky Census Data Kentucky State Data Center ksdc.louisville.edu/1census.htm Urban Studies Institute 502.852.7990 (phone) 426 W. Bloom St. 502.852.7386 (fax) Louisville, KY 40208 U.S. Census 2000 Census information for the state of Kentucky to help you understand the demographics of your market. Chamber of Commerce Bell County Chamber of Commerce www.bellcountyworks.com E-mail: Chamber@BellCountyWorks.com 606.248.1075 (phone) 606.248.8851 (fax) They have compiled a clearinghouse with the latest information available about business opportunities in Bell County and Kentucky. P.O Box 788 Middlesboro, KY 40965 Berea Kentucky Chamber of Commerce chamber.berea.com Email: bereachamber@berea.com 859.986.9760 (phone) The mission of the Berea Chamber is to preserve a strong sense of community and to provide leadership, enhance communication and collaboration, and promote prosperity in the Berea area. Seminars on marketing, human resources, taxes, finances, government regulations and other topics are offered on a regular basis. Most of our guest speakers focus on the small business interest. 926 W. Jefferson St Berea, KY 40403 Business Start-Up: Resource Guide 11 Kentucky Chamber www.kychamber.com E-mail kcc@kychamber.com 502.695.4700 (phone) The chamber provides thousands of members with services that help businesses grow and thrive. These services are wide ranging and ever changing to meet Kentucky's complex business needs: legislative representation, timely news and relevant information, and unparalleled business resources 464 Chenault Road Frankfort, KY 40601 Richmond Chamber of Commerce www.richmondchamber.com E-mail rchamber@richmondchamber.com 859.623.1720 (phone) 859.623.0839 (fax) Seminars and workshops on marketing, human resources finance, taxes, technology and so much more are offered on a regular basis. Our monthly luncheon speaker or panel discussion is always focused on business issues relating to economic development. 201 East Main Street Richmond, KY 40475 Business Start-Up: Resource Guide 12 Business Assistance on the Web General Business Assistance Name of Resource About.com Description / Website address This is a very friendly site that is pleasing to the eye as well. With a straightforward layout, your search becomes easy. www.entrepreneurs.about.com/mbody.htm Through the web site, entrepreneurs are able to access a comprehensive set of information, tools, and services to start and grow a business. www.allbusiness.com Everything you need to start a business from entry strategies to marketing. www.entreworld.org An invaluable general-purpose site with a wealth of articles and information for the small business owner. www.inc.com This is another comprehensive website that offers significant resources for the entrepreneur. www.morebusiness.com AllBusiness.com Entreworld Inc. More Business Marketing, Sales and Business Plans Name of Resource About.com BizPlanIt Description / Website address Subject specific guides to various elements of the marketing function. www.entrepreneurs.about.com/cs/marketing/ Provides free business plan information, articles, links, local and regional business information centers and a library of the most useful business sites. www.bizplant.com BusinessTown.com Inc. Magazine Marketing Power.com (American Marketing Association) Advice on creating a business plan that will take your company to the next level www.businesstown.com/ Visit their website for some useful online advice and training on various topics. www.inc.com This is a very useful site managed by the American Marketing Association. You will need to register and this gives you access to valuable resources, including tutorials for various aspects of marketing.www.marketingpower.com Business Start-Up: Resource Guide 13 Financial Management & Venture Capital Name of Resource About.com Description / Website address This site offers guidance on fund raising for a start up. www.entrepreneurs.about.com/cs/fundingresources/ This site offers guidance on various aspects of financial management of the entrepreneurial venture. www.entrepreneurs.about.com/cs/financialmgmt/ A site that claims to bring entrepreneurs and investors together. www.thecapitalnetwork.com This is a venture capital firm whose website has useful resources for entrepreneurs. www.www.draperatlantic.com/toolbox_resources.html This site focuses on the ways and means of rising private funding for a start up. www.regdresources.com Once again a versatile site with information on business plan services, marketing and market research and funding resource services. www.businessplanfunding.com Capital Network Inc. Draper Atlantic Regulation D. Resources Venture Capital Consultants Government Resources Name of Resource Library of Congress Service Corps of Retired Executives (SCORE) Small Business Administration Description/ Website address Website that enables you to search the entire library. www.loc.gov Partner of the Small Business Administration. The program provides immediate counseling via email, monthly highlights, and stories, and connections to other useful websites. www.score.org Small Business Administration is an organization providing information about starting, financing and expanding small businesses, including links to government offices. www.sba.gov This is a website committed to taxes, taxes and more taxes. www.irs.ustreas.gov US Internal Revenue Service Business Start-Up: Resource Guide 14 Legal Resources Name of Resource Mycounsel.com Description/ Website address Provides legal information for small businesses. Also inquire about insurance, business plans, financing and employment law. www.mycounsel.com This is a very useful website for entrepreneurs seeking patent information, articles, legal services and hints for small business creation. www.nolo.com The Business Law Lounge is a website dedicated to supplying current information on legal matters, receiving business credit, and more. www.lectlaw.com NOLO The Business Law Lounge Copyrights and Patents Name of Resource American Bar Association Patent Overview Delphion: Intellectual Property Network InventNET Description/ Website address Good description of the patent process in clearer terms than the US Patent Office. www.abanet.org/intelprop/comm106/106general.html Allows you to perform patent searches and research easily. www.delphion.com Network for inventors that provide practical information regarding patenting and a question and answer forum. www.InventNET.com Find information on patent and trademark terms, laws, online applications and more. www.uspto.gov US Patent and Trademark Office Business Start-Up: Resource Guide 15 Recommended Books for Starting Your Business Title Planning and Growing A Business Small Business Advisor Entrepreneurship: Contemporary Approach The E-myth Revisited Guerrilla Marketing New Conceptual Selling Author/ Publisher Fast Track and Kauffman Center for Entrepreneurial Leadership. Entrepreneur Magazine Staff. Wiley, John & Sons, Inc. Richard Hodgetts & Donald Kuratko. South-Western Publishing Michael E. Gerber. HarperBusiness Jay Conrad Levinson. Houghton Mifflin Company Stephen E. Heiman &Diane Sanchez. Warner Books Sam Hill & Glenn Rifkin. Harper Collins Bruce Blechman & Jay Levinson. Houghton Mifflin Company Mark Van Osnabrugge & R.J. Robinson. Thomas Nelson Description Great resource for starting your own business and writing a business plan. Textbooks are available for loan by the Entrepreneurship for the Public Good program. Complete guide for starting a business. From finding the right location to understanding your financials, this book is a great start for aspiring entrepreneurs. This book contains tools and concepts entrepreneurs need to know prior to and while taking the start-up plunge. This book is used in entrepreneurship courses. Walks you through the steps of the life of a business- from entrepreneurial infancy through growing pains. Teaches the entrepreneur how to systematize every part of business. Combines numerous guerrilla marketing tactics with real-life examples and applications. This book focuses on achieving long-term success in sales via a customer-driven model. The book contains many “personal workshops” to better focus on the reader’s particular situation. Learn unique, fun, & low-cost marketing strategies based on research from successful entrepreneurs. Offers creative, nontraditional financing techniques for raising capital. Angel Investing is a guide to help entrepreneurs seek out and attain potential sources of funding. Radical Marketing Guerrilla Financing Angel Investing Business Start-Up: Resource Guide 16 Business Legal Organization Options Type of Organization Sole Proprietorship Description of Organization Simplest form of business. No existence apart from you the owner. Business liabilities are your liabilities (both personal and business). Two or more individuals own the business. Each partner contributes time, money, property, labor or skill. All partners are liable for business debts and to a certain point, liable for certain acts of the partner. Each partner can incur debt, sign contracts and make business obligations. Recommend legal partnership agreement through an attorney. Have one or more general partners responsible for managing the business and liable for total debts incurred. Cost of Establishing Cost varies at county level Where to File Business Name File Assumed Name with County Clerk where business is conducted or transacted. 1. Kentucky Secretary of State and County Clerk if operating under an assumed name 2. Federal Employer Identification Number (EIN) Taxes Profit or loss on personal income tax Necessary to file a Partnership Return that includes the EIN (each partner files an individual return) Partnership General 1.Varies (may have legal fees if using an attorney) 2. $20 to file Assumed Name Certificate Partnership Limited Corporation General Life separate from owners and has rights and duties of its own Owned by stockholders, but not necessarily managed by a stockholder. Liable for its own debts and taxes. As a general rule, can distribute or retain income. No forms provided for drawing up Articles of Incorporation in Kentucky. Wise to Consult an attorney and/or accountant before incorporating. The Kentucky Limited Liability Company is a structure that combines the principle business advantages of a corporation with the income tax treatment of a partnership. Limited Liability Company (LLC) 1. $40 domestic; $60 foreign, to file as a Limited Partnership with the Sec. of State. 2. $20 for Assumed Name Filing 3.Cost varies at County level Varies (usually requires an attorney to write Articles of Incorporation). 1. $40 filing fee for Articles of Incorporation with Secretary of State plus organizational tax (minimum fee 1,000 shares or less is $50). 2. $20 Assumed Name filing. 3. $15 Annual Report fee with Secretary of State 40 filing fee for Articles of Organization 1. $20 for Assumed Name filing 2. $15 Annual Report fee with the Secretary of State. Same as General Corporation 1. Same as General Partnership for Assumed Name filing 2. Must have an EIN number 3. Draft "Certificate of Limited Partnership" 1. Secretary of State. 2. County Clerk 3.IRS Employers Identification Number. 4. State Revenue Cabinet Withholding, Corporation Income License & Tax. 5. May require Unemployment Insurance. 6. Workers Compensation (may be required for stockholders). 7.Other depending on type of business involvement Secretary of State and County Clerk. Same as General Partnership 4.File "Limited Partnership Certificate" with Secretary of State 1) Required filing of separate return 2) Corporation taxed on different tax scale from personal taxes. S Corporation (Small Business Corporation) Basically a small business corporation formed the same as a regular corporation advantage to an S Corporation status rather than General Corporation is that it: 1.Is taxed in a manner similar to that of a General Partnership 2. Provides the same protection to the individual stockholders as a General Corporation 3. Is formed the same as a General Corporation. Same as General Corporation (except the S Corporation election must be filed with the IRS. Organizational structure of the LLC determines its income tax status. A. If LLC resembles a partnership; it will be taxed as a partnership. B. If favors a corp.; it will be taxed as a corp. Corporation usually pays no taxes itself, because earnings are divided among the shareholders. Structuring your Kentucky Business, Kentucky Chamber for Economic Development www.thinkkentucky.com Business Start-Up: Resource Guide 17 Getting Money For Start-ups When You Can’t Attract Conventional Sources of Funding 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Barter Financing – Think about what you need the money for and try to barter it. Landlord Financing – Landlords are ripe for lending or investing in your business. Contract Financing – This technique requires the customer or client to prepay for services, using an agreement upon contract. Other People’s Credit – If you need capital because you have no credit, why not rent someone else’s credit. Concession Sales – Selling space to other vendors in your own retail store is an excellent way to raise small amounts of capital. Future Commitments – You can raise money based on commitments from your customers. Manufacturer’s Outlet – The manufacturer gains an advantage by getting his or her product onto the market for demonstration purposes. Dealer’s Outlet – Use the facilities of a local retailer in exchange for providing services to the retailer. Buy Instead of Starting a Business – It is easier to get financing on an existing business than it is on a start-up. Lease Space at Your Competitor’s – Lease space from a competitor who has too much room. Work Out Of Your Home – Take advantage of the tax deductions. Incubators – The incubator consists of putting a number of small businesses under one roof and providing lots of auxiliary services to support these companies. Tenant Partnerships – Bring all necessary subcontractors together under one roof and share facilities, maybe even form a partnership. Equity Sharing – You can use the principle of equity sharing for any business that requires real estate. Just get investors to put the down payment on the real estate for part of the property. Staged Financing – Raise capital for each stage or milestone in the development of your business. Three Sources for Small Unsecured Loans – credit unions, credit cards, and thrifts. Pyramid Your Credit – Take out $3,000 30-day loan form one bank and deposit in another bank in an interest bearing account. In 25 days, withdraw it form the second bank and pay off the loan to the first bank. Then wait a few weeks and go back to the first bank and ask for a $4,000 30-day loan. Seller Financing/Earn out – How can you easily raise money for a business? Buy one. Why? Because the seller will usually finance most of the purchase price. Leveraged Buyout – Use the same tactics the big boys use, purchase the company using its own assets to secure loans that are used to pay the seller. Assume Liabilities – Get the seller to accept your offer to assume the liabilities as part of the purchase price. Broker’s Commission – Have the broker leave his commission in as a liability to you. Seller Assumes the Receivables – Arrange for the seller to keep the receivables and reduce the price accordingly. Offer Less Than 100% - Once you have bought the business and assumed the liabilities, a good financing technique is to offer the creditors something less than 100%. Use Cash Flow for a Down Payment – Sellers are sometimes willing to wait for their down payment. Determine the net cash flow generated by the business over the first several weeks by calculating the difference between cash receipts and what must be paid out. The Escrow Method – With the aid of a good attorney, you can insist that the down payment be held, not cashed, by the escrow officer until certain conditions have been satisfied. Option Financing or Lease Purchase – Some sellers will allow you to lease their business with an option to buy. Partners with The Seller/Lease Part of The Business – There are times that you can get the seller of a business to take you in as partner until you find the money for the credit or buyer the entire business. Similar Buyers – Contact the sales representative for the franchisor and ask for a list of other people like you who want to buy a franchise or ask the seller for a list of people who wanted to buy the business but can’t come up with the cash. Supply-side Financing – Suppliers and vendors can be excellent sources of capital in many ingenious ways. Inventor/Supplier Financing – Use inventory for improving your cash flow. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Business Start-Up: Resource Guide 18 31. Customer Financing – Customers can also be an excellent source of financing. 32. Advance Payments/Anticipation – Another method for getting money form your customer is to ask for money before shipment. 33. Private Flooring of Inventory – When banks put up the money to finance durable good inventories such as cars, refrigerators, and TV’s, it is called flooring. 34. Royalties 35. Licensing – Distributor licensing is a popular way to sell partial rights to your product or service. 36. Franchising – Why not become a franchisor to raise capital? 37. Timesharing – Turning idle equipment, excess space or anything you are not using all the time into dollars is what this concept is all about. 38. Sublease – Sublease part of the building and ask for several months’ rent in advance. 39. Advertising Space – If you won property that many people see daily, you can raise capital by renting space for advertising and display. 40. Pre-selling/Paid Subscriptions/Advance Bookings – You can sell just about anything in advance or get advance subscriptions. 41. Direct Response/Pre-selling – There is no end to the products or services you can sell for capital to get your company off the ground. 42. Coupon Pre-selling – You can practically sell anything using coupons. 43. Prepaid Subscriptions – Think of all the companies that use this method of financing: Book of The Month, Fruit of The Month, plus all the direct mail order offers of special editions. 44. Deposits – This one more form of selling in advance. Ask for a deposit or down payment with an order. 45. Improved Collection Procedures – Bill customers quickly, set a definite written policy for handling past-due accounts, establish penalties for late payment, contact past-due accounts by telephone immediately, set up your collection procedures according to the customer, determine how you will handle bad debts and customer disputes, and delegate responsibilities. 46. Shoestring Economics – Lean heavily on suppliers for credit, buy all equipment and fixtures at foreclosure sales, or from classified bargains, use seconds as inventory, sell consignment merchandise, and barter for services. 47. Rent it – You can literally rent everything you need to start a business. 48. Subcontractors – Let someone else do it, make it, deliver it, even sell it. 49. Competitors – Getting money, products, or services from your competitors can work under certain circumstances, for instance being a subcontractor to your competitor. 50. Charity – They say you can’t get something for nothing, but that’s not true. Source: B. Blechman and J.C. Levinson (1991), Guerrilla Financing, Boston: Houghton Mifflin. Business Start-Up: Resource Guide 19 By: Jay Conrad Levinson 100 Marketing Weapons These guerrilla marketing weapons should all be considered for promoting your product, service or website offline. Notice how more than half of them are free. 51. Neatness 1. Marketing plan 52. Referral program 2. Marketing calendar 53. Sharing with peers 3. Niche/positioning 54. Guarantee 4. Name of company 55. Telemarketing 5. Identity 56. Gift certificates 6. Logo 57. Brochures 7. Theme 58. Electronic brochures 8. Stationery 59. Location 9. Business card 60. Advertising 10. Signs inside 61. Sales training 11. Signs outside 62. Networking 12. Hours of operation 63. Quality 13. Days of operation 64. Reprints and blow-ups 14. Window display 65. Flipcharts 15. Flexibility 66. Opportunities to upgrade 16. Word-of-mouth 67. Contests/sweepstakes 17. Community involvement 68. Online marketing 18. Barter 69. Classified advertising 19. Club/Association memberships 70. Newspaper ads 20. Partial payment plans 71. Magazine ads 21. Cause-related marketing 72. Radio spots 22. Telephone demeanor 73. TV spots 23. Toll free phone number 74. Infomercials 24. Free consultations 75. Movie ads 25. Free seminars and clinics 76. Direct mail letters 26. Free demonstrations 77. Direct mail postcards 27. Free samples 78. Postcard decks 28. Giver vs. taker stance 79. Posters 29. Fusion marketing 80. Fax-on-demand 30. Marketing on telephone hold 81. Special events 31. Success stories 82.Show display 32. Employee attire 83. Audio-visual aids 33. Service 84. Spare time 34. Follow-up 85. Prospect mailing lists 35. Yourself and your employees 86. Research studies 36. Gifts and ad specialties 87. Competitive advantages 37. Catalog 88. Marketing insight 38. Yellow Pages ads 89. Speed 39. Column in a publication 90. Testimonials 40. Article in a publication 91. Reputation 41. Speaker at any club 92. Enthusiasm & passion 42. Newsletter 93. Credibility 43. All your audiences 94. Spying on yourself and others 44. Benefits list 95. Being easy to do business with 45. Computer 96. Brand name awareness 46. Selection 97. Designated guerilla 47. Contact time with customer 98. Customer mailing list 48. How you say hello/goodbye 99. Competitiveness 49. Public relations 100. Satisfied customers 50. Media contacts Guerrilla Marketing Coach www.gmarketingcoach.com/weapons.htm Business Start-Up: Resource Guide 20