Questions
- I’m not sure what kind of business I want to
start. What business should I choose?
- What is a business plan and why do I need one?
- Where and how do I get the money to start my
business?
- How much money do I need to get started?
- What kind of licenses and permits will I need?
- I don’t know how to do projected financial
statements for my business. How do I get started?
- How do I find out about
suppliers/manufacturers/distributors?
- What tax obligations will my small business have?
- Are there any grants available for my small
business?
- What form of business ownership is best for a new
business?
Question
I’m not sure what kind of business I want to start. What business
should I choose?
Answer
Usually, the best business idea for you is the one that you have
the most interest in and the one you have experience in. For example, if
you were going to start a successful restaurant, you would more than
likely enjoy cooking and serving people good food, and you’d have some
experience in actually running a restaurant. A thorough study of the
market in which you plan to operate and an understanding of the growth
potential and trends for businesses in your area are necessary steps in
selecting your business idea.
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Question
What is a business plan and
why do I need one?
Answer
A business plan provides a detailed description of your business,
helps you define what business you are really in, identifies your goals,
and serves as a roadmap for your business. It can help you avoid
unforseen problems, properly allocate resources, and help you make good
business decisions. A well-written business plan will include
information on how you will market the business, who the owners/managers
are and their relevant experience, current and projected income
statements, balance sheets, and cash flow statements. The business plan
is a critical component of any loan package in the event you want to
borrow money to start your business. It communicates to lenders,
suppliers, sales personnel, and others about your operations and goals.
The Small Business Center will not write your business plan for you, but
will help you understand how to write the plan and give you feedback
about the plan.
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Question
Where and how do I get the money to start my business?
Answer
Most new small businesses are capitalized by their owner’s savings
and salaries, loans from family and friends and loans using automobiles,
homes, or other assets as collateral. Some entrepreneurs use credit
cards to finance the early months of start-up but this alternative can
be costly and risky. Banks are the traditional source of borrowed funds.
Commercial finance companies, venture capital firms, trade credit, cash
value of life insurance policies, equipment leasing, and selling stock
are additional sources of financing for your venture. The Small Business
Administration (SBA) offers a number of financing alternatives, but is
most well known for its 7A Guarantee Loan. Another great SBA loan
product is the Community Express Loan. Lenders will want to know
how you will use the loan; how much you want to borrow; and how you will
repay the loan. A well-written business plan with projected financial
statements can communicate your ideas and needs to potential lenders and
investors.
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Question
How much money do I need to
get started?
Answer
Careful consideration should be given to accurately calculating
your start-up costs because one of the leading causes of business
failure is insufficient start-up capital. In calculating your start-up
costs, you should consider the cost of land and building, if you intend
to purchase, or the rent you will pay, if you intend to lease a place to
open your business. You should include enough money to cover your
salary, operating expenses, and money to repay your loans. Contact the
Small Business Center for help in getting started.
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Question
What kind of licenses and
permits will I need?
Answer
The licensing and permits needed by your business will vary
depending on the nature of your business idea and where it will be
located. You must contact federal, state, and local municipalities to
determine what is required specifically for your business. For
businesses in Cumberland County, contact the State’s Business License
Information Office at 1-800-228-8443. You should also contact the city,
the county, and the N.C. Department of Revenue. Contact the Small
Business Center for a complete listing. Check with the city and county
for questions related to zoning issues. Also, if you will hire
employees, incorporate, or form a partnership you will need an Employer
Identification Code. A North Carolina State Tax Payer Identification
Number is also required if your business involves retail sales. Register
your business name with the Cumberland County Register of Deeds.
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Question
I don’t know how to do projected financial statements for my
business. How do I get started?
Answer
The Small Business Center can provide you with helpful
information, computer templates, and worksheets to help you get started.
Trade associations can be a good source of information for
industry-specific information. You can also check several sources in
your library for information on industry standards and averages. Your
accountant can also be an excellent source of professional assistance
when preparing projected financial statements.
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Question
How do I find out about
suppliers/manufacturers/distributors?
Answer
A good way to learn about suppliers is by searching the Internet
and researching the information in the Thomas Register, found in the
reference section of most libraries. Most manufacturers will be happy to
provide you with the name of local distributors of their product. Trade
shows are another good way to learn about suppliers.
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Question
What tax obligations will
my small business have?
Answer
Your business tax obligations will vary depending on whether you
hire employees, how your business is legally organized (sole proprietor,
partnership, corporation, S corporation, LLC, etc.), and the nature of
the business you conduct. To learn about your specific business tax
obligations, contact the Internal Revenue Service to get Publication
334, Tax Guide for Small Business. Contacting an accountant in the
start-up phase of your business can help you save time and money and
avoid complications of tax pitfalls later.
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Question
Are there any grants
available for my small business?
Answer
There is a tremendous amount of misinformation about grants for
small businesses. Generally speaking, it is rare for a small business to
get a grant for start-up. Some exceptions exist if your business
fulfills a need by agencies or departments of the federal government or
the Department of Defense. Nonprofit organizations that are organized
for charitable purposes often seek grants from charitable foundations.
You should seek the advice of an attorney and/or a CPA if you are
interested in forming a nonprofit corporation.
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Question
What form of business
ownership is best for a new business?
Answer
The form of business organization you choose will depend on a
variety of factors including your financial condition, the type of
business you plan to start, the number of employees you will hire, the
amount of risk involved, and your tax situation. You can learn more
about each form of business ownership—sole proprietorship, partnership,
corporation (C, S, and nonprofit), and limited liability company at the
North Carolina Secretary of State’s Corporations Division website listed
below.
www.secretary.state.nc.us/corporations/
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