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New to Business Guide |
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Initial Business Steps |
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In this Section
Evaluating Your Chance for Success Once you've decided you have the right stuff to be an entrepreneur, you're ready to determine if your business idea has the right stuff. Before you pump your life savings into a small business, you want to know if it has a chance to succeed. Here's a look at the prime considerations for determining if your business idea has a chance to succeed: Market assessment -- is there a market for your product or service? If so, how much income can you expect to derive from it? Profitability assessment -- how much will starting a new business cost you? Can you afford a lengthy "red ink" period following startup as well as periodic lulls in cash flow? Can you afford to fail? Financing assessment -- will you be able to obtain the necessary financing for your business? If so, from where? Legal assessment -- what potential legal liabilities are you exposing yourself to by starting a new business? Are the costs of protecting yourself worth the trouble? Researching your industry -- how can you learn more about your chosen industry and about the resources that are available to help you? Do You Have the Right Stuff? If asked whether they had the "right stuff" to run a small business, most people who are interested in starting a new business would answer with a resounding "yes." But, the purpose of this section is not to arrive at a yes or a no answer. It's really to help you evaluate your strengths and weaknesses so you'll be in a better position to make certain decisions that you'll have to make before you start a new small business. For example, should you take on partners? Should you hire an accountant or a lawyer? Should you hire a store manager if you're opening a retail business? Should you work from home? Your answer to these questions and many others will, in large part, depend, upon which skills you have and which skills you lack. The first step is assessing your strengths and weaknesses. The second step is looking at the personality traits of a successful owner. The third step is comparing the two lists and deciding what to do. If you already feel that you know your strengths and weaknesses, you can move straight to evaluating your chances for success, which is an evaluation of your business idea, as opposed to an evaluation of yourself. Assessing Your Strengths Successful small business owners know their own strengths and weaknesses. They build their businesses around their strengths, and they compensate for their weaknesses. If you're to succeed, you'll have to be able to identify what you do well and what you don't do so well. As you evaluate yourself, be honest. You'll only hurt yourself if you're not. Also, don't panic if you discover that you have weaknesses. Every small business owner has them. The key to success is not so much in having every skill (although that would help), as it is in finding ways to compensate for the weaknesses. Strengths and Weaknesses Checklist The checklist below help you rate yourself and give you some feedback about whether you're ready to start your own business. You're in effect making a list of what you like to do and what you don't like to do. Generally, we like doing things we're good at, and we don't like doing things we're not good at. It's a simple approach, but it should help you start to focus. Examine each of the skills areas listed in the chart. Ask yourself whether you possess some or all of the skills listed. Then rate your skills in each area by circling the appropriate number, using a scale of 1-5, with 1 as low, 2 as between low and medium, 3 as medium, 4 as between medium and high, and 5 as high. Sales, pricing, buying, sales planning, negotiating, direct selling to buyers, customer service, follow-up, managing other sales reps, tracking competitors 1 2 3 4 5 Marketing, advertising/promotion/public relations, annual marketing plans, media planning and buying, advertising, copy writing, marketing strategies, distribution, channel planning, pricing, packaging 1 2 3 4 5 Financial planning, cash flow planning, monthly financial, bank relationships, management of credit lines 1 2 3 4 5 Accounting/bookkeeping, billing, payables, receivables, monthly profit and loss statements, balance sheets, quarterly/annual tax preparation 1 2 3 4 5 Administrative scheduling, payroll handling, benefits administration 1 2 3 4 5 Personnel management, hiring employees, firing employee, motivating employees, general management skills 1 2 3 4 5 Personal business skills, oral presentation skills, written communication skills, computer skills word processing skills, fax/e-mail experience, organizational skills 1 2 3 4 5 Intangibles -- ability to work long and hard, ability to manage risk and stress, family support, ability to deal with failure, ability to work alone, ability to work with and manage others 1 2 3 4 5 Total ______________ After you've rated yourself in each area, total up the numbers. Then apply the following rating scale:
Essential Qualities for Owners You can be successful even if you don't possess every skill needed to run a small business. There are, however, certain qualities that you should possess if you're to be successful. Let's take a look at them. Willingness to sacrifice -- you must be willing to accept the fact that, as a small business owner you are the last one to be paid. Your bank, your vendors, and your employees are all in line ahead of you and must be paid before you see any of the money. You must also be willing to sacrifice much of what once was your free time to your business. If you like working nine-to-five, knowing how much you'll make, and taking three weeks of vacation every year, don't go into business for yourself. Strong interpersonal skills -- if you thought that getting along with your boss was tough, wait until you have to deal with suppliers, customers, employees, lawyers, accountants, government officials, and everybody in between. Successful owners are able to work with all personality types, and they're able to find out from their customers what they like and don't like. Strong leadership skills -- successful owners understand that others are looking to them to be led to the Promised Land. Others will be looking to you for answers, and if you're not ready for that responsibility, you probably shouldn't own your own business. Strong organizational skills -- successful owners are able to keep track of everything that's going on in their business and they're able to set priorities and get things done. They know that if they lose track of what's going on, they're sunk. Intelligence -- we're not talking about the ability to score well on standardized tests. We're talking more about "street smarts" and common sense. Successful owners are able to anticipate problems before they arise and to take preemptive steps to avoid them, and they know how to solve crises after they occur. Management ability -- small business is all about managing relationships with your customers or clients, with your employees, with your suppliers, with your accountant and lawyer, with your banker, and with your family. If you don't think you can effectively manage those relationships, you shouldn't start a new business. Business experience -- without some solid business experience, you're probably not going to be able to borrow any money. Your banker will want to know about your experience, not just in business but in the same field as the business you're hoping to start. If you lack the experience, get it any way you can -- volunteer at an existing business or try to get a part-time or weekend job in the field. Optimism -- how will you react when business isn't going as well as your expected? A pessimist may fold the tent, but an optimist who believes in the business will keep going. Successful owners are optimists who are able to weather the rough spots. Although the qualities listed above are important to a small business' success, particularly to one just starting out, not every single owner of every single successful business has had every single one of the desired qualities. This suggests there's hope for those who don't possess every quality. Maybe one of these categories applies to you: The unique idea -- if you've built a better mousetrap, they'll beat a path to your door, even if you're a poorly organized pessimistic misanthrope. The genius -- if you possess the gift of greatness, they'll not only overlook your weaknesses, they'll revel in them. Blind luck -- the Small Business Hall of Fame contains more than a few stories of people who backed into success because of their incredibly good timing. Now that you've taken a look at your strengths and weaknesses, you can consider how to compensate for weaknesses. Compensating for Weaknesses At this point, you should have looked at your own strengths and weaknesses and judged for yourself whether you're ready to start a small business. You should also have compared those strengths and weaknesses with the traits you'll need to have if you're to be successful. The next step is to figure out what to do if you don't yet possess all of those traits. If you discover that you don't have all of the traits you need to succeed, don't despair. You have options, including: hiring someone who can handle those tasks you may not be good at, partnering with someone who has the traits or skills you lack, or developing those traits or skills yourself. Refer back to the list of items you don't like to do (if you haven't made out your list yet, see "Assessing Your Strengths".) Ask yourself if you can pay someone else to perform them. For example, if you don't like to sell, you can hire a salesperson; or if you don't like to do accounting work, you can hire an accountant. Down the road, as you get further along in setting up your new business, you may determine that the convenience of paying someone else to do the work is outweighed by the costs. But for now, all you have to do is identify whether someone else could do the work for you. Now look again at the list of items you don't like to do. If your list includes items that you can't hire someone else to do, such as working with others, the solution is not so easy. Your best bet may be to partner up with someone whose skills complements yours. For example, a person who likes working with people but not with numbers and forms may be a good match for someone who likes working with numbers but not with people. Finding a good partner can be difficult. Most people partner up with those they know best, such as friends and family. But be aware that partnering with those you know best doesn't always work. Some marriages and friendships have been ruined by business partnerships while others have been enriched by them. Finding a partner through others means, such as through a business association, is even more tenuous. The best advice is to be careful. Make sure you're a good match before you go into business together. Developing the Skills Yourself. There are at least three ways to do this. The first is by trial and error. In other words, you'll develop the skills over time by learning from your mistakes. The downside to this approach is that most small businesses won't give you much time or allow you to make many mistakes. If you benefit from trial and error, it'll usually be with the third or fourth new business you start. The second method is to take classes at a local business school. While classes may offer a wealth of valuable information, they are usually expensive, they often take a long time to complete, and they normally don't offer much in terms of real-world experience. The third method, using a small business incubator to help you get started, is probably the most effective. Incubators are programs that provide you with hands-on advice, as well as office space and access to office equipment and supplies. They're usually sponsored by federal or local governments, but there are some private ones as well. There are so many of these incubators that, chances are, one is near you. For more information and the location of the incubator nearest you, call the National Business Incubation Association at 614-593-4331 or the Small Business Administration at 1-800-827-5722. Return to Table of Contents for this guide | Return to index of all guides | Return to the top of this page Create A Business Planning Roadmap In business planning, the two most commonly asked questions are: What business are we in? and what business should we be in? Every business must do some type of planning to help direct the company towards its ultimate goal. Below are some helpful hints and guidelines to help you develop a successful strategic plan. Business Mission First, clearly define the mission and goals of your business. This will benefit both the customers and the employees of your organization. Customers will have confidence business with your organization knowing that you'll be able to satisfy their ongoing needs. And, your employees will be able to contribute more successfully knowing they are part of a team striving to achieve a common goal. Market Size and Growth Potential An essential part of your strategic plan is to identify your customers and potential customers. Size the market for your product or service and determine what "share" of this market you already have or expect to capture. Are new markets emerging for your product or service? Are existing ones growing? The answers to these questions will help you refine your strategic plan. Customer Value Assessment Customer value assessment focuses on the needs of the customers -- how customers perceive and receive value from your product or service is essential to the success of your business. What will the product or service do for your customer? Will it help improve revenues, decrease costs or help them become more efficient? Every company must determine how its customers define value and move their organization to match those defined needs. This can be done using outside consultants and direct customer contact, as well as management's assessment. Competitive Assessment A competitive assessment is critical to the creation of any strategic plan. Investigate four basic areas within each of your competitors:
Customer Value Improvement Plan Once customer value has been assessed, establish a tactical plan to improve the perception and delivery of value to your customers. In today's economy, every business must maximize the value from every dollar they spend. Your product or service should be viewed as an investment for your customers. They should feel that their business will improve from the use of your product or service. Map out each area for which you create customer value, and develop a plan to improve in each of those areas. Costs A financial analysis is a critical component of any strategic plan. Does it make good economic sense to follow your plan or are you throwing good money after bad? Each area of the plan must be analyzed to determine the best way to finance the investment in your business. Can the plan be funded using internal financing, or should you seek outside financing? Would it be more cost effective to look into a joint venture? Is a merger or acquisition the way to go? Can you outsource a capability that is not one of your core competencies? Monitor the Plan The last component of the strategic plan is an outline to monitor its progress. You may need to be making adjustments to accommodate changing customer needs, changes in the perceived value, and/or changes to internal goals or economic factors that would prohibit the project's completion. Return to Table of Contents for this guide | Return to index of all guides | Return to the top of this page One of the first steps in examining your business is to do some research to get to know more about your market. Presumably you already know that a market exists for your product. If you have an idea for a business, but you're not sure whether a market for it exists or if the market is big enough to support your business, you are getting ahead of yourself. You may need to take a step back and look at finding the right small business for you. For those who believe that a market exists, but who want to know more about the size and shape of the market in order to forecast their chances for success, research is the best place to start. Researching your market to know more about your customers and your competitors is a critical step for small business owners. If Procter & Gamble puts out a product that doesn't sell, they move on to the next idea. If you put out a product that doesn't sell, you're out of business. When you conduct research, you'll want to find out the following:
Have you also considered those who aren't direct competitors but who might, nevertheless, compete against you? For example, if you sell an online magazine, you're competing not just against other online magazines but against other products that occupy someone's leisure time. How will be you be positioned in the marketplace? Will you compete with existing businesses head on, or will you try to find a special niche? Analyzing the Market Environment Analyzing the market environment will help you analyze your competitors and develop competitive strategies. Market research on a budget will help you locate and target your potential customers. Business planning will help you develop the marketing portion of your business plan. Conceptually, all of marketing is based on the idea that you must thoroughly know the environment in which your business operates in order to successfully promote and sell your product or service. You may have developed a unique business idea, but why do you believe your idea will be successful? Is it based upon discussion of the idea or presentation of a prototype product or plan to friends and associates? If your business has been operating for a while, you've probably thought about branching out with new product lines, side businesses, or additional locations. How can you be sure the odds are with you as you pursue new directions? Ultimately, your idea must fulfill a need for your buyers and must do so in a way that's somehow superior to the competition, however you define it. If you want to be sure that your idea will do these two crucial things, you need to know as much as you can about the following:
Market Research Today the world is defined by the term "information age." All businesses require accurate and timely information to be successful. Whether your company is large or small, the right amount of financing, equipment, materials, talent, and experience alone are not enough to succeed without a constant flow of the right business information. Many large companies make market research into a very sophisticated and lengthy process so they can find out everything possible about their customers. For example, Philip Kotler, author and economist, writes in Marketing Management, "Coke knows that we put 3.2 ice cubes in a glass, see 69 of its commercials every year, and prefer cans to pop out of vending machines at a temperature of 35 degrees. We each spend $20 per year on flowers; Arkansas has the lowest consumption of peanut butter in the United States; 51 percent of all males put their left pants leg on first, whereas 65 percent of women start with the right leg; and .P&G once conducted a study to find out whether most of us fold or crumple our toilet paper." While you probably won't be able to afford a separate marketing research department to gather and monitor all the information that could possibly help you, all successful business owners must know their markets, competitors, customer wants and needs, and "what it takes to be competitive." It is not enough to know the answers to what, where, when and how questions about our businesses. We also need to know why people buy our products and services. You should expect to budget at least a minimal amount of time and money for research, especially if you are starting a new business or branching out into a new direction. Determine your market research needs and objectives. The first step in doing market research is to decide what you really need to find out. The kind of information you are seeking should determine the type of research you will do (although, of course, budgetary constraints will play a part in your decision.) Do you need to obtain a general feel for how key target buyers think about your product category and its various types of items, brands, and buying occasions? If so, interviewing groups of target buyers in focus groups may be the way to go, even though this type of research indicates only directional trends and may not be statistically reliable. Or, is the confirmation of general trends in your industry sufficient? In that case, reading information from outside information services, industry trade associations, and industry experts may be all you need to do. You may wish to conduct blind tests of different formulas before finalizing recipes for a new product. In that case, you can do "laboratory" tests, where brands, packages, and names of products are not revealed to the test subjects, and achieve statistically reliable results at the 90 percent to 95 percent confidence level of predictability. Or perhaps you have completed extensive product development and testing and are now ready for a field test of your prototype products. Market Research Procedures Generally, market research procedures break down into the following categories: Primary research: Research involving the actual data gathering about the specific usage patterns, product feature likes and dislikes, etc., of target buyers or current users of your products is considered primary research. Secondary research: Most of us are familiar with secondary research from doing library research with books and periodicals. With secondary research, someone else has done the actual data gathering in the field and has written it up in a form that's easier for you to use. Secondary research is generally much less time consuming and cheaper than primary research. Marketing Plan A business plan is the blueprint for taking an idea for a product or service and turning it into a commercially viable reality. The marketing portion of the business plan addresses four main topics:
The marketing portion of a business plan addresses how you will get people to buy your product or service in sufficient quantities to make your business profitable. It consists:
Return to Table of Contents for this guide | Return to index of all guides | Return to the top of this page One of the most common reasons small businesses fail is that the owners underestimate how much money they will need to start the business. It always seems to cost more than they thought. There's and old adage about planning a trip from the U.S. to Europe: Plan what you should wear and how much it will cost, then halve the clothes and double the money. Perhaps we need a similar adage about starting a small business. In the "Business Tools" area in the Innovators Guide, there's a checklist of everything you'll need to consider when figuring out how much money you'll need to start a new business. The lesson to be learned from the many small business failures is that you need to be extremely careful when determining how much money you need to start your new business. Don't fall into the "rosy forecast" trap in which the new owner overoptimistically predicts robust sales in the first year and, as a result, doesn't have enough money on hand when the cash flow dries up. Work Smart When you estimate how much you'll need, either build in some cushion by padding the numbers, or go back and change your estimates every time something costs more than you thought. For example, a lot of small business owners who limit their advertising to the Yellow Pages will estimate their advertising costs as the cost of placing an ad. But when they actually take out the ad, they'll decide to place it under three categories instead of just one. Although the difference may only be $30 to $40 a month, the numbers really add up, and the planning gets completely skewed when the owner decides to make similar changes in several different areas. For a complete picture of how you can determine what it will cost you to start a new business, consider the following:
Return to Table of Contents for this guide | Return to index of all guides | Return to the top of this page Finding the money needed to start a new business is almost always one of the most difficult hurdles new owners face. At this point in the process of analyzing your business idea, you should have examined both the costs of starting a business and your market with the result that you know how much it should cost and how much you should be able to earn. Assuming the startup costs are more than you have on hand and more than you'll be able to earn right out of the gate, the next step is to figure out whether you can raise the difference. Commercial lenders tend to shy away from new small businesses because they believe the risks of failure are too high. Commercial lenders want to see a history of success and a solid credit record. Therefore, a lot of small businesses that need to borrow funds to get started find themselves in a classic catch-22: the bank won't lend them money unless they have a solid track record, but they can't build the record until they get the money. What to do? One possible solution is to look to smaller lenders with good reputations for small business lending. Bank mergers and consolidations have forced some of the smaller banks to take some chances they perhaps wouldn't have taken before. Small businesses are often the beneficiaries of those changes. Each year, the Small Business Administration publishes a report that rates commercial banks on their small business lending performance. Contact the SBA on the Internet or by phone at 1-800-827-5722 for more information. Some banks will offer small business loans through the SBA. Ask your banker about SBA loans, but be aware that the SBA loan program is being squeezed from all sides. First, Congress is looking to reduce funding. Even if Congress is unsuccessful in reducing funding, current funding levels are not expected to grow in the coming years. Or, like many small businesses, you could raise the money yourself by taking out a second mortgage or by selling some of your possessions. Also, you could borrow from family and friends or take on partners and investors. Other possible sources include venture capital firms that do startups, debt capital, cash flow financing, asset-based financing, receivables financing, state economic development pools, and city and county funds. Return to Table of Contents for this guide | Return to index of all guides | Return to the top of this page In making a legal assessment of your business idea, you need to determine to what extent the operation of your business might expose you to legal liability. Talk to your lawyer and ask him or her about the risks. Save Money: If all you want is an overview of the types of liabilities your business may be exposed to, ask your insurance agent rather than to your lawyer. Your insurance agent will have a good idea of the overall picture and, unlike the visit to the lawyer, it's free. Of course, this tip applies only to an overview of your liabilities. If you need legal advice (for example, if you need an assessment of the odds that a suit will be filed against you), you should consult with your lawyer. Once you determine the risks, there are, of course, steps that you can take to protect yourself. One step is by purchasing insurance. For a complete discussion of how to purchase business insurance to protect yourself adequately, see the business insurance discussion in the Innovators Guide. Another way to protect yourself is by incorporating your business so the risks would be borne by the company and not by you. However, corporations may not be for everyone, because they can be expensive to create ($400-$500 if you do it yourself or $1,000-$5,000 if a lawyer does it for you) and a lot of trouble to maintain. Return to Table of Contents for this guide | Return to index of all guides | Return to the top of this page Where can you go to find out more information about the costs of starting a particular type business? The following is a list of our favorite sources: Federal Information Resources Governments, both federal and state, spend billions of dollars on research. Here's where to look for it and hopefully keep from getting lost in the maze of government publications. SCORE, Service Corps of Retired Executives -- SCORE is a national organization sponsored by the U.S. Small Business Administration (SBA) of over 13,000 volunteer business executives who provide free counseling, workshops, and seminars to prospective and existing small business people. Customized economic research -- there are countless methods of research and resources available. Research may be as simple as sitting in your car and watching people walk by a specific location or it may go all the way to hiring a professional research firm to do your market research and analysis. State and local agencies -- state agencies and nonprofit organizations also help small business people. These agencies and organizations provide valuable information on the local area that they serve. Information on exporting -- if you're interested in selling overseas, these government agencies are eager to help. Sources of Exporting Information: According to the U.S. Small Business Association, good sources for information and advice on exporting are: Small Business Development Centers -- Small Business Institutes provide small business owners with intensive management counseling from qualified business students who are supervised by faculty. SBIs provide advice on a wide range of management challenges facing small businesses, including finding the best foreign markets for particular products or services. The U.S. Department of Commerce's (DOC) International Trade Administration (ITA) is a valuable source of advice and information. District Export Councils (DECs) are another useful ITA-sponsored resource. The 51 District Export Councils located around the United States are comprised of 1,800 executives with experience in international trade who volunteer to help small businesses export. The United States and Foreign Commercial Service (US&FCS) offices, which provide information on foreign markets, agent/distributor location services, trade leads and counseling on business opportunities, trade barriers and prospects abroad The United States Department of Agriculture. If you have an agricultural product, you should investigate the U.S. Department of Agriculture's (USDA) Foreign Agricultural Service (FAS). Most state commerce and economic development office, which have international trade specialists to assist you (many states have overseas trade offices.) Port Authorities are a wealth of export information Private organizations such as Exporters Associations, World Trade Centers, import-export clubs and organizations such as the American Association of Exporters and Importers and the Small Business exporter's Association trade associations. The National Federation of International Trade Associations lists over 150 organizations in the U.S. to help new-to-export small businesses enter international markets. Many of these associations maintain libraries, databanks and established relationships with foreign governments to assist in your exporting efforts. State and Local Government Help State and local government assistance varies from location to location. Most states and local governments will have some type of an economic development program. These programs will range from providing economic information to giving low interest loans and forgivable grants. To find out what is available in your state, contact your state department of economic development for eligibility requirements. The city and county governments are also a source of assistance. To find out what is available in your area, look in the local government section in the telephone book. The usual name given for city, county, and state departments is 'Economic Development' and is listed as such in the phone book. Work Smart The loan department at your bank may also be a valuable resource in identifying state, local, and agency assistance to the new businessperson. They may have gone through the steps with other new businesses in your area. Another suggestion is to call the regional or federal HUD office. HUD (the federal Department of Housing & Urban Development) provides job and other grants to startups and small businesses for job creation (e.g., $10,000 per job created) in the form of low interest loans, often in conjunction with the SBA. HUD will be able to provide the names and phone numbers of local city, county, and state organizations in your area who represent HUD for development of targeted geographic urban areas. Another potential resource of assistance may come from local nonprofit economic development agencies. If your community has an economic development agency, this agency may be your best source of providing information on a complete package for the new business. These agencies may assist you in all your research, along with providing financial assistance. The local economic development offices at the city and county levels will also be a good source of identifying specific area banks that are most experienced with SBA loans or are willing to work with small businesses and startups. Customized Economic Research Customized economic research covers a wide range of categories. The research can range from sitting in your car and watching people walk by a specific location to hiring a professional research firm to do your market research and analysis for you. Don't overdo your market research. Generally, the do-it-yourself economic research approach will provide you with the necessary information to evaluate your new business. If your new business is going to be a retail establishment, your two main questions in this area are (1) where will the store be located, and (2) who will your customers be? Assume you plan to open a submarine sandwich shop in a strip mall that has a vacancy. Some of the questions that should be addressed might be, was there a store in this location before? If two other restaurants have already tried it and failed, do you want this location? The best and easiest way to find out this information, if you don't already know, it is to ask business people in the same strip mall or the mall management. Be careful they are not just telling you what you want to hear. Are there competing or complementing stores in the same area? If three restaurants are already there and all appear to be extremely busy, then maybe your research may be almost done for you. This may be a location that has a high need for more restaurants. But, if two of the restaurants are also sub shops, why will somebody come to yours instead of the other ones? What time of the day will your sub shop make money? Is this a strip mall that is a destination for the lunch crowd or is it busiest in the evening after work? The most effective way to answer these questions may be to sit in your car and watch the traffic patterns. If you note that over the lunch period the parking lot is packed and most of the people are there for lunch, this may be the place where you want to open your restaurant. If you notice that in the evening hours very little traffic comes to this strip mall and the other restaurants have very few customers, then you will know that you probably will not be able to depend on the evening hours to make any money. Talk to shoppers that are in the area. Ask them questions on why they shop or eat in this location. Be careful on how you phrase your questions or they may tell you the answer you want to hear instead of their true beliefs. What is in the future for this location? Will major road construction or store closings affect your new business location? Is this location in an area that is growing in business and population? To answer the questions on population, market size, etc., look at the government information resources section. This will provide you with a road map on more specific economic research. Another way to obtain customized economic research is to hire a professional research firm. This can be a very expensive way to do your research. Much of the information that they will provide can be obtained from other sources, e.g., government information resources, interviewing the potential customers, etc. If the new business will be a larger company, a high financial risk, or a very specific and narrow customer base, then it may make sense to use a professional research firm. Federal Information Resources The federal government's main conduit to help the new businessperson is the Small Business Administration (SBA). The following list gives a brief description of the most popular loans available from the SBA: 7(a) General Loan Program -- this is the main type of loan that the SBA provides. A 7(a) loan is actually a guarantee of a loan provided by a commercial bank. With proper qualifications, the new or expanding business can obtain a guarantee of up to 80 percent of the amount provided by your commercial lender. LowDoc -- this is a fairly new type of loan guarantee provided by the SBA. LowDoc is a low-documentation lending program. LowDoc is for loans up to $100,000 with SBA guarantees of up to 90 percent. If you need less than the $100,000 and an SBA guarantee, this is the way you would probably want to go. It will entail much less paperwork than a normal SBA loan guarantee. 504 Development Company Loan Program -- this program uses public and private partnerships to finance fixed assets. The Small Business Investment Company (SBIC) Program -- this program's purpose is to combine private capital and SBA-guaranteed loans to provide a source of venture capital for startup and growth companies. The Micro loan Program -- this program is for small loans that help entrepreneurs in inner-city and rural areas form small, often home-based enterprises. Export Finance -- this program is designed to promote exporting and offers specialized loan guarantees that offer working capital and longer-term financing to promote exporting. The Small Business Administration (SBA) is also the federal government's main provider of counseling to the small and new businessperson. Below is a list of some of the types of counseling that the SBA provides: Business initiatives, education, and training -- the SBA provides a wide range of publications and audiovisual materials. This material is geared toward management of a small business and technical assistance. International trade -- the SBA is available to provide guidance to a business in the export trade area, in particular to those wishing to take advantage of the new world markets in Mexico, the Pacific Rim, Canada and Europe. Veterans affairs -- the SBA provides training conferences specifically for veterans who are prospective and established business owners. Women's business ownership -- the SBA also provides training conferences specifically for women who are prospective and established business owners. Contact your nearest SBA office by looking in the telephone directory under U.S. Government or try their home page, or call 1-800-827-5722. Bureau of the Census The Bureau of the Census information is a general term used for a wide variety of information. Most people think of the Census Bureau as just counting people living in each city. Actually this is done only every 10 years. The rest of the time, they are preparing other types of statistics that could be of use to you as a new businessperson. Below are descriptions of some of the other Bureau of the Census publications that can be very useful to you in researching your new business: Catalog of United States census publications -- this is published monthly with quarterly and annual compiling. This catalog contains a list of all publications with appropriate descriptions. Census of retail trade -- this is published every five years (years ending in 2 and 7) and updated monthly by the Monthly Retail Trade. This publication lists statistics for more than 100 different types of retail establishments by state, metro area, county, and community (population over 2,500). This includes information on the number of outlets, total sales, employment, and payroll. Census of wholesale trade -- this is published every five years (years ending in 2 and 7) and updated monthly by the Monthly Wholesale Trade. This publication lists statistics for more than 150 types of wholesaler categories. The statistics include the number of establishments, payroll, warehouse space, expenses, end-of-year inventories, legal form of organization, and payroll. Census of selected services -- this is published every five years (years ending in 2 and 7) and updated monthly by the Monthly Selected Service Receipts. This publication is similar to the Census of Retail Trade for retail service organizations such as auto repair centers and hotels. This publication does not include any information on real estate, insurance, or the professions. Census of manufacturers -- this is published every five years (years ending in 2 and 7) and updated yearly by the Annual Survey of Manufacturers. This publication lists statistics for 450 different classes of manufacturing industries. The statistics are compiled by industry and include information on capital expenditures, value added, number of establishments, employment data, material costs, assets, rent, and inventories. Census of population -- this is published every 10 years and updated yearly by the Current Population Report. This publication lists statistics on the population characteristics of states, counties, standard metropolitan statistical area (SMSA), and census tracts. The demographics that are reported include age, employment income, family composition, level of education, marital status, occupation, race, and sex. Statistical abstract of the United States -- this annual publication is a source for finding current and historical statistics about various aspects of American life. The publication includes statistics on income, prices, education, population, law enforcement, environmental conditions, local government, labor force, manufacturing, and many other topics. State and metropolitan area data book -- this is a supplement to the statistical abstract listed above. This publication provides statistics on states and metropolitan areas in the United States and on subjects such as area, housing, income, manufacturers, population, retail trade, and wholesale trade. County and city data book -- this is published every five years as a supplement to the statistical abstract listed above. This publication provides 144 statistical items for each county and 148 |