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Monday, May 11, 2015

Thinking of Starting a Small Business?



Big Sky Economic Development 

Small Business Development Center
Guiding Montana Businesses to Success


Below you’ll find answers to the most frequently asked questions when deciding to build your new business.  

 I am thinking of starting a business. Where do I start?
Here are some first steps to follow if you are thinking of starting a business:
  • Ask yourself, “Why do I want to go into business?” “What are the main reasons for wanting to start a business?” Determine whether your reasons are based on realistic expectations.
  • Conduct a “Self-Assessment” survey of your skills and abilities to understand what your strengths and weaknesses are.
  • Research the market and industry you are interested in.
  • Take a Pre-Business Workshop class through your local SBDC.
Is there a start-up checklist?
This will vary by type of business, but there is a general start-up checklist on our website under Business Checklist.

How do I obtain financing?
The first step is to determine how much money you need by figuring out:
  • Start-up expenses
  • On-going monthly expenses
Most common sources of financing are:
  • Commercial Lenders
  • SBA 7A Loan Guarantee Programs
  • SBA 504 Fixed Asset-Lending Program
  • Big Sky EDA Revolving Loan Funds
  • BLX Community Express Loan Program
What sorts of documentation will a lender need to see?
In order for a lender to be able to make a credit determination, he/she will need to see the following:
  • Personal Financial Statement for all owners
  • Three years of tax returns for all owners
  • Completed business Plan
  • Credit reports for all owners
  • Minimum of 2 year cash flow projections
  • Source and Uses Statement
Are there any grants to start a small business?
Contrary to what you might have heard, grants are generally not available for ‘for profit’ businesses.

How much cash down is a lender expecting?
As a general rule of thumb, 20-30% of the total project cost. This is favored by the type of business and the personal financial capacity of the borrower(s). 

 Do I need any licenses or permits?
To determine whether you need a professional license, contact the Professional and Occupational Licensing Bureau of the State Department of Labor and Industry at 406-841-2300.

What do I need to do to hire employees?
If you are going to hire employees you will need to get an employee identification number (EIN) from the IRS. You will also need to obtain workers compensation insurance and understand the wage, hour and child labor laws. You can obtain more information on the Montana Department of Labor and Montana Department of Revenue websites.

How do I determine my start-up costs?
Research. Gather information and obtain price quotes to help determine your start-up costs and expenses. Talk to similar businesses to get an idea on costs, and check average industry sales.

What is a business plan?
A business plan is an outline overview of what your business is and how it is going to operate. It provides a game plan for directing and guiding your business, and can be used as a great tool for communicating your business to potential investors and banking institutions.

Why do I need a business plan?
A business plan is used to help obtain financing, but also as a tool to think through the development of your business and ensure that you have considered all the potential challenges and opportunities. It will also help you determine whether your idea is feasible or not.

Is there a basic Business Plan Outline?
Yes, there are many business plan outlines available. Our Business Plan Guide provides a great outline on how to write a business plan. The Billings SBDC can also assist you with the process of writing a business plan. Attending our Pre-Business workshop is the best place to start, followed by one on one counseling with a Business Advisor.

Where can I get help with market research?
The counseling staff at the SBDC can assist you with market research techniques. Please call to schedule an appointment. The Business Information Center (BIC) is an extensive business library available for your use, and an excellent resource for market research. There are also a number of helpful websites highlighted under “Business Resources” Market Research.

Where can I get help with all this?
The Billings Small Business Development Center (SBDC) can assist you. Please call to schedule an appointment, or fill out the Request for Counseling Form at http://mtsbdc.ecenterdirect.com