How do I know how much money I will need?
- Funding needs are usually determined by adding the amount of money needed to cover one-time startup costs including buildings, leasehold improvements, equipment, inventory and working capital for expected operating expenses. For additional information, contact your local SBDC.
How do I get a loan?
- Lending institutions typically look for the 5 C\’s when evaluating loan applications. The 5 C\’s are credit, character, collateral, cash and capacity. Lenders will expect business owners to contribute their own money to the development of the business before they will consider loaning money to a business owner. They also make decisions based on credit score, good character and ability of the business to pay back the loan. For detailed instructions on developing loan proposals, refer to the SBDC publication Mastering Loan Proposals. For further assistance preparing a loan proposal, contact your local SBDC.
Are there non-traditional loan sources?
- Yes. There are several kinds of non-traditional sources of financing such as microlending programs, angel investors, venture capitalists and various other non-bank lenders.˜ For a list of some non-traditional financing sources, click on resources link.
What documents will I need to apply for a loan?
- Typically, you will need a personal financial statement, tax returns for the last three years (if currently in business, both business and personal tax returns), as well as copies of contractual agreements (for example, a copy of a lease). Depending on the situation, lenders will likely want to see a business plan, or at a minimum, financial statements demonstrating how the loan will benefit the business and be paid back. If you are seeking financing for your business, please contact an SBDC office for assistance.
Is my credit score important when applying for a loan?
- Credit scores are a critical decision factor in evaluating a loan application. Most financial institutions consider the way a person handles his or her personal credit a good indicator of how business credit will be handled. Prior to applying for a loan you should obtain a copy of your personal credit report along with your credit score. Even with a great business plan, a poor credit score can prevent you from getting a loan. The SBDC can help you asses the impact of your personal credit score on business financing.
Are there government grants for my business?
- Generally, there are no government grants available for small businesses. In fact, the term “grant” may be a misnomer, since grants simply pay for services the government needs done. Most government grants are awarded to non-profit organizations or local governments, not to private companies. One exception could be the SBIR or STTR programs, which fund the research and development of technological innovation that meets specific government needs. For more information on these programs, click on reference.
Does the SBDC provide financing?
- No. The SBDC is an economic development program of the University of Georgia system and does not lend money. SBDC Consultants can help you identify sources of funding to best fit your financial needs.
Can I get an SBA guaranteed loan to refinance present debt?
- Yes, if the debt is a business debt (i.e. not personal) and the refinance must result in a minimum of 20 percent improvement in cash flow. Contact the SBDC for more information.
Can the SBA lend me money?
- No, the SBA does not make direct business loans. However, it does provide guarantees which eliminate some of the risk to its lending partners, such as banks, community development organizations and microlenders. SBA partners lend money to small businesses based on the guidelines for each of its three loan programs. (The SBA does make some direct loans under very specific circumstances under their Disaster Loan Program.) For more information, click on reference.
What are angel investors and how do I find them?
- An angel investor is a wealthy individual who provides capital for early stage or start-up businesses, usually in exchange for an ownership stake in the company. Angels often provide funding for businesses that need more capital than is available through personal and family investments, but are not large enough to attract venture capitalists. Angel investors often organize themselves into angel networks or angel groups to share research and pool their own capital. For more information, click on reference.
How can I get access to venture capital?
- As a rule, venture capitalists do not lend to small businesses because the large amount of dollars they invest (millions) are beyond the scope of most start-ups. In a situation where venture capital is an option, investors will look to share in the profits of the business and will expect a huge return in a relatively short period of time. For more information on venture capital, click on reference.
Choosing the legal structure for your business depends on several factors including formation requirements, liability issues, tax and succession-related concerns. Common business entities are sole proprietorships, partnerships, C-corporations, S-corporations or Limited Liability Companies (LLC). For information on each type of company, click on reference. It is best to consult with an accountant and/or attorney to choose the appropriate legal entity for your business.
What is the difference between an employee and an independent contractor?
- The major factors to consider in deciding whether a worker is an independent contractor or an employee fall into three main categories namely; behavioral control, financial control and relationship of the parties. Usually a worker is considered an employee only when the business has the right to direct and control the worker. Typically, if you have significant investment in your work you may be considered an independent contractor. If a worker receives health insurance or company paid retirement such arrangement would justify an employee/employer type relationship. Please refer to the IRS Form SS8 or contact the IRS directly when in doubt.
Do I need Workers Compensation Insurance and how do I obtain it?
- Georgia employers with three or more employees are required by law to carry Workers Compensation Insurance. This insurance is regulated by the state but sold by local community insurance agents. A minimum of three quotes is recommended. Owners that work in the business are considered employees but can exempt themselves from workers compensation insurance coverage. For more information, visit the Georgia State Board of Workers Compensation.
How do I find a good attorney?
- To find a good attorney, it may be wise to talk with a several prior to making a selection in order to make sure that there is a good fit between the business owner and the attorney. Generally you want to get an attorney that is familiar with your industry. It is advisable to inquire up front about the rates for the services provided. The business owner may also wish to seek references from other business owners who have used the services of a given attorney.
What types of insurance should I carry for my business?
- You should determine the appropriate type of insurance your company needs based on the different risks inherent to your business. There are many types of insurance available: liability, property and worker’s compensation. An insurance agent or broker can guide you to make choices that will effectively meet the specific needs of your business.
What is a copyright and how do I obtain one?
- Copyright is a form of protection provided by the laws of the United States (title 17, U.S. Code) to the authors of original works of authorship, including literary, dramatic, musical, artistic and certain other intellectual works. This protection is available to both published and unpublished works. Copyright is secured automatically when the work is created A work is “created” when it is fixed in a copy or photorecord for the first time. Copyright registration is available. For more information, click on reference.
What is a patent and how do I obtain one?
- A patent is a property right granted by the US Government to an inventor “to exclude others from marketing, using or selling the invention in America or importing it for a limited time set when the patent is granted. To get a patent, an application must be filed in the US Patent and Trademark Office. For more information, click on reference.
What are trademarks and servicemarks?
- Trademarks (e.g. Coca-Cola) and Servicemark (e.g. UPS) prevent others from using the same name. Trademarks/servicemarks cannot be used to prevent others from making or selling the same goods or services under a clearly different mark. A trademark, issued by the US Patent and Trademark Office, lasts for 10 years and can be renewed. For more information, click on reference.
Can the SBDC review my legal paperwork (e.g. leases, contracts, etc.)?
- SBDC consultants do not provide legal advice. We encourage you to establish a relationship with an attorney that specializes in business issues who can review your legal documents.
Managing My Business
How do I find and retain quality employees?
- Many small businesses hire individuals they know or those referred to them by friends and family members. To hire specialized employees, small businesses might work with a staffing agency, headhunter organization, online resume database or simply take out an ad in the classifieds. Retaining employees after hire is very important because of the costs associated with turnover. Employees will stay at their jobs if they are adequately compensated and challenged by their work. For more information on finding and retaining quality people, contact your local SBDC.
How do I get the most impact from my website and online presence?
- A website in an important marketing tool for almost every business. In addition, there are a number of digital maketing and social media tools that can be effective in achieving your marketing objectives. For more information on maximizing the impact of your online presence, talk with your local SBDC
How much should I spend on advertising?
- The amount you should spend on advertising will depend on the industry and your type of business. A general rule of thumb is that small business owners should allocate from two to five percent of gross sales but as much as 10 to 15 percent of expected gross sales when launching a new product or service or when competing in the mass market. SBDC consultants are available to help you with industry information, delivery vehicles and planning your advertising budget.
What is the best form of advertising for my business?
- Every business has a “best” method of advertising. Experience is a good teacher, so compare the methods used by your successful competitors with what you plan to do. SBDC consultants can help you evaluate advertising alternatives.
How do I find new customers?
- The first step in finding new customers is to specifically determine your target market. It may be broken down by age, gender, socioeconomic status, geographic region or any number of behaviors or lifestyles. Once a target market is identified, you can determine the best strategy for reaching it.
How do I keep my existing customers?
- The best way to keep customers is to give them quality service at competitive prices. A rule of thumb to keep in mind is the 80/20 rule–80 percent of your business comes from 20 percent of your customers. It is important to focus marketing efforts on those valuable 20 percent. Business owners must have a customer service plan in place and train all employees to maintain an excellent standard of service and strive to always meet customer expectations. The product or service should be the same every time. It is important to remember that doing business with your company should be pleasurable and memorable for the customer. Problems should be taken care of quickly and completely.
Does the SBDC offer classes in marketing?
- Yes. These classes provide useful information on how to market your business using effective and unique strategies designed specifically for small businesses. Learn how to maximize your marketing dollars and enhance your profitability. To find a class in your area or to register for an online class, click on reference.
Does the SBDC conduct market research?
- Yes. The SBDC’s Applied Research Division is available to provide in-depth customized market research for clients on a fee basis. Additionally, the SBDC International Trade Center conducts global business research. Local SBDC consultants regularly assist clients with identifying key information for inclusion in business or marketing plans or for compiling loan documentation.
How do I put together a marketing plan?
- In developing your marketing plan it is important to analyze your current situation to see how you fit into the market. Based on your current target market and target area, it is important that you consider the following factors to include market share, competition, changes in demographics, attitudes, beliefs, norms and advances in technology. It would be useful to conduct a SWOT analysis to in order to ascertain your company\’s strengths, weaknesses, opportunities and threats. The analysis should provide you with useful information necessary to define marketing goals and objectives leading to the formulation of strategies aimed at meeting these goals and objectives.
Should I consider selling to the government?
- Federal, State, and Local governments purchase a tremendous amount of goods and services. For some business, this can be a good strategy. The Georgia SBDC can help small businesses assess their readiness to pursue government contracting. Another great resource is the Procurement Technical Assistance Centers at Georgia Tech. For more information, click on the resource link.
How do I get certified as a woman-owned or minority-owned business?
- Corporations or government agencies that are looking to do business with women-owned and minority-owned enterprises typically encourage the business to be certified. National Minority Supplier Development Council (NMSDC) and the Women’s Business Enterprise National Council (WBENC) are major private sector certifying organizations. The SBA 8(a) Business Development Program and Woman Owned Small Business (WOSB) programs are useful for federal procurement opportunities. State and local opportunities may exist, but the certification requirements vary widely. For assistance with certification, contact your local SBDC.
Do I need a state tax ID number and how do I obtain one?
- Any small business that operates in the state of Georgia may be required for one or more tax-specific ID numbers. These may include Sales & Use tax, employee withholding tax, international fuel tax agreement, motor fuel distribution, coin-operated amusement machines, alcohol and tobacco. For additional information on business registration and contact information, click on reference. All employers are also required to have a Georgia Department of Labor number in order to pay State Unemployment Insurance on behalf of their employees. Applications are available on-line or through your local Department Of Labor office.
What is the self-employment tax? Do I have to pay it?
- Sole proprietorships and partnerships that report a profit are required to pay self-employment tax in lieu of Social Security and Medicare contributions. Self-employed persons may be required to make quarterly deposits of estimated federal and state taxes based on the profits of the business. For specific information, contact an accounting professional.
Are there local business taxes?
- All businesses operating in Georgia are required to pay property (ad valorem) taxes on real and personal property of the business. Property taxes are assessed and collected by individual counties. The Georgia Department of Revenue web site has links to local tax offices through the State Property Tax Division.
What business expenses can I deduct?
- The IRS states that in order for an expense to be deductible, it must be ordinary and necessary in conducting the business. There are many rules as to the documentation that must be provided to maintain the deductibility of an expense. For assistance in clarifying these rules, contact an accounting professional or refer to IRS Publication 535.
Do I need to collect sales tax?
- Yes. If you sell or rent tangible items to the final consumer, you must collect and remit sales and use tax. There are certain types of sales which are exempt. For more information, click on reference.
How do I find a good CPA?
- In choosing an accountant it is important that you consider an individual that possess a good working knowledge of your business as well the accounting software package that you are currently using or plan to use. Also ensure that that the prospective accountant has a large small business clientele. Check references from at least three current clients and also make sure that this individual is board certified to practice in the state of Georgia.
Writing a Business Plan
I’m already in business. Why do I need a business plan?
- A business plan provides a reference for determining the degree of success of your business efforts. It should be periodically updated to reflect your current situation. It can be a helpful tool for developing a marketing plan, expanding your current business or obtaining capital for the future. Additionally, the SBDC offers business plan classes locally or online. For a complete list of these classes, click on reference. For individual assistance, contact your local SBDC.