Small Business Startup Process.....

So you want to start a small business.  It is not an impossible task, because many entrepreneurs do it every day.  But get some facts straight.
There is no easy way to do it.  A lot of hours and legwork are needed.  Be prepared for frustration and failure as well as success.  Anything worth doing is worth doing well, but history has shown that 2/3 of new employer firms survive at least two years, and about half survive at least four years. Business survival also varies by industry and demographics. 

First, there ARE NO GRANTS ANYWHERE TO START A SMALL BUSINESS!!!  Grants are basically one-time shots by foundations or governments to achieve a social purpose.  You cannot maintain any business on grants alone.

History has also shown that the primary reason for remaining open is capitalization.  People traditionally just do not give themselves enough operating room moneywise.  So before you spend a penny on your 'new' business, collect data.  Do a Capital Assessment! First, you must determine EVERY cost to get your business set up, before your first customer. That includes leases, equipment, permits, inspections, furniture, renovations, computers, software, advertising, and all other costs involved before your first day of operation.  And THEN you must total up, by month, all costs involved in actually running your  business for typically a year.

That means rent or lease, utilities, wages (yours and employees), taxes, marketing, insurance, transportation, etc., etc.  Add the two figures together and you get a figure which is your capital 'window'.  You should have that amount of working capital available to realistically work your business for a year.  After all, you DO want to keep your business open for at least a year, don't you?

Keep these figures handy, labelled and sorted because they must go into your business plan.  REPEAT.  Business Plan.  The Plan is an absolute necessity for you to (1) get a business loan, and (2) keep track of your business progress and success. 

Now for an example.  If you have, in hand, the amount of capital needed from your research, then good.  But most startups do not have the capital 'window' , and must ask for help by way of a business loan.  

Note that the word is LOAN.  Forget the word GRANT.  There are basically no grants to startup a business.  The word is LOAN.  And a lender wants and needs a quality business plan as part of the loan application process.  The next consideration :   percentages.

The following is an example, and only an example. Let's say that your capital needed is $100,000.  You have determined that from your research.  Realize that lenders will not loan you the entire amount, because they want you to assume some of the risk.  Be prepared to come up with 30% (for this example, $30,000) as your part of the effort.  That need not be in pure cash, but may be equipment, or a patent, or supplies, or some other item(s) of value, all noted in your business plan.

Look over the many sites and sources available to put flesh on your plan outline.  Remember that you do need to include your financials for at least the past three years into the plan. Once you have your Plan started, get in touch with your nearest SCORE Chapter to have them look it over and render their help and critique .

Then, if you want, you take your business plan to the SBA (Small Business Administration) for evaluation.  If you do so, and the SBA approves your plan, that signals your lender that they have a security against loss of 80% of the amount LENDED.  In the example, the lender has 80% of their $70,000 (or $56,000) protected against loss by the SBA.  This may improve their opinion of your efforts, and assist the loan process.

Realize that lenders must evaluate your Business Plan and, based on all things considered, can still turn down your loan application.  The next steps include looking for other sources of capital such as a second mortgage or family or friends, reducing your capital needs, and/or after full and deep consideration, deciding to not pursue the business.  That is what the business plan is ultimately for.  To give you, the entrepreneur, a good quality look at what you must realistically put into the business to make it viable, before you sink everything into it.

Many startups immediately spend themselves out of their business, so you need to do extensive and complete research and complete a quality business plan before spending a measureable amount  of money on your idea.

In addition, you need to publish or establish your Fictitious Name Statement, and get a business license if needed.  Work with your local and State govenments to determine other fees, permits, and taxes you may have to address.   Remember that YOU are an employee of the business and must be paid.

So you have several tasks.  Go to  www.score.org,   www.sba.gov, or to  www.bplans.com   to get the planning process started.  Contact your nearest SCORE Chapter and make an appointment.  Prepare for some long hours and much work.  Get Started.