Business Start-Up Frequently Asked Questions
Embarking on your entrepreneurial journey requires more than just motivation and talent. Thorough research, meticulous planning, and strategic decision-making are crucial for long-term success. While initial missteps aren’t always fatal, recovering lost momentum demands exceptional skill, discipline, and dedication.
We’ve compiled a comprehensive list of frequently asked questions to guide you through the critical phases of starting and growing your business. Take the time to explore these questions, as they’ll help you evaluate your business concept, personal goals, and readiness for entrepreneurship.
Not sure where to start? No problem! Just fill out our Needs Analysis form, and our team of experts will provide tailored advice for your unique situation.
Getting Started
Before embarking on your entrepreneurial journey, it’s crucial to evaluate your readiness and understand the various aspects of business ownership. This guide will help you assess your capabilities and prepare for the challenges ahead.
- Do I have what it takes to own and manage a small business?
You will be your own most important employee, so an objective appraisal of your strengths and weaknesses is essential. Some questions to ask yourself are:
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- Am I a self starter?
- How well do I get along with a variety of different personalities?
- How good am I at making decisions?
- Do I have the physical and emotional stamina to run a business?
- How well do I plan and organize?
- Are my attitudes and drive strong enough to maintain motivation?
- How will the business affect my family?
Try the Quiz for Small Business Success
- What type of business should I start?
The ideal business often lies at the intersection of your skills, interests, and market demand. Consider these steps:
Identify your strengths and passions
Research local market needs and growth potential
Consult with business experts and mentors
Analyze the competitive landscape
Remember, matching your expertise with market demands increases your chances of success.
What is a business plan and do I need one?
A well-crafted business plan is essential for:
Defining your business goals and purpose
Allocating resources effectively
Navigating unforeseen challenges
Making informed decisions
Securing funding from investors or lenders
Key components include:
Executive summary
Company description
Market analysis
Organization and management structure
Product or service line
Marketing and sales strategies
Financial projections (balance sheet, income statement, cash flow analysis)
Why do I need to understand my business in detail?
Clearly defining your core business is crucial. Ask yourself:
What is my primary product or service?
Where does most of my revenue come from?
What activities consume most of my time?
Which aspects of the business are most profitable?
This clarity can lead to strategic decisions that significantly improve profitability.
What legal aspects do I need to consider?
Key legal aspects to address include:
Business structure (corporation, LLC, partnership, sole proprietorship)
Tax status (e.g., Subchapter S election)
Occupational licenses and permits
Zoning laws and local regulations
Intellectual property protection
Consult with a qualified attorney or CPA for advice tailored to your specific business and location.
What do I need to succeed in a business?
A thriving business typically requires proficiency in:
Marketing and sales
Financial management and accounting
General management skills
Industry-specific knowledge
Technical expertise
Strategic planning
Identify your strengths and weaknesses in these areas. Consider partnerships, key hires, or additional training to fill any gaps.
Would a partner(s) make it easier to be successful?
While not a guarantee of success, the right partner can bring:
Complementary skills and experience
Additional start-up capital
Shared workload and responsibilities
When considering a partnership, evaluate:
Potential partners’ technical and financial contributions
Personality compatibility and shared vision
Clear definition of roles and responsibilities
Legal and financial implications of the partnership structure
Administrative and Legal Requirements
Once you’ve completed your preparations and are ready to launch your business, there are several crucial steps to follow. This guide will help you navigate the initial filing requirements and set your business on the path to success.
What do I do when I’m ready?
Before taking the leap, ensure you have:
A comprehensive business plan
A chosen location for operations
A clear understanding of your capital requirements
Specific information on potential employees, vendors, and market opportunities
At this stage, it’s wise to seek an objective review of your plans:
Consider reaching out to the business department of a local college for an impartial assessment
Our Small Business Consultants at The AlldayCPA® Group are available to review your work and assist with fine-tuning your strategy
Once you’re confident in your plans and have made the final decision to proceed, it’s time to consult with a CPA and begin the formal process of establishing your business.
How do I incorporate my business?
If you’ve decided to incorporate your business, here’s what you need to know:
The process begins with preparing a certificate of incorporation or articles of organization
Modern incorporation typically requires only a single incorporator
Many states offer standard forms for small business incorporation
Key information required for incorporation includes:
a) Corporate Name:
Must be unique within the state
Cannot be deceptive or misleading
Availability can be checked with the state charter office
b) Business Purpose:
Include a “specific object” clause detailing the company’s primary activities
c) Corporate Lifespan:
Most corporations have an indefinite lifespan, but you can specify a limited duration if desired
Additional required information:
Names and addresses of incorporators
Location of the registered corporate office in the state
Special Considerations for S Corporations:
Must be an independent, unaffiliated group
Limited to a single class of stock
Maximum of 100 shareholders (increased from 75)
Shareholders must be individuals, certain trusts, or estates (not other corporations)
Must be a domestic corporation
Important: Before signing any legal documents, always consult with a qualified attorney for personalized legal advice.
Where do I get a business license?
Every business must secure proper licensing:
At minimum, obtain a business license from your county (parish) office
The AlldayCPA® Group can assist you in navigating the licensing process
For personalized support with obtaining your business license, contact our office at 1-800-259-4213
Additional Licensing Considerations:
Depending on your industry and location, you may need additional permits or professional licenses
Research state and local requirements specific to your business type
Consider federal licensing requirements for certain regulated industries
Remember, proper licensing is crucial for legal operation and can impact your ability to secure contracts, obtain financing, and protect your business interests.
Building Your Team
As your business grows, building a strong, capable team becomes crucial. This guide will help you navigate the complexities of hiring, compensating, and managing employees effectively.
How can I find qualified employees?
Choose your employees carefully. Decide before hand what you want them to do. Be specific. You may need flexible employees who can shift from task to task as required. Interview and screen applicants with care. Remember, good questions lead to good answers-the more you learn about each applicant’s experience and skills, the better prepared you are to make your decision.
How do I set wage levels?
Wage levels are calculated using position importance and skill required as criteria. Consult your trade association and accountant to learn the most current practices, cost ratios and profit margins in your business field. While there is a minimum wage set by federal law for most jobs, the actual wage paid is entirely between you and your prospective employee.
What other financial responsibilities do I have for employees?
You must withhold federal and state income taxes, contribute to unemployment and workers compensation systems, and match Social Security holdings. You may also wish to inquire about key employee life or disability insurance. Because laws on these matters vary from state to state, you probably should consult local information sources. Visit https://statelaws.findlaw.com/business-laws.html to locate state business laws.
Should I hire family members to work for me?
Frequently, family members of the owner “help out in the business.” For some small business owners it is a rewarding experience; for others it can cause irreparable damage. Carefully consider their loyalty and respect for you as the owner-manager. Can you keep your family and business decisions separate?
Operation and Administration
Efficient operations and administration are crucial for the growth and sustainability of your small business. This guide covers key aspects to help you streamline your processes and make informed decisions.
Do I need a computer?
Small business today faces growing inventory requirements, increased customer expectations, rising costs and intense competition. Computers can provide information that leads to better returns on investment. At the same time, they help you cope with the many other pressures of your business. Computers are not cure alls, however, and considerable care should be given to:
deciding if you need one, and
selecting the best system (or personal computer) for your business.
What about telecommunications?
All small businesses share some common functions: sales, purchasing, financing, operations and administration. Depending on your individual business, telecommunications can support your objectives in any or all of these areas. In its basic form, the telephone (the terminal) and the network (local or long distance) make up the basic components of telecommunications. It is an effective tool that can easily change with seasonality and growth. How you use telecommunications can affect how efficiently and profitably your company grows in the future.
What should I know about accounting and bookkeeping?
The importance of keeping adequate records cannot be stressed too much. Without records, you cannot see how well your business is doing and where it is going. At a minimum, records are needed to substantiate:
Your tax returns under Federal and State laws, including income tax and Social Security laws;
A request for credit from vendors or a loan from a bank;
The value of your business, should you ever wish to sell it.
But most important, you need them to manage your business successfully and to increase your profits.
How do I set up the right record keeping system for my business?
The kind of records and how many you need depend on your type of business. An accountant can provide you with many options. When deciding on what is and is not necessary, keep in mind the following questions:
How will this record be used?
How important is this information likely to be?
Is the information available elsewhere in an equally accessible form?
What financial statements will I need?
You should prepare and understand three basic financial statements:
The Balance Sheet, which reports assets, liabilities and equity.
The Income Statement (profit-and-loss), a report of your earnings and expenses over a given period of time.
The Cash Flow Statement, a report showing your cash balances and the sources and uses of cash for a given period of time.
Can I operate a business from my home?
Yes. In fact, experts estimate that as many as 20 percent of new small business enterprises are operated out of the owner’s home.
How do I find out about suppliers/manufacturers/distributors?
Most suppliers want new accounts. A prime source for finding suppliers is the Thomas Register, which lists manufacturers by categories and geographic area. Most libraries have a directory of manufacturers listed by state. If you know the product line manufacturers, a letter or phone call to the companies will get you the local distributor-wholesaler. In some lines, trade shows are good sources of getting suppliers and looking over competing products.
Where can I go for help?
You can consult with us, The AlldayCPA® Group. We have small business consultants that are experts in business start ups. Call us toll free at (800) 259-4213 to make an appointment with a Small Business Consultant.
How do I set up the right record-keeping system?
The kind of records and how many you need depend on your type of business. We can help provide you with many options. When deciding on what is and is not necessary, keep in mind the following questions:
How will this record be used?
How important is this information likely to be?
Is the information available elsewhere in an equally accessible form?
Can I get financial assistance from the government?
There are government programs that have been established for the sole purpose of helping small and emerging businesses.
Call us for an appointment and we will be glad to meet with you to discuss these programs, see if you qualify for and provide you with further direction on how to get the financial assistance.
Financing and Capital Management
Effective financial planning and management are crucial for the success of your small business. This guide will help you navigate key financial decisions and understand your options for funding and managing your business’s capital needs.
How much money do I need to get started?
Once you have taken care of your building and equipment needs you also must have enough money on hand to cover operating expenses for at least a year. These expenses include your salary as the owner and money to repay your loans. One of the leading causes of business failure is insufficient start-up capital. Consequently, you should work closely with your accountant to estimate your cash flow needs.
What are the alternatives in financing a business?
Committing your own funds is often the first financing step. It is certainly the best indicator of how serious you are about your business. Risking your own money gives confidence for others to invest in your business. You may want to consider a partner for additional financing. Banks are an obvious source of funds. Other loan sources include commercial finance companies, venture capital firms, local development companies and life insurance companies. Trade credit, selling stock and equipment leasing offer alternatives to borrowing. Leasing, for example, can be an advantage because it does not tie up your cash.
What do I have to do to get a loan?
Initially, the lender will ask three questions:
How much do you need to borrow?
How will you use the loan?
How will you repay the loan?
When you apply for the loan, you must provide projected financial statements and a cohesive, clear business plan which supplies the name of the firm, location, production facilities, legal structure and business goals. A clear description of your experience and management capabilities, as well as the expertise of other key personnel, will also be needed.
What kind of profits can I expect?
Not an easy question. However, there are standards of comparison called “industry ratios” which can help you estimate your profits. Return on Investment (ROI), for example, estimates the amount of profit gained on a given number of dollars invested in the business. These ratios are broken down by Standard Industrial Classification (SIC) code and size, so you can look up your type of business to see what the industry averages are. These figures are published by several groups, and can be found at your library, and on the Internet.
Is it better to lease or buy the building and equipment?
This is a good question and needs to be considered carefully. Leasing does not tie up your cash; a disadvantage is that the item then has no resale or salvage value since you do not own it. Careful weighing of alternatives and a cost analysis will help you make the best decision.
Marketing and Sales Strategies
Effective marketing and sales strategies are crucial for attracting customers, building brand awareness, and ultimately driving revenue. This guide will help you navigate key aspects of marketing and sales to position your business for success.
What does marketing involve?
There are four basic aspects of marketing, often called the “four P’s”:
Product: The items or services you sell.
Price: The amount you charge for your products or services.
Promote: The ways you inform your market as to who, what and where you are.
Provide: The channels you use to take the product to the customer.
As you can imagine, marketing encompasses much more than just advertising or selling. For example, a major part of marketing involves knowing your customer�s needs and desires: What do they want? What can they afford? What do they think? Your understanding and application of the answers to such questions play a major role in the success or failure of your business.
What is my market potential?
The principles of determining market share and market potential are the same for all geographic areas. First determine a customer profile (who they are) and the geographic size of the market (how many there are). This is the general market potential. Knowing the number and strength of your competitors, and then estimating the share of business you will take from them, will give you the market potential for your business.
What about advertising?
Your business growth will be influenced by how well you plan and execute an advertising program. Because it is one of the main creators of your business image, it must be well planned and well-financed. Contact local advertising agencies or your local SBA office to assist you in devising an effective advertising strategy.
How do I set price levels?
The price of a service or item is based on three basic costs: Materials, Labor and Overhead. After these costs are determined, a price is then selected that will be both profitable and competitive. Because pricing can be a complicated process, you may wish to seek help from an expert in this area.
Are some locations better than others?
Time and effort devoted to selecting where to locate your business can mean the difference between success and failure. The kind of business you are in, the potential market, availability of employees and the number of competitive establishments all determine where you should put your business.
By addressing these questions, you’ll be better prepared to navigate the complexities of starting and growing a successful business. Remember, thorough planning and informed decision-making are your best allies in this exciting venture.
Need expert guidance onyour entrepreneurial journey?
Our team is ready to provide personalized support tailored to your unique business goals. Contact us today to schedule a consultation and take the first step towards realizing your entrepreneurial vision.