Starting a business is complicated, so we have developed a number of helpful resources to walk you through key items such as business plan development, financial support, and local, state and federal regulations.
Developing a Business Plan
A business plan is critical for any entrepreneur looking to start a small business. It serves as a roadmap for defining your product, growth goals, market and competitive environment. It is also critical to your financial investment strategy. Adapted from the International Economic Development Council’s publication, “Entrepreneurial and Small Business Development Strategies,” an entrepreneur should be able to articulate the following before developing a business plan:
Product – Express the reasons why customers will buy and use your product or service rather than the competitor’s products or services.
Competition – Explain why larger competitors will not be able to copy your product or service and sell it at lower prices, with wider distribution and more promotion.
Financial Projections – Conservatively project your financial returns and needs in a simple income statement and balance sheet.
Experience – Describe the background knowledge, skills, and managerial abilities that allow you to start a new venture and ensure its success.
Strategic Planning – Define the personal goals, current needs, and future interests that make you willing to devote the next five to ten years to your business’ growth and success.
There are several local resources available to help you develop an effective business plan.
Access to capital is critical for business growth and development. Capital is needed for start-up costs, expansion, and resources that will help you remain competitive with your business. There are traditionally two forms of capital – debt and equity.
Debt capital refers to loans that are repaid with interest on a pre-established schedule within a specified time period. Equity investments are capital investments that do not require repayment. Instead, investors assume partial ownership of the venture with the expectation that they will benefit from the business’ appreciation in value.
There are a variety of financing options that may be available to you:
Small Business Administration (SBA) Programs – The SBA offers a variety of programs that are suitable for different types of businesses. Potential businesses should start with their local Small Business Development Center for a better understanding of which financing option is best for you.
Small Business Investment Companies – Small Business Investment Companies were established by the Small Business Investment Act to help small businesses find venture capital and management expertise.
Bank Community Development Corporations – Bank Community Development Corporations (BCDCs) play a critical role in financing small businesses and new business ventures. Bank CDCs are consortiums of several banks in a community or region. Unlike multi-bank loan pools, they can make direct equity investments—in addition to debt financing. Potential businesses should start with their local Small Business Development Center to find out if any local BCDCs are available.
Venture Capital – Venture capital is money invested in the form of equity, with hopes that the business will grow and become very profitable. In return for the investment, the business owner gives up part of the ownership of the business.
Determining The Best Form of Enterprise
There are four main legal structures for business organizations: sole proprietorship, general partnership, corporation, and limited liability company or partnership. Before determining which type of structure meets your business needs, you should understand the advantages and disadvantages of each. The following offers a high-level overview of each, but we recommend that you consult with an expert familiar with the different structures before making a decision. Again, local resources are available to assist you with this.
Sole Proprietorship – This structure allows one person to have sole ownership, control, and responsibility for the business. This is the most common form of small businesses. In addition to generally permitting the owner to retain all profits, a sole proprietorship reduces the applicable legal restrictions and allows a quick and efficient termination of the business if necessary. However, the business owner also assumes full personal liability and can have more difficulty raising capital for a sole proprietorship, compared to other business structures.
General Partnership – General partnerships differ from sole proprietorship in that two or more people are included in the businesses enterprise. Partnerships generally rely on multiple financial and administrative resources, but the owners still bear unlimited liability for all debts and liabilities.
Corporation – Generally reserved for larger businesses, a corporation is a separate legal body that is owned entirely by shareholders. Shareholders are responsible for electing a board of directors that, in turn, operate and control the corporation. Corporations are generally the most difficult to set up due to legal and tax requirements, but once a corporation is set up, there are typically better tax benefits. Plus, because corporations are often considered to be a more serious enterprise, the owner may have more credibility with banks and lenders.
Limited Liability Company or Partnership – Limited liability structures provide the protection of a corporation with the flexibility of a partnership.
As a potential new business owner, you might be unfamiliar with various skills required to run a business. Fortunately, you can look to the following local organizations for assistance:
The College of DuPage Illinois Small Business Development Center offers entrepreneurs and small business owners free one-on-one advice and a variety of training workshops to help your business not just survive—but also thrive. The expertise the Center offers is both affordable and valuable. Resources and assistance include: financial analysis/checkup, management assessment, marketing plan development, potential funding options, and business plan analysis.
The Service Corps of Retired Executives (SCORE) matches small businesses that need expert advice with mentors in the business community who volunteer to share their expertise.
The United States Small Business Administration (SBA) offers outstanding online education through its SBA Learning Center. This portal features an entire library of free online courses for businesses of all sizes. Throughout the VirtuGrow website there are several helpful links to the SBA Learning Center. Additionally, the SBA SizeUp tool will help you manage and grow your business by benchmarking it against competitors, mapping your customers, competitors and suppliers, and locating the best places to advertise.
The Village of Woodridge serves as an excellent resource regarding site selection, construction, and the development and licensing regulations that are required to do business in the Village.
As part of your business plan development, you may want to know where potential customers are located within a certain distance of the Village. The Community Development Department has a variety of economic and demographic data available, including demographic information for the Village of Woodridge and surrounding area. Village staff routinely obtain demographic and economic statistics on the community, as well as specific trade areas (one, five and 10 miles). Reports. Contact the Community Development Department at 630-719-4750.
Developing a Business Plan
Determining The Best Form of Enterprise
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