SBDC Counselor Training Manual

MODULE 11 How to Start a New Business

Table of Contents
1. Performance Objective

2. Introduction

3. The Eight Steps

Performance Objective

The Business Counselor will assess the new business client's needs,
identify the Eight Basic Steps to starting a business, and provide the client
with pertinent literature and information.

Evaluation

Your proficiency with the basic issues of starting a new business will be
evaluated by the following methods
1. Role playing a typical counseling scenario with the Training Coordinator
2. Demonstrating, to the mentor satisfaction during co-counseling, the
ability to assess a client's needs and provide the appropriate
information and literature.
3. Listing at least three types of literature to be provided to a start-up
client.
4. Participate answering case study questions concerning starting a new
business.

Suggested Prerequisites

Module 1: Code of Professional Conduct

Module 2: Counseling Techniques and Interpersonal Skills
Module 4: Techniques to Cross-Sell SBDC Services
Module 6: Government Legislation, Regulation, Resources, & Services
Module 7: Marketing Research & Planning
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Module 9: Sources & Requirements for Financing
Module 10: Business Plan Development
SBDC COUNSELOR CERTIFICA
How You Will Be Trained
1. Read module 11 in its entirety
2. Compile a file of literature typically provided to a new business client
3. Co-counsel two new business client’s with a SBDC Counselor or
assigned mentor.1

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INTRODUCTION
Up to fifty percent of new businesses close the first year. To help beat
those odds, clients who are ready to pursue the great American dream-
business ownership-should follow these Eight Steps: know thyself, learn
planning, financing, legal issues, recordkeeping, insurance, taxes, and find
help.

STEP 1: KNOW THYSELF

The following "success traits" seem to be common to successful

entrepreneurs:
• Self-Starter • Trustworthy
• Hard worker • Organized
• People-oriented • Determined
• Decisive • Healthy
• Leader • Enjoy Responsibility
Past working experience should determine the type of business a client
should start. Business operation is easier if the client is familiar with the
products, services and industry. It is also important for clients to like the work
they do and should be encouraged to pursue businesses that interest and
excite them. New business start-up is much more complicated when the
client tries to learn both simultaneously.
If a client is lacking in these aspects, he or she wants to run should take the
time to improve the chances for success by working in the type of business
he or she wants to won and take classes or seminars to increase knowledge.
Good traits include patience, determination, willingness to listen to advice
and realistic expectations of the time and money required.3
A client may want to begin by completing the SBA’s Small Business
Readiness Assessment Tool or by reviewing the SBA’s Is Entrepreneurship For
You? Article.
http://app1.sba.gov/sbat/index.cfm?Tool=4

http://www.sba.gov/smallbusinessplanner/plan/getready/SERV_SBPLANNER_ISEN
TFORU.html
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STEP 2: PLANNING

A good business plan is the best guarantee for success. According to

SBA surveys, proper planning is the major factor for business survival and
growth. A business plan is prepared for three very basic reasons: to
determine feasibility, to provide a written document for financing and to
guide actual business operations.

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 A business plan should document the marketing, organizational and
financial aspects of the business. Clients should plan their company start-up
to determine if the firm will have profits or losses-on paper-before they quit
their job, get a second mortgage on their home, and commit themselves and
family to a new lifestyle. The client will determine how much capital is
needed to start and operate the business until it can support itself.
Clients should also closely examine their personal financial needs as
most new businesses cannot pay the owner's salary for a while! Lenders and
investors expect to see a business plan. A formal plan will demonstrate that
the client has done the required "homework" and developed a workable
business idea.
For more information on business plans, see Module 10, Business Plan
Development.

STEP 3: FINANCING

The client's next step is to locate funds. Clients must expect to first
commit their own savings (equity) and use personal assets as collateral for a
loan. Lenders and investors look for the following credentials:
• major personal financial commitments,
• business income sufficient to repay the loan,
• collateral in the amount of the loan,
• managerial experience in a similar type of business.
For more information on financing, see Module 9, Sources and Requirements
for Financing.

STEP 4: LEGAL FORM

The client should get advice from an attorney, insurance agent,

accountant, and other business professionals before deciding on sole
proprietorship, partnership, limited liability company; or incorporation.
Exposure to liability and taxes are the most important considerations in
choosing the legal form.
If the client will have investors, incorporation may be necessary.
Other legal issues may include obtaining a fictitious name,
occupational licenses from the city and county, sales tax registration,
Wyoming unemployment tax and worker compensation insurance, federal
unemployment tax, federal social security tax, and federal employer
identification number, trademarks, or service marks, and other necessary
permits.
For more information on government regulations, see Module 6,
Government Legislation, Regulation, Resources and Services.

STEP 5: RECORDKEEPING

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A good recordkeeping system is essential in order to provide information
required by the IRS, investors, and lenders. Records are extremely important
for planning and control: how much money was made, what the expenses
were, if there was a profit or loss, what money is owed to the business, and
who is owed money by the business. All are questions that must be answered
by recordkeeping.
The basic records that a new business must keep include:
• a check register that shows each check disbursed, check date and
amount, payee, and a brief description of the expenditure,
• a cash receipts journal that shows money received, receipt date and
amount, payer, and a description of the receipt.
• an accounts receivable ledger that lists outstanding monies owed to
the client's business by his or her customers,
• an accounts payable ledger that is a record of outstanding bills that
the business owes to its vendors,
• a payroll journal that is used to track employee payroll and includes
such items as gross and net earnings, payroll taxes, and various other
payroll deductions, and
• an inventory control ledger that tracks inventory purchased, inventory
sold, and inventory on hand. This ledger is only applicable to those
businesses with significant inventories.
There are many manual and computerized bookkeeping systems
available that may make this recordkeeping easier to manage.
The next step is to translate the appropriate figures first into a new
trial balance, and then into financial statements. For more information on
financial statements, see Module 8, Financial Statement Analysis.

STEP 6: INSURANCE

The client must be certain to have all necessary insurance coverage in place
before opening for business. The client should talk with an insurance agent
about property, liability, worker's compensation, auto, business interruption,
health, and life insurance. The client should get quotes from several agents,
then purchase all insurance from one. Better service can be obtained this
way. All policies need to be reviewed every three years-as the business
grows, so will the firm's insurance needs.

STEP 7: TAXES

"Don't mess with the IRS" is a common refrain among business owners.
Clients should start out on the right foot by learning what is required,
attending seminars and workshops, and meeting with an accountant. The
client may need a Federal Identification Number (available from the IRS), a
Sales Tax Number (from the Wyoming Department of Revenue) and a state
employment number (from the Wyoming Department of Employment). For
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more information on tax regulations, see Module 6, Government Legislation,
Regulation, Resources, & Services.

STEP 8: FIND HELP

Clients should begin by forming the mind set that they don't know it all. They
should develop a "professional team" of advisors, consisting of a small
business counselor from the SBDC and /or SCORE, an attorney, accountant,
banker, and insurance agent. If the client will ask for advice and listen to it,
the chances for success will be greatly increased. In conclusion, those who
fail to plan, plan to fail. The client should take time to write a business plan
and learn as much as possible before making such a monumental decision.
Then the American dream can come true!

Helpful Websites

Region 1 - www.pitchthenplan.com/tb/wyregion1.htm Lincoln, Sublette, Sweetwater,

Uinta

Region 2 – www.pitchthenplan.com/tb/wyregion2.htm Big Horn, Hot Springs, Park,

Washakie

Region 3 – www.pitchthenplan.com/tb/wyregion3.htm Converse, Natrona, Niobrara,

Platte

Region 4 – www.pitchthenplan.com/tb/wyregion4.htm Albany, Carbon, Goshen,

Laramie

Region 5 – www.pitchthenplan.com/tb/wyregion5.htm Campbell, Crook, Johnson,

Sheridan, Weston

Region 6 – www.pitchthenplan.com/tb/wyregion6.htm Fremont, Teton

SBA Management and Planning Series Templates

http://www.sba.gov/tools/resourcelibrary/publications/serv_pub_mplan.html

SCORE Template Gallery

http://www.score.org/template_gallery.html

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Module 11 Training Checklist

• Business Counselor __________________

• Read Module 11 _____DATE
• List three types of literature that would be appropriate to provide a
start-up client:
1.________________
2.________________
3.________________ ______DATE
• Co-Counsel Start-Up Clients Client #1 _____DATE
• Case Study Case #3 _____DATE