Getting Started

Congratulations! You are among the increasing number of women entering the business market. Indeed, between 1992 and 1997, the number of women-owned business firms increased 16 percent-- almost triple the rate of 6 percent for all firms. The U.S. Census Bureau reports that, in 1997, women owned businesses in the United States totaled 5.4 million, employed 7.1 million people, and generated $818.7 billion dollars in receipts.

Whether you are looking to start your own business or expand an already existing company, this resource guide is designed to help you achieve that goal. It contains information on planning your business, resources to help you network or learn more about the business arena, and suggestions on financing your business venture.

Before starting out, list your reasons for wanting to go into business. Some of the most common reasons are:

• You want to be your own boss.
• You want financial independence.
• You want to fully use your skills and knowledge.

Next you need to determine which business is "right for you." Ask yourself these questions:

• What do I like to do with my time?
• What technical skills have I learned or developed?
• What do others say I am good at?
• How much time do I have to run a successful business?
• Do I have any hobbies or interests that are marketable?

Then you should identify the niche your business will fill. Conduct the necessary research to answer these questions:

• Is my idea practical and will it fill a need?
• What is my business advantage and over existing firms?
• Can I deliver a better quality service?
• Can I create a demand for my business?

The final step before developing your plan is the pre-business checklist. You should answer these questions:

• What business am I interested in starting?
• What services or products will I sell?
• Where will I be located?
• What skills and experience do I bring to the business?
• What will be my legal structure?
• What will I name my business?
• What equipment or supplies will I need?
• What financing will I need?
• What are my resources?
• How will I compensate myself?

Your answers will help you create a focused, well-researched business plan that should detail how the business will be operated, managed, and capitalized.

The Business Plan

The first step towards reaching your goal is planning. Many of the organizations listed in this resource guide will ask you if you have created a business plan. The following will give you the reasons a business plan is both important and beneficial, as well as an outline for how to create your own plan. (Source: The U.S. Small Business Administration)

 

Outline for a Business Plan

There are businesses that have survived without a plan, and some have been profitable, but the odds are surely against them... a business without a plan will be extremely fortunate if it ends the year with expenses under control and revenues that are profitable.

A business plan serves three important functions: 1. It is a chance to try out ideas and make mistakes on paper rather than in the real world, with real people and real money. 2. The plan is a tool to measure the business's performance. (For example, the cash flow projection can be used to compare actual expenses and revenues with monthly estimates to see how closely the business is staying within its budget). 3. Any realistic attempt to borrow money for the business must include such a plan for the lender to make a judgment on the likelihood of the business' success.

While there are lots of ways to write a business plan, this outline describes what will be required by a lender to consider any business loan request. Variations from the outline are common and depend on whether the business is a start-up or an expansion, the complexity and degree of risk, and the prior relationship of the borrower with the lender.

 

I. Introduction:

The introduction should summarize what the business is: highlight why you are the person that can make it profitable and what you are requesting. Include:

• Type of business - retail, wholesale, manufacturing or service and registered or incorporated name.
• Is it a start-up, the purchase of an operating business or an expansion?
• Form of business - proprietorship, partnership or corporation.
• List of owners, percent of ownership and annual compensation.
• Sources and uses of the funds including borrower's contributions to the total. Include a list of what you will purchase with the loan and describe the benefits that will result.
• Proposed collateral - inventory, machinery, equipment, real estate and (where appropriate) their value and balance of related mortgages.

 

II. Business Activities:

This section describes what the business does and how it will succeed in its location. Give an evaluation of the industry in general (is it growing or in decline), an objective description of the competition and a specific discussion of who, what, where, when, and how it will be done. Include:

• Description of the products or services you will sell.
• The market area and your potential customers. Any claims that you make about the projected volume of your business must be substantiated. Surveys or letters from potential customers indicating their interest in buying a service or product of your kind totaling more than the market presently offers will strengthen your claim for projected sales.
• List competition - strengths and weaknesses.
• Describe your sales strategy and method for attracting and holding customers.
• List employees by title - responsibilities and their schedule.

 

III. Management:

This will show why you will be able to do what it is you say you are going to do. Design an organizational chart showing who is responsible for what and which services (if any) will be provided by outside professionals. You should also include a resume and:

• Description of your experience related to this line of work.
• List management team responsibilities and salaries.

 

IV. Financial Information:

This will show the lender your need for the loan and your ability to repay. Financial information must be consistent throughout. An existing business should provide financial statements to show trends of the business. A start-up business will present a balance sheet for the time at which the business starts. Projections are necessary for either an existing business or a start-up and must be substantiated by business history or by supportable assumptions from the market area. Include:

• Financial statements (balance sheet as well as profit and loss statement) for the last three years - tax returns at minimum. In addition a balance sheet and an aging of accounts receivable and accounts payable dated within the last 90 days.
• Monthly cash flow projection for the year ahead.
• Projected year-end balance sheet and profit and loss statement for the year ahead or further (if necessary) to the point of "breakeven."
• Current personal financial statements for individuals, partners, or corporate officers with 20% or greater ownership including family income and living expenses. Personal financial statements for cosigners.
• If borrowers have other employment, include personal tax returns.
• If you are purchasing an existing business include appraisals and financial statements from prior owner.

 

V. Supporting Documents:

Attach any other documents, which will strengthen your plan by supporting the borrower and the borrower's capabilities. Include surveys, letters, contracts, purchase orders or any other form of commitment, which will substantiate your claim for projected sales.