Frequently Asked Questions

By AllBusiness.com*

The "OBJECTIVES" of the plan is the most important part. Every plan should spell out your goals. Every objective should specify results and activities that can be easily tracked. These may be increasing monthly sales or profits to some specific number or by a specific percentage, decreasing costs or operating expenses to a specific number or percentage, or maintaining cash flow, paying off a loan, or finding a specific amount of new funding.

Objectives don't have to come exclusively from financial results. You can set objectives for performance, customer satisfaction, and other key elements of success, as long as you define how they will be measured. For example, if your business wants to serve the best coffee on the block as a plan objective, then add that it will be determined by a random survey of customers (or by some other measurable means.)

To track outside sales performance, set objectives for numbers of presentations and percent of closes. If you want to increase customer satisfaction, the plan should define how and when the survey will be done and what the main questions will be. You can set objectives for average length of toll-free calls and then measure it on your phone bill. You can set dates for product release and then track whether or not they happen on time. You can set attendance goals for seminars. Just make sure that the objective comes with some measurement you can track later.

To test your objectives, list them and ask yourself, for each one, how you'll know whether or not you've achieved it. That will eliminate a lot of vague and useless objectives. "Being the best" is great, but it isn't a business objective without definition and measurement.

The second most important element is the MISSION statement. A mission statement defines long-term, far reaching goals of a company in three specific ways:

1. What does the company do for its customers? What business are you in? Think broadly about the benefits you offer, because that helps you look at the longer term and grow the business. Starbucks, for example. Offers a lot more than coffee and not just products. A certain environment, an affordable luxury or a meeting place.
2. What does this company do for its employees? Don't you want our employees to stay with you? Doesn't that mean providing decent work, useful feedback, training, benefits, etc? Isn't that one of the deeper goals of a good company" Put that in your mission statement.
3. What do the owners want? Your mission is probably to grow and produce profits, and the mission statement should say so. Profits and growth are very important goals. The mission statement should be more permanent than a topic in a business plan. You need to apply it consistently over time for it to take shape. It should be something that has real meaning when managers refer to it. It should serve as a reminder of what the main point is.

Avoid fussy, vague missions. One good trick is to review your mission statement for useless comparisons, particularly regarding what business you're in and what you do for our customers. Do your competitors do the same thing? Are you missions identical? Think about how your company is different, and use that to influence your long-term mission.

Unfortunately the VISION STATEMENT is often confused with the mission statement. Some people use the two terms interchangeably. Actually, the vision statement is about what the future will look like if the mission is achieved. Some say a vision statement images what success looks like.

Martin Luther King's "I have a dream" speech was a vision statement. Son was John Lennon's song "Imagine." Visions are frequently related to social good, so they tend to be more important for nonprofit and governmental organizations. They inspire leadership.

Do you need all three?

We recommend:

• Objectives and mission statements for any standard business plans
• Vision statements when and if you have one.

*AllBusiness.com provides resources to help small and growing businesses start, manage, finance and expand their business. The site contains Forms & Agreements, Business Guides, Business Directories, thousands of Articles, Expert Advice, and Business Blogs. Material copyrighted by AllBusiness.com.

By AllBusiness.com*

(NOTE if you are applying for an MDLF loan, you will NOT meet with the MDLF Loan Committee.)

Be prepared! Many people misunderstand what the bank can and can't do for you and why. Before you get to the bank with the plan, here are some ways to prepare yourself and your plan.

As you develop your plan, set realistic assumptions about financing options. Bankers expect you to know the basics before you walk in their door:

• They can't loan you money just because they believe in your business plan. Laws that protect depositors' money prohibit banks risking that money on speculation. Banks can make loans to borrowers who pledge assets they will lose if they are unable to pay. (YOUR COLLATERAL).
• Many entrepreneurs pledge personal assets to borrow money for their business. Many business owners have taken out second or even third mortgages or home equity loans to get their businesses through hard times. Understand that if you do this, you risk losing your house, your savings or whatever else you pledge.
• If you are applying for an SBA loan, you'll need to present an excellent business plan and 30% of the financing. SBA loans will provide up to 70% of the money you need if you get approved.
• There are at least two other ways to finance your small business: You can lease your equipment, or you can use a credit card to buy whatever you need at very high monthly interest rates (The CCBDC does not recommend this alternative, although it can be a stop-gap measure for temporary funding providing you pay it back as quickly as possible)

You should also expect to fill out bank loan applications even if the required information is in your business plan. Bank managers need to have the forms filled out and in place, business plan or not. The bank will ask for past tax returns to prove whatever information you provide about your personal or business income. Be prepared to explain any discrepancies between your financials and your tax returns.

Only the good loan managers will actually read and comment on your plan. Although a business plan is required for most business loans, there is no guarantee that banks will read your plan. Many are just filed away. Obviously, you should prepare a plan to be read, and you can evaluate the bank by how closely they read your plan. A bank that wants a relationship with you will read you plan because they want to know who you are and what you plan to do. Here are the things they are most likely to look for:

• Your business background. You have more credibility if you have had experience in business and in the field you're entering. The business plan should describe the management team with short biographies of main managers.
• Your financial projections. Bankers expect to see the three main statements, income, balance, and cash flow, projected monthly for the first year, and annually for a couple of years after that. Cash flow is the most important part of your plan.
• Realism in the financials. Bankers will compare your projections to industry reports showing average performance for different kinds of businesses. If you project margins way better than industry averages, you will need to explain why and how you are going to accomplish that. For example, if the average sporting goods store has a 33% gross margin, don't show a banker a plan with a 70% margin.
• Alignment with the financials. The amount you ask to borrow should match the financials in your plan. For example, don't try to show that you don't need any money; if you didn't you wouldn't be borrowing. But don't show that you need much more money than you can afford to borrow. Your cash flow should be realistic, and it should show how much money you need and why you need it.
• A complete plan. While management team and financials are most important, a good banker will also expect to see a readable plan, from the executive summary through to the end. It should cover what you sell, your market, company background, and specific dates and activities.

So the business plan is a two-way test. Although many banks will require a plan, not all of them will really process the plan. Be grateful if they do. That means they are interested in your business and want to build a long-term relationship!

*AllBusiness.com provides resources to help small and growing businesses start, manage, finance and expand their business. The site contains Forms & Agreements, Business Guides, Business Directories, thousands of Articles, Expert Advice, and Business Blogs. Material copyrighted by AllBusiness.com.

By AllBusiness.com*

You can forecast sales for your new product like everybody else does: Bye estimating and making educated guesses. It may be hard to forecast, but it's even harder to run a business without a forecast. You don't have to spend thousands on market research, although that is a nice shortcut if you have the budget.

Nobody knows the future; we are all just guessing. You don't need a degree or mathematical prowess or software to forecast your sales. People in your industry a very good idea of what was realistic. Although there are mathematical and statistical routines that can automatically project past data forward into the future, they are all based on the assumption that the past predicts the future.

Start your forecast by breaking it down into its components parts. It is easier to estimate the pieces and add up to the whole. Break down your business into units, then project units and average prices separately. Multiply units times price to calculate sales. That also makes it easier to go back to a forecast and modify either the units or the price when you find out which seems wrong.

Most businesses divide into units even if they don't realize they do. Attorneys, accountants, classic service businesses, all sell time in quarter-hour units. Consultants sell days or projects or hours. Taxis sell pickups and rides and quarter miles. Restaurants sell meals and drinks.

Breaking things down into units makes forecasting easier. For example, I have no idea how much a new restaurant could sell. But if I saw it, I could count the tables or possibly the seats. Then I'd estimate how many people can fit per table, how many tables are filled at peak hours. From there I'd calculate how many peak hours there are per day, and how many days per month. I might differentiate weekend hours from weekday hours. Then I'd estimate the average consumption per person.

The simple math creates a forecast. Better yet, especially when I'm guessing for a new business, it creates a rationale for that forecast. I can use that rationale to explain the forecast as part of the plan, and when I implement the plan, I can use that reasoning to catch where the forecast was off.

Sometimes you can find pieces of information that help you if you put them together like a crossword puzzle. Do a thorough Internet search for expert forecasts in your industry area, and with luck, you'll find an expert forecast in a trade magazine or newspapers. Sometimes you can find industry wide information in a trade association directly or annual report of a related company. You can't always find a forest with research, but you can sometimes find a reality check.

Forecasts will not be accurate. Accepting that will help you get over the block and start developing numbers. Do the best you can and then concentrate on tracking plan vs. actual? Then you can catch what is wrong with the forecast and revise it as quickly as possible. Expect to be constantly revising your forecasts, that is called management. Your plan is just the beginning of the follow-up, tracking, and revisions!

*AllBusiness.com provides resources to help small and growing businesses start, manage, finance and expand their business. The site contains Forms & Agreements, Business Guides, Business Directories, thousands of Articles, Expert Advice, and Business Blogs. Material copyrighted by AllBusiness.com.

By AllBusiness.com*

Your business plan needs to have solid numbers. Forecasting your numbers is the only way you're going to know what's going on in your business. New business or not, you can work expense numbers from the bottom up, and then check them from the top down. Here's how:

Start with a list of the personnel you need. Make sure you include yourself, and do this even if you're the only person involved. Make a list with names or positions or groups on the left and what you will pay them across 12 columns for months, then 3 more columns for the years. Summarize the first 12 months, and the other gross totals for Year 2 and Year 3. This becomes your personnel plan, and it gets you on your way. If you're the only person involved, then it's a simple list, but you still need it because you need to include yourself in the list of expenses.

Next, make a list of operating expenses. Start with what you're paying people from the first list, your payroll. Then make a row on the list for payroll burden, payroll taxes, insurance and benefits. Calculate burden based on payroll. If you have no idea, multiply the payroll by 20% as an estimate.

Continue with other obvious expenses. It doesn't take past history to calculate how much space you need and estimate your monthly rent. You can do that with a few phone calls. Make a few more calls about what you'll end up paying for telephones, computers, Internet Access, bookkeeping, legal services, insurance and other expenses. You should know enough about the business to be able to make estimated guesses for what you will have to spend on advertising, travel, sales and marketing materials and other key expenses.

Make a third list for sales and cost of sales. You can't make or sell a product or offer a service without having a pretty good idea of what it costs to provide. Break things down into components. Even services have cost components that you can estimate if you break them down; A taxi service has gasoline and maintenance; a publication has printing and paper; a store has inventory costs; a restaurant has food and drinks. Make a list and estimate how much you can reasonably expect to sell and what that will cost you.

When those basic lists are done, check them against available industry information. You can find information on the web or it may be in your business plan software (if you're using software packages). This will give you average gross margins and profitability for businesses like yours. This is a standard of comparison: If your gross margin (that's sales less cost of sales) is double the average, then you probably haven't included all your costs. If your profitability is way more than average, than you probably haven't listed all your expenses.

Most of the time, you can get another check on your numbers by looking at published financials of publicly traded companies. Find a few whose business matches yours in some way, and see what they report for percentage gross margins and profitability. Obviously, these are all relatively big companies and their cost structure will be different from your startup, but you should know what they spend and why.

By the time you are done, you should have a solid estimate of costs and expenses. As the business starts, track that estimate against reality, compare back and revise future budgets as often as you need to stay in control of cash flow and profits.

*AllBusiness.com provides resources to help small and growing businesses start, manage, finance and expand their business. The site contains Forms & Agreements, Business Guides, Business Directories, thousands of Articles, Expert Advice, and Business Blogs. Material copyrighted by AllBusiness.com.

The NYLovesBiz.com website states that New York State's Division of Minority and Women-owned Business Development (MWBD) helps the state's minority and women's business community. Check out www.nyLovesBiz.com/Small_and_Growing_Businesses/mwbe.asp for more information.

We have a list of helpful websites in our notebook that is always growing. Read the growing list

You want money to either start-up or keep your business running. We can guide you in taking the steps to apply for a loan. Read the Business Loans section for more information on the loans we offer.

New York State will certify your business as minority or women owned. Becoming a certified minority or women owned business will allow you to bid on government contracts. There is an application process that can be accessed at www.nylovessmallbiz.com. In the drop down box under Growing Your Small Business, click on Minority & Women.

The best resource for home day care businesses is the ACCORD CORPORATION. They offer classes, help with the certification process and offer additional on-going training you will be required to take. Their website is www.accordcorp.org. The phone number is 1-585-268-7605.

NEVER mingle your business funds with your personal funds. If the IRS audits your business, they will most likely disallow any expenses attributed to the business, even if you have receipts. The IRS will claim that it is not clear that these were not personal expenses.

The Doing Business As certificate is filed with the Cattaraugus County Clerk's office at 303 Court Street, Little Valley. It costs $25 to file the certificate; $1 for a plain copy and $5 for a certified copy that will be required to open a business checking account. . Check with your bank or credit union to see if they require a plain copy or certified copy. You will need your d/b/a to open a business bank account. The d/b/a protects your business name from being used by anyone else in the County. If you are going to do business in other counties, you do NOT need to register in each county, just in the county the company is based in.

Go to www.census.gov and pull up NYS and then Cattaraugus County. The census lists such items as income, housing, population, languages, etc.

Go to www.labor.state.ny.us to look up statistics. Employers can also post jobs they have available and potential employees can search for jobs here.

One of the best websites that outlines the obligations of an employer is www.nylovessmallbiz.com. This site has contact numbers and links for worker's compensation, disability, unemployment, notices, unemployment tax, immigration requirements, EIN numbers and information on the Healthy NY Health Insurance Program. The CCBDC also has NYS Publication 449 - "Doing Business in New York State - A Guide for Employers."

The NYS DMV website has a wealth of information. The site address is www.nydmv.state.ny.us. This site contains FAQs, application forms needed to become a dealer, inspection station, repair facility, etc., and other information. There are also contact telephone numbers listed.

The website www.dos.state.ny.us site lists most of the licensing information that is required by NYS.

The best source of information is the NYS Dept. of State website at www.dos.state.ny.us. You can search for corporate names, obtain corporate forms, search for by-law information, etc.The most common question is "How do I register a d/b/a for my corporation?" If a corporation wants to do business under another assumed name, they must file a d/b/a. There are forms available on the website to accomplish this.

Go to the IRS website at www.irs.gov and search for Form SS-4 (instructions for form SS-4). You can apply done on-line and the number is obtained immediately. The form can also be downloaded, printed and mailed in. If you don't have computer access, the CCBDC assist you with on-line access.

The CCBDC has forms and instructions to obtain a sales tax number. The number is NOT obtained here in the County; it is issued in Albany. Instructions are in Publication 750-P. In this publication is form DTF-17, the application for registration as a sales tax vendor. You can also go to the website www.tax.state.ny.us to print the application and publication.

The state will send a tax certificate which must be displayed in your place of business. You will receive paperwork on a quarterly basis to report taxable sales and to send in the tax owed NYS.

The tax for Cattaraugus County is currently 8.00%. Sales on the SNI Reservation to a sales tax exempt customer require that a copy of the tribal enrollment card must be on file to prove that the transaction was truly tax exempt. If you are ever audited by the tax authorities you will be responsible for the tax if you do not have proof of tax exempt status. This is the same if a non-profit organization, school, municipality, etc makes a purchase from you. ASK for a copy of the tax exemption certificate when conducting these sales and keep it on file.