I want to start a small business. Where do I begin?
Owning a small business is very different from managing a business or working for a larger company. The AZSBDC offers informational workshops and other events that provide basic information on starting or growing a business. Check our Events page for upcoming events at your closest SBDC Center. You can make an appointment to discuss your plans with an AZSBDC Business Analyst by calling your local Center or by submitting an Online Request for Counseling HERE. An AZSBDC Business Analyst can assist you in developing a business plan. This service is free and confidential. AZSBDC workshops vary in topic and in price.
My business has been established for some time. What can the AZSBDC do for me?
The AZSBDC provides a wide range of services to established, growing businesses, including:
- Small business consulting and planning assistance;
- Financial and cash flow analysis;
- Technology plan development;
- Identifying sources of capital for growth;
- Procurement assistance for companies interested in government contracting;
- Import and Export assistance;
- Clean Technology and green initiatives; and
- Second-stage training programs, including NxLevel and Profit Mastery
An AZSBDC Business Analyst will work with you to provide access to resources that fulfill your growing company’s specific needs. Contact your closest SBDC Center or submit an Online Request for Counseling HERE.
What is the AZSBDC and how is it different from the Small Business Administration (SBA)?
The AZSBDC is Arizona’s largest and most accessible statewide source of assistance for small businesses. It is the product of an innovative partnership between the SBA and our Host institutions, which include 10 community colleges across Arizona. We exist to put our expertise and resources to work for new and growing small businesses throughout Arizona.
The AZSBDC is funded in part through a cooperative agreement with the SBA. The SBA is a federal program that provides financial, technical and management assistance to help enterprising Americans start, run and grow businesses. You can learn about other SBA programs HERE. The AZSBDC is an SBA resource partner and the administrator of the SBDC program in Arizona through the Maricopa County Community Colleges District (MCCCD).
What does the AZSBDC do?
The AZSBDC provides one-on-one confidential evaluation and guidance by Business Analysts with real-life business ownership and management experience to help small business owners fast-track their plans for startup and growth. The AZSBDC also offers affordable workshops and seminars that can help entrepreneurs gain the knowledge and skills that they need to succeed.
Does the AZSBDC charge for its services?
The AZSBDC does not charge for counseling. Workshops, seminars and other events may have a fee attached to them to cover expenses. Check our list of upcoming Events HERE.
How do I know if I have what it takes to own/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 include:
- Am I a self starter?
- How reliant am I on having a steady paycheck?
- Do I get along with a variety of people and personalities?
- Am I good at making decisions?
- Do I have the physical and emotional stamina to run a business?
- Do I plan and organize well? Am I detail oriented?
- Is my drive strong enough to keep me motivated?
- How will the business impact my family?
What is a business plan and why do I need one?
A business plan defines your vision and your plan for your business. It identifies goals and strategies and functions as a working document. It includes basic financial components such as a current and pro forma balance sheet, an income statement and a cash flow analysis, and sales and marketing strategies and projections. Because it provides specific and organized information about your company, a good business plan is a crucial part of any loan package.
Will the AZSBDC write my business plan for me?
No. An experienced AZSBDC Business Analyst will guide you through the process of developing a comprehensive business plan, provide you with advice on projecting cash flow and capital requirements and assessing and planning for sales and marketing needs.
What legal aspects do I need to consider in starting a business?
Licenses required, zoning laws and other regulations vary from business to business and from state to state. See our Resources page for links to information sources, including the Arizona Corporation Commission. You also must decide about your form of organization (corporation, partnership or sole proprietorship) or tax status (e.g., type of corporation or LLC). Consult an attorney and/or an accountant for assistance in properly formalizing your business. AZSBDC Business Analysts do not give legal or accounting advice, but they may be able to provide you with a referral to a qualified expert.
How much money do I need to get started?
One of the leading causes of business failure is insufficient start-up capital. You should work closely with an accountant to estimate your cash flow needs. Once you have taken care of your facility and equipment needs, you must have enough money on hand to cover operating expenses until positive net income is generated. These expenses include your salary as the owner and money to repay your loans.
Are there any grants available for my small business?
The harsh reality is that 95% of businesses are financed through personal funds (savings, friends, family). Generally speaking, grants given to small business startups are very rare. Be leery of individuals or organizations that claim that there are grants for small businesses and that they will provide the information to you for a fee. Do your research before paying for questionable services.
Does the SBA offer grants for small business start-up?
The SBA’s limited grant offers are generally designed to expand and enhance an existing small business through technical assistance. SBA grant programs generally support non-profit organizations, intermediary lending institutions and state and local governments in an effort to expand and enhance small business technical and financial assistance. (Visit the SBA’s Grant Resources website HERE.)
What do I have to do to get a loan?
Initially, a lender will ask these basic questions:
- How much do you need to borrow?
- How much of your own money are you investing?
- How will you use the loan?
- How will you repay the loan?
Do your homework. Before approaching a lender, get a copy of your credit report and make sure that it is accurate. If there is anything amiss – correct it with the reporting agency. If there are blemishes – prepare explanations. If you have a poor credit record or cannot demonstrate a personal investment and the ability to repay a loan, you will not be considered a good risk. Instead of applying for a loan now, you should work at maintaining good credit (timely and consistent payment of debt) for two years and then apply for a loan.
When you apply for a 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. Work with your AZSBDC Business Analyst to prepare a written business plan with credible financial and market data. If you are already established in business, be prepared to provide two to three years of financial statements and tax returns.
Can I obtain a business loan from the AZSBDC?
The AZSBDC does not have any money to loan, but your AZSBDC Business Analyst can suggest appropriate sources for financing. With a complete business plan, you will be able to apply for SBA guaranteed loans and approach local investors and banks for capital. To find out more about SBA’s guaranteed loan programs visit their website at www.sba.gov.
What is a SBA loan and how do I get one?
A SBA loan is a loan that has been guaranteed by the U.S. Small Business Administration (SBA). The guarantee assures the lender that it will be repaid a portion of the money it loans even if the borrower fails to repay it. The SBA will guarantee up to 85% on loans of $150,000 or less and up to 75% on loans over $150,000. With few exceptions, the maximum SBA guarantee is $1 million.
SBA is a federal agency created in 1953 to help America’s entrepreneurs form successful small businesses. One way SBA helps existing and potential small business owners is when owners obtain financing from a bank. The SBA does not administer grants or provide direct funding to individuals or businesses. The SBA does not provide low interest loans.
As a business owner, you will make a request to a lender (usually your local bank) for funds needed for your business plans. The lender will evaluate your request and decide whether it can make the loan to you on its own. If the lender feels the request has merit but cannot make the loan without additional support, then the lender can request a SBA guarantee. Not all banks participate in the SBA loan guarantee program, so don’t hesitate to ask whether the bank makes SBA loans. The SBA guarantee enables the lender to make a loan that it would not otherwise provide. SBA-guaranteed loans can often be structured for a longer period of time and cannot be set up with a balloon payment due at maturity. This facilitates cash flow planning and management through long-term debt that you can repay in equal installments.
What assistance does the AZSBDC provide to me if I am seeking a loan?
Your AZSBDC Business Analyst can guide you through the process of assembling a good business plan and/or loan proposal that presents your plans clearly. If you already have a proposal, your analyst can offer feedback on its contents and make suggestions to improve the document.
A lender may suggest that you work with the AZSBDC to prepare a formal SBA loan application. AZSBDC Business Analysts are very familiar with SBA loan requirements and can assist you in presenting your loan application so that it contains all of the required exhibits and tells your business story completely. Lenders and the SBA have told us that borrowers who work with one of our SBDC Centers usually do a better job of presenting their loan request, thereby making it easier for the lender and SBA to make a decision regarding the loan request.
The AZSBDC does not have authority to approve your loan request and cannot influence the lender or the SBA in their decision regarding your loan. The AZSBDC does not have any money to loan to individuals or businesses.
What should I know about accounting and bookkeeping?
The importance of keeping good financial records cannot be over stressed. 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;
- Your request for credit from vendors or a loan from a bank; and
- Your claims about the business, should you wish to sell it.
Most importantly, you need good, detailed records to run your business successfully and to increase its profits.
What does marketing involve?
Marketing is very complex and there is no simple answer to that question. Your AZSBDC Business Analyst can discuss marketing basics that apply to your business or business concept and help you develop strategies that will make it easier for your venture to succeed.
There are four basic aspects of marketing, often called the “Four P’s”:
- Product: The item or service that you sell;
- Price: The amount that you charge for your product or service;
- Promotion: The ways in which you inform potential customers of your offering; and
- Place: The channels that you use to distribute or put your product in front of customers.
Marketing encompasses much more than just advertising or selling. It is very important to understand who your customers (or prospects) are, what is important to them, how they get their information to make buying decisions and what types of media or other sources they use to get that information. You can then plan a strategy to put your message and your products in front of them for their consideration. Understanding why prospects buy and how what you have to offer can fulfill their needs will play a major role in the success or failure of your business.
How much does it cost to discuss my business questions with an AZSBDC counselor?
The information, management counseling and technical assistance services of the AZSBDC professional staff are provided at no charge. Any existing small business or aspiring entrepreneur in Arizona may receive free counseling assistance from a member of the AZSBDC Network. Minimal fees may be charged for workshops or other training programs.
What qualifications do AZSBDC counselors have?
The professional staff members of our 11 Centers and their related satellite centers are highly skilled individuals who have significant experience in the private sector. Many also have extensive management and financial consulting backgrounds. In addition to permanent staff, the SBDC also utilizes business owners, corporate executives, business school faculty, business school students and other volunteers.
Is the information that I discuss with the AZSBDC confidential? I will be providing financial and/or proprietary information about my business.
All client information discussed by the client with AZSBDC personnel is confidential. All AZSBDC staff members are required to sign confidentiality statements and cannot discuss proprietary information about your business with anyone other than AZSBDC personnel or persons whom you so designate, in writing.
Is special assistance available to help minorities, women, Veterans or disabled entrepreneurs start a small business?
The services provided by the AZSBDC are available to all groups including minorities, women, Veterans and the disabled, on a non-discriminatory basis. The SBA has created a small business loan pre-qualification program that is designed especially for those groups who are historically under-represented in the business community. Other groups may include borrowers in specially designated geographic areas, exporters, rural businesses and other selected industries. The pre-qualification program works in reverse order to the standard loan application process. An application is prepared and submitted directly to SBA. If the loan application is approved, the SBA issues a pre-qualification letter stating the agency’s intent to authorize a loan guaranty. The borrower can then take that letter to prospective lenders to seek their participation in an SBA-guaranteed loan. A lender must agree to the loan before it can be finalized.
The SBA also offers the 8(a) Business Development Program to help small disadvantaged businesses compete in the American economy and access the federal procurement market. You can learn more about SBA programs HERE.
The Veterans’ Business Outreach Program (VBOP) offered by the SBA is designed to provide entrepreneurial development services such as business training, counseling and mentoring to eligible Veterans owning or considering starting a small business. The AZSBDC Network participates in a multi-state Veterans Assistance Program that is funded by the SBA. You can learn more about it on our Veterans Assistance page. You can learn more about the VBOP HERE.