How can i industry sign banking arkansas business plan template
welcome to starting a business in the new year and today's panelists is Martha lonegan welcome Martha hello Timothy thank you and hello to all the people out there listening today I am seated at the University of Arkansas at the flagship campus at the University of Arkansas in the Walton college I am in the Arkansas Small Business and Technology Development Center they're located in the Reynolds building and there are seven centers like this in the state of Arkansas and this center here in Fayetteville reaches out to the eight-county region and ask people like me marketing professionals attorneys accountants to volunteer to do seminars offered free like this with the webinars or sometimes for small fees all over the eight County region in Arkansas to help startup businesses and also existing businesses who are looking at wanting to borrow money to expand their business open a second location and so I am a commercial SBA loan officer with legacy National Bank which is based in Springdale and we have five branches in Benton in washington county and i myself was a former business consultant here at the center for four years helping small business owners so i can tell you firsthand that the service is offered here for free at the walton college are very valuable they're very valued by local bankers and helping them to make decisions about making loans to small businesses I also in my other life was a business attorney represented small businesses and banks and my husband and I are still going on 11 years as small business owners we have an auto hotel business in Arkansas Oklahoma and also going into Kansas a little bit so that's my background and that's what I do small business is a passion of mine I come from as far back as I can count five generations of small business owners and I love working with small businesses if you're not familiar with Northwest Arkansas we have an explosive burgeoning small business and technology startup community here we a lot of growth in Northwest Arkansas because about 25 miles north of me is the headquarters for wal-mart Stores Inc we also have Tyson Foods which is one of the largest producers of meat chicken and poultry in the poultry and pork in the United States and Northwest Arkansas is now the metropolitan area 500,000 people so we are growing and small businesses absolutely booming here and so starting a business in Arkansas this is about Arkansas typically with these webinars we have people from all over the country and even though I'm going to talk about starting a business in Arkansas all of these basic applications and things you need to think about and ideas are all applicable no matter where you are in the United States almost every state recognizes LLC is a business entity important things like if you hire an attorney to help you it needs to be an attorney who does small business work not just someone who typically mostly does divorce law etc so hopefully all of these tips and ideas will be a value to you even if you aren't in Arkansas but if you are in Arkansas I do encourage you to go to one of the seven small business and technology development centers for assistance I know our bank is always thrilled when our loan applicants have come to the center because they're helping them go through the startup process or helping them analyzed with free market research the place they want to open their second location in so we're always very bankers are very excited when their loan applicants have been to a Small Business and Technology Development Center in their area and there are over 900 of them in the United States so if you just type in small business development center Cleveland Ohio you're going to find an SPDC near you so these are the main things the SBDCs offer training I talk to you about the different seminars on social media marketing seminars on legal entity choices the market research now not every SBDC will offer market research the SBDCs are partially funded by the Small Business Administration which we're going to talk about SBA loans in the seminar today this webinar but this Center it does use some of its fun to purchase market research from major national market research companies you can find out if you're opening a bakery in Bentonville Arkansas which bakes good item most people in Benton County but did they buy more scones did they buy more cookies what was the average price you can get a traffic count on the three streets you're considering opening your bakery in and then the consulting the center here at the walton College both of the business consultants have masters in business administration degrees the center director Bill Fox as formerly owned a small business and was a banker himself so reach out to these SBDCs so the main thing we're going to talk about on the agenda today are the feasibility of your idea the steps how you have to write a business plan even if you don't need a loan even if your self funding which shoot sixty percent of people self-fund either with personal funds friends and family loans or retirement accounts we'll talk about some different availabilities and ideas for financing obviously the center is partially funded by the Small Business Administration I can tell you at my bank legacy National Bank is a preferred lending partner with the SBA we believe in sba loans because normal loans to startups would not pass typically most banks loan review policies but when the bank can get a guarantee from the federal government and enter your loan as an SBA loan you are much more likely to get financing and to get better terms so you're going to hear a lot in this seminar about the SBA and if you are a taxpayer in the United States of America you are helping to fund the Small Business Administration to help grow our economy so it's something you need to know about is your idea feasible these are the three main things market management and money you have to have all three there can't just be a great demand and yet you have no idea how to run a business because no one's going to be able to buy your products if you can't keep the doors open so all three of these are very important market what are the driving forces what are the competitive forces and notice on this it says knowing your niche there can be a hundred different types of businesses that all sell a certain product in a major metropolitan tenaria an example I used to give when I taught this seminar for the center was we have a entertainment district here in Fayetteville called Dickson Street and it's right next to the University of Arkansas and at one point in a three-block radius they had six south american mexican style restaurants and you would think oh my goodness how can six Mexican restaurants located within three blocks of each other possibly operate well it shows one that there's a demand for that kind of food each of those restaurants one was only open on thursday friday and saturday late at night it was street tacos and they didn't even have a place for people to sit down more than four people one is a fancy restaurant that you know plate of tacos is nine dollars because it's a sit-down restaurant one was at chipotle a national chain the college students coming into town for the first time already recognized that and would go there one was a locally owned Mexican restaurant started by two University of Arkansas students and it had big sign out front that said owned by University of Arkansas alumni so it's finding your niche what's special about your business you can't just have the best barbecue sauce you can't just have the cutest clothes in town there has to be something special that can be something as simple as opening your type of store in a part of town that doesn't have that product or service yet it can be something as simple in a big city as easy parking extra hours opening early something I'm working with a client right now who's going to open a store where you can go in their showroom and custom order on a screen their clothes you can order them online you can order them in the showroom you can custom design them or you can order them in person and that's a special niche there are lots of clothing stores in Fayetteville but not that many where you can sit there on the screen and design your own clothing so what is special in marketing we call this unique value proposition your uvp you have to have something special and unique about your service or about your product in order to compete in the market and then obviously market size and share a lot of times people will say I wish we had this business in our well the reason it may not be there is there's not enough people living there management notice it says at the top your responsibilities it doesn't say you have to do all these things as a small business owner you're going to have to make sure you have the right person assisting you or the right employee or else you are going to have to learn about all these different areas marketing financial control cash control which is king is the business cash flowing operational efficiency I always encourage people to go visit other stores other businesses like yours and other towns when you travel see if you can get an idea for how they are operating their store to make yours more efficient and then once again putting the right person in the right job often small business owners are not able to hire full-time employees at the beginning in fact you're likely not even going to be able to pay yourself a salary you're just going to be able to take money out at the end of the month when there's more money than month so if you're going to hire someone another great resource is on temp agencies and the great thing about temp agencies is that you don't have to interview the people you don't have to worry about asking inappropriate or illegal questions if you just don't have a good fit with the person you can call the temp agency and say I'm sorry I just don't feel that that person is a good fit for us please try the next candidate and then they take care of payroll now that means instead of paying them eight dollars an hour you may be paying the temp agency 12 but they're taking care of all those things for you so that you can get a right fit for the job money you have to make a list of all your startup costs this is something that spdc and consultants will help you with but they're not going to call the insurance companies for you they're not going to go interview website developers for you they're not going to go out and talk to the owner of the strip mall and find out if there are fees each month that you pay on top of the rent for parking or for snow removal you as a small business owner have got a lot of footwork to do banks like mine will look at what you present us and work with you and see if we can find a good loan package for you but we don't put the don't know how much you need you have to show us with a list of startup costs how much you're going to need what it's for and then how much you're going to be able to invest there are no one hundred percent loans on for startups especially you're going to have to have either a piece of equipment you already own that you can contribute to the business or you're going to have to have some money saved up or borrowed from friends and family to help be part of the initial down payment with SBA loans typically that may just be ten percent but if you're a startup and you don't qualify for an SBA loan be expecting at least twenty percent so if the business is going to run all your startup's costs and you just Herman you're going to need a hundred thousand dollars to open this business you as a small business owner if you get an SBA loan are going to be expected to contribute ten thousand dollars so you might pay for a piece of equipment for the kitchen in the business or you might buy all the office furniture you have to show that you have what we like to call some skin in the game you're investing in the business as well as the bank and you need to create sales projections to show the profit and loss and the cash flow that you're expecting for three years out and people often say well how am I supposed to know I don't know how much this business is going to generate well that's all a process of learning the industry if you go to an SBD see the people there the center they can do some research and show you what typical stores like yours or typical accounting offices in your area are reporting as gross sales you can obviously gauge that down a bit since you're going to be new you know I worked with people who have worked say in a clinic or a hairdresser shop and they kind of have an idea of how many of their clients are going to come with them if they go open their own physical therapy office or their own hair salon and so they have an idea of how many of those clients will come and an idea i think you know i'll be able to bring in about three thousand a month and you set this all out these projections and then you plug in all those monthly expenses this is how much more rent is this is how much my utilities will be this is how much the website company is going to charge for maintenance and you plug those into spreadsheets and it makes financial projections and then you can say I hope it will increase ten percent the second year and by the third year I should be doing twenty five percent better than this year and so this is to show the banks I think this business will cash flow this is how much I think I'll make these are my expenses I know about and it helps them makes to make a good decision on making the loan whether or not it's going to be a profitable business so business plan every small business is going to need a business plan and as you're going and planning in the future every small business needs to have an accountant and an attorney that you consult with and don't be scared about going to attorneys when I talk to people a lot of the time they say oh I can't afford an attorney and I can't afford an accountant especially if in your in a larger town there are going to be attorneys and accountants who do a lot of small business work they're going to have packets where you know have a flat fee for LLC they'll set up your LLC file your articles of organization help you draft your operating agreement teach you how to set up a bank account because bank accounts for businesses are very different than personal an accountant can help walk you through the steps if you're going to have yourself as an employee or have employees how to do payroll etc but it needs to be someone who regularly practices in that area before you develop your business plan you've got to know what kind of entity you're going to have so C corporation there and the screen on the left and s corporations those have shareholders now with shareholders come shares and shares can be bought and sold on the open market so most businesses especially in Arkansas go with the limited liability company route and with a limited liability company instead of being a shareholder you're a member and then you have an operating agreement and it states what the percentages are are you 5050 are you 60 40 who's going to manage the business on a daily basis what are we going to do with this LLC if one of us gets divorced what's going to happen with this LLC this business if one of us passes away so you need to have all of those things find out in that document the reason you want to have an entity which is listed for on your screen on the left is limited liability that means you put the assets of the business in the business's name when you sign documents you sign as the member of the business or the member manager and this limit your liability so if you set up a contract with someone to deliver 500 t-shirts for an event and you sign the contract as Martha's t-shirt company LLC Martha Wanda and comma member then if something goes wrong with that contract they can't sue me as an individual they can only sue the company and so these entities on the Left have an FBI n number and that stands for federal employer identification number and that is the equivalent of an individual having a social security number does that make sense so f EIN numbers start with two numbers versus your social security number starts with three a
d so then that's going to trigger when you set up this legal entity it's going to trigger filing its own tax return and business tax returns are due in March personal tax returns are due in april and the IRS computers will look to see that the business return filed in March which back on like page 22 says these are the members and these are their social security numbers that that tax return matches the income that you show you received from the business or the loss when you file your personal tax return that's how those flow over so it's very important to have that F EIN number that's something your accountant can help you get or if you hire an attorney to do the whole package for it people ask me all the time well can I do legalzoom.com can't I do all this on my own well the answer is yes you can but I know no good business consultant is going to advise a person whose background is in cooking or whose background is in fashion to go do very important business work that lays the foundation out for your business I know in Northwest Arkansas we have attorneys who for seven hundred fifty dollars have an entire LLC package and they will walk you through all this and help you understand how to operate your business legally to protect your assets on the right hand side is you just doing business as you example I always give as say I'm a really good seamstress than one year I make a pageant dress for my niece and she goes in wins a beauty pageant and then all the girls that she knows in the pageant industry started saying oh who made that dress and she says well my Aunt Martha made it I can start making dresses and selling them to these young ladies and then put that money in a bank account it would be a good idea to open a separate bank account that's Martha wan digan DBA Martha's pageant dresses and then at the end of the year I'll just have my regular tax return and all report to the government I spent this much money on pageant materials and supplies and I spent I brought in this much money from people buying the dresses from me so here's my profit and I reported on my personal return so you can do it that way and a lot of people start out that way but you don't have that liability protection if something went wrong say a young lady came to my house and fell down the stairs when she was coming in to do a fitting on her dress she's going to be soon me personally it's not going to be my business it's going to be my personal home insurance that is at risk I don't have any business insurance because I haven't set up a limited liability company so those are the things you really need to think about at the bottom of that slide is the Secretary of State's office for Arkansas where you can research and learn about this it's where you file those legal documents every one of you has a secretary of state site in your state that you can go and get information on that so we're planning all these things in order to plug them into our business plan so our business plan is going to have a page where you describe all of these things listed on the screen you're going to do this for yourself whether you need a loan or not if you're going to need a loan from a bank you absolutely have to have a business plan they need to know that you have covered all of these topics that you know how you're going to market your business that you know who's going to operate who's going to be there a day to day if it's all online sales who's the tech person who's going to make sure that you can always access your server who's going to check the orders who's going to respond to customer complaints who's going to fill the orders they need to know all of this information up front and you can go out there you can just Google business plan templates and look at some examples or you can go to one of the 900 SBDCs in the United States and there are free business consultants who can help you put one together I know the center here at the walton College the business consultants if you email them they will send you a free business plan template it's just a word document it says at a market analysis and that's where they could order you market research to put in there you can talk about the general market how there are so many Mexican restaurants in your town and are always packed on Saturday night and how you're opening your Mexican restaurant in a burgeoning part of town that doesn't have any and so you'll be putting this narrative in notice it has the projected balance sheet income statement cash flow statement those are all the things that I talked about earlier how you need to get projections together especially for a lender to show them that you're confident you can sell this much product or get paid for this much service these are your expenses here's what you think your loan payment will be and at the end of the year you'll still have some money there and all of that will be covered so all of these elements go in a basic business plan but even if you're not getting a loan you need to plan this out and analyze your business in regard to financing I've talked about before I would say when I was at the center here for four years sixty percent of our cut our clients self funded through friends and family through retirement plans etc or you go start looking at the bank financing and with an SBA guarantee the banks are going to be more likely to make that one the SBA is a corporation that was created by the US government back after World War Two and it's like a giant insurance company and so local banks will have you fill out sba forms and they'll look at your business plan they'll look at your financial projections don't need copies of your articles of incorporation you'll have to fill out a form that says you're a US citizen or you have a green card and can work in the united states that you haven't been convicted of a felony and they'll help you fill out this application and then if the SBA approves it the bank will get back depending on your loan amount 50 75 or 85 percent of the loan balance if your loan fails so by the federal government through the SBA offering this it gives banks and opportunity to make loans that otherwise would have been too risky under their in-house Loan policy there are also alternative financing options out there different companies the crowd funding etc and I urge you to be really cautious about those always look at the interest rates always look at the terms there are some that are very reputable such as kiba and we have a local group here in Fayetteville Arkansas called startup junkie consulting and they are located here in Fayetteville Arkansas and they help sponsor people to apply for Kiva crowd funding and that is a very reputable group and that can help people get loans at no cost I mean at no interest rate and typically loans under twenty thousand dollars so you can check in your area and see if there are any Kiva sponsorship groups that help small businesses get started and like I said startup junkie here in Northwest Arkansas works hand-in-hand with the center here at the walton college and they help sponsor people to get those types be sure if you're going to start planning your business based upon getting a loan that you make sure you have all the documents sign that you know you're getting the loan before you sign a lease before you start ordering inventory because if something happened and your loan didn't go through then you're still going to be on the hook for whatever documents you signed there are no grants for for-profit businesses there's a great confusion out there in the market I think what people are confusing it with is once your business has been operating a few years you can bid on government contracts and government contracts are sometimes set aside for dis a disadvantaged groups in our society that have not typically owned businesses women-owned minority businesses and you can have an opportunity in certain cases to bid on government contracts above the general public that the grants are for not-for-profits don't expect a Harper set financing we talked about that and so the Small Business Administration loans are very very helpful to small businesses and small does it mean just tiny typically an SBA loan is for a small business that has less than 500 employees and less than five to seven million dollars a year in gross sales so you can see SBA funding is available for what I kind of consider to be pretty medium large companies if somebody's got 200 employees and they're making 5 million a year to me that's a pretty good sized business so they're available for all types of businesses one of the things SBA funds are not available for or if you just go by like a strip mall and you want to lease out the spaces in it that's not operating a business but if your business takes up fifty percent of the strip mall you can still get SBA funding to buy the whole strip mall and least part of it out so it's really rare that there's a specific business that the SBA doesn't allow funding for and you can go to sba.gov SBA govt go to that website they have so much free information about starting a business general business not just about going to get an SBA loan SBA loans are not going to be as low and interest rate typically six to seven percent has been average but I know we're starting to see in Northwest Arkansas if you have good credit scores a lot of 475 and five percent SBA loans so don't just concentrate on the percentage if you go to a bank that doesn't do SBA loans they may offer you a three and a half percent loan to buy a piece of equipment but likely it's only going to be for three years whereas if you go to an SBA bank and get a loan for a piece of equipment say it's four and a half percent you're probably going to be able to get that equipment loan 52 up to 10 years think about that that's going to cut your monthly payment in half if you can get a 10 year equipment loan on an $80,000 bulldozer at four and a half percent that's a lot better deal for you as an entrepreneur and a start-up then a three-year note on the same $80,000 piece of equipment at three and a half percent so really look for these banks that do SBA lending especially if you can find a bank that's a preferred lending partner that means the SBA has given certification to that bank that that bank has good SBA staff on hand and they're going to be able to approve a lot of your loans in house they've already got authority from the SBA they're going to go much more quickly and they know how to process those loans so look for PLP preferred lender program banks in your area not every bank does that because they have to designate staff and as you can see the SBA by funding this center cares about small business your tax dollars pay for it I'll co on real estate if you're going to buy your building you can go up to from 5 to 25 years typically an in-house bank is only going to give you 10 to 15 years on a real estate loan for a business but if you can get sba backing you can go out 15-20 years there is a fee and you'll hear this oh you don't want to get an SBA loan there's three percent fee but if you can get a longer time that is a much better deal because it's going to help your cash flow because your payments are going to be lower that three percent fee can be put on the loan you don't have to pay it upfront you can if you want but don't be afraid by paying that fee that the SBA loan is not the better choice for you also if your bank sells or if your bank were to go out of business and you have an SBA loan it never changes the only thing that might change is the address you send it to if you have an in-house one that the bank just generated itself without an SBA guarantee if they sell the bank the new buyer of the bank could call your note do and say we don't want to continue to service your loan you have 60 days to go out and get 90 8212 dot 14 cents the on your loan and so that is really valuable to know that your note is never going to change and that's another reason we encourage people at the center and in general with my bank is to look at SBA loans whether you come to our bank or not go find a bank that does SBA loans because they're very very supportive of entrepreneurs SBA money does not come from the SBA it backs the loan from the bank it makes her so you get to steal deal with your local banker you're not going to be dealing with SBA in Washington your bank will send them reports keep them updated let them know what's going on with your loan but you will deal with your local bank and also we're not going to have balloon notes where you just make interest only payments and then once a year pay the principal they will be regular principal and interest loans unless of course it's a line of credit and so line up credits are also offered through the SBA all right as you're starting this you need to know if the type of business you're opening requires a special license or a permit they're going to open a liquor store if you're going to be a hairdresser if you're going to be a doctor or a psychologist or a psychiatrist make sure that you have the proper permit and license in order you're going to check this is going to vary from city to city county to county state to state zoning you may pick a really cute little old Victorian house in a part of your town and think oh my goodness that would be such a cute clothing store well you need to make sure that that property is zoned or get its own through the city before you go sign a lease on it don't sign a lease and say oh I'm sure it'll get Ruiz owned because if you sign that lease for five years and then the City Council turns down your zoning you're stuck with a five-year lease on a building camp at your business in we talked about getting your f EIN number if you're going to sell products to the public you especially are going to need to learn sales and use tax and this is a very complicated area of law and you need to consult a local business attorney and a CPA to make sure you are doing your sales and use tax because what happens if you open a retail business you have now become a tax collector for the state you live in you collect that tax for them and you send it to them weekly or monthly and if you don't do that they will come and in the state of Arkansas they will chain the doors to your business and they will put orange tape on the front door and they will shut you down so learning how to do sales and use tax properly it's very very important and you need to get some consultation initially with someone who knows sales and use tax a CPA or sales and use tax attorney to make sure your setup you don't have to hire them to do it for you every month they can teach you payroll they can teach you how to pay sales and use tax and how to collect it properly and make sure your system set up and you can learn that yourself but you need to seek expert advice initially because it is very very serious once again making sure you're going to be able to get that permit or get that license before you start signing contracts to open a business is very important and we already talked about sales and use tax there are other taxes if you're going to have employees you've got to learn the whole payroll system and the taxes that you as the employer pay and the taxes you take out of the employees wages and then where you send those taxes states have corporate and franchise taxes and I have down miscellaneous taxes different cities different sections of cities I went on vacation to San Francisco two years ago and the hotel I say that had five different taxes five taxes there was a state tax there was a city tax there was a financial district improvement tax there was a sewer I can't remember all of them but there were five there was a hospitality as a city hospitality tax a state hospitality tax you're going to have to learn all the different nuances of the taxes that are in your area and learn them very very well here are and Timothy said these slides are going to be available for you online he'll have them for you up on the ASB TDC website notice how these website this website address for both of these 1 ends in govt which means it's the federal government and one ends in govt with Arkansas before you can trust these websites for information about ho
to start a business about taxes be very very cautious of websites that end in dot c om and are giving you business and tax advice they're going to want your credit card you're going to end up paying money and they are private companies they're not the government they're not the state so wherever you live go to your state's website Secretary of State's office your state sales and use tax it's a great idea to educate yourself about the different taxes about the things that are required of you that way you can have an intelligent conversation with the accountant or the attorney you hire also the conversation is going to go more quickly which those people work by the hour you're going to save money so if you understand the difference between an S corp and an LLC somewhat before you go in and talk to the attorney they're not going to have to spend 30 minutes explaining that to you so these are some great places to get some tax advice and also here that are on the slides that Timothy will have available for you afterwards our videos this IRS website it has tons of two and three minute videos about different kinds of taxes different parts of your tax return it is a just a fabulous the sba.gov and the IRS gov websites are just a wealth of free information current relevant and the IRS one even has videos that you can watch and then therefore Arkansas is one ours is called the Department of Finance administration in Oklahoma it's called the Oklahoma Tax Commission every States going to have different sites and they'll have a lot of information out there with you record-keeping if you don't like keeping books keeping receipts keeping records you will be a miserable business on you're going to have to have a system you can't just go to walmart with your business credit card and charged a bunch of office supplies and then just keep the credit card statement for the business account that says walmart 2961 if you get audited you have to have the walmart receipt that shows file folders printing paper pens and pencils you have to be able to show that those were business-related expenses so you can get a scanner or you can throw them in a file I don't care but you have to keep all of those anytime you buy a business asset for the business you need to that receipt for many many years because now you're operating a business in that city in that county you're going to have to file a business property returned with the county they're going to send it to you it's not a heap you have a small business it's not a huge bill I know when my husband and I first started his business all we have is a home office but we had a computer we had furniture we had file cabinets we had telephones and so the first year we established the business we got a county a business property tax bill and I want to say it was like forty seven dollars well that property has depreciated so far down and we have replaced the computer once but now I think the bill last year it was actually like three dollars and sixty-two cents so you have to keep up with that over time and I sent them a check for three dollars and sixty-two cents because that is the property that we have in our home office and so if you have a bigger business a full retail store this is something you've got to keep up with to file every year and tell the county what business property is in their County and like I said you can consult an accountant when we first set up our small business I was on the phone I was down there the accountant was teaching me how to do payroll my husband's an employee she was teaching me how to do quarterly filings and send in quarterly tax estimates and so I got a lot of bills from her to first six months now I email her occasionally she sends me updates she does my taxes that doesn't have to be a constant expense but you need someone who knows what they're doing to train you on this banking you're always going to have a separate bank account even if you start out as a DBA even if you say oh you know I really just can't afford I'm not sure how this is going to go I don't want to set up an LLC say you're going to make baked goods and take them to farmers markets and you just want to see how that's going to go that's fine but go set up a separate personal checking account that has your name on it and then Jones family bakery DBA on the checking account then every time you go to a farmers market take all of that money that you make and put it in that bank account every time you go out and buy our and and and blueberries and and yeast and all the things you need kitchen equipment write the check out of that account then at the end of the year when you go to your taxes you can download that to a memory stick take it to your accountants they run that you can get a little QuickBooks or a little quicken and they'll have the profit and loss that will pass through to your personal account obviously if you set up an LLC or an S corp you're going to have a federal tax ID number and you're going to go to the bank and you're going to set up that bank account and it's going to be under that number and under your business's name and then you and whoever your member partners are are going to be authorized signatures on that account and that's where you keep just business it's your business and after running it for six or seven months you're able to look and say you know I think we got about 10,000 extra dollars in here and looking at our projections we can still pay our expenses you could each take 5,000 out of that account and give it to yourself personally as a distribution that's your business you can make those decisions but then you put that money in your personal checking account and that's where you pay for a vacation pay for your kids to go on a ski trip with the church youth group you just have to be very careful to not ever write any checks or charge on the business credit cards any personal expenses everything has to be related to the business say the business has a vehicle that vehicle needs to be titled in the name of the LLC and you can use that business account to pay for gas that you use driving the car that's fine you can use that account to pay for oil changes and car washes as long as the car is owned by the business you just have to be very careful to not mix and mingle personal with the business account because what this causes is a piercing of the corporate veil if you're not operating in as a business and if you don't have business insurance on that car then if you have a car wreck and someone investigates that they'll say this really wasn't a business you just did all this for a tax break you know you're using this business account to pay to get your nails done you're using this business account to pay for personal family vacations judge it's not really a business and we want to go after him personally now also for this car wreck they really weren't operating a business so you have to be very careful to run it as a tree business insurance when I worked at the center people will call all the time and say hey who's a good insurance company for an accounting office who's a good insurance company for a daycare and my answer was I have no idea insurance companies change their policies one year they'll say no more chicken house loans one year they'll say we're not insuring restaurants again the best thing is call if you want to call some insurance companies and say do you provide restaurant coverage ask other people you know in town who operate a business like yours who's your insurance agent give them a call get at least three quotes but there are a lot of areas listed here on the screen of different types of insurance you are going to have to have and it's impossible in any seminar to talk about all the different kinds of insurance that people are going to have to have it's going to be very specific to the type of business you have and it's going to be something that you're going to have to go over step-by-step what your business is offering are you going to need life insurance on each other if after a few years this business gets built up and it's worth a lot of money and it's in your operating agreement that if one of you were to pass away that your family or your that you as the partner gets a first right to buy from your heirs your interest in the business what if in five years that business is worth a half a million dollars do you have 250,000 laying around to buy your partner's interest so that her husband or his wife or their kids don't sell their interest in the business to the public that's why you have life insurance on each other so that you'll have that cash if something happens to your partner personnel like I said most small businesses that I consider true small businesses mom-and-pop stores don't have employees initially but if you're going to have employees you need to understand the difference between employee and independent contractor just because you tell someone they're an independent contractor I don't even care if you draft a contract you bet have an attorney look at that because if it's found out in a couple years they were really an employee you were controlling them you were paying them and they weren't an invented contractor the IRS and the state taxing authorities are going to come after you so that's why we advise small businesses a lot to look at hiring a temp agency initially so you can learn that whole process and don't have to learn all these things if you hire one employee or 62 you need an employee handbook if you don't have in an employee handbook the proper procedure for calling into work that you're going to be late or not come to work do you accept texts do you accept emails do they have to talk to you who does it go to if you don't have that rib now you will lose every unemployment hearing that ever comes your way you have to have an employee handbook this is something you can go find one online you can draft it up put some ideas in it of what you think it wants to be but you must take it to a local attorney who practices in your state and let them look at it if you put something in your employee handbook that invite that violates your state employment laws it's totally worthless and those vary from state to state home-based businesses check with your city we have a little tiny town up here in Northwest Arkansas called Tontitown Arkansas i think the total residents within the actual town itself is probably 1,500 people they have an ordinance that if you operate a home business in the city limits of Taneytown Arkansas you are to pay a $25 fee and register with the city clerk every year so my answer is I don't know if your city has restrictions like that for home-based business you need to check the covenants in your housing addition you may not be allowed based upon those housing covenants to operate any kind of home business in your home and I got news for you nosy neighbors will figure it out when they see UPS trucks or people coming there for meetings so you need to check all of those decide if you only have a p.o box fedex can't deliver their fedex in the post office are not friends you have to think about all these issues if you're going to have a home-based business do you want people knowing your home address do you need to go set up an address somewhere else at one of those like mail boxes etc places or things like that telephone should you get a business telephone can you use your personal if your business expands that's going to take over your personal cell phone marketing notice at the top website I don't care what kind of business you own or operate you have to have a website and I tell people all the time I can say it once or I can say it 16 times you have to have a website this is how the world finds you it's how people investigate you I don't believe there's any such thing as a word-of-mouth referral left in the business world as soon as I tell someone to go eat at a restaurant as soon as I tell someone to go hire an attorney the first thing they do before they contact you is get on their phone and look you up your first impression as a business owner too i would say ninety percent of your customers is what they see on their cell phone about you so you need to make sure that looks good it doesn't have to be the fancies website in the world but it needs to be clean it needs to be clear it needs to look modern and it needs to be mobile ready there are web site companies out there like Weebly that you can set up your own if you can click and drag and load pictures you can create your own website and you can hire them and pay them a small monthly fee like nine dollars a month to host you on the web but if you're opening a full-blown store if you're opening a major accounting office if you're having an online sales company you need to investigate hiring a local small business company that sets up websites it's vitally important social media every small business should be on linkedin and at least facebook if you sell products if you have visual events and like if you're a wedding planner if you have very beautiful visual things you can take pictures of and especially products instagram is absolutely vital and then it begins to go on and on but social media is very important that the main point of social media is to get people to your website so we still go back to number one you have to have a website networking especially if you're in a small to medium-sized town joining chambers of commerce join downtown business associations going to networking groups meeting people getting them where they know like and trust you for referrals is gold to small business and I know it takes time away from your business but you need to be a part of your community you can't just open a small business in a town to make money to suck money out of the town and make yourself rich make it where you have a job or you don't have to have a boss you have to show the community that you're giving back get associated with some not-for-profit group or public school group or some entity in your town where you can give back to the town I promise you it will pay back to you when people see you giving to community groups and being a part of the community they will want to come to your business because they would rather buy local even if you're a little more expensive even if there's not as going to parking at your little bodega as there is in the Walmart parking lot they will go the extra mile for you if they feel like their dollars are going to someone who loves their town who wants to help grow their community I see it every day I am still with my bank I'm very involved with two large chambers here one in Fayetteville Arkansas what in Rogers Arkansas join as many chambers as you can people travel the region they go to different towns for dinner and for services and someone's hiring a wedding planner they don't care if you're in Fayetteville and they live in Rogers 25 miles away but they might have never heard of your wedding planning company if you hadn't joined the chamber in the other tab so join lots of these chambers of commerce go to these events meet people they have business after hours they have morning coffee get togethers go out and network and refer business to other businesses say you are a wedding an event planner you should get to know some local construction rental places that rent generators go meet those people develop a relationship with them refer people to them for generators and I bet somebody at that construction company is going to have a child a son or daughter who gets married in the next two or three years so learn to work your community and give back set up an advertising budget go out and get vids decide who is your target consumer where are they at are they on Instagram do they read the local society magazine that comes out is there a little flyer magazine in your town about all the children's stores is radio advertising something for you look at what your future competitors are doing it's called the world wide web and it's called capitalism go out and look at your future competitors where are they advertising if they're big companies and their advertising their over and over it is likely it's working because they have a marketing team and the marketing team is mea
uring that and they're not going to keep taking out an ad in this local magazine or keep putting ads on this radio station if they're not seeing some return on that investment so be very aware be looking at your competitors because I promise you as soon as they hear you're coming into the market they are going to be looking at you so yes it's a lot to do I know when I have initial meetings with entrepreneurs and are talking to them now about the loan process but before when I was a business consultant I would set the meeting for about an hour and they would often say oh I think it's going to take a couple of hours and after about an hour in I would start to see her eyes gloss over and I could see them going oh my goodness I have so much to do and what you do is you set a plan all right have you decided if you're going to have a brick-and-mortar store or if you're going to work out of your home or do online first that gives us our first checklist let's make that basic decision then these are the startup costs we already know here's a list of all the startup costs I need to get estimates on now maybe you need to go home and talk to your spouse are you going to be willing to be a co guarantor on this loan anytime you're starting a business and you have a spouse or a partner who has steady income and is willing to help garen t the repayment of the loan it's going to help you more with that loan process then you need to start deciding alright are we truly a small business or we're going to have less than 500 employees neither one of us have a felony conviction we're able to work in the United States or US citizens I think we should maybe try the SBA right start looking for a bank that can offer you both you can try looking to see if you'll qualify for an SBA loan and if not look at their in-house products but look for those SBA preferred lenders who can offer you both so that you're able to have all the options in front of you make sure you can get a license to open a liquor store in the town you've chosen you don't get to do something a liquor store at least in Arkansas because you want to it's going to be very each town has so many licenses they can't be so many feet from churches they can't be so many feet from schools so maybe a town could have 22 liquor licenses but there may only be four spots in the whole town that you can legally build one so you have to do all that investigation in advance on the final thing will be the signing of leases and other agreements but do not do that until you know you have your funding do not do that until you know that you can get product from your supplier I worked with people before who said I'm going to open this store and I'm going to sell these products and it's going to be great because nobody sells this line in Northwest Arkansas and I'm like well let's go talk to the supplier and find out what they're going to require sometimes they're going to require you to get a federal tax ID number and have your LLC set up before they'll even talk to you and I had this with a client one time who was going to carry a certain line of fitness clothing at her yoga studio and she went through this whole process and we were getting her ready to go and when she went to that supplier the minimum buy-in was a hundred thousand dollars they would not sell anyone less than a hundred thousand dollars a starting inventory so that business plan changed and we came up with another idea for a backup product something else to increase sales besides just the yoga classes that she was going to offer so you you need to investigate all that and be sure that what you want to do you can there is a free ebook about licenses permits and tax requirements for the state of Arkansas offered by the ASB TDC and it's available on their website and you can go to the ASB TV website you already know that website it's where you signed up for this webinar and you can go there and there are lots of free ebooks and resources there so I encourage you if you live in Arkansas to go to the ASB TDC org you can see the website address at the bottom of your screen and look at all the free resources there is a whole library of webinars like this one on social media on legal entities we're going to have one this thursday that is this same webinar in Spanish language the entire webinar will be in Spanish all these webinars are saved on that site so if in six months you have a friend and you know that Spanish is our preferred first language you can tell them to go to this website and watch this webinar for free all right so that is the end of the formal presentation yes it is a lot to take in I know the center the seminar is often two to three hours but we're just wanting you to get an idea of how to get started of what all it's going to entail and be there to offer to you on these resources and give you ideas of other resources in your communities but all of you regardless of where you are in the United States you are somewhere within driving distance of an SPD see all right Thank You Martha just to remind everybody today's webinar is being hosted by the Arkansas Small Business and Technology Development Center located at the same in Walton College of Business at the University of Arkansas in Fayetteville Arkansas I just want to thank our folks up there for the fine job they've done
