FAQ
Video FAQs
In addition to the questions below, KyVetBiz is developing a library video clips that will help answer your questions. Check back often for more clips.
I have heard about this free government money. How do I get a grant to start or grow my business? Watch Video
FAQs
Ownership
Do I have what it takes to own and operate a small business?
Many people say they were born with the “entrepreneurial spirit.” Whether people are born with it or not, there are certainly personality traits that are commonly found in entrepreneurs. Small business owners are generally risk takers, self-starters, reliable, innovative, competitive and passionate about their product or service.
I want to start a small business - what are my first steps? What do I need to do to start my business?
The first thing you need to do is assess your personality and professional and personal lives to decide if you can take the risks associated with small business ownership. The next step is to start planning and researching to determine the business’s feasibility and to ensure it has the greatest opportunity for success. This includes examining the marketplace, consumer spending habits and competitors. Then, we recommend attending a course on starting a business at your local SBDC or taking one of our on-line courses
What type of business should I chose?
Choosing a business is a personal decision, but you should take into consideration your skills, experience and your interests. Additionally, once you decide on the type of business to open, you should research the marketplace, the competitors and potential customers to determine if the business idea is feasible.
Business Planning
Do I need a business plan?
Yes. A business plan is the resume for your business. It provides information about your company and its industry, describes a marketing plan, details an operations plan and projects the financial needs of the business. It helps you allocate resources properly and make informed decisions. It provides specific and organized information about your company and how you will repay borrowed money. A thorough, well-written business plan is crucial to obtaining financing. Additionally, it can tell your sales personnel, suppliers and others about your operations and goals.
What is included in a business plan? The business plan describes an entrepreneur’s idea or a company’s past and current operations and then demonstrates how the request for an investment or loan will enhance the company goals and reward the investor. However, the most important function of the business plan is to communicate your goals and guide your company.
Will the SBDC write the business plan for me?
No. The SBDC will assist you in developing and reviewing a business plan. However, it is important that you write your business plan yourself. Writing a business plan forces you to think through issues that you may not have considered otherwise. The SBDC does offer workshops and on-line training courses that will assist you in writing your business plan
SBDC Assistance
What can I expect from my consultant?
Clients can expect to work with a highly qualified and experienced consultant dedicated to helping your small business succeed. At your initial meeting, your consultant will review your business needs or proposal, determine a course of action and identify areas that both of you will be responsible for completing. Together, you will determine an appropriate timeframe to complete your assignments and then schedule a follow-up appointment. SBDC consultants will continue to provide assistance as long as it is beneficial and the client completes the work necessary to succeed.
What does the SBDC expect from me, as a client?
The SBDC expects for you to arrive at your appointment on time and prepared with appropriate information and documentation. If your SBDC consultant asks you to work on a particular aspect of your business prior to an appointment, the consultant expects that assignment to be complete.
Consulting services are provided to you free of charge because of the financial support the SBDC receives from the federal government and host universities across the Commonwealth. You may be asked to write your legislators and university officials to let them know about your experience with the SBDC.
Additionally, SBDC clients may be asked to participate in surveys designed to measure our economic impact. Of course, since our services are confidential, we will not release any information that could identify you or your business without prior consent.
Are the SBA and the SBDC the same thing? No. The SBDC receives funding from the SBA and works closely with the SBA in delivery of services. However, the SBDC and the SBA provide different services and assistance to clients.
How much does the SBDC charge for its services?
The SBDC provides confidential management consultations at no charge. Some services such as workshops are nominally priced.
Does the SBDC only help start-ups?
No. The SBDC consulting staff is experienced in providing assistance to existing businesses as well as start-ups. Our consultants will assist with plans for expanding a business, strategic planning, human resource issues, marketing research, future plans and creating marketing strategies. SBDCs throughout the state also offer training programs designed to help existing business owners with financial software, marketing strategies and other programs geared toward existing business ownership.
Financing
I am looking at starting a new business. What types of grants are available? Watch Video
Grants to start a business are extremely rare. Ask business owners you know and odds are you won’t find one that started with a grant. As the old saying goes, "It takes money to make money." This is particularly true when you are thinking about starting a business. You will need to identify how much money you’ll need to get started. Expect that you’ll have to provide 20-30% as your investment in the business because 100% financing is not available.
Who do I contact to receive a loan from the Veteran’s Administration?
There are opportunities for veterans, but the Veteran’s Administration does not offer loans. The Small Business Administration has a Patriot Express available to qualifying veterans and members of the military community who are interested in starting or expanding a business. Also, veterans should check into the services and support provided by the Office of Small and Disadvantaged Business Utilization.
What do I need to do to get a loan?
In order to get a loan, you will need three years of tax records (include tax records for the business if you are in operation); a personal financial statement, a credit report and copies of any outstanding contractual agreements (for example, copy of a lease). Additionally, the lender will want to see a thorough business plan that includes financial projections, a market analysis and an operational plan.
Does the SBDC offer loans?
No, the SBDC does not offer loans. Our services are technical and educational in nature. SBDCs will assist in developing business plans, calculating financial projections and packaging loans to adequately prepare clients for meetings with lenders.
What alternatives are there to financing a business?
Committing your own funds is often the first step in financing. It is certainly the best indicator of how serious you are about your business. Risking your own money gives confidence for others to invest in your business. You may want to consider family members or partners for additional financing.
When do businesses generally start returning revenue?
Most new businesses generate negative net income for the first 12-18 months. Is my credit score important in securing a loan?
Credit scores are becoming increasingly more important in a financial institution’s decision to lend money. Most financial institutions use a credit score as an indicator of how a person manages their personal finances. Prior to applying for a loan, you should obtain your credit score and credit report. The SBDC can assess the impact your credit score has on your ability to secure funding.
What kind of financing is available when your credit rating is bad or you have a bankruptcy? How can I raise funds under these circumstances?
Unfortunately, traditional financing options are very limited and often nonexistent. At best an individual may try to work with a micro-lender like Community Ventures Corporation; however, the poor credit rating and bankruptcy will still be an issue in a micro-lender’s decision to provide financing.
Other alternative financing options should be explored such as friends and family members as investors. As stated earlier traditional financing is not a realistic option given this scenario.
Legalities
What legal aspects do I need to consider?
There are many different legal aspects that small business owners must consider. These include: zoning, permits, business structure, taxes, registration, worker’s compensation and many, many more. The SBDC can assist you in determining the appropriate steps necessary for starting or expanding a business. The SBDC also strongly recommends you consult with an attorney on legal issues.
How should I structure my business?
The business structure impacts taxes, liability, owner succession and other areas of your business. The basic structures of business ownership are sole proprietorship, limited liability company (LLC), a partnership, C Corporation (Inc. or Ltd) and a Sub Chapter S Corporation (Inc. or Ltd.). Among other considerations, selection of a business structure depends on the level of control you desire, size and nature of the business and vulnerability to lawsuits. It is advisable to consult with an attorney and an accountant to determine the structure that works for you.
What is an Employer Identification Number and where do I get it?
An Employer Identification Number is a federal tax identification number used to identify business entities. It is absolutely essential if you have employees or operate as a corporation or a partnership.
Most businesses may obtain an EIN via the IRS web site. You will receive federal income tax deposit information and other IRS information via snail mail 4 to 6 weeks after applying.
How do I get and protect my company name?
First, you need to determine if the business name you want is available. This can be done by searching the Kentucky Secretary of State’s database or by calling (502) 564-2848, press 2, and then press 1. Next, you need to fill out paperwork to reserve your name with the Secretary of State. This paperwork requires you to list the business entity that you have selected. We recommend you consult with an attorney to determine the business structure that is most appropriate for you.
What is the difference between an employee and a contract laborer?
Generally the definition of employee is an individual who uses your tools; comes to work on your schedule; you supervise their efforts; and, have custody and control of their work product and environment. An independent contractor owns his/her own company and offers their services or products to several clients.
What are the requirements and tax implications of having a home based business?
Home-based businesses must comply with all local, state and federal zoning, permitting and licensing requirements.SBDC Consultants are available to assist home-based businesses, but we recommend you see an accountant for assistance in tax preparation or other tax issues surrounding your home-based business.