Online Business Resources

www.sba.gov – The U.S. Small Business Administration (SBA) provides programs for businesses in the areas of technical assistance, training and counseling, financial assistance, assistance with government contracting, disaster recovery assistance, advocacy laws and regulations, civil rights compliance, and special interests, such as women, veterans, Native American, and young entrepreneurs.  The website provides links to numerous information resources.

www.score.org – The Service Corps of Retired Executives (SCORE) is dedicated to helping small businesses get off the ground, grow and achieve their goals.  SCORE provides volunteer mentors, free confidential business counseling, free business tools, and inexpensive or free business workshops.

Other Websites

www.archive.org………………..Internet Archive Wayback Machine

www.bizstats.com………………Business/Industry Statistics

www.bls.gov………………………U.S. Bureau of Labor Statistics

www.entrepreneur.com……….Entrepreneur Magazine

www.franchise.org……………..International Franchise Association

Business Plans

A business plan is a written document created to detail all aspects of a business on a comprehensive level.  The process of writing a business plan requires significant research into each of the topics discussed.  In some cases, the process of researching and writing a business plan will reveal potential problems or lead the writer to choose not to go into business.

A business plan helps to define short and long-term goals for the business and the methods for measuring the level of success in reaching them.  Many banks and investors require a written business plan before lending to or investing in a business.  Also, by carefully examining each aspect of a business at its beginning, a business can be structured to create the maximum level of tax advantage for the owners.

Explore the website www.score.org for assistance with writing a business plan.

Start-Up Costs and Capitalization

Start-up costs -Start-up costs are incurred before the start of operations. Typical expenses include the costs of organization, professional consulting, capital equipment acquisition, and leasing a space.

Capital – Cash from the owners or investors is the most common source of capital when beginning a new entity.  Business loans are also common and can be secured through private banks or the Small Business Administration (SBA).

SBA loans – The SBA is a federal agency which guarantees certain loans and lines of credit made by banks to small businesses.  Loans and lines are available for working capital, asset purchase, and debt refinancing needs.

Use of Budgets

Annual budget – Development of an annual budget generally takes place late in the year prior to the year of the budget and is broken down by month. Financial statements from recently completed periods are used
to develop estimates for the budget. Using the budget, costs can be reduced, resources properly allocated, and new goals for the year can be set.

Internal Controls

Control procedures – Internal control procedures are designed to safeguard the assets of a business. Without them, dishonest employees or owners can misappropriate assets in the form of cash, property, or supplies with little effort.

Separation of duties – Duties which, if conducted by the same individual, would allow for simple concealment of theft should be kept separate. The following are examples of duties that should be performed by different people.

  • Receiving, recording, and depositing customer payments
  • Sourcing, approving, ordering, and receiving supplies or merchandise
  • Inputting, approving for payment, and paying vendor bills and payroll
  • Balancing and inputting transactions into bank accounts
  • Counting cash and merchandise on hand at the beginning and end of the day

Small businesses generally lack sufficient staff to properly separate all duties which should be separated. In this case, increased involvement of owners and management in daily operations of a business can assist in
detecting misappropriation of assets.

Mandatory vacations – Many schemes to steal from a business require constant, manual intervention by the person perpetrating the scheme. By having and enforcing a mandatory vacation policy, the time a perpetrator spends away from work may allow a scheme to be uncovered in the course of daily operations. Mandatory vacations should be a minimum of two weeks, during which time the vacationing person has no access to a business or its records.

Environment of detection – If an employee or owner believes embezzlement will be discovered in the normal course of business, it is much less likely one would choose to embezzle. Creating an environment of detection is the process of alerting all employees and owners that systems are in place to detect embezzlement and theft, and that such acts will be prosecuted if perpetrated. This can be accomplished through training, one-on-one conversations, and the establishment of a hotline employees and owners can use to report suspected theft.

Background checks – Background checks during the hiring process allow a business to determine whether a prospective employee has any criminal history. Many background checks also include credit histories to uncover any financial conditions which may make an employee more likely to steal from a business.

Top 10 Reasons Businesses Fail

Failure rates – Data from the SBA indicates 2 in 10 new businesses fail within the first year, and only 5 in 10 businesses survive five or more years.

Reasons for failure – The 10 most common reasons for failure are listed below.

  1. Lack of experience. This can apply to a lack of experience in a specific business or in running a business in general.
  2. Insufficient capital. Sufficient capital must be in place to support a business until cash flow from operations is adequate.
  3. Poor location. 
  4. Poor inventory management. Keeping too much inventory uses too much capital unnecessarily, while having too little inventory can lead to shortages and customer dissatisfaction.
  5. Over-investment in fixed assets.
  6. Poor credit arrangements. Lacking access to sufficient, reasonably priced credit.
  7. Personal use of business funds. Business funds should not be used for personal purposes.
  8. Low sales.
  9. Competition. Not properly assessing competition can potentially leave a business in a position of needing to compete in a market where it cannot do so and survive.
  10. Unexpected growth. Growth without sufficient planning for the consequences can lead a thriving business to failure.