1. www.sbdc.psu.edu 1 The First Step of Starting a Business 119 Technology Center University Park, PA 16802 814-863-4293 sbdc@psu.edu

2. www.sbdc.psu.edu 2 About the SBDC Eighteen Centers in Pennsylvania More than 1,000 Centers Nationwide The SBDC network provides free confidential one-on-one consulting to current or potential small business owners and free and low-cost educational programs. www.asbdc-us.org www.pasbdc.org www.sbdc.psu.edu www.facebook.com/PennStateSBDC

3. www.sbdc.psu.edu 3 Starting a Business: Am I crazy? You really do have the time Your risk exposure is as low as it will ever be You are surrounded by resources and mentors who are able to help You can add ‘Entrepreneur’ to your resume

4. www.sbdc.psu.edu 4 Personal Qualifications Ask yourself: Why do I want to own a business? Am I willing to work hard? Can I make decisions? Can I handle risk? Do I have the skills that I need?

5. www.sbdc.psu.edu 5 One-third fail in the first year, 50% go under within five years Poor Management: getting into a field with little or no experience Poor Marketing: underestimating the time needed to build a market, ignoring competition Poor Finances: not having enough working capital, not allowing for unexpected expenses Why do businesses fail?

6. www.sbdc.psu.edu 6 Legal Issues New Business Registrations www.irs.gov www.pabizonline.com www.dos.state.pa.us www.revenue.state.pa.us www.dli.state.pa.us www.eatsafepa.com www.attorneygeneral.gov …and possibly others

7. www.sbdc.psu.edu 7 Pennsylvania Sales and Use Tax “The Sales and Use Tax is imposed on the retail sale, consumption, rental or use of tangible personal property in Pennsylvania. The tax is also imposed on certain services relating to such property and on the charge for specific business services.” A Sales and Use Tax License can be obtained by completing the Form PA100, the Pennsylvania Enterprise Registration, at www.pabizonline.com Publication REV-717AS “Retailers’ Information” details which products and services are subject to Sales and Use Tax

8. www.sbdc.psu.edu 8 Pennsylvania Sales and Use Tax “A Use Tax at the same rate as Sales Tax, is due on taxable purchases of tangible personal property or specified services used or consumed in Pennsylvania where no Sales Tax is paid to a vendor. Licensees must report and pay Use Tax at the time their regular Sales Tax return is due.” The most common purchases that are subject to use tax include computer equipment, office furniture, and administrative and cleaning supplies www.revenue.state.pa.us

9. www.sbdc.psu.edu 9 Other Pennsylvania Registrations Professional Licenses: Bureau of Professional and Occupational Affairs www.dos.state.pa.us www.dos.state.pa.us Retail Food Facilities: Bureau of Food Safety and Laboratory Services www.eatsafepa.com Home Improvement Contractors: PA Attorney General www.attorneygeneral.gov

10. www.sbdc.psu.edu 10 Local Registrations and Issues Different Municipalities: City, Township, Borough, County Business Registrations Tax Regulations: Local Sales or Occupancy Tax Zoning Requirements: Home-Based Businesses and Signage Health Department: Food Businesses Codes Enforcement Officer: Uniform Construction Codes and Occupancy Permits Ask for written verification of compliance

11. www.sbdc.psu.edu 11 Business Support Banking: Checking Account Merchant Card Processing Loans www.annualcreditreport.com

12. www.sbdc.psu.edu 12 Business Support Insurance: Fire, Theft, General Liability Worker’s Compensation Life Health—PPACA Homeowners and Personal Auto Policy Endorsements

13. www.sbdc.psu.edu 13 Business Support Attorney: Start-Up Issues Ongoing Support Tax Professional: Industry Specialist Before Year-End

14. www.sbdc.psu.edu 14 Business Structure Sole Proprietorship: One Owner Individual Owns all Assets Unlimited Personal Liability Owner’s Compensation is a ‘Withdrawal of Equity’

15. www.sbdc.psu.edu 15 Business Structure Partnership: Two or More Owners Partnership Agreement Suggested Partners Own all Assets Unlimited Personal Liability Partners’ Compensation is Generally a ‘Withdrawal of Equity’

16. www.sbdc.psu.edu 16 Business Structure Limited Liability Company (LLC): Separate Legal Entity Owner’s Interest can be Sold Potentially Limits Personal Liability Partners’ Compensation is Generally a ‘Withdrawal of Equity’

17. www.sbdc.psu.edu 17 Business Planning Two rules of business planning: Write the plan yourself! Use the plan that you have written!

18. www.sbdc.psu.edu 18 Business Planning Five Reasons for Writing a Business Plan It forces you to look at your entire business It becomes a tool to help you manage your business It demonstrates your goals and objectives to others It provides a basis for your financing proposal It creates a ‘yardstick’ to measure your progress

19. www.sbdc.psu.edu 19 Business Planning Organization and Management Business Purpose and Goals Corporate Structure Management Team Individual Roles Advisors and Support Opportunities and Threats

20. www.sbdc.psu.edu 20 Business Planning Products and Services Products, Services, or Production Process Facility Requirements Suppliers Pricing Future Expansion

21. www.sbdc.psu.edu 21 Business Planning The Industry Industry Trends Strengths and Weaknesses Regulatory and Technology Issues Trade Associations

22. www.sbdc.psu.edu 22 Business Planning Human Resources Employees Independent Contractors Compensation and Benefits

23. www.sbdc.psu.edu 23 Business Planning What if… Data Backup Alternative Suppliers Insurance Disaster Preparedness

24. www.sbdc.psu.edu 24 Marketing Plan The Competition Direct vs. Indirect Strengths Weaknesses Differentiation

25. www.sbdc.psu.edu 25 Marketing Plan The Customers Target Market Size of the Market Characteristics and Demographics How to Reach Them

26. www.sbdc.psu.edu 26 Marketing Plan Promotional Strategies Start-Up and Ongoing Different Media—Traditional and Non-Traditional Trial and Error Remember that marketing is much more than advertising. It is every contact that your business may have with a customer.

27. www.sbdc.psu.edu 27 Financing a Business Sources of Financing Personal Funds Loans from Friends and Family Crowdfunding Commercial Loans Small Business Administration Guaranteed Loans State and Local Loan Programs Angel Investors and Venture Capital Firms Grants

28. www.sbdc.psu.edu 28 Financial Plan Start-Up Costs Expenses Incurred Before Opening Written Estimates Overestimate Working Capital Reserve

29. www.sbdc.psu.edu 29 Financial Plan Recurring Monthly Expenses Fixed Payments Written Estimates Overestimate Seasonal Variations Owners’ Compensation

30. www.sbdc.psu.edu 30 Financial Plan Estimating Revenues Cash Sales Credit Terms to Customers Seasonal Variations

31. www.sbdc.psu.edu 31 Source and Use of Funds Sources: Owner Injection Investors Loan Proceeds Uses: Start-Up or Expansion Costs Working Capital

32. www.sbdc.psu.edu 32

33. www.sbdc.psu.edu 33 Cashflow Statement “A summary of the inflows and outflows of cash in over a certain period of time.” “What will my checkbook look like over the next few months or year?”

34. www.sbdc.psu.edu 34

35. www.sbdc.psu.edu 35 For Additional Assistance: 200 Innovation Boulevard, Suite 119, University Park 152 East Market Street, Suite 100, Lewistown 814-863-4293 717-247-1280 www.sbdc.psu.edu sbdc@psu.edu