Welcome to
Micro
BUSINESS
a
Build a solid foundation
© 2011
MoneyWI$E
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Micro Business Basics
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 A joint financial education project of
Consumer Action and Capital One.
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Topics we will cover:
 What a micro business is.
 How to anticipate the needs of
a new business.
 Business planning and
bookkeeping.
 Different ways that businesses
are organized.
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Your expectations
 What do you hope to get out of
this seminar?
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Micro businesses
 Micro businesses are very small
companies run by their owners
with few or no employees.
 They are often home-based, with
annual sales under $250,000.
 Many micro businesses start with
a hobby or a great idea.
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Growing micro businesses
 Micro businesses can qualify
for loans to help them grow into
large regional, national or
franchise businesses.
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Failure rate
 The U.S. Small Business
Administration says that more
than half of small businesses fail
in their first year.
 Many businesses fail because
they lack adequate funding.
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Ready for business?
 Some people are better off as
employees rather than as
business owners.
 What issues do you think people
who are thinking about starting a
business must consider?
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A good businessperson has...
 Discipline
 Experience
 Patience
 People skills
 Aptitude with numbers
• Can you think of other attributes
you need to excel in business?
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Anticipating business needs
 Sound financial planning is key to a
successful business
 Try to predict what it will cost to run
your company
 Prepare a budget that closely reflects
your business plan*
*A written document that outlines your
business idea and the steps you will
take to make the venture succeed
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Business resources
 SCORE, 800-634-0245
www.score.org
 SBA, 800-827-5722
www.sba.gov
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Business vs. personal funds
 Co-mingling personal and
business transactions makes it
hard to track business activity
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Business credit cards
 Manage cash flow
 Keep your business obligations
separate from your personal
obligations
 Earn discounts on supplies,
rental cars and other services
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Planning and bookkeeping
 Keeping accurate, organized
records is vital to the success of
your business.
 A lost receipt is a lost deduction
 Lost deductions mean you pay
more money in taxes.
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Business plan
 One of the first documents you
need to prepare
 A business plan will help you
focus your vision for your
business
 You can use your business plan to
approach lenders and potential
partners
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In a business plan
 Your business purpose
 Products or services
 The company’s structure (sole
proprietorship, partnership or
limited liability company, for
instance)
 Short bios of key personnel
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Help in writing your plan
 Community groups
 SCORE
 SBA
 Free templates online
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Business bookkeeping
 Monitor your profits and losses
 Know the value of your business
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Start up costs
 Many fast-growing companies are
started with the founder’s personal
savings, in some cases no more
than $10,000.
 Start-up funding should cover
operating expenses for at least one
year.
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Typical start-up costs
 Salary needs
 Initial costs
 Direct costs
 Overhead
 Recurring costs
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Topics for the next session
 Business structure
 Finding funds for your business
 SBA Loans
 Reading a projected profit and
loss statement
 Government requirements
 Micro business mistakes
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Welcome to Session Two
 We will cover:
•
Business structure and organization
•
Finding funds for your business
•
SBA Loans
•
Reading a projected profit and loss
statement
•
Government requirements
•
Top five micro business mistakes
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Structure/organization
 Businesses can be established
legally in different ways
 This is known as its business
structure or organization
 No one legal structure is best for
all micro businesses
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Sole proprietorships and
partnerships
 Sole proprietorships are oneperson businesses
 Partnerships are businesses
formed by two or more
owners
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Corporations
 A corporation is a legal entity,
organized under state or federal
laws
 It is legally separate from the
people who own it
 Corporation owners are usually
protected from personal liability
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Limited liability companies
 Known as LLCs
 Combines features of sole
proprietorships, partnerships and
corporations
 LLCs can help business owners
protect their personal assets
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Finding funding
 Use your own money
 Find a partner or investor with
cash to invest
 Borrow funds
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Credit
 A business loan or business line
of credit can help you meet your
business needs
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Business credit cards
 Business credit cards can help:
• Manage your cash flow
• Keep your business and personal
obligations separate
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SBA Loans
 The Small Business
Administration (SBA) can help you
prepare loan documents
 It also guarantees loans
 You pay for these services
through fees when your loan is
approved
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SBA sponsored lending
 Loan guaranty programs
 Building and renovation loans
 Loan pre-approval services
 Start-up financing and technical
assistance for start-ups, newly
established micro businesses and
growing micro businesses
 Federal contracting assistance
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SBA streamlines lending
 Lower down payments
 Longer terms
 Lower interest rates
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Steps to an SBA loan
 Ask the SBA for a list of banks in your area
 Compare choices by contacting SBA
lending officers at a few of the banks
 Decide where you will apply
 Compile the financial and business records
required by the bank
 The bank will submit your loan to the SBA
for approval
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Government contracting
 There are many opportunities for
small business and minorityowned businesses to provide
goods and services to the
government.
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Class activity
 Sample Projected Profit and
Loss Statement
 Take out the sample Projected
Profit and Loss Statement
worksheet
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Local and state requirements
 Business licenses
 Building permits
 Health/occupational rules
 Sales/income tax
 Employee withholding
 Workers’ compensation insurance
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Federal requirements
 Verify your employees’ right to work in
the U.S.
 Withhold federal income taxes
 Minimum wage, overtime and child
labor laws
 Make estimated income tax payments
 Social Security and Medicare
payments
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Micro business mistakes
 Inadequate planning
 Failure to discipline yourself
financially
 Insufficient cash reserves to
sustain growth
 Poor record-keeping
 Excessive debt
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Questions and answers
 We have reserved some time
to answer your questions.
 Please raise your hand if you
have a question.
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Congratulations!
You have completed the
MoneyWI$E seminar on Micro
Business Basics
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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Your feedback
Please fill out the Seminar
Evaluation Form and leave it on
your way out.
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