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FAQs

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1. What is the Springfield Small Business Development Center (SBDC)?
The Springfield SBDC is a community economic development program which provides assistance to small businesses throughout Clark County, Ohio. We are a member of the SBDC Region 4 with offices in Dayton, Edison State Community College and Wright State University. All SBDC'S offer a variety of services to assist entrepreneurs at various stages of business development and growth. The SBDC makes available a wealth of information online.

Additionally, the SBDC'S knowledgeable staff can provide guidance, recommendations, and resources that are specifically designed to meet the various needs of small business owners and prospective business owners. Most SBDC's services are available at no cost. Primary areas of focus include planning, growth, financing, marketing, management issues, technology, and improving business profitability.

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2. What do I need to do to start my own business?
One of the most important things to do before starting your own business is to determine whether or not your business idea is feasible and right for you. To accomplish this, you must plan and research your idea to ensure that your business has a favorable chance for success, will meet your expectations, and will provide an adequate reward for the risk involved. It is wise to validate your beliefs about your plans through research and careful planning because you will not have time to do it once you start your business. An SBDC counselor can aid a client in developing this process and an outline for crafting an objective evaluation of your idea into becoming a viable business.

As you begin, the SBDC recommends that you attend a Business Start-up seminar which is held every month at our Auburn Avenue headquarters located in Springfield, Ohio. In addition, the SBDC offers excellent counselor resources to assist you in the evaluation and planning process. Action steps for starting a new business as well as information and tools are available on the Official Small Business Administration website at www.sba.gov and the 1st Stop Business Connection at www.development.ohio.gov.

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3. I need to write a business plan. How can SBDC help?

If you need to write a business plan, you are in the right place. The SBDC has a wealth of information regarding business planning, and we are here to help you every step of the way. A great place to start would be to attend our business plan training seminars that we offer throughout the year.

The SBDC offers action steps for writing a business plan that help guide you through the process and point you towards helpful information and tools. We encourage you to use the SBDC business plan outline as the basis for developing your plan, as well as, a sample business plan to use as you write your business plan.

Refer to:

Sample Business Plan
Business Plan Outline
The Do's and Don'ts of Writing A Business Plan


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4. I know that I have a successful business idea. All I need is money. Why does all this have to be so complicated?

You may "know" that you have a successful idea, but that is not sufficient to obtain a business loan. Banks do not lend business money based only on your opinion and are naturally cautious when extending loans. If you wish to obtain financing, you have to demonstrate, in writing, that your idea will be successful. This can be accomplished by developing a business plan. In addition to demonstrating business feasibility by developing a good business plan, a lender will also consider other criteria when making a loan decision. Issues such as owner equity contribution, collateral, and credit history are also important factors that determine the outcome of the loan decision.


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5. I talked to my lender about applying for a small business loan. They suggested I contact the Springfield SBDC. Why?

Lenders often refer their customers to the SBDC for assistance in preparing to apply for a small business loan. The SBDC uses a methodical, strategic, time tested approach in business planning. A lender may refer their customer for assistance in developing a business plan, loan proposal, or other information needed to apply for a loan. The lender may also feel as though you'd benefit from talking with someone about your small business questions, obtaining guidance on feasibility issues, or gathering information about the industry or market.


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6. Is it a requirement that I contact the SBDC in order to obtain a small business loan?

No. Working with the SBDC is optional. However, working with the SBDC better equips you as you proceed through the loan application process. We often hear from lenders that their customers who work with the SBDC are better prepared and have better business plans/loan proposals than those who do not. An added benefit of working with the SBDC is that you have the opportunity to discuss your questions with an objective third party that is not involved in making the decision on your loan application.


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7. What is the best type of business to start?

It is up to you to decide what kind of business would be appropriate for you to start. The best business to start is typically one in which you have an interest since business ownership requires a big investment of time and resources. Having previous skills or knowledge relevant to a particular trade or industry is also a plus when considering what kind of business to start. Regardless of the type of business, you must determine whether adequate demand exists for that product/service.


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8. I want to start a business from my home, what should I do?
As with any other business, it is important to determine whether or not the business idea is feasible. It is also important that a home-based business have proper zoning approval and a business license. Check with the city or county clerk to find the zoning laws for a particular area and licensing requirements. In addition, home-based business owners should work closely with their insurance agent to obtain adequate coverage for the business and related assets since a homeowner's policy may not provide coverage for businesses. Review our Frequently Asked Questions for other issues concerning home businesses and startup businesses in general.
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9. Is it better to buy an existing business or start a new one?
It depends. An existing business should have established procedures and processes, operations, reputation, as well as a customer base which can result in a high price tag. It should also have a positive cash flow. If the business is lacking in these areas, that is problematic. Also keep in mind that an existing business may also have "baggage" which can cause problems for the future owner. Good existing businesses typically sell at a premium.

A potential buyer should consider the return on the investment in an existing business in comparison with the return on starting a new business. A new business can start with a clean slate. While it may take less money to start a new business than it does to purchase a going concern, it takes time and can be very difficult to build a new business. The new business also has no track record on which to base decisions. Significant working capital is often required to grow a new business.

The bottom line is that every business purchase situation is different and should be carefully evaluated on its own merits.

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10. How do I know if my business name is being used? How do I register my name?
A Doing Business As (DBA) Certificate is required for any sole proprietorship or general partnership operating under a fictitious name or business names other than the owners. The DBA Certificate records the full name and address of the business owner and the fictitious name and is kept on file at the Secretary of State's office.

To do a statewide business name search for a corporation, contact the Ohio Secretary of State's website at www.sos.state.oh.us.

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11. Do I need an Employer Identification Number (EIN) or Federal Tax ID number? If so, how do I obtain it?
The EIN is essentially the social security number for your business and is the same as a Federal Tax ID number. A EIN is a nine-digit number assigned to sole proprietors, partnerships, corporations, estates, trusts, and other entities for filing and reporting purposes. Every business with employees must have an EIN as do corporations, LLCs, and businesses that need to collect and remit taxes. However, even businesses with no employees may choose to have a Federal Tax ID number/EIN. For example, a sole proprietor might need to have an EIN to open a business account at a bank or in order to work with venders. Otherwise, sole proprietors can use their social security number for tax reporting purposes.

Contact the IRS for additional information or to obtain a Federal Tax ID number or visit www.irs.gov.
Contact the State of Ohio

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12. What do I need to do to obtain a business license in Ohio?
Most Ohio businesses are required to obtain various licenses and certificates. It is recommended that you review License, Permits and Taxes for information on general business license requirements. For more information on business license requirements, contact your local city or county clerk's office.

Some occupations and industries in Ohio require specialized licenses and permits. For example, restaurants must seek approval from the County Health Department. For more information, refer to publications such as the Directory of Licensed Occupations in Ohio, at the governing board or agency which oversees a particular occupation/industry.

Refer to: Business License, Permit, and Tax Requirements

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14. Can the SBDC assist me in developing a selling plan and a marketing plan?

A. Yes, you have come to the right source to assist you in creating this critical information. The SBDC can first assist you in developing a sound Business Plan for your business. Besides crafting the all important financial information, part of your plan needs to encompass how you intend to market, to distribute and to sell your product.


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15. What actually is marketing?

A. Marketing addresses the overall picture of presenting your product in a successful manner to customers who will purchase your product. Once the overall picture is put into perspective then the details of selling a product may be addressed. Marketing strategies are the game plan or roadmap to be followed in order to successfully sell a product.


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16. Why spend time on a marketing plan when I need a business plan first?

A. A well structured marketing plan can assist you in crafting a first class Business Plan. By understanding your marketing plan well you will be more confident in presenting our overall business plan to financial backers. Remember the market plan is your roadmap to success. Your business plan needs to be built around the concrete research created from a thoughtfully developed marketing plan.


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17. What is a marketing plan?

A. It includes determining the necessary target selling price levels required to profitably support your business, understanding the strategies of your competition, their methods of selling and distributing their product, the gross margins you will need to sustain and to grow your business. How will you promote your product? Who will sell the product? An identification of your prospective buyers and an analysis of how you will reach them. A review of distribution or warehousing your product.


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18. How do I establish pricing?

A. A selling price is the result of capturing your estimated operating expenses, taxes, actual sales and marketing expenses and then adding a desired profit margin to cover all expenses. Of course, you must then determine if you are in line with competitor's products offered to the market or if the unique features of your product will carry a premium price in the market place.


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19. This is more complicated than I imagined, how do I get my hands around these issues?

A. By breaking the issues into small, manageable ideas that can be identified and quantified into dollars and cents a realistic picture begins to emerge. This picture then can assist you in making other key decisions and in developing a strategy for running your entire business based on fact, not emotion alone.


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20. What is the best way to sell my product?

A. You have many available options based on your product price structure, your personal time availability, your understanding of your market and your competitor's methods of selling a similar product. Your choices include, but are not limited to any one of the following: direct mail, advertising in magazines, use of a web page as a marketing tool, selling the product through a retail location (either your own or as product sold through a retail store), utilization of contract manufactures, distributors, and manufacturer's agents who are skilled in selling products such as yours.


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21. How do I narrow my selection process?

A. This is a difficult question to answer without specific information, but easy question to answer from the point of view of providing guidance. 1) Are you going to sell product locally or throughout a large geographic area? If local, then time permitting allows you to become the primary seller of your product. This assumes that you are also not the manufacturer of the product. In other words you are in a local retail operation environment. Selling in a large area, then you need to employ other selling tools to reach your prospects. See question above. 2) What methods are employed a by a successful competitor to sell and market similar products? This answer should give you serious direction as to making a healthy decision.


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22. Can the SBDC assist me in finding sales people in say, California to sell my product?

A. Possibly. We do have resources available that can often assist a client in securing non-local sales people. Based on the client's product, manufacturer's agents can be located in many cases; careful use of the web, understanding how your competitors market their product can provide valuable insight into “best ways” to sell a product in multiple geographic areas. Also, do not forget one powerful tool that is available to you: an excellent web page of your own!


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23. What types of insurance will I need for my business?
It is very important that business owners maintain adequate insurance coverage such as liability, property/casualty, and loss of use, and product liability insurance. Unemployment and workers' compensation are mandatory if you have employees. We recommend that you review your insurance needs with your insurance agent or one who handles commercial coverage. Also, if your business is home based, be sure that you have additional coverage for your business assets as most homeowner's policies do not cover any losses related to a business.

Health insurance can sometimes be difficult and costly for small business owners to obtain group rates, since they do not have the benefit of economies of scale like corporations, which receive lower group rates. One option to small business owners is to join a trade association that offers health insurance to its members. These members are pooled together to receive a group rate. Additionally many of the larger insurance providers offer special group packages that are tailored to fit the needs of small business owners. Ask your insurance provider for a small business quote. It is also helpful to contact your local Chamber of Commerce and inquire about any insurance programs they have developed specifically for small business owners.

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24. Does the SBDC give business loans or grants?
The Springfield SBDC does not provide any grants. However, we do administer several economic development loan programs for the City of Springfield, Ohio, Clark County, Ohio and a loan program specifically designed for day care providers. Through an associated company, Clark County Development Corporation, we administer the SBA 504 Loan Program. These loans generally require the participation of a commercial lender for 50% to 60% of the projects cost.

Review: Small Business Grant Information

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25. What assistance does the SBDC provide to me if I am seeking a small business loan?
The SBDC can help you throughout the business loan process including assisting you with preparing a loan proposal containing the information that lenders and the SBA need to review when you make a business loan request. The SBDC can provide information about general issues that lenders consider when evaluating a potential small business loan and can guide you through the process of assembling a good business plan and/or loan proposal that presents your plans clearly. (Frequently, lenders refer loan applicants to the SBDC for assistance in gathering this information.) If you already have a proposal, we can offer feedback on its contents and any modifications that may be advisable.

The SBDC is not a decision maker in the lender's process. We cannot influence the lender in their decision about your loan or negotiate on your behalf when applying for a business loan. In certain circumstances the SBDC may be able to provide some part in your financing from loan funds they manage for the City of Springfield, Clark County or State of Ohio.

The SBDC recommends that anyone who is considering applying for a small business loan review the following information:

Review: Obtaining Small Business Financing and Can I Qualify for a Loan

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26. How can I receive grant money for my small business?
To our knowledge, there is limited grant money available for starting a for profit small business. In some cases, there may be grant programs available to existing small businesses or entrepreneurs for a particular industry serving a specific purpose, such as a day care or research and development for technology businesses. However, these programs are typically narrow in scope. Most small business owners have to look to personal resources and loans to finance their small business. Nonprofit organizations, 501(c)(3), are the most likely candidates to receive grant monies. (NOTE: SBA does not guarantee loans to non-profits).
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27. Is it possible to get 100% financing for my business?
No. It is extremely rare to see a small business obtain 100% financing from a bank. Banks don't issue 100% financing for businesses because it places the entire burden of the risk on the bank. They prefer if the owner shares some of the risk, thus most banks will require the individual to cover at least 10% of the financing cost to start their business. Some banks will require an even larger owner equity injection depending on the industry, or type of business, or collateral.
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28. I've never had any trouble obtaining a home mortgage, credit card, or auto loan. Does this mean that I'll be able to easily obtain a loan for my small business?

Obtaining a small business loan is not the same as obtaining a personal loan. It is much more challenging to obtain a loan for a small business than a loan to purchase a home or car. It is important not to assume that just because you easily obtained a personal loan that you'll be able to obtain a small business loan.


Refer to:

Can I Qualify for a Business Loan?
Obtaining Small Business Financing

See SBA website at sba.gov.


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29. How much money can I borrow?

The amount of money that you can borrow varies. The amount that you can borrow depends on certain criteria such as how much you state that you require in your business plan, how much collateral or personal investment you are willing to put into the business, and, personal credit history. It is up to you to gather the appropriate financial data to make informed projections regarding start up costs. These projections should show you how much you need to borrow and help you determine your ability to repay the debt. However, the decision regarding how much you can borrow rests ultimately with your lender.
Refer to: 

Developing a Loan Proposal:  Suggest Contents
The Do’s and Don’ts of Writing a Loan Proposal
Conducting Market Research
Understanding Financial Statements
Cash Flow
Sample Cash Flow Statement


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30. My personal credit is poor. Can I still get a small business loan?
When making a decision on a business loan, lenders will consider your personal credit history. Poor personal credit can be the basis for declining a business loan. Therefore, poor credit can be a problem and can prevent you from obtaining a business loan. You should consider obtaining a copy of your personal credit report to gain a better understanding of your credit history. If you have credit problems, you may want to contact Consumer Credit Counseling Services for guidance. You may need to rebuild your personal credit before applying for a business loan.

Refer to:  Can I Qualify for a Business Loan

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31. What kinds of things do lenders consider when making small business loans?

When making a decision on a small business loan request, lenders consider a variety of factors such as your character and credit, purpose and amount of the loan, project feasibility, repayment ability, collateral, and your cash equity in the project and business plan. Each of these factors is important and can influence the loan decision.

Refer to:

Developing a Loan Proposal: Suggested Contents
The Do's and Don'ts of Writing a Loan Proposal
Conducting Market Research


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32. How do I estimate my start-up costs and project financial statements?

Creating financial projections is an important step in determining the feasibility of your business. It is essential that a business is aware of its current and future cash position to ensure sufficient cash is available for business operations.

Additionally, financial projections are a critical part of your business plan and/or loan proposal. The projections are estimates of the financial future of your business. Although the numbers are based on estimates, do not consider such projections as "a guess." Research plays an important role in accurately determining future sales and costs. The projections serve as a basis for planning and are likely to change as more information becomes available.  It is important to remain conservative throughout the development of the statements. In other words, understate revenues and overstate expenses.  Also, a logical written explanation should be made for all assumption and be attached to the projection. 

Refer to: 

Understanding Financial Statements 
Cash Flow
Sample Cash Flow Statement (.xls)


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33. How long will it take to develop my plan and get a loan?
There is no specific time range for developing a business plan.  The length of time it takes to craft a plan varies based upon the complexity of the business, the loan amount requested, the scope of research required, and the commitment to writing the plan. 

Similarly, the loan application approval process differs in each situation depending upon the amount requested, the complexity of the loan request and the type of business loan being pursued.  The best thing that you can do to reduce the time it takes is to provide the lender with a thorough business plan and loan proposal

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34. What is a SBA loan and how do I get one?
An SBA loan is a loan that has been guaranteed (backed) by the U.S. Small Business Administration (SBA). The guarantee assures the lender that it will be repaid a portion of the money it loans even if the borrower fails to repay the loan. As a business owner, you will make a request to a lender (usually your local bank) for funds needed for your business plans. The lender will evaluate your request and decide whether it can make the loan to you on its own. If the lender feels the request has merit but cannot make the loan without additional support, then the lender can request a SBA guarantee. SBA considers issues such as collateral, credit, equity, and loan repayment ability when making a determination to guarantee a loan.

SBA does not provide grants to small business. With the exception of disaster loans, the SBA does not provide direct loans to individuals or businesses. More information on SBA loans can be found at www.sba.gov.

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35. Where do I get a SBA loan application?
SBA loan forms should be obtained from your lender. With an SBA loan, the bank is applying on your behalf for the loan guarantee from the SBA. In order to apply for an SBA loan, you must have found a lender that is interested working with you on your project. Some SBA loan programs use bank forms while others use SBA forms. Therefore, you should not complete SBA loan forms until your lender instructs you to do so.  (SBA forms are available online at www.sba.gov)
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36. How do I know if buying a business is a "good deal"?

There are a variety of factors to consider when deciding whether or not to purchase a business. The business purchase price in relation to the actual value of the business is certainly one of them. Paying too much for a business can cause many problems and lead to failure. In addition to the purchase price, there are other personal factors to consider including your financial situation, goals, and risk tolerance. It is also important to determine whether or not the business is a good "fit" for you in relation to your experience and skills. A good deal for one person may not be a good deal for someone else.

The decision to purchase a business should only be made after carefully investigating the business and considering your situation and objectives.

Refer to: 

 Buying a Business: A Check List 
 Do’s and Don’ts of Buying a Business


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37. What kinds of information should I request from the seller?
In order to determine whether or not you are interested in purchasing a business, you must thoroughly investigate the business and obtain financial information from the seller. It is common to request the past 3-5 years Income Tax statements and Profit and Loss statements. The SBDC can assist with an analysis to use in evaluating a prospective business.  This analysis is only a starting point for the investigation process and should not be the sole basis for making any financial decisions.
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38. The seller has told me their business has "unreported cash sales". Is that good?
No.  Inaccurate reporting to tax agencies is dishonest and illegal! Seller claims of unreported sales should never be counted to determine the cash flow of a business. These claims are unreliable at best. When making a purchase decision, the buyer should rely on financial information which can be documented (i.e. tax returns, and/or accountant generated financial reports.  Be aware of any disclaimers). Lenders only consider documented financial information. When a seller makes these claims, it brings into question the accuracy of financial data.
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39. The seller won't provide any financial information on the business. Is that a problem?
Yes, you need accurate financial statements/tax returns on the business in order to make a good decision as to whether or not to purchase a business. If you are seeking financing, the lender will also require this information.  The seller’s unwillingness to provide accurate financial information should be a “red flag”.
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40. I am buying an existing business. Do I still need to write a business plan?

It is likely that you'll make some changes to the business after acquisition.  It is recommended that at least some of the sections of the business plan, it not an entire plan, are written and included in a loan proposal based on what you expect the business to do under your ownership.  Changes in personnel, business structure, or location all should be disclosed to a lender.  The best way to do this would be writing a business plan for the business you intend to buy that discloses all the changes you expect to make.  However, a loan proposal that includes this information is acceptable as well.  It all depends on what kind of information your lender will require and how extensive any changes might be.
Refer to: 

Sample Business Plan
Business Plan Outline
The Do’s and Don’ts of Writing a Business Plan


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41. Can I get financing for buying an existing business?

Whether or not it is possible to obtain financing to purchase a business depends on a variety of factors including the personal financial situation of the borrower, the cash flow of the business, available collateral, business history and expectations for the future, and business purchase price. The lender will analyze the business, the borrower, and the structure of the deal to determine whether or not to provide financing.

Review: 

Can I Qualify for a Loan 
Obtaining Small Business Financing.


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42. There is substantial "goodwill" in the purchase price of the business. Will that affect my ability to obtain a loan for the project?
It is often challenging to obtain financing for large amounts of business goodwill. Typically, lenders don't like to finance goodwill because it does not represent tangible assets and can't be used as collateral. If a project contains significant business goodwill, the lender may expect the borrower to contribute a higher percentage of cash to the deal to help finance the project, and/or the lender may request additional collateral. In some instances, the seller may be willing to finance the goodwill portion of the project.
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43. I'm buying an existing business which happens to be a franchise. Is there anything special I need to consider?
You should obtain a copy of the franchise agreement and review it carefully. You should also determine if you'll be required to pay the entire franchise fee, transfer fee, royalty fees, or advertising fees. In most cases, the franchisor will have to approve the transfer or sale of the franchise. If you are seeking SBA financing, it is important to determine if the franchise is one which is eligible for SBA financing (sba.gov/small business planner buy a franchise). 

For more information, visit the SBA franchise registry.  Consider consulting an attorney to review all types of franchise agreements in order to thoroughly understand your position, obligations and financial involvement with a franchise business

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44. Do I need to plan for additional operating capital when I purchase a business?

In most cases, you'll need to plan for additional operating capital when purchasing a business. The amount of operating capital you'll need over and above the purchase price of the business should be included as you calculate your total project costs and consider your financing needs.
Refer to: 

Understanding Financial Statements
Cash Flow
Sample Cash Flow Statements (.XLS)


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45. How do I sell my product or services to the government?
The Procurement Technical Assistance Center (PTAC) is an organization through which you can learn about and access the government marketplace.  PTAC offers consulting and information to help a business become a successful government contractor.  To get started, PTAC offers one day training programs.

For more information, contact PTAC at (937)253-0038 or view their website at www.swcoptac.org .

See also “Recommended government contract and procurement links.

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46. What should I take into consideration when hiring employees?

Making the decision to hire employees is a big and often necessary step for any business. As an employer, you must consider many critical issues to ensure compliance with employment rules and regulations. Key issues to consider when hiring employees include obtaining an employer identification number, verifying employee eligibility, recognizing the difference between employees and independent contractors, understanding payroll tax responsibilities, and comply with employment laws, and more.

Refer to: 

Hiring Employees – What You Need to Know

Review: 

BASICS OF HIRING EMPLOYEES


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