In 2005, the Idaho Legislature passed, and the Governor signed, the Idaho Contractor Registration Act, which requires construction contractors to be registered. The Act requires registration, not licensure. Registration is with the Idaho Bureau of Occupational Licenses.
No, not unless you have invented a new technology that is of value to a federal agency or you have developed a new way to utilize natural resources. Otherwise, there is practically no grant money out there for ordinary for-profit small businesses. Somehow the fantasy persists that there is a ton of money available to for-profit businesses that doesn't need to be repaid. The reality is that almost all grant money is awarded only to registered non-profit organizations or to businesses doing innovative research that is "in the national interest."
Ninety-five percent of new businesses are financed with personal funds (savings, family, and friends). Those who are eligible for financing assistance, usually a loan, must still invest in their own venture and provide collateral. So, if you are serious about starting or growing a viable business, you must be resourceful enough to capitalize it without "fantasy" money. For more information about grants, visit Idaho Small Business Solutions website.
The answer to this question will vary depending on whether you are starting a business or are already in business and on the following:
- the amount of money needed
- length of time in business
- geographic location
- personal credit rating and financial net worth
- business credit rating, if an existing business
- management ability
- ability to provide collateral and repay the debt
- viability of the business idea
- type of financing needed (debt or equity)
Committing your own funds is often the first financing step for a start-up. 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.
Next, approach family and friends - those who know you best and want to see you succeed. Show them the benefits available by investing in your business. Let them have an equity stake in your business, become a partner, or if they prefer to lend you the money, write up a contract and pay back the loan with interest, as if you were working with a bank.
The next obvious source is a bank, particularly for an established business. Developing a relationship with a bank and a banker before approaching them for a loan is key. They will help you determine which type of loan is best for you.
Other loan sources include commercial finance companies, venture capital firms (only available to rapidly growing tech companies), angel financing (private investors of a few thousand dollars up to $5 million who are interested in rapidly growing companies), local development companies, and life insurance companies. For information about financing options, see Idaho Small Business Solutions website.
Trade credit, selling stock, seller financing, use of supplier/vendor financing (have a supplier extend 120 day terms instead of the usual thirty while you extend only 30-day terms to your customer), end-user funding (having the ultimate customer finance the research and development of the product), and equipment leasing offer alternatives to borrowing. Leasing, for example, can be an advantage because it does not tie up your cash.
Consider which options are right for you and then work with your banker or an Idaho SBDC consultant to determine the option that is best for you.
Securing a business loan can be a daunting process, particularly in this economy. The best way to enhance your "asking" position is to do your homework. Before approaching a lender, get a copy of both your personal and business credit reports and make sure they are accurate. If anything is amiss, correct it with the reporting agency. If there are blemishes (late or missed payments, defaults, etc.) - prepare explanations.
Prepare a detailed written business plan with credible financial and market data. If you are already established in business, be prepared to provide two to three years of financial statements and tax documents. Understand that if you have a poor credit record (personal or business) or cannot demonstrate a personal investment in the business and the ability to repay a loan, you will not be considered a good risk. Instead of applying for a loan now, you may need to work at maintaining good personal and business credit (timely, consistent payment of debt) for at least two years and then reapply.
Your banker will know of several types of loans. One of the most common for small businesses is an SBA loan. The Small Business Administration does not make direct loans to businesses; rather, they guarantee loans. To get an SBA loan, a business owner must first contact a commercial loan officer at a bank. All SBA loan programs, even those for women, veterans, and the handicapped, require the business owner to start with a bank.
The bank evaluates the needs of the business, determines whether the potential borrower is eligible for a loan, helps the borrower fill out application forms, and determines which of the many loan programs is most appropriate for the situation. If the loan needs a guarantee in order to be more attractive to the lender, the package is forwarded to the SBA.
The role of the SBA is limited to guaranteeing some portion of the loan made by the bank to the borrower. This guarantee lowers the risk to the bank, but it doesn't affect the amount of the loan.
Most banks in Idaho are SBA-approved lenders. However, some are more active in making small business loans than others. Start with your own bank to find out if they make small business loans. If not, contact a state or community bank. They are generally more interested in helping small businesses than the large national banks.
Before you quit your job or print business cards, it is wise to take stock of personal considerations. Ask yourself:
- Do I have what it takes to be an entrepreneur?
- Am I a risk-taker?
- Do I have a grasp of basic financial and marketing principles?
- Am I resourceful and organized?
- Can I support myself and/or my family financially during the early stages of the venture when cash may be short?
- Will my family and friends be supportive during the start-up process?
- Am I knowledgeable and experienced enough in my chosen field?
If the answer to any of these questions is "no," you may want to focus on some form of self-improvement before proceeding. If most of your answers are 'yes,' then it is time to become a realist! Get as much information as you can on the feasibility of your idea and on the real experience of starting and managing any business. You can do this by:
- accessing business publications and data from your local library
- taking seminars and workshops
- speaking with or reading the Web sites of trade or professional groups that represent your chosen industry
- consulting with people who are already in the same or similar line of business (avoid those who may perceive you as a potential competitor)
- seeking advice from professional counselors like those at the Idaho SBDC
Also, take the time to review the Business Start-up section of this Website and read through the information on Idaho Small Business Solutions Web site, then contact your nearest SCORE Chapter or Idaho SBDC office to arrange for a free consulting session.
Idaho Small Business Solutions, a website created by over 20 Idaho state agencies, makes it easy for business owners to get a grip on the multitude of regulations, taxes, and licenses affecting business operations in Idaho. The site takes the guesswork out of which agency to contact for what. The heart of the site is the Business Wizard. It asks five questions about your business and then develops a customized checklist of agencies to contact. The checklist includes phone numbers and links to forms and websites.
If you have been in business for awhile and you know what agency has the information you are seeking, just browse through the topic buttons on the home page. Links to downloadable forms and other information are at your fingertips.
Idaho Small Business Solutions is a major project of the RIB (Reducing Idaho's Bureaucracy) Committee, composed of representatives from state and federal regulatory and assistance agencies. The Idaho SBDC served as project manager for development of the website and maintains its content.
A business plan precisely defines your business, identifies your goals and serves as your firm's resume. It describes the products and services you will sell; the customers to whom you will sell them; the production, management and marketing activities needed to produce your offerings; and the projected profit or loss that will result from your efforts.
The business plan allows you to use the research you completed for your plan to make decisions affecting the future of the business. Although a plan is time consuming, it is important to business success. Completing the plan forces you to examine all decisions regarding management, marketing, personnel and finance in an objective and organized way.
Another important benefit of the planning process is that you will project the amount of financing needed for start-up and the early stages of your business. Therefore, the business plan becomes a useful tool in securing capital before start-up. Then, later, the plan becomes your owner's manual guiding your daily operations and activities.
Business planning is an ongoing activity. Existing businesses, as well as start-up firms, benefit from writing and regularly updating their goals, plans and activities.
Once you decide to establish a business, one of your first considerations will be to determine and register the type of business organization (also called entity type) to use. Your selection of a business structure is very important. It will affect your personal liability and the way you report your taxes, as well as other issues.
For detailed information, refer to the descriptions of the various business forms in the legal structures section or visit Idaho Small Business Solutions. It may also be advantageous to seek professional advice from an attorney and/or tax specialist.
The Secretary of State's website has information and forms to assist business owners file their business registration.
Many business owners assume they need a website, but not all businesses need one, depending on your particular situation. There are four general reasons to have a website:
- to sell products and services
- to provide information
- to increase visibility
- to provide additional customer service
First, decide if any of these reasons make sense for your business. To sell products and services on the Internet, success involves:
- having a great product or service
- attracting a targeted market
- selling and satisfying your customers
E-Commerce (selling through a website) is a six step process; all online businesses will go through the first three steps:
- Create the online content.
- Host the content on the Internet.
- Market the website and content.
Businesses conducting online sales will need to complete three additional steps:
1. Collect and record customer orders
2. Process payments
3. Fill and ship customer orders
Before committing valuable cash and precious time pursuing the development of a website, you may want to read through the information on the e-Commerce section of this website to determine if your business is Internet ready. Your responses will be instantly analyzed. A custom report for your business will point out your company's e-commerce strengths and weaknesses.
Marketing is one of the most important aspects of your business. Without marketing, potential clients can't find you. Marketing consists of four elements, often called the "four P's":
Marketing encompasses much more than just advertising or selling. A major part of marketing involves researching your customers:
- Who are they?
- Where are they located?
- How do you reach them?
- What do they want? (Great product? Great customer service? Follow-up support?)
- What can they afford?
- What do they think?
Your understanding and application of the answers to such questions plays a major role in the success or failure of your business.
For assistance in creating a marketing plan for your business, contact your nearest Idaho Small Business Development Center or SCORE office.
The principles of determining market share and market potential are the same for all geographic areas. First determine a customer profile (who) and the geographic size of the market (how many). This is the general market potential. Knowing the number and strength of your competitors (and then estimating the share of business you will take from them) will give you the market potential specific to your enterprise.
For many of us, a home-based business seems like a solution to a host of problems. We can be home with the kids, sit at the computer in our sweats, avoid the cost of office or shop space, and have more control over our day.
Yet numerous pitfalls exist that an unwary business owner may encounter. City and county planning and zoning regulations can throw a potential home-based business into a sea of unexpected costs and conflicts. Many of these regulations were developed long before personal computers changed the whole complexion of having a small business. These laws were meant to keep noisy, smelly, high-traffic activities out of residential neighborhoods. Yet today they are being applied across the board to quiet computer consultants, as well as the noisy, smelly businesses.
If you are entertaining the idea of having a home-based business, contact your city or county planning and zoning department and your city clerk's office, depending on where you live. Contact them before you start the business, not after. They will tell you what the requirements are to operate a home-based business in your community.
Having a home-based business can also bring you into contact with your county assessor's office, who will assess a tax on your business furniture and equipment, as well as other agencies. For detailed information on starting a home-based business, visit the Idaho Small Business Solutions Web site.
A special word of caution - if you are starting a home-based business in response to an advertisement about earning money at home, BEWARE!! Before you put any money on the line, check the information found on the Idaho Small Business Solutions Web site or contact a counselor at your nearest Idaho SBDC office.
Two of the greatest challenges for any business are hiring the right people and keeping them. Employees, and more importantly their contributions, are a business's most important asset. So how do you go about finding, selecting and retaining the best people?
Decide What You Want
Before beginning your hiring efforts, know what you want. One way is to list the skills, experience, and other attributes you are looking for in the following categories:
- must have - skills you do not have the time, money or desire to teach but which are absolutely necessary to the job, such as education, occupational license and experience
- should have - sets of skills in which the candidate should have some degree of knowledge or skill
- nice to have - what you'd love to have but can live without
Search in the Right Places
The harder it is for you to find the skills you need, the wider the net you must cast. You may choose from local media, the state's employment center (ID Department of Labor offices), and the Internet. View any employment ad as a marketing tool for your company, making it as appealing as possible. Put a headline on your ad that describes the absolutely best benefit you can offer. Be sure to add your must-have list of skills, experience, and education. To get qualified people without having to weed through a pile of applications, be specific about what you say and very selective about where you place the ad.
Don't underestimate the value of networking. You may choose to ask your best employees if they know someone who would fit well in your organization or use your network in the community to find employees.
Conduct a Thorough Interview
Give the applicant a complete and accurate picture of your business. In today's market, you have to sell both yourself and your company. Through your questions, cover the job's must-haves, should-haves, and nice-to-haves and be sure to obtain a clear picture of where the candidate is in relation to these attributes. Remember, good questions lead to good answers - the more you learn about each applicant's experience and skills, the better prepared you are to make your decision. If you find yourself talking as much or more than the candidate, stop - you only learn about the candidate when you are listening. Don't be afraid to press a candidate for more information - it is then that you may learn important information.
Hire the Right Person
Some tips for choosing who to hire include:
- Go with your gut instinct
- Accomplishments are what really matter
- Attitude counts
- Be objective
The three critical elements in hiring the right person for the job are skills match, company fit, and job match. Be objective in determining which candidates have the best overall fit. In terms of wages, try to be a leader in your market - think about the cost of paying a little more versus the cost of turnover (roughly 25% of salary and benefits).
Hold on to Good Employees
Employee retention is as important as the initial hire. An individual's suitability to a particular job is the single most important factor in job performance and retention. Be sure to provide jobs that fit with the employee's personality and then take the time for a proper orientation. Listen to them and continue to provide training and skills development opportunities. Set clear expectations, show concern for employees, and treat them fairly. Some other low or no-cost employee retention tips include:
- Use an open management style that gives employees a sense of ownership and more control over their destiny.
- After completion of a tough project, give team members some time off or reward them in some other way.
- Be as flexible as possible with work hours, dress, work rules, telecommuting.
- Try to make the work challenging or allow individuals to make an immediate difference in some way.
- Have fun. Throw a pizza party for no particular reason; give away family tickets to an amusement park.
- Assign coaches or mentors to help employees not only with specific jobs, but also in developing their careers.
- Consider offering an equity stake in the company to key hires.
- Make sure your managers and supervisors have the necessary skills to hire and keep good people.
Your business's reputation is a key element in retaining employees and attracting new ones. Make sure you know how your business is perceived in the community and do whatever it takes to make that perception a positive one.
The counseling management and technical assistance services offered by Idaho SBDC counselors and staff are provided at no charge to the client. Charges may be made to recover client-approved direct costs for items such as printing, postage, data retrieval, etc., related to special projects. Nominal fees are generally charged for training seminars and special events.
Identity theft, Internet fraud, and security breaches are increasingly common in today's business world. To help your small business manage security and privacy challenges, the Better Business Bureau (BBB) has partnered with nationally-recognized security and privacy experts to create a new toolkit called Security & Privacy - Made Simpler TM. The objective is to demystify the complexities of data security and provide small businesses with a non-technical road map to securing their customer and employee data.