Tips for New Entrepreneurs

This guide exists to assist you, if you are looking to fulfill the dream of owning a business. Some of the advice offered in this user guide will help the potential entrepreneur start on the path towards a successful business venture. We have broken it down into three useful guides for you. If more help is needed, please feel encouraged to visit the H&R Block Business and Career Center at the Central Branch of the Kansas City Public Library. It is an excellent resource for new entrepreneurs. To contact an H&R Block Business & Career Center librarian by phone, 816.701.3717, or by e-mail, bcc@kclibrary.org.

How to Write a Business Plan


A business plan is a multi-purpose document.
It will:

  • Show whether your business idea is feasible (and can make a profit)
  • Help you to think through your business and stay on track
  • Help you communicate your ideas to others, such as bankers, suppliers, partners, etc.

A business plan outlines your business and should include:

  • The goals you have for your business and your strategy for accomplishing the goals.
  • An explanation of the day-to-day operations of your business.
  • Your reasons for believing your business will be a success.

Your business plan should be read and reviewed frequently so that you can update it as conditions in your business, industry, and/or economy change.
Most business plans include six to eight key sections:

  1. Executive summary
  2. Business/company description
  3. Products and/or services
  4. Market analysis and marketing plan
  5. Management team/key personnel
  6. Operation plan/strategy and implementation
  7. Financial plan/projections
  8. Appendices

Let's look briefly at each of these sections.

1. Executive summary

The executive summary is a brief (2-3 pages) overview of your company. It should contain:

  • Your mission statement
    • 101 Mission Statements (2007) Jeffrey Abrahams
    • Say It and Live It (1995) Patricia Jones
    • The Mission Statement Book (1995) Jeffrey Abrahams
  • Goals and objectives
  • A synopsis of all of the other sections of your business plan.

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2. Business/company description

The business/company description section is where you describe the structure of your business. Include:

  • Company name
    • Check to see if the name you have selected for your business is currently being used by an incorporated company in Missouri by going to the Missouri Secretary of State’s
    • You can also check to see if the URL address you would like to use for your business's web page has already been claimed by going to a Whois Service
  • Legal form of ownership (sole proprietorship, LLC, etc.)
    • Entrepreneur Magazine’s Ultimate Book on Forming Corporations LLC's, Sole Proprietorships, Partnerships (2004) Michael Spadaccini
    • Forming a Partnership (2007) Ira Nottonson
    • LLC or Corporation? (2010) Anthony Mancuso
  • Basic description of the industry in which you operate
  • Your company strengths
  • Niche or problem your company will fill
  • Your reasons for starting the company.

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3. Products and/or services

The products and/or services section is where you explain what your company will do.

  • Detailed description about your product or service
  • Pricing information
  • Your product's competitive advantage

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4. Market analysis and marketing plan

Outline who your customers are, where they are located, the current and projected state of the industry and your competitors. Describe how you plan to market, promote, and encourage growth in the demand for your product. Think of this section as the place to justify the need for your product and to explain why your company will be successful.
Customers
Describe in detail who your customer is:

  • Consumers or individuals are defined in terms of demographic characteristics: age, sex, race, ethnicity, education, income, etc.
  • Identify how large this population is and where it is located by using ReferenceUSA, American FactFinder, USA Counties, MO Census Data Center, Mid-America Regional Council (MARC), and books such as Community Sourcebook of Zip Code Demographics and CEDDS: The Complete Economic and Demographic Data Source, available at the Kansas City Public Library.
  • Business customers are defined by industry, size, and location. Obtain data on the potential size of your business customer base by using the Economic Census, ReferenceUSA, and Sorkins' Directory of Business & Government.

Competitors
Your business plan needs to include information on your competition: highlighting specifics on your major competitors, including their size, pricing, advertising methods, and quality of goods. Some of the research you employ in this section will need to be primary research.

  • Identify your competitors and their market size by using the ReferenceUSA database. Our Researching a Company guide will provide you with additional sources.
  • Identify indirect competitors. The MONASH Marketing Dictionary defines indirect competition as: "a product that is in a different category altogether but which is seen as an alternative purchase choice; for example, coffee and mineral water are indirect competitors." You can find your indirect competitors through the ReferenceUSA database.

Industry
Create a SWOT analysis of the industry that you are operating in. A SWOT analysis looks at the Strengths, Weaknesses, Opportunities, and Threats to the industry. Identify the maturity of the industry, the growth potential, the underserved population, your niche, changes in the industry that will provide opportunities and/or threats, and consumer trends. Reveal what might impact the industry for good or bad, be it the economic climate, growth in competitors (domestic and international), change in governmental regulations, advances in technology, and lifestyle changes.

Marketing Plan
Now that you have outlined your customer base, your competition and the industry arena, explain the strategy for marketing your product or service.

  • Word of mouth is often stated as a primary method as it appears to be inexpensive and not time-consuming. However, to be effective, you need to be proactive in guiding this approach. You might want to read some books about word of mouth marketing.
  • Network with people in your business, other entrepreneurs, and potential customers or clients
  • Paid advertisements is another common approach. Newspapers, radio, magazines, billboard signs are all locations where ads can be placed. Check out these library for rates and outlets:
    • Standard Rate & Data Service
    • Gale Directory of Publications and Broadcast Media
  • If you wish to hire someone to write and place your ads you might want to consult the Advertising Red Books as a way of learning about advertising agencies.
  • Websites, blogs, podcasts, MySpace, YouTube, Facebook and Twitter are all inexpensive ways to present your product and/or service. The many ways in which these can be employed effectively can be learned by reading:
    • Twitter Revolution (2008) Deborah Micek
    • Blog Marketing (2006) Jeremy Wright

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5. Management team/key personnel

  • Name key employees/advisors, their backgrounds and qualifications
  • List professional services you have employed (lawyers, insurance agents, accountants)

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6. Operation plan/strategy

This is where you describe the details of the daily operation of your business.

  • Location
  • Building/office description and size
  • Customer/supplier access (parking, highways, airports, warehouses)
  • Suppliers: ReferenceUSA, print directories
  • Permits, licenses (link to business license page)
  • Federal regulations
  • Staff and compensation: Salary Facts Handbook (2008) JIST Works, Inc. and Bureau of Labor Statistics

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7. Financial plans and projections

Your finances:

  • Balance sheet
  • Income statement
  • Projections

A key source to use when evaluating your financial statements is Annual Statement Studies Robert Morris Associates. This source gives the ratios that are average in your industry and is used by bankers when evaluating loan prospects. A similar source is Dun & Bradstreet's Industry Norms and Key Business Ratios.
The following books can provide you with a more complete understanding of financial reports.

  • Streetwise Finance and Accounting for Entrepreneurs (2006) Suzanne Caplan
  • Keeping the Books (2008) Linda Pinson
  • Financial Management 101 (2008) Angie Mohr

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8. Appendices

  • Copies of contracts
  • Prepared promotional information
  • Photographs and/or maps of operating locations

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There are many sources in the library that can assist you in the writing of your plan. You can read actual successful business plans in the Business Plans Handbook.
The following books will give you additional information about business plans:

  • Ernst & Young Business Plan Guide (1991) Daniel R. Garner
  • Your First Business Plan (2005) Joseph A. Covello
  • How to Prepare a Business Plan (2001) Edward Blackwell

For additional information, contact an H&R Block Business & Career Center librarian by phone, 816.701.3717, or by e-mail, bcc@kclibrary.org.
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Financing a Small Business

One of the major reasons for new business failures is lack of sufficient capital. Yet developing a good funding package can be difficult.

The primary structures of financing are:

  • Debt/Loan: this is money that you will need to pay back and is the most prevalent type of financing
  • Equity: you usually do not need to pay this money back, but you will be giving someone else partial ownership and partial control of the business. You will usually have to share profits with your financing partner.

Grants

Grants, or money that does not need to be repaid, are practically non-existent for small businesses. You might have seen infomercials about government grants to start your business, but these grants do not exist except in very restricted situations. Any grant that might be available from the federal government can by found by searching the Loans and Grants search engine or Grants.gov.

Sources of Financing

  • Personal savings
  • Friends and relatives
  • Banks and credit unions
  • Venture capital firms

Preparing Your Financial Request

  • Before asking for money for your business, have your financial needs organized and your business well thought out. This starts with a good business plan (link to business plan help page).
  • Prepare several financial documents outlining your company's finances. Have these documents ready before you talk to your lender. These documents include, but are not limited to:
    • Cash Flow Statement
    • Income Statement
    • Balance Sheet
    • Personal Finance Statement

Financial Documents

  • Cash Flow Statement – a document that shows monthly cash coming in and going out and the net cash balance.
  • Income Statement – shows revenue and expenses over a period of time: the difference between the two is your profit.
  • Balance Sheet – the statement showing the value of your assets compared to the value of your debts or liabilities.
  • Personal Finance Statement – This document is a personal balance sheet. Lenders expect you to provide a certain amount of your own money and assets to finance your business. They also want to see how you have managed your personal finances.
  • Other statements. Depending on the lender, there can be a number of additional forms, statements, and sources of information you will be asked to provide.

The 3 C's

There are three areas that a lender evaluates when looking at a loan application.

  • Character: Have you managed money responsibly in the past, do you have the proper background, education, and skills to run your own business?
  • Capacity: Does your cash flow cover the loan payment?
  • Collateral: Do you have something of value that can be used to service your debt if you can't repay the loan?

Small Business Administration

The Small Business Administration (SBA) has a number of financing programs for start-up and existing small businesses. The most active is their Basic 7(a) Loan Guaranty. The purpose of the loan guaranty is to help small businesses who might not otherwise qualify for a conventional loan. The loan is not given directly by the SBA, rather SBA guarantees a large percentage of a loan made by a commercial bank which reduces the bank's risk exposure.

Other Resources

Library resources

The Library has numerous books that can help you learn about business financing. They can be found by using the subject heading of small business finance and small business loans. Some sample titles include:

  • Entrepreneurs Guide to Raising Capital (2000) David Nour
  • Financing Your Small Business (2006) James E. Burk
  • How To Raise Capital (2005) Jeffry A. Timmons
  • SBA Loans: A Step by Step Guide (2002) Patrick D. O’Hara

For additional information, contact an H&R Block Business & Career Center librarian by phone, 816.701.3717, or by e-mail, bcc@kclibrary.org.

Licensing a Business in Missouri


When forming a business, there can be many forms that need to be filed with a number of state and local governmental offices. The forms vary depending on the legal formation of your company (partnership, LLC, etc.) and whether you have employees, retail sales, a franchise business, and many other variables. Businesses can be subject to tax filings, zoning clearances, occupational licenses, permits, and much more. Hiring the services of a qualified lawyer and accountant can ease you through the process.

  1. Starting Off
  2. Register the Name of Your Business
  3. Missouri Sales Tax
  4. Obtain Local Business Licenses
  5. Kansas City, MO Earnings and Profit Taxes
  6. Federal Identification Number/Employer Identification Number
  7. Additional Licenses, Clearances, Taxes, and Forms
  8. Additional Sources of Information

1. Starting Off

A good starting place to learn what needs to be filed is the Missouri Small Business & Technology Development Centers. You are encouraged to go to their website for more complete information.

2. Register the name of your business

  • To check on the availability of a business name, search the Secretary of State's Business Entity database.
  • The name you choose must be registered with the Secretary of State (573) 751-4153 by filing the necessary forms and paperwork. The way to register a name is different for each type of legal structure. Choices of Legal Structures are sole proprietorship, partnership, limited partnership, Limited Liability Company (LLC), or corporation. A discussion of the issues involved in the legal formation of your company can be found at www.missouribusiness.net/doingbusiness/legalform.pdf.

3. Missouri Sales Tax.

Both wholesalers and retailers need to be registered with the Missouri Department of Revenue. Go to their website for forms or call at (573) 751-2836 to get a sales tax number or sales tax exemption.

4. Obtain local business licenses.

For Kansas City, Missouri, minimally you must have both a zoning clearance and an occupational license. There can be additional licenses and/or permits you need depending on the nature of your business. See the city's web page for forms and additional information.
Additional county forms, licenses, permits, and taxes might need to be filed. Make sure you check with your county's requirements.

5. Kansas City, MO Earnings and Profit Taxes

need to be filed with the city. Check with the Finance Department for additional information.

6. Federal Identification Number/Employer Identification Number

Some businesses need to have a Federal Identification Number and/or Employer Identification Number. Go to the IRS web site to learn more and to apply online.

7. Additional Licenses, Clearances, Taxes, and Forms

There are many additional licenses, clearances, taxes, and forms that might need to be filed for your business. It is important to contact the local, state, and federal licensing, taxing, zoning, economic development, and other possible agencies to learn what is required for your particular business. Qualified lawyers and accountants can be of great help to you in this process.

8. Additional sources of information.

Websites that give good overviews include:

For information about licensing a business in the state of Kansas, please consult the Frequently Asked Questions (FAQ) from the Kansas Business Center.

For additional information, contact an H&R Block Business & Career Center librarian by phone, 816.701.3717, or by e-mail, bcc@kclibrary.org.

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