Business start-up, management and financing

I want to start a business, but don't know what steps to take first.

Starting a business can seem overwhelming, not to mention confusing. One of the programs our organization offers is a 14-week classroom training course ("Atlanta Microenterprise Initiative" also known as "AMI") that teaches our clients, step-by-step, the process of starting or expanding a small business. It's like a business A to Z course where we teach topics that include licensing and regulation; business taxes, tax credits and other incentives; bookkeeping; sales/business development; operations; contract and equal employment opportunity laws; and business technology and e-commerce. We also spend about a month on marketing, including primary and secondary market research, as well as competitive and industry analyses - which are some of the most important activities you need to conduct before you commit yourself to loans, leases and/or other long-term business contracts. AMI will help answer the questions you probably have at this point, as well as better prepare you to understand and undertake the responsibilities and risks of starting a business. AMI will also help you write a solid business plan that you can use to manage your business over the short-, intermediate- and long-term. AMI clients attend class:

Monday AND Wednesday from 11:00am - 1:30pm,OR Tuesday AND Thursday from 6:00pm - 8:30pm, OR Saturday from 10:00am - 2:30pm

We start a new AMI training cycle three times per year, beginning with an orientation where we explain the program's logistics and what you can expect. (To be considered for AMI, it is mandatory that you first attend the orientation. There are no exceptions to this requirement.) Please visit "Upcoming Events" for the date of the next orientation. For your convenience, click on "Registration" on the navigation bar above and you will be directed to our registration page.

Please tell me about grants for women- and minority-owned businesses.

The truth is that, contrary to popular belief, there are very, very few grants available to for- profit businesses. There are, of course, some exceptions. For example, for-profits engaged in medical research or healthcare, job training / re-training, hi-tech / computer-related activities, childcare or the development of low-income residential housing can sometimes obtain grants to get started and / or expand. But the vast majority of grants are restricted to tax-exempt, non-profits. Unfortunately, the proliferation of "scams" that promise "free money" to start a business have led many people to falsely believe that there are grants available to for-profit businesses for any purpose (and to waste significant amounts of time and money in this pursuit).

From time to time, there are business plan and similar competitions in which money is given (i.e. you don't have to repay it) to for-profit businesses. A couple examples of this are the Miller Urban Entrepreneurs Series - http://www.millerurbanentrepreneurs.com - and the American Express / Count-Me-In competition - http://www.makemineamillion.org/m3/home.php - but opportunities like these tend to only be periodic and, therefore, there's a very specific time window in which you can apply. Some people confuse business "incentives" or community or business development "initiatives" with grants. Incentives / initiatives include programs like Atlanta's Renewal Community (replaced the old Empowerment Zone), which provides tax credits to businesses that locate in certain underutilized or blighted neighborhoods (http://www.hud.gov/news/release.cfm?content=pr02-013atl.cfm). Such businesses are eligible to receive an offset (i.e. "tax credit") against any income taxes they may owe. Other components of the renewal community include special loan programs that businesses can use to improve the community at-large by stimulating job growth, improving abandoned property, etc. Other incentives/initiatives include SBA's HUBZone ( http://www.sba.gov/hubzone/ ) and their 8a program ( http://www.sba.gov/8abd/ ), which are designed to help small, women- and/or minority-owned companies improve their overall operations so that they can more effectively compete with larger companies for public- and private-sector procurement opportunities. Additionally, many larger corporations and many municipalities offer special procurement consideration to "WBE" (Women's Business Enterprise), "DBE" (Disadvantaged Business Enterprise) and / or "MBE" (Minority Business Enterprise) companies, meaning they make a concerted effort to purchase products/services from such companies. Many of these entities also have dedicated procurement representatives for this purpose. Contrary to popular belief, however, there is rarely, if ever, any up-front cash available through any of these incentive/initiative programs.

So how can a small business get money to buy equipment, inventory and / or meet start-up or expansion expenses? The answer is that most have four primary options: 1) self-finance, meaning the owner must personally pay for those expenses; 2) get others to invest, meaning the owner must get friends, family members or others to invest money in the business; 3) obtain a loan; or 4) start/operate the business on a smaller scale, re-invest as much of the profit as possible back into the business by gradually purchasing the equipment and supplies needed to achieve your ultimate objectives.

How do I obtain a business loan?

Typically, business loans are made based on the proposed use of the proceeds and, consequently, it may be necessary to obtain more than one loan to meet your needs. For example, it may require three separate loans - all of which may have different amortization schedules and interest rates - if you're seeking money to purchase business equipment, renovate a building, and to use for working capital purposes.

Before seeking a loan, it's important to have done a careful projection of your anticipated future financial needs. This should include not only your anticipated expenditures for equipment and other large purchases, but also your anticipated working capital needs, including money for overhead. It should also include a projection of your anticipated revenues. Failure to conduct a thorough analysis of your future financial needs can result in requesting an insufficient amount of the money needed to implement your major business objectives - and this can result in business failure.

There are two basic "genres" of business loans: "Traditional" loans are typically made either by banks (e.g. Bank of America, Wachovia, etc.) or by non-bank lenders (e.g. GE Capital, CIT Small Business Lending, etc.) to businesses requiring larger sums of money. Such loans usually require a down payment (as much as 20 percent or more), collateralization (as much as 100 percent) and / or a strong credit history. Traditional loans can be either SBA-guaranteed or not.

"Micro loans" are made to small businesses - including home-based ventures and start-ups - that have fewer than 5 employees, including the owner(s); that are unable to obtain financing from traditional sources like banks and non-bank lenders; and that need less than about $50,000. Most micro lenders will accept a blemished credit history as long as all existing credit accounts have been current for several months; the owner presents a strong and comprehensive business plan; demonstrates solid business acumen, preferably in the chosen industry; and demonstrates the capacity to properly and successfully run the business.

How do I obtain a business license?

Business licensing is generally controlled by the municipality in which the business is based (which in metro Atlanta can be either the city or the county, depending on whether the business is based in an incorporated or unincorporated area).

I want to purchase an existing business. What do I need to do next?

There are any number of considerations one needs to make before purchasing an existing business, chief among them: Whether the selling price is commensurate with the business's value - and this value is predicated on a number of factors, including the annual revenue the business has traditionally generated and the likelihood that its clients will continue to patronize the business under new ownership. Purchasing an existing business without conducting a thorough business valuation can be a recipe for disaster.

My business is not yet profitable and I'm having trouble paying my household's bills. Is there a program that can help me pay my personal living expenses until my business becomes profitable?

There is no program or other assistance that can help you with living or other personal expenses. However, you may want to consider obtaining a working capital loan, from which you could pay yourself a modest salary that can help you to meet your living expenses. Another alternative would be to obtain a full-time job and run the business on a part-time basis until it begins to show a profit; or obtain a part-time job that can help you to sufficiently supplement the revenues from the business.

                       Working with WEDA

Do you charge for your programs and services?

The cost to undertake the Atlanta Microenterprise Initiative ("AMI") is $420 for the 14-week series, however, we use a sliding scale to determine a client's ability to pay. Those whose total household income and family size qualify can receive scholarships that range from 30% to 50% of the total fee. AMI and loan orientations are free of charge. All other programs and services, including workshops, are assessed a fee that is determined by the scope of services provided. For details, please check the information on each individual program.

Does WEDA offer loans?

Through a partnership with the U.S. Small Business Administration and Innovative Bank, WEDA offers a micro loan program - called "SOHO" (Small Office/Home Office) that lends up to $50,000. This program provides SBA-guaranteed micro loans with 7 year repayment schedules. Loans can be used for business start-up and/or expansion, including for working capital purposes. Loan products are also available for veterans (including their spouses) and exporters.

It's important to note that WEDA is not the lender and is, instead, the originator. This means that we package the loan applications, then send them directly to the lender. While we are available to answer any questions you may have, the bank - not WEDA - establishes the lending criteria and makes the lending decision. To apply for SOHO, it's mandatory that you attend one of our free, monthly loan orientations where we discuss the particulars of the loans programs, answer questions, disseminate applications, etc. Please visit "Upcoming Events" for the date of the next orientation. For your convenience, click on "Registration" on the navigation bar above and you will be directed to our registration page.

Do you provide business or personal financial counseling on a walk-in basis?

At this time, we are unable to accept walk-ins for counseling. Additionally, counseling is currently limited to clients of the WEDA / Metropolitan Atlanta Women's Business.

I'm a business start-up, but I just need help with my business plan.

Our organization utilizes a strict protocol when working with start-up entrepreneurs: They are not eligible to receive one-on-one assistance, including business plan assistance, until they have successfully completed our 14-week classroom training course, the Atlanta Microenterprise Initiative, which is described in greater detail above.

I've tried to telephone WEDA, but it's really difficult to get through. How do I contact you?

WEDA receives far more telephone calls each day than we're capable of responding to personally. We encourage you to first surf our website as the answer to your question may be found online. If not, the best way to receive a speedy response is to contact us via email at inquiries@WEDA-atlanta.org