This is the first crucial to begin the process of starting your business. Eighty percent of small businesses fail after the first five years. Why does this phenomenon occur? Typically small businesses fail because the research and strategy developed to start the business are non-existent. It is important to select the right industry that meets your needs not only because it is something you are interested in but also because it is something that reflects your experience, management style, leadership, background and specialty.

As you decide the business you’d like to start – visit the following Web sites for further clarification:
Is Entrepreneurship For You?
Discover if You are Really Ready
Small Business Quiz

Consider attending BizLaunch’s free monthly Starting a Business Workshop ---link to BizLaunch page, workshop section---

The business plan (BP) is a living, breathing document – it is the very essence of whether your business will succeed or fail. The BP consists of the how, when, where and what you need to do in order to successfully, start and operate your business. Many start-ups skip this crucial in their quest to get started in business.

Warning: Do not skip this step.

Get a business plan outline from the SBA

The BP is used to ensure that the assumptions made regarding your industry type are completely accurate. It is developed first for you the entrepreneur. Next it may be needed if you need to secure leased retail or commercial space. It is also needed if you need to acquire capital from a financial institution. The length of the business plan varies depending on the complexity of the businesses industry. Typically a plan will range from 10 – 20 pages.

Should you write the plan yourself? YES!

BizLaunch offers a free quarterly Business Plan Workshop ---link to BizLaunch page, workshop section---

The Arlington County Public Library offers free business databases (accessing via your library card) which can assist you in identifying the latest market trends, competition, opportunities and more. The business databases include: RefUSA, Business & Company Resource Center & ProQuest. Visit the Arlington County Library Web site.

SCORE counselors are available at BizLaunch on Tuesday mornings to help critique the elements of your business plan. Schedule an appointment.

Web sites featuring free sample business plans:

BusinessPlans.com,
MoreBusiness.com,
BulletproofBusinessPlans.com, and
CCH’s Business Owners Toolkit.

A business never can have too much capital. Determine in 2 how much you’ll need to start and manage your business successfully. Include financing for unforeseen circumstances: business continuity planning or other potential business emergencies.

Common Forms of Seeking Capital for a Small Business Start-Up:

• Personal Savings
• Friends & Family
• Traditional Lending
• Commercial Lending
• SBA Guaranteed Lending
• Venture Capital

....be sure to shop around for a financial institution that lends to small businesses in your industry sector.

Before you set up an appointment with a lender be able to answer the following questions:

• Can the business repay the loan? Is cash flow greater than debt service?
• Can you repay the loan if the business fails? Is collateral sufficient to repay the loan?
• Does the business collect its bills?
• Does the business control its inventory?
• Does the business pay its bills?
• Are the officers committed to the business?
• Does the business have a profitable operating history?
• Does the business match its sources and uses of funds?
• Are sales growing?
• Does the business control expenses?
• Are profits increasing as a percentage of sales?
• Is there any discretionary cash flow?
• What is the future of the industry?
• Who is your competition and what are their strengths and weaknesses?

Questions to Ask the Lender

Ask the bank to confirm the terms and conditions of the loan in writing, and carefully analyze them before you sign any agreement. These details should include:

• The amount you are borrowing;
• The interest rate you will be charged;
• Details of other charges the bank propose to make;
• How and when you should make the repayments;
• Any security required;
• Any arrangement fee to cover the costs of setting-up the facility and finalizing the security arrangements;
• When the loan will be reviewed;
• What sort of circumstances will trigger an early review or repayment; and
• What minimum information needs to be provided at a review.

It is also recommended to ask the following questions when you wish to borrow from your bank:

• How much in total will the finance cost me?
• Are there any penalties if I repay the finance early?
• How are my other finance packages affected?
• Could you transfer money between my accounts without asking me?
• Under what conditions would you be able to call in the finance?
• How long will it take to obtain this finance?
• Can I receive a grant for my business?

If you are a non-profit organization which seeks to improve the quality of life through education or science more than likely there are grants available.

If you are opening a for-profit business the likelihood of securing a grant is remote.

Obtain a list of current financial institutions with contact names of organizations participating in the SBA’s financial programs. You’ll also find the current ranking of lenders working with small businesses here.

Additional Resources

Attend BizLaunch’s quarterly Finance Workshop, hosted by the Small Business Administration. Learn more.

Do not skip this step! It is important to hire an accountant and lawyer in order to save you headaches in the future. These two professions may cost you some overhead – but consider them both worthwhile investments.

Tip: Don’t hire a friend of a friend; unless they are practicing in your specific industry or business field.

Search Engine for Local Accountants
Questions for the Accountant Before You Hire
List of Arlington and Virginia Lawyers
Arlington Bar Association
Tips on Hiring Attorneys

The location of your business is extremely crucial to the success of your business. There is a formula which can aid you in securing your leased space. There are 3 types of zoned business locations in Arlington: home-based, retail or commercial.

Home-Based Business

If you are planning to start a business in your home you must fill out a home occupancy permit through the Arlington County Zoning Office as well as a parking space disclosure. There is no additional cost associated acquiring a home occupancy permit.

Note: If you reside in an apartment building check with your leasing agent to ensure there are no restrictions in operating a business out of your rental unit.

If you need to lease space in Arlington it is highly recommended you speak with Arlington Economic Development, hire a broker and start six months to one year in advance. Space is highly competitive and the old adage that the early bird catches the worm is entirely true in these circumstances. Before you speak with a broker, make sure you know how much space you need and the amount you can afford per square foot. This is where the business plan comes in handy!

Retail Business
Construction Permit
When do you need a Permit?
The Permit Process (PDF file; Adobe Acrobat required)
Certificate of Occupancy
Signage
Does your business involve food? Click here

Commercial Business

Construction Permit
When do you need a Permit?
The Permit Process (PDF file; Adobe Acrobat required)
Certificate of Occupancy
Signage

Recycling

A business is required by law to recycle the two recyclable materials it generates in the greatest quantities. They must submit a recycling plan with DES within thirty days of receiving a Certificate of Occupancy and have an operational recycling program in place within ninety days. Forms are available online. If a business qualifies for a Home Occupancy Permit, it is exempt from this requirement. For additional information contact: Department of Environmental Services Solid Waste Division
4300 S. 29th Street, Arlington, Virginia 22206
703-228-6570

In the United States there are 4 major types of business entities you can form for your business:

1. Sole Proprietorship
2. General Partnership
3. Limited Liability Partnership or Company
4. Incorporation

Sole Proprietorship: The vast majority of small businesses start out as sole proprietorships. These firms are owned by one person, usually the individual who has day-to-day responsibility for running the business. Sole proprietors own all the assets of the business and the profits generated by it. They also assume complete responsibility for any of its liabilities or debts. In the eyes of the law and the public, you are one in the same with the business.

Partnership: In a Partnership, two or more people share ownership of a single business. Like proprietorships, the law does not distinguish between the business and its owners. The Partners should have a legal agreement that sets forth how decisions will be made, profits will be shared, disputes will be resolved, how future partners will be admitted to the partnership, how partners can be bought out, or what s will be taken to dissolve the partnership when needed;. Yes, it’s hard to think about a "break-up" when the business is just getting started, but many partnerships split up at crisis times and unless there is a defined process, there will be even greater problems. They also must decide up front how much time and capital each will contribute, etc.

General Partnership: Partners divide responsibility for management and liability, as well as the shares of profit or loss according to their internal agreement. Equal shares are assumed unless there is a written agreement that states differently.

Limited Liability Partnership: "Limited" means that most of the partners have limited liability (to the extent of their investment) as well as limited input regarding management decisions, which generally encourages investors for short term projects, or for investing in capital assets. This form of ownership is not often used for operating retail or service businesses. Forming a limited partnership is more complex and formal than that of a general partnership.

Limited Liability Company: The LLC is a relatively new type of hybrid business structure that is now permissible in most states. It is designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. Formation is more complex and formal than that of a general partnership. The owners are members, and the duration of the LLC is usually determined when the organization papers are filed. The time limit can be continued if desired by a vote of the members at the time of expiration. LLC's must not have more than two of the four characteristics that define corporations: Limited liability to the extent of assets; continuity of life; centralization of management; and free transferability of ownership interests.

Corporation: A corporation, chartered by the state in which it is headquartered, is considered by law to be a unique entity, separate and apart from those who own it. A corporation can be taxed; it can be sued; it can enter into contractual agreements. The owners of a corporation are its shareholders. The shareholders elect a board of directors to oversee the major policies and decisions. The corporation has a life of its own and does not dissolve when ownership changes.

To register & organize your business in the State of Virginia, visit the Virginia State Corporation Commission.

The State Forms may be found here.

Your trade name is what makes your business “uniquely” you. However, it should also reflect the industry that you are in. A Fictitious Trade Name is required to be filed when a business is operating under an assumed name. If the company is incorporated with the State of Virginia and is doing business in Arlington County under the corporate name, the company does not have to register the name on county level. If the company is incorporated in a different state, then it must register with the State Corporation Commission in Richmond Virginia as a foreign corporation.

There are three types of Fictitious Trade Name applications:

1. Individual
2. Partnership
3. Corporation

If a company is incorporated with the State of Virginia and is doing business in Arlington County under a fictitious name, the Company must register the fictitious trade names on county level. The Arlington County Circuit Court will administer your official trade name. Locate forms to submit to the Clerk of Court’s Office.

The Business License is the way you pay for your local taxes.

Business License Tax

The Commissioner of Revenue assesses Arlington County business privilege license taxes on business conducted in Arlington County, including home-based businesses. Applications for licenses must be filed by March 1 of each year or within 75 days from the day a business commences operations.

Business Tangible Personal Property Tax

Arlington County levies a tax on tangible personal property located in Arlington on January 1 and used in a trade or business. This includes items such as furniture, fixtures, machinery, tools, and programmable computer equipment. Businesses must itemize personal property and/or equipment, giving its date of acquisition and original purchase price. You must file a return by May 1; payment is due by September 15. Business tangible personal property tax is not prorated if you should cease business during the year.

Other Business Taxes

The following taxes are levied on industry specific activities: Short-Term Rental Tax applies to certain rental businesses such as video rental stores. Transient Occupancy Tax applies to hotel, motel, or tourist home room or space rentals. Meals, Food, and Beverage Tax must be charged by a seller for prepared foods sold in Arlington.

Note: Don’t forget to file your state and federal taxes! This is where you accountant will come in handy.