New Business FAQ
Got questions about your business? We’re LINKing you to answers. Browse these common questions and discover resources to help you further.
How do I determine if my personality is right for my proposed business?
You will be your own most important asset, so an objective appraisal of your strengths and weaknesses is essential. To determine if your personality is right, you need to answer:
- Am I self-starter?
- How well do I get along with a variety of personalities?
- How good am I at making decisions?
- Do I have the physical and emotional stamina to run a business?
- How well do I plan and organize?
- Are my attitudes and drive strong enough to maintain motivation?
- How will the business affect my family?
source: Psychology Today
What training and knowledge do I need to start a business?
Few people start a business with all of these bases covered. Honestly assess your own experience and skills; then look for partners or key employees to compensate for your deficiencies.
The following are four basic needs for success in small business:
- Sound management practices
- Industry experience
- Technical support
- Planning ability
What accounting and bookkeeping knowledge do I need?
You need accounting and bookkeeping knowledge or resources to run your business successfully and to increase your profits.
Your bookkeeper will keep your detailed records. Your accountant will set up company financial standards and do the periodic required reporting for the State of Connecticut and Federal Government. Some of these items include:
- Your tax returns under federal and Connecticut state laws, including income tax and Social Security laws
- Your request for credit from vendors or a loan from a bank
- Your claims about the business, should you wish to sell it.
Additional Resources
How do I find information on existing businesses to assist with my planning?
You can utilize our Resource Organizations to find local partners to counsel, mentor, and train your small business.
What are the common pitfalls and mistakes that startups encounter?
According to the data provided by U.S. government, 20% of new business fail during the first two years operation. So you should be aware of a few of the biggest mistakes that startups make so you can avoid them in advance.
- Don’t be afraid to fail
- Make a business plan
- Get organized
- Understand your market and target audience
- Follow the proper legal structure and business registration
Additional Resources
The Most Common Mistakes Entrepreneurs Make
What are the common risks associated with expanding an existing business?
Once your business becomes profitable, your next goal is probably to see it grow. If that growth comes too fast, though, you could run into some unexpected problems. Six common risks of business growth are:
- Cash flow crunch while dealing with increased demand for your product or service
- Operational inefficiency for uncontrolled expansion
- Negative feedback due to customer service issues during an expansion
- Overworked and stressed employees, who are more likely to consider jumping ship
- Outgrowing your office space
- A faltering ability to lead and manage
Additional Resources
How do I determine if there is a substantial market for my market of service?
You’re naturally excited about your new product or service. But how do you know if anyone will actually buy it? In order to give your new idea the best chance to succeed, you need to accurately test the market. Here are three ways to do so:
- Start with friends and family
- Small scale testing
- Testing the market online
Additional Resources
Why is my product or service a better value for my customer?
Here are five ways you can compete with a big businesses:
- Personalize your service
- Innovate easily
- Explore your network
- Redefine value for your customers
- Welcome competition
Additional Resources
Who are my competitors and how do I convince my customers to buy from me?
View our BizLINK Directory to find the existing-direct competitors around your area. Then, you have to identify what makes your business unique. The following steps will help you identify your Unique Selling Proposition (USP):
- Gather a couple of people from your team who know about your business
- Put yourselves in the shoes of others in your industry
- Pinpoint the types of things these others might say about your products
- Make a long list
- Step back into your own shoes
- Now read your list. What makes you different from your competitors?
- Select the most compelling points and incorporate them into your marketing program
Additional Resources
Are my advantages substantial enough?
To identify if your competitive advantages are strong enough, you have to create a competitor analysis.
Additional Resources
What is the fastest and cheapest way to develop my product/service?
By eliminating delay, downtime, and other speed bumps, you will boost sales throughput. This powerful combination will give you the lowest possible cost and your customers the greatest value.
NOTE: Quality + Speed = Low Cost
Is my product or service a “pain killer” (solves an existing problem) or a “vitamin” (a faster, better, cheaper solution to an existing problem)?
If you want to differentiate between pain killer and vitamin as you’re generating an business idea, ask yourself this question: Does this pain point keep my customer up at night?
Additional Resources
Do I have a product/service that suits a “niche market” or is more mainstream and of interest to a large company?
A niche market tends to be small but well defined, targeting a specific segment of the customers. A mainstream market targets all individuals, with profit generated depending upon the quantity of products sold.
Additional Resources
How much money, time, and other resources will I need to make my venture profitable?
On average, it takes two to three years for a business to be profitable. Yet each business’s profitability timeline will be different, so it’s critical to do Break-Even Analysis to see when your venture will make money and how much revenue you need to cover your expenses.
Additional Resources
How do I create a realistic cash requirements plan and timeline with appropriate contingency plans?
An emergency fund is a crucial safety net for when unexpected expenses or revenue shortfalls occur. To set your emergency funds goal, it’s helpful to consider the following stuffs:
- Realize that it can take months to save enough to cover even a single month of expenses
- Recognize the two types of emergency funds (unexpected expense vs. unexpected loss of income)
- Estimate your cost for critical expenses
Additional Resources
How do I create a cash flow projection?
Five steps for calculating projected cash flow
- Find your business’s cash at the beginning of period (subtract the previous period’s expenses from the previous period’s income)
- Estimate incoming cash for next period
- Estimate expenses for next period
- Subtract estimated expenses from estimated income
- Add cash flow to opening balance
Additional Resources
How can I reach the next level of development when my initial capital is expended?
If you run out of initial funds and have not yet reached the next level of development with your business, you should strive to keep your emotional state healthy and to keep your business afloat. Some options include:
- Cutting expenses
- Requesting short-term flexibility from your landlord and vendors
- Cutting staff
- Exploring new revenue streams
- Measure your business metrics to see where you might improve
Additional Resources
Options for Paying Your Employees When You Can’t Make Payroll
How do I find the right employees and train them?
The best way to find new hires is to test them with the actual work. Then, create a training program and ensure employees get the knowledge they need.
- Create a Plan
- Host regular training sessions
- Use employees as trainers
- Cross-train workers
- Set training goals
Additional Resources
What agreements and/or documents should I have with my employees, contractors or collaborators, and customers?
The right legal documents will limit your liability and can help you avoid contract disputes with your employees. Hiring a lawyer can help you deal with these documents. Ten essential contracts for small businesses are:
- Business Contract
- Service Contract
- Independent Contractor Agreement
- Release of Liability
- Equipment Lease
- Non Disclosure Agreement
- Provisional Patent Application
- Non Compete Agreement
- Employment Agreement
- Employee Handbook Receipt Acknowledgment
Additional Resources
What are the regulatory issues that I will encounter (local, state, and federal) and how can I efficiently comply?
It’s important for businesses to be in compliance with any local, state, or federal regulations. Take the following steps to do so:
- Document any internal requirements, such as minutes of shareholder meetings, or at least keep a record of important business decisions
- Be aware of state filing requirements, which vary by state and business structure
- See if your business is affected by any federal regulations
- Keep any required licenses, permits, or certificates up to date
Additional Resources
How can I best present my company to a bank or lending institution?
The presentation will review your business plan and include an executive summary, which amounts to an elevator pitch for your company. This is your chance to express your passion and vision for the business, so make sure the presentation is concise and impactful.
Additional Resources
Establishing a Bank Funding Relationship: Small Business Loans and Services
How does a bank determine if they will extend me a loan?
You’ll need to prepare the following information to get the small business loan you’re looking for:
- Why you need funds, and how much you need
- Your credit history
- What type of financing you’re requesting
- Your business plan
- A presentation
Additional Resources
Guide to Funding Strategies: Finding the Fuel to Grow Your Small Business
What types of loans are available and from what institutions?
You can get the following types of small business loans from our partner banks, the SBA, and some local lenders. Remember, pay attention to the amount, rates, terms, and other elements, as they’ll help you find the small business loan type which is suited for you.
- Business line of credit
- SBA loan
- Short Term Loan
- Business Term Loan
- Merchant Cash Advance
- Business Credit Card
- Equipment Financing
- Commercial Mortgage
- Accounts Receivable Financing
- Startup Loan
Additional Resources
Are there ‘back of the envelope’ calculations I can use to determine the viability of my business idea?
To determine if your startup idea could be profitable, all you need to do is build a rough back-of-the-envelope calculation. This simple equation should model your expected revenues and costs to estimate your business’s profitability.
- Am I self-starter?
- How well do I get along with a variety of personalities?
- How good am I at making decisions?
- Do I have the physical and emotional stamina to run a business?
- How well do I plan and organize?
- Are my attitudes and drive strong enough to maintain motivation?
- How will the business affect my family?”
Few people start a business with all of these bases covered. Honestly assess your own experience and skills; then look for partners or key employees to compensate for your deficiencies.
The following are four basic needs for success in small business:
- sound management practices
- industry experience
- technical support
- planning ability
You need accounting and bookkeeping knowledge or resources to run your business successfully and to increase your profits.
Your bookkeeper will keep your detailed records. Your accountant will set up company financial standards and do the periodic required reporting for the State of Connecticut and Federal Government. Some of these items include:
- Your tax returns under federal and Connecticut state laws, including income tax and Social Security laws
- Your request for credit from vendors or a loan from a bank
- Your claims about the business, should you wish to sell it.
Additional Resources
You can utilize our Government & Foundation Organizations to find local partners to counsel, mentor, and train your small business.
According to the data provided by U.S. government, 20% of new business fail during the first two years operation. So you should be aware of a few of the biggest mistakes that startups make so you can avoid them in advance.
- Don’t be afraid to fail
- Make a business plan
- Get organized
- Understand your market and target audience
- Follow the proper legal structure and business registration
Additional Resources
Learned 12 Mistakes From the Experienced Entrepreneur
Once your business becomes profitable, your next goal is probably to see it grow. If that growth comes too fast, though, you could run into some unexpected problems. Six common risks of business growth are:
- Cash flow crunch while dealing with increased demand for your product or service
- Operational inefficiency for uncontrolled expansion
- Negative feedback due to customer service issues during an expansion
- Overworked and stressed employees, who are more likely to consider jumping ship
- Outgrowing your office space
- A faltering ability to lead and manage
Additional Resources
You’re naturally excited about your new product or service. But how do you know if anyone will actually buy it? In order to give your new idea the best chance to succeed, you need to accurately test the market. Here are three ways to do so:
- Start with friends and family
- Small scale testing
- Testing the market online
Additional Resources
How To Know if a Product or Service Will Sell Before Launching it
Here are five ways you can compete with a big businesses:
- Personalize your service
- Innovate easily
- Explore your network
- Redefine value for your customers
- Welcome competition
Additional Resources
View our community map to find the existing-direct competitors around your area. Then, you have to identify what makes your business unique. The following steps will help you identify your Unique Selling Proposition (USP):
- Gather a couple of people from your team who know about your business
- Put yourselves in the shoes of others in your industry
- Pinpoint the types of things these others might say about your products
- Make a long list
- Step back into your own shoes
- Now read your list. What makes you different from your competitors?
- Select the most compelling points and incorporate them into your marketing program
Additional Resources
To identify if your competitive advantages are strong enough, you have to create a competitor analysis.
Additional Resources
By eliminating delay, downtime, and other speed bumps, you will boost sales throughput. This powerful combination will give you the lowest possible cost and your customers the greatest value.
NOTE: Quality + Speed = Low Cost
If you want to differentiate between pain killer and vitamin as you’re generating an business idea, ask yourself this question: Does this pain point keep my customer up at night?
Additional Resources
A niche market tends to be small but well defined, targeting a specific segment of the customers. A mainstream market targets all individuals, with profit generated depending upon the quantity of products sold.
Additional Resources
On average, it takes two to three years for a business to be profitable. Yet each business’s profitability timeline will be different, so it’s critical to do Break-Even Analysis to see when your venture will make money and how much revenue you need to cover your expenses.
Additional Resources
An emergency fund is a crucial safety net for when unexpected expenses or revenue shortfalls occur. To set your emergency funds goal, it’s helpful to consider the following stuffs:
- Realize that it can take months to save enough to cover even a single month of expenses
- Recognize the two types of emergency funds (unexpected expense vs. unexpected loss of income)
- Estimate your cost for critical expenses
Additional Resources
Five steps for calculating projected cash flow
- Find your business’s cash at the beginning of period (subtract the previous period’s expenses from the previous period’s income)
- Estimate incoming cash for next period
- Estimate expenses for next period
- Subtract estimated expenses from estimated income
- Add cash flow to opening balance
Additional Resources
Watch: How To Create Cash Flow Forecast Using Microsoft Excel
If you run out of initial funds and have not yet reached the next level of development with your business, you should strive to keep your emotional state healthy and to keep your business afloat. Some options include:
- Cutting expenses
- Requesting short-term flexibility from your landlord and vendors
- Cutting staff
- Exploring new revenue streams
- Measure your business metrics to see where you might improve
Additional Resources
The best way to find new hires is to test them with the actual work. Then, create a training program and ensure employees get the knowledge they need.
- Create a Plan
- Host regular training sessions
- Use employees as trainers
- Cross-train workers
- Set training goals
Additional Resources
The right legal documents will limit your liability and can help you avoid contract disputes with your employees. Hiring a lawyer can help you deal with these documents. Ten essential contracts for small businesses are:
- Business Contract
- Service Contract
- Independent Contractor Agreement
- Release of Liability
- Equipment Lease
- Non Disclosure Agreement
- Provisional Patent Application
- Non Compete Agreement
- Employment Agreement
- Employee Handbook Receipt Acknowledgment
Additional Resources
It’s important for businesses to be in compliance with any local, state, or federal regulations. Take the following steps to do so:
- Document any internal requirements, such as minutes of shareholder meetings, or at least keep a record of important business decisions
- Be aware of state filing requirements, which vary by state and business structure
- See if your business is affected by any federal regulations
- Keep any required licenses, permits, or certificates up to date
Additional Resources
You’ll need to prepare the following information to get the small business loan you’re looking for:
- Why you need funds, and how much you need
- Your credit history
- What type of financing you’re requesting
- Your business plan
- A presentation
Additional Resources
You can get the following types of small business loans from our partner banks, the SBA, and some local lenders. Remember, pay attention to the amount, rates, terms, and other elements, as they’ll help you find the small business loan type which is suited for you.
- Business line of credit
- SBA loan
- Short Term Loan
- Business Term Loan
- Merchant Cash Advance
- Business Credit Card
- Equipment Financing
- Commercial Mortgage
- Accounts Receivable Financing
- Startup Loan
Additional Resources
To determine if your startup idea could be profitable, all you need to do is build a rough back-of-the-envelope calculation. This simple equation should model your expected revenues and costs to estimate your business’s profitability.