Small Business Packet
A business plan is a formal document explaining in detail your strategy for developing a
financially successful business. The submission of a good business plan is a must if you
expect to receive financing. Virtually all sources of financing require a plan and most
lenders will prefer that your financial statements be developed with the assistance of a
reputable accountant or business consultant. The plan outlines your ideas on paper and
offers the opportunities to first visualize your plan in written copy. Often times, this
information is revised several times before the final draft is made. The following outline
details the information required in a typical business plan.
I. Cover Sheet: Name of Business, names, addresses, phone numbers of principals
Description of Business:
Describe the type of business or service to be started, how you will operate the
business, and how you will use the loan to build a successful operation. If you
have an existing business, then provide a complete history of it and what changes
(if any) will be made using the loaned funds.
History and nature of business
Products and pricing strategy
Marketing or service area
Facilities and operations
Proposed changes to existing business with loan (if applicable)
Staffing Plan to include management-provide complete resumes for the
principals, and a description of their experience and management
capabilities that will help ensure the success of the business. List also
professional advisors such as accountant, attorney, member of the board of
directors or advisors, etc.
Indicate how much cash you will inject without borrowing. If you plan to
borrow equity from friends or relatives, then detail the terms of repayment. List
any outside collateral you plan to use in the business. Banks generally require
collateral to secure a loan. Collateral includes fixed assets of the business (land,
buildings and equipment) and personal property that are clear of liens, and may
include inventory and accounts receivable. List available collateral with
estimated or appraised value.
Sources and uses of funding - Explain the purpose of the loan. It is
important to itemize the proposed use of the funds. Estimate the funds
needed for operating capital, accounts receivable build-up, equipment and
machinery, remodeling expenses, etc. If real estate construction is
involved, then detail the land cost, land improvements, and utilities, and
present a firm written estimate from the contractor including the
performance bond cost. Indicate the total dollar amount required and the
primary source of repayment.
Financial statements to include balance sheets and income statements
for the last three years.
Current financial statement for most recent interim period since last
fiscal year ended.
New and existing businesses-
Projection of sales, expenses, and profits for three years after loan is
received. This is also known as a proforma income statement.
Proforma cash flow statement and proforma balance sheet for three
Personal financial statement(s) of owner, each partner or stockholder
owning 20 percent or more of the business.
Possible Supporting Documents (Attachments):
Personal financial statements
Personal tax returns
Letters of reference
Letters of intent
Copies of leases
Anything else relevant to the plan
Note: Information provided by the Wisconsin Department of Commerce.
Other Business Plan Assistance Sources:
Time Line for Starting a Business
This is a guideline and the time period may vary from business to business. It should
serve as a reminder and framework for allocating time in order to lay a solid foundation
for a new business.
9 to 12 Months Prior to Start-up
-Determine time required to obtain business permits.
-Contact and join chamber of commerce.
-Visit with others in your network.
-Research community amenities like real estate, schools, etc.
-Subscribe to local papers.
-Check zoning ordinances.
-Check utility requirements.
-Decide on a business location.
-Apply for necessary local, county, and state licenses.
-Prepare preliminary business plan and budget.
-Research available financial resources through the community and lenders.
-Arrange for business listing in local phone book.
6 to 9 Months Prior to Start-up
-Determine office and plant layout and design.
-Choose advisors - attorney, CPA, consultant, insurance agents, and brokers.
-Review leases and contracts with attorneys and advisors.
-Obtain bids on major business equipment.
4 to 6 Months Prior to Start-up
-Decide on form of business (sole proprietor, corporation, LLC, etc.).
-Determine business hours.
-Prepare final budget and review with lender.
-Order sign for office.
-Purchase office equipment and furniture.
0 to 4 Months Prior to Start-up
-Make sure business filings and license applications are complete.
-Arrange for insurance.
-Arrange for telephone installation.
-Open checking accounts.
-Sign-up for credit card systems at local bank.
-Arrange for business announcement ads in local papers.
-Order office opening announcements.
-Contact State Department of Workforce Development for employer/employee
rules and requirements.
0 to 4 Months Prior to Start-up (continued)
-Prepare job descriptions for employees.
-Advertise for, interview, and hire employees.
-Write personnel and office policy manuals.
-Contact IRS for booklets and apply for Federal Employer ID Number.
-Contact the State Department of Revenue for seller's permit, tax forms, and
-Obtain payroll withholding booklets from tax authorities.
-Review tax requirements with accountant.
-Arrange for janitorial service, waste removal, laundry service, grass mowing.
-Interview and select collection agency.
-Start setting up office.
-Schedule utilities to be turned on.
-Prepare press release and begin advertisement.
-Plan an open house.
Source: Wisconsin Department of Commerce
How to Start a Small Business
Starting and managing a business takes motivation, desire, and talent. It also takes
research and planning. Like a chess game, success in small business starts with decisive
and correct opening moves. Although initial mistakes are not fatal, it takes skill,
discipline, and hard work to regain the advantage.
To increase your chance for success, take the time initially to explore and evaluate your
business and personal goals. Then use this information to build a comprehensive and
well thought-out business plan that will help you reach these goals. The process of
developing a business plan will help you think through some important issues that you
may not have considered yet. Your plan will become a valuable tool as you set out to
raise money for your business. It should also provide milestones to gauge your success.
Getting Started Before starting out, list your reasons for wanting to go into business. Some of the most
common reasons are:
*You want to be your own boss. *You want financial independence.
*You want creative freedom. *You want to fully use your skill and
Next, determine what business is "right for you". Ask yourself these questions:
What do I like to do with my time?
What technical skills have I learned or developed?
What do others say I am good at?
Will I have the support of my family?
How much time do I have to run a successful business?
Do I have any hobbies or interests that are marketable?
Once you have answered those questions, you should identify the niche your business
will fill. Conduct the necessary research to answer these questions:
What business am I interested in starting?
What services or products will I sell?
Is my idea practical and will it fill a need?
What is my competition?
What is my business' advantage over existing firms?
Can I deliver a better quality service?
The final step before developing your plan is the pre-business checklist. You should
answer the following questions:
What skills and experience do I bring to the business?
What will be my legal structure?
How will my company's business records be maintained?
What insurance coverage will be needed?
What equipment or supplies will I need?
How will I compensate myself?
What are my resources?
What financing will I need?
Where will my business be located?
What will I name my business?
Source: David A Buchen of the Small Business Administration "First Steps to Success"
U. S. Small Business Administration
The U.S. Small Business Administration was created in 1953 as an independent agency
of the federal government to aid, counsel, assist and protect the interests of small business
concerns, to preserve free competitive enterprise and to maintain and strengthen the
overall economy of our nation. SBA assists several thousand businesses each year by
providing financial assistance through the 7(a) and 504 loan programs.
Commonly asked questions of and advice from the SBA
How do I apply for an SBA loan guarantee?
Contact a bank and discuss your loan proposal with one of their loan officers.
Every bank in the state is authorized to submit loans to us. Be prepared to
discuss your proposal in detail with the banker. You should have the following
available for the banker to review- business plan, personal financial statement,
business financial statements (if already in business) and projections.
What do I need to qualify for an SBA loan?
SBA is generally looking for the following major items:
A reasonable equity injection or down payment. For a new
business, it is generally a minimum of 25% or up to 50% and most
Individuals who can establish they have knowledge and experience
needed to operate a successful business.
Businesses that will generate sufficient profits to both repay their
loan and give management reasonable compensation for operating
How does the SBA guarantee loan program work?
SBA acts like an insurance agency and provides a guarantee to the bank in the
event of default. Since the bank makes the loan, applications must be made to
the bank and monthly loan payments must be paid to the bank. The bank is also
responsible for closing the loan and disbursing the loan proceeds.
SBA's involvement is limited to reviewing the loan applications submitted by the
bank to assure they meet SBA eligibility and credit standards. SBA will provide
the bank with a written authorization outlining the conditions of the guarantee.
Where do I obtain an application for a SBA loan?
Applications are provided to all banks that actively participate with the SBA.
Since the bank prepares part of the application, it is preferable that interested
applicants get it from the lender.
What if the banker declines me for an application?
Ask the banker what is wrong with your business plan, correct it, and resubmit.
If the bank is unwilling to submit the application to SBA, try another bank.
What is the interest rate on SBA loans?
SBA does not set the interest rate on the loans, only the maximum rate the bank
may charge. The actual rate is negotiated between the bank and the borrower.
Rates range from 1% to 2 3/4% over prime rate.
How long do I have to repay and SBA loan?
The repayment is generally between 5 and 25 years depending on the life of the
assets financed. Working capital loans (inventory and accounts receivable)
should be repaid in 5 to 10 years. The SBA also has short-term loan guarantee
programs, so please have your banker contact SBA for details.
If there is no break on the interest rate, why should I bother with all the paperwork for
a guaranteed loan?
By having an SBA guaranteed loan, it affords you the opportunity of having a
longer term to pay back the loan depending on what funds will be used for. Your
term is still negotiated with the bank, however, SBA regulations allow a
maximum of up to 10 years for working capital loans, and up to 25 years for the
purchase of fixed assets or a major renovation of business premises. Most
financial institutions do not give commercial loan customers the advantages of
longer terms to pay out their commercial debt. The average time frame for
commercial loans without an SBA guaranty is 5-7 years in many instances and
less than 3.
For more information, please contact your local lending institution or the U.S. SBA at:
U.S. Small Business Administration
740 Regent Street, Suite 100
Madison, Wisconsin 53715
Small Business Answer Desk at 1-800-827-5722
SBA's web site at www.sba.gov
General Technical Resources
The organizations listed below are those that most often provide financial and/or
technical assistance to individuals wanting to start or expand a small business. We have
provided the addresses, phone numbers, and web addresses of their offices located closet
to Clark County. If you need more information on other locations or need assistance
from an organization not listed, please contact the Clark County Economic Development
Corporation at 715-267-3205.
Wisconsin Department of Commerce Service Corps of Retired Executives
535 W. Washington Avenue (SCORE)
P.O. Box 7970 P.O. Box 868
Madison, Wisconsin 53707 Marshfield, WI 54449
1-800-HELP-BUSiness (435-7287) (715) 384-3454
Business Wizard www.wisconsin.gov/state/app/wizard/LoadIntro
Impact Seven, Inc. WI Women's Business Initiative Corp.
126 S. Avenue 2745 N. Dr. Martin Luther King Jr. Drive
Almena, Wisconsin 54805 Milwaukee, WI 53212
1-715-357-3334 www.wwbic.com 1-414-372-2070
University of Wisconsin-Eau Claire Indianhead Community Action Agency rdSmall Business Development Center 209 E. 3 Street Kevin Jones, Director P.O. Box 40
P.O. Box 4004 Ladysmith, Wisconsin 54848
Eau Claire, Wisconsin 54702 1-715-532-5594
CAP Services, Inc. Small Business Development Center
5499 HWY 10 East (Telephone Counselors)
Stevens Point, WI 54481 1-800-940-7232
1-715-345-5200 www.wisconsinsbdc.org www.virtualincubate.com
Wisconsin Bankers Association NW Wis. Manufacturing Outreach Center
110 E. Main Street UW-Stout Technology Transfer Institute
Madison, WI 53703 278 Jarvis Hall
1-608-259-8326 Menomonie, WI 54751
www.wisbank.com 1-715-232-1360 or 1-715-232-2397
Wisconsin Housing and Economic USDA Rural Development
Development Authority (WHEDA) 4949 Kirschling Court
P.O. Box 1728 Stevens Point, WI 54481
Madison, Wisconsin 53701 1-715-345-7610
Wisconsin Business Development Finance Corporation
One Pinkney Street, Suite 504
P.O. Box 2717
Madison, Wisconsin 53701
State of Wisconsin Department of Revenue
Compliance Bureau-sales tax/sellers permit, consmr. use tax permit, withholding tax ID # P.O. Box 8902
Madison, WI 53708-8902
Income, Sales, and Excise Tax Division-personal income tax and corp./franchise tax P.O. Box 8906
Madison, WI 53708
Manufacturing Property Assessment Office-tax exemption info. for manufacturing firms P.O. Box 8933
Madison, WI 53708
State of Wisconsin Department of Workforce Development
Unemployment Insurance Division
P.O. Box 7942
Madison, WI 53707
State of Wisconsin Department of Revenue
Internal Revenue Department
1320 W. Clairemont Avenue
Eau Claire, WI 54701
To acquire an EIN call 816-926-5999
Wisconsin Department of Financial Institutions
P.O. Box 7846
Madison, WI 53707
Wisconsin Department of Natural Resources
West Central Region- Eau Claire
Americans with Disabilities Act
US Equal Opportunity Commission
Legal Forms of Organization
Source: Wisconsin Department of Commerce
Each form of organizing your business -sole proprietorships, partnerships, limited liability companies, and corporations- has its own advantages and disadvantages. While it is possible under some circumstances for a business to start under one structure and change to another later, proper planning can prevent difficulties caused by an unsuitable legal form of organization at any given time in the life of the business.
The sole proprietorship is the most common legal form. It is an unincorporated business owned by a single individual or a husband and wife. A sole proprietor is not considered to be a separate legal entity under the law, but rather is an extension of the individual who owns it. The income or loss of a sole proprietorship is combined with the other earnings of an individual for income tax purposes. Among the advantages are the ease of start-up, the relative freedom of operations, and the limited need for planning the legal structure of the enterprise. Disadvantages include limited opportunity for expansion because there is no mechanism to allow potential investors to gain equity in the firm (without changing form of organization). Also, the owner is personally responsible for all obligations, debts, income taxes, and other liabilities of the business.
Partnerships A partnership is the combining of one or more individuals or businesses as co-owners under a partnership agreement. The agreement should be in writing, and determines the powers, liabilities, and authorities of each of the partners. A partnership is a legal entity recognized under the law and as such it has rights and responsibilities in and of itself. A partnership can sign contracts, obtain credit and borrow money. When a partnership is small, most creditors require a personal guarantee of the general partners for credit. Partnerships can take two legal forms, general or limited.
In a general partnership, two or more individuals join together to run the business enterprise. In addition to having authority to run the business, the income and expenses of the partnership are directly taxable to each individual partner based on his or her proportionate interest in the firm. The partnership files an information tax return and pays no separate business income tax. The responsibility for liabilities can be modified by agreement among the partners, but partnership creditors typically have recourse to the personal assets of each of the partners for settlement of partnership debt.
In a limited partnership, the "limited" partners have protection against obligations of the firm beyond their