Business Plan Model
Created by: David Cincotta and Ryan Nickolas
Purpose Statement
To help residents and at risk youth in the Lower Ninth Ward to create their own businesses through the creation of a business plan outline.
Vision Statement
The business plan will help to spur economic growth in the Lower Ninth Ward, as residents will be more informed as to the process and will have resources nearer at hand.
Operational Plan
The general outline of the process is:
-Acquire loans from the government that are for long term investments. These are CDC or 504 long term loans.
-Determine the type of ownership for the business (LLC, corporation, sole ownership, or partnerships).
-Register the business with city government.
-Register for taxes.
-Obtain permits required to purchase land and start construction if a building is being created.
-Find consultants to help guide owners along the process and begin looking towards growth of the business.
Evaluation
The plan can be judged as successful based on how many businesses are created annually as well as whether they are maintained for a period of at least ten years. The weakness that this plan has is the ability to get the information out to the public, but if the plan was sent to an organization already active in the community such as NENA then the plan would be more likely to be successful. An alternative to starting businesses is getting residents into existing businesses.
Introduction
This report will focus on helping young adults as well as adults, to start their own businesses. It will help guide individuals along in the process and will give a step by step framework which can be followed to the appropriate resources required to register as a business. The creation of new businesses is vital to the Lower Ninth Ward as its commercial district was decimated by hurricane Katrina, and much of it has never been redeveloped. There are plans in the works for a re-zoning of the Lower Ninth Ward along Claiborne Avenue that will extend the business district further into the community. This would allow for the Lower Nine to become a more stable environment for people to move back to as there would be jobs available for the residents in the area instead of having to drive out into downtown or farther to get to work.
Literature Review
In the course of researching for to find out about the process of starting a business several key sources arose in regards to starting a business or training to enter into the entrepreneurial world.
The first source and the most vital was the SBA website for Louisiana:
This site basically lays out the step by step process that can be easily followed to acquire all the paperwork and other information regarding business start-up. Another organization that arose from research was Youth Empowerment Project for New Orleans:
This is a program that helps youth follow their dreams and gets them the education they need. This could be a starting point for many kids in the area to jump into the real world and get experience relating to topics they are interested in. There are many sites related to the topic of youth development so all that needs to be done to find more of them is to search “youth empowerment programs” in google.
Methodology
The need for this report arose after talking to Lower Ninth Ward residents and hearing of the business plight in the area. There used to be many small local businesses, some even run out of people’s homes. After the hurricane struck, they all disappeared and the land was left barren. Now that some have moved back with the prospect of more moving back every day, it is vital that business begin again in the Lower Ninth Ward. After searching for viable options through various organization the SBA or small business administration, a government sponsored organization gives a frame work for people to start their own business, starting from within the home to buying or renting a space and to the eventual growth of the business into a chain or franchise. The SBA site gives simple guidelines about what needs to be done in terms of paper work and gives links to places where the paper work can be found and printed out by the residents. The point of all this is to facilitate a plan between the residents and their dreams of starting and owning a business. This plan was initially intended to be for young adults that want to go into a trade rather than get a degree, but the plan is flexible enough that anyone can use it.Outcome and process
Step 1: Write a business plan.
There are multiple elements that any good business plan must have. These include:
A. Cover sheet (This statement is about why you wish to start a business and what business you will be starting.)
B. Table of Contents
C. Business Data
1. Description in detail of the business
2. Marketing strategies
3. How the business will be competitive
4. Operation of the business
5. Personnel needed
6. Business insurance
D. Financial Data
1. Loan applications
2. Supplies required
3. Balance sheet
4. Analysis of how to break even
5. Three year projections of business growth
6. Assumptions projections were based on
7. Cash flow model
E. Additional documentation
1. Tax returns of the owners from the past three years, and personal financial statements that can be gotten from any bank.
2. Copy of the franchise contract (if applicable)
3. Copy of the lease or purchase agreement for building space
4. Copy of licenses needed for the business
5. Resumes of all the owners
6. Letters of intent from suppliers
Step 2: Get Business Assistance and Training.
Get involved with free counseling services and training to help plan a business plan and secure financing. This can be done online at the SBA or SBDC website (SBA: http://www.sba.gov/category/navigation-structure/counseling-training SBDC: http://www.lsbdc.org/) or at a local SBA or SCORE office (365 Canal St. Suite 2820, New Orleans, LA 70130, Phone # 504-589-6685, Open hours: Monday-Friday: 8am-4:30pm) as well as financial planners in the area (Small Business Development Center: 3330 N. Causeway Blvd, Suite 422, Metarie, LA 70002, Phone# 504-831-3730)
Step 3: Choose a Location for the business.
Factors that determine ideal location for business include:
-The type of business activity
-Ease of Access
-Proximity to your competitors
-Zoning and signs (contact the local zoning board at 504-658-4015 to ensure that no zoning ordinances are broken and that everything will run smoothly.)
-Whether or not the business will be Home-Based
Step 4: Finance Your Business
There are two main business loan types.
1. A microloan: which is small, short-term loan with a maximum of $50,000, but the average amount loaned is $15,000. The loans may be used as: working capital, for the purchase of supplies, the purchase of store amenities, or the purchase of any equipment required. The loan can’t be used to pay off existing debts. This loan will require some collateral that is decided by the organization authorizing the loan.
2. A CDC/504 loan: This is a long term loan that is used to help with the creation of economic growth in the area. The maximum amount loaned with this type is $1.5 million for the creation of a private business. The loan may be used to: purchase land, and building space, make improvements on a plot of land, construct a building or buildings, or purchase equipment. The loan can’t be used as working capital, or to pay off debts or refinance a property. The collateral for this type of loan is typically the assets being created with the loan, such as the building or equipment purchased.
Step 5: Determine Legal Structure.
Different forms of ownership available:
1. Sole proprietorship- Here are some the forms that may have to be filled out with this type of ownership:
A. Income Tax
B. Self-employment Tax
C. Estimated tax
D. Social security, medicare, and income tax withholding
E. Additional information on social security, medicare and income tax withholding
F. Federal unemployment
G. Information on filing returns
H. Excise taxes
Links about and to all of these forms can be found at (http://www.irs.gov/businesses/small/article/0,,id=98202,00.html)
2. Partnership- Here are the forms for this type:
A. Annual return of income
B. Employment taxes (including: social security, medicare, and income tax withholding)
C. Excise taxes
Links about and to all of these forms can be found at (http://www.irs.gov/businesses/small/article/0,,id=98214,00.html)
3. Limited Liability Company (LLC)-This type of ownership limits individual liability of the debts, and allows for flexible business management. The forms for this type are:
A. Profit or loss from Business, supplemental income or loss, self-employment tax (Form 1040)
B. Wage and tax statements, and wage transmittal
C. Federal unemployment tax return
D. Quarterly federal tax return
E. Annual federal tax return
F. Individual income tax return
G. Return of partnership income
H. Annual transmittal of US returns
I. Corporation income tax return
J. 1099-A, B, C, CAP, DIV, INT, LTC, MISC, OID, PATR, R, S, SA forms (these must be filled out)
Links about and to all of these forms can be found at (http://www.irs.gov/businesses/small/article/0,,id=158448,00.html)
4. Corporation-The forms for this type are:
A. Income tax
B. Estimated tax
C. Employment taxes
D. Excise taxes
Links about and to all of these forms can be found at (http://www.irs.gov/businesses/small/article/0,,id=98240,00.html)
Step 6: Register the name of your business with your state government.
To determine the name of the business, first acknowledge:
-If you are the sole owner of the business, its legal title* and your full name.
-If your business is a partnership, the legal title* of the partnership and the last names of the partners.
-If your business is a limited liability corporation (LLC) then give the business’ legal title*.
*The legal title is the make that is required on all forms. The actual physical title that can be put on a sign can be different from the legal title as long as it is registered as the “fictitious title”. For example, say Jane Doe is the sole owner of a business, and she wants to name her business Seaside Catering instead of using her business’ legal name which is Jane Doe, she will have to register the name Seaside Catering as a “fictitious title”.
-The title for a sole ownership or a partnership must be registered with the Parish Clerk of Court. The form can be downloaded here: http://www400.sos.louisiana.gov/comm/cforms/f-309.pdf
-The title for an LLC or corporation must be registered with the Louisiana Secretary of State, use the same form as for the Parish Clerk of Court.
Step 7: Get a tax identification number (EIN) from the IRS and your state revenue agency. This can be done many ways, either online (https://sa1.www4.irs.gov/modiein/individual/index.jsp), by phone at (800) 829-4933, by fax or by mail. All of this information can be found at: http://www.irs.gov/businesses/small/article/0,,id=97860,00.html
Step 8: Learn about local and state tax obligations.
The most common tax requirements are tax permits, income taxes, and employment taxes. Information on these topics can be found at: http://www.sba.gov/content/learn-about-your-state-and-local-tax-obligations
Step 9: Obtain business licenses and permits.
Get a list of federal, state and local licenses and permits required for your business. Here is a link that can help guide you through the process of starting a business, and give a checklist of things that must be accomplished at the state level. http://www.sos.la.gov/tabid/98/Default.aspx
Step 10: Understand employer responsibilities.
Learn the legal steps you need to take to hire employees.
1. Get an EIN (step 7)
2. Set up records for withholding taxes. These records must be kept for at least 4 years.
3. Verify an employee’s eligibility to work with and I-9 form (http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=31b3ab0a43b5d010VgnVCM10000048f3d6a1RCRD&vgnextchannel=db029c7755cb9010VgnVCM10000045f3d6a1RCRD)
4. Register with the Louisiana state New Hiring Reporting Program. (http://newhire-reporting.com/LA-Newhire/default.aspx)
5. Get workers’ compensation insurance.
6. Get unemployment insurance tax registration.
7. Get disability insurance (if required).
8. File taxes
Conclusion
This process will allow for residents to create jobs and maintain them, thus bettering themselves and their communities by increasing economic prosperity. The concerns that this raises is whether or not the residents will follow through with the plans once started. The response to this must be that an organization is created or utilized such as SCORE or SBDC (step 2 in process and outcomes) to give counseling and mentorship while the plan is being formulated. This will keep the owners on track and help to ensure the success of the venture.
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