“How to Start or
Expand<= /p>
Your Own Small=
Business”= ;
An Informative Booklet . . .
Prepared by:
North Campus 704-637-0760 ext. 383
South Campus 704-788-3197 ext. 383
www.rowancabar= rus.edu
– 2 –
The Rowan-Caba= rrus Community College Small Business Center Goals are:
• To provide professional workshops, seminars and short courses throughout the year at both the
North Campus (
• To provide referral ser=
vice to
other agencies and organizations such as
SCORE, SBA, local banks, etc. &=
#8226;
To conduct individual business counseling to small business owners and
operators.
• To up-date our small bu= siness clients on relevant small business activities, legislation, etc.=
The
• Seminars, workshops and courses for small business owners and prospective owners.
• Free confidential busin= ess counseling available on an as-needed basis.
• Inter-agency coordinati= on and collaboration between the SB Center and chambers of
commerce, volunteer consultants, business and trade associations, economic
development agencies, banks and financial agencies, accounting and legal firms,
educational consultants and instructors, and other groups.
• Information and referral center for small business owners and prospective owners.
• Partnerships with state agencies and other groups, such as Divisions within the
Department of Commerce, the University Small Business Technology Development
Center, the Technological Devel=
opment
Authority,
trade associations. • Customized training and development for small business. The Center will pro= vide
customized training and develop= ment opportunities for small business personnel.
If you would like to know more =
on how
like to get on our mailing list, please contact our office at either of these numbers:
North Campus (
704-637-0760 ext. 383 704-788-3= 197 ext. 383
– 3 –
The Rowan County Chamber of Com= merce, Inc. is a not-for-profit, private, community development
entity organized under the stat=
e laws
of
501(c) 6 and we are a business organization.
The
and consensus-building leadership”. Our objectives are:
• To promote and advance = the industrial, commercial, agricultural, economic, civic and social welfare
of the people of
• To encourage the growth= of existing industries and businesses while giving all proper assistance to
any new firms or individuals se=
eking
to locate in the
• To support all those activities believed to be beneficial to the community and to oppose those w= hich
might be detrimental; • A= nd, in general, to promote the welfare of all area citizens, following always those policies intended
to accomplish the greatest good= for the greatest number.
Any firm, individual, associati= on, corporation, partnership or estate having an interest in the above
mission and objectives shall be eligible to apply for membership in the Chamber. Membership investments
are determined by the Chamber&#= 8217;s Board of Directors and we currently have more than 900 members.<= /p>
The government of the
Directors who are elected for three-year terms by the membership. The Board also consists of any officers=
who are not board members when elected to office as well as certain ex-officio directors (at the discretio= n
of the Chair of the Board). The= Board adopts policies, rules and regulations for conducting the business of
the Chamber. Annually, the Board elects officers to include the Chair of the Board, Chair of the Board-Elect= , up to six
Division Chairs, Treasurer and = Past Chair of the Board.
The Chamber’s Program of = Work, or “What We Do”, also is reviewed annually and approved by the<= /span>
Board. Chamber projects, activi= ties, etc. are categorized by “Divisions” with volunteer committees w= hich
do the bulk of Chamber work. As stated earlier, we are membership-based and, therefore, volunteer-driven.
The Chamber’s activities = are many and include those which develop the Small Business, Industrial and
Agriculture communities. The Ch= amber serves as a clearing-house for business and sponsors seminars of=
benefit to the business communi= ty. Federal, State and Local issues are of extreme importance to the Chamber including legislation,
regulations, elections, transportation and other infrastructure issues.
– 4 –
The Chamber also is a strong ad= vocate of education, workforce development and developing
community leadership. Finally, = the Chamber is a catalyst, partner and coalition-builder for many activities an= d
organizations and we serve as <=
st1:place
w:st=3D"on">
inquiries.
– 5 –
The Cabarrus Regional Chamber of Commerce’s mission, “actively serving members as an advocate,
resource and catalyst for busin= ess success,” provides a platform from which the Chamber addresses and
represents the needs of the bus= iness community. The Chamber provides a single, strong system for
planning and achieving economic= goals which focus on the prosperity of the Cabarrus region.
The lifeblood of the Chamber is= its volunteers. Through service on committees, volunteers
accomplish goals and objectives= in the Chamber’s annual business plan. The committees function
within focus areas of Public Po= licy, Workforce Development, and Economic Development.
Public Policy activities enhance leadership development and serve to maintain open lines of
communication between the busin= ess and government communities. Workforce Development initiatives
bring together local educators = and the business community to facilitate skills necessary for a vibrant<= /b>
workforce. Economic Development strategies are developed for business recruitment, retention and=
expansion. As a business organization, we address business education, promotion and recognition of
business excellence.=
The organizational structure of= the Cabarrus Regional Chamber allows for seamless communication
between the membership, staff a= nd 24-member Board of Directors. The Board focuses on establishing<= /p>
policy and promoting the mission through its annual business plan.
Chamber membership is an excell= ent investment for any business, industry or professional. We
provide access to business, com= munity and government leaders; cost-effective marketing; networking
opportunities; education initia= tives; and the satisfaction of knowing you are helping to create a
sustainable community of the fu= ture.
The Cabarrus Regional Chamber of Commerce is proud to serve its members and the region. By
bringing people together, we encourage dialogue that promotes a healthy business environment and<= /b>
helps to provide quality of lif= e for our citizens.
– 6 –
TABLE OF CONTE= NTS
Introduction. ...........................................................................= ................................................................... 7
Questions to Ask Yourself Before Going Into Business........................................................= ..................... 7
Business Plan ...........................................................................= .................................................................. 8
Forms of Business ...........................................................................= .......................................................... 9
Financing ...........................................................................= ...................................................................... 10
Types of Loans......................................................................= .................................................... 11
Applying for a Business Loan...................................................................... ............................ 12
Mistakes to Avoid in Drafting t= he Business Plan for a Loan.......... ........................................= .. 13
Criteria Bankers Use in Making = a Loan Decision................................... ...............................= .. 14
Do’s and Dont’s When Applying for a Loan............................................. ............................... 15
Zoning and Building Inspection.................................................................= ...... ........................................ 16
Business Permits and Licenses...................................................................= ............................... ............... 17
Registration of Business Name..= ..................................................................... ......................................... 18
Taxes..........................= ...........................................................................= ..................... .............................. 19
Insurance......................= ...........................................................................= .................................................. 20
Patents, Trademarks and Copyrights........................................................... ............................................. 21
Occupational Safety and Health Administration..................................... ................................................. 23
Resource Directory.............= ...........................................................................= .... ....................................... 24
Web Site Addresses ...........................................................................= ...................................................... 26
– 7 –
INTRODUCTION
The Cabarrus Regional Chamber of Commerce, Rowan County Chamber of Commerce, and Rowan-
Cabarrus Community College, rec= ognize that small business is vital to the continued strength of
our local, state, and national economies. In fact, the small business sector has 42% of all business
sales in the United States, emp=
loys
57% of the workforce,
and provides the first job for =
67% of
the workforce.
In
98% of which have fewer than 100
employees.
For many small business owners, knowing where to get appropriate information is a common
problem. This booklet is design= ed to be a guide through the preliminary stages of starting a business=
and to provide information abou= t the various regulations that will affect you and your business
activities. A resource director= y at the back of the booklet gives the addresses and telephone numbers
of additional small business resources.
“How to Start or Expand Y= our Own Small Business” is a project of Rowan-Cabarrus Community
College’s Small Business = Center in cooperation with the above named organizations.
QUESTIONS TO A= SK YOURSELF BEFORE GOING INTO BUSINESS
Going into business requires ce= rtain personality traits and attitudes, particular training and experience,
and an ability to learn. Consid= er these questions before you make the decision to start a business of<= /b>
your own:
1. Have you ever worked in a bu= siness similar to the one you want to start?
2. Do you like to make your own decisions?
3. Are you able to take responsibility?
4. Are you a good organizer?
5. Are you ready to put in the = long hours that might be necessary?
6. Are you prepared to stick wi= th it through the rough times?
7. Do you have the physical sta= mina to handle the work load and schedule?
8. Do you have the support of y= our immediate family for at least the first year?
9. Are you prepared to lose your savings?
10. Can you prepare a detailed, credible business plan for the first three years?
Note: A good strong “yes” answer to all of = the above questions is needed if you
expect to be successful in your business.
– 8 –
BUSINESS
A business plan is a written do= cument that describes how you will run your business. There are
three main reasons for writing a business plan. First, it will serve as a guide during the lifetime of
your business and will help to = keep you on the right track. Second, the business plan is a requirement
if you are going to borrow mone= y. And third, the business plan shows how the loan will improve
the worth of your company.
When you write your business pl= an, you should include detailed information in a particular format.<= /p>
You will have a much better cha= nce of getting a loan if you have developed a comprehensive plan,
which shows that you know what = needs to be done, and which uses realistic start-up costs.
Here is a suggested outline for= your business plan:
COVER SHEET
The title page of your plan con= tains: name, address, telephone number, etc.
STATEMENT OF PURPOSE
The thesis statement of your bu= siness plan. Formulated after writing your plan.
TABLE OF CONTENTS
Listing of contents of your pla= n. Used to locate areas addressed in plan.
BUSINESS SECTION
Information on your industry, in general. Information on your business, in particular.
MARKETING SECTION
Information on your total marke= t. Emphasis on your target market.
FINANCIAL DOCUMENTS
Records showing past and current finances.
SUPPORTING DOCUMENTS
Documents that back up statemen= ts and decisions made in the three main parts of your plan.
There are many resources to hel= p you in the writing of your plan. A wealth of information is
available at the Rowan Public L= ibrary and the Cannon Memorial Library. The Small Business
Administration has many useful publications to aid you in preparing your plan. Free counseling<= /p>
can be obtained from
Development Center), and SCORE (Service Corps of Retired Executives). You may also attend
classes and workshops through <= st1:stockticker w:st=3D"on">RCCC Small Business Center. To find out more = about these services,
call (704) 788-3197 ext. 383 in= the Concord/Kannapolis area or (704) 637-0760 ext. 383 in Salisbury.=
– 9 –
FORMS OF BUSIN= ESS
Before opening a business of yo= ur own, you must choose the legal structure which will best suit
your needs and those of your business. There are basically three forms of business organization:<= /b>
the sole proprietorship, the partnership, and the corporation.
A SOLE PROPRIETORSHIP is own= ed and operated by one person. This is the simplest, least
expensive business structure, a= nd many who are just starting a business choose this form until it<= /p>
becomes practical to enter into= a partnership or to incorporate.
A PARTNERSHIP is an associat= ion of two or more persons to carry on as co-owners of a business.
This type of business allows for combining of capital, expertise, and responsibilities.
A LIMITED LIABILITY COMPANY = is the newest form of business legal structure. It is a hybrid
entity that allows owners the protection from personal liability provided to the corporate structure
and the flexible flow-through taxation of the partnership.
A CORPORATION is a distinct = legal entity, separate from the persons who own it. It is formed by
the authority of the state gove= rnment and is owned by shareholders who buy shares of stock.
Operating as a corporation allo= ws for capital growth and some reduction in liability.
Each form has its advantages and disadvantages. The one you should use depends on your
circumstances, including the following: your financial condition, the type of business you are
entering, the number of employe= es, the risk involved, and your tax situation.
See your lawyer or tax attorney= for help.
CONTACT: Refer to Business Form= s at the NC Dept. of Commerce Business Servicenter
Website: www.nccommerce.com/servicenter/blio
919-715-2864 or 800-228-8443
– 10 –
FINANCING
After you have made the decisio= n to start a business and have prepared a business plan to determine<= /p>
the amount of money needed for = its operation, it will probably be necessary for you to obtain
outside financing.
Your loan request should include these basics:
1. A loan request summary, incl= uding the name of the borrower, the purpose, the amount
you need to borrow, the terms, = the collateral, and the guarantors.
2. A two or three-page descript= ion of the business.
3. The education, experience and management capabilities of the owners and key
management.
4. A personal financial stateme= nt on all company owners.
5. A list of all items serving = as collateral for the loan.
6. A list of the proposed uses = for the borrowed funds.
7. A line item list of how much= is needed to start the business (including borrowed funds).
8. A list of all the sources of= funds that will be used to start the business (including the
borrowed funds).
9. A projected cash flow statem= ent for two years, and beginning-ending balance sheet for
two years.
– 11 –
TYPES OF LOANS=
TERM LOANS:
A term loan refers to any loan = with a maturity of greater than one year, a monthly payment amount
paid out of the firm’s ex= cess cash flow. The amount of money available for debt repayment can be
determined by projecting future= cash flow for a two to five year period. Term loans may be made
to qualifying businesses for ma= ny different reasons, the most common being:
• The purchase, expansion= or modernization of facilities, equipment, etc.;
• The refinancing of pres= ent debt; or
• To replenish working ca= pital depleted by previous expansion.
SEASONAL
A true seasonal line of credit = is used to finance short term, cash shortages in the normal course of
business. There should be a dir= ect relationship between fluctuations of inventory and/or receivables
and the amount of borrowing. In= order to determine the size of the line of credit, you will need to
provide the bank monthly or qua= rterly financial statements and any other information considered
valuable in evaluating seasonal trends. Pay drawn on the seasonal line should occur at the low
point in the business cycle (when the amount of inventory and receivables are at their lowest level
and cash is available).<= /b>
NON-SEASONAL
In some special cases bo= rrowing under a credit for other than seasonal needs is acceptable if the
need is short-term, recurrent in nature, and if there is a reliable source of repayment. Normally, this
type of lending is limited to a= few special types of business operations such as finance companies,<= /p>
real estate mortgage warehousin= g, large construction companies and utility companies. There is
usually more risk involved in non-seasonal lines, in that they are not self-liquidating in nature.=
Repayment is dependent on the firm’s ability to generate adequate cash flow and/or acquire substitu= te
forms of debt. Consequently, the general financial strength of this type of borrower must be
exceptionally strong.
REVOLVING
Under some circumstances, a cus= tomer can best be served by a revolving credit agreement, which
permits the borrower to borrow against a predetermined maximum over a stated period of time.
Borrowings may fluctuate up and= down; depending on the customer’s need for funds, but generally<= /p>
will lead to an eventual fundin= g of the debt at the maturity of the revolving credit agreement. A
revolving line of credit agreem= ent is best suited for situations in which the borrower is expanding
and needs interim funds for wor= king capital, fixed asset expenditures, or other longer term needs
until the expansion is complete= . The borrowing associated with these various expenditures are
rolled into some form of long-t= erm debt.
– 12 –
APPLYING FOR A BUSINESS LOAN
The following steps should be t= aken to apply for a business loan:
1. Prepare a business plan.
2. Target one to three local ba= nks and complete their application forms, including a financial
statement for all owners of 20%= or more of the business.
EXISTING BUSINESSES ALSO INCLUD= E:
3. Profit and Loss (Earnings or Income) Statement and Balance Sheets for the last THREE
years. If not available then use business tax returns. Financial statements should be
current (no older than ninety d= ays).
4. A list of all existing busin= ess debts. For all loans show original amount of each loan,
current balance of each loan, m= onthly payment on each loan, maturity date and what
collateral is pledged to each l= oan.
START-
5. A line-item list of how much= is needed to start the business (including the borrowed
funds).
6. A list of all sources of sta= rt-up funds (including any borrowed funds).
7. A projected Profit and Loss statement for the first year of operation.
WHEN YOU HAVE COMPLETED THIS INFORMATION:
8. If you would like to have yo= ur package reviewed you may contact the Small Business
Center (
Development Center (SBTDC) at t= he University of North Carolina-Charlotte, for an
appointment.
9. Set up an appointment with y= our banker (if you have a choice, apply at the commercial
loan department of your bank). = Take your completed application and business plan.
10. If your bank should turn you down, ask the bank to make the loan under the SBA’s 7(a)
Guaranty Loan Program. If the b= ank is not familiar with this program have them contact
the SBA’s Charlotte offic= e at (704) 344-6563 to discuss your application with an SBA
loan officer. In most cases, th= e SBA will deal directly with your bank.
11. If you are still turned down consider the Self Help Credit Union or other alternatives. For
options, visit your local
– 13 –
MISTAKES TO AV= OID
IN DRAFTING THE
BUSINESS
Here are errors in business plan preparation that will probably result in denial of a package by a
bank:
• Submitting a “rou= gh copy” perhaps with coffee stains on the pages and crossed-out words
in the text, tells the banker t= hat the owner doesn’t take his idea seriously.
• Outdated historical fin= ancial information or industry comparisons will leave doubts about
the entrepreneur’s planni= ng abilities.
• Unsubstantiated assumpt= ions can hurt a business plan; the business owner must be prepared
to conclude that the idea is not realistic.
• A lack of understanding= of the financial information is a drawback. Even if an outside
source is used to prepare the projections, the owner must fully comprehend the information.
• Absence of any consider= ation of outside influences represents a gap in a business plan.
The owner needs to discuss the potential impact of competitive factors, as well as the
economic environment prevalent = at the time of the request.
• No indication that the = owner has anything at stake in the venture will lead to denial. The
lender will expect the entrepre= neur to have some equity capital invested in the business.
• Unwillingness to person= ally guarantee any loans raises a question: If the business owner
isn’t willing to stand be= hind his or her company, then why should the bank?
• Introducing the plan wi= th a demand for unrealistic loan terms is a mistake. The lender
wants to find out about the via= bility of the business before discussing loan terms.
• Too much focus on colla= teral is a problem in a business plan. Even for a cash-secured
loan, the banker is looking tow= ard projected profits for repayment of the loan. The emphasis
should be on cash flow.<= /b>
– 14 –
CRITERIA BANKE= RS USE IN MAKING A LOAN DECISION
Bankers are conservative, factu= ally oriented and realistic. They will evaluate your loan application=
using the “5 C’s= 221; of credit.
1. CAPACITY - The borrower̵= 7;s ability to repay the loan from the normal course of
business operations, as indicat= ed in the business plan.
a) Existing business must be ab= le to demonstrate, through financial
statements, that sufficient cas= h flow exists, prior to the loan, to support
operations.
b) Must be able to demonstrate sufficient revenue growth and cash flow
after the loan is made to retir= e the debt.
2. CHARACTER - The borrowerR= 17;s demonstrated willingness and ability to repay the loan
as agreed.
a) Existing business must have a clean credit history.
b) Start-up business: The owner= must have clean personal credit, which
means few, if any, delinquencie= s, no repossessions, and no judgments.
3. COLLATERAL - Provides a seco= ndary source of repayment for the loan and is critical
in start-up situations. Most ba= nks like to be 100% collateralized. Common collateral
offered and values given:
a) Certificate of deposit 100%<= /span>
b) Real Estate-80%
c) Stock (publicly traded) 75%<= /span>
d) Vehicles 75-85%
e) Equipment 50-75%<= /p>
f) Accounts Receivable 50-75%
g) Inventory 0-50%
4. CAPITAL - The amount of equi= ty invested in the business by the owner(s) and/or
investor(s) or from retained earnings.
a) Banks would prefer to see be= tween 25-50% equity invested in a
business.
b) Start-up businesses: 30% is = the minimum equity requirement even for a
SBA guaranteed loan.=
5. CONDITIONS - Factors in the economy that might impact the businesses ability to
repay its debt or deteriorate i= ts collateral position.
– 15 –
DO’S
Do’s
1. Do make a professional presentation; make an appointment, dress in business attire, have your
written materials well organize= d and ready to present to the lender. Remember, obtaining a
loan is a “selling job= 221;.
2. Do give the lender the most accurate picture possible, the good and the bad. The lender will=
appreciate your honesty. You wi= ll be better off presenting the risks of your business rather than
letting the lender discover the= m.
3. Do present the loan amount a= nd terms you calculated to be the most favorable, but be flexible
enough to consider the lender&#= 8217;s changes and suggestions. You may be able to negotiate interest
rates with the lender.
4. Do have the lender explain t= he loan approval process. Ask for the date when your loan
application will be acted upon.=
Don’ts
1. Don’t become impatient. Sometimes loan applications must be sent outside the local office for
approval.
2. Don’t spend the loan proceeds before you have them.
3. Don’t be surprised if = the lender wants to meet you at your place of business. Remember, it is
the lender’s job to get t= o know as much about your business as possible.
4. Don’t be intimidated. = Ask tough questions. Make sure you get all the information you need<= /p>
and that you completely underst= and the loan application process before you leave the meeting.
– 16 –
ZONING,
Before you start a business, you should get in touch with the city or county zoning department, the
city fire department and the co= unty building inspection department. Check the zoning of your
building for the rules that app= ly to you. Building permits are required if you are building or
remodeling, and they can be obt= ained at the building inspection department. Zoning requirements
must be met before applying for= a building permit. Zoning compliance permits may be required
even if no building or remodeli= ng is involved. Be aware that signs must also comply with specific
regulations and zoning and buil= ding permits are required for signs. Also be aware of fire safety and=
American Disability Act (ADA) requirements.
CONTACT:
Rowan County
City of Salisbury
110 North Main Street
Salisbury, NC 28144<= /p>
Zoning Permits (Development Ser= vices)
704-638-5207
Website: www.ci.salisbury.nc.us
Rowan County Office Building
402 North Main Street
Salisbury, NC 28144<= /p>
Building Inspection<= /p>
704-636-8747
Website: www.co.rowan.nc.us
City of Kannapolis
118 South Main Street
Kannapolis, NC 28081=
Planning & Zoning Departmen= t
704-933-5999
Website: www.ci.kannapolis.nc.us
Cabarrus County<= /p>
City of Concord
66 South Union Street
PO Box 308
Concord, NC 28026
704-920-5152
Website: www.ci.concord.nc.us/d= evserv
Cabarrus County Governmental Ce= nter
65 Church Street, SE=
PO Box 707
Concord, NC 28026
Building Inspector • 704-920-2128
Planning and Zoning • 704-920-2137
Website: www.co.cabarrus.nc.us<= /span>
– 17 –
BUSINESS PERMI=
TS
If your business is located wit= hin an incorporated city limit, a city business license may be required.
For businesses located outside = city limits, a county business license may be required.
License fees vary depending on = the type of business. Check with the city or the county office to
find out whether you need a bus= iness license and the fee schedule, if a license is required for your<= /p>
business. Special applications = are required for liquor, malt beverages, and wine licenses.
Cabarrus County<= /p>
City of Concord
26 Union Street S.
Concord, NC 28025
704-920-5216
Website: www.ci.concord.nc.us
Cabarrus County Governmental Ct= r.
65 Church Street SE<= /p>
PO Box 308 28026
Concord, NC 28025
704-920-2128
Website: www.co.cabarrus.nc.us/planningservices=
City of Kannapolis
118 S. Main Street
Kannapolis, NC 28081=
704-933-5999
Website: www.ci.kannapolis.nc.us
Rowan County
City of Salisbury
132 N. Main Street
PO Box 479
Salisbury, NC 28144<= /p>
704-638-5311
Website: www.salisburync.gov/finance
Rowan County Office Building
402 N. Main Street
Salisbury, NC 28144<= /p>
Tax Collector
704-633-3871
Website: www.co.rowan.nc.us
NC State
NC Dept. of Revenue
877-252-3052
Website: www.dor.state.nc.us/business
A state license may be required= for some small businesses.
NC Business License Information Office (BLIO)
919-715-2864
Website: www.nccommerce.com/serv=
icenter/blio
– 18 –
REGISTRATION OF BUSINESS NAME
The name you choose for your bu= siness can be important from a business image standpoint and
also in communicating to the pu= blic the product or service being provided.
Once you have chosen a name for= your business, you should find out whether the same name or a
confusingly similar name is bei= ng used by someone else.
Rowan County Area Cabarrus Coun= ty Area
Register of Deeds Register of D= eeds
402 North Main Street 65 Church Street, SE
Salisbury, NC 28144 Concord, NC= 28025
704-638-3102 704-920-2112
Website: www.co.rowan.nc.us
Website: www.cabarruscounty.us
NC State
North Carolina Dept. of Secreta= ry of State
PO Box 29622
Raleigh, NC 27626
800-228-8443 or 919-807-2225
Website: www.secretary.state.nc.us/corporations
![3D"*"](3D"smallbusinessresourcecenter_files/image001.gif")
=
19 –
REGISTRATION OF
BUSINESS NAME
The name you choose for your bu= siness can be important from a business image standpoint and
also in communicating to the pu= blic the product or service being provided.
Once you have chosen a name for= your business, you should find out whether the same name or a
confusingly similar name is bei= ng used by someone else.
Rowan County Area Cabarrus Coun= ty Area
Register of Deeds Register of D= eeds
402 North Main Street 65 Church Street, SE
Salisbury, NC 28144 Concord, NC= 28025