I was speaking at a seminar on how to start a business. One of the main topics I always talk about is a business plan.

A business plan, including the financial feasibility study, does a couple of things for prospective business owners or entrepreneurs.

First, the financial part shows people if the business (or expansion) is worth doing. Business plans do not guarantee success and owners will still have to roll up their sleeves and do the work. It’s a blue print of what to expect if the goals are met.

Second, for a small business, is the start up venture going to be full time or part time? Some businesses start out, or may need to start, as a side job while working for someone else in order to maintain a secondary source of income.

I’ve produced business plans for clients where my chin would hit the floor after showing how much money they can make, while other clients I’ve shown working for McDonalds is a better choice. (Not to knock working for McDonalds, but when the business in only going to net a new owner $5 per hour with risks of capital, debt, etc., working somewhere else for $8.50 is a better way to go.)

However, one lady could not grasp the concept of a business plan, or why I would spend my time to produce one for a client if the business was not going to be viable. (Viability is the reason, especially before entering into a business that could lose thousands of dollars in a hurry.)

I’ve also mentioned that all of the bankers that I know want to see business plans nowadays. A banker was in the audience and reiterated my statement.

One thing I always point out is a business plan will stand alone when the customer or loan officer is not present at a committee meeting. If a loan goes to the SBA, the business plan will work its way to Washington, for example, where no one knows the parties involved.

The banker in the back of the room stated that a business plan helps him understand the business idea and sell the project to a loan committee in the absence of the customer.

Borrowers need a good selling loan officer to present the deal to a committee. Not all loan officers may be able to pitch the idea.

I’ll get more into what goes into a business plan later, but for now, when starting a business, it’s always a good idea to do the home work, find a good loan officer if going to a bank, and secure the money – first (either from personal funds, partners, investors, banks, etc.). After these steps are done, setting up with local, state and government agencies, such as the IRS or state comptroller, actually takes the least amount of time in many cases.

What business ever started out large? I can’t think of a single one.

According to Wikipedia, “Ford was launched in a converted factory in 1902 with $31,000 in cash (approximately US$704 thousand, adjusted for inflation).” Even with adjusted dollars, that is not a large corporation by any means.

“The original Model A “Fordmobile” is introduced – 1,708 cars are produced.” That’s not a huge volume either, even with a smaller population.

“Small businesses are the heart of the American economy,” Obama said in a speech at the White House. “They’re responsible for half of all private sector jobs, and they created roughly 70% of all new jobs in the past decade.

[NOTICE:  Past decade...so things weren't so bad after all...hmmm.]

“They’re not only job generators, they’re at the heart of the American Dream.” These statements were published from CNN on March 16, 2009.

Obama wants funding for Small Business Development Centers increased.  These centers can be a good source of information and help for new and existing small businesses.

Yes, Obama has increased loan amounts the government will guarantee and tried to get banks to loan, but these are loans. Who pays for failed loans? Unless you just came out from under a rock, the answer is taxpayers as well as the average citizen through inflation (printing money).

Obama wants to punish the rich. He’s pretty much said so, as well as other leading Democrats.

Taxes are being raised. Entrepreneurs and investors, like the 11 original that started Ford, need incentive.

Investors buy loans from banks; so if they are taxed at high rates, why buy the loans? No buyers for the bank’s loans means no loans. Many banks have a policy not to lend to start up businesses.  Even with the government guarantees, the bank still has the final decision.

More costs are being imposed on small businesses, such as mandatory leave and other required benefits. Small business cannot always compete, especially when government can pay more for salaries, benefits, etc. since it does not have to earn a profit.

However, many employees do not want to have to pay for any portion of the benefits that may be provided by small businesses.  This lack of participation creates higher healthcare costs as well.  (You probably won’t hear this statistic.)

Many dealerships, which are small businesses, are not getting contracts renewed.  When the government takes over industry, it can eliminate competition – and the small businesses. By the way, small businesses can employ hundreds of people.  

Today, George W. stepped up to the plate. From the Washington Times today, George W. said, “You can spend your money better than the government can spend your money…government does not create wealth. The major role for the government is to create an environment where people take risks to expand the job rate in the United States.”

Sam Walton and his wife put 95% of their money in WalMart. That’s a risk taker. And they even started with just one store – a small business.