Ask the Expert

COVID-19 Updates

Business Start Up

Where are the grants to start business financing?

Unfortunately, there aren’t a lot of resources dedicated to grants. You can search online but unfortunately free-financing tends to come via business plan or pitch competitions and it’s not a lot of financing (less than $10K). If you search via grants.gov or if you do an online search by a particular demographic, there might be something there. But whether you find a grant or not be prepared to  fundraise for your own start-up budget or work with a debt/equity financier to fund initial needs and create a repayment schedule)

What tools help me start my business?

Your business would do well if you take time to write your idea down and research questions necessary for your business lifecycle. E.g.

Defining your purpose – Writing a mission statement and value proposition for what and why you’re choosing to pursue this business idea; For mission statement, ask yourself what is your personal, societal and company’s reason for being. For value proposition, explain the benefit a potential customer expects from what your business is offering.

Business plan –  The roadmap for your business and can give you a direction for the first number of years in operations; It focuses on your industry, marketing, strategy, operations and more.

Start-up budget – This will help you identify the necessary expenses needed for your launch along with the amount of money you need to identify and have available.

What do I need and where do I go to begin operating my business?

Your business needs to secure these key things items first:

Choose the right name – Making sure the business name you’ve chosen has been taken and appropriate for the purpose of business

Business Ownership/Entity – Not all entities are the same and it makes sense before you launch to large the difference because it would be helpful regarding tax time.

Business License – Some business requires specific licenses to operate their business based on location or practice. See this site: https://www.azcommerce.com/small-business/quick-links/business-licensing/ to learn more.

Obtaining an EIN – This is your business’ social security number. You can obtain this through the IRS for free. There are other local providers that can direct you to how to obtain it.

Sales Tax – In the state of Arizona, the Transaction Privilege  Tax (TPT) license, or sales tax is necessary for selling any products or services. You can learn more about this from the Arizona Department of Revenue (ADOR).

How can a startup succeed when they are overwhelmed with so many issues?

At the Maricopa SBDC we have an excellent tool designed specifically to help entrepreneurs sort through all the issues they may be experiencing. It is called Growth Wheel. Formatted as a wheel which is divided into four main areas of concentration, it allows a business owner to concentrate on one area of need at a time. The four main areas are Customer Relations, Operations, Business Concept, and Organization. Clients can tackle issues more effectively when they are broken down into more achievable parts.

Does the SBDC help companies get loans?

Yes, the Maricopa SBDC maintains close relationships with many lenders that offer many different kinds of loans. You may very well not be bankable with a large nationwide bank. That does not mean you can’t get a loan at a reasonable rate. There are numerous alternative lenders that are available to help you.

Do I have to write a business plan?

Not necessarily. While it is very helpful to have the concepts of your business in writing, a lengthy detailed business plan may not be the best use of your time. We have tools available, such as Growth Wheel, that will assist you in creating a “lite” business plan that is sufficient for most situations. Typical recipients of business plans, such as banks, are most interested in your financial projections and Executive Summary. They are not interested in reading a 50-page narrative of everything you are doing.

Costs of Doing Business

What do you mean by “Margin”?

Simply put margin is the difference between what you sell a product or service for and how much it costs you to produce it. If you sell a product for $10 and costs you $8 to produce it your margin (or gross profit) is $2. Margin is expressed in terms of percentage (%), so in this example your margin is 20%.

What are “fixed” costs?

Fixed costs are expenses your business has to pay whether you sell any product or service or not. Examples of fixed costs are rent, utilities, insurance, etc.

How do you figure what your break even point is?

Your break even point is basically how much you have to sell in order to cover all of your fixed expenses. So the formula is breakeven = total fixed costs divided by profit margin

If fixed expenses total $50,000 in a month and the margin is 20% the breakeven for that month would be $250,000.

Export Assistance

Are there special funds available for exporters?

Yes, both SBA and EXIM Bank have special export loan guarantee programs. Contact the Maricopa SBDC export team at our Center for details.

I am a new exporter, where should I start to export?

Start with market research, gathering industry information first and find out your target country. Maricopa SBDC counselors are happy to help you identify resources.

How can the Maricopa SBDC assist in exporting?

The Maricopa SBDC has an export team that can help with one to one counseling; Maricopa SBDC also has workshops talking about hot topics, and each time we have special guest speakers from law firms, freight forwarders, cities, and federal offices. All the workshops are no cost, you are welcome to register online to join.

Lending

I’m interested in getting an SBA loan for some equipment but I also want a line of credit for ongoing operating expenses. Can I get two SBA loans?

Yes you can. You can have several as long as they are all in good standing and don’t exceed the SBA program limits. Your business must continue to show positive cashflow and have good collateral supporting the loan(s).

Why do I need to personally guarantee on a business loan?

When a bank takes on the risk of lending money they want to know that you also have some skin in the game, showing your faith that your business will succeed!

I want to expand my business and purchase my own building instead of leasing one.  Can the Maricopa SBDC help with that process?

Absolutely!  We have resources that provide market analysis when selecting your new location as well as capital experts who assist you in becoming lender ready!

Does my personal credit score affect my business’ chances for a loan?

Yes. If your personal finances are well handled, you likely will treat your business with the same care.

What is the lowest “good” credit score?

Some lenders will accept a 680 credit score. 705 is the midpoint of a “good” score and “770” is the midpoint of a “very good” rating.

Should I go to my bank first to seek a business loan?

Yes. They should be motivated to grow your relationship. Your branch may be able to help, but likely they will put you in contact with a business banker that specializes in loans. And your FIRST stop should be the Maricopa SBDC!

Marketing

How can I make my Facebook advertising more effective?

There are two ways, the first is to make sure you’ve installed the Facebook pixel on your website. Simply Google Facebook Pixel and you’ll find instructions. By having the pixel installed, you allow Facebook to track visitors to your website and target them specifically. You can target folks who have visited your site that might not have purchased something or simply target people who have been to your website which means those people have shown an interest, they are essentially ‘warm’ leads.

The second way is to spend some time learning about how to create audiences in the Facebook Ads Manager. Instead of targeting everyone, try narrowing the focus of who you target. Like just coffee drinkers, or just people who like tea. You can even target people who have purchased from an ad on Facebook only, so you know they are looking at ads and have responded. This saves you time and money but it also gets your ads in front of real buyers.

What are the best marketing methods to use to get more customers?

The answer is… where are your customers hanging out? Yes, right now Instagram is hot, but if your customers don’t use it then you are wasting time and energy. The same applies for Twitter. Twitter is super popular among academics but not so much for CEO’s who might not have time to scroll through countless posts. And, don’t discount direct mail which is still viable and effective. The best marketing method is the method by which you can reach your perfect customer. How can you find out where they are? Ask. Start asking your customers how they found you, do a quick survey asking clients what their favorite social media platforms are, call your best customers and ask them 3 short questions to learn more about them. First understand who your customer is and where they hang out, then get to those places and start promoting!

What is market segmentation and why is it important?

You may think “everyone”! Unfortunately, targeting everyone can be expensive and time consuming. Maybe you sell coffee beans, everyone can’t be your customer because not everyone drinks coffee. But it’s also erroneous to target all coffee drinkers. If you sell an organic Columbian medium roast coffee, then you can start segmenting your market. One segment could be folks who like Columbian coffee, another segment could be folks who like medium roast, and yet another segment could be those who like organic coffee. The message for each of these customers will likely be different. Finally, you could have a segment of folks who ONLY like organic Columbian medium roast coffee… it’s super specific which means it can be  much easier to find just those people AND if that’s all they drink, it’s likely they are more willing to try yours. In this example, you have 4 different customers, all different. And, knowing the differences helps you to be much more intentional and targeted in your marketing message and methods.

Technology Commercialization

How do I validate my technology?

The better question to ask is how do I validate my business model and am I solving a problem that customers are willing to pay for?

I have an invention should I patented it?

Not necessarily. Just because a patent is granted does not necessarily mean the invention will be able to be monetized. I would advise against spending your first money invested into the business on a patent.

What do early-stage tech investors require?

From a documentation perspective they are looking for a Pitch Deck, business plan and financial forecast. However what they’d really like to see is a minimum viable product that has been market validated.

Women Owned Businesses

What is a Women’s Business Enterprise (WBE)? 

 A WBE is 51% owned and controlled by one or more women who are U.S. citizens or Legal Resident Aliens.  Management and daily operations are controlled by a woman with industry expertise.  The principal place of business is in the U.S. or its territories.

What are the main reasons to consider certification as a woman-owned business?

Certification can provide new opportunities for doing business with the federal government, the private sector, non-profits, and local  government agencies.  There are programs with set asides for Woman-Owned Small Businesses (WOSB) and Economically Disadvantaged Woman-Owned Small Businesses (EDWOSBs).

Who certifies woman-owned businesses? 

The Women’s Business Enterprise National Council (WBENC) is a leading provider of certification.  In addition to certification, they offer networking and matchmaking events.  https://www.wbenc.org/

Is it easy to obtain certification? 

Certification agencies typically have an application process, application fees, extensive documentation requirements and an on-site visit.  The process can take approximately 3 months to complete.  Planning is essential.