If you're planning on starting a new business, you probably have questions. The Illinois Small Business Development Center (SBDC) at JJC can help! Available to assist your business with one-on-one advising sessions and through influential workshops, the SBDC is a no-cost resource - and anyone can take advantage of it.
Have general questions about best practices for starting a business or about the services offered at the Illinois SBDC? View our frequently asked questions.
Frequently Asked Questions About Starting Your Business
How much money do I need to start a business?
Answering this depends on the type of business you open and your chosen industry. Another useful estimate based on a study by the Ewing Marion Kauffman Foundation puts the average cost of starting a new business at just over $30,000.
But this isn't always the case. For many small businesses, startup costs are lower (such as online businesses, home-based businesses and freelancers). they often only need a few thousand dollars to get started.
Startup costs can typically be divided into six categories:
- Cost of sales
- Professional fees
- Technology costs
- Administrative costs
- Sales and marketing
- Wages and benefits
It is important to identify all startup costs (expenses) and capital equipment (assets) you will need before launching your business.
Do I have what it takes to be a small business owner or entrepreneur?
Most people generally have the ability to become successful business owners. It all starts with understanding your personality and tolerance for risk.
You should also be able to identify your own strengths or what you can personally bring to your business. Then, you can decide which type of outside expertise you will need, such as a business partner, outside technical expertise, a strategist or a communicator.
How should I structure my business?
The majority of businesses start as sole proprietorships. This is because you can report "business income" as "personal income" for tax purposes. The major disadvantage, however, is that as the owner, you are also the business. That means you assume all liabilities for the actions of the business and put your personal assets at risk.
Other types of business structures are general and limited partnerships, C-Corporations, S-Corporations (S-Corp) and Limited Liability Companies (LLC). Each has its advantages and disadvantages, depending on the type of business you are starting.
In making this important decision, we encourage you to first seek legal guidance. Sources for comparisons on legal and tax considerations for different business structures can be found in this article or through the SBA.
What customer problem do I solve?
As an entrepreneur, you should identify customer pain points and create solutions to resolve the problem. Whether you are opening a restaurant, launching a beauty salon, creating a web-based business or developing market transforming technology, the foundation of a successful business starts with understanding your customer problems or pain points.
What solution does my business provide?
Once you understand customer problems, you are in a better position to provide the right product or service at a cost that will return a profit to you (hopefully). Ideally, your business should provide a solution that is better than what your competition is offering (better, faster, cheaper). That is the foundation of your business model.
What is my business model and how will I make money?
The price of your products or services must cover all of your expenses, plus more - so that you make a profit. In business, cash flow is king. Knowing how fast that will occur (in weeks, months, years) is critical. A profit should be realized and repeated.
For example, a restaurant's business model is to make money by cooking and serving food to hungry customers.
A website's business model may not be so clear because there are many ways in which these types of companies can generate revenue. Some websites make money by providing something "free" (such as content - like videos or articles) and then they sell advertising on their site to other companies and make money that way. Other websites might sell a product or service directly to online customers.
Do I really need a business plan?
Statistics show that those who develop and implement a business plan tend to survive and those who don't, fail.
Whether you are a "reluctant" entrepreneur exploring a business while keeping a day job, or a full-time entrepreneur preparing to open, your business plan is a necessary guide to making your vision a reality. A business plan demonstrates your level of commitment to family, friends, employees and financial contributors. Learn more about business plans.
A business plan doesn't need to be an intricate document. For successful early stage ventures, a "lean" business plan can be articulated in eight to 10 pages. Include your company mission and description, where you want to go, how you will get there and what outcomes you expect.
What key metrics are important for my business?
Use feedback over intuition. Early on, you can obtain critical key metrics in your launch that can give you confidence to move ahead with your investment in time and money.
Early feedback includes:
- A customer's reaction to your concept or business features (ask potential customers "how likely are you to buy?")
- Knowing the number of competitors in your market so you can differentiate yourself from them
- Customer satisfaction rates
- Return rates
- Repeat visits
- Number of hits on your website
- Understanding how much it costs to obtain a customer
These types of metrics should be the key drivers to your business growth or necessary tweaks that may be needed in your first year.
Where can I go for help?
Frequently Asked Questions About the SBDC
I want to start my own business. Where do I start?
I'm looking for a loan. Can the SBDC help?
Yes and no.
The Illinois SBDC does not provide loans of any type.
Most government "loans" through SBA and state programs are guaranteed to banks rather than direct loans to businesses. However, these loans are not for everyone. The lending programs generally work through banks, require collateral, equity (owner) investment, a business plan and other supporting documents. Preparation is key to successful borrowing. Contact the Illinois SBDC for help.
Does the SBDC write business plans?
The Illinois SBDC does not write business plans, but we can help you with:
- Organizing your business plan
- Finding the right content for your business plan
- Structuring the plan to your audience
- Business plan reviews through one-on-one advising
Does the SBDC have any training events?
Absolutely! If you are looking for training, we offer workshops in person and online. Many of our workshops can help you turn your ideas into a business.
Some topics include:
- Starting up
- Business planning
- Digital marketing
Does the SBDC offer assistance to established businesses?
Yes! The Illinois SBDC offers many training programs on the following topics:
- Financial analysis
- And more!
In addition, much of our one-on-one advising sessions are focused on established businesses. Our advisors and partners provide expertise in:
- Strategic planning
- Mergers and acquisitions
- Management structure
- Transition planning
- And more!