6 Frequently Asked Questions About Starting a Business
Karen Appelgren, director of the Zions Bank Business Resource Center in Boise, addresses entrepreneurs’ most pressing questions.
Starting a business can often be filled with unknowns. We’ve rounded up answers to six frequently-asked business startup questions, according to Karen Appelgren, director of the Zions Bank Business Resource Center in Boise.
Business Startup FAQ #1: Are there grants or other “free money” available to help me start my business?
Generally speaking, no, unless your business meets the criteria and gets selected for Small Business Innovation Research or Small Business Technology Transfer grant funding, or similar state-supported programs like IGEM. In these cases, universities hold the grant monies and work with you to commercialize your idea. There are also some grants available to startups offered by nonprofit organizations if you meet their criteria.
Business Startup FAQ #2: Can I get 100 percent financing for my startup from a bank or investor group, like angels or venture capitalists?
Banks require a down payment and will not fund 100 percent of startup costs. Similarly, investors typically will not fund 100 percent, either. These entities want to see that you have “skin in the game” — meaning you are willing to invest some of your own money into the business.
Business Startup FAQ #3: Is a written business plan still necessary?
Although sometimes viewed as “old school,” if you are pursuing funding, banks and investors will want to see a written business plan. Your business plan serves as your roadmap for success. It is helpful to ensure you have thoroughly explored the idea, researched the industry and competitive environment, understand your potential customers and costs, and have a go- to- market strategy with a timeline for implementation. It’s also valuable to get a plan onto paper to share with family members and friends so they understand what you are trying to accomplish and why you are leaving your day job.
The Zions Bank Business Resource Center offers a helpful template to get started.
Business Startup FAQ #4: Is it true that every entrepreneur loses money their first few years in business?
It doesn’t have to be. If you have completed your market research, created realistic financial projections, have industry experience and a mentor, you may be able to avoid financial and other pitfalls. Visit the Zions Bank Business Resource Center in Salt Lake City or Boise for complimentary business counseling. Be sure to seek advice from lawyers and other specialists so you can avoid common pitfalls that can take a new business down.
Business Startup FAQ #5: When is the best time to start a business?
The best time to start a business is when you have done your homework (see #3 and #4 above) and have evidence that there is a market need for the product or service you wish to provide. In addition, the optimal time is when you have taken an honest personal inventory of the following:
- Your skills and experience
- Your risk appetite
- Your availability or time commitment
- The timing of your business launch as it relates to what may be happening in the economy or your industry
- Your interests and passions
- Your family buy-in (if applicable)
- Whether you have money saved for personal expenses, in case it takes longer for your business to get to profitability than expected
Business Startup FAQ #6: Where can I get a good business idea if I know I want to be an entrepreneur?
Begin by thinking of pain points you experience in your personal or business life. Then do some research to see if others have the same issue. You can also keep a journal to record pain points you hear others expressing even if these aren’t issues you’ve personally encountered.
Consider whether this issue is an area or industry with which you have enough familiarity and expertise to try to solve the problem. Look for trends relating to demographics, lifestyles, technology, workplaces and underserved markets. Then, come up with a product or service idea to address the issue(s).
Finally, ask yourself a key question: Am I a visionary, an implementer or combination of both? You will need both qualities to build a business from scratch. Can you find the missing component in a business partner? Would buying an established business or purchasing a franchise with systems and processes already in place be a better option for you?
“As an entrepreneur, you can pursue both passion and profit on a path that ultimately improve the lives of consumer or business customers,” Appelgren says.
Are you an entrepreneur in need of advice and support? The Zions Bank Business Resource Center can help you find answers and resources, develop strategies, solve problems and get guidance with business, marketing, sales, financing, management, growth opportunities and more.
Ali Hardy is a freelance writer for Zions Bank.