Podcast
Questions and Answers
What are three examples of personal financial resources an entrepreneur can utilize to fund their business?
What are three examples of personal financial resources an entrepreneur can utilize to fund their business?
Liquid cash in checking and savings accounts, funds from selling assets, and funds received as a gift or investment from friends and family.
What is the main argument against the idea that grants are "free money" for businesses?
What is the main argument against the idea that grants are "free money" for businesses?
Grants are funded by tax dollars and typically require stringent compliance and reporting measures, indicating they are not truly free.
What credit score is generally considered favorable for business loans and what is the minimum period of credit history required by lenders?
What credit score is generally considered favorable for business loans and what is the minimum period of credit history required by lenders?
A credit score of 650 or above is generally considered favorable, and lenders typically require a minimum of 3-5 years of credit history.
What is the role of Community Development Financial Institutions (CDFIs) in supporting small businesses?
What is the role of Community Development Financial Institutions (CDFIs) in supporting small businesses?
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What percentage of the total startup cost do lenders typically expect entrepreneurs to contribute as cash or equity investment?
What percentage of the total startup cost do lenders typically expect entrepreneurs to contribute as cash or equity investment?
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What type of assets are lenders likely to accept as collateral for a loan, and what is an important consideration regarding their value?
What type of assets are lenders likely to accept as collateral for a loan, and what is an important consideration regarding their value?
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Describe how crowdfunding works and give an example of a common use case.
Describe how crowdfunding works and give an example of a common use case.
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What is the first step to launching a business according to the outlined steps?
What is the first step to launching a business according to the outlined steps?
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Why is market research crucial for starting a business?
Why is market research crucial for starting a business?
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What are the two general categories of businesses mentioned?
What are the two general categories of businesses mentioned?
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What should you evaluate when selecting a business idea?
What should you evaluate when selecting a business idea?
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How can an entrepreneur determine if additional qualifications are needed before starting a business?
How can an entrepreneur determine if additional qualifications are needed before starting a business?
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What defines market segments within a market?
What defines market segments within a market?
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How can you estimate the market potential for a product or service?
How can you estimate the market potential for a product or service?
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What are the two types of competition a business may face?
What are the two types of competition a business may face?
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Name two sources where you can find helpful information for market research.
Name two sources where you can find helpful information for market research.
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Why might consulting industry experts be beneficial during market research?
Why might consulting industry experts be beneficial during market research?
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What types of assistance does the Michigan SBDC provide to small businesses?
What types of assistance does the Michigan SBDC provide to small businesses?
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What should entrepreneurs consider before starting a business according to the guide?
What should entrepreneurs consider before starting a business according to the guide?
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Why is the guide not considered a substitute for legal or financial counsel?
Why is the guide not considered a substitute for legal or financial counsel?
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What is the significance of having an online version of the business guide?
What is the significance of having an online version of the business guide?
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List two additional resources available for starting and operating a business in Michigan.
List two additional resources available for starting and operating a business in Michigan.
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What are two critical factors to analyze when determining the viability of a business idea?
What are two critical factors to analyze when determining the viability of a business idea?
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How can market research influence pricing strategies for a business?
How can market research influence pricing strategies for a business?
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What is one common financial mistake that entrepreneurs make before opening their businesses?
What is one common financial mistake that entrepreneurs make before opening their businesses?
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Identify a benefit of understanding customer preferences in market research.
Identify a benefit of understanding customer preferences in market research.
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What should an entrepreneur evaluate when analyzing potential competitors?
What should an entrepreneur evaluate when analyzing potential competitors?
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Explain why it is important to establish a pricing menu for products and services.
Explain why it is important to establish a pricing menu for products and services.
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What aspects of the market should be considered when identifying the target demographics?
What aspects of the market should be considered when identifying the target demographics?
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Name two economic factors that can influence market conditions.
Name two economic factors that can influence market conditions.
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Study Notes
Starting a Small Business in Michigan
- The Michigan Economic Development Corporation (MEDC), state government, and the Michigan Small Business Development Center (MI-SBDC) support business launches and growth.
- The MI-SBDC provides counseling, training, and research to help businesses start, grow, transition, and innovate.
- This guide provides general and Michigan-specific information on business startup steps, organizational structures, business plans, taxes, and management.
- It is an informational resource, not legal or financial advice.
- Updates are available online at the website michigansbdc.org
Personal Assessment: Are You Ready?
- Self-assessment helps determine personal and professional suitability for entrepreneurship.
- This includes evaluating reasons, goals, timeliness, resources, health, and family balance.
- Answer questions honestly about personal and professional strengths, weaknesses, health, stamina, knowledge, judgment and willingness to sacrifice.
- Bring answers to MI-SBDC consulting sessions.
Steps to Starting a Small Business
- Step 1: Self-assessment
- Step 2: Select a business idea (consider strengths, interests, problem-solving, unmet needs)
- Step 3: Market research to assess feasibility
- Step 4: Refine or reconsider the business idea based on market research
- Step 5: Analyze startup costs (accurate estimations are crucial)
- Step 6: Refine or reconsider the business idea based on analysis
- Step 7: Write a comprehensive business plan (crucial for financing).
- Step 8: Complete the startup checklist (licenses, permits, legal structure).
- Step 9: Secure financing (personal resources, grants, loans, CDFIs , SBA loans, crowdfunding).
- Step 10: Start your business.
Selecting a Business Idea
- Identify strengths, passions, solvable problems, and unmet needs
- Make a list of multiple business ideas
- Evaluate each idea based on personal assessment and market research
Market Research
- Market potential: gathering facts & statistics to evaluate feasibility
- Customer segmentation: groups of customers with similar characteristics
- B2C (Business-to-Consumer): selling directly to consumers
- B2B (Business-to-Business): selling to other businesses.
Industry Research
- Examine the total pizza market sales (U.S., Michigan, local).
- Track sales trends (increases/decreases).
- Understand trends in pizza offerings.
- Assess pizza parlor trends.
Market Size and Customers Research
- Determine the total market size (consumers/businesses interested).
- Analyze purchase frequency and prices.
- Identify key customer segments.
- Estimate potential revenue by multiplying potential customers, purchase frequency, and product price
Competition Research
- Identify direct & indirect competitors (similar/alternative products).
- Analyze competitor locations, products, marketing, strengths, and weaknesses.
- Understand potential customer dissatisfaction and areas for improvement by investigating competitor products/services.
Market Research Tools and Resources
- Libraries: Business librarians, trade publications, census data, RMA statements.
- Internet: Keywords, strategies, trusted websites, competitor sites.
- Primary sources: Industry experts, surveys, competitor visits (observe customer perspective).
Analyze Startup Costs
- Businesses fail due to unrealistic expectations of starting costs and speed of earnings.
- Accurately estimate the costs, align available resources, and potentially refine the businesses.
- Start with bootstrapping and building slowly
Funding Your Business
- Personal Resources: Liquid cash, asset sales, gifts, home equity, credit cards, insurance policies, retirement investments.
- Grants: Limited availability to local governments, agencies, and non-profits (strict eligibility and compliance).
- Loans: Traditional & non-traditional lenders want evidence of credit history, cash investment (20-30%), and collateral value.
- CDFIs (Community Development Financial Institutions): Private lenders focused on underserved communities.
- SBA Loans: Loan guarantee programs through commercial banks & CDFIs.
- Crowdfunding: Donation-based, Rewards-based, Equity-based (investigate advantages/disadvantages carefully).
- MILE (Michigan Invests Locally Exemption): Allows Michigan residents to invest in small businesses.
Write Your Business Plan
- Detailed plans are crucial for financing.
- Document all collected research and insights into strengths/weaknesses.
- A detailed business plan simulates the business environment and helps to align goals.
- The plan can be a management tool.
Complete the Startup Checklist
- Business structure & legal entity: Choose a name, select legal structure, register entity, apply for an Employer Identification Number (EIN).
- Buying an existing business: Requires thorough information on previous business operations and finances to identify and avoid liabilities.
- Business image & branding: Create a strong brand to attract customers and communicate business character.
- Licensing & Permits: State and local licenses for specific activities, food services (check state and local governments).
- Taxes (State & Federal): Obtain necessary tax registrations.
- Employee considerations: Additional responsibilities at federal & state levels.
- Intellectual property: Patents, trademarks, service marks, and copyrights (consult a consultant).
- Business Insurance: Determine coverage, shop for rates.
- Zoning and local requirements: Ensure the location complies with local laws.
Secure Financing
- Get a business plan before securing any lease or purchase agreement
Start Your Business
- The hard work of running a business begins.
- Leverage resources such as Michigan Economic Development Corporation's (MEDC's) Pure Michigan Business Connect (PMBC) for B2B sales connections.
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Description
This quiz guides you through the essential steps and considerations for launching a small business in Michigan. It covers topics such as business plans, organizational structures, and the support available from state resources. Assess your readiness for entrepreneurship and gain insights tailored to Michigan's entrepreneurial landscape.
