Small Business Development Center West Central Minnesota



Learn more about answers to questions about starting or expanding a business.


How do I know how much money I will need? How do I write a budget?

The money you will need depends on what kind of business you have. Budgeting allows many businesses to create a spending plan that is unique to their business and its activities.  It is an invaluable tool that helps businesses prioritize their spending and manage their money in an effective matter.  A budget helps your business ensure that you will always have enough money for things that your business needs and deems as important.  Businesses that plan and monitor their budget are able to identify wasteful expenditures, adapt quickly to changing financial situations, and achieve their financial goals.  Following a budget or spending plan also helps your business stay out of debt, or help you work your way of out if currently in debt.

What are financial statements?

Financial statements represent a collection of reports about a business’s financial condition, activities, and cash flows.  Financial statements help businesses determine their ability and capability to generate cash and pay back their debts, compute financial ratios to help identify the condition of the business, and investigate and record certain business activities and transactions.

How do I get capital for my business?

Lending institutions typically look for the 5 C’s when evaluating loan applications. The 5 C’s are credit, character, collateral, cash and capacity. Lenders will expect business owners to contribute their own money to the development of the business before they will consider loaning money to a business owner. They also make decisions based on credit score, good character and ability of the business to pay back the loan.

There are also non-traditional loan sources including micro-lending programs, angel investors, venture capitalists and various other non-bank lenders.

Venture capitalists are investors who either provide capital to start-up ventures or support small companies that wish to expand but do not have access to public funding. As a rule, venture capitalists do not lend to small businesses because the large amount of dollars they invest (millions) are beyond the scope of most start-ups. In a situation where venture capital is an option, investors will look to share in the profits of the business and will expect a huge return in a relatively short period of time.

An angel investor is a wealthy individual who provides capital for early-stage or start-up businesses, usually in exchange for an ownership stake in the company. Angels often provide funding for businesses that need more capital than is available through personal and family investments but are not large enough to attract venture capitalists. Angel investors often organize themselves into angel networks or angel groups to share research and pool their own capital.

What documents will I need to apply for a loan?

Typically, you will need a personal financial statement, tax returns for the last three years (if currently in business, both business and personal tax returns), as well as copies of contractual agreements (for example, a copy of a lease). Depending on the situation, lenders will likely want to see a business plan, or at a minimum, financial statements demonstrating how the loan will benefit the business and be paid back.

Does the SBD provide financing?

The Small Business Development Center does not administer loan or grant programs.  However, our consultants do help small businesses assess funding options and opportunities, identify financing sources, evaluate eligibility, and prepare documentation that lenders require in many financial institutions.  In fact, many lenders require their borrowers to work with their local SBDC professional before submitting a loan application.

Are there government grants for my business?

Generally, there are no government grants available for small businesses. In fact, the term “grant” may be a misnomer since grants simply pay for services the government needs to be done. Most government grants are awarded to non-profit organizations or local governments, not to private companies. One possible exception is for companies developing or exporting agricultural goods, including food and forest product. Another exception could be the SBIR or STTR programs, which fund the research and development of technological innovations that meet specific government needs.

What role does bookkeeping play in my business?

Keeping track of your financials for your business through proper bookkeeping and accounting principles is crucial to the survival and growth of your business.  Proper bookkeeping helps your business plan ahead and monitor and manage its cash flows.  Computing tax obligations and creating reports to investors becomes easier with proper bookkeeping practices.  Business planning also becomes easier through appropriate bookkeeping procedures.  Overall, bookkeeping helps the business possess better financial analysis and management skills.

How can projections and historical analysis help my business?

Financial projections are estimates or guess of the future financial performance of a business or organization.  Planning out and constantly updating your company’s financial projections each year could be one of the most important things that you do for your business for various reasons.  Financial projections are beneficial for a business because the plan constructed from the projections helps translate your company goals into specific, measurable, achievable targets.  The financial plan derived from the projections also provides your business with a vital feedback-and-control tool.  But most importantly, the plan can help anticipate future problems for your business.  There are several different types of financial projections.

In order to predict or forecast a business’s future, one must first understand that business’s past.  Historical analysis of a business or company allows individuals to test a business’s ability to create financial value over time and to compete effectively and efficiently within their interest period.

Growing Your Business

How do I know if it’s time to expand?

Growing and expanding your business is unique to each company. Questions you should consider are: How do you define growing and expanding? Do you have steady positive cash flow? Do you have a loyal customer base? Are your customers asking you to expand? Do you have a new market you will be entering? Do you need more space?

What steps do I need to take to expand?

Growing your business is a lot like starting one. You need to start by figuring what your goals and objectives are. You should then reevaluate your business plan, figure out how much money you are going to need and when you will see a return on that investment. Will you need to change your marketing strategies? Will you need to hire more employees? Will you implement the changes all at once or in phases? Do your research and planning first and have checkpoints along the way to make sure you are on track.

How do I get money to expand?

Similar to starting a business the money you will need to expand depends on your business. You will need financial projections and budgets to find out what your company needs. See the financial FAQ for more information.

Human Resources

How to improve my hiring process?

When you are hiring new employees it is important to take several steps. First when you need to hire new people, take the time to assess your exact needs and write a job description based on those needs. Look at current employees to determine what has helped people succeed in this position or similar positions in the past. Keep this in mind as you write the job description as well as go through the application process. An honest job description will help you to get qualified and interested applicants.

How do I retain employees?

One of the most important steps in improving employee retention is to learn why your employees leave. Keeping in touch with your employees and their needs will help you in the long run. Often small perks such as breakfast or employee bonding opportunities go a long way. For more tips on employee retention see the SBA’s training on employee recruitment and retention.

How does Minnesota’s minimum wage law affect my business?

The first step in looking at the new minimum wage is to find out what kind of business you are. If you have less than $500,000 of gross sales a year, you are considered a Small Employer by the state of Minnesota. Small Employers as of August 1, 2015, must pay at least 7.25/hr. Larger employers ($500,000 or more in gross sales revenue) have to pay $9.00/hr, as of August 1, 2015. For more information see the full article.

How does the Affordable Care Act affect my business?

The Affordable Care Act has changed a lot of rules for employers and employees. The first step in finding out how this affects your business is to find out what category your business falls under. There are different requirements for companies with 25 or fewer, 50 or fewer, and 50 or more full-time employees.  For more information about these requirements see the SBA’s website.


Can the SBDC review my legal paperwork (e.g. leases, contracts, etc.)?

SBDC consultants do not provide legal advice. We encourage you to establish a relationship with an attorney that specializes in business issues who can review your legal documents.  The West Central Minnesota Small Business Development Center has created a unique partnership with LegalCORPS in order to bring pro bono legal services to its clientele.  Individuals may sign up for a one-time thirty minutes consultation with a business attorney at no cost.  Continued legal services may be provided by a LegalCORPS attorney if the client meets the income requirements for ongoing representation.

What are trademarks and servicemarks?

Trademarks (e.g. Coca-Cola) and Servicemark (e.g. UPS) prevent others from using the same name. Trademarks/servicemarks cannot be used to prevent others from making or selling the same goods or services under a clearly different mark. A trademark, issued by the US Patent and Trademark Office, lasts for 10 years and can be renewed.

What is a patent and how do I obtain one?

A patent is a property right granted by the US Government to an inventor “to exclude others from making, using or selling the invention in America or importing it for a limited time set when the patent is granted. To get a patent, an application must be filed in the US Patent and Trademark Office.

What is a copyright and how do I obtain one?

Copyright is a form of protection provided by the laws of the United States (title 17, U.S. Code) to the authors of original works of authorship, including literary, dramatic, musical, artistic and certain other intellectual works. This protection is available to both published and unpublished works. Copyright is secured automatically when the work is created. A work is “created” when it is fixed in a copy or phonorecord for the first time.

What types of insurance should I carry for my business?

You should determine the appropriate type of insurance your company needs based on the different risks inherent to your business. There are many types of insurance available: liability, property and worker’s compensation. An insurance agent or broker can guide you to make choices that will effectively meet the specific needs of your business.

How do I find a good attorney?

To find a good attorney, it may be wise to talk with several attorneys to see which one may be the best fit for the business owner and business. Generally you want to get an attorney that is familiar with your industry. It is advisable to inquire up front about the rates for the services provided. The business owner may also wish to seek references from other business owners who have used the services of a given attorney.

What is the difference between an employee and an independent contractor?

The major factors to consider in deciding whether a worker is an independent contractor or an employee fall into three main categories namely; behavioral control, financial control and relationship of the parties. Usually a worker is considered an employee only when the business has the right to direct and control the worker. Typically, if you have significant investment in your work you may be considered an independent contractor. If a worker receives health insurance or company paid retirement such arrangement would justify an employee/employer type relationship. Please refer to the IRS Form SS8 or contact the IRS directly when in doubt.

What legal form should my business adopt?

Choosing the legal structure for your business depends on several factors including formation requirements, liability issues, tax and succession-related concerns. Common business entities are sole proprietorships, partnerships, C-corporations, S-corporations or Limited Liability Companies (LLC).  It is best to consult with an accountant and/or attorney to choose the appropriate legal entity for your business.


How important is marketing?

Marketing is at the heart of any business. All the other parts of your business depend on marketing. Marketing includes social media engagement, online presence, publishing news releases, investing in advertisements, and general branding among others. Good or bad marketing can make or break your business. One important step in good marketing is good planning. Marketing plan template

What are some tools I can use to market my business?

There are many different tools you can use for marketing your business. From social media management dashboards to publishing programs it is important to find the right tool for your marketing. Start by making a plan and then find the tools for you. You can do this by using our Marketing Plan Template. For more information on marketing tools go to our resources page.

I haven’t done much marketing in the past. Where do I start?

Your first marketing task is to write a marketing plan. You want to find who your target audience is based on age, gender, income, etc. and figure out how best to reach that audience. That may be through social media, local radio, television, or billboards. It’s also important to keep in mind that marketing is an investment of your time and money. You have to think about which form is going to have the biggest payout after you invest your time and money.

How important is a website for my business?

Whether it’s building your brand, customer loyalty or just selling your product or service having a website has become a key part of running a successful business. Over 97% of people search for local businesses online today. By having a website, you control the narrative about your business. You can build your brand on your website by having your logo, products or services, and having a distinct voice.

How important is having a social media presence for my business?

Marketing in social media marketing can be used in the same ways marketing in traditional media is used. As with other forms of marketing, it is important to have a plan for your social media. In marketing, social media included, it is important to think of it as an investment. When it comes to social media you are investing your time, and the payback on that can be substantial.

What is the easiest way to market my business?

The first thing you need to think about when marketing is who your audience is. This is going to affect how you go about reaching them. That being said one of the easiest ways to market to a range of audiences is through email marketing. Email marketing has one of the highest returns on investment of any marketing strategies. On average there is a $44.25 return on every dollar spent for email marketing.

Starting Your Business

I am interested starting a new business, but I’m not sure what steps I should take. What would you suggest?

There are many things to consider before starting a business.  From choosing the right business, to a feasibility study, to writing a business plan.  When considering a business, it is important to understand the industry. Take the time to research the business and gain a good knowledge of the customers you intend to serve. Success comes with research, education, careful planning and adequate cash flow. Perhaps most important when contemplating the start of a business is what funding sources you will use to finance your business.  Sources of funds can come from a business loan, but lenders also require you to provide equity of your own.

Do I need a business plan before I meet with the SBDC?

No, we are happy to help you at any in point while starting your business. Whether that’s going over a draft of your business plan or just talking about your business idea the SBDC is here to help. There are many resources available on our website. If you have more questions register now to meet with a consultant.

How do you start writing a business plan?

One of the first steps in a new venture is the development of a business plan. The business plan describes the business including its product or service, market, people and financing need. Take your time writing each section, don’t try to sit down and write it all at once. Don’t avoid the hard question. If it takes more work it may be more important to answer. While the summary is one of the most important parts of the plan you should answer it last to guarantee that all the important parts are included. Business plan template

 How do I finance my start-up business?

Most businesses are financed out of a combination of owner’s equity (owner’s investment) and a commercial loan. If an entrepreneur is seeking a commercial loan, a lending bank typically expects at least 10 – 50 percent of the needed dollars to come from the entrepreneur, depending on the type of business and risks involved. Attractive incentives are currently being offered by the SBA and USDA in the form of loan guarantees and waived fees. For more information on financing see the Finance FAQ or contact us.

If there is one item I should focus on to make my odds of success the greatest, what should it be?

Business owners and entrepreneurs who understand and are dedicated to good planning are usually among the most successful. Be prepared to dedicate many hours to build the success of your business. Your business plan should be your guide along the journey to success.