DOCUMENT RESUME ED 329 765 CE 057 344 TITLE First Business Guide. INSTITUTION Ohio State Univ., Columbus. Center on Education and Training for Employment.; Small Business Administration, Washington, DC. Office of Business Development. PUB DATE 91 NOTE 116p. PUB TYPE Guides - Non-Classrcom Use (055) EDRS PRICE MF01/PC05 Plus Postage. DESCRIPTORS Accounting; Bookkeeping; Eudgeting; *Business Administration; *Entrepreneurship; Marketing; Measures (Individuals); Merchandising; Public Agencies; Scheduling; *Self Employment; *Small Businesses; Taxes ABSTRACT This guide offers first-time business persons information as well as administrative and operational techniques for one-person business enterprises that have low initial start-up costs and low operational and own-W-:1d costs. These one-person businesses can be home based or have site locations outside the home. Inc-uded in this guide is a list of potential types of small businesses and estimated cost for starting up the business. The list groups the business types into the general areas of Trades and Construction, Service, Retail, Food Service, and Manufacturing. The five main sections in the guide can be used together or independently: (1) business administration; (2) cash/budget management and acccunting/bookkeeping; (3) marketing and sales; (4) estimation, pro-,ect management, and sales; and (5) merchandising and inventory. Each section may contain an introduction and a summary with questions. The business administration section contains information on customers, associates, vendors/suppliers, the various government agencies that affect businesses, and 53 references. The guide coatains examples of a cash budget, competitors information sheet, weekly sales calls and report, labor cost sheet, job estimate work sheet, customer estimate, job cost summary sheet, and purchase journal. The First Business Guide Planning Calenda,* is also included. (NLA) *********************************************************************** Reproductions supplied by EDRS are the best that can be made from the original document. **t******************************************************************** -d et4 10.1. U $. DEPARTMENT Of EDUCATION Othce OtEducabonan Remarcn and omprovement EDU6MIONAL RESOURCES INFORMATION CENTER (ERIC> document h*s been reproduced 107Th,S recehred from the PerOn Or Orgnaation ,,r.gmettnq .1 'Amor changes neve been made To mprove reproduction Chtehty PO,r1t6 01.1w 0 01,0110n stated thiS doC u men> do not necesyerily rePreSenl otfichal Of R! aoston or policy SBN.U.S. small Business Administration Office of Business Development T ItNNG r\ 101-110 ER ON EDUCATION AND CE 'SWF FOR EMPLOYMENT THE OHIO STATE UNIVERSITY UNIVFliSIT 0 Ohio Small Business Development Center BEST COPY AVAILABLE FIRST BUSINESS GUIDE Center on Education and Training for Employment The Ohio State University 1900 Kenny Road Columbus, Ohio 43210-1090 1991 "The U.S. Small Business Administration's participation in this cosponsorship activity does not constitute an express or implied endorsement of any of the cosponsor(s)' or participants' opinions, products or services." This publication has the following U.S. Small Business Administration authnrization code: "SBA Auth. #88-1181" First Business Guide, copyright 1991, Center on Education and Training for Employment, The Ohio State University. FIRST BUSINESS GUIDE TABLE OF CONTENTS * PAGE INTRODUCTION 1 BUSINESS TYPES/1DEAS 2 BUSINESS ADMINISTRATION 3 INTRODUCTION GENERAL OPERATIONS BANKING TELEPHONE SCHEDULING OPENING & CLOSING MISCELLANEOUS REFERENCES PRODUCT/SERVICE DISTRIBUTION MEMODS COSTS PRODUCT/SERVICE PRICING MARKET PRICING ANALYZING COSTS & MARK UPS GOVERNMENT REGULATIONS PERMITS & LICENSES TAXES SUMMARY CASH & BUDGET MANAGEMENT 19 ACCOUNTING BOOlUCEEPING INTRODUCTION CASH BUDGETING SALES REVENUES/CASH IN OPERATING EXPENSES/CASH OUT BOOKKEEPING MONITORING CASH IN MONITORING CASH OUT SUMMARY iii 5 PAGE MARKETING & SALES 29 INTRODUCTION MARKETING RESEARCH INDUSTRY CUSTOMERS COMPETIIION SELLING MARKETPLACE OUTREACH & ADVERTISING PERSONAL SELLING PRODUCTS & SERVICES SUMMARY ESTIMATION, PROJECT MANAGEMENT & SCHEDULING 45 INTRODUCTION ESTIMATION LABOR MATERIALS & EQUIPMENT OVERHEAD PROJECT MANAGEMENT JOBS MANAGEMENT & SCHEDULING JOB COSTING SUMMARY MERCHANDISING & INVENTORY 69 INTRODUCTION MERCHANDISING SELECTION DISPLAY & LAYOUT PROMOTION INVENTORY CONTROL PURCHASING CONTROL SUMMARY PLANNING CALENDAR 85 iv Fmsr BUSINESS GUIDE INTRODUCIION The Fust Business Guide is a basic guide designed to assist first time business persons. The guide offers information as well as administrative and operational techniques for one person business enterprises. The information and the techniques discussed in the guide are directed at one person business operations that have low initial start-up oasts, and low operational and overhead costs. These one person businesses can be home-based businesses, pushcart vendors or have site locations outside the home. The types of businesses that one person can start up and operate are unlimited. Included in this guide is a list of potential types/ideas for one person/small businesses that you might consider starting. On the list, next to each potential business type/idea, is an estimated cost for starting up the business. The list also groups the business types into the general areas of Trades & Construction, Service, Retail, Food Service and Manufacturing. There are five main sections or parts in the First Business Guide. Each section can be used independently, however, it is suggested that you read the entire guide, as there is useful information in all the sections. The different sections in the guide are: Business Administi ation Cash & Budget Management and Accounting & Bookkeeping Marketing & Sales Estimation, Project Management & Scheduling Merchandising & Inventory Sor,e of these sections may seem to assist only one or two of tlY.: business types on our list. For example, the Estimation, Project Management & Scheduling section may seem to work for Trade & Construction businesses; however, any and all Service and Food Service or Manufacturing businesses should include in its operations estimation, project management, and scheduling. A pushcart food vendor can also do catering work, which requires estimation, project or job management, and scheduling. Another example of a section seerning to specialize on only one type of business is the Merchandising & Inventory section. This section will have information for retail businesses, however the Merchandising & Inventory section will also assist a manufacturing and/or service business. Along with retail businesses, most manufacturing, service, food service, trade and construction businesses will have an inventory of goods and supplies. The sponsors and writers of this guide wish you and your new business enterprise much SUCCeSS. The Ohio State University, Center on Education and Training for Employment (CETE) wishes to acknowledge and thank the principal author, Rodney M. Terminello, Jr., MBA. In addition, CETE and Mr. Terminello wish to thank the following persons for their participation in producing the material for the First Business Guide: Lisa Perrin, U.S. SBA Deputy District Director; Jack E. Brown, Ohio SBDC State Director; and Dr. M. Catherine Ashmore, Entrepreneurship Program Director, CETE. 0.4 1 FIRST BUSINESS GUIDE BUSINESS TYPES/IDEAS TRADES & CONSTRUCTION (HOME BASED) I. WELDING $2,500 CARPENTRY $2,500 HANDYMAN/REPAIRMAN $1,000 PAINTER $1,000 PLUMBER $2,500 ELECTRICIAN $2,500 MECHANIC $2,500 SMALL MACHINE REPAIR $5,000 SERVICE (HOME BASED) IL TAILOR $1,000 PET GROOMING $1,000 $ 500 HOUSE SITTING BOOKKEEPING $1,000 DELIVERY $1,000 WHOLESALE $1,000 MAIL ORDER/PHONE ORDER $1,000 MOVING, SHIPPING & PACKAGING $1,000 $ 500 GARAGE SALE CONTRACTOR & EXPEDITOR FRAMER FOR ARTWORK $1,000 PHOTOGRAPHY $1,000 $ 500 SHOPPING SERVICE RETAIL TEL $ 750 FLEA MARKET & SINGLE BOOTH $ 500 GARAGE SALE BOOTH INDOOR MALL & STREET VENDOR $4,500 KIOSK - INDOOR MALL & STREET VENDOR PUSHCART $5,000 - ARTS & CRAFTS, JEWELRY, CLOTHING, SOUVENIRS FOOD SERVICE IV. KIOSK - ONE-PERSON OPERATION $10,000 PUSHCART $10,000 WHOLESALE PACKAGING - TO RETAIL OUTLETS $ 4,000 CATERING PARTIES, LUNCHES, DINNERS, - CONSTRUCTION SITES $10,000 MANUFACTURING V. TOOL & DIE MAKER $10,000 WELDING & FABRICATING $10,000 SUB-CONTRACTING $ 7,500 JOINT VENTURING $ 7,500 BASEMENT & GARAGE $10,000 CLOTHING MAKER $ 5,000 ARTESIANS $ 5,000 FURNITURE & CABINET MAKER $ 5,000 2 FIRST BUSINESS GUIDE BUSINESS ADMINISTRATION DITRODUCITON When operating your business enterprise there are certain general areas that you should manage and control. These areas make up the business administration part of your enterprise. Business administration includes general operations, product or service distribution, product or service pricing, and compliance with government regulations. Each of these areas plays an important role in your business's profitability and success. While these areas may seem like small chores and often like nuisances, your ability to manage and control these areas will benefit your business enterprise. The areas require your attention on a daily, weekly, or monthly basis, and with proper planning and scheduling, you will be able to minimize the inconvenience and your operating costs and maximize your profits. 9 Business Administration 3 QEMEKAL OPERATIONS Every business enterprise has its own way or style of conducting its general operations and business administration. These different styles usually reflect the individual It is important to note that while you may have a personality of the business owner. unique style or the type of business you operate may have a special way of conducting business, you must remain organized and business-like in your dealings with your customers, associates, vendors/suppliers, and the various government agencies that affect your business. BANKNG The Cash & Budget Management and Accounting & Bookkeeping section of this guide gives details relating to the role of a business checking account and how to use a It is important to understand what a business checking business checking account. account is and what the costs are for having a business checking acccunt. The business checking account is different from a personal checking account. Some of the differences are the size and fomat of the checks and the deposit slips; another is how you write and sign the checks. Other differences are the type of service charges the bank will assess your business account and how the bank sets up these service charges. The bank usually requires additional documentation regarding your business when you open up your business account. For example, your bank may request a corporate resolution stating who the officers of the corporation are and who in the corporation is allowed to sign the business checks. In addition, the bank will ask you how many signatures are required on each check. The "Jusiness checking account is used strictly for the business and should never be used as a personal checking account. When properly used, the business checking account can act as a tool in your cash flow management and bookkeeping system. The costs of a business checking account will vary from bank to bank. Some banks may offer interest bearing business accounts. One bank surveyed in Ohio only offered the interest bearing business checking accounts to businesses listed as sole proprietorships and not to businesses listed as corporations or partnerships. Each bank will vary in the amounts it will charge for servicing a business cheadng account. Here are some examples of the types of charges and dollar amounts you can expect for a business checking account: Monthly account maintenance fee $ 2.75/month - Each check you write on the account $ 0.12/check Each deposit you make into the account S 0.17/deposit Each check you include in the deposit $ 0.10/cileck - You may receive an earnings credit each month from the bank if your average monthly collected balance is above a stipulated dollar amount. This means if you are able to maintain a certain balance of collectable dollars in your account then the bank will calculate a certain percentage of this balance and apply this percentage to the service charges like those listed above. The surveyed bank in Ohio offered a 3% earnings credit. Business Administration 0 4