Video:Small Business Financing Tips

Transcript:Small Business Financing Tips

For me, the reason I went into business is so that I could retain some contact, or more contact, with myself. I think a lot of people actually who do go into their own business also have that feeling. They want to be themselves more, and they're not allowed to be themselves in a lot of corporate environments. Hi, this is Ralph Jarmon - I'm here today with About.com. Welcome to my office.

I've been in business now as a CPA for about 25 years, and I started working in New York with the traditional big firms, right in the beginning. I finally found myself with sole practitioners, sort of upscale sole practitioners, where I really learned the blood and guts of this business. I learned to be very flexible, and realized that I wanted to go into my own small business, that I really didn't feel comfortable in a corporate environment, that I felt that I could do better on my own, and be happier. So I left that, and I decided that I was going to do this regardless of whatever happened.

Create a Business DBA

I've come across numerous situations where people come to me at the end, and I've seen a lot of businesses fail because they failed to pay payroll taxes, sales taxes, or find themselves under great financial burden, because they've taken care of the first thing last. It's really important to know what kind of business entity you're going to create to begin with, to know all the consequences and requirements for the law. And if you're a sole proprietorship, I advise people - probably just for image purposes - to go out and create a DBA, which is a "doing business as" filing that allows you to get a separate employer ID number if you want to do that, it allows you also to set up a bank account in that company's name. I can create my image in that name, with everything that I do.

Small Business Planning

A business plan is basically a map. And you have to look at this business plan yourself and see how close you're coming to the goals that are defined by so much income six months out, one year out, two years out, three years out. Do your best in terms of trying to get as far as you can with that business plan and then it's very important to bring it to a pro, whether it's a CPA, or some other financial consultant, a business plan consultant, to get a better picture. You need someone who's really savvy to sit down and say, yeah, that works anyway - I don't have anything vested in you, I'm not afraid to hurt your feelings by telling you this doesn't work. Because a lot of people who failed, who I've seen basically never passed this around to any third party and got an objective, outside opinion.

Financing the Business

How are you going to get the money, if you need money? How are you going to finance your business? It really depends on the kind of business you're trying to establish. I didn't need financing. Now, If I needed to get money from someone, I would have had to get a business plan together, and I would have had to go to somebody to ask for money, whether it was a loan or an investor. Now of course, if you're bringing this to either an investor or a lender, you're bringing it to a very sophisticated financial person, with the exception of your rich uncle, who may or may not care. Just be absolutely diehard in your conviction.

There's always that tendency to want to plan it out and have it all on paper, and it can become an impediment moving forward. So you have to take action at some point. It's just really getting in there and deciding, and having the guts - I think there's a courage factor - and say, I'm doing this, and I'm disconnecting from being an employee. I'm not working for somebody else, I'm working for myself.

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