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Match Business Plan to Funding Source

Your Company | SMALL TALK / Advice From Small-Business
Experts

November 08, 2000|KAREN E. KLEIN | SPECIAL TO THE TIMES

Q: I am about to graduate as a paralegal and I need a good business plan in order to open my own paralegal service. Can you offer any advice?

--Patrick Randolph, Atlantic City, N.J.

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A: There are myriad books, workshops, Web sites and software packages to guide entrepreneurs through writing a business plan. If you have the money, you can pay a consultant to assist you with the task. But don't rely on boilerplate programs that will make your company look like every other start-up on the block.

First off, it is important to match your deal to the investor or lender that you'll be approaching. Loan officers and would-be investors will determine the characteristics of your company and industry from reading the executive summary. Make sure yours is honest, thorough and fully exploits the positive potential of your company without making outlandish claims and exaggerations.

It should be no more than two pages at the beginning of your plan, stressing what is unique about your service and any innovative approach, market strategy or production techniques that you've developed.

If your business will offer a distinctive competence or other competitive advantage, list it here. Make sure you touch on the marketing plan and how it will support the revenue model. Let your readers know how the proceeds of the loan or investment will be used.

Second, your readers will want to determine the terms of the deal from your financial projections and your balance sheet. Get help with the numbers if you need it. They will be scrutinized by experts.

Third, introduce the key people in your new company. List their track records, backgrounds and experience. In your case, you may want to include letters of reference from your instructors, as well as school records, if appropriate.

A Web site tutorial that will walk you through the creation of a business plan can be found on the U.S. Small Business Administration's home page at http://www.sba.gov.

--John Vinturella, business consultant

and author, New Orleans

Learning Profit Side of Child Care

Q: What is the standard profit margin for child-care centers? Where can I get more information about this industry?

--Amy R. Robinson, Irvine

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A: According to a survey by MarketData Enterprises of Tampa, Fla., in 1998, child-care centers operate on a very tight margin of roughly 4% to 5% pretax. You should be able to find specific profit information in the annual reports of some of the larger child-care providers that are publicly held, such as KinderCare, ChildTime Learning Centers and La Petite Academy.

Running a successful, for-profit center is a difficult proposition when staffing costs run about 60% of budget industrywide and there are increasing pressures to improve program quality. Of the 100,000 licensed centers nationwide, about 45% operate on a for-profit basis. The remainder are nonprofit entities operating in conjunction with community, corporate or religious groups.

Our organization offers industry information, training, credential programs, conferences and other information to our 7,000 licensed member facilities nationwide. You can get more information on our Web site, http://www.nccanet.org or by calling (800) 543-7161. The National Association for the Education of Young Children (http://www.naeyc.org), at (800) 424-2460, offers information on planning and opening a child-care center. In California, try the Professional Association of Childhood Educators at (800) 924-2460; the California Department of Education (http://www.cde.ca.gov); the California Department of Social Services

(http://www.dss.cahwnet.gov); and the U.S. Department of Health and Human Services (http://www.acf.dhhs.gov).

--Lynn White, executive director,

National Child Care Assn., Atlanta

Assembling Stitching-Tool Business

Q: I have created an innovative tool for stitching crafters and am in the process of producing 500 pieces. I have a lot of questions about packaging, retail pricing and business requirements. I don't know where to go from here and I don't have a lot of money to invest. Your help and direction would be greatly appreciated.

--Patti Hottman, Hawthorne

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A: Pay a visit to the Small Business Development Center in Torrance at 2377 Crenshaw Blvd., Suite 120, (310) 787-6466. They offer a free monthly workshop called "Nuts & Bolts" that answers many questions about starting a business. They also have consultants who can meet with you on any number of subjects, including marketing, business management and financing (though there are limitations on how much free help they can provide).

Before you go any further, I encourage you to visit the SBDC as well as the Small Business Administration (http://www.sba.gov). Many businesses lack start-up funds, so don't let that discourage you. But don't spend any more time and money until you have taken preliminary steps to map your target market, figure out channels of distribution and determine how to promote it. Good luck.

--Kenneth Keller,Keller & Associates,

small-business consultants, Valencia

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Send questions to Karen E. Klein, Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail kklein6349@aol.com. Include your name, address and telephone number. This column is designed to answer questions of general interest. It should not be construed as legal advice.

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